Quote:
Originally Posted by Andrew H.
Ever heard of loss leaders?
|
Oh, the old "Loss Leaders" gambit. When you take the entire New York Times best seller list, and put in on fire sale, every day, all the time....that's not merely a "loss leader like milk".
You are taking aim at the heart of the publisher's profits. Selling for $10 what the publishers have priced at $25/30 and which normal retailers would sell for $20ish.
This pricing disparity was SO GREAT...that you could justify paying $400 for the original kindle just on the cost savings alone.
So...Amazon was using it's ability to sustain losses to attack the very profitability of the publisher's who's books it was selling. As Amazon was also the 800lb gorilla in the paper book selling business, the publishers were hand cuffed.
Along comes Apple and the possibility of a credible alternative to Amazon for the publishers. THEN FINALLY, the publishers were able to bring Amazon to the bargaining table. Amazon had a choice....stop the crazy low pricing....accept time windowing for ebooks....or become an agent seller instead of a retailer of ebooks.
All of those choices basically removed the publisher's highly profitable hard back business from having to compete with THEIR OWN product. Just like publishers never release the paper back version until the hard back has had it's run. Nothing new here.
Amazon chose to go the agency seller route as it was the best of the three options. Amazon certainly couldn't allow Apple to have the best sellers months before it did (the time window solution).
Quote:
Originally Posted by Andrew H.
And my overall point was responding to the contention that agency pricing helped Amazon and that publishers should go back to the wholesale model to get an edge over Amazon - a point that I don't think makes sense given how Amazon had an even greater edge during the pre-Agency period since they were able to compete on price.
|
Well...as Amazon had already bought themselves a near monopoly....not much was going to change that. At least, though, there is not a CLEAR and OVERWHELMING price advantage to buy an ebook over a hard back book. And thus, we saw the price of the Kindle device drop like a stone. No longer could it sustain even the $250 price point it had reached by the time of the agency agreement.
Lee