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Old 12-17-2009, 09:32 AM   #1
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Amazon's $9.99 eBook Attacked as "Predatory Pricing"

A few news snippets from MediaBistro's eBook Summit. More publishers bashing Amazon, with profitability for publishers being threatened. Plus, adverts may be coming to an eBook near you.

Amazon's $9.99 eBook Price Point Attacked as "Predatory Pricing" From: mediabistro.com (blog)
Quote:
Bob Livolski, founder, Books on Board:
"It's an attack on literature so Amazon can control the industry."
@ eBook Summit: Advertising Is Coming To E-Books From: paidContent.org
Quote:
- the $9.99 standard price for a digitized title—as established by the space’s leader, Amazon —is not enough to support content creation and distribution.
Quote:
Fuchsberg, the president of Skiff:
“If e-books are where more consumers are spending their time, ads will inevitably follow."
Growing e-book industry discusses challenges at MediaBistro event From: DM News - Dianna Dilworth
Quote:
To address this issue, Amazon has tried to push consumer adoption by setting the industry's competitive price point for e-books at $9.99 each. But publishers are concerned that this cost is not profitable and runs the risk of hurting the choice of books that will be able to be published.

Last edited by Wetdogeared; 12-17-2009 at 10:24 AM. Reason: Formatting
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Old 12-17-2009, 09:35 AM   #2
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Ummm... isn't the standard paperback price like $9.99?

That includes printing, distribution etc etc and turns a profit? Or am I missing something here?
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Old 12-17-2009, 09:39 AM   #3
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Originally Posted by Slite View Post
Ummm... isn't the standard paperback price like $9.99?

That includes printing, distribution etc etc and turns a profit? Or am I missing something here?
That's the whole point actually: paperbacks come after hardbacks have ensured a healthy profit, at least for successful books. As I understand it, the publishers' argument is that going directly to paperback prices is threatening the whole business model, which is based on a price curve that starts high and falls over time.
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Old 12-17-2009, 09:42 AM   #4
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Originally Posted by FlorenceArt View Post
That's the whole point actually: paperbacks come after hardbacks have ensured a healthy profit, at least for successful books. As I understand it, the publishers' argument is that going directly to paperback prices is threatening the whole business model, which is based on a price curve that starts high and falls over time.
Ok, so the bussiness-model is based on the fact that you sell paperbacks at a loss because you have already "brought home the bacon" with hardbacks?
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Old 12-17-2009, 09:45 AM   #5
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These critics do not understand. I won't buy the hardcover. And if I buy the paperback, it would have a lit price of $7.99 and then I would use a discount coupon to get it. And if it's one of these paperbacks that has a higer then $7.99 price on it, I won't buy it. So really, if I buy an eBook at $9.99, they win, not lose.
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Old 12-17-2009, 09:49 AM   #6
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That thing about adverts makes my skin crawl... Please, PLEASE, don't dirty our books with ads!
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Old 12-17-2009, 10:07 AM   #7
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Typical corporate BS. They're just mad that they somehow convinced people to pay more ($25 and up) for eBooks on other sites, but Amazon is selling them cheaper (which is one of the things Amazon tries to do as a rule - provide goods cheaper than the competition).

It is BS like this that pushes honest people into supporting piracy.

When they lie to your face and tell you ridiculous things like: "We can't make money when Amazon sells ebooks for $9.99!" Everyone knows they are full of crap! They sell paperbacks for $6.99 and $7.99. I know they're not losing money on them, or they wouldn't be doing it!

I don't care what their PR people say. You cannot convince me that the costs of publishing and distributing an ebook are anywhere near the cost of printing & distributing a physical book. I'm an IT professional. I know how much servers and bandwidth cost. I know how much techie staff to keep the servers and bandwidth working costs. I can tell you for certain that it costs a lot less to run a datacenter than it costs to run a physical distribution center and a printing mill.

I used to work in the printing industry. I saw what it takes to print a large quantity of materials. It's a LOT of money and equipment. The cost of ONE of those printing presses is more than 1/2 of what my whole datacenter cost - and our datacenter supports over 100 physical locations and over 50,000 users - with a tech staff of nine people. How many people does it take to run a print shop? A lot more than nine.

These publishers are crying wolf. I say call them on it. They have a choice: get on board with the new technology or get left behind. They're doing a pretty good job of showing they want to be left behind. How long will it take for an upstart techie-based publisher to take over their business?
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Old 12-17-2009, 10:35 AM   #8
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I don't understand why publishers think their business model is some sort of sacred thing that must not change. Every business model changes, especially with the introduction of new technology. I'm sure coach makers thought Henry Ford was using "predatory pricing" with his Model Ts. I also fail to understand why they are going after Amazon and not WalMart or Target with all of their $9 hardcover shenanigans? Rubbish, all of it!
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Old 12-17-2009, 11:31 AM   #9
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Quote:
Originally Posted by Slite View Post
Ok, so the bussiness-model is based on the fact that you sell paperbacks at a loss because you have already "brought home the bacon" with hardbacks?
Not at a loss, but with a lower margin.

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Originally Posted by Connallmac View Post
I don't understand why publishers think their business model is some sort of sacred thing that must not change. Every business model changes, especially with the introduction of new technology. I'm sure coach makers thought Henry Ford was using "predatory pricing" with his Model Ts. I also fail to understand why they are going after Amazon and not WalMart or Target with all of their $9 hardcover shenanigans? Rubbish, all of it!
Of course the business model will have to change. And of course they are mostly trying to cling to the old ways of doing things, because they are scared of change. Who isn't?

