Amazon vs. Hachette Update - It's About Price - Page 15

eschwartz · 08-03-2014, 01:53 PM

Quote:

Originally Posted by pwalker8

No, I don't. I am specifically talking about ebooks and when they come out at what price point. If the issue was the perceived value of hard back verse paper back, then publisher would come out with hard back and paper back at the same time. They don't. One year is roughly long enough where someone isn't going to wait a couple of months for the cheaper price. Jordan's widow was applying the same logic when she held off releasing the ebook versions of the last three volumes of the WOT series. If your logic were correct, then if someone releases a hard back book and the ebook at the same time and same price point, then no one would by the ebook, since the hard back has more "value". Yet, that is obviously not true.

On the contrary, the value is in the format itself.

Some people despise ebooks with all their soul,
some people will always get the ebook if possible, no mater what,
some people only buy freebies and depend on the library regardless of format,
some people buy whatever they see first and don't think about it much.
Some people only buy at certain price points, but since ebooks and pbooks are different products entirely (unlike the HB/MMPB split), their pricing tolerance of each is different.

I could probably come up with some more groups if I thought about it a bit.

Sydney's Mom · 08-03-2014, 02:05 PM

The biggest difference between ebooks and pbooks is that an ebook will be read once (if you respect the DRM), while a hardcover may be passed around or sold, and even a paperback can be passed around or sold. Everyone is looking at this from Amazon's or Hatchett's point of view, while the original post was from the customer's point of view. If I buy a hardcover for $20.00, and pass it around to my family and eventually sell it at a yard sale at $2, the per read cost is pretty low. Definitely lower than the per read cost of my ebook, which will be at least $9.99. And everyone that reads that book is a real lost sale for Hatchett (yes, I know some would read it and then buy their own copy, but let's assume they read it and pass it on).

Now, I know Hatchett could care less about the used market for pbooks, because they don't get the money, but they certainly know that consumers have that in mind. I share some ebooks with my husband, who is not on my Amazon account, but I don't share them with my mother-in-law, even though I recommend them to her. So, if I bought a pbook at $20, and passed it around to my husband and my mil, 3 sales were subsumed in that first $20 purchase (this was my normal treatment of books pre-kindle). But if I bought the ebook for $9.99 and shared it with my husband and then told my mother-in-law about it, she would have bought it and so Hatchett made the same off the 3 people who read that book (this is my normal treatment of books now). And when I think of the number of pbooks that have been passed around over the years both to me and by me, I find this argument over ebooks ridiculous.

Ridiculous because if Hatchett wants to charge me more than $9.99, I know I am subsidizing the person who bought the pbook, and paid a lot less, in the end, than I. This doesn't make sense, so I can only think that Hatchett must think I am removing the DRM on all of my ebooks, and passing them around like pbooks. But I don't think this is borne out in the market. At least among the people in my group who read ebooks, piracy of this sort is nonexistent. Hatchett really is making a LOT more with ebooks than pbooks, simply because of the number of times that copy is read, and thereby prevents a sale, is exactly one, whereas with pbooks, I NEVER kept it to myself.

Barcey · 08-03-2014, 03:35 PM

This discussion reminded me of an old calculation I performed based on numbers provided by HarperCollins.

https://www.mobileread.com/forums/sho...d.php?t=216608

This was based on the infamous HarperCollins presentation where the CEO was explaining to investors how clever they were on making a larger contribution to profit per unit on ebooks then hardcover books. They were admitting that the per unit contribution to profit was $2.20 higher under $14.99 agency because they were paying $1.58 less per unit to author royalties. They are also pocketing an addition $0.62 per unit. I had to go to the internet archive to find a copy of the slide that it was based on.

https://web.archive.org/web/20130811...always-denied/

I admit that I threw that comparison table together quickly and I was being sloppy (lazy) but I'd tried to show in the final column that under the wholesale model the publishers were likely afraid of the authors squeezing them to make the same per unit royalties as on hard covers and the retails would be squeezing them to make 30% so the publishers contribution to profit could drop significantly.

