Postage offer costs Amazon $600m

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A free postage scheme that Amazon offers to its US customers is costing it $600m (Â£305m) a year in lost revenue, the firm has revealed.

The Amazon Prime service allows customers to pay a one-off $79 annual fee and then get all items bought from the website delivered at no charge.

Chief executive Jeff Bezos defended the policy as having long-term benefits.

The company also revealed that it had taken more than one million pre-orders for the final Harry Potter book.

It is selling the J.K. Rowling book at a hefty discount.

'Very focused'

At a meeting of shareholders, Mr Bezos remained upbeat on the firm's "customer-centric" approach.

And he called for patience after heavy investment in technology, and focussing on new locations such as China.

"We are very focused on the long term, but we also believe that the long term has to eventually come," he said.

Amazon has announced plans to launch a digital music store that will allow customers to download music without any digital copyright protection.