Is Amazon likely to acquire a Big 5 publisher? And, if so, what would it do with it?

[pwalker8]

Originally Posted by darryl

I agree. I fell into the trap of lazily using "agency" to encompass the practice of setting ebook prices high so as to protect print sales. I think you are correct. Agency itself will likely remain, though I do expect that Amazon will price so as to maximise overall ebook sales revenue, rather than per unit margin. As you say, "Amazon isn't proud, they'll make money wherever they can." I don't think its likely that they would adopt the Big 5 practice of setting ebook prices high to favour print. This would indeed place pressure on the other players.

I think S&S would fit beautifully into Amazon, though I'm afraid I don't see Caroline Reidy as an Amazon executive! On reflection I also agree with you about Hachette. The French would probably see an Amazon acquisition as being a cultural disaster of epic proportions. With PRH 75% owned by Bertelsmann last I heard, HC part of News and McMillan owned by Holtzbrinck S&S does seem to be the likely target if Amazon does choose to go this way.

Given Amazon's market share of the ebook market in the US, I would expect them to charge whatever the market will support. I think the idea that ebook prices are artificially high to support print is more an article of faith than reality. Ebook prices are at the level they are because people are willing to pay that price. Bezos owns the Washington Post. The last time I looked, he hasn't cut the price on that newspaper.

Amazon makes a ton of money of selling print books. Most likely, a lot more money than they make selling ebooks.

[rcentros]

Originally Posted by pwalker8

Bezos owns the Washington Post. The last time I looked, he hasn't cut the price on that newspaper.

Although, when I bought my Fire, I was offered a free, six month digital subscription.

[SteveEisenberg]

Originally Posted by rcentros

Although, when I bought my Fire, I was offered a free, six month digital subscription.

The next half-year was US$1. And now they quietly bill me $3.99 a month. How long I'm grandfathered in at a still highly discounted price, I have no idea.

The Post is of course personally owned by Bezos, rather than being a part of Amazon. While he doesn't want the paper to lose money, I think he bought it as a public service. By contrast, if Amazon bought a big publisher, it would be a business decision, made on similar criteria to those if Amazon bought any other supplier.

[darryl]

@fjtorres. That's all it is, of course, An interesting thought experiment. Possible, but quite unlikely. Like you, I can't see Amazon engaging in a bidding war. It would be a nice acquisition for them but not an essential one. They have and are carrying out a long term strategy for the industry which we can only guess at, and no doubt it does not rely on such a purchase.

@pjwalker. If the Big 5 were to set ebook prices at $100 per book whilst leaving print prices the same there would probably still be a handful of people who bought the ebook. The trick in pricing an ebook is of course to maximise the revenue. Not revenue per unit, but overall sales revenue. In the case of ebooks this is the price that brings in the maximum overall revenue. Since marginal costs for ebooks are minimal and the "royalty" is a percentage this price can get very low indeed. On the other hand, print books do carry significant marginal costs which must be taken into account. Rather than simply maximising overall revenue, pricing a print book must take into account the marginal costs of producing such a print book. This exercise will almost without exception result in a significantly higher optimal price for the print book, since demand for both print and ebooks is quite price elastic.

I don't claim to be infallible, but my own opinion, apparently shared quite widely, is that Big 5 pricing of ebooks certainly takes into account the effect of such pricing on print books. Pricing so closely to Paper versions is a strong indicator that such pricing has been influenced by concern that a significantly lower price for an ebook would significantly and adversely effect paper sales. Especially with new release books. This does make sound commercial sense. Given the investment of the Big 5 in the physical distribution system and their close control of it it is quite understandable why they would favour it, even at the cost of sacrificing some revenue. There is a price for this, and they seem to be willing to pay it, though I doubt it is a viable long term strategy. And the price may not be as high as some of us thought, including me. Another thread here suggested that a not insignificant percentage of people would buy an ebook they wanted immediately at a higher price. Some indicated they would in fact buy a print version instead. Of those who would not, many would consider buying the ebook at a lower price later when deals became available or the price was reduced. No doubt significant sales are lost, but for a significant number purchase is simply deferred, enabling the traditional practice of picking up the sales of those prepared to pay more before offering cheaper options.

