Authors Group Urges Opposition to E-Book Settlement

[AnemicOak]

Originally Posted by Edward M. Grant

Yes and no. Compared to the other online book stores I've visited, Amazon is magic;

Yes, but what I mean is it's likely that eventually someone else will come along and do something better something that resonantes with a number of customers who then start buying more and more there and less from Amazon. It's also so good, because so many others are sooo bad at this point (something that could change). Hell some of them can't even handle a simple author or title search well.

Amazon's site isn't perfect by any stretch, but they do quite a bit right and as a company they are cutomer service obsessed (not that their CS is perfect) and try to give everyone a good experience.

whereas until I downloaded a couple of thousand free e-books Amazon's algorithm was very good at recommending books I'd never heard of that I'd like to buy.

Yes, I'm right there with you. I discovered quite a few books/authors that way, but it's now not nearly as good with all the free books people are downloading just because they're free.

[Xoanon]

Originally Posted by tubemonkey

It's called progress. Do you guys still use buggy whips?

I used to feel pretty ambivalent about the fate of publishers, authors, and booksellers in this new digital age. With the never-ending stream of self-pitying whining they come out with however, I'm now rubbing my hands with glee and actively looking forward to the day they all go out of business so I won't have to listen to it any more.

Good riddance to the lot of them.

[tubemonkey]

Originally Posted by Xoanon

I used to feel pretty ambivalent about the fate of publishers, authors, and booksellers in this new digital age. With the never-ending stream of self-pitying whining they come out with however, I'm now rubbing my hands with glee and actively looking forward to the day they all go out of business so I won't have to listen to it any more.

Good riddance to the lot of them.

[Fbone]

Originally Posted by AnemicOak

Yes, but what I mean is it's likely that eventually someone else will come along and do something better something that resonantes with a number of customers who then start buying more and more there and less from Amazon.

It will be difficult for new companies to enter knowing that they will have to sell almost every single bestseller at a loss to match Amazon. Also, Amazon will price match aggressively to gain complete price advantage.

[HansTWN]

Originally Posted by Fbone

It will be difficult for new companies to enter knowing that they will have to sell almost every single bestseller at a loss to match Amazon. Also, Amazon will price match aggressively to gain complete price advantage.

Well, if Amazon keeps the prices for bestsellers below cost for eternity, then yes. In that case consumers benefit and I don't see what the scary thing about the "monopoly" would be. But the scenario some are painting here is that they will then raise the prices to clean up --- which again would make it very easy for someone else to come in and compete with them. So, which one is it?

Besides, I don't think Amazon will sell below cost now --- they don't enjoy the generous margins on the Kindle hardware anymore. And in the past a major part of the strategy was to get people to switch to ebooks. A major part of the market has switched already by now. So most probably they will sell at cost or slightly above it.

[plib]

Originally Posted by SteveEisenberg

Since the breakup of medieval guilds, there haven't been a lot of retail near-monopolies. One obvious example is state-run alcohol monopolies. But retail monopolies are indeed rare, which is why I take examples from other industries, like transportation.

Which was kinda my point. It's virtually impossible to have a monopoly in retail, so comparisons to other high barrier to entry industries, or even transportation, are pretty meaningless.

[plib]

Originally Posted by Xoanon

I used to feel pretty ambivalent about the fate of publishers, authors, and booksellers in this new digital age. With the never-ending stream of self-pitying whining they come out with however, I'm now rubbing my hands with glee and actively looking forward to the day they all go out of business so I won't have to listen to it any more.

Good riddance to the lot of them.

Well, authors are pretty much a requirement wouldn't you say? Though not the Authors Guild, I agree. The other two are in for a big shakeup.

[tubemonkey]

Originally Posted by HansTWN

Besides, I don't think Amazon will sell below cost now --- they don't enjoy the generous margins on the Kindle hardware anymore. And in the past a major part of the strategy was to get people to switch to ebooks. A major part of the market has switched already by now. So most probably they will sell at cost or slightly above it.

