Inside the Australian and New Zealand book industry

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Amazon outlines objectives in Hachette dispute

Amazon has outlined its objectives in its dispute with Hachette US over sales terms in a post on its Kindle forum. A key objective is ‘lower ebook prices’, says the retailer, which argues that US$14.99 (A$16) ebook prices are ‘unjustifiably high’ given there is ‘no printing, no over-printing, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market’ as ‘ebooks cannot be sold as used books’. It also argues that ebooks are ‘highly price-elastic’, with lower prices leading to higher revenues. According to Amazon’s calculations, dropping ebook prices from US$14.99 (A$16) to US$9.99 (A$10.70) would lead to an increase in total revenue of 16%. ‘This is good for all the parties involved,’ says Amazon. The retailer also outlines how it believes revenues should be split, arguing that 35% should go to the author, 35% to the publisher and 30% to Amazon. It says: ‘Is 30% reasonable? Yes. In fact, the 30% share of total revenue is what Hachette forced us to take in 2010 when they illegally colluded with their competitors to raise ebook prices. We had no problem with the 30%—we did have a big problem with the price increases.’ Amazon adds that it does not believe all ebooks should be priced at US$9.99 or less, as ‘there will be legitimate reasons for a small number of specialized titles to be above $9.99’.

 

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Category: International news