Quote:
Originally Posted by JoeD
If amazon had a monopoly and thought dropping prices would increase sales by a bigger factor i'm sure they'd do that as opposed to pushing up prices and risking losing more and more customers and at the same time making the grounds more fertile for a competitor to re-enter the market who would now have the option of competing on price. As this is an entertainment market, customers still have a choice to just not buy any books, unlike a monopoly on some essential product (gas, electric, water...)
One other thing that might occur though rather than a price drop (or in addition to) could be the squeezing of author percentages.
Agency pricing may have been put in place to stop amazon getting a monopoly but combined with drm i believe it's going to have the reverse effect. They need to get rid of one or the other imo. In fact, they really need to get rid of both, since dropping drm will have little impact for customers if the book is still the same price from amazon and their eco system is better. Dropping price but not drm would like wise not impact amazon customers too much either since they've already bought and been locked into amazon's eco system and amazon would be able to match most price drops with their own sales.
I guess in short, publishers are screwed :P
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There is one other complicating factor: in a competitive-pricing environment, Amazon will *always* be cheaper than competitor retailers. That was the thinking behind the Agency Model Price Fix scheme. (Which, yes, helps Amazon way more than it hurts them.) Even without factoring in Amazon's (theoretical) ability to live off profits from other revenue streams, Amazon's Kindle store is more efficient than any (non-Apple) competitor can muster: their data center is self-funding, for starters, and they don't pay the so-called Adobe Tax on ebooks *or* hardware. And, since the rest of Amazon's online empire is also self-funding, Amazon doesn't need to divert ebook revenue to subsidize other parts of the business (like fading B&M storefronts; a concern Kobo is newy-freed from), and thus Amazon ebook margins can always be leaner than a competitors. Oh, and then there is the "small" matter of economies of scale.
Not really sure *all* publishers are screwed, though.
Yes, their *traditional* business model is under extreme stress. They need to evolve it ASAP before it drags them all down.
Their biggest problem is that the longer they wait to change their ways, the harder it'll be to adopt the most effective solution: disintermediate Amazon themselves. In other words: get into ebook retailing themselves.
Harlequin does it to good effect. If Amazon ever got too pushy, Harlequin has enough brand identity that they could easily do without Amazon and survive. For *them* cutting Amazon out of the loop is always an option and Amazon knows it.
Why is Amazon getting into publishing and hardware and everything in between? Because they know that the only indispensable elements in reading are authors and readers; everybody else has to sing for their supper. So they are looking to make themselves more useful, more important, to both authors and readers, than the traditional publishers.
eBooks are truly disrupting the entire industry. The old balance of power based on publisher's gatekeeping is just about dead. (Just ask Ray bradbury.)
And it truly is every player against all others.
At least until a new balance of power emerges.