I'm with you here.

Another strategy they had was to collect advertising revenue from the Kindles. In order to fend off opposition, they sold those Kindles at a cheaper price and added further incentives with special offers only available on those Kindles. Now that ad supported Kindles are widely accepted, the special offers are no longer needed to entice buyers and the program seems to have ended. I see non-ad Kindles being phased out in the not too distant future.

[Fbone]

Originally Posted by HansTWN

Well, if Amazon keeps the prices for bestsellers below cost for eternity, then yes. In that case consumers benefit and I don't see what the scary thing about the "monopoly" would be. But the scenario some are painting here is that they will then raise the prices to clean up --- which again would make it very easy for someone else to come in and compete with them. So, which one is it?

If someone does enter the market, Amazon within minutes can undercut their prices. Amazon price matches now and there is a good chance they would continue to do so. It would be difficult for someone to start an ebook retailer knowing Amazon's past behavior.

Besides, I don't think Amazon will sell below cost now --- they don't enjoy the generous margins on the Kindle hardware anymore. And in the past a major part of the strategy was to get people to switch to ebooks. A major part of the market has switched already by now. So most probably they will sell at cost or slightly above it.

I believe Amazon has already stated they will lower prices on some bestsellers to $9.99. Whether that will be a permanent move or not I don't know.

[cfrizz]

Originally Posted by plib

Which was kinda my point. It's virtually impossible to have a monopoly in retail, so comparisons to other high barrier to entry industries, or even transportation, are pretty meaningless.

Bingo! I'm beyond tired of reading all this non-existant doom & gloom all because the BPH don't want to join the 21st century.

Has technology changed the music industry? Absolutely...for the better, since I can buy ONLY the songs I want without having to buy an entire album full of crappy songs, all from the comfort of my home. What's not to like? Yet I don't see anyone accusing Amazon of having a monopoly on music.

The same will be true with ebooks. I love Amazon for everything EXCEPT their readers & their ebooks! And I buy lots of ebooks.

I don't have room to store endless amounts of books I ran out of room YEARS ago & stopped buying them. Well in the 2 years since I got my ereaders, I have acquired over 500 books & none of them from Amazon.

The BPH are just going to have to deal with the fact that the simplicity & ease of ereaders is going to take over & all their feet dragging is not going to put the genie back in the bottle.

They all *itch about Amazon, but THEY are the ones who have broken the law trying to maintain THEIR monopoly!

[rhadin]

Originally Posted by HansTWN

Well, if Amazon keeps the prices for bestsellers below cost for eternity, then yes. In that case consumers benefit and I don't see what the scary thing about the "monopoly" would be. But the scenario some are painting here is that they will then raise the prices to clean up --- which again would make it very easy for someone else to come in and compete with them. So, which one is it?

It is both. When Amazon is threatened by competition, it sells at a loss and lets other parts of its business pay the bills. As soon as the competition disappears, Amazon increases prices so that ebooks support themselves. Then when someone else comes along who tries to undersell Amazon and be competitive, Amazon cuts prices to below cost again and lets other parts of its business support the ebooks. When the new competitor goes out of business because it can't sustain the losses, Amazon raises its prices so that ebooks support themselves. When a new competitor comes along and tries to compete with Amazon, Amazon cuts prices to below cost . . .

This is how it is done. This is how Amazon is likely to act because shareholders will demand profits. Is it guaranteed that Amazon will act this way? No, but how likely is it based on current practices that Amazon will let someone undercut it? Not likely at all.

[crossi]

Best sellers are a very small part of the books a store sells. Yes some popular items are put on sale slightly below cost by Amazon but not the vast majority of the books they sell. If the other booksellers wanted to sell all books except those few on the current bestseller list they could easily match Amazon's prices and still stay in business.

[fjtorres]

Originally Posted by jgaiser

You've lost me. So increased ebook sales is bad for authors and publishers?

