Amazon to cut e-book prices

In a blog post on the Amazon site authored by the "Amazon Books team", the ecommerce giant said e-books were very price sensitive. Based on a review of many titles, Amazon argued that ebook priced at $9.99 sold 1.74 times as many copies as one sold at $14.99, generating 16 per cent more revenue.

It said keeping prices low saved money for consumers while authors would get higher royalties and 74 per cent more readers, with publishers also getting more money. "The total pie is bigger and there is more to share amongst the parties," it said.

Amazon claims that pricing an e-book at $14.99 or $19.99 is too expensive and unjustifiable in most cases. "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 — ebooks cannot be resold as used books," Amazon said in the blog.

Hachette was not immediately available for comment but Amazon's actions have alienated top-selling authors James Patterson and Malcolm Gladwell, who mocked the situation in a spoof video on Slate.com. Lagardere has said Amazon accounts for some 60 per cent of Hachette's digital sales.

The companies have been sparring in public, with Amazon this month proposing that authors get all the revenue from ebooks sold on the site, an offer Hachette rejected.