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BearMountainBooks,
I agree with you. At $2.00 there is no need for rental. And rental may work poorly for low volume Indie books.
As a potential customer, I am resistant at $5.00 - unless I will use it as reference. Or, I really, really want it.
SmashWords is growing faster than their ability to add resources. Usually a good problem for a business - especially in a recession. Once their inventory quadruples and their capacity matches load, I could envision an offshoot subscription based model:
$5.00 a month, download any book in any DRM format that expires in no more than 2 weeks(customer chooses period), max 7 books out on rental.
If SmashWords was successful, it could bring a needed shake up of the publishing industry. And give a significant advantage to independent authors.
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