Amazon vs. Hachette Update - It's About Price

[tubemonkey]

Originally Posted by leebase

Apple certainly is in the "margin" business...as in "make a profit"....as are all book sellers save Amazon. It is not in the publishers best interest for Amazon to drive profits out of the book business.

Let the customers decide with their wallets. If Amazon is so sure that certain publishers price their books "too high" -- let the market teach them. All the indie publishers and "wiser" traditional publishers will price cheaply, and the stupid publishers will just go out of business because they, unlike Amazon, don't know the worth of a book.

Apple is in the "high" margin business. There is a difference. As to Amazon, they took a loss on some ebooks. Overall, they still made a profit on ebook sales.

Under wholesale, the publishers made more than they did under price fixing. If Agency is such a wonderful pricing scheme, then why don't they do it for print books?

[tubemonkey]

Originally Posted by leebase

Because there is a predator that is threatening to destroy the book retail business.

Well, the courts took care of that predator and slapped Apple down.

[leebase]

Originally Posted by tubemonkey

Well, the courts took care of that predator and slapped Apple down.

A travesty for sure.

[mrscoach]

Originally Posted by tubemonkey

Apple is in the "high" margin business. There is a difference. As to Amazon, they took a loss on some ebooks. Overall, they still made a profit on ebook sales.

Under wholesale, the publishers made more than they did under price fixing. If Agency is such a wonderful pricing scheme, then why don't they do it for print books?

I've always wondered why, if agency was best for them, they didn't do it for pbooks. Maybe never it wasn't so great overall? It just showed me they were trying to undermine ebooks.

[DuckieTigger]

Originally Posted by darryl

Very interesting link. I hadn't seen this take on things before and don't think it is correct, though I can't think of anything that absolutely blows it out of the water. However, based on what Amazon is saying, everyone generally makes more money at a $9.99 price point. Also, Apple and Google are already well and truly in the EBook business. Microsoft is playing catchup just about everywhere. It is difficult to believe that fear of Apple, Google and Microsoft is such that Amazon's whole market strategy is to keep margin's unattractively low. In fact, margins seem to be quite healthy. Amazon is a formidable competitor and would continue to be so even in an aggressive price war with Apple, Google or Microsoft, not that I expect that to happen.

There is a few things in the link that, while not by itself incorrect, stretch the truth still.

First Amazon does not use predetory pricing for the ebook division (that would be illegal, they never been found guilty of). The losses on some titles are recovered with other titles. The profit margins are NOT marginal per title, only because the ebook division makes only little profit overall. The margins are either a loss or a good profit depending on title.

Second the assumption that a competitor can just as easily discount as Amazon and overall make a profit is not true. If it wasn't for Amazons "secret sauce" in marketing and presenting their books, the losses from certain titles would be hard to recover from other titles. Stating that it is cheap to start an ebook store and then mentioning Apple, Google, and Microsoft is strange.

Third is the fear of monopoly. There is nothing illegal (in the US at least) to have a monopoly. It is not even illegal to crush all competitors to become a monopoly. The only thing that is illegal would be to abuse a monopoly to screw over the consumers. Morally wrong and unethical to stomp competitors into the ground? Yes, most definitely, but that is part of competing.

And the last thing the post assumes is that Amazon will be put out of business if others enter and they lose market share. Guess what? If all prices were the same in every ebook store it would only result in higher profits overall for Amazo even with a smaller market share. Lack of discounting is not necessary the death sentence of Amazon.

[Josieb1]

I'm not informed on all this but I just don't understand why Amazon doesn't let Hachette do what it wants and let the readers decide.

[tubemonkey]

Originally Posted by Josieb1

I'm not informed on all this but I just don't understand why Amazon doesn't let Hachette do what it wants and let the readers decide.

Because Amazon wants the freedom to adjust prices as they see fit. Agency won't allow it.

[crossi]

Originally Posted by Josieb1

I'm not informed on all this but I just don't understand why Amazon doesn't let Hachette do what it wants and let the readers decide.

Because if Amazon determines through monitoring of their customers, i.e. how many customer click on a book link but don't buy, how many have that book on their wish list and don't buy and for how long, ect that they would make more profit overall on that title by selling at a lower price, the Agency contact would prevent that. Amazon is very good at finding the price that generates the most income for the items they sell. Agency type contacts interfere with their business and hurt both their profits and the authors' and publishers' profits.

[DuckieTigger]

Originally Posted by Josieb1

I'm not informed on all this but I just don't understand why Amazon doesn't let Hachette do what it wants and let the readers decide.

Goes both ways, why doesn't Hachette let Amazon do what they want? They need to find something they both agree on. Negotiations take time:

How Long the Amazon-Hachette Dispute Could Last

Kensington’s CEO Steven Zacharius recently disclosed to the Wall Street Journal that he negotiated with Amazon for 18 months before settling on a contract.

Originally Posted by tubemonkey

Because Amazon wants the freedom to adjust prices as they see fit. Agency won't allow it.

Except right now agency model would be unfair for Amazon unless they also put a MFN clause in. Otherwise Apple could underprice them since they have the right to discount at the moment. If they said that they wouldn't take advantage of it is irrelevant. Hachette is not going down that rabbit hole down again if they can help it.

[DuckieTigger]

Originally Posted by rhadin

The real question, I think, is can publishers price books too high for their market.

That is not the real question yet, imo. Because that one is easy to answer: YES.

At what point will a consumer not spend the money? I can't answer that as I am atypical.

That one is the real question that, I think, you are trying to find an answer to. It is maybe not so much about not spending the money, but whom to give it to when buying books. I can't answer that either, as I am not typical either. For me it is not shopping for a certain book and try to find the best price, but rather I shop in my price range and look for the best book I can find there. I am aware that this limits my choices of books. OTOH, if I only look where I can afford, than I never see anything that is too expensive.

