Is Amazon Losing $2 Per eBook?

In an impressively thorough analysis, Rory Maher and Henry Blodget of TBI Research explain why and how Amazon is losing $2 on every eBook it sells. Their piece was published on 11/20, but it’s relevant now, given Amazon CEO Jeff Bezos’ statement in The New York Times this weekend that, “For every 100 copies of a physical book we sell, where we have the Kindle edition, we will sell 48 copies of the Kindle edition.”

According to Maher and Blodget, the problem is that publishers are inflexible about their wholesale prices, selling books to distributors at $12 per book, whether eBook or print edition. Since Amazon has established its $9.99 pricepoint for Kindle books, it’s losing about $2 for every sale. Of course, it would be hard to verify this with every publisher, and you can bet Amazon wouldn’t be forthcoming about it (the company won’t even say how many Kindles it has sold).

Maher and Blodget go on to develop a rather thorough prescription for how to fix the situation, so if you’ve got a bit of time, give them a read. And eBookNewser wonders what you think about Bezos statement and the lost $2.

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