Amazon setting itself up to lose

[leebase]

Originally Posted by carld

Searching for Harlequin turns up 5,852 results at the Kindle store. My guess is Harlequin is perfectly happy selling their books through Amazon.

They also sell direct, or so I've heard. Still, as Amazon selling "all books" makes it a convenient place to go to, even if you are just looking for Harlequin. A Big6.com type site would likewise have that "one place to go to".

The publishers can't do this now because Amazon would retaliate by refusing to sell the paper books....as they did for a day last time. That leverage is going away. There will come a point when the publishers no longer fear losing Amazon as a seller of their paper books. That is the day they could choose to sell ebooks directly with no intermediary.

Lee

[abookreader]

Harlequin is far ahead of the game in e-Books compared to MacMillan and Penguin etc. The already have a vibrant e-Store where they sell direct to the customers. Yet they'd tell you that they absolutely do still need the millions of eyeballs that pass through Amazon.com every single day. That's why they continue to list their books there.

Remember, Amazon isn't just selling James Patterson to the person who woke up this morning and decided to go buy the James Patterson book. They are also making all those sales to the person who went to Amazon.com to buy a new pair of curtains for the bathroom, and ended up clicking on the new Patterson book as well. That's a huge number of buyers and if you want to maintain your status as the Bestselling Author, you are going to do it through those types of marketing.

BigPublishing.com would have a mountainous task trying to recruit the customer base that the large retailers already have established. If it were all that easy to be an Amazon.com, I think we'd have a couple more Amazon.com stores out there.

[carld]

They could do that, but they'd have to pull their ebooks from Apple, B&N and everyone else as well. I don't see that happening.

[murraypaul]

Originally Posted by leebase

Once physical books take enough of a back seat to ebooks....when the lionshare of profits come from ebooks...then what incentive will the big six publishers have to continue selling through Amazon? Overnight they could cease working with Amazon and open their own, combined, ebook website. They won't have to worry about losing sales as anyone who wants to buy books can be directly accommodated by them via their own website. They could disintermediate Amazon the way that Amazon has disintermediated the local book store.

As long as Amazon can maintain the dominance of the Kindle platform and be the only access for the DRM for that platform, the publishers have no choice but to sell through them or abandon those customers.

[mr ploppy]

Originally Posted by carld

Searching for Harlequin turns up 5,852 results at the Kindle store. My guess is Harlequin is perfectly happy selling their books through Amazon.

They also have a lot of free ebooks on Amazon, something that is apparently difficult to achieve. I doubt real publishers have much interest in selling direct to consumers. If they wanted to they could have done that years ago with real books long before Amazon got a stranglehold on distribution.

It's like selling on Ebay. You could sell on your own website a lot cheaper (or sell at the same price and make a lot more profit), but Ebay is where all the buyers are. Access to those buyers is worth the percentage that Ebay (and Amazon) takes. All their costs are built into what the buyer pays anyway, so it's not as if it really matters.

Without any price incentive nobody would bother buying direct from publishers. And if they undercut Amazon they would just get price-matched and make even less money. Smaller publishers would also risk being de-listed completely.

[Greg Anos]

The more e-books become the dominant form, the less likely such a shift would occur.

Let me put in "Run, Spot, Run" terms.

Are you going to literally "bet your business" that your customers will abandon where they normally go to buy your books, to go somewhere else (which they may not know where it is).

It's betting the business, because once you cut off Amazon, et. al., there goes all the cashflow from sales. No cashflow, no business. (Lots of cashflow, but losing money on every sale - go broke slowly. No cashflow, even on profitable sales - go broke very, very fast).

Will you get enough cashflow, fast enough, to keep from imploding. That's the bet.

[Leep]

Don't forget the proprietary device in the mix. Amazon still controls what a huge number of their customers put on their Kindles and they make it super easy to purchase ebooks from Amazon.

To steal the majority of Amazon customers, the big publishers would need to overcome that advantage that Amazon holds as well as customer loyalty and excellent customer service.

cheers

[leebase]

Originally Posted by Ralph Sir Edward

Are you going to literally "bet your business" that your customers will abandon where they normally go to buy your books, to go somewhere else (which they may not know where it is).

Who would have thought they'd disrupt the normal order of business to institute agency pricing in the first place?

Originally Posted by Ralph Sir Edward

It's betting the business, because once you cut off Amazon, et. al., there goes all the cashflow from sales. No cashflow, no business. (Lots of cashflow, but losing money on every sale - go broke slowly. No cashflow, even on profitable sales - go broke very, very fast).

So perhaps they just open up their alternate site with the lower "pay no middleman here" prices.

Lee

[Andrew H.]

This is extremely naive.

1. It's not *easy* to set up a business like Amazon. It is extremely *hard,* which is why most competitors have failed. Big publishers that have tried to sell directly have failed miserably (although a couple of niche publishers in romance and sf have done okay).

2. If publishers sell directly at a 30% discount, Amazon and other online retailers will drop them. (Also, if they drop the 30%, where is their incentive - they are then making no more than they made selling through Amazon).

3. The big six publishers all have a conflict of interest because each wants to sell their *own* books. Meaning that the other publishers will object if 5 of the 10 bestsellers are all HC books, and they may not all agree to get behind a large promotion for a future "Harry Potter" equivalent because the sales would only benefit 1 of the 6.

