As everyone and their neighbor speculated, at the core of Amazon’s spat with Hachette is its mission to get lower ebook prices. In a statement on the Kindle forums today, the company directly addressed the issue, and explained why it is pushing for cheaper digital book prices.
Today the company elaborated on this, “providing specific information about Amazon’s objectives” and why it is pushing the issue. Says the Internet retailer, ebooks do not have the same costs as printed books for numerous reasons: no transportation costs, returns, printing, and more.
For this reason, ebook price tags like $14.99 and $19.99 are “unjustifiably high”, says Amazon. Beyond this, it also says that “ebooks are highly price-elastic,” and that higher prices mean lower sales numbers. The company crunched the numbers, and says that one ebook selling at $14.99 would sell 1.74 copies if priced at $9.99.
Everybody wins in the lower price tag scenario, says Amazon, from the customer up. It follows this up with a barb at Hachette:
“So, at $9.99, the total pie is bigger – how does Amazon propose to share that revenue pie? We believe 35% should go to the author, 35% to the publisher and 30% to Amazon. 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.”