Amazon vs. Hachette Update - It's About Price

[fjtorres]

I'm not defending Amazon. If they want me to defend them they should be pushing for ebooks at a baseline of $4.99, not $9.99.

We seem to have different definitions of baseline: to me, baseline is the expected price for the category. Anybody wanting to go higher would need a very good excuse.

Like in console gaming: $60 is the baseline for AAA XBOX/PS3 titles. A few games come in special editions that run anywhere from $10 to $40 extra, but they have to make a strong case that the extras are worth the premium. Going higher than the baseline is rare.

That is how I read Amazon's statement: run of the mill midlist and even most name author ebooks (which, name or no name, are nothing special) should run at the baseline or lower. The occasional Harry Potter-type event release might command a slight premium but those would be as rare as the $99 console game.

[Fluribus]

Originally Posted by SteveEisenberg

Physicists writing books to be read by other physicists will fit into that "small number of specialized titles" exception, at least if only a small number of physicists write such books.

I'm not sure why you are assuming that "small number of specialized titles" means only titles written for a tiny audience comprised of PhD experts. I consider many of the books I read to be small and specialized titles. The audience isn't large. They are in subjects that the vast majority of people don't care about. It would take either a miracle or serious manipulation to get one to the top of the charts.

[ApK]

Originally Posted by pwalker8

What I said was that Amazon was selling ebooks at a loss.

Ok . So how is that a 'losing proposition' for Hachette?

[pwalker8]

Originally Posted by ApK

Ok . So how is that a 'losing proposition' for Hachette?

I never said that Amazon selling ebooks at a loss was a losing proposition for Hachette. That's just your misrepresentation of what I said. However, Amazon setting a price point in the public's mind that devalues ebooks is a big issue for all the major publishers and what they have been fighting against for several years. Of course, Amazon's new demand that publishers foot the bill for Amazon selling ebooks at a loss is a pretty big issue as well.

[ApK]

Originally Posted by pwalker8

I never said that Amazon selling ebooks at a loss was a losing proposition for Hachette. That's just your misrepresentation of what I said.

Originally Posted by pwalker8

What I said was that Amazon was selling ebooks at a loss.

Umm, let's see...

Originally Posted by pwalker8

What is going on between Amazon and Hatchette is that Amazon is trying the leverage their dominate market position to force Hatchette to chose between two losing propositions, sale their books at a loss to Amazon, or be locked out of the ebook market.

Yeah, I guess you're right. Account for enough ambiguity and unclear language, and I can see what you mean.
So, I concede, I must have misinterpreted what you said as something intelligible and worthy of a reply. Won't happen again.

[ApK]

Originally Posted by SteveEisenberg

I quoted this one before, but I want to quote it again because, fjtorres, what ApK writes is much more consistent with Amazon's statement than your baseline concept. Don't have a PhD? Not interested in teaching undergraduates? Don't have the skills or inclinations to be a fundraiser? Don't want to be beholden to a right-wing, or left-wing, think tank? In that case, Amazon decrees that you can no longer be a research-oriented non-fiction author, no matter how many books you could sell, because Amazon wants you to fit into the $9.99 or less model used by authors who write multiple genre page-turners a year.

I don't see it that way.
1. If Amazon's assessment of the situation proves correct, BPH's revenue will increase and they can pay all the big advances they want. I don't see how it's connected. My alternate funding thoughts were purely an aside to further the idea that BPHs should prepare to adapt to paradigm shifts in the industry.

2. You're saying Amazon will kill research-oriented books by forcing one price on most stuff. But, if fjorres's summary of the agency price fixing case is accurate, then BPHs wanted the exact same thing, just at a price $5 higher, and all Amazon is claiming is that they will all make more at the lower price.

3. I do think an alternate funding option could potentially be better for everyone. BPH can be just as politically biased as a think tank, and they are in a better position to try disguise that bias and be manipulative with it, starting with nothing more than their choices of authors and books to pay these big advances to. Plus they often exert editorial pressure on authors, which, if anecdotal evidence around here can be believed, often harms the academic quality of the work.
Just as I'm sure there are publishers who still maintain a high standard and sterling reputation, so too could the other funding sources.
"Don't have the skills or inclination" to make use of the new model? Oh well, buggy whip maker, adapt or die. Even today, not every qualified expert, who might produce the most definitive work on a subject, has the skills or inclination to get an agent and successfully pitch to a BPH, either.

[SteveEisenberg]

Originally Posted by Fluribus

They are in subjects that the vast majority of people don't care about.

Most bestsellers are in subjects that the vast majority of people don't care about. One reason for this: If even one percent of the literate humans buy a book, it is an enormous bestseller.

The arguably bestselling book of all time (Tale of Two Cities) was written about the French Revolution, sixty years after it ended. I suspect that even when Dickens published this title, the vast majority of people didn't care about it.

Now, I realize that many people buy A Tale of Two Cities because it is required reading. But I think the principle generally applies. I am not interested in sadomasochism. Ditto for most of humanity. But there is a big enough minority to support some humongous sales figures.

