You assume all of the Amazon traffic was organic. He directed all of his marketing efforts to the book on amazon.com; presumably he could have captured a good number of those purchases elsewhere.
I think the real issue is less about costs and more about how Amazon hides big revenues behind "delivery fees." Most platforms (Apple, Google, PayPal, even Amazon in the AWS world) that take a percentage cut + special fees separate the special fees to mirror actual costs (e.g. credit card processing). In this case Amazon just used it as another place to add significant markup, presumably in a way that was not expected.
Should he have read the contract more closely? Yeah, no question. But it still strikes me as sleazy on Amazon's part, even though I agree with you that a lot of what he did was only possible because of what Amazon's done.
They charge him $.15/MB to delivery the book[1]. Cell carriers charge you ~$15/200MB = $.075/MB for data. Certainly a markup, and it gets better as more people use WiFi, but not 129000%.
But remember, they're charging that $0.15/MB even for people who don't own a 3G-capable Kindle. In those cases it really is roughly a 120,000% markup over an already profitable service.
And those cell users can download the book multiple times at no additional cost, in perpetuity. So sometimes they may be taking a loss. It's really not all that simple, and I think calling it a 120,000% markup is dubious at best.
I think the real issue is less about costs and more about how Amazon hides big revenues behind "delivery fees." Most platforms (Apple, Google, PayPal, even Amazon in the AWS world) that take a percentage cut + special fees separate the special fees to mirror actual costs (e.g. credit card processing). In this case Amazon just used it as another place to add significant markup, presumably in a way that was not expected.
Should he have read the contract more closely? Yeah, no question. But it still strikes me as sleazy on Amazon's part, even though I agree with you that a lot of what he did was only possible because of what Amazon's done.