Amazon’s declaration of intent with the Kindle

Amazon is nothing if not relentless.

With the launch of the third generation Kindle – this time with a WiFi only model priced at $139 in the US – the Seattle-based company is reinforcing its leadership of the e-book reader market.

It faces competition from the multi-purpose Apple iPad, of course, but I still think there is a place for an E Ink screen device on which it is more comfortable to read books.

Still, as discussed in my column this week and in Ken Li’s related article, Amazon is still smarting from large publishers having imposed on it their preferred “agency model” of pricing earlier this year.

That gives Amazon and other e-book retailers a 30 per cent fee for distributing e-books but allows large publishers to set the list prices for their wares above Amazon’s preferred $9.99 or less.

I discussed the issue this week with Russ Grandinetti, Amazon’s vice-president for Kindle content, and he did not appear to have forgiven and forgotten. As he said:

“The reasons we thing the agency model is a bad idea have not changed. It leaves less money for publishers to pay authors and that’s not good for the business. Publishers are raising prices on books and we think this is leaving money on the table for everyone. When the marginal cost of distribution approached zero, then prices come down and you want to set them to maximise dollars of revenue.”

Ken’s piece explains how Amazon has set up two publishing imprints itself as well as signing a deal with Andrew Wylie to distribute 20 titles by well-know authors on Mr Wylie’s own Odyssey imprint.

Given its investment in Kindle, Jeff Bezos’ company has every incentive to keep putting publishers under pressure to cut e-book prices and make content widely and cheaply available.

This battle of wills is far from over.