WSJ: E-Book Sales Fall After New Amazon Contracts

[fjtorres]

Originally Posted by DuckieTigger

So if nothing changed concerning how and how much pbooks are discounted, then the decline in ebook sales is due to the move back to agency alone?

Not exactly.
It is due to high prices--which Amazon (and other retailers) no longer can temper with promotional discounting.

BPH ebook pricing has been steadily rising--even without agency--for two years now, roughly the time that the Tradpub apologists have been saying "ebook sales have plateaued". Average BPH prices had crept up over a dollar since 2013 even before Agency kicked in.

(We had that discussion earlier this year in one of the author earnings threads.)

What Agency has done is jack them up even more--often substantially--well above the buy-no buy threshold of many readers. There will always be true fans that will pay anything to get a specific author's book but for every one of those there are many who won't. Book buying is discretionary spending.

The BPHs problem is they see everything through the dual prism of high overhead (loads of high salaried VPs doing very little value add and glass tower rents are just two areas beyond cuts) and, much worse, the metric of reader-spend.

Their obsession is to squeeze every last buck possible from the readers even if, in the end, they don't get any of the added money. (Which is what happened with the conspiracy--they jacked up prices by two bucks or but they themselves got less per book.) In their blind gross-obssessed world view, discoubting $10.99 ebook to $9.99 is a whole dollar they can't report in their quarterly report and not at all the reason they got to report the other ten dollars.

They are now starting to reap the fruits of that thinking.
Even their pet pundits like Shatzkin are starting to belatedly realize there really is a line where even a small increase loses you the whole sale. That squeezing readers for money that never gets to the bottom line (because you lose it in warehousing, transportation, pulping, or inventory taxes or because you forced the retailer to keep it) is simply a self-defeating policy.

For years the BPHs have been fighting Amazon even though Amazon is trying to help them sell more books (more readers for their authors? Boo!) and make them more money because they already get too much of their via Amazon.

What they failed to notice is that Amazon doesn't need them as much as they needed them in 2010. Amazon prosperity, especially in ebooks, is no longer tied to BPH prosperity. They can use new tactics to prosper despite--or from--BPH losses.

Which is what they are doing.

The BPHs want people buy their titles as low-margin pbooks instead of high margin ebooks? Fine, Amazon will make sure they sell those pbooks and not B&N or BAM or Walmart or the airport shops. It certainly won't be Apple or Google or Kobo. Less BPH ebook sales means less money for Apple, Google, and Kobo. More money for Amazon, though. And more money for Indies and other, non-agency tradpubs.

Oh, and it also means a bigger share of the total market for Amazon.
And a bigger BPH dependency on Amazon.

As I said: self-defeating.

[DuckieTigger]

Originally Posted by fjtorres

Not exactly.
It is due to high prices--which Amazon (and other retailers) no longer can temper with promotional discounting.

That is the move back to agency. Only way is to increase prices. There would be little reason to go to agency and reduce the prices - that would be admitting that Amazon has been doing it right all along in how they set prices. I think that is the last thing the BPH want to admit openly.

[fjtorres]

Originally Posted by darryl

There are of course other sources of Indies, and I haven't seen reports on how these are going. However, Amazon in a sense pioneered this market and I suspect their share of it is likely a very large proportion indeed.

There is one source that was apparently credible enough for the AU/AG whiners to forward to the DOJ: according to the gold-plated ones, Amazon commands 85% of Indie ebook sales.

According to a survey a few months back, they control 90% of the ebook subscription service market, small though it may be (relatively speaking). That last is critical because KU is already delivering more rental income to Indies than they make in sales at Nook et al.

That is not healthy.
If those folks don't get their Indie sales act in gear things will get dangerous by next year.

[darryl]

Originally Posted by fjtorres

There is one source that was apparently credible enough for the AU/AG whiners to forward to the DOJ: according to the gold-plated ones, Amazon commands 85% of Indie ebook sales.

According to a survey a few months back, they control 90% of the ebook subscription service market, small though it may be (relatively speaking). That last is critical because KU is already delivering more rental income to Indies than they make in sales at Nook et al.

That is not healthy.
If those folks don't get their Indie sales act in gear things will get dangerous by next year.

I agree. In fact, I think things are even worse. To me KU is the only subscription service with a sustainable business model. As I understand the position, and please feel free to correct me if I am wrong, the others subscription services are essentially paying the Big 5 an equivalent amount to a sale for every borrow. Which of course is simply not sustainable. Big Publishing still, despite everything, seems to want to foster the sales of nothing but print books, preferably hard covers. Not ebooks. Not subscription services. In fact, not any innovation whatsoever.

It was no accident that Amazon started KDP at the same time as they launched the first Kindle. Whilst I doubt they had KU in mind, I'm sure they did foresee the boom in self-publishing if the Kindle did take off, and of course the value of a supply of relatively cheap ebooks free of the BPH. To be both competitive and sustainable, other subscription services will need either real support from the BPH, or a source of Indies, or preferably both. Amazon, of course, has a lot of its Indies on exclusive terms. Competing subscription services may need to entice some of these Indies to go non-exclusive. Or, of course, go with a competing self-publishing platform. Maybe partner with or buy one of the existing ones and pump money into it. A difficult task and maybe an impossible one against one of the most innovative and aggressive competitors on the planet.

[Phogg]

Originally Posted by fjtorres

There is one source that was apparently credible enough for the AU/AG whiners to forward to the DOJ: according to the gold-plated ones, Amazon commands 85% of Indie ebook sales.

