Future Ebook Price Point

[kennyc]

So these virtual servers run on the clouds, and it's all natural never touched by human hands. La-la-la-la-la...

[TFeldt]

-A- system is never touched by anyone, exactly. That's the whole point of redundant load-balancing. The image you use to clone instances is painstakingly designed by developers, but that's done once and then replicated to the thousands (or however many instances kindle requires) of virtualized systems.

There's certainly on-going updates to these images (or kickstarts, as they used to be called in the golden days), for instance when kindle added the lending system. But that's also done once, and then replicated on demand.

I'm not arguing that there are on-going costs to maintain a book, I was talking about the -cost- of each book. My $0.00004 example is what it all boils down to since that amount includes power, maintenance, hardware, bandwidth and storage. What it actually costs to maintain said hardware is included in that figure. That's the -cost per copy-.

What it actually costs to maintain a title I have no idea, but that's not up to the retailers but the producers of the book.

[TFeldt]

Also, I'm a moron. Please mentally substitute all my references to e2c with ec2. e2c was a load-balancing technique in the 90s and I constantly get the two mixed up. For specific information about how ec2 works you should check http://aws.amazon.com/ec2/#functionality

The most relevant highlight is "Amazon EC2 enables you to increase or decrease capacity within minutes, not hours or days. You can commission one, hundreds or even thousands of server instances simultaneously."

Creating thousands of instances manually in minutes would be quite a feat.

[murraypaul]

Originally Posted by TFeldt

Do these virtual systems run on physical hardware? Absolutely. Does the physical hardware require maintenance? Certainly. But does anyone go into the server hall and say "I need to fix the kindle servers"? No. There are no specific systems dedicated to anything, everything is virtual. When a physical system goes down hundreds or even thousands of virtual systems blink off as well, but then they're instantly load-balanced to another virtual instance. That's the whole point of e2c and s3 (for storage).

Thus, there's zero hardware costs for kindle in specific. This is easily verifiable since amazon was doing e2c and s3 long before kindle arrived, and they'd be doing it whether or not kindle existed today. If they fix a physical server then you can't say they're doing it because kindle needs it, they're doing it because e2c needs it. You might argue that "didn't they have to expand when they opened the kindle store" but even that reasoning doesn't work since they're selling surplus resources. If they have a surplus then they don't need all the resources they've already got.

Have to disagree with you on this one, precisely because they do sell excess resources.
The physical hardware will be capable of running a certain capacity of virtual machines. The Kindle service will use some of those. Therefore those machines are no longer available, therefore there are less excess resources to be sold, therefore there is a cost (lost revenue) from the Kindle machines.

[TFeldt]

Originally Posted by murraypaul

Have to disagree with you on this one, precisely because they do sell excess resources.
The physical hardware will be capable of running a certain capacity of virtual machines. The Kindle service will use some of those. Therefore those machines are no longer available, therefore there are less excess resources to be sold, therefore there is a cost (lost revenue) from the Kindle machines.

Absolutely, but that's where my $0.00004 come in. And you can be sure that it's a -lot- less than $0.00004 per book for amazon, probably not even a hundredth of that.

[twowheels]

Originally Posted by TFeldt

Absolutely, but that's where my $0.00004 come in. And you can be sure that it's a -lot- less than $0.00004 per book for amazon, probably not even a hundredth of that.

They're selling machine time at less than one cent per hour... if they can do that, and make a profit, their per book costs are practically immeasurably small.

[TFeldt]

Originally Posted by twowheels

They're selling machine time at less than one cent per hour... if they can do that, and make a profit, their per book costs are practically immeasurably small.

Phew, finally someone who sees the math my way. Felt like I had inadvertently kicked a hornets' nest there for a while. But hey, this thread gave me an excellent chance to break in this new keyboard

[kennyc]

Originally Posted by twowheels

They're selling machine time at less than one cent per hour... if they can do that, and make a profit, their per book costs are practically immeasurably small.

Originally Posted by TFeldt

Phew, finally someone who sees the math my way. Felt like I had inadvertently kicked a hornets' nest there for a while. But hey, this thread gave me an excellent chance to break in this new keyboard

As I said above the hardware storage and bandwidth may actually be reasonably negligible but there is always going to be people-time that is associated with any of this and that is what is going to add to the cost per item or spread across the items and it is far from free.

and yes, I can be a hornets nest....just have to change my avatar.

[TFeldt]

Aye, but I was never debating the per-title costs. I have absolutely no idea what those might be so I'd be speaking in utter ignorance if I did. What I responded to was the following statement;

Originally Posted by taustin

That simply isn't true. Servers aren't free, and neither are high speed pipes to the internet. And both require people and electricity (I'll bet Amazon spends more on electricity every day than you or I will in an entire lifetime to keep them working properly.

