The price war begins...and ends?

The price war begins...and ends?

When Amazon announced last week that it was going to sell Kindle books through, it said it was going to have the lowest e-book prices. That wasn't an empty promise.

The Kindle store opened for business today and there are some eye-watering discounts. Let's take it from the top—number one bestseller Stieg Larsson's The Girl Who Played with Fire (Quercus) is selling for £2.70, a whopping 66% off its list price. Compare that with Waterstone's and WH Smith, who are selling the e-book for £5.49 and £5.19 respectively. The print book is £3.85 on Amazon, 52% off, while its overall a.s.p. is £5.04. Dan Brown's The Lost Symbol Kindle edition is £3.41 (57%), while its e-book counterpart at the two Ws is priced at £5.71 and £5.31. 

And on and on. A quick eyeballing of various genres on Amazon, and most Kindle books seem to be priced somewhere around 55-60% off r.r.p. While over at Waterstone's and WHS, it is around 35%. The iBookstore, of course, is the priciest of the e-book stores; discounts rarely stray above 25%.  

UK publishers have been holding to the line that an e-book should cost much the same as print, because production costs are so low and a book's price largely accounts for author royalties, marketing, editorial etc. Today, Jeff Bezos' great clunking fist has knocked that argument down. Not that it is not a valid argument; we in the trade know that it is largely true. But it is a tough sell to readers, even those who are savvy enough to understand the advantages Amazon has on pricing over traditional bricks and mortar shops on physical books.   

I'm obviously not privy to Amazon's e-book terms with publishers, but it would be interesting to see what sort of margin Amazon is making on Kindle books (would any publisher care to enlighten me?). One suspects at 60% and over it cannot be much. It is also going to be interesting to see how the likes of Waterstone's and WHS respond. Will they discount to compete or will they hold fast with prices that give a sensible margin? It is a difficult position; their stores have USPs over Amazon on print (immediacy, browse-ability, physicality), few on the web. Online shopping comes down largely to delivering the product cheapest. One wonders, whether on its first day in the UK, Amazon has already won the price war.