That ebooks are 48% of their new book sales isn’t really that impressive. A majority of the profit/sales that Amazon makes on books are used books. In fact, Amazon was always in the red until they started touting used books which require no effort on their part except for listing the book from other sellers.

The TBI article had a lot of nonsense in it. For one thing, they blame the publishers for high prices, but they fail to consider that the distributors are taking so much of the profit that the price must be increased so the publisher makes any profit at all.

Get Amazon and others to lower their 55-65% percent off the top, and prices could go down.

The good news is that authors will have more leverage because with ebooks a publisher is providing much less of the total package.

Reasons:

1. Simpler formating. Unlike printed books, which require experts to lay out, ebook formatting is little more than long strings of text. Yes, they may look ugly in comparison to a well-done printed book, but since all of them look ugly, it matters not.

2. No printing costs, warehousing or distributing required. A single digital copy provided to some central source is all that is needed and any tech-savvy author could do that. No publisher with expertise and money to print large press runs is required. No need to warehouse those copies and no need for salesmen to get stores to carry copies or display them prominently.

Of course, the publisher is still providing a gatekeeper role, spending money for advertising to say a particular book is worth buying and using their contacts to get the book reviewed. But a well-established author doesn’t need that and for any writer a single, well-connected agent could provide the publicity for a smaller slice of the price than a publisher with dozens or hundreds of employees.

The above may be why many publishers seem reluctant to get into ebooks and why they want to keep prices high to keep the market small. Ebooks don’t eliminate the need for publishers, but they do reduce their role.

Margins on e-reader hardware sales are currently low – gross profit margins are in the 20% range before costs like marketing and overhead are even taken into account. E-Book sales on the other hand can generate high margins depending on the wholesale price charged to distributors.

I’d believe it. Those e-ink screens are pretty expensive right now.