Why e-books?

[darryl]

Originally Posted by ratinox

That's not how an argument works. It's not up to me to disprove your position; it's up to you to prove yours, as I have attempted to prove mine. You disagree with my methodology and claim that it is flawed. Fine. Prove it. That's on you.

I've already pointed out specifically sufficient flaws to do just that. Should I then presume that your lack of a specific response to them denotes your agreement? Also, you may benefit from reading the posts of Pwalker8 and kacir.

I'm fearful of concussion if I keep beating my head against a brick wall like this. Let's just agree to disagree. Our respective posts are there for all to see, and people can make up their own minds on the issue, with or without the assistance of either of our posts.

[Cinisajoy]

Originally Posted by darryl

@ratinox. I'm impressed that you have gone to so much trouble. But the data to make a calculation such as you have attempted is simply not available to us. Your methodology is flawed and the assumptions you have used are problematic to say the least. I'm not sufficiently interested in this to spend much time on it, but make the following comments:

You estimate Amazon's share of revenue from the sale of ebooks is about $500M annually, based on ebooks sales of 1M per day at an average price you estimated at $4.50. Your starting point, 1 million ebooks per day, is presumably taken from the February Author Earnings Repot which you link to. However, that report also contains a far more suitable basis for the calculation you attempted. That is, ebook sales revenue per day of $5,755,000. Adopting this as the basis for a similar calculation results in Amazon's share being in round figures $700M per annum.

Your estimate of Amazon's electricity usage based on rated capacity? I will simply say that it is very crude and leaves a lot to be desired. For example, are all operating at full capacity? Assuming thay all operate at full capacity, what is the mix of 25 and 30 capacity Data Centres?

Your next step is even more dicey. You concede the report is somewhat outdated. However, what on earth makes you think you can estimate server usage based on an indefensible split half way between percentage of Kindle contributions to Gross Revenue and to Net Profit. A figure which you yourself think is too high and reduce to an arbitrary 10%. Amazon's servers run all its infrastructure and businesses, including all retail sales, all marketplace sales and, of course, its cloud computer business, which logically would seem to be far more demanding of server capacity than storage and sale of ebooks. Percentage of Sales, gross or net, is a very poor indication of server capacity used.

And what on earth makes you think that Amazon would be paying $US0.25 per kilowatt hour for its electricity? Particularly if it is using so much of it?

Unfortunately, your estimates are not even vaguely accurate. This does not mean that your position has been totally disproved. Simply that your calculations are of no assistance whatsoever in resolving the issue one way or the other. However, your position is, in my eyes at least, totally counter-intuitive. My position, at least until is is disproved, is that overhead costs ot the type you refer to, whilst they do exist, are negligible so far as they relate to the cost of storing and selling Kindle books.

I would think kw hours would be closer to $0.06 if not lower. It is common knowledge the more electricity one uses, the cheaper the kw rate.
(This figure is based on half of what I pay. I think I put the decimal in the right place.)

[ZodWallop]

Originally Posted by ratinox

...it costs Amazon roughly 50% of Kindle's revenues just to keep the servers running.

Seems you are confusing the retail outlet with the publisher. The efficiency of the store front isn't really the publisher's problem.

The argument is getting increasingly silly and at this point, I'll let it go.

[ratinox]

Originally Posted by Cinisajoy

I would think kw hours would be closer to $0.06 if not lower. It is common knowledge the more electricity one uses, the cheaper the kw rate.
(This figure is based on half of what I pay. I think I put the decimal in the right place.)

