As Competition Wanes, Amazon Cuts Back Discounts (trims free lunch)

[speakingtohe]

Originally Posted by Andrew H.

Remember, at the time that Amazon developed its format, epub didn't exist yet. Sony was still using LRF, and you could still buy books in MS's .lit format. Sony converted from LRF to epub about a year (or two?) after the kindle came out, IIRC.

I don't think that Amazon will convert to epub because it would be somewhat expensive to convert all of their books to epub, with, presumably, little real advantage to them. (Keep in mind that Sony didn't have a bookstore originally).

I also don't think that there would be much advantage to regular readers if Amazon converted, since I don't think that there's any chance in [insert hot place] that they would use adobe's drm. Amazon is a high volume, low margin business, and even paying 22c per DRM'd book would be a meaningful hit to their profit on many books. Moreover, this would mean giving adobe significant power over Amazon's products, which no company would like to do - this is probably why Apple went with its own DRM.

So essentially, you would end up with a market having all epub, but three incompatible forms of DRM, which might be worse than the current situation.

Finally, I think epub vs. mobi is not like Beta vs. VHS. It's trivial to convert from one (non-DRM'd) format to another - trivial for sellers and trivial for purchasers. I think it's more like .mp3 vs. .aa4 (or whatever format itunes uses) - switching between these formats is not a big deal.

I don't disagree with most of what you, ftjorres and others have said, although why Amazon would have to mass convert all of their existing books just to sell epubs or why we would be left with only epub has me a bit puzzled. Even I am not dumb enough to think that Amazon jumping ship and abandoning their own format will happen soon if ever.

And Amazon inventing their own epub DRM seems unlikely As Sony or Kobo implementing it on their hardware so that people could buy books from Amazon would be just plain silly.

My original point was that if Amazon really wanted to hurt their competition, they could most likely do this by selling epubs as well as what they sell now. With or without Adobe DRM. Obviously they chose not to do this, whether for sound business reasons, plain stubbornness or a desire not to appear as the big bad wolf I do not know. My psychic abilities do not extend that far.

I will try to stop beating the poor dead horse now before it disintegrates

Helen

[latepaul]

By "selling epubs" do you envisage them changing the Kindle firmware so it can read epubs, or do you mean having a non-Kindle epub store alongside the existing Kindle book store?

I find the later more likely, though it would be confusing for customers (and the prices better be the same! which means that 22c will have an effect across the board.).

For the former to work they need to make up in "foreign" device sales whatever they lose in other stores selling to Kindle-owners. Plus they need to cover the extra costs - not only the 22c but the development/licensing of new software, support and so on. I easily see it coming out as no net gain. In addition they spread the message that you don't have to buy your ebooks from then just because you own a Kindle - something many people know but a vast majority haven't really thought about.

[speakingtohe]

Originally Posted by latepaul

By "selling epubs" do you envisage them changing the Kindle firmware so it can read epubs, or do you mean having a non-Kindle epub store alongside the existing Kindle book store?

I find the later more likely, though it would be confusing for customers (and the prices better be the same! which means that 22c will have an effect across the board.).

For the former to work they need to make up in "foreign" device sales whatever they lose in other stores selling to Kindle-owners. Plus they need to cover the extra costs - not only the 22c but the development/licensing of new software, support and so on. I easily see it coming out as no net gain. In addition they spread the message that you don't have to buy your ebooks from then just because you own a Kindle - something many people know but a vast majority haven't really thought about.

I would envisage them doing just what other stores do that sell more than one format. Or what libraries do that have more than one format available. Or more likely the same way they sell books now with ebooks and paper books listed under formats.

And why would they lose any more money by other stores selling to kindle owners than presently. Kobo sells epubs and kepubs and are not obligated AFAIK to let other stores sell kepubs, and there are stores selling mobi already.

As I keep saying, I don't really expect Amazon to start selling epubs, just that they could if they wanted to and that it would most likely hurt their competitors much more than it would hurt Amazon themselves if they did.

