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Old 07-05-2013, 04:06 PM   #1
frahse
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As Competition Wanes, Amazon Cuts Back Discounts (trims free lunch)

As Competition Wanes, Amazon Cuts Back Discounts
By DAVID STREITFELD, NY Times
Published: July 4, 2013


"Jim Hollock’s first book, a true-crime tale set in Pennsylvania, got strong reviews and decent sales when it appeared in 2011. Now “Born to Lose” is losing momentum — yet Amazon, to the writer’s intense frustration, has increased the price by nearly a third.

Jim Hollock wrote a true-crime story set in Pennsylvania.

Mr. Hollock’s first book had decent sales when it appeared in 2011, but now that it is losing momentum, Amazon raised the price.

“At this point, people need an inducement,” said Mr. Hollock, a retired corrections official. “But instead of lowering the price, Amazon is raising it.”

Other writers and publishers have the same complaint. They say Amazon, which became the biggest force in bookselling by discounting so heavily it often lost money, has been cutting back its deals for scholarly and small-press books. That creates the uneasy prospect of a two-tier system where some books are priced beyond an audience’s reach."


read more -
http://www.nytimes.com/2013/07/05/bu...ounts.html?hpw

(Disclaimer) As an occasional author, I too have felt the bite of this, and hell I like a free lunch as well as any author.
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Old 07-05-2013, 04:12 PM   #2
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Competition waning?

Does Amazon have an obligation to sell at a discount? They've got the same incentive as the author to maximise profit. They've presumably calculated that the increase in sales at a higher discount doesn't offset the loss of revenue.

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Old 07-05-2013, 04:15 PM   #3
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And I will continue to go where the prices are cheapest. DRM doesn't lock me in.
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Old 07-05-2013, 04:51 PM   #4
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-- DRM doesn't lock me in.
"You devil, you!"
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Old 07-05-2013, 05:01 PM   #5
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Does Amazon have an obligation to sell at a discount? They've got the same incentive as the author to maximise profit. They've presumably calculated that the increase in sales at a higher discount doesn't offset the loss of revenue.
I think it depends on the system they’re using to sell the books.

On conventional paper based books, which is what I think that article is referring to, it’s on a ‘sale or return’ basis. Amazon buys x number of books from the publisher at 50% of the publishers RRP and sets the resale value discount level at somewhere between 50 and 100% of the RRP.

Ebooks are generally sold on the ‘Agency’ system whereby the publisher sets the price and the reseller simply gets a commission percentage on each book sold.

On either system, I think the author gets a fixed royalty commission on each book sold, so the more books sold, the more commission the author gets. I’m not sure if the royalty commission is fixed to the price of the book.

What the author in that article is complaining about, is that the higher the price of the book that Amazon charges (or the lower the discount being applied) represents fewer and fewer books being sold which translates into fewer readers and of course less royalties.

Amazon, having priced so many conventional retailers out of business is now hiking the price on less mainstream, less commonly available books because it has less competition from retailers selling them and can effectively set whatever price it wants to sell them at.

It is of course predatory and under-hand monopolistic business practice. The primary reason I avoid Amazon like the plague, including their Kindles.
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Old 07-05-2013, 05:18 PM   #6
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Thanks for that, HoraceWimp. But surely Amazon are under no obligation to discount at all? The same author complaining about the rise in the price (still less than the publisher recommended) surely benefited from the earlier increased sales that he believes were a direct result of Amazon taking a hit and discounting harder.

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Old 07-05-2013, 05:39 PM   #7
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Quote:
Originally Posted by Graham View Post
Thanks for that, HoraceWimp. But surely Amazon are under no obligation to discount at all? The same author complaining about the rise in the price (still less than the publisher recommended) surely benefited from the earlier increased sales that he believes were a direct result of Amazon taking a hit and discounting harder.