Amazon likes print, but does not have a vested interest in the print distribution network. I suspect that even if it does acquire one through acquisition (and is allowed to keep it) it would rather sell more ebooks, and will not price ebooks to preserve its new print book sales. A good guide is probably to be found in the pricing of its own imprints. What will be interesting if this ever happens is Amazon's treatment of its new authors, of whom all but a few will have contracts significantly less lucrative than Amazon imprint authors. And what, for instance, would be the position if Amazon wanted to put some titles into KU? Particularly older contracts may well not cover this. Would they need to re-negotiate? If not, would they be able to treat reads like sales? And at what price? Could they treat them as heavily discounted sales in which case some contracts would provide that an author receive nothing or close to it? So many questions.

Whilst I expect there may well be a business as usual period following any such acquisition, I don't think it would be a long one.

[Dopedangel]

Well if Amazon buys a big 5 publisher I expect a larger number of back titles to come out as ebooks. Personally that's the only reason I feel Amazon would want to buy a publisher to get rights to popular titles and series. Otherwise self publishing and publishing through its own imprints satisfies most of its need to defang the big five.

[pwalker8]

Originally Posted by SteveEisenberg

The next half-year was US$1. And now they quietly bill me $3.99 a month. How long I'm grandfathered in at a still highly discounted price, I have no idea.

The Post is of course personally owned by Bezos, rather than being a part of Amazon. While he doesn't want the paper to lose money, I think he bought it as a public service. By contrast, if Amazon bought a big publisher, it would be a business decision, made on similar criteria to those if Amazon bought any other supplier.

I suspect that Bezos owns the Post for the same reason he donates a lot of money to various politicians, i.e. to influence public opinion and public policy. I seriously doubt public service has a thing to do with it.

[darryl]

Originally Posted by pwalker8

I suspect that Bezos owns the Post for the same reason he donates a lot of money to various politicians, i.e. to influence public opinion and public policy. I seriously doubt public service has a thing to do with it.

Here we agree. Actual public service and altruism without an ulterior motive is very rare.

[fjtorres]

Originally Posted by darryl

I don't claim to be infallible, but my own opinion, apparently shared quite widely, is that Big 5 pricing of ebooks certainly takes into account the effect of such pricing on print books. Pricing so closely to Paper versions is a strong indicator that such pricing has been influenced by concern that a significantly lower price for an ebook would significantly and adversely effect paper sales.

Oh, there's a reason it's widely shared.
Among the evidence the DOJ collected and submitted to court for the conspiracy trial there were emails and other documents proving that intent. It is why they were willing to take less money and cost their authors money.

Agreeing to agency models still suited the publishers' long-term interests because they wanted to "shift their industry to higher e-book prices to protect the prices of their physical books and the brick and mortar stores that sold those physical books," Cote wrote, adding that "[t]o change the price of e-books across the industry ... the Publishers would have to raise Amazon’s prices."

From:
https://arstechnica.com/tech-policy/...-judges-words/
...among other widely disseminated sources, including tbe Judges full pu lished ruling.

It's not as if the BPH execs were shy about publicly expressing their intent and rationale. Reidy herself said so openly.

Likewise it is no secret why the BPHs prefer print: they controlled access to market and between their steady flow of "fresh produce" and coop payments (pay to play, aka, payola) they limited the exposure and market reach of the books of smaller publishers, limiting their growth, keeping them weak, and making them easier and cheaper to buy out. That is how the US trade publishing business went from dozens of big-ish publishers to just five monsters in one generation, the "stunt and buy strategy" of the multinationals.

All those imprints the BPHs own and ship books under? They used to be healthy, independent publishers with decades of success (and IP) that were "convinced" to sell to the megacorps.

The BPHs stock in trade is access to bookstore shelves, it is their reason for existing. And wide acceptance of ebooks undercuts and devalues that power. Despite all the inherent advantages of their size and enormous IP catalogs that meant they could easily dominate ebook sales in free and open competition, they chose to "throw in" with Apple in an illegal collusive scheme to limit ebook adoption by raising prices. In fact, Apple ended up forcing them to cap the price hike at $15 because left to themselves they would have gone much higher, totally killing ebook sales and Apple's iBooks with it. Of course, by dictating pricing to the BPHs Apple became the defacto leader of the conspiracy which is why they were left holding the bag when the BPHs settled. (Well, that and the tactics they used to get Random House to join Agency.)

All publicly documented and hard to handwave away.

https://www.theverge.com/2013/6/13/4...x-ebook-prices

You're totally correct in your understanding.