Anyway, Amazon, in the OP statement, doesn't just say $9.99 is the at-release-time price limit for "specialized titles." That perhaps wouldn't mean much, because, as I've implied, most books are for a specialized audience. But Amazon also clearly implied that, if it gets what it seeks, only a "small number" of eBooks (and I think eBooks are the future of books) will be allowed to be priced above $9.99 at release. And that means lots of books I much like will no longer be published, or (maybe more likely) will be published with less advance research and editorial care.

Originally Posted by ApK

If Amazon's assessment of the situation proves correct, BHP's revenue will increase and they can pay all the big advances they want.

That's true, with the emphasis on the word "If." In the first part of this post, I started from the vantage point of believing that Amazon's case for $9.99 or below being the sweet spot was shown, in previous posts, to be too weak to take seriously. If you don't accept that Amazon pulled a fast one by supplying statistics barely relevant to their argument (by ignoring form factor shifting between eBook and paper), you won't accept my subsequent arguments either. That's fine -- I'm not here to bash people into submission.

[JSWolf]

Originally Posted by Hrafn

[*]Lower-priced mass-market paperbacks for those willing to wait.

Except these days we don't always get the lower priced mass-market paperbacks. We get some fugly format that the publishers can use to over charge the customer. It's not that far off (pricewise) from some of the discounted hardcovers.

[JSWolf]

Originally Posted by rkomar

I shop at a scifi bookstore, and have noticed that a lot of books come out in hardcover, then trade paperback, then nothing else. Trade paperback seems to be the new MMPB (at nearly twice the price). I'm not sure why, but they seem to be abandoning that second market. Maybe that market has abandoned them?

This is pricing reading out of a lot pf people's price range. This is making reading no longer affordable. No longer affordable means no sales and no sales means less profits. So go back to mass-market at a lower price where people can afford and make more money. Stop over-charging. You (BPH) will make more money selling more at a lower price.

[ApK]

Originally Posted by SteveEisenberg

That's true, with the emphasis on the word "If." In the first part of this post, I started from the vantage point of believing that Amazon's case for $9.99 or below being the sweet spot was shown, in previous posts, to be too weak to take seriously. If you don't accept that Amazon pulled a fast one by supplying statistics barely relevant to their argument (by ignoring form factor shifting between eBook and paper), you won't accept my subsequent arguments either. That's fine -- I'm not here to bash people into submission.

Of course. This entire thread could have been effectively replaced with a "Who do you think is right? Amazon, Hachette, or none of the above" poll.
But that would not have been nearly as fun.

[JSWolf]

Originally Posted by rhadin

So then, you are saying, the statement is not true, that there are costs and all is not profit.

An eBooks costs X amount to make the eBook. Once that money is recovered, that part of the price of the eBook is pure profit. So lets say we have an eBook at $14.99 and $4 goes to the cost of making the eBook. Let's say it's $100 to make the eBook. That means that the 26th eBook sold would be making $4 clear in profit since the cost to make the eBook have been recovered.

The way I see it, this fugly non-mass market very expensive paperback format gained momentum when agency was in play. That way, the publisher could say that the price of the paperback is still high so the eBook price doesn't have to drop much if at all. If they went mass-market at the usual $7.99, then the price of the eBook would have to drop to match. But keep the paperback price high and the eBook could then stay high.

This is the BPH's way of gouging the hell of of the customers and not giving a damn abut them.

[JSWolf]

Originally Posted by rhadin

The fallacy in your argument is that you are assuming that Hachette would sell 74% more books. The numbers Amazon gave were over its entire catalog, not just the Hachette catalog, and the numbers only pertain to Amazon's customer base, which does not include all of the other outlets that sell Hachette books.

I suspect that if Amazon were willing to guarantee that increase over the full distribution chain, Hachette would agree. But I also suspect that Amazon is unwilling to even guarantee such a sales increase among its own customers.

As to whether it is a good business plan or not, I cannot say. There is too much missing data that is fundamental to making a sound business decision. I'm surprised that anyone here on MR believes they have enough data to determine who is objectively right or wrong in this dispute.

When a book is in hardcover, I do see sales of the eBook going up if the eBook is priced at $9.99. But to keep it there are the eBook is old enough and sales won't really continue. The price needs to drop once the hardcover days are over. I've bought some eBooks at $9.99 because I wanted it now. But if it was higher say $12.99 or $14.99, no way would I buy. So I do think that sales would be higher at $9.99 then $14.99. People that wouldn't have bought the hardcover wouldn't be paying $14.99 for the eBook. There's a lot of people out there just no willing to pay that much and they very well might fork over $9.99 while the book in in hardcover.

[eschwartz]

Originally Posted by rhadin

Please provide the independent source that supports your statement quoted above.

Originally Posted by Hrafn

Hachette's (or any publisher's) incremental cost for ebooks is zero (there is no printing, distribution or similar incremental costs) -- all their ebook production costs are fixed. Each additional ebook sold is therefore pure incremental profit for them (they do of course have to cover their fixed costs from this in order to break even).