Fair enough. But your estimate is low for the US. According to the EIA, the best commercial rate average in the country is 7.84 cents per kWh. But since Amazon has data centers distributed all over the US I think it is better to use the national average. That's my bad for using my local rate which is on the high side. Still, with an average commercial cost of 10.70c/kWh it puts Kindle servers' electric bill at around 20% of Kindle's revenue, again assuming that the rest of my assumptions are vaguely correct.

https://www.eia.gov/electricity/mont...m?t=epmt_5_6_a

[Cinisajoy]

Originally Posted by ratinox

Fair enough. But your estimate is low for the US. According to the EIA, the best commercial rate average in the country is 7.84 cents per kWh. But since Amazon has data centers distributed all over the US I think it is better to use the national average. That's my bad for using my local rate which is on the high side. Still, with an average commercial cost of 10.70c/kWh it puts Kindle servers' electric bill at around 20% of Kindle's revenue, again assuming that the rest of my assumptions are vaguely correct.

https://www.eia.gov/electricity/mont...m?t=epmt_5_6_a

I said 6 cents. Oh and average means all prices divided by all buyers so some will be higher and some will be lower.
You just overestimated again. I would bet that the electric output might be 10% but here is the catch, Amazon sells other stuff besides just e-books.

If I had to guess I would say that electricity would be less than 5% of their total revenue.

Logically I would say Amazon probably has a contract with the electric provider for 5 cents a kw hour.

Without looking at your location, do you have your choice of electric companies or is there only one?

[pwalker8]

Originally Posted by darryl

Thanks. I totally agree. We better be careful. This is getting to be a habit!

I'll try to do better.

[ratinox]

Originally Posted by Cinisajoy

If I had to guess I would say that electricity would be less than 5% of their total revenue.

If you have any data whatsoever to back up your claim then I'd like to see it.

Without looking at your location, do you have your choice of electric companies or is there only one?

Where I live? I have one distributor, which owns the power lines, and I believe three generators. Rates for the generators tend to be within 1-2c/kWh of each other.

[Cinisajoy]

Originally Posted by ratinox

If you have any data whatsoever to back up your claim then I'd like to see it.



Where I live? I have one distributor, which owns the power lines, and I believe three generators. Rates for the generators tend to be within 1-2c/kWh of each other.

Mine was just a very rough guess based on my knowledge of how US businesses work.

Here big companies get many discounts.
Example: Jill's Book Store with 1,000 square feet will not be offered a discount on electric. B&N with 10,000 square feet will be offered a small discount.
Amazon with 100,000 square feet will get the best rate.
Amazon probably has a contract for a certain cost per kw for several years.

[polarsuds]

Because I have very low vision and it is much easier to read a big font on my bright kindle screen than a real book.

[ratinox]

Originally Posted by Cinisajoy

Mine was just a very rough guess based on my knowledge of how US businesses work.

Fair enough.

I've worked in small and mid-sized data centers (nobody nearly as big as Amazon, though). Electricity for power and cooling is the largest continuing expense a data center of any size faces. I have no doubt that Amazon gets good rates on their power bills, but don't forget that Amazon doesn't get nearly the 30% that Apple takes from each sale.

[Cinisajoy]

Originally Posted by ratinox

Fair enough.

I've worked in small and mid-sized data centers (nobody nearly as big as Amazon, though). Electricity for power and cooling is the largest continuing expense a data center of any size faces. I have no doubt that Amazon gets good rates on their power bills, but don't forget that Amazon doesn't get nearly the 30% that Apple takes from each sale.

You are right they don't. They get more than 30%. If a book is priced between $2.99 and $9.99, and the author chooses 70% then Amazon takes 30% + a small delivery fee.
If the book is .99 to 2.98 or higher than 9.99 then Amazon gets 65%. Or if the author has chosen the 35% royalty on the book then Amazon gets 65%.
This is on ebooks and if I remember right, it is darn close to 30% on sales too.

[ratinox]

Originally Posted by Cinisajoy

You are right they don't. They get more than 30%. If a book is priced between $2.99 and $9.99, and the author chooses 70% then Amazon takes 30% + a small delivery fee.
If the book is .99 to 2.98 or higher than 9.99 then Amazon gets 65%. Or if the author has chosen the 35% royalty on the book then Amazon gets 65%.

