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image Will $9.99 Kindle bestsellers lead to the equivalent of a housing crisis in publishing?

How long will the so-called good times—for book shoppers—roll before Amazon stops subsidizing bestsellers in hopes of selling more Kindles? Or before Amazon’s “cheap” books drive down prices to the point where publishers suffer grievously, if you’re looking at it from that perspective?

Here’s an excerpt from Steal This Book (for $9.99), by Motoko Rich of the New York Times:

The doomsday scenario for publishing is that the e-book versions cannibalize higher-price print sales. Publishing houses, already suffering from the recession, could be forced to cut author advances or lay off more editors.

“It’s like a flood of cheap houses onto a real estate market,” said Michael Norris, senior analyst at Simba Information, a market research firm. “Sooner or later it’s going to affect the prices of all the properties around them.”

On the other hand, it is not inevitable that publishers and authors will have to relent. As Amazon faces competition from devices like the widely expected tablet from Apple, “then the book publisher of Obama’s next book can say ‘O.K., which of you is going to offer us the best deal?’ ” said Fiona Scott Morton, a professor of economics at the Yale School of Management. “I don’t think the content providers have to be in a worse position.”

But then again, what if Amazon uses its proprietary Kindle format—spread out over different platforms—to try to lock in consumers accustomed to shopping there?

Or suppose it takes advantage of its vast resources to become a major publisher, going far, far beyond the current experiment with AmazonEncore?

We might just see a different kind of unsustainable bubble. Amazon could buy up the books of major writers, cement its position in the market, then reduce the advances to authors and publishers once it dominated enough of American publishing.

Simply put, whether from an author’s perspective or a reader’s, Amazon deserves lots and lots of watching by anti-trust agencies—informally, and perhaps in time through a formal investigation.

Detail: Many customers of Fictionwise and other stores would say that even $9.95 is too much. I myself think with enough volume, the $9.95 would seem high. When e-reader hardware prices fall and screens improve, volume will pick up.

Meanwhile, despite the slightly problematic headline over the New York Times piece—is the $9.95 really a “steal”?—I was pleased to see Motoko Rich end the article with the example of a Kindle owner who was buying more books.

 
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