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The Kindle Causes “Unease” at BEA

Jeff Bezos, CEO of Amazon, campaigned hard on Friday on behalf of the Amazon e-reading device. Booksellers are becoming increasingly nervous about the rise of ebooks. According to the New York Times article, Amazon is selling many of its Kindle books below what it costs to buy the book from the publisher. Amazon, for example, sells all new hardcovers at $9.99. Assuming Amazon gets a 40% discount off the retail price, it’s likely averaging a $5.00 a book loss on hardcovers.

The article appears to conflates booksellers and publishers because it implies that booksellers fear the Kindle because Amazon’s market power may leverage lower publisher prices. I would think booksellers would welcome a lowering in its inventory cost, but worry that ebooks would eat into their market share. Conversely, publishers see a rise in revenue from increased ebook sales given lower operating costs, but would not want to lower its prices upon pressure from Amazon.

Ebook sales are increasing. According to the article:

Nearly all publishers say their sales of electronic books are growing exponentially. Carolyn K. Reidy, the chief executive of Simon & Schuster, said its sales of electronic books will more than double this year compared to last year, after growing 40 percent in 2007 from 2006. David Shanks, the chief executive of Penguin Group USA, said his company sold more electronic books in the first four months of 2008 than in all of last year.

Ultimately, I think ebooks are the wave of the future and brick and mortar stores will have to rethink how to monetize their businesses.

Via New York Times (thanks Tina B).

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

4 Comments

  1. Tanya
    Jun 12, 2008 @ 13:29:34

    While I am glad that the Kindle is drawing attention to eBooks, I think the proprietary nature seriously limits Kindle users to reading only the books available at Amazon. Other eBook readers offer greater flexibility. I have been particularly pleased with the Cybook, which is extremely light and has great battery life – and, most importantly, can read eBooks from a variety of sources. I like having the freedom to shop around and compare prices. Bookeen, Cybook’s manufacturer, has been extremely proactive in fixing problems and issuing new firmware, which is a definite plus.

    ReplyReply

  2. Tanya
    Jun 13, 2008 @ 17:10:11

    I did some more research after reading this post and the linked NY Times article yesterday. In light of the NY Times article and the NY Times estimate that Amazon is losing 25% on the sale of the McClellan book, is its $9.99 program predatory pricing designed to drive others out of the business? This seems to clearly violate predatory pricing and anti-trust legislation, specifically the Robinson-Patman Act. The government, as far as I can see, has done nothing to curb this. What do you guys think of this?

    ReplyReply

  3. The Publishing Industry Needs to Embrace Technology | Dear Author: Romance Book Reviews, Author Interviews, and Commentary
    Jun 15, 2008 @ 04:00:55

    [...] Book Expo America, ebooks were the hot topic. A report from the New York Times signaled that there is some within the industry who are fearful of the rise of ebooks in general [...]

  4. DS
    Jun 15, 2008 @ 08:47:13

    No, you are not limited on the Kindle to Amazon books. You ran read unprotected Microsoft Word, HTML, TXT, JPEG, GIF, PNG, BMP, PRC and MOBI files.

    ReplyReply

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