Helen

[Crusader]

Amazon conceivably had the opportunity to enter the ePub market when they bought The Book Depository. For a brief time BD sold ePub books, but after Amazon bought them they stopped and decided to 'focus on printed books only'. I'm sure that if Amazon wanted to enter the ePub market they could have used the BD as an alternative store, but they chose not to do so.

[latepaul]

Originally Posted by speakingtohe

I would envisage them doing just what other stores do that sell more than one format. Or what libraries do that have more than one format available. Or more likely the same way they sell books now with ebooks and paper books listed under formats.

OK sorry to be dense but does that include changing the Kindle firmware or not?

And why would they lose any more money by other stores selling to kindle owners than presently. Kobo sells epubs and kepubs and are not obligated AFAIK to let other stores sell kepubs, and there are stores selling mobi already.

Whether they lose money depends on whether other stores can sell to Kindle owners. Other stores cannot currently sell DRM-ed ebooks to run on a Kindle. IF they allowed that then they'd be opening up competition on their device to other stores (assuming they went for ADE epubs). I don't know what the market in non-DRM-ed mobis is but I'll bet it's pretty small. A given publisher of a given book is usually going to either require DRM or not across the board not based on which store is selling it. So if Amazon make Kindles work with ADE epubs then you'll be able to buy the same DRM-ed title from elsewhere. That's a choice you don't currently have (unless you break DRM but most people don't).

Kobo on the other hand has always sold both formats side by side as far as I know. In any case I think the economics are different if you're not the market leader. It also makes a difference the degree to which you reduce your margin in your hardware to puch ebook sales. Maybe Kobo's kept their margins higher and therefore want to promote selling the device as a device rather than just a ebook-selling mechanism. There's been breakdowns arguing that Kindles are sold at or under cost and whilst personally I'm sceptical about that I do think the margins are very slim.

[fjtorres]

Originally Posted by latepaul

OK sorry to be dense but does that include changing the Kindle firmware or not?

Two different things: selling epubs to non-Kindle customers and turning Kindle into ADEPT devices.
The former means setting up a parallel store for epubbers. And making prices equal would mean Amazon would have to eat the Adobe tax. That...is asking a bit much. Not only would they be helping a competing ecosystem, they would be paying Adobe for the "privilege".
The latter requires new firmware, raises hardware costs, makes Kindles more complicated, and increases support costs. All to help prop up a competing ecosystem?

Not. Going. To. Happen.

Consumers that actively want epub and only epub have plenty of fine options. Amazon is fine with that.

Amazon is competitive, yes, but they are not blindly competitive. They are not into scorched-earth policies designed solely to hurt competitors or into PR-driven, "we're nice to people who want us gone" policies. Both policies are fast prescriptions for running a company into the ground and *has* happened.

Amazon is too polite to say it, but their approach is clear: if you don't care about ebook plumbing and are open to their products they will do business with you and do everything they can to please you.
If you are not, they will not be offended if you go elsewhere.

They are not gunning for 100% market share.
They are not looking to destroy all competitors at any cost.
They just want as big a market as they can *profitably* maintain.

Market share at any cost is a poor strategy. Look up the history of Palm vs PocketPC.

[latepaul]

Originally Posted by fjtorres

Two different things: selling epubs to non-Kindle customers and turning Kindle into ADEPT devices

Yes I'm aware of that. I was just trying to figure out which Helen was referring to.

[fjtorres]

Neither is going to happen any time soon.

[BearMountainBooks]

Originally Posted by fjtorres

Two different things: selling epubs to non-Kindle customers and turning Kindle into ADEPT devices.

They are not gunning for 100% market share.
They are not looking to destroy all competitors at any cost.
They just want as big a market as they can *profitably* maintain.

Market share at any cost is a poor strategy. Look up the history of Palm vs PocketPC.

I'm not sure about the 100 percent market share. They LOVE exclusivity and have been after authors for quite some time to go exclusive. They are ACTIVELY searching and wooing backlist authors AND indies to go exclusive. Every time they add a new country (since at least a year ago) if you aren't exclusive, you get a smaller commission. So for several newly added countries, I get paid 35 percent regardless of price. Exclusive? Oh, we'll pay you 70 percent.

