Bill Peschel, a commenter on The Passive Voice, suggests that Amazon is bound to stop offering independent authors 70 percent of the retail price on well-priced ebooks, and cut the wholesale price to 60 or 50 percent of retail, or even less. He asks:
‘Why would Amazon leave money on the table if they know that authors will accept less?’
I reply:
I’ll tell you exactly why Amazon would leave money on the table:
When the table it’s on belongs to the consumer.
Amazon isn’t in business to sell books. (Or electronics, music, movies, patio furniture, knickknacks, teddy bears, buggy whips, or anything else they have an SKU for.) Amazon is in business to lower prices. The company’s entire business model is about increasing efficiency, lowering overhead, and using that to cut prices so that consumers will shop there instead of the competition. This is a company that is perfectly content (and so are its stockholders) with a net profit margin of less than 1%. Leaving money on the table is what Amazon does.
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