While I was at Blue Met last week, Chad had some interesting things to say about how Amazon selling ebooks at $9.99 was something that publishers could definitely make a profit off. He was making a lot of sense—basically that at 70% of $9.99, publishers would be earning more per ebook than they’re currently getting per print book.
But now Jason Epstein says this at the NYR Blog. So, would be interested in seeing Chad’s rebuttal.
The problem began when Amazon set out to charge $9.99 per e-book download, considerably less than it was paying publishers for their e-book inventory. Since Amazon’s competitors could not afford such a costly strategy, Amazon hoped to dominate (or even monopolize) the e-book market and dictate future e-book pricing. Should Amazon’s $9.99 price become the industry standard—a reasonable assumption since e-books like iTunes are merely disembodied electronic information—publishers might then be obliged to sell e-book content to Amazon for perhaps as little as $6.00, too little to contribute their share of pre-digital legacy costs for warehousing, inventory and traditional marketing. Publishers, unable to support these residual costs by physical book sales alone, might eventually submit to the digital imperative and market their books directly to the web to be read on digital screens or printed on demand one copy at a time at diverse locations. Though Amazon’s strategy, if successful, might force publishers to shrink or even abandon their old infrastructure, demand for physical books, printed and bound, will not disappear. Publishers might thus find it necessary to subcontract their physical inventory to specialized distributors.