One of the highlights of last year for a lot of journalists and publishers was the news that e-book sales fell for the third year running, while sales of printed books rose for the first time in years. The commentary that follows is usually something along the lines that ebooks and Amazon are doomed. None of this is true, and here is why:
What a lot of people are forgetting is that Amazon also sells print books. When the sales of print books increases, so do revenue and profit for Amazon. Except for self-publishing, Amazon’s margin on both Kindle readers and e-book’s are slim. Amazon has higher margins on print books, especially following the new terms with the publishers.
Another common misconception is that Amazon makes money from Kindle Reader sales. We do not see a breakdown of sales figures, but from tear down, we know that Amazon sells the devices very close to cost and at a loss if you consider marketing costs. For Amazon, the Kindle Reader is a vehicle for e-book sales and domination of the e-book market.
Because we don’t have a breakdown of Amazon’s revenue figures, nobody can tell with any authority that the fall in e-book sales has any effect on Amazon’s revenue and profit. Books and e-books no longer make up a large part of Amazon’s revenue, and it is safe to say that Amazon is looking to maintain market share.