Heard on the Street / Financial Analysis and Commentary
Kindle Is a Page Turner for Amazon Investors</br></br>Amazon.com CEO Jeff Bezos said the Kindle e-book reader is "turning into something special." But just how special for investors?</br></br>Right now, it likely isn't adding to Amazon's bottom line. Mr. Bezos gave a clue Thursday when he told shareholders at the annual meeting they should regard the digital-books business as being in "investment mode" right now rather than a "big cash-flow generator for us."</br></br>His comment reinforces speculation in the publishing industry that Amazon is losing money on at least some of the books it sells for the Kindle. Most of the 290,000 titles available sell for $9.99 or less, a price point in many cases probably below what Amazon pays publishers. Generally speaking, retailers pay 50% of the publishers' list price, which for new, popular titles can be as much $25 to $30.</br></br>Any losses are likely to increase as Kindle-book sales become a bigger part of Amazon's business. E-books are a tiny but rapidly expanding part of the overall market, nearly doubling last year while the overall book market shrank, estimates the Association of American Publishers. Mr. Bezos said Thursday that Kindle sales account for 35% of Amazon's physical book sales for titles available in both formats.