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Why would Amazon do this? Think about it for a second. Amazon is currently paying authors/publishers 35% and keeping 65%, but now they're announcing they will keep 30% and give the authors/publishers 70%. Why would Amazon slash their own profit margins? Furthermore, will this move make the publishers happy?
Well, let's take a look at the numbers.
Here are the numbers for a typical book using the existing 65/35 payout structure.
List Price:________$28.00 (35% is $9.80)
Pbook Retail Price:_$15.00 (So publisher/author gets $9.80 and Amazon gets $5.20)
Ebook Retail Price:__$9.99 (So publisher/author gets $9.80 and Amazon gets $0.19)
Here are the numbers for the new 30/70 payout structure.
List Price:________$28.00 (35% is $9.80)
Digital Price:_______$9.99 (70% is $6.99)
Pbook Retail Price:_$15.00 (So publisher/author gets $9.80 and Amazon gets $5.20)
Ebook Retail Price:__$9.99 (So publisher/author gets $6.99 and Amazon gets $2.00)
Cleary the publishers are now making LESS money with ebooks if they switch to this new payout structure. However, Amazon is still retaining the old payout structure, so most publishers will just stay on the old system. So why is Amazon doing this if publishers won't sign up? Because Amazon is going after the authors.
Make no mistake about, baby -- Amazon just declared war!
Last edited by Daithi; 01-20-2010 at 11:23 AM.
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