According to a survey a few months back, they control 90% of the ebook subscription service market, small though it may be (relatively speaking). That last is critical because KU is already delivering more rental income to Indies than they make in sales at Nook et al.

That is not healthy.
If those folks don't get their Indie sales act in gear things will get dangerous by next year.

So they are back to being the Menendez brothers.

It's (sob) ... not healthy for there to be one big survivor of our scorched earth conspiracy that got our hand slapped by the courts.
(Sniffle)...there is little competition because only one of the major ebook distributors survived our price fixing scheme....

Boo hoo hoo hoo.

[Purple Lady]

Originally Posted by pdurrant

Personally, I bought loads from Fictionwise before agency pricing, and almost nothing afterwards. I remember comments from many other customers along the same lines.

I used to buy a lot from Fictionwise before agency too. After agency I specifically looked for Random House titles because they didn't join in right away. After Random House joined in, you couldn't buy an ebook from big publishers from Fictionwise. You can't buy what the big publishers didn't allow to be sold. I just can't understand how they were so stupid.

[fjtorres]

Originally Posted by darryl

I agree. In fact, I think things are even worse. To me KU is the only subscription service with a sustainable business model. As I understand the position, and please feel free to correct me if I am wrong, the others subscription services are essentially paying the Big 5 an equivalent amount to a sale for every borrow.

Pretty much.
The numbers I remember for Oyster and Scribd are along the lines of 60-80% of retail list. Which for BPH books priced north of $10 would be a lot.
(There might be different terms for some titles but in general the payout is per checkout and a function of list price. The publisher controls the payout which is why they need to look for ways to throttle consumption.)

KU appears to work because, as even Smashwords admits, titles in KU *sell* better in KDP than comparable titles in KDP that aren't in KU. That is one big incentive right there. Especially for authors willing to sell DRM-free KF8.

Competition for KU is going to have to come from existing retailers, I think.
The existing subscription services simply don't have the visibility among mainstream ebook readers that even Google and Kobo have, much less Nook or Apple. Without that visibility and the sales boost in the partner channel there is no reason for the publisher (tradpub or indie) to participate unless the per read payout resembles the sale pay out. Which is unsustainable.

As one author said, KU is a marketing service that *pays* the author instead of charging them. Not going to be easy to top that.

[fjtorres]

Originally Posted by Purple Lady

I used to buy a lot from Fictionwise before agency too. After agency I specifically looked for Random House titles because they didn't join in right away. After Random House joined in, you couldn't buy an ebook from big publishers from Fictionwise. You can't buy what the big publishers didn't allow to be sold. I just can't understand how they were so stupid.

At one point I had $100 in micropay rebates at Fictionwise.
When I heard the conspiracy was coming I liquidated it on non-BPH titles.
Never found reason to go back.

[Purple Lady]

Originally Posted by fjtorres

At one point I had $100 in micropay rebates at Fictionwise.
When I heard the conspiracy was coming I liquidated it on non-BPH titles.
Never found reason to go back.

I didn't use their micropay much, but I loved their 50 - 60% off coupons. That usually made their prices comparable to Amazon. I usually only do the BPH from the library now unless they have a sale, but they don't like to do that much. My tbr list is too big anyway.

[HappyMartin]

It seems quite obvious from my perspective. Basic economic theory should cover. We have a product that is not an essential, like beer or tobacco for example, so a rising price impacts demand.

I wanted to preorder the new Salman Rushdie book. $18.96 for the Kindle version, $15.40 for the hardcover. Changed my mind. For $10 a month I get all the music I want from Apple. For $10 I get Adobe Lightroom and Photoshop for a month and I run a big part of my business on that. It's become tough to justify almost $19 for an ebook. Sorry Mr Rushdie. I didn't buy your book.

[tompe]

But for best sellers for example they are not replaceable with other books. Especially not for peopla reading a couple of books per year.

[tompe]

For me I always buy specific books and they are not replacable with other books. Today I bought Aurora by Kim Stanley Robinson because I want to read it. I want to read this specific book and not any other book.

[crossi]

Now me, I've over 400 books I want to read in my wish list, and far from every book I'm interested in gets added to it. Then there are the 50 or so books i"ve already bought but not read yet. With that backlog even new books by my favorite 50 or so authors don't get bought immediately unless the price is too good to pass up. Why buy it right now when it might be months or more before you could get around to reading it. Esp since the price might drop while you are busy reading your already bought books. my backlog is so bad I sort of dread a price drop notification esp if an author drops a bunch of their books at once. My TBR pile grows faster than I can read them even without that. And I read fast, usually a book every day or so.

[darryl]

Originally Posted by tompe

But for best sellers for example they are not replaceable with other books. Especially not for peopla reading a couple of books per year.

Rubbish. I wonder if Joe Konrath is going to expose this old chestnut as a Zombie Meme. Perhaps it is true of you, and no doubt you are not entirely alone. But for most people the opposite is true. "Best Sellers" are replaceable by other tradpub books. They are replaceable by Indie Books. And they are replaceable by and competing with other forms of entertainment. Even more so among your hypothetical two books per year people, many of whom would probably much rather see the movie in any event.

[eschwartz]

"Best Sellers" to most people are replaceable by whatever-the-heck Best Sellers are in the airport racks and the Walmart displays etc.
The old whatever-the-heck "Best Sellers" did the same thing in their time.

And as people become more price conscious and increasingly adopt the ereader app that is probably already on their phone, they start looking at the Amazon.com front pages to find the latest "Best Sellers".


They aren't buying bestsellers because they want those books, they are buying them because it's there and they don't care about investigating further...