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

[Lemurion]

Originally Posted by HoraceWimp

As far as I'm aware, Amazon still buy their e-books on the same basis they buy conventional paper based books—on the sale or return system rather than the agency commission system.

So if that trade paperback you mention has a RRP of 34.95, Amazon would be buying that for 34.95 minus the 20% cost of paper book printing and distribution, minus 50%. So 34.95 minus 6.99 = 27.96, minus 50% = 13.98.

So Amazon buy that e-book from the publisher at 13.98. You don't think selling that e-book at 9.34, making a loss of 4.64 is predatory pricing in any way?

I don't know that your precise breakdown of what Amazon pays for print books is strictly accurate; my own experience in the industry is that all retailers work on a straight discount off cover, usually ranging between 45 and 55%. Still, I do think your final figure is close to what Amazon pays the publisher for the book, though I would expect it to be a dollar or two higher.

Ebooks, on the other hand, are not bought on the return system, for obvious reasons, although the listed price is clear evidence that the book in question is not being sold on the agency model.

Where I think you're going wrong is in conflating the amount Amazon pays for print editions with the amount they pay for eBook editions. The two are governed by different agreements, and so there is no reason why Amazon would be paying the same price for both. Yes, the eBook price is compared to the print list, but that's something Amazon always does, regardless of whether there is a different list price for the eBook. It magnifies the apparent savings.

Since we can't know how much Amazon pays for the eBook, there's no way to tell if it's predatory pricing.

[HoraceWimp]

Originally Posted by Andrew H.

"Predatory pricing" is a specifically legal term. http://en.wikipedia.org/wiki/Predatory_pricing It's not a synonym for having an aggressive pricing strategy.

Defining a business practice as unlawful and proving that business practice as unlawful are two entirely different things.

As I think I mentioned in a previous post, at the end of the day it all really comes down to what you choose to believe and how you choose to interpret the information put in front of you.

You and many others in this thread choose to believe that what Amazon is doing is a perfectly lawful, perfectly legitimate business practice. I choose to believe that Amazon is using predatory pricing tactics to deliberately put competitors out of business. I personally find that morally and ethically repugnant, regardless of its perceived lawful legitimacy.

I also choose to believe that Amazon, now having a virtual 90% monopoly on the e-book market will ultimately be bad for future consumer buying choices as e-books prices start to rise.

I also believe it's my prerogative to hold those opinions.

Originally Posted by Andrew H.

As others have pointed out, Amazon's $9.99 price applied only to NY Times bestsellers, of which there are maybe 40-50 at a time.

Without having the incentive, time or inclination to trawl through all the 9.99 books Amazon may have sold in the past, I'll take your word for it.

[HoraceWimp]

Originally Posted by Lemurion

Ebooks, on the other hand, are not bought on the return system, for obvious reasons, although the listed price is clear evidence that the book in question is not being sold on the agency model.

Where I think you're going wrong is in conflating the amount Amazon pays for print editions with the amount they pay for eBook editions. The two are governed by different agreements, and so there is no reason why Amazon would be paying the same price for both.

Quote:

First, there’s the wholesale model, the way that book publishers have sold printed books to bookstores and other outlets for years. The publisher sets a cover price for a book, sells it to a retailer at a discount (typically 50 percent) and then the retailer can sell the book to consumers for whatever price it chooses.

The other method of selling books is via the agency model, which means, essentially, on commission. The retailer offers the book to consumers at a price the publisher sets and gets a percentage of whatever sales are made. It’s rare for print books to be sold in this way, but it’s the method Apple uses to sell content like music and apps in its iTunes store.

Until 2010 — as Andrew Albanese explains in his admirably lucid “The Battle of $9.99: How Apple, Amazon and the ‘Big Six’ Publishers Changed the E-Book Business Overnight,” a new “e-single” published by Publishers Weekly — book publishers had been selling e-books to Amazon using the wholesale model. They’d simply adapted the system they were already using to sell print books to the online retailer. This, they would soon realize, was a big mistake.

The wholesale model is widely seen as an odd way to sell e-books, since what the purchaser buys is “licensed access” to a digital file, rather than a physical object like a book. But what would torment publishers most about this arrangement was the freedom the wholesale model gave to Amazon to set the prices of e-books.

