"MediaMemo by Peter Kafka""Are you one of those Kindle owners who stuffs your device with cheap e-books? Enjoy it now, say analysts at Bernstein Research. Because they’re not going to stay cheap – or at least, not quite as cheap – forever.One of the chief selling points of Amazon’s Kindle (AMZN) is that once you’ve paid $359 or more for the e-book reader, you can start recouping your investment by buying digital books for much less than it costs to buy their physical counterparts. And the vast majority of Kindle downloads are indeed priced at $9.99 or less (and a third of them are freebies).Digital books should be higher margin products than physical ones, since the costs to produce and distribute them are so much lower. And they will be, eventually. But right now Amazon is subsidizing the cost of those $9.99 books, which means they’re just barely profitable.Bernstein analysts Claudio Aspesi and Jeffrey Lindsay estimate that Jeff Bezos and company record an operating profit of $0.61 on each $9.99 e-book they sell. But a $24.95 hardcover generates $4.25 in operating profit. That’s a 7 to 1 ratio, and that can’t continue, indefinitely.The good news: Aspesi and Lindsay argue that Bezos doesn’t have to raise his prices by that much to make his e-books much more profitable. Bumping up best-seller prices from $9.99 to $12.50 would boost his profits from 6% to 20% per book, they estimate. The flip side: Costs for the devices themselves will certainly go down, as well."http://mediamemo.allthingsd.com/20090619/like-your-kindle-books-cheap-dont-get-too-used-to-it/?reflink=ATD_yahoo_ticker

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