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Originally Posted by pwalker8
I don't follow the logic of your assertion. How would the move to agency pricing, i.e. the publisher setting the price, break the publishers' model?
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Because before the sale price was decided by the retailer.
Quote:
Originally Posted by pwalker8
Amazon didn't get a better deal that it passed on to the consumer, it was selling a small subset of ebooks at a loss or very small profit to drive the sales of kindles and establish the ebook market. Companies do this all the time, especially if they have a good cash flow from other parts of their business.
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Before the agency pricing publishers were setting the list price, and retailers were selling them at whatever discount was convenient. Amazon's business adapted very well to ebooks, so it was selling more ebooks than other retailers. Because of this, Amazon got a better deal on ebooks. It used this advantage to sell ebooks at a lower price than the competition, which increased the market share. They figured that consumers prefer the $9.99 price tag to anything above $10, and and the books on NYT's list were sought after so it was a good business move to get more customers. Unless the books had a list price higher than average (for a book on NYT's list) Amazon was still making a small profit, because it had a better deal. And people preferred to get the ebooks instead of the p-books because of the difference in price.
This meant that for the top selling books the market was shifting towards ebooks and this was not good for publishers, since they had more control over p-books. At least one publisher tried to make Amazon change the price by refusing to use it as a distributor for all their titles, which resulted in lower sales for that publisher, which the publisher couldn't afford.
This whole situation was a result of poor management on the part of the publishers because they didn't realize what an impact ebooks would have.