Personally I wouln't mind paying books a bit more, if that could ensure a healthy publishing industry willing to spend that margin on quality. I do hope the new model leaves some room for quality publishing
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Old 12-17-2009, 11:34 AM   #10
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I think 9.99 is too high for the eBook version of a $35.00 hardback
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Old 12-17-2009, 11:36 AM   #11
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Originally Posted by FlorenceArt View Post
Not at a loss, but with a lower margin.



Of course the business model will have to change. And of course they are mostly trying to cling to the old ways of doing things, because they are scared of change. Who isn't?

Personally I wouln't mind paying books a bit more, if that could ensure a healthy publishing industry willing to spend that margin on quality. I do hope the new model leaves some room for quality publishing
The model that exists now doesn't have any room for 'quality publishing'.
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Old 12-17-2009, 12:00 PM   #12
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Quote:
Originally Posted by FlorenceArt View Post
Not at a loss, but with a lower margin.

Of course the business model will have to change. And of course they are mostly trying to cling to the old ways of doing things, because they are scared of change. Who isn't?

Personally I wouln't mind paying books a bit more, if that could ensure a healthy publishing industry willing to spend that margin on quality. I do hope the new model leaves some room for quality publishing
A lower margin still provides a profit-so what are they crying about, that they won't make *as much* money? That's greed, not pain.

They might have a point about comparing 'direct to ebook' & 'direct to paperback'. It depends on what their business model actually is, but what makes sense to me is that the hardcover edition covers their basic expenses: advance, editing & proofing, promotion. As well as typesetting (formatting), printing & distribution of course, but those expenses apply to any edition. If so, then paperback can be produced at a lower margin & still earn a profit-but direct to paperback can't. Nor can direct to ebook-if this is the business model.

Basically, I tend to agree with the higher prices for ebooks, as long as they're competing against a hardback version. Once the book comes out in paperback I think the ebook prices should be lowered, too.
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Old 12-17-2009, 12:08 PM   #13
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This just flashed into my mind, and since its feeling pretty lonely in there, I thought I'd let it out here.

In manufacturing (pharmaceuticals come to mind, too, but that's a totally different scenario with buzzards in the trees), prices start high to cover the cost of research and initial manufacturing. Naturally, the prices stay high as long as someone else doesn't reverse-engineer the product, but for the most part, the prices eventually come down (except, of course, the pharmaceuticals which people really NEED within the borders of the US--the same drugs somehow are magically cheaper outside the U.S.).

The thing that occurred to me is that perhaps publishing on a book-by-book basis isn't much different. The research might be the authoring, and the publisher might be the manufacturer with the retooling and advertising (and other) costs.

From what I have read in the forums, it appears that like many researchers in other industries, not-Rawlings-or-King authors get a pittance at best and the "Company" gets the rest. Indeed, much "research" cost is lost because every attempt is not a success in any industry, and that cost must be made up by the successes.

On top of that, unlike every other industry, books can't be reverse-engineered and produced by a competitor to bring down the price. The closest the book industry comes to that is the proliferation of used book stores.

So I guess I'm just saying that viewed from that perspective, I can see the reasoning behind the hb pricing which is the initial manufacturing release -- just like the initial release of any product, and pb pricing reflects the same price reductions you see after a year in any other industry.

A simple(-minded, perhaps) example is DVD movie releases. Harry is around $14 (US) right now, but the 5 previous movies are all around $7. It doesn't cost any more to create the new DVD than it does a year from now, but the market will support it, and a year later people like me buy the $5 edition which plays just as well.

This may or may not be presented as well as it sounds in my head, but now that you are reading it, its no longer alone inside there.
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Old 12-17-2009, 12:14 PM   #14
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Quote:
Bob Livolski, founder, Books on Board:
"$9.99 is a predatory pricing practice by Amazon. It's an attack on literature so Amazon can control the industry."
I see so making books affordable is an attack on literature. FAIL


It is when authors/publishers/retailers are more concerned about $ than writing that is the true attack on literature.


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Old 12-17-2009, 12:27 PM   #15
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Ok, so the bussiness-model is based on the fact that you sell paperbacks at a loss because you have already "brought home the bacon" with hardbacks?
No, paperbacks are still sold at a profit, though it's a smaller one than hardbacks. As I've explained elsewhere, this is what's called market stratification. Some people are willing to pay more for a product than others, and this is a way to extract extra profit from those who are more wealthy while still being able to offer it (a year later) to those who can't or won't pay as much.

If publishers are moved to a flat-pricing model, the end result for those who buy paperbacks is that the price rises. Do you want that? I don't.

Let's say a publisher makes $3 profit on 1000 hardbacks, then $0.5 profit on 10000 paperbacks over a few years (imaginary numbers, of course). The total profit over time on the paperbacks is higher, but if the publisher only sold paperbacks it would be missing out of the large chunk of profit coming at the book's release (which is also important for cash-flow reasons). In this scenario the total profit is $8000 from selling 11000 books. If those were all paperbacks at the same price, then the publisher would have to take in $0.72 from each of them, which would get magnified through the distribution and retail chain to mean a hefty price-rise on the paperbacks.

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Originally Posted by JSWolf View Post
These critics do not understand. I won't buy the hardcover. And if I buy the paperback, it would have a lit price of $7.99 and then I would use a discount coupon to get it.
Why should they be worrying about your particular buying habits? Some people are willing to pay more, some are willing to pay less, that's the whole point of market-stratification.
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