In Amazon's statement they are presenting even a worse picture for Hachette.
- The customer is happy because they're paying $9.99 instead of $14.99
- The authors would be getting $3.50 royalties instead of $2.62 (per unit)
- Amazon gets 30% so they'd be happy
- Hachette gets $3.50 contribution to profit instead of $7.87

If unit sales went up 71% because of the lower price the authors should be thrilled, Amazon would be thrilled but I'm not sure it would be enough to fix Hachette's profit margin.

The statement was very clever to get the consumer and the authors on Amazon's side but it certainly wasn't intended to help make an agreement. It might make Hachette think that the wholesale model would be better for them but I doubt it. This is going to drag on.

DuckieTigger · 08-03-2014, 03:53 PM

Going to drag on or Amazon refuses to sell ANY Hachette books (e or p) if nothing is agreed on within the next (insert number) weeks. Hachette probably counts on Amazon not to be that bold, but who would suffer more from it - Amazon or Hachette?

ApK · 08-03-2014, 04:02 PM

Quote:

Originally Posted by DuckieTigger

Going to drag on or Amazon refuses to sell ANY Hachette books (e or p) if nothing is agreed on within the next (insert number) weeks. Hachette probably counts on Amazon not to be that bold, but who would suffer more from it - Amazon or Hachette?

Short term, Hachette. Long term, not sure. If it sets the stage for Amazon customers learning they have to shop multiple sources to find what they want, and motivates Hachette to develop those other sources, and if that in turn makes other publisher's follow the example, then perhaps it will be a watershed moment of BPHs adapting, and mega-retailers losing some power.

DuckieTigger · 08-03-2014, 04:24 PM

Quote:

Originally Posted by ApK

Short term, Hachette. Long term, not sure. If it sets the stage for Amazon customers learning they have to shop multiple sources to find what they want, and motivates Hachette to develop those other sources, and if that in turn makes other publisher's follow the example, then perhaps it will be a watershed moment of BPHs adapting, and mega-retailers losing some power.

So Amazon cannot really afford to dump them either, in your opinion. What is the alternative then? Amazon snatching up authors?

ApK · 08-03-2014, 04:33 PM

Quote:

Originally Posted by DuckieTigger

So Amazon cannot really afford to dump them either, in your opinion. What is the alternative then? Amazon snatching up authors?

Negotiating and coming up with a compromise they both will be happy with, which is what I fully expect them to do.

SteveEisenberg · 08-03-2014, 09:07 PM

Quote:

Originally Posted by DuckieTigger

So Amazon cannot really afford to dump them either, in your opinion.

I think they can afford to dump Hachette. But I don't know that they afford to make that a precedent.

I can't find the expiration dates for the other publishers, but it sounds like Harper-Collins and Simon and Schuster come real soon. Now we are talking about publishers of campaign biographies. Can they afford to slap a "ships in 3-5 weeks" warning on a book by the next president of the United States -- much less make that book unavailable on the Kindle? Seems risky.

The bare knuckle approach would be to divide and conquer. Offer some publishers a much better deal than others. Every two years, pick off another victim at the renewal. No one really knows if that would work.

eschwartz · 08-03-2014, 09:11 PM

Quote:

Originally Posted by SteveEisenberg

I can't find the expiration dates for the other publishers, but it sounds like Harper-Collins and Simon and Schuster come real soon. Now we are talking about publishers of campaign biographies. Can they afford to slap a "ships in 3-5 weeks" warning on a book by the next president of the United States -- much less make that book unavailable on the Kindle? Seems risky.

No the question is can they successfully tell people that it is Hachette's inefficiency that is causing the delays, and they won't sign a contract to make it worth Amazon's while to lay in a huge stock in their own warehouses that they may be unable to sell?

As far as making books unavailable on the Kindle, haven't we long since concluded that that claim was a frakking lie?

darryl · 08-03-2014, 09:33 PM

Hachette was just the unlucky one of the BWM. The only option for it to reach an agreement now is for Amazon to cave completely. Otherwise it must stall until some or all of the other BWM are also out of contract. The BWM will then present a united front.

SteveEisenberg · 08-03-2014, 10:44 PM

Quote:

Originally Posted by eschwartz

No the question is can they successfully tell people that it is Hachette's inefficiency that is causing the delays, and they won' sign a contract to make it worth Amazon's while to lay in a huge stock in their own warehouses that they may be unable to sell?

