Authors Group Urges Opposition to E-Book Settlement

[stonetools]

Originally Posted by fjtorres

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.

I'm afraid your analysis is faulty. Amazon's strategy is to sell ebooks AS A WHOLE at loss, in order to draw customers so that they can sell NON-BOOK items at a profit. Now, as the suit progresses, it may come out that Amazon makes money on ebooks over all. But most business analysts think Amazon is losing money on ebooks over all. Since Amazon doesn't realease sales figures, we don't know for sure, but that's the way to bet.

[stonetools]

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. 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.

However, bestsellers are a major part of the REVENUE a book store makes. On this forum, people constantly confuse sales with revenue. They aren't the same.

[Edward M. Grant]

Originally Posted by stonetools

Barnes and Noble also weighs in againstthe settlement:

I don't remember B&N complaining when they were undercutting independent book stores and putting them out of business.

[Dopedangel]

Originally Posted by stonetools

I'm afraid your analysis is faulty. Amazon's strategy is to sell ebooks AS A WHOLE at loss, in order to draw customers so that they can sell NON-BOOK items at a profit. Now, as the suit progresses, it may come out that Amazon makes money on ebooks over all. But most business analysts think Amazon is losing money on ebooks over all. Since Amazon doesn't realease sales figures, we don't know for sure, but that's the way to bet.

Thats not the real strategy Amazon real strategy to keep selling at low prices to kill the competition and then dictate term in the future and make a lot of money.
They have already killed the book store a few years down the road they can and will ask authors or publishers more for even putting up their books on Amazon.

[murraypaul]

Originally Posted by stonetools

I'm afraid your analysis is faulty. Amazon's strategy is to sell ebooks AS A WHOLE at loss, in order to draw customers so that they can sell NON-BOOK items at a profit.

Care to offer some evidence of that?

Now, as the suit progresses, it may come out that Amazon makes money on ebooks over all. But most business analysts think Amazon is losing money on ebooks over all. Since Amazon doesn't realease sales figures, we don't know for sure, but that's the way to bet.

Oh, so actually you have no idea if it is true or not, but still state it as a fact?

[AnemicOak]

Originally Posted by stonetools

Barnes and Noble also weighs in againstthe settlement:

LINK

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

Makes sense that they'd be against it. If agency pricing helped anyone it helped B&N.

[Edward M. Grant]

Originally Posted by Dopedangel

They have already killed the book store a few years down the road they can and will ask authors or publishers more for even putting up their books on Amazon.

We have plenty of book stores around here. Last I read indie book stores were booming after Borders collapsed.

And according to the numbers I've seen posted around the web, Amazon's market share in e-books has dropped from around 90% to around 60% over the last couple of years.

[BeccaPrice]

I notice that all the charts that show that book prices are falling take into consideration all the self-published 0.99 wonders. I'd like to see an honest chart, that showed the prices of books from the big 6 - betcha that would show a substantial increase.

[stonetools]

Originally Posted by murraypaul

Care to offer some evidence of that?



Oh, so actually you have no idea if it is true or not, but still state it as a fact?

Hey, I was following ftorres' lead. He seemed dead certain about Amazon's "basket price" strategy. At least I qualified it by talking about the consensus about business analysts.

[crossi]

How can they engage in "vigorous competion on price" when all prices are required to be the same? What exactly are they talking about?

[stonetools]

Originally Posted by crossi

How can they engage in "vigorous competion on price" when all prices are required to be the same? What exactly are they talking about?

The idea is that the publishers, not the retailers, competed on price.

[JoeD]

Originally Posted by stonetools

I'm afraid your analysis is faulty. Amazon's strategy is to sell ebooks AS A WHOLE at loss, in order to draw customers so that they can sell NON-BOOK items at a profit. Now, as the suit progresses, it may come out that Amazon makes money on ebooks over all. But most business analysts think Amazon is losing money on ebooks over all. Since Amazon doesn't realease sales figures, we don't know for sure, but that's the way to bet.

Didn't the DoJ consider that in their filings and state that whilst amazon do sell some books at a loss, their overall book side of the business is turning a profit and can stand on its own two feet, it's not subsidised by the other sides of the business?

Pretty sure I read that, but it has been a while since I read the filings.

[JSWolf]

Originally Posted by stonetools

I'm afraid your analysis is faulty. Amazon's strategy is to sell ebooks AS A WHOLE at loss, in order to draw customers so that they can sell NON-BOOK items at a profit. Now, as the suit progresses, it may come out that Amazon makes money on ebooks over all. But most business analysts think Amazon is losing money on ebooks over all. Since Amazon doesn't realease sales figures, we don't know for sure, but that's the way to bet.

But part of the new system is eBooks cannot be sold at a loss. Amazon would have to make money on them.

[stonetools]

Originally Posted by JoeD

Didn't the DoJ consider that in their filings and state that whilst amazon do sell some books at a loss, their overall book side of the business is turning a profit and can stand on its own two feet, it's not subsidised by the other sides of the business?

Pretty sure I read that, but it has been a while since I read the filings.

Amazon CLAIMS that. I'm not sure the DOJ signed on to that claim in its filings. Most business analysts don't buy it.

At the end of discovery, we'll know for sure.

[stonetools]

Originally Posted by JSWolf

But part of the new system is eBooks cannot be sold at a loss. Amazon would have to make money on them.

Even those who favor Amazon thinks that provision is flawed and will be easily circumvented.

One pundit :

My second concern relates to the terms of the proposed settlement with three publishers which the Court is being asked to approve. In apparent partial recognition of the dangers of discounting by retailers, particularly the deep-pocketed Amazon, the settlement limits a store’s discounting to the total amount of margin it earns from a publisher within a year. As I understand it, that means that if a store were to sell $10-million of a publisher’s books in a year, the store could not discount more than the $3 million margin (assuming a 30% agency “commission”) it would have earned across all the sales it made.

This isn’t bad as a principle, and perhaps some variation of it could even address the concern I express about enabling publishers to sell direct. However, translating the principle into action is complicated. It will require reliable data collection, forecasting, and some means of enforcement. I see none of those elements spelled out in the settlement agreement.

At a minimum, it would seem that ebook retailers would have to report actual sales prices of all relevant transactions to the publishers, or have them summarized in a clearly defined and agreed-upon way. This is not data that any retailer, to my knowledge, now shares with its trading partners although, of course, the publishers monitor prices for compliance with publisher-set agency prices.

But even with the data being provided, when one comes to the last period of the year it will require forecasting and close monitoring to keep track of where things stand in every instance where a retailer is anywhere close to its contractual limit with any publisher.

And, then, what is the penalty if a retailer exceeds its discounting allowance? And who gets compensated? The publisher? Other competing retailers? The other publishers whose sales were compromised by the excessive discounts given to a competitor’s ebooks?

LINK