Your figures are accurate for independent authors (that is, authors who act as their own publishers and use Amazon for distribution and sales). They are completely off for trad-pub authors who typically get 15% of cover price (not sale price) royalty.

Then again, authors who act as their own publishers have to cover all of the publishing-related costs themselves: editing, layout, proofing, cover artwork, advertising, and so forth if they want a professional product. An independent author can expect to pay on the order of $5K out of pocket (or Kickstarter funds) to cover these costs for a full-length novel. That's not a number pulled out of my behind; that's what it cost Ryk E. Spoor to get Polychrome (shameless plug: buy the book and read it--it's good) published.

This is on ebooks and if I remember right, it is darn close to 30% on sales too.

Do you have any references to back this claim? Because it flies in the face of Amazon's claims of selling at low margins like Walmart and my experience as an Amazon customer.

[ratinox]

Okay, it's about time I actually responded to the original question: why ebooks.

It's a bit complicated for me.

My earliest forays into ebooks were with text files from Project Gutenburg on my two Newton devices. Great devices for reading, albeit rather bulky and inconvenient to carry around. Then they died and there really wasn't anything that could provide a comparable or superior reading experience other than dead trees. And that's what I went back to for quite a while.

Then electronic paper devices like the first generation Kindle started being made. Neat idea but not compelling at the start. And then I got this itch to find something that could replace computer printouts. The electronic paper thought came back and I started looking at large format devices (Kindles and the like were too small). iRex came to the rescue with iLiad, one of the first large format, dedicated readers (and the only one I could get my hands on at the time, and never mind that iRex deserved its fate).

And then my parents sold their house where I was keeping all of my dead trees and I didn't have any other place to store them. Despite my preference for physical media (of any sort) I simply didn't have space for all of it. I donated almost all of my books to the town library. Since then I've been almost exclusively ebooks. The rare exceptions are technical books for work and when I want an author to autograph something.

Personally, I think the last nail in the coffin of paper books as entertainment will be someone figuring out a way for authors to autograph ebooks at conventions and signing events and such.

[Cinisajoy]

Originally Posted by ratinox

Your figures are accurate for independent authors (that is, authors who act as their own publishers and use Amazon for distribution and sales). They are completely off for trad-pub authors who typically get 15% of cover price (not sale price) royalty.

Then again, authors who act as their own publishers have to cover all of the publishing-related costs themselves: editing, layout, proofing, cover artwork, advertising, and so forth if they want a professional product. An independent author can expect to pay on the order of $5K out of pocket (or Kickstarter funds) to cover these costs for a full-length novel. That's not a number pulled out of my behind; that's what it cost Ryk E. Spoor to get Polychrome (shameless plug: buy the book and read it--it's good) published.



Do you have any references to back this claim? Because it flies in the face of Amazon's claims of selling at low margins like Walmart and my experience as an Amazon customer.

Excuse me but an independent author can spend anywhere from $0 to more than $10,000 on a book. Ryk Brown spends way more than $5k on his books. He is great too. Joe Nobody and Russell Blake are also very committed to their books. (If we are recommending great authors.) Oops almost forgot J A Konrath, Blake Crouch and Hugh Howey. Sorry guys, still love yall.
But that has nothing to do with Amazon.
And Amazon sells many more independent authors than trad. So if you want to get technical, Amazon makes more than 30%. Truth be told Amazon makes way more off the 99 cent books than the higher priced books. They also sell more of them unless it is new release week.

This is well proven by Hugh's and Data Guy's author earning report.

As to the second part, go look at becoming a seller on Amazon. It has all the figures.
That is where I get my figures.

[ratinox]

Okay, Now I see the source of my confusion. I'm looking at Amazon as the wholesaler or deep-discount retailer (think Costco or Walmart). You're looking at Amazon as the storefront provider and distributor for independent sellers including authors.