Quote:
Originally Posted by wallcraft
Currently the major publishers have not reduced their prices, they are still getting about 50% of the list price back from retailers (including Amazon) and they are typically charging hardback rates for the ebooks. What they are afraid of is that Amazon will stop deeply discounting new and bestseller ebooks and readers will then stop buying from publishers who don't reduce their list price to sane levels. Note that a discount selling price of $9.99 implies that publishers "should" in the long term expect perhaps $8-9 per ebook, i.e. a list price of about $16-18.
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The market hasn't dictated a price of $9.99 per book (meaning, that price didn't come to be because people weren't buying books unless they were at that price point or lower.) The $9.99 (or $9) price point is Amazon (and Wal-Mart's) use of a loss leader strategy, where the retailer sells a product below their cost to acquire that product in the hope that consumers will buy the discount product AS WELL AS other products in the store.
I think this move from publishers isn't about operating from a position of fear (always a no-no in strategy and/or negotiations) of how the market will respond, but is more parallel to what the movie industry does with theatrical new releases. Theatrical movies can't go to DVD's within a certain period of time; 1) so that studios can make a fair profit, of course, and 2) so that theatrical venues who show films have a chance to make a fair profit as well. If the book publishing industry is similar to the movie industry, publishers have the best opportunity to make the most money in the initial format of release (in most cases, hardcover). As hardcover is the most profitable for the publisher, I’m okay with them exploiting this market as much as possible, and once they think the market is saturated, releasing the book to the next market – in this case, eBook format.
Waiting 4 months for eBooks is the equivalent to waiting for a movie to be released on DVD (or netflix) instead of seeing it in a movie theatre. On an individual basis, yes, it's disheartening, and I'd rather have my $9.99 ebook the same day my neighbor gets his hardback book. But, I can also see the big picture, I'm all in favor of capitalism and free markets, so I'm okay with publishers implementing this strategy to make more money (as long as they use it to go and find new talented writers and publish more great books).