Not too much question there. The media here is the umpire, and I think we may just agree that the umpire would probably attribute the delay threat to Amazon. I suspect we'd disagree on whether the umpire is being fair, but that's wasn't what you said is the question.

Quote:

As far as making books unavailable on the Kindle, haven't we long since concluded that that claim was a frakking lie?

You mean, because they can drop DRM, and then ask the purchaser to either sideload, or send a file to their kindle.com address? Failing to mention an option that arguably increases risk of the book being shoplifted, and makes obtaining it beyond the technical expertise level of many readers, is not an underlined and boldfaced lie. By the standard of political campaigns -- not to mention Stephen Colbert -- I'd say it has considerable truthiness.

eschwartz · 08-03-2014, 11:04 PM

Quote:

Originally Posted by SteveEisenberg

You mean, because they can drop DRM, and then ask the purchaser to either sideload, or send a file to their kindle.com address? Failing to mention an option that arguably increases risk of the book being shoplifted, and makes obtaining it beyond the technical expertise level of many readers, is not an underlined and boldfaced lie. By the standard of political campaigns -- not to mention Stephen Colbert -- I'd say it has considerable truthiness.

NO. I was thinking about the part where the books are and were offered for sale on the Kindle Storefront, actually.

tubemonkey · 08-04-2014, 02:00 AM

Quote:

Originally Posted by darryl

Hachette was just the unlucky one of the BWM. The only option for it to reach an agreement now is for Amazon to cave completely. Otherwise it must stall until some or all of the other BWM are also out of contract. The BWM will then present a united front.

Can the others start negotiations when it's their turn when the previous BPH hasn't concluded a contract yet? If so, then the decision was poorly written.

darryl · 08-04-2014, 02:29 AM

So far as I am aware they are each free to negotiate new contracts to replace the old. I gather the DOJ will watch them carefully but quite frankly I expect collusion and a united negotiating position. This is why I believe Hachette is dragging the chain and why Amazon sought to place pressure on them both by its offer to Authors and its justification of its position.

DuckieTigger · 08-04-2014, 03:13 AM

If they are colluding and Hachette waits for the others to join in the negotiations would that not draw more attention to them colluding?

For the other publishers it would make sense to start negotiating a new contract before the old one expires. Nothing wrong with that, especially if either side or both want changes. Once an agreement is found the new can seamless transition from the old once it expires.

Or am I missing something?

08-03-2014, 03:35 PM	#213
Barcey Wizard Posts: 1,531 Karma: 8059866 Join Date: Oct 2007 Location: Canada Device: Kobo H2O / Aura HD / Glo / iPad3	This discussion reminded me of an old calculation I performed based on numbers provided by HarperCollins. https://www.mobileread.com/forums/sho...d.php?t=216608 This was based on the infamous HarperCollins presentation where the CEO was explaining to investors how clever they were on making a larger contribution to profit per unit on ebooks then hardcover books. They were admitting that the per unit contribution to profit was $2.20 higher under $14.99 agency because they were paying $1.58 less per unit to author royalties. They are also pocketing an addition $0.62 per unit. I had to go to the internet archive to find a copy of the slide that it was based on. https://web.archive.org/web/20130811...always-denied/ I admit that I threw that comparison table together quickly and I was being sloppy (lazy) but I'd tried to show in the final column that under the wholesale model the publishers were likely afraid of the authors squeezing them to make the same per unit royalties as on hard covers and the retails would be squeezing them to make 30% so the publishers contribution to profit could drop significantly. In Amazon's statement they are presenting even a worse picture for Hachette. - The customer is happy because they're paying $9.99 instead of $14.99 - The authors would be getting $3.50 royalties instead of $2.62 (per unit) - Amazon gets 30% so they'd be happy - Hachette gets $3.50 contribution to profit instead of $7.87 If unit sales went up 71% because of the lower price the authors should be thrilled, Amazon would be thrilled but I'm not sure it would be enough to fix Hachette's profit margin. The statement was very clever to get the consumer and the authors on Amazon's side but it certainly wasn't intended to help make an agreement. It might make Hachette think that the wholesale model would be better for them but I doubt it. This is going to drag on. Last edited by Barcey; 08-03-2014 at 03:38 PM.