Source: http://www.salon.com/2013/07/01/ever...ook_price_war/

[Lemurion]

I just checked at BN - they have the eBook for $10.36 with a $16.99 eBook list (and they're charging $31.49 for the print edition), so there's no way the publisher is charging $13.98 for the eBook on a sales vs. commission model.

[Nate the great]

Originally Posted by HoraceWimp

Whilst it is entirely your prerogative to believe whatever you want to, I would disagree somewhat that there is no evidence to suggest that Amazon are not engaging in the practice of predatory pricing with the distinct intention of putting competitors out of business. It appears I am not the only one who seems to think this:

With the launch of the Kindle, Amazon promoted a low baseline price of $9.99 for most e-books. That meant that Amazon was selling virtually all newly published e-books at a loss. For example: A new book with a hardcover list price of $29.95 would be given an e-book price of $23.95 — 20 percent less to account for the publisher’s savings in printing, binding and distribution. The publisher would sell that e-book to Amazon for $12, and Amazon would retail it for $9.99, taking a $2 loss.

Why would Amazon do this? Observers have proposed several motives. Perhaps Amazon aimed to entice heavy readers to the newfangled Kindle; the customer could tell herself she’d make up the cost of the device in savings on the books themselves. Others have suggested that cheap e-books were loss leaders that drew customers back to Amazon over and over again, presumably so they’d go on to purchase high-margin items like TVs.

The most popular theory by far holds that Amazon intended from the start to totally dominate the e-book marketplace. By using its wealth to subsidize the sale of e-books at a loss, it could drive any competitors out of the market. Bricks-and-mortar chains like Barnes and Noble and online start-ups like Kobo (both of which would introduce their own e-reader devices) or device-neutral rivals like Google would simply not be willing or able to bleed cash as long as Amazon could. And because the Kindle is a “closed platform” — Kindle e-books can only be read on Kindle devices or apps — the more Kindle e-books a customer owned, the more reluctant she’d be to switch to a different device.

Source: http://www.salon.com/2013/07/01/ever...ook_price_war/

That Salon article is nonsense:

Revisionist History - Salon & Amazon's Evil eBook Motives

You can't base a model of the ebook market off of a single ebook:

It's simply not possible to model a complex system with millions of variables by using a single data point. To do so would be to oversimplify the complexities of the ebook market as a system to the point that the argument has no relevance.

[Andrew H.]

Originally Posted by Nate the great

That Salon article is nonsense:

Revisionist History - Salon & Amazon's Evil eBook Motives

You can't base a model of the ebook market off of a single ebook:

I didn't cite the Salon article; your quote attribution is mixed up.

[Nate the great]

Originally Posted by Andrew H.

I didn't cite the Salon article; your quote attribution is mixed up.

Sorry! Will fix.

[pidgeon92]

Originally Posted by HoraceWimp

I also choose to believe that Amazon, now having a virtual 90% monopoly on the e-book market will ultimately be bad for future consumer buying choices as e-books prices start to rise.

90%? I seriously doubt that. The Salon article you quoted had that figure from 2009. It's four years later and consumers have a lot more choice in where they can buy ebooks.

[fjtorres]

Originally Posted by Andrew H.

As others have pointed out, Amazon's $9.99 price applied only to NY Times bestsellers, of which there are maybe 40-50 at a time.

And only for a *limited* time period for each title.

As Judge Cote pointedly reminded the Publishing Industry apologists last September, Amazon has never sold ebooks at an aggregate loss. ebooks are a profit center for Amazon.

[murraypaul]

Originally Posted by HoraceWimp

Sale or return is just an old expression for only paying for what you sell. With regards to conventional paper based books, they’d buy in x number of them at a set 50% discount on RRP and return the ones that hadn’t been sold to the publisher. It’s the old system for the way in which conventional physical books were bought from the publisher.

Most other resellers of e-books use the agency system pioneered by Apple in their iTunes store whereby they simply take x% commission on whatever items were sold.

When Amazon started out selling e-books they most definitely negotiated with publishers to use the old ‘sale or return system’ as opposed to the newer ‘agency system’ for the specific purpose that it allowed Amazon to undercut their competitors and sell e-books at a loss, rather than simply take a % off the top of the sale.