(I spend several hundred dollars a month on books and see no reason why [my wife] should be treated any differently.)

My point is that I won't voluntarily spend 10 cents on other entertainment media, but don't think twice about buying a book I want. That's because I'm a reader and not a movie-goer or gamer.

As you mentioned, you are also in the unique position to be able and willing to afford several hundred dollars a month on books. I do not even have that much free money to spend each month on luxuries. My needs are different than your needs in that matter. That is the main reason I signed up with Kindle Unlimited. On average I am able to spend less money on books per month than before. And still I can read more and without having to wait. No excuse prevents me or my wife from reading a book that might have had to wait previously because of money.

[DuskyRose]

Originally Posted by DuckieTigger

As you mentioned, you are also in the unique position to be able and willing to afford several hundred dollars a month on books. I do not even have that much free money to spend each month on luxuries. My needs are different than your needs in that matter. That is the main reason I signed up with Kindle Unlimited. On average I am able to spend less money on books per month than before. And still I can read more and without having to wait. No excuse prevents me or my wife from reading a book that might have had to wait previously because of money.

I've gone from paper to digital several years ago, having already dabbled in reading ebooks and fanfic on digital devices since about 1998.

Before going digital I joined an on-line book trading site, and have now traded out most of my books since going mostly digital. (Trade out the paper, sell the credit, buy ebooks with the money.) Some of the old-timers at the site have gone digital, but between those that do digital, and those that swear they won't, is pretty much the same complaint.

Ebooks are too high in a lot of cases. Because they already have a good handle on the secondary market that gets them what they want.

Now, those that have gone digital find the good deals, the freebies, the coupons, to still get their books at not much more (or a lot less) than it was costing them to trade books for the cost of postage. Many have found new authors by trying freebies they may not have gotten in paper format. All seem to have their price limits, and it's no where near anything over $9.99 for ebooks. For many, that's also too high.

For those not wanting to ever go digital, they usually mention the number one reason is the price. Besides the cost of some sort of eReader, (which many would find hard to afford, and some just don't want to mess with.) the new release prices scare them away and they don't bother looking at the free stuff after that.

The fact is that many people are (and have to be) money conscious, and they find trading used books an option they can afford, and are willing to wait for the new releases to hit the secondary market and wait in line for them.

But those books don't earn the author or publisher anything beyond the First Sale. The site has facilitated the trade of over 4 million books that didn't do a thing for the Publishers.

Yet, since going digital, I've bough more books the last few years, at cheaper prices, and that money goes to the Authors and publishers. All because the price is low enough that I can weight the cost of getting the book used as opposed to buying it digital. Because there are very, very few authors I'll pay over $7 for. Yes, I'm mindful that while I do re-read, and do want some as keepers, that I can't turn around and trade that ebook out to get another book, like I can at the trade site.

I'm surprised that the secondary market never seems to be discussed when it comes to the Publishers trying to get customers. There are a lot of people who'd be tempted to go digital if the price was right for them. And availablity for backlist books was a lot better.

I would think there would be a lot of money there if they get the balance right.

[TCSimpson]

This was a good read.
http://www.leegoldberg.com/my-letter...uglas-preston/
What I found interesting that not many here have addressed, and those who basically dislike or hate Amazon don't seem to even acknowledge is:

You wrote in your ad: “As writers–most of us not published by Hachette–we feel strongly that no bookseller should block the sale of books or otherwise prevent or discourage customers from ordering or receiving the books they want.”

Does that same sentiment also apply to the brick-and-mortar bookstores, from big chains to indies, that refuse to stock paperback books from Amazon Publishing’s imprints Thomas & Mercer, 47North, Montlake, etc? If so, why don’t I see the same level of outrage from Authors, or the Authors Guild, over this widespread ban, which has been going on for years and harms hundreds of authors?

[petrucci]

Originally Posted by DuckieTigger

You mean pbooks and ebooks? Why should a book be cheaper than a movie ticket? With a movie ticket you get to see the movie exactly once and it takes only about 2 hours. A regular book takes much longer to read and entertain you, and you can read it as often as you want. A little bit different once the dvd comes out - that is usually more expensive than the movie ticket and pretty close to a hardcover book in price.

The reason that an e-book should be cheaper than a movie is that it is much cheaper to produce. Movies involve innumerable people including writers, makeup, props, set design, special effects, actors, directors, cinematographers, sound, musicians, lawyers, insurance, and the list goes on. An electronic book should cost a very small fraction of the cost of movie ticket.

I certainly do not view e-books as similar to dvds. The latter you can resell. Most e-books cannot be resold.

[SteveEisenberg]

Originally Posted by petrucci

The reason that an e-book should be cheaper than a movie is that it is much cheaper to produce.

Note that just 659 theatrical films (produced in all countries) were released in the United States last year.

This compares to 15,000 plus titles annually released by Penguin Random House alone, and not including the Author Solutions self-publishing subsidiary.

Right now I am reading this Simon & Schuster autobiography of a man who escaped North Korea:

http://books.simonandschuster.com/De.../9781476766577

This kind of book has such a small audience compared to a theatrical film that there would be no hope of recouping costs at the price point you suggest. Having said that, it will indeed be much cheaper than a movie ticket -- in a couple years.

You may say that you read bestsellers. But the great majority of big publisher bestsellers sell far fewer copies than the number of people who watch the average big studio film. Even if the price of the book was 99 cents, more people would watch the film, because most people read few books. Unless you want no non-indie books to exist, the lower sales numbers have to considered in the book price charged during the first year or so after release.

[Crusader]

Here's Hachette's CEO's response to people who complied with Amazon's request to email him: http://www.digitalbookworld.com/2014...the-way-we-do/