Per copy, ebooks are cheaper than paper books, but they are not free.

These days servers (power, maintenance, etc) and bandwidth is next to free. Thus the per-copy cost of an ebook is virtually nil compared to the very real costs of a physical copy (material, printing, shipping, storage, etc).

[taustin]

Originally Posted by TFeldt

Aye, but I was never debating the per-title costs. I have absolutely no idea what those might be so I'd be speaking in utter ignorance if I did. What I responded to was the following statement;


These days servers (power, maintenance, etc) and bandwidth is next to free. Thus the per-copy cost of an ebook is virtually nil compared to the very real costs of a physical copy (material, printing, shipping, storage, etc).

These days servers (power, maintenance, etc) and bandwidth is next to free. Thus the per-copy cost of an ebook is virtually nil compared to the very real costs of a physical copy (material, printing, shipping, storage, etc).[/QUOTE]

Amazon is known to have spent $56 million on servers with Rackable Systems in 2007, and $86 million in 2008, when they bought more servers than Microsoft.

You have a funny definition of "virtually nil"

Plus, what I was responding to was Rob Lister's claim that the cost is nil, not virtually nil. The typical data center uses megawatts of electricity, servers have limited lifespans, and system engineers do not work for free. You can play accounting games with how you track the expenditures, but there most certainly is a per copy cost to selling ebooks.

And, once again, the cost of putting ink on paper and getting the book in to your local store accounts for only about 10% of the retail price. Really.

[Pinecone]

Originally Posted by HarryT

It's a question of whether it's commercially viable to produce a book at $1 per copy. If your costs are $2 a copy, it clearly isn't.

Agreed.

But at $3 a book ($2 to produce, $1 profit), piracy is less appelaing than at $14 a book.

[Fbone]

Also have to add in multiple downloads of the ebook. Syncing across several devices. Saving notes, annotations and bookmarks. Possibly lending.

[TFeldt]

Originally Posted by taustin

Amazon is known to have spent $56 million on servers with Rackable Systems in 2007, and $86 million in 2008, when they bought more servers than Microsoft.

You have a funny definition of "virtually nil"

Like I've said in the posts above; amazon provides the largest virtualization service in the world in addition to running some of the world's most accessed services. Kindle is even a drop in the bucket compared to the total amount of resources required for the amazon network. If you're trying to say that $142 million is anything but an investment in said architecture then you'd be wrong.

You can't count investments as losses or the world would simply stop. If they hadn't expanded their network then they would have to close down profitable services, which wouldn't make any fiscal sense. What is relevant to this discussion is how much it costs to use said architecture in order to deliver a book, that's the per-copy charge, since their network would exist whether or not amazon was doing kindle.

And like I said, if I (a one man shop in sweden) can deliver a book for $0.00004 with various middle-men taking their cut then you can be certain it's many, many magnitudes cheaper for amazon. Any other numbers you toss out is just disinformation ignoring these basic facts.

And, once again, the cost of putting ink on paper and getting the book in to your local store accounts for only about 10% of the retail price. Really.

Not arguing that, never said it cost outrageous amounts to sell pbooks. What I said is that the per-copy cost per ebook can't be honestly compared to the cost of a pbook. Let's say the pbook is a hardcover at $15 msrp. So that'd be $1.5 cost for that particular book according to your percentage. The cost of an ebook (delivered by my network) would be 0.000026% of that. Would you call that even remotely comparable?

[HansTWN]

Apart from the fact that you forgot the overhead (and that if the ebook is sold at an incredibly cheap price then very few pbooks will be sold and all overhead costs have to be paid for by ebooks), since when is there always a direct relationship between unit cost and selling price? They charge what they can get.

[xg4bx]

Originally Posted by murraypaul

I'd agree with another poster that, for me, it already has.
Most of the books I've bought have been 99c. Some at $1.99 and a couple at $2.99. I don't think I've gone above that. I let the Amazon recommendations system guide me and act as my not-crap filter, and it has worked pretty well.

i dont know where the myth that a large portion of indie stuff is crap comes from. i exclusively buy indie novels and have yet to buy one that i consider garbage. those sample chapters they give are pretty damn helpful.

the most i'll currently pay for an ebook is $5 and thats for what i consider high end indie authors like BV Larson and Vaugh Heppner. new authors? 99 cents to $3 is fair.

as for major publishers i think the ebook should cost no more than their lowest cost print version which is usually an $8 mmpb. i think thats a nice fair price that everyone can live with.