This is how Amazon were initially able to sell so many e-books at a loss and grow their Kindle market (a smaller loss than the agency system would have produced)—because Amazon themselves were able to set the price and not be dictated to by what price the publisher set.

Whether Amazon have now switched to the newer agency system I couldn’t say because I don’t know. I believe they may still be fighting this with the publishers who want them to switch to the agency system.

No offence, but you seem to actually not know really quite a lot about how book sales work, so perhaps you should stop making quite so many pronouncements?

[HoraceWimp]

Originally Posted by Nate the great

That Salon article is nonsense:

Yep, that’s pretty much the usual response when people read things they either don't like or don't agree with.

As I’ve said previously, people have to believe whatever they choose to believe.

[HoraceWimp]

Originally Posted by pidgeon92

90%? I seriously doubt that. The Salon article you quoted had that figure from 2009. It's four years later and consumers have a lot more choice in where they can buy ebooks.

The article wasn't from 2009, but the 90% figure was, so point taken.

It might not be as high as that now for the reasons you rightly point out, but I'd still reckon it's pretty high. Particularly so when you consider the high market share the Kindle e-reader alone has. Kindle e-readers dwarf all the others put together.

[HoraceWimp]

Originally Posted by murraypaul

No offence, but you seem to actually not know really quite a lot about how book sales work, so perhaps you should stop making quite so many pronouncements?

I didn't realise I was making any pronouncements, I thought I was expressing an opinion.

The web article I quoted clearly shows that Amazon was buying e-books under the old ‘sale or return’ or ‘warehouse’ system as they now call it and not the more common ‘agency’ system.

It would seem that, that was the method Amazon used up until 2010. What they use now I have no idea, as I've already stated.

If you feel by that means I “actually not know really quite a lot about how book sales work” that of course is entirely your prerogative.

However, I have worked for 30 odd years within the publishing industry. That of course doesn’t make me an expert on it, but it does mean I know something about it.

I’m getting the distinct feeling though, that this is a place where alternative opinions that happen to conflict with the majority view are not welcome.

[murraypaul]

Originally Posted by HoraceWimp

The web article I quoted clearly shows that Amazon was buying e-books under the old ‘sale or return’ or ‘warehouse’ system as they now call it and not the more common ‘agency’ system.

The agency system wasn't 'more common'.
It was not used for ebooks until the Agency Conspiracy.
Yes, publishers sold to Amazon at a 'wholesale' price, just as they did to everybody else.
This isn't news to anybody, we all know it already.

If you feel by that means I “actually not know really quite a lot about how book sales work” that of course is entirely your prerogative.
However, I have worked for 30 odd years within the publishing industry. That of course doesn’t make me an expert on it, but it does mean I know something about it.

Well, you've made a lot of mistakes when discussing ebook sales, so I've going to venture to guess that your experience is all on the pbook side?

When you say something like this:

Whether Amazon have now switched to the newer agency system I couldn’t say because I don’t know. I believe they may still be fighting this with the publishers who want them to switch to the agency system.

it makes it blindingly obvious that you haven't followed anything that has been happening with ebooks in the last few years. Otherwise you couldn't possibly be unaware of the conspiracy between the big 5 publishers (and Apple) to force Amazon and other ebook sellers to switch to the Agency model.

[Indio777]

Originally Posted by Lemurion

The book in question is a US Trade Paperback with a suggested list of $34.95. Amazon is currently offering it for $25.01 (a 28% discount, for a saving of $9.94). It is also available on Kindle for $9.34.

According to the article, Amazon raised the price to over $30, from $23, and now seems to have lowered it back down somewhat. The real issue here, though, is that the book is grossly overpriced. Even at $25 it's still well over the average price I'll pay for a trade paperback, as most of the ones we've bought in the last year ran under $20.

Per the book details on Amazon, this book was published by Kent State University Press. The Jim Harrison bibliography was also published by a university press.

Books published by university presses are generally priced higher than other books, sometimes a lot higher. I guess it's maybe because not that many copies are printed in comparison to "commercial" publishers and they are trying to recover the cost of publishing a title?