The new economics of book publishing

From The Guardian‘s profile of Amanda Hocking:

By January last year she was selling more than 100,000 a month. Being her own boss allowed her to set her own pricing policy – she decided to charge just 99 cents for the first book in a series, as a loss leader to attract readers, and then increase the cover price to $2.99 for each sequel. Though that’s cheap compared with the $10 and upwards charged for printed books she gained a much greater proportion of the royalties. Amazon would give her 30% of all royalties for the 99-cent books, rising to 70% for the $2.99 editions – a much greater proportion than the traditional 10 or 15% that publishing houses award their authors. You don’t have to be much of a mathematician to see the attraction of those figures: 70% of $2.99 is $2.09; 10% of a paperback priced at $9.99 is 99 cents. Multiply that by a million – last November Hocking entered the hallowed halls of the Kindle Million Club, with more than 1m copies sold – and you are talking megabucks.

I remain perpetually amazed that so much time and effort from major publishers is going into iPad editions when the Kindle market is just sitting there…