Quote:
Originally Posted by leebase
BING0 -- now you know why the "Agency 5" stood up for themselves against Amazon. It is the SAME self preservation that an individual author wishes to exercise.
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Indeed. Amazon is not a good guy, and "good guys vs bad guys" is meaningless in this context.
Amazon is the world's largest catalog retailer. They are working turf pioneered by Sears, Roebuck and Co., who defined themselves as the retailer to rural America. Back when Sears started, a lot more of America
was rural, and people who lived there had a problem. If you wanted something, it either had to be stocked at your local general store, or you had to travel a possibly
long distance to get it. Sears carried
everything, and published a catalog with what they offered. You could select it from the catalog, order it from Sears, and have it delivered to you. Sears became huge in consequence.
Amazon moved the catalog to the web and dispensed with retail outlets. Order from the web, and Amazon ships to you. When Amazon started out, they hired supply chain experts and distribution experts from major retailers and shippers to help them build out warehouses and distribution capability.
Amazon wants
market share, and uses price, selection, and convenience to get it. In the case of ebooks, they want to be your only supplier, and the ecosystem based around the Kindle and Kindle apps is tailored to making that happen. While Amazon uses the ebook format created by Mobipocket (who they bought) for Kindle books, they use a modified form of Mobi's DRM. The intent isn't to prevent piracy: it's to lock you in to Amazon as the vendor. Want to
buy an ebook to read on your Kindle/Kindle app? You have to buy from Amazon, and give them a cut of the take.
If the Mobi format book
isn't protected by DRM, you can side load and read it. If it is, and it's not from Amazon, you have to strip the DRM. Most folks don't know how to do that, and may not want to bother if they
do know.
Kindle/Kindle app users have the selection they like at a price they are willing to pay, and don't see this as an imposition...now. What happens if Amazon
does obtain a monopoly on ebook sales (or even a strong majority of the market? Want to bet they
won't raise prices, because you don't have an alternative and they
can, if they think they need to?
If you
don't think they would, tell me where to get some of what you're smoking. Amazon is a Fortune 500 company with a strong P/E ratio and a healthy stock price. Their overriding goal is to
maintain that position, and they will do what they think they have to in service of that goal.
Amazon is a retailer. The resell things
others produce. Amazon set a default price of $9.99 for ebooks and conditioned a large number of folks to think that was what ebooks
should be priced at. They did
not talk to the producers (the publishers) of the ebooks they sold about this move.
The precipitating problem was that Amazon was selling Kindle editions of hardcover best sellers at the default $9.99 rate. Hardcover best sellers are the publishing industry's crown jewels. They generate the most revenue and profit, and often make the difference between whether a publisher makes money or shows a loss on the year. Enough folks were buying the Kindle edition that publishers were seeing sales drop on hardcovers.
What they initially pressed Amazon to do was delay the availability of the ebook version to give the hardcover time to sell, for the same reason there is a year delay between the hardcover and the mass market paperback release. Amazon declined, and even
dropped the price of some Kindle editions to $7.99 in a node thumb at the publishers. The "Agency 5" response was to change the terms under which they did business with Amazon to require higher prices. It was essentially "You want to offer the ebooks
at the same time as the hardcover? Fine. Charge more for it, and give us a higher cut of the take, top compensate for what we lose in
not selling the hardcover."
Amazon cried crocodile tears. They probably make more all told under the Agency model, but can point at the publishers as the bad guys in the price rise.
This is actually a facet of a larger battle, as Amazon had peen pressing for even higher discounts on paper books. The standard wholesale discount on books is 40% (and is what libraries pay). Amazon's is more like 50% or higher, and Amazon wanted even greater ones. With greater discounts, Amazon has more pricing flexibility, and can gain even greater market share. The question becomes "At what point does the
producer stop
making money on sales to that retailer, because the discount is so high?" There's some evidence things were reaching that point.
The publishers aren't bad guys. They are trying to
survive. To survive they must make money, and what their costs are and how much they
have to make to remain in business will determine the prices they charge. The big question now is
can a major trade publisher produce ebooks at the low price people would like to see and stay in business? The answer may well be "No. They can't."
A fair number of folks here seem to feel "Screw 'em. Let them go
out of business! I'll buy direct from the author, and we'll all be happy!"
Be careful what you wish for. You might get it. I don't think you'll be happy if you do.
_______
Dennis