[Marseille]

Originally Posted by Kali Yuga

I see. Well, publishers have set the prices for paper books in many countries in the EU since the 1980s; has it been an unhealthy market?

Ah yes, Europe. That bastion of free market capitalism. Just because something functions doesn't make it healthy.

By some measures, the ebook market doubled under agency pricing. Does that indicate whether we are in a healthy or unhealthy market?

It indicates momentum that has been building towards the ebook market for a long time, aided by a healthy marketplace that hasn't been completely undone overnight -- in part because publishers are doubtless taking into account information already gleaned from retailers over the past many years, info that will no longer be forthcoming as publishers won't engage in the full selection of practices retailers engaged in. Selection of reading devices and the amount of promotion both professional and word of mouth are having their expected effect, building on momentum that resulted from early-on healthy discounting. As to price sensitivity, you can't be sensitive to price if you're ignorant of what the former prices are, which so many new customers are, because they are new.

All your cite means is that publishers/Apple picked the best possible moment to pull a switcheroo.

With ebooks, the pricing is far more dynamic, and can change to reflect conditions, and apparently does follow demand-based pricing. Does that not qualify as "ebb and flow?"

Sure. My ebb and flow comment had to do with the creation of the ebook market being uneven. Not pricing. That publishers haven't set prices and forgotten them doesn't mean that they aren't more insensitive to consumers than many different retailers who all had different consumers with different behaviours and an understanding of how to draw them in. As time goes on, the distance publishers have from the market will become more and more apparent.

Agency pricing also helped Apple establish itself without getting into a bloody price war with Amazon. Is it a bad thing that Amazon's quest for a monopolistic standing was halted?

I think B&N (who is growing quite nicely) and Sony already had that covered. To wit, if Amazon had acquired a 'monopoly', they might have been the only retailer in a position to do what Apply did for music -- free it from DRM (note Amazon has done a fine job cutting into Apple's former music monopoly). As DRM's primary purpose is to lock someone into your store, the chances that any major retailer will attempt to strongarm publishers into giving it up (much less succeed given less than full market power) while they are neck-and-neck with competitors is unlikely.

Also, a bloody price war would have been incredibly good for customers, and probably accelerated the market at large. Certainly better than Apple making deals with publishers so it wouldn't have compete on price. <--- There is no universe in which that type of collusion, while I'm sure technically legal since they didn't agree on a price, simply agreed who the setter (incentivized to end retailer discounting and thus the need for Apple to compete with Amazon et al) would be. Apple's music quasi-monopoly didn't turn into a permanent one and did help customers. I think Amazon's would have too, because it wasn't a monopoly based on force (no more than was present at every other retailer), but on merit. People bought from Amazon because of what Amazon added to the market, and if it had backpedaled and added less, they would have lost customers.

In real free markets, you're allowed to win by doing performing better than everyone else. Apple liked that when they were doing better than everyone, and didn't when missed the ebook boat almost completely.

It's extremely difficult to evaluate the long-term effects -- in part because it's just too easy to imagine counterfactuals that support a divergence of views. E.g. you imagine an "agency pricing crippled ebooks" scenario, I dream up a "discounters went out of business" scenario. The former may well seem more plausible to you, the latter to me.

Hmmm. I guess it depends on what you mean by crippled. A functioning market can be crippled. Most people manage to get their broken bones mended, but almost no one thinks US Healthcare is a healthy market. Liberals want to centralize (see concept: single-payer), Conservatives want to undermine insurance companies (see concept: health-savings accounts). Both hate what the US has now.

I don't think agency pricing means the end of all things, or even that overall sales will slow (it's easier to screw with a market that's already set to explode than a static one -- your justifications echo what publishers will say while they are setting prices and illustrate my points pretty well). But it is a blow to the market.

So, if we stick to the present: Readers are still shaping the market and have the exact same tools at their disposal as before.

No they don't have the same tools. They used to be able to purchase books that were too expensive on sale at discounters, thus strengthening the argument for lower prices and getting them from other retailers who notice people like sales (something retailers are very good at noticing). As it is, in the ivory tower at publishers, a non-buy can mean a variety of things. People don't like reading. The author sucks. Pisces is rising in full something or the other.

I fully agree that a strong voice got choked, though -- specifically the voice of Amazon. As much as I respect their business acumen, though, let's not confuse "what's best for Amazon" with "what's best for readers" -- or, if you prefer, "Amazon's agenda" with "the best interests of readers."

My "strong voice" included all discounting retailers, not just Amazon. And I still believe that the retailer, closest to the customer, bring an extraordinary level of expertise as well as a much larger incentive to create sale pricing than any publisher does. Because of their market incentives, they end up representing consumers in the market place the same way publishers represent content producers. We still have strong content-producer representation, but weak consumer representation. And long term, the market will suffer for that.

For the record, I haven't bought a single ebook from Amazon - you might it sound like I'm their man. I was an eReader man. And discounters like ereader had a very different market from Amazon, just like Amazon had a different market from Sony. Retailers tailored the behaviors to particular groups of consumers. Publishers now force retailers to treat all of them the same. That's great if you're really, REALLY late to to the show and prefer not to have to compete in an open market, but it's really bad if you've invested your entire company in drawing in one type of consumers and you can no longer offer them anything different than anyone else. Even Amazon was a late-comer to ebooks, and even it to some extent stood on the shoulders of the discounters who Apple killed so it wouldn't have to be sensitive to consumer price concerns. I would have very much liked to have Apple on the side of consumers the same way they were in the music business, and mark my words, publishers should sleep with one eye open, because if Apple ever gets powerful enough in the market to gut them, odds are good they will.

We had a healthier market before agency pricing. I don't think I can make a better case than that ^, so go ahead and take the last word as to our discussion.