Amazon's New Deal to Alter Publishing Industry
- Amazon will pay authors and publishers a royalty of 70% of the list price of Kindle books, shaking up author’s traditional cut of 10%.
- The new model will encourage authors to go directly to Amazon, effectively bringing the company into publishing.
- Rules for the deal dictate the price range, geographical distribution and the competitiveness of the price.
- The deal will have authors pressure their publishers to drop retail prices significantly lower than physical book prices.
Takeaway: Amazon uses strategic pricing to optimize its assets and to tighten its grip over the e-book market, and disrupt the publishing industry again.
Henry Blodgett at AdAge.com