The Amazon Books Team has provided specific details about e-commerce giant Amazon’s objectives regarding e-book pricing.
The major goal that Amazon has is to reduce e-book prices. Many e-books are selling for $14.99 or higher, which, according to the company, is “unjustifiably high”. E-books, after all, require no printing and no warehousing or transportation costs, among other things. E-books can’t be resold as secondhand items, so they provide even less value to the customer than regular books. For these reasons the company believes e-books should be less expensive.
The Amazon Books Team then proceeded to provide reasons why lower pricing would prove beneficial to all parties concerned. Simply put, the cheaper the book, the more it will sell – which in turn leads to larger profits.
“The important thing to note here is that at the lower price, total revenue increases 16%,” they said.
They added: “The author is getting a royalty check 16% larger and being read by an audience that’s 74% larger. And that 74% increase in copies sold makes it much more likely that the title will make it onto the national bestseller lists.”
The team proposed that 35% of the revenue should go to the author, 35% to the publisher, and the remaining 30% to Amazon.
The team did admit that not all e-books should be priced at $9.99 or less.
“We accept that there will be legitimate reasons for a small number of specialized titles to be above $9.99,” they said.
Lastly, the Amazon Books Team admitted that they would be adjusting their model to send 70% of Hachette, a book publisher that has been at odds with Amazon in recent months. It would be the responsibility of Hachette to split that amount evenly between themselves and the author. The team did state, however, that though they believed Hachette was “sharing too small a portion with the author today,” this was ultimately not Amazon’s call.