amazonAmazon has gone public with new details about its high-profile standoff with book publisher Hachette, confirming that the e-commerce giant is trying to lock in a standard price of $9.99 for e-books — and making the case that the lower price is actually better for everyone involved, including the publisher.

kindleapp300300“Many e-books are being released at $14.99 and even $19.99,” the company says in a new post in the Kindle forums. “That is unjustifiably high for an e-book. With an e-book, there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market — e-books cannot be resold as used books. E-books can be and should be less expensive.”

Here’s how Amazon says the economics work out.

“It’s also important to understand that e-books are highly price-elastic. This means that when the price goes up, customers buy much less. We’ve quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000.”

Of that revenue, the company says it would have 35% go to the author, 35% to the publisher and 30% to Amazon — not the 50% take that some reports have claimed.

We’ve contacted Hachette seeking comment on Amazon’s post. The publisher’s negotiations with Amazon have been at a standoff for months over this issue, causing high-profile authors to speak out against Amazon as the company has delayed shipments and pre-orders of key Hachette titles.

Amazon’s final point in its post addresses the issue of fairness for authors: “One more note on our proposal for how the total revenue should be shared. While we believe 35% should go to the author and 35% to Hachette, the way this would actually work is that we would send 70% of the total revenue to Hachette, and they would decide how much to share with the author. We believe Hachette is sharing too small a portion with the author today, but ultimately that is not our call.”

Read Amazon’s full post here.

Comments

  • Kary

    I think Amazon could have serious legal issues with that post, but for this sentence: “Is it Amazon’s position that all e-books should be $9.99 or less? No, we accept that there will be legitimate reasons for a small number of specialized titles to be above $9.99.”

    But as to the rest I agree with Amazon and can’t believe how many authors and members of the press have jumped on the wrong bandwagon supporting the greedy publisher. Ebooks should cost less, and profits would undoubtedly be higher for anyone involved on the selling side, and costs lower for consumers. It’s a win-win.

  • http://blog.CascadeSoft.net @CascadeRam

    A long-winded post from Amazon, but they don’t explicitly spell out their demands and what exactly they are requiring from Hachette.

    It seems like they want Hachette to price almost all e-books at $9.99, but it is interesting that don’t explicitly state this.

    • Kary

      It’s the price fixing concern I alluded to in my post.

  • Alec Matias

    This is anecdotal, but in the days when all ebooks were $9.99, I bought a ton. Then Apple came along and the prices soared and I started turning to my local library to borrow ebooks for free. I have dozens of ebooks, but none were purchased since the prices surged, and lately any ebook I considering buying is more expensive then if I ordered a hardcopy. Library is great and I’ve borrowed more ebooks than I own, it’s just it can take months on a waitlist to score a copy. I’d be impulse-buying so much more at $9.99.

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