I asked on Twitter this morning, “Trying to figure out why the price of ebook readers (sold by tech cos) should be linked to the price of ebooks (sold by publishing cos.)” @philipbrewer responded, “Cross-subsidies are an old trick, as in “give away the razor sell the blades.”
He’s got a great point, but I think he’s wrong. Gillette owned the razors and the blades, controlled the whole supply chain. Likewise HP with printers and ink, another example of this. That integration allows them to set the dial on profit and loss in different lines to maximize overall profit.
Amazon with the Kindle does not control the supply of content. As
I probably have a lot more to say next week, when I’m out from under this chemo infusion session. Currently on the 5FU pump, and rather hard of thinking. I do suspect the razors-and-blades issue also ties into my recent observation that ebooks (at least the DRM variety) are a service and not a product. More to come, when I have brainpower to pursue it. In the mean time, feel free to be intelligent about these question in comments.