SEATTLE (dpa-AFX) - Amazon.com Inc. (AMZN), which has locked horns with publisher Hachette Book Group over e-book profit-sharing arrangements, Tuesday called for lower prices for e-books, saying they can be and should be less expensive.
The on-line retailer said lower prices would provide larger royalty check for the author and enhanced readership.
According to the firm, e-books are being released at $14.99 and even $19.99, which is unjustifiably high.
'With an e-book, 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,' the firm noted.
Noting that books do not just compete against books, the firm said books compete against mobile games, television, movies, Facebook, blogs, free news sites and more.
At the same time, e-books are highly price-elastic, and when the price goes up, customers buy much less.
Amazon said that for every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99, and at the lower price, total revenue increases 16 percent.
In such a scenario, the customer is paying 33 percent less, and the author gets a 16 percent larger royalty check as well as 74 percent larger readership.
Also, the higher total revenue generated at $9.99 is good for the publisher and the retailer as well. At $9.99, even though the customer is paying less, the total pie is bigger and there is more to share amongst the parties, Amazon noted.
Amazon proposed that 35 percent of the revenue should go to the author, 35 percent to the publisher and 30 percent to Amazon.
'We believe Hachette is sharing too small a portion with the author today, but ultimately that is not our call,' Amazon said.
Earlier this year, Amazon blocked pre-orders for some of Hachette's books amid talks with the publishing company over income from e-books.
Earlier this month, Amazon offered Hachette authors all of the proceeds from the sale of any digital book, thereby bypassing the publisher.
Media reports also indicated recently that Amazon has begun talks with book publisher Simon & Schuster, Inc., a division of CBS Corp. (CBS) over e-book pricing and profit sharing for the e-books sold by it.
AMZN closed down 0.1 percent on Tuesday at $320.00.
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