Publishers Fear Amazon Will Cut Their Kindle E-Book Margins

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Book publishers fear Amazon (AMZN) may force them to lower prices on Kindle e-books, Bloomberg reports.

Currently, Amazon sells Kindle books at a loss to make the e-reader’s price tag — now $299 — easier for consumers to stomach. That will eventually have to change.

Amazon pays publishers $12 to $13 for the digital copies of New York Times bestsellers it sells for $9.99, according to Paul Aiken, executive director of the Authors Guild, via Bloomberg. Meanwhile, publishers make a steep margin on e-books: $2.15 per book, according to Bernstein — eight times the 26 cents they get for a print copy.

But if Amazon wants to someday sell Kindle books at a profit — the whole point of getting into the business — it has two options: Raising its retail e-book pricing, or forcing publishers to sell e-books for lower wholesale prices.

Ultimately, both will probably happen.

Meanwhile, publishers hope new players like PlasticLogic, FirstPaper, ScrollMotion, and Google’s e-publishing service could help turn the tables in their favour. But so far, Amazon has an early lead.

“The industry as a whole is a bit nervous about the Kindle and the possibility that Amazon will really lock up the e-book market,” Authors Guild executive director Paul Aiken told Bloomberg.

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