There are lots of little things they are doing to get authors to go 100 percent Amazon ebook. A couple of authors who have signed with them signed 2 year exclusivity deals with Amazon (Amazon as the publisher). This is a new way of doing business because in the past the publisher wanted as much distribution as possible.

So I'm thinking they are hedging their bets. They're more than happy to have as many 100 percent on Amazon as possible.

[fjtorres]

Originally Posted by BearMountainBooks

I'm not sure about the 100 percent market share.

I meant that literally. One-hundred-point-zero percent.
Exclusivity deals are ways to add value to the ecosystem--B&N does them, too--but they are no guarantee of added market share. What they do is differentiate you from the generic vendors who don't have the resources to sign up even time-limited exclusives. (The same thing is happening in video games, where different retailers sign limited exclusivity deals to earn consumer loyalty.)

To get to 100% means nobody else survives and nobody else can get in.
We can agree that is not going to happen with ebooks, right?

Amazon obviously wants to be second to none and they want as high a share as possible but, contrary to myth, they have never shown a desire to bleed themselves to obliterate all competitors.

Simple test: has Amazon ever thrown a tantrum because a publisher gives B&N an exclusive? Have they ever stopped selling a pbook because the ebook is only availablle elsewhere? Amazon has been denied content available elsewhere and their response has been to move on.

Call them aggressive, call them greedy, call them cheap, and a case can be made for it.

But stupid they aren't and *seriously* trying for a 100% market share in what is strictly a middleman business would be outright stupidity.

It can't be done and even trying is going to land you in court.

[BearMountainBooks]

When they initially did the exclusivity deal with indies and some backlist authors (basically via the KDP upload system) they didn't even allow us to send out free review copies. It too WEEKS to get that resolved. They also had language forbidding excerpts other than their free sampling.

It was not their brightest moment. :>) It was resolved within a couple of months, but corporations are run by individuals. And crap is going to happen.

But in general, they try to be clever about controlling market share. The saddest part of it is that IN GENERAL they don't even have to do anything. The competition lags and doesn't try hard enough. They aren't innovating fast enough or working to figure out the market (example: B&N doesn't pay affiliates for ebooks. Thus there is no point in me or any other book site being an affiliate. Sure we can send them to buy the print copy, but you want to grow Nook? Use your affiliates to help you!)

OTOH, I think Sony is doing some things right. I don't know what they are, but I am selling more ebooks on Sony than kobobooks right now (I'd have to see if there are more sales than B&N. Not sure off the top of my head.) :>) Yeah, my world view is simple. BUT people with Sony devices are obviously loyal and happy and buying books. B&N sales are going the other direction. (I know, I know. I'm one small person, one example. But it's my world...)

[speakingtohe]

Originally Posted by latepaul

Yes I'm aware of that. I was just trying to figure out which Helen was referring to.

What I was saying originally, was that if Amazon was really trying to drive out most or all of the competition was that they would be selling epubs as well as kindle books.

Basically that Amazon wants to make money and as much as they can like most businesses, but they aren't the big bad wolf trying to blow down all the houses.

Pretty contentious point I guess

Helen

[Lemurion]

Originally Posted by speakingtohe

What I was saying originally, was that if Amazon was really trying to drive out most or all of the competition was that they would be selling epubs as well as kindle books.

Basically that Amazon wants to make money and as much as they can like most businesses, but they aren't the big bad wolf trying to blow down all the houses.

Pretty contentious point I guess

Helen

I agree.

There are two ways to dominate a market: you can either try to increase your sales, or work to decrease your competitors' sales. Amazon's always been much more focused on increasing their own sales than worrying about anyone else's.

[fjtorres]

Th law of unintended consequences at work:

[URL="http://news.cnet.com/8301-1023_3-57593408-93/amazon-in-its-prime-share-price-passes-$300/"[/URL]

All the publishing industry bad-mouthing of Amazon is creating a buying frenzy for their stock. Even more people to be disappointed when the literary apocalypse doesn't materialize.

[sjkramer]

Originally Posted by fjtorres

It's been discussed.
We've moved past.

Indeed we have moved past, and Amazon is acting like a monopoly, right on schedule. Progress!