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Originally Posted by brecklundin
Anyone who actually believes that tripe, I have a bridge I want to sell you...how is it that Amazon is losing money again? etc etc
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It is unclear whether or not Amazon is profiting or losing money with the Kindle and Kindle books. It is likely they have a thin margin on the devices, possibly very thin given the recent price cuts. What we do know is that Amazon in particular spent years losing money and accruing substantial debts in order to achieve a pre-eminent position in several markets; so it's not unreasonable to assume they are doing so with ebooks.
As to how ebooks might lose money: Publishers charge retailers a wholesale price based on the official cover price. Retailers in turn can charge whatever they want for it -- afaik there is no MAP with books or ebooks, hence the recent price war between Amazon and Walmart; so if Walmart and Sony and B&N want to lose money on every copy of
The Lost Symbol they sell, officially there isn't much Doubleday can do about it. (They can't even cut off supplies, since retailers usually get their books from a distributor like Ingram or B&T.) Since the wholesale price on a new bestseller is probably around $12, every time the ebook retailer sells one for $10 they are losing at least $2 per sale, plus whatever their associated costs are (bandwidth, storage, staff, taxes etc, i.e. it's not free).
Also keep in mind that Amazon is not the one proclaiming that they are losing money; Amazon is not providing any real or hard numbers, so it's mostly speculation by analysts and journalists. Regardless of the reality, Amazon is spinning the few facts they reveal in order to cement the idea that "ebooks = Kindle."
Many ebook bestseller are therefore loss leaders; however, the same is true with paper books as well. So the key issue is whether an ebook retailer is collecting significant profits from the smaller sales. Some analysts think they are, some don't. In the absence of hard numbers, only the retailers really know.
As to the publishers, they are primarily defending their profit margins -- which aren't exactly as big as, say the oil industry -- and maintain the perception of value of their product. Most of their profits are made from hardcovers, and ebooks that cost half the (official) price and come out on the same day as the hardcover will clearly cannibalize sales. What is unclear here is how the book buyer will react to this relative windfall. Will they buy more books? Will they spend their money elsewhere, e.g. on movies and music? Will they save it? No one really knows. However, there is a lot of speculation that the retailers will pressure the publishers to reduce the wholesale prices -- which, by the way, almost certainly means lower earnings by the artists, unless it turns out that lower prices produces enough sales to balance out the reductions.
Few individuals or organizations can truly react efficiently and positively to disruptive technology, by the way, especially for the individual who is not in control of the process. The idea that publishers should just roll over and accept a new world without attempting to exert any influence whatsoever over the process -- especially when that transitional process could damage or completely destroy that organization -- is a tad unrealistic.
As to "cooking the books," keep in mind that some of those tricks are actually illegal. IIRC both Microsoft and Dell have gotten caught and finded for manipulating earnings reports. Maybe that's happening, but I need more that raw cynicism or skepticism before treating any such assertions as more than wild conjecture.