In another of its oddly presented, sometimes incendiary and stiffly written commentaries, Amazon yesterday posted a statement on its dispute with Hachette in the Kindle forum of the Customer Discussions section of its website. From "the Amazon Books Team," the "update re: Amazon/Hachette business disruption" provides "specific information about Amazon's objectives." (Amazon gets points this time around for not referring to books as "demand-weighted units.")
The company argued again that its objective is "lower e-book prices" and again said that all e-books should be priced to consumers at $9.99, although it conceded that there are "legitimate reasons for a small number of specialized titles to be above $9.99."
It argued that e-books should be priced lower than printed books because "there's 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--e-books cannot be resold as used books. E-books can be and should be less expensive."
In addition, Amazon argued again that lower prices increase sales, claiming that the average e-book selling 100,000 copies priced at $14.99 would sell 174,000 copies at $9.99. "Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000."
The company proposed that the $9.99 "total pie" be divided 30% for Amazon, 35% for the author and 35% for Hachette. It wrote: "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 e-book prices. We had no problem with the 30%--we did have a big problem with the price increases."
It conceded that Hachette would have to make the decision about how much to give authors. "We would send 70% of the total revenue to Hachette, and they would decide how much to share with the author. We believe Hachette is sharing too small a portion with the author today, but ultimately that is not our call."
Amazon didn't comment on other demands that it usually makes of suppliers, such as, in Hachette's case, paying for buy buttons and having an Amazon person devoted to Hachette. Likewise, it didn't address the rationale for making similar demands of Bonnier Group in Germany, where price fixing doesn't allow Amazon to pass on lower costs to customers.
