Summary
Wholesale distributors are paid as a percent of newstand (retail) sales. Revenues are not their cost drivers! The "push" of Publishers and "pull" of retail newstands are in conflict with one another. The wholesale distributor is squeezed by both "clients." Kindle e-book concept will eliminate 3/4s of the wholesale distributors and free up most of the newstand shelf space. Hence newstands will follow the path of newspapers...gone.
Analysis
To become practical the Amazon Kindle e-book must drop 90% of its $359 price. Not difficult to do at all given increased volumes from only modest market penetration potential.
Publishers will give the e-books to subscribers in exchange for multi-year subscriptions...and not limit the use of the e-book to their own subscriptions.
Publishers will save on postage, paper, and printing ... which could allow their profits to go through the roof.
More detail on the existing broken business model can be found in the article appearing in The Seybold Report www.seyboldreport.com/the-newsstand-mess-alternatives-7-cent-solution
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
