Once upon a time I worked at an ebook company. We were naively trying to compete with Amazon (i.e. we sold every book we could get our hands on).

Sometimes we'd negotiate a deal with a publisher, and slash the price of a book to a point where no one involved in the transaction was making money, sometimes we and the publisher would be losing money... Without fail within an hour the list price of the content on Amazon would be exactly what we set.

Amazon were/are prepared to eat the loss: I suspect this is the case for all products that are sold by Amazon. It was a very effective strategy for them. My company went into administration after just 9 months.