Amazon Pushes Revenue Argument In Dispute With Publisher

Josh Evans Contributor
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Amazon’s latest attempt to resolve its ongoing dispute with publisher Hachette Book Group over e-book pricing focuses on the supposed all-around benefits of a price reduction.

Amazon published a blog post Tuesday outlining its reasoning behind its insistence that Hachette decrease the price of its e-books. The post points out that e-books are very price-elastic, meaning higher prices cause consumers to buy less, and lower prices cause them to buy more.

According to Amazon’s research, a price reduction from $14.99 to $9.99 would increase the number of copies sold by 74 percent. If Amazon’s estimate is accurate, this would mean savings of 33 percent for each individual customer while still increasing revenue by 16 percent.

The retail giant also noted that a drop in prices would help e-books be more competitive against alternative sources of entertainment and information.

“If we want a healthy reading culture, we have to work hard to be sure books actually are competitive against these other media types,” the blog post said.

While Amazon stated that it would be content to continue to receive a 30 percent share of e-book revenue as it has in the past, it also recommended that Hachette increase the cut it gives authors to 35 percent.

Despite this friendly gesture, Amazon has drawn harsh criticism from authors over its recent actions in the dispute, which include removing preorder buttons for Hachette books, slowing delivery times and reducing discounts, The Wall Street Journal Reports.

An open letter signed by hundreds of authors of books published both by Hachette and other publishers called out Amazon for harming authors that have no control over their publishers’ actions.

“It is not right for Amazon to single out a group of authors, who are not involved in the dispute, for selective retaliation,” the letter said.

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Josh Evans