Graham
I think you miss the point Graham. If Amazon raises the price of a book up fewer copies are sold of that book which means that the author gets less $$ back at the end of a given month. So if a book costs $5.00 and the author gets 30% of that then one copy brings him/her $1.50 when someone buys it. And if 10 people buy that book that means he/she gets $15.00 but if the price of the book goes up to $10.00 then 30% is $3.00 which would mean that if 10 people bought it he'd get $30.00 but if only 5 people buy that book (at the newer higher price) where before it would have been 10 who bought it then he/she gets $15.00 or the same amount that he got for selling 10 of the books at the $5.00 price. In short unless more and more people buy the book he doesn't really stand to earn more than he would if the price hadn't been raised. In fact he'd be lucky to break even and make the same amount back that he would have made if the price hadn't been raised.
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Old 07-05-2013, 06:16 PM   #8
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The NY Times piece is meaningless, unsubstantiated Amazon bashing, IMO:

NY Times Discovers Amazon is Trying to Make Money Selling Books - Oh The Horror
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Old 07-05-2013, 06:30 PM   #9
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The NY Times piece is meaningless, unsubstantiated Amazon bashing, IMO:

NY Times Discovers Amazon is Trying to Make Money Selling Books - Oh The Horror
I agree, it's like complaining that years ago Amazon offered coupons for XX off items that yielded big discounts. They don't offer the coupons like they used to, so what?

Get worried when Amazon starts price gouging customers and almost everything they sell is higher than retail brick and mortar stores. Until then enjoy the great store they are.
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Old 07-05-2013, 06:36 PM   #10
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But surely Amazon are under no obligation to discount at all?
I don’t think they’re under any obligation to discount them. If Amazon are using the ‘sale or return’ system for conventional books they will be buying those books at a fixed price—usually 50% of the publishers RRP. The discount they apply will be somewhere between 50-100% of the RRP but even then they’re under no obligation to even sell them at the RRP if they think they can get a higher price.

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The same author complaining about the rise in the price (still less than the publisher recommended) surely benefited from the earlier increased sales that he believes were a direct result of Amazon taking a hit and discounting harder.
Certainly the author would have been given a bonus in the sales of the book the more Amazon discounted them. Theoretically, more people would be prepared to buy a book at a lower price than they perhaps might have done at a higher price.

However, what I think the author is complaining about is that now Amazon have rid themselves of most of their competitors they’re hiking the prices on books which is likely to produce fewer sales, even if it produces a higher profit margin for Amazon.

The key point here is I think that the author did mention that he was less concerned about the royalty payments dropping and more concerned about fewer books being sold because they were now at a higher price.

No point writing a book if no-one is going to buy and read it because it’s priced at too high a price—the author clearly wants people to buy and read his book. Perhaps expanding readership audience in readiness for a sequel is more important to him?
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Old 07-05-2013, 06:40 PM   #11
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Get worried when Amazon starts price gouging customers and almost everything they sell is higher than retail brick and mortar stores.
What Bricks and Mortar stores might they be? They’ve put most of them out if business. They have little to no competition left—hence the rising prices.
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Old 07-05-2013, 06:56 PM   #12
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I think you miss the point Graham.
Haven't you just made the same point I did though? You've picked figures for sales where the author would be ahead if the price were lower. You could have picked figures where the author ended up better off. My point was that Amazon would have been doing the same calculations, and have judged that the time for deep discounts was over.

HoraceWimp's comments about the different pricing structures were valid, if the author was in one where he got the same amount per sale regardless of the price Amazon were to set.

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Old 07-05-2013, 07:01 PM   #13
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What Bricks and Mortar stores might they be? They’ve put most of them out if business. They have little to no competition left—hence the rising prices.
In Nate's piece he mentions that Amazon have 25% of the US print market. The other 75% is hardly 'no competition'.

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Old 07-05-2013, 07:17 PM   #14
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Amazon is eee-vile!: they discount books and devalue literature!
Amazon is eee-ville!: they don't discount old, slow-selling books enough to boost sales!



In every other business, when a product's sales decline, the *supplier* drops the price, runs an ad campaign, or gives retailers incentives to drop prices (while keeping their margin more or less constant).

But No!, publishing is a special snowflake and they expect everybody upstream and downstream to sacrifice so the publishers can maintain their sales without lifting a finger. (And if something goes wrong... well, there is the handy-dandy ready-made answer to everything: blame Amazon!)

Maybe if the publisher did something vaguely resembling backlist promotion or stopped pricing old releases as if they were still new, they might get enough volume to goose sales.

If they don't like how Amazon does business, why don't they *stop* doing business with Amazon? It's only 25% of the pbook market, after all...
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Old 07-05-2013, 07:21 PM   #15
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So to summarise, the authors and publishers want Amazon to continue to pay them the same amount for the book, but sell it for less?
If they want to lower the price, then they should lower the price they sell to Amazon at.
Why should Amazon take all the pain?
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