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Amazon may shrink publisher margins on e-books

updated 04:55 pm EDT, Thu July 9, 2009

Amazon may up e-book price

Amazon's price cut of its Kindle 2 e-book reader have prompted some in the publishing industry to worry that the online retailer, which is far and away the leading provider of e-books, may put pressure on them to drop the prices for electronic versions of their books for the device, according to a Bloomberg report. Amazon reportedly pays between $12 and $13 to publishers for Kindle editions of books that are on the New York Times bestseller list and sells them for about $10 to customers. Many publishing houses are concerned the giant online vendor will put price pressure on them in order to bump its own profit margins.

Publishers earn about $2.15 per digital book versus 26 cents for a print copy.

The $10 price cannot be maintained indefinitely from a financial standpoint by Amazon nor publishers, according to analyst Claudio Aspesi. He believes Amazon is likely to raise prices to $12.50 while at the same time asking publishers to drop their price points. This strategy could help the company reach its projected $1 billion in profits for the Kindle by 2010.

Publishers are hoping for added competition to the Kindle, that will reduce their reliance on Amazon as a client for e-books, and to avoid what Apple managed to accomplish with iTunes in becoming a near-monopoly or at least the top place to go to when looking to purchase digital music online.

This may come from Sony with its Reader, although Sony is hoping to tap into a different revenue stream by selling third-party ads on the device., News Corp. is to be developing its own device as well. Google has plans to sell e-books via the web as well, though it is not yet tied to any related hardware. Plastic Logic and FirstPaper are expected to introduce e-readers in the future.



By Electronista Staff
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Comments

  1. Hurley42

    Fresh-Faced Recruit

    Joined: May 2008

    -1

    Publishers?

    With the increasing popularity in ebooks, what is the purpose of a publisher? Why should writers accept a middle-man making money from their hard work? Publishers need to go bye bye.

  1. Eriamjh

    Addicted to MacNN

    Joined: Oct 2001

    0

    Selling at a loss...

    ...and making it up on volume didn't work for GM and it won't work for Amazon.

  1. shagless

    Fresh-Faced Recruit

    Joined: Jan 2005

    +4

    overpriced

    Though I enjoy using my kindle app on my iphone, I do not purchase too much because of very ridiculous pricing. I am sometimes paying more for the digital version of a book versus a paperback. A paperback which has to be bound and printed and shipped. I realize there is a formatting issue with e-books, but really they need to look at their pricing on books if they want to keep having e-books and the kindle successful.

  1. JulesLt

    Fresh-Faced Recruit

    Joined: Jul 2005

    +2

    Publishers

    Hurley - you are mistaking publishers with printers - look inside any published book, and you will find that the vast majority are printed by third-party printers.

    What publishers provide for authors are marketing (how else does Dan Brown do so well?), muscle (do you think an individual, unsuccessful author could negotiate with Amazon?), editing (most professional authors understand the importance of a good editor), proof-reading (not the same as spell-checking) and crucially, for the writer without a years income in the bank, an advance or salary to produce a book.

    Books are one of the most labour-intensive of the arts (compare to a song or painting - a book typically takes months to write).

  1. Devlin du GEnie

    Fresh-Faced Recruit

    Joined: Jul 2009

    +1

    Overpriced, locked down

    Print publishers need only look at the music industry to see their future. Alas, no one seems to have learned from the spanking that iTunes gave RIAA members.

    * Drop the DRM.

    * Lower prices to reflect current production costs.

    * Settle for being profitable rather than obscenely profitable.

  1. legacyb4

    Mac Elite

    Joined: May 2001

    +1

    should digital cost more?

    Never understood how they can justify a digital version costing MORE than print? The purchased copy that reaches a reader's hands is the same form that left the publishing house's computer on its way to the printing house. How can you justify charging more?

    While I understand the need to cover costs, etc. I am fully against artificially bumping costs "just because". Get over it because greed is going to kill you...

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    cost

    It isn't just that the digital costs more, it sometimes costs a LOT more.

    And forget about the 'printing' costs. They also end up making 'more' because the DRM prevents loans. So, in theory, rather than selling one printed book that gets shared between 10 people, they get to sell 10 books.

    You'd think they could cut the price in half and still make out in the deal.

    But, as you can see, it doesn't matter what business it is, if there's royalties involved, it's all about trying to gouge for as much as possible because that's all they know.

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