Amazon to E-Book Publishers: Change or Die

February 3, 2010

Regarding $10 eBooks, while I agree that this is the price point that the market seems to be headed for for widely distributed books, it is important to note that while this works well for big publishers (they set much higher retail prices that Amazon then discounts to $9.99), it doesn’t work well for smaller publishers or for niche publications, which don’t get the same discounting.

Because Amazon takes a very large chunk of the sales price, and bases the publisher share on the list price, there is a lot of room for uncertainty. If you have a best seller, it’s easy; you price where you want, and unless you’re crazy about it, the price will become $9.99. If you don’t have a best seller, then you need to set a price, see how it gets discounted, then adjust until the discounted price is one that you feel is fair for your customers, but still yields a fair profit.

I think most small publishers would prefer a scheme that takes the guess work out. In practice that would mean a smaller percentage to Amazon (good), but smaller (or no) discounts (not so good). Amazon seems to be signaling a willingness to do this, both in the Macmillan case and in other actions. Overall, I think that is good, and I’m guessing it will not push prices higher in the long run (the market ultimately will set prices).

Richard Hamilton
Read the Article at HuffingtonPost


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