Sony's 20 pence e-book promotion is one of the more curious price strategies, even for a sector that is no stranger to selling its most desirable products at a loss. But 20p takes it to another level. There appears to be little benefit to the instigator (Sony), except that it is costing its imitator and rival (Amazon) millions. Publishers in general decry the pricing, and yet those caught in the headlights will be reaping huge financial rewards, as will their authors.

As I mentioned last week, the numbers (those we have) are compelling. Life of Pi has sold 250,000 copies as a 20p e-book since Christmas. The Hundred-Year-Old Man Who Climbed Out of the Window and Disappeared, published by indie Hesperus Press, sold 145k copies in 2012, and currently sits behind Life of Pi in the Kindle bestseller lists. The former is priced at £7.99 by Canongate, and the latter £8.99 by Hesperus, suggesting that each sale could be costing Sony/Amazon as much as £3 (based on typical wholesale terms). Since Amazon is selling many more e-books than Sony, it is costing Amazon many more millions of pounds to price-match.

As we discovered when compiling the e-book statistics from the major publishers as part of The Bookseller's Review of the Year, the impact of 20p is significant. Publishers featuring in the promotion have seen e-book sales growth double that of their competitors; their market share of the e-book market is therefore greater than what it is in the print-book world.

Pan Macmillan has seen a number of its bestsellers priced by Sony at 20p, including Fifty Sheds of Grey, The Stranger's Child, Dead Man's Grip, and Perfect People. In 2012 its e-book sales grew by more than 200% to 4.5m. The consequence is that Pan Macmillan's marketshare of the digital market is roughly double what it is of the print book market (7%, against 4%). At Faber titles such as The Expats, Capital, and Safe House, have been caught up in the scheme. Its e-book sales have also outpaced others, with e-book sales values in 2012 up by 260% compared to 2011. Remember, as we noted last week, the average e-book growth of the big trade publishers in 2012 was 108%.

Last week we calculated that 65m e-books were sold in the UK in 2012, equating to a market value of upwards of £230m, at publisher prices. We can speculate the self-published titles add 10m to the volume figure, and perhaps £20m to the value number. But how do we calculate the impact of 20p? I'm sure there's an algorithm that will do this for me, but my hunch is that, based on the disproportionate growth of those publishers and books included in the 20p deal, that the e-book market was bigger in volumes terms than our estimations last week, and it will also seem bigger to publishers.

But here's the rub. The important bit. The amount paid by the consumer for their e-books will be smaller. At the moment the top five e-books selling in the UK via the Kindle store are priced at 20p. Canongate says that Life of Pi is racking up sales of 10,000 every day, meaning that even at a conservative measure of the other titles relative performances, we might be talking about 10% of the overall e-book market that is books selling at 20p. At consumer prices that would have had a dampening impact on last year's numbers: if 10% of those 65m e-books were actually sold at 20p, then the value of the market at consumer prices would look more like £215m.

If this persists, in 2013 as the rate of volume growth accelerates, the rate of value growth will continue to diminish. The consumer will be paying less for more. Significantly less, for significantly more, in fact.

We might write this off if the 20p promotion was reaching some kind of endgame, but I'm not sure it is. Sony says it is ongoing. Yet hardly any of the 20p titles feature in Sony's e-book chart meaning that it cannot be gaining market share on the biggest selling e-books, a fact publishers back. 

From talking with senior executives from across publishing over the past weeks, I'd suggest there is now a growing split in the trade. Publishers caught up in the promotion tend to shrug their shoulders and indicate there is little they can do about it, even though they might disapprove. Publishers not supping from the 20p cup are worried by the volume numbers being reported by their competitors, and question why these presses cannot terminate their Sony contracts if they actually object to the price cuts. But that seems unlikely, unreasonable even. In reality it would be a brave publisher who terminates a licence for others to print money on their behalf.

How we now react will be important. If 20p continues it will become a strategy just as £1 e-books were once thought of as the cutting edge of marketing, and everyone will be forced to come up with a response. If we are not careful 20p will start to redefine the e-book business in the UK.