Mind you, it didn't have to be this way.
All the BPHs had to do was notice tbat Sony killed their lrf walled garden to support interoperative epub and realize the best way (for everybody) to prevent Amazon domination was to support a multivendor alternative.
But Amazon was just an excuse, the real intent was to cripple ebook sales.

Which they have now succeeded in doing.
But only to their books.
Everybody else is doing fine.

[pwalker8]

Originally Posted by fjtorres

Oh, there's a reason it's widely shared.
Among the evidence the DOJ collected and submitted to court for the conspiracy trial there were emails and other documents proving that intent. It is why they were willing to take less money and cost their authors money.



From:
https://arstechnica.com/tech-policy/...-judges-words/
...among other widely disseminated sources, including tbe Judges full pu lished ruling.

It's not as if the BPH execs were shy about publicly expressing their intent and rationale. Reidy herself said so openly.

Likewise it is no secret why the BPHs prefer print: they controlled access to market and between their steady flow of "fresh produce" and coop payments (pay to play, aka, payola) they limited the exposure and market reach of the books of smaller publishers, limiting their growth, keeping them weak, and making them easier and cheaper to buy out. That is how the US trade publishing business went from dozens of big-ish publishers to just five monsters in one generation, the "stunt and buy strategy" of the multinationals.

All those imprints the BPHs own and ship books under? They used to be healthy, independent publishers with decades of success (and IP) that were "convinced" to sell to the megacorps.

The BPHs stock in trade is access to bookstore shelves, it is their reason for existing. And wide acceptance of ebooks undercuts and devalues that power. Despite all the inherent advantages of their size and enormous IP catalogs that meant they could easily dominate ebook sales in free and open competition, they chose to "throw in" with Apple in an illegal collusive scheme to limit ebook adoption by raising prices. In fact, Apple ended up forcing them to cap the price hike at $15 because left to themselves they would have gone much higher, totally killing ebook sales and Apple's iBooks with it. Of course, by dictating pricing to the BPHs Apple became the defacto leader of the conspiracy which is why they were left holding the bag when the BPHs settled. (Well, that and the tactics they used to get Random House to join Agency.)

All publicly documented and hard to handwave away.

https://www.theverge.com/2013/6/13/4...x-ebook-prices

You're totally correct in your understanding.

Mind you, it didn't have to be this way.
All the BPHs had to do was notice tbat Sony killed their lrf walled garden to support interoperative epub and realize the best way (for everybody) to prevent Amazon domination was to support a multivendor alternative.
But Amazon was just an excuse, the real intent was to cripple ebook sales.

Which they have now succeeded in doing.
But only to their books.
Everybody else is doing fine.

I won't rehash my opinion of Cote, other than to say she is hardly an expert on why people in the publishing world do something. She's expressing an opinion, not stating facts.

Kind of funny that Amazon was just fine letting the BPH use agency pricing once Amazon had mostly eliminated the competition in the ebook world.

Once again, value is set by what people will pay. People as a whole seem to place the value based on the work rather than the format of the work. Obvious some do not, but for the most part, the market has spoken. People are willing to pay more or less the same price for an ebook as they pay for the paper book.

[binaryhermit]

Removed out of an abundance of caution with regards to politics

EDITED to add: If they do, I could see an attempt to block it since it'd presumably need regulatory approval

[rcentros]

Originally Posted by SteveEisenberg

The next half-year was US$1. And now they quietly bill me $3.99 a month. How long I'm grandfathered in at a still highly discounted price, I have no idea.

I figured they might have had a discounted price (after the trial period) on Fires. I didn't know for sure as I didn't accept the offer. (Not a fan of the Washington Post.)

[rcentros]

Originally Posted by pwalker8

I suspect that Bezos owns the Post for the same reason he donates a lot of money to various politicians, i.e. to influence public opinion and public policy. I seriously doubt public service has a thing to do with it.

Agreed. Plus it's probably a tax write off.

[darryl]

Originally Posted by pwalker8

I won't rehash my opinion of Cote, other than to say she is hardly an expert on why people in the publishing world do something. She's expressing an opinion, not stating facts.

Kind of funny that Amazon was just fine letting the BPH use agency pricing once Amazon had mostly eliminated the competition in the ebook world.