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08-03-2014, 02:05 PM	#212
Sydney's Mom Wizard Posts: 2,899 Karma: 6995721 Join Date: Dec 2008 Location: Idaho, on the side of a mountain Device: Kindle Oasis, Fire 3d Gen and 5th Gen and Samsung Tab S	The biggest difference between ebooks and pbooks is that an ebook will be read once (if you respect the DRM), while a hardcover may be passed around or sold, and even a paperback can be passed around or sold. Everyone is looking at this from Amazon's or Hatchett's point of view, while the original post was from the customer's point of view. If I buy a hardcover for $20.00, and pass it around to my family and eventually sell it at a yard sale at $2, the per read cost is pretty low. Definitely lower than the per read cost of my ebook, which will be at least $9.99. And everyone that reads that book is a real lost sale for Hatchett (yes, I know some would read it and then buy their own copy, but let's assume they read it and pass it on). Now, I know Hatchett could care less about the used market for pbooks, because they don't get the money, but they certainly know that consumers have that in mind. I share some ebooks with my husband, who is not on my Amazon account, but I don't share them with my mother-in-law, even though I recommend them to her. So, if I bought a pbook at $20, and passed it around to my husband and my mil, 3 sales were subsumed in that first $20 purchase (this was my normal treatment of books pre-kindle). But if I bought the ebook for $9.99 and shared it with my husband and then told my mother-in-law about it, she would have bought it and so Hatchett made the same off the 3 people who read that book (this is my normal treatment of books now). And when I think of the number of pbooks that have been passed around over the years both to me and by me, I find this argument over ebooks ridiculous. Ridiculous because if Hatchett wants to charge me more than $9.99, I know I am subsidizing the person who bought the pbook, and paid a lot less, in the end, than I. This doesn't make sense, so I can only think that Hatchett must think I am removing the DRM on all of my ebooks, and passing them around like pbooks. But I don't think this is borne out in the market. At least among the people in my group who read ebooks, piracy of this sort is nonexistent. Hatchett really is making a LOT more with ebooks than pbooks, simply because of the number of times that copy is read, and thereby prevents a sale, is exactly one, whereas with pbooks, I NEVER kept it to myself.

08-03-2014, 03:53 PM	#214
DuckieTigger Wizard Posts: 4,763 Karma: 246906703 Join Date: Dec 2011 Location: USA Device: Oasis 3, Oasis 2, PW3, PW1, KT	Going to drag on or Amazon refuses to sell ANY Hachette books (e or p) if nothing is agreed on within the next (insert number) weeks. Hachette probably counts on Amazon not to be that bold, but who would suffer more from it - Amazon or Hachette?

08-03-2014, 09:33 PM	#220
darryl Wizard Posts: 3,108 Karma: 60231510 Join Date: Nov 2011 Location: Australia Device: Kobo Aura H2O, Kindle Oasis, Huwei Ascend Mate 7	Hachette was just the unlucky one of the BWM. The only option for it to reach an agreement now is for Amazon to cave completely. Otherwise it must stall until some or all of the other BWM are also out of contract. The BWM will then present a united front.

08-04-2014, 02:29 AM	#224
darryl Wizard Posts: 3,108 Karma: 60231510 Join Date: Nov 2011 Location: Australia Device: Kobo Aura H2O, Kindle Oasis, Huwei Ascend Mate 7	So far as I am aware they are each free to negotiate new contracts to replace the old. I gather the DOJ will watch them carefully but quite frankly I expect collusion and a united negotiating position. This is why I believe Hachette is dragging the chain and why Amazon sought to place pressure on them both by its offer to Authors and its justification of its position.

08-04-2014, 03:13 AM	#225
DuckieTigger Wizard Posts: 4,763 Karma: 246906703 Join Date: Dec 2011 Location: USA Device: Oasis 3, Oasis 2, PW3, PW1, KT	If they are colluding and Hachette waits for the others to join in the negotiations would that not draw more attention to them colluding? For the other publishers it would make sense to start negotiating a new contract before the old one expires. Nothing wrong with that, especially if either side or both want changes. Once an agreement is found the new can seamless transition from the old once it expires. Or am I missing something?

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