Or in other words rhadin can be his own independent source to verify. To test, @rhadin, please perform the following thought experiment:

Go to your computer's file browser, and copy a file to another location. Then report back:

Did it cost you any money to do so?

Originally Posted by rhadin

So then, you are saying, the statement is not true, that there are costs and all is not profit.

I am saying you clearly have no idea what the heck I said.

I never said a book costs nothing to produce, I said ebooks unlike pbooks have a per-unit cost of exactly nothing.

Thank you, DuckieTigger.

Originally Posted by DuckieTigger

All color mine, not in originals.






Seriously? First you quote out of context a reply to a reply (in red), then to make your point you conveniently omit the sentence right after (in green). Then you get explained again the meaning of your out of context quote (by somebody else), and all of a sudden that makes you think you are right in the first place?

What is lacking is your reading comprehension, or what is worse, you knew exactly what you were doing by misrepresenting words for your own advantage. Go back to the original, the reply to your own post:



It simply means that for an ebook to be profitable overall all it needs is pay for creation, which is fixed. Once that happens that ebook never has a chance to reduce or eliminate the profit overall at any cost it is sold at (even for free). A pbook will never ever be profitable if each unit is sold below manufacturing cost, no matter how low the overhead is.

Which is contrary to your belief that a set number (e.g. 100,000) of sales is needed to break even (Post # 65). For ebooks it is a set number of $ to break even, not # of sales. Each ebook sale is profit in the amount of the price the publisher is selling it. All of that profit first goes toward paying for the overhead (creation + advance), and then a certain % amount of that profit from additional sales goes to publisher as overall profit for them. The rest is going to the author. It is not rocket science.

[DuckieTigger]

Originally Posted by pwalker8

I never said that Amazon selling ebooks at a loss was a losing proposition for Hachette. That's just your misrepresentation of what I said. However, Amazon setting a price point in the public's mind that devalues ebooks is a big issue for all the major publishers and what they have been fighting against for several years. Of course, Amazon's new demand that publishers foot the bill for Amazon selling ebooks at a loss is a pretty big issue as well.

Devalues ebooks? Ebooks devalue themselves automatically once the mmpb enters. How come the exact same ebook is now worth less money? If it isn't dirty price fixing. The mistake enters when you actually believe that an ebook is the exact same thing as a hardcover book. It is the same, but only until the paperback comes out. Then it is the same as a paperback. The true value is the exact same as a hardcover, but then after a while the true value changes to the paperback? That does not make any sense. The true value of an ebook is somewhere inbetween. It is durable like a hardcover, but it is portable like a paperback. Most ereaders or phones take up less space and weight than a paperback. When you buy a hardcover you pay for two things - the better quality of the book itself compared to paperback and early access. With an ebook you only get the early access, thus it is only one benefit over the paperback. If all is fair, than the ebook should be exactly cheaper by the amount of the per unit price of the hardcover book (printing and storing). More than likely the ebook still won't be quite $9.99 suggested retail price if the hardcover suggested retail is $14.99. But then it should be at the retailers discretion to discount.

[darryl]

Originally Posted by SteveEisenberg

But we shouldn't celebrate when they use their retail dominance to force other publishers closer to their own mold.

Steve. Isn't this called competition? If Amazon is forcing anything isn't it by offering their customers what they want? Amazon is not a monopoly, but the BPH have imho long constituted an oligopoly of the worst kind.

Originally Posted by SteveEisenberg

Physicists writing books to be read by other physicists will fit into that "small number of specialized titles" exception, at least if only a small number of physicists write such books. But what about readers who didn't take college physics and want lots of popularized books on physics to choose from? As I read Amazon's statement, we are likely to be out of luck. Ditto when I want to read a middlebrow, 600 page, narrative history title that required worldwide research and four years to write. Do you really think that can plausibly cost little more than the six-months-to-write, no-research-required work of pure imagination? If not -- if you just want $9.99 as a baseline -- you should stop defending Amazon.

Academic publishing has long been a specialised area, usually with very high prices justified by the small numbers, and have no legitimate place in this discussion. Even if I am wrong in this and academics are going to exchange books amonst each other via Amazon, it will I'm sure come as no surprise to you that the mantra is "publish or perish" to anyone with tenure or seeking tenure. And some academic books with a small audience clearly should be an exception to $9.99.

Originally Posted by SteveEisenberg

I quoted this one before, but I want to quote it again because, fjtorres, what ApK writes is much more consistent with Amazon's statement than your baseline concept. Don't have a PhD? Not interested in teaching undergraduates? Don't have the skills or inclinations to be a fundraiser? Don't want to be beholden to a right-wing, or left-wing, think tank? In that case, Amazon decrees that you can no longer be a research-oriented non-fiction author, no matter how many books you could sell, because Amazon wants you to fit into the $9.99 or less model used by authors who write multiple genre page-turners a year.

I mentioned above that imho academic publication is a specialist case, and that some academic books clearly should be an exception to Amazon's proposed $9.99 price point.