The latest generation of Kindle was released in October. In November, Amazon’s Kindle broke sales records as the hottest item on holiday gift lists. My holiday blog titled "Kindle vs Nook & Sony e-Reader For The Holidays!" exceeded over 70,000 page-views. On Christmas day, Amazon's Kindle hit an unprecedented milestone in publishing history - it sold more Kindle digital books than physical books.
Unfortunately the economics of eReaders sales in the US is not a winning proposition for Amazon or any of its competitors, including Sony and Barnes and Noble. Apparently book publishers are standing their ground on wholesale pricing - selling books at approximately $12 to distributors regardless if its sold in its print format or if as a digital copy. Amazon, in turn - to remain competitive with traditional books - sell their digital copies for Kindle at $9.99, losing $2.00 per sale.
With other titles, Amazon is probably making a small gross profit from older paperbacks - in the neighborhood of $0.50 to $1 per book.
In order for the business model to work, Amazon has to become ubiquitous enough to be the product of choice when the consumer thinks "eBook." As I reported in my blog, "Kindle vs Nook & Sony e-Reader For The Holidays!" it does appear the holidays did provide Amazon with a unique opportunity to outpace the competition. While Sony and Barnes and Noble ran out of inventory prior to the holiday, Amazon figured out how to meet the demand for the '09 Christmas season.
One avenue that is lucrative for Kindle is the deals they strike with eBook publishers that adapt digital books directly for the Kindle format. These are books that do not have a traditional copy in print. In these instances, Kindle takes a percentage as high as 60% of the sale price. When compared to the 30% that Apple or Google requires, Amazon is obviously flexing their muscle based on their current popularity.
Graphic Novels which now have hundreds of titles available on Kindle are selling 100-200 page novels in the range of $.99 to $9.99 on Kindle. "Crude Behavior" by Robot Comics which is one of the top ten graphic novels sold on Kindle this year has a $4.99 selling price, while Will Eisner's "A Contract With God" sells for $9.99.
Nonetheless, there is no disputing the fact that Kindle's milestone makes it the king of eReaders in 2009. Equally impressive to outselling traditional books, on December 14, customers ordered over 9.5 million items worldwide from Amazon, which was a record-breaking 110 items a second. And for trivia buffs, this Christmas, Amazon's customers bought enough gingerbread house kits that if stacked on top of each other would be as tall as the Sears tower.
To put this all in perspective, if Kindle outsold traditional books on Christmas Day - that means it left Dan Brown's The Lost Symbol and Sarah Palin's Going Rogue in the dust. Quite an impressive feat beating out this year's two top sellers! But then again, perhaps the majority of book buyers bought both of these books on Kindle versus the hard copies!