The Amazon books team deliver some interesting, but non-specific, data on ebook prices. Bottom line – lower prices deliver higher revenue and profits because e-book prices are “highly elastic”. So indie authors putting their work on for £2.99 against the standard publisher price of £8.99 are doing exactly the right thing.
It’s worth noting here that ebook prices now behave much more like the dynamics of crowd-funding than traditional book pricing. Your product is essentially unlimited so you price at the point that produces the highest volume. It’s clear publishers don’t understand this yet. They are setting prices on the basis of product scarcity – put simply, publishers still don’t understand the market for ebooks.
One more note on our proposal for how the total revenue should be shared. While we believe 35% should go to the author and 35% to Hachette, the way this would actually work is that we would send 70% of the total revenue to Hachette, and they would decide how much to share with the author. We believe Hachette is sharing too small a portion with the author today, but ultimately that is not our call.
This begs the question, if Amazon are fighting for higher author royalties and more profits overall, what are Hachette fighting for and why does anyone support them? It’s clear, Hachette are fighting for their existing and increasingly outmoded business model. They’re fighting for stasis in the face of inevitable change. Worst of all, they are fighting against changes that are vastly to the benefit of writers. I still say this is a fight authors do best not to take sides in. But if you are going to join the battle, you’re a fool not to see Amazon as your ally.