Sunday, June 21, 2009

Bad News for Kindle Owners?

I might have some bad news for Kindle owners. If this report from paidContent.org turns out to be correct, Amazon will have to raise the average price of Kindle books substantially if the business model is going to work in the long term.
We think Amazon’s strategy, however, is to raise electronic book prices over time, while simultaneously influencing the book publishers to accommodate at least a partly electronic book model.” A suggested new price point that could “dramatically” increase margins for publishers and Amazon: $12.50.

The analysts argue that by raising the average price by $2.51, Amazon’s margins could increase from 6 percent to 20 percent on the sale of an e-book. That, they say, is “comparable to its physical book business” since Amazon would only have to sell 1.7 e-books to match the profits from the sale of a hardback, instead of 7.
Of course, this may or may not really happen. How much faith do you have in research analysts these days? They haven't been right much lately as far as I can tell. I also have to wonder if Amazon is really willing to tick off so many customers just when the Kindle is picking up steam and seems to be actually having an impact on overall book sales.

Would an increase of $2.51 per book cause you to buy fewer Kindle books, or is that below the tipping point for you?

6 comments:

  1. All the more reason not to buy a kindle reader! As of now I can't really afford it.

    *grin*

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  2. wouldn't buy it if my life depended on it..

    However a price increase on digital format will affect everyone as this will eventually have a ripple effect and who knows down the line our own favourite ebook seller, make 'like' Amazon business model and run with it.

    E.H>

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  3. I own a Sony ebook reader. I use it to read freely available content online. Only occasionally (when going on a vacation etc) do I actually purchase any reading content from sony. On those rare occasions I feel ripped off because I have no physical ownership of an actual book. I can buy the same book in a store and then re-sell it, lend it to anyone etc. etc. The finances behind buying ebooks is just all off. I'm also the person that owns an Ipod and love it...but I still buy my music via an actual CD that I can download on my computer and own...ie: can re-sell, lend etc.

    Until ebook readers all work on the same format....offer ownership in the form of re-sell value etc. I think there will always be those hardcore book owners like myself. Come see my shelves....its far far more exciting than me handing you an electronic device and saying "you really should see my library!" What a downer that truly is....

    www.shishnit.org

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  4. Gautami, I have learned, the hard way, that it's best to wait when a completely new product is introduced. Prices always drop, enhancements are always added, and the late adapter almost always comes out ahead of the game.

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  5. You are likely correct, Erotic Horizon. If it works for Amazon, all e-books will get more expensive - although Sony's are already overpriced by even more than Amazon's.

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  6. Kristy, those are great points. I agree with you - as Sony Reader owner, myself. I use it when I'm traveling, especially on free e-books that can be downloaded because of expired copyrights or other freebies given away on the web.

    I will never, never give up my books and will keep adding to them until the day I die, I suspect. E-books are kinda cool but they are not really books and they never will be.

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