4. There is a lot of friction and "stickiness" in getting people to change their ways. I mean, it is just as realistic to ask why Amazon doesn't publish all of its authors itself...that may even be simpler.

5. 90% of sales are still of paperbooks, and it's going to be a long time before that number drops below 70%. (60% of music sales are still on CD). So publishers would be screwed if they dropped Amazon.

6. 75% of Amazon's sales come from non-book items. If you remove books from the mix, you lose a lot of potential customers who weren't necessarily looking for a book.

[MJK2111]

So, let's assume that Amazon does fall out of grace with publishing companies and the publishers aggressively market product on their own...

Who cares?

Amazon will survive. The publishers will survive, and most likely thrive. It will most likely not affect the general buying public.

Concerned that the publishers will charge more than Amazon? There's nothing really stopping Amazon from raising prices today.

Much ado about nothing...

[abookreader]

Originally Posted by leebase

Who would have thought they'd disrupt the normal order of business to institute agency pricing in the first place?

So perhaps they just open up their alternate site with the lower "pay no middleman here" prices.

Lee

Lee Lee Lee!!!!

Did you honestly just suggest that the Big 6 Publisher "devalue the book" with low prices?

I dunno. I think that if you were to look at the list of 10 Commandments for Business they probably start with....

1. Don't Engage in a Price War with WalMart
2. Just like 1 but insert "Amazon" where it says WalMart

Bestsellers are largely made because they ..... well sell lots of books. Which pretty much means you need lots of customers. If the publishers start removing their items from the large well known retailers, those spots are not going to remain empty on the Amazon website. Amazon will start promoting other books. Books that they can sell.

And believe me, there are no shortage of authors out there that would line up in droves for the opportunity to be an "Amazon Author" and they might not write exactly like Nora Roberts but I guarantee you Jeff Bezos can find somebody out there who will come pretty darn close. We probably could find more than a few volunteers right here at mobileread who'd be willing to let Bezos splash their book all over the front page of Amazon at $4.99 per new release.

[DiapDealer]

Originally Posted by leebase

So perhaps they just open up their alternate site with the lower "pay no middleman here" prices.

How would they be able to offer lower prices on an alternate site? Surely they'd have to conform to their own Agency Model pricing.
If Amazon and the alternate publisher site existed at the same time, no court in the country would allow publishers to sell their own books for a cheaper price on their own site all the while forcing another company to sell them at a higher price.

No other alternate site is going to be able to offer the convenience that Amazon does: they could deliver content directly to people's Kindles via Wifi through the Kindle's email address, but not 3G--and they're going to be forced to deliver it DRM free (unless Amazon hands over their proprietary mobi DRM for a "pretty please?")... can you see any publishers doing that?

No, publishers would have to cut Amazon out entirely... instantly. Which would basically cut out the entire Kindle user base. Nobody's going to take a gamble like that.

[leebase]

Originally Posted by abookreader

Lee Lee Lee!!!!

Did you honestly just suggest that the Big 6 Publisher "devalue the book" with low prices?

If they are getting ALL of that price? Sure. There is nothing inconsistent as your are implying.

Originally Posted by abookreader

I dunno. I think that if you were to look at the list of 10 Commandments for Business they probably start with....

1. Don't Engage in a Price War with WalMart
2. Just like 1 but insert "Amazon" where it says WalMart

3. When Amazon declares war on you, don't just lay down and take it.

Originally Posted by abookreader

Bestsellers are largely made because they ..... well sell lots of books. Which pretty much means you need lots of customers. If the publishers start removing their items from the large well known retailers, those spots are not going to remain empty on the Amazon website. Amazon will start promoting other books. Books that they can sell.

Yep. I'd put my money on the Big 6 being more attractive than Amazon could possibly be without the books from the Big 6.

Originally Posted by abookreader

And believe me, there are no shortage of authors out there that would line up in droves for the opportunity to be an "Amazon Author" and they might not write exactly like Nora Roberts but I guarantee you Jeff Bezos can find somebody out there who will come pretty darn close. We probably could find more than a few volunteers right here at mobileread who'd be willing to let Bezos splash their book all over the front page of Amazon at $4.99 per new release.

That's already happening. Amazon is already a publisher and working to become a major publisher. You think DoubleDay would like to depend on Randomhouse selling it's books?

Lee

[carld]

Originally Posted by leebase

If they are getting ALL of that price? Sure. There is nothing inconsistent as your are implying.

Oh yeah there is. The Price Fix Six were making more money with Amazon's $9.99 model than they are with their inflated agency pricing. That didn't stop them from shoving it through anyway. It was all about Amazon devaluing the book, rather than the amount of money they were making, or so they claimed.

[abookreader]

Originally Posted by leebase

If they are getting ALL of that price? Sure. There is nothing inconsistent as your are implying.

Not according to the Executives of the Big Six themselves. Their problem with the $9.99 new release (in their words) was never that they weren't making enough money. In fact, they made more money per book under the old contracts pre-Agency pricing. We heard over and over that their problem with the $9.99 price was that it "devalued public perception of the worth of a book."

and now here you are suggesting that they turn right around and sell at low prices again. Hey, I'm all for it. I liked those $9.99 books.

Yep. I'd put my money on the Big 6 being more attractive than Amazon could possibly be without the books from the Big 6.

I'd take that bet. In fact, I'd take that bet today. The fastest growing segment in the book industry today is the low priced eBook from unknown or barely known authors.