Quote:
Originally Posted by Worldwalker
Until the cabal made their demands, Amazon acted fully as a retailer. They purchased ebooks from the publishers at the wholesale price the publishers set, and sold them to the end-users at the price they (Amazon) set. That's what a retailer does: buys wholesale, sells retail.
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Wow. Is this really what you think happens? Does Amazon have to deal with "digital returns," too?
The paper book biz is a weird and highly inefficient beast. Retailers can order a massive number of books (or, with a company like B&N or Amazon, demand the publisher do a large print run or they won't stock it). The retailer can send back the unsold titles at any time a 100% return of the publisher's cost. The publishers will also hold an author's royalties until the returns are sorted out (which is preferable to trying to claw back delivered royalties).
Does any part of that process even remotely make sense when dealing with a digital good?
With ebooks, the retailer really is working like an agent. They are not purchasing blocks of ebooks and reselling them, and getting stuck with or returning the unsold portion; that would be patently absurd and just replicate the massive inefficiency of the paper inventory process. Instead, Amazon collects the payment and sends its contractually obligated cut to the publisher, who can then send the author's royalties without concerns about returns.
The similarity to the standard model is in the contractual payments and pricing abilities. To wit: The retailer sells one ebook copy of a book. They collect the payment from the buyer, and send the publisher their cut. In the standard model, the publisher's cut is a formula based on the cover price, and the retailer can sell the ebook at any price. If the ebook's cover price is $25, and their obligation to the retailer is $12, and the retailer sells it for $10, then the retailer is taking a $2 loss -- i.e. subsidizing the consumer's low price. This can work in a digital realm, but doesn't strike me as anywhere near as simple as a basic 70/30 split, where the publishers and authors don't lose out because the retailer wants to screw a competing retailer.
By the way, Amazon lets self-publishers and small publishers set the price on ebooks all the time with a 70/30 split with the Digital Text Platform -- so they basically help develop and popularize agency pricing. Isn't there some famous phrase about being hoist upon one's own petard?
And let's be clear about something here: Amazon isn't Fighting the Good Fight for the sake of the consumer and the free markets; they were routinely getting blasted around here (and occasionally defended by yours truly) prior to the agency pricing change. They're fighting for the right to dominate the ebook market and squeeze the life out of their competitors. This is not necessarily a bad thing, but it is best to recognize that what's really going on is that your desires ("cheaper ebooks") are temporarily aligning with Amazon's goals ("increase market share").