Quote:
Originally Posted by riemann42
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.
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Just to clarify above that you use the term "profit" in several cases when you should use the term revenue. The amount that the publisher gets is their revenue and the amount Amazon gets it their revenue. Profit is calculated after deducting expenses from the revenue. (simplistic)
BOb