Once again, value is set by what people will pay. People as a whole seem to place the value based on the work rather than the format of the work. Obvious some do not, but for the most part, the market has spoken. People are willing to pay more or less the same price for an ebook as they pay for the paper book.

Judges are rarely experts in the industry of litigants. However, Judges findings are based on the evidence. And, where Judges at first instance do get it wrong, other Judges get the chance to correct this on appeal, usually multiple levels of appeal. With the benefit of lawyers arguing why the initial judge got it wrong. Apple did of course appeal and lost, and the Supreme Court refused to hear a further appeal. The facts involved were contained in the evidence before her. Her "opinion" or "findings" are based on the evidence. If only we could say the same of your opinion expressed here.

Amazon did later accept agency agreements when the settlement agreements expired and Publishers again sought them. To see why you only have to look at what has happened. The phrase "hoist by ones own petard" comes to mind.

As for people's willingness to pay these inflated prices? The fact that sales of Big 5 ebooks are stagnant whilst sales elsewhere continue to grow suggests otherwise. My poll on this site, whilst imperfect, suggests about 30% will either pay the high prices set or buy the paperbook. Of the other 70% an unknown portion would consider buying the book later at a better price if it becomes available. That poll is here

As I said, the Poll was not perfect. But it gives some general idea, and there seems to be nothing similar publicly available.

[SteveEisenberg]

Originally Posted by pwalker8

I suspect that Bezos owns the Post for the same reason he donates a lot of money to various politicians, i.e. to influence public opinion and public policy. I seriously doubt public service has a thing to do with it.

There isn't much difference between the claim in your first sentence, and "public service," except for a judgment about mental state.

Now, if you said that Bezos owns the Post for the same reason that Amazon pays money to lobbyists (and you didn't say that one!), I would disagree.

In case someone here does think it, there's a pretty good empirical test. No business, or business mogul, is going to have any tolerance of criticism from lobbyists it pays. So if the Post publishes even a few negative articles about Bezos and/or Amazon, it proves to me that, at least in Bezos's not-insane mind, he is running it a public service rather than as a lobby for his interests. And -- here is the evidence of negative articles:

How Jeff Bezos Reacts to 'Negative' Amazon Articles in Washington Post

Amazon Key is Silicon Valley at its most out-of-touch

[pwalker8]

Originally Posted by darryl

Judges are rarely experts in the industry of litigants. However, Judges findings are based on the evidence. And, where Judges at first instance do get it wrong, other Judges get the chance to correct this on appeal, usually multiple levels of appeal. With the benefit of lawyers arguing why the initial judge got it wrong. Apple did of course appeal and lost, and the Supreme Court refused to hear a further appeal. The facts involved were contained in the evidence before her. Her "opinion" or "findings" are based on the evidence. If only we could say the same of your opinion expressed here.

Amazon did later accept agency agreements when the settlement agreements expired and Publishers again sought them. To see why you only have to look at what has happened. The phrase "hoist by ones own petard" comes to mind.

As for people's willingness to pay these inflated prices? The fact that sales of Big 5 ebooks are stagnant whilst sales elsewhere continue to grow suggests otherwise. My poll on this site, whilst imperfect, suggests about 30% will either pay the high prices set or buy the paperbook. Of the other 70% an unknown portion would consider buying the book later at a better price if it becomes available. That poll is here

As I said, the Poll was not perfect. But it gives some general idea, and there seems to be nothing similar publicly available.

In the US, Appellate Courts defer to the trial courts on points of fact, they very rarely will correct facts on appeal. Appeals typically are on specific points of law. It is not uncommon for an Appellate Judge to suggest if an appeal had been made on a different point of law, it might have been successful. The narrow focus of appeals seems to be one of the major differences in US law and the rest of the world.

You do understand that a large part of the reason that the US Supreme Court declined to hear the case was because Scalia had died and they were in a 4-4 ideological dead lock. They declined a lot of cases during that time period for reasons that had nothing to do with the merits of the case.

You are comparing apples and oranges. Of course, no one actually has the figures, but a more valid comparison would be percentage of sales for a given book. Book sales are much like movie sales in that the overall sales figures tend to be driven by block busters. We haven't had a true block buster novel in a few years. Arguably the last big block buster was Fifty Shades of Grey which had a somewhat skews sales figures in favor of digital sales (29 M in print and 15 M digital in 2012 according to some estimates).