Quote:
Originally Posted by Sabardeyn
A part of the problem is that while volume of sales will make a difference, what all of these publishers are looking at is how much profit they can make.
So right now, if "Store X" sells an ebook at .05 profit per unit sold x 20 units sold = $1.00. That is much better than, say "Amazon" selling at .01 profit/unit x 70 units = .70 cents. At least, it is for the publishing company.
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Interesting.
What was happening is that Amazon was buying a book for $13.00, and selling it for $9.99 at a loss of about $3 for Amazon, and $13.00 of revenue for the Penguin.
Now with the agency model, it goes like this: Amazon brokers the sale of a book on behalf of the Penguin for $14.99. The Penguin pays Amazon a commission of $5.25. Amazon profits $5.25, and the Penguin gets $9.74 of revenue.
Under the old model, say, a 100 people buy the book. That's $1,300 profit for the Penguin and a loss of $300 for Amazon.
Now, 40 people buy the book, and the rest go buy the hardback from Amazon for $9.99 (which is Amazon's way of saying FU to the Penguin). That's $389.60 profit for the Penguin and Amazon's profits are all eaten up by the loss they are taking on the hardback.
In the end, the publisher loses big, but they won a battle, forcing Amazon to charge more for the ebook and fighting the idea of the $9.99 best seller. Clearly it is pyrrhic victory for the evil Penguin, and a big loss for the rest of us.