Actually, for authors stuck with traditional publishing contracts who accepted the "standard" term of 15-25% of "net" ebook revenues (where "net" is usually decided arbitrarily by the publisher) ebook sales generate significantly less royalties than pbooks. And the effect is magnified with the so-called "Bestseller" authors; ebooks can easily generate 39% less than pbooks. Basically, those folks negotiated higher pbook royalties but at the expense of lesser ebook terms, thinking ebooks would never amount to anything.

Ooops!

Kris Rusch has discussed the numbers repeatedly at her website, in different contexts, but one of the best is from last fall:
http://kriswrites.com/2011/11/16/the...-making-money/

I’ve done this math before, but it’s worth doing again for those of you who fail to get it. This time, let’s just use a $6.99 price point as our example, and a 25% of net e-book royalty rate from the traditional publisher, and let’s ignore the problem of “net” entirely.

At $6.99, the writer is entitled to $1.22 of that book. Subtract the standard agent’s commission of 15% and the writer gets $1.03.

On that $6.99 sale, Amazon gets $2.09, the publisher gets $3.67, the agent gets $0.18, and the writer gets a whopping $1.03. The only person who gets paid less than the content creator here is the agent, and that’s because the agent got 15% of the writer’s take.

...

In the past, the past the writer got 50% of cover price on e-books. So even if the publisher or Amazon sold that book at a discount, the writer still got 50% of the original cover price. Meaning that a $6.99 e-book sale gave $3.49 to the writer. No matter if the publisher only sold the book for the discounted price of $3.99.

Cover price is still the gold standard for royalty rates on print books. Only a few smaller traditional publishing companies pay writers based on net receipts, and in those contracts, “net” is clearly defined as what the publisher receives from the distributor (be that an actual distributor or a bookstore).

The subject of the column, BTW, is how "Traditional Publishers are making money", specifically how they make more money off ebooks than pbooks. And the answer is the extra money comes from "lower costs", where lower costs includes (legally) shorting their authors.

So, with those contracts in place it is easy to see why Traditionally Published authors see "More ebook sales" as "less money for me!". They are, sort-of, being victimized.

What is less easy to see is why they continue to stridently defend their victimizers.

Stockholm Syndrome, anyone?

[fjtorres]

Originally Posted by crossi

Best sellers are a very small part of the books a store sells. Yes some popular items are put on sale slightly below cost by Amazon but not the vast majority of the books they sell.

Pretty much. The Anything-but-Amazon crowd focuses on their discounted sale prices but conveniently forgets the books that *don't* get discounted.

Amazon's business is built off basket pricing: just like supermarkets, they advertise sale items to draw traffic and try to "co-sell" other lower-discount items so they make a net profit on the whole basket of products sold.

Theoretically, if *everybody* only bought sale items *ever*, Amazon would be bled dry by the practice and would have to raise prices. But since in the real world consumers *don't* behave that way, basket pricing delivers net profits to Amazon. 17-plus years of evidence proves it does.

It seems some people are simply incapable or unwilling to accept that even if Amazon always sells *some* books at a loss doesn't mean they *always* sell *all* books at a loss.

Sophisticated 20th century marketting practices are hard to grasp, I know.

[stonetools]

Barnes and Noble also weighs in againstthe settlement:

Barnes & Noble says that before publishers enacted agency pricing, it could not compete against Amazon: “[a]s a result of Amazon’s pricing (which priced most bestselling books sold by Barnes & Noble below Barnes & Noble’s, and Amazon’s, direct costs), Barnes & Noble was losing substantial money in an effort to compete with Amazon’s pricing, and was unable to gain significant market share.”


Under agency, “publishers have engaged in vigorous competition on price, which, contrary to the superficial pricing analysis in the complaints before the Court, has resulted in lower e-book prices,” B&N says, presenting a chart that shows “average e-book price (weighed by units sold)” between August 2009 and February 2012.

LINK

If you click through , you'll find BN has charts, even.