Now that’s not considering things like cannibalizing HC sales or lost revenue – but neither of those are strictly speaking the same as losing money on sales.

what amazes me, is how limited publishers seem to be in their thinking. to release an e-book, they *upload a single file that already exists*. they use essentially the same blasted file to produce their print editions. so why don’t they want to keep the price at about ten bucks? if the publisher has paid out a large advance, they just need to sell more copies. *way* more people would be willing to pay $10 for a book than would be willing to pay $25. why sell a dozen copies of a book at $25 when one could sell 100 copies at $10? and if they could do it without risking that they’ll end up with a pile of remainder copies?

what *are* they thinking.

Amazon.com, which cut the Kindle’s price yesterday, pays publishers $12 to $13 for Kindle editions of books on the New York Times best-seller list, and typically sells them for $9.99, said Paul Aiken, executive director of the Authors Guild, a New York-based group providing legal support to writers.
-http://www.bloombergnews.com/apps/news?pid=20601204&sid=acG2.Nq6kU4A

Rich does a superficial analysis of the economics. She is accurate in saying that Amazon is taking a per-unit loss on many titles in the Kindle store because doing so a) helps them sell more devices and b) helps them “lock in” their Kindle audience.
Mike Shatzkin (book industry consultant/author)
-http://www.idealog.com/blog/fleshing-out-the-timess-ebook-story-of-may-17

“We all know that these companies are taking a loss and that’s not going to continue forever,” said Jonathan Karp, publisher and editor in chief at Twelve, an imprint of the Hachette Book Group. But he added that “$9.99 has now become the effective price for e-books in August of 2009. Let’s just take a breath and see how long this lasts.”

Karp seems to me to be areliable source, just as any witness would be in any court trial.

The article goes on to say:

Sony’s price cut on digital books and the new devices may not be enough to help it catch up to Amazon. One significant drawback to Sony’s new devices is that, unlike the Kindle, they cannot connect wirelessly to an e-book store. Owners of Sony Readers must plug their devices into a computer to buy and download books.

The new Readers also cannot access magazines or newspapers, and Sony has yet to develop a version of its reading software for other devices like the iPhone. Mr. Haber from Sony said that the company was working on developing all of these features.

Sarah Epps, an analyst at Forrester Research, said Sony had publicly indicated that the two new devices were part of a new suite of e-reading products it would introduce this year. She said it was a “reasonable assumption” that Sony would introduce another device in the fall that had wireless features.

That leads me to believe that these are the first of several readers from Sony we can expect to see this fall.

Retailers, though, generally pay publishers half of a hardcover book’s list price. So if a hardcover lists for $25, the e-book retailer is probably paying $12.50 for a product it might sell for less than $12. Sony declined to say whether it makes money on e-books overall, but says it sells only some at a loss, peddling many at much higher prices.
http://online.wsj.com/article/SB124744388627630253.html

“We all know that these companies are taking a loss and that’s not going to continue forever,” said Jonathan Karp, publisher and editor in chief at Twelve, an imprint of the Hachette Book Group. But he added that “$9.99 has now become the effective price for e-books in August of 2009. Let’s just take a breath and see how long this lasts.”
-http://www.nytimes.com/2009/08/05/technology/personaltech/05sony.html

Paul excellent counter! I for one have seen no real numbers validating this subsiding issue. The sources provided are absolutely shameless Mr. Pressman. Providing sources that have “skin in the game” in regards to higher e-book prices is a bit silly, wouldn’t you agree? One thing is certain and that is Amazon’s position is that 9.99 pricing is sustainable, due to the loss leader concept in which some books are sold at a loss while the vast majority are sold for a profit. This is not a revolutionary concept just ask Walmart. One of my favorite sayings is “that a lie told often enough becomes the truth.”

As far as I’m concerned it’s still rumor and speculation. Of course, that’s my training as a lawyer – but I’ve generally found that taking that attitude results in being right more often than being wrong.

“An Amazon spokesperson would not comment on the discount issue, but a number of publishers confirmed that Amazon pays the standard discount—which is, with some fluctuation among houses, about 50% off list price—for Kindle editions.” -Publishers Weekly
http://bit.ly/5wmet

“For the moment, say some publishers, Amazon is effectively subsidizing the $9.99 price tag for new book titles in digital form by paying publishers the same $13 it pays them for a new hardcover title with a list price of $26. It’s a classic “loss leader” situation.” -New York Times
http://bit.ly/JPMHP