Amazon: Hachette spat can be fixed with lower ebook pricing

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Amazon has characterized its struggle with publisher Hachette as a quest for a “healthy reading culture”, which it is trying to achieve by forcing down ebook prices.

In a statement on Tuesday, Amazon said lower ebook prices would mean more sales and ultimately more money to go around. Of that money, it said Amazon should get a 30 percent cut – the same as it gets now – and the author and publisher should each get 35 percent.

It was previously reported that Amazon’s desire to negotiate a higher cut than it currently receives was central to this whole fiasco. However, this new proposal would leave the split between Amazon and the author/publisher as it has been since its (ultimately doomed) 2010 tussle with the big publishers over ebook pricing.

In effect, Amazon is revisiting that 4-year-old argument. The 35/35 element is a bit of a jab at the publishers, who have the final say on what they and the authors get from their combined 70 percent, as many authors currently receive only 25 percent of net revenue.

In May, as Amazon and Hachette were negotiating new terms, the Kindle firm started delaying shipments of Hachette titles, cutting off pre-orders and generally stoking an industry-wide debate about book retail in the digital era.

In its Tuesday post, Amazon said prices like $14.99 and $19.99 were “unjustifiably high” for ebooks that aren’t specialized titles, because of the substantially lower production and distribution costs they entail, and also because you can’t resell ebooks – a current reality that’s being tested in European courts.

The firm said that, if an ebook sells one copy at $14.99, it will sell 1.74 copies at $9.99. If you look at sales of 100,000 copies, that means a 16 percent increase in overall revenue. It pointed out that more sales make it more likely that the ebook will make the bestseller lists, and that lower retail prices will encourage reading:

“Keep in mind that books don’t just compete against books. Books compete against mobile games, television, movies, Facebook, blogs, free news sites and more. If we want a healthy reading culture, we have to work hard to be sure books actually are competitive against these other media types, and a big part of that is working hard to make books less expensive.”

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