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Amazon finally explains what it wants from Hachette: lower ebook prices

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30 percent of revenue and ebooks at $9.99 or below

Amazon is finally providing some explanation for its ongoing dispute with the publisher Hachette, explaining that it's taken issue over Hachette's insistence on pricing ebooks above $9.99. In a note today, Amazon explains that it's not actually looking for a particularly large share of the revenue on ebook sales: it's only interested in taking 30 percent, a fairly standard figure for digital store sales and the same figure that it says Hachette proposed in 2010. Instead, the change Amazon wants to see is for most ebooks to sell for $9.99 or less, with only a "small number of specialized titles" being offered at prices above that.

"Ebooks can be and should be less expensive."

"With an ebook, there's no printing, no over-printing, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market — e-books cannot be resold as used books," Amazon's books team writes. "Ebooks can be and should be less expensive." By Amazon's math, sales increase significantly as pricing drops toward the $9.99 point, and that's supposedly a win for everyone. From Amazon's perspective, it's particularly important, because ebooks are competing against everything else in its store, from games to movies. Publishers, however, may not like that ebooks could further eat into higher-priced print sales. Amazon also declined to say whether it is currently receiving a 30 percent cut on ebook sales, or if those terms were only current as of 2010. Hachette did not immediately respond to a request for comment.

Amazon's post today is the first real insight we've gotten into this dispute, which has been continuing now for months. In an attempt to coerce Hachette into signing a deal on its preferred terms, Amazon has effectively been discouraging shoppers from buying its books. Some Hachette books have had their ship times pushed back by weeks, and other books haven't been offered for preorder.

It's a bold tactic, to say the least, but Amazon's post paints these negotiations as a sort of historical payback. Ebooks once quite widely cost $9.99 on Amazon, but that changed after a group of large publishers, Hachette included, were alleged to have colluded to raise prices (though those publishers ultimately settled in court without admitting fault). The alleged collusion was said to in part be aimed at breaking Amazon's hold on the ebook market thanks to its low prices. With a contract now up for renegotiation, it appears that Amazon is trying to find terms that will let it reclaim that early success.