Amazon vs. Hachette Update - It's About Price

[rhadin]

Originally Posted by tubemonkey

As to Amazon, they took a loss on some ebooks. Overall, they still made a profit on ebook sales.

We know that Amazon took a loss on "some" ebooks because the numbers were publicly known. We do not know that Amazon still made an overall profit on ebooks because the numbers are not public. The assumption is that they made a profit but that is all it is. Amazon has never broken out the financials. We do not know, for example, whether the reason Amazon has not shown a profit for most of its corporate life is because of losses in selling televisions or losses in selling books or on losses in selling print media or losses in selling digital media or whatever.
We only know that Amazon has not been a profit-making company.

Originally Posted by tubemonkey

Under wholesale, the publishers made more than they did under price fixing. If Agency is such a wonderful pricing scheme, then why don't they do it for print books?

There has been no need to institute agency pricing for print books because even Amazon, in its willingness to sell at a loss, will only do so for a small portion of the print market. If you look at Amazon's pricing, most print books are priced at or near the list price.

Amazon has always made it clear that it considers digital books different and that it was willing to set a price ceiling in order to capture as close to 100% of the ebook market as it can. For Amazon, there are a lot of advantages to controlling the ebook market. But more importantly, the ebook market is one that offers the opportunity for control. The pbook market has already been well-established and even though it might capture a significant portion of the pbook market, it has no hope of capturing close to 100%.

The digital ebook market is a new market still in its infancy and not yet so well-established that it cannot be owned. Publishers recognize this and recognize Amazon's strategy for what it is -- a scheme to control the digital market. Let us not forget that for years Wall Street has been willing to let Amazon slide as regards profits but it hasn't extended that same willingness to any other bookseller or retailer.

I think the reason for Amazon's recent aggression with Hachette and Disney are a direct result of Wall Street telling Amazon it is time to make profits and give dividends, just like is expected from every other company.

[rhadin]

Originally Posted by DuckieTigger

Second the assumption that a competitor can just as easily discount as Amazon and overall make a profit is not true. If it wasn't for Amazons "secret sauce" in marketing and presenting their books, the losses from certain titles would be hard to recover from other titles.

I don't know what "secret sauce" you are referring to but the big advantage Amazon has had is Wall Street's willingness to let it continue to lose money and not pay dividends, something Wall Street has been unwilling to do for any other company. As I wrote earlier, I suspect that Amazon's recent aggressiveness with Hachette and Disney is a direct result of Wall Street's change in tune and the now requirement that Amazon produce profits and dividends just like other companies are required to do.

[rhadin]

Originally Posted by TCSimpson

This was a good read.
http://www.leegoldberg.com/my-letter...uglas-preston/
What I found interesting that not many here have addressed, and those who basically dislike or hate Amazon don't seem to even acknowledge is:

The reason there is no outrage -- or at least one reason based on discussions I have had with a few authors -- is that the reason the B&M stores refuse to physically carry those books is because Amazon will not also let them sell the ebook versions. It is also worth noting that all of the B&M stores will special order an Amazon title; all they are doing is refusing to stock them on the shelves.

Another logical reason why no outrage is that authors recognize that there is limited shelf space available and thus none of the B&Ms carry all of the titles published by any of the major publishing houses -- they pick and choose. The B&Ms have simply chosen not to shelve Amazon imprints in the absence of the right to sell the ebooks, too.

[shalym]

Originally Posted by rhadin

The reason there is no outrage -- or at least one reason based on discussions I have had with a few authors -- is that the reason the B&M stores refuse to physically carry those books is because Amazon will not also let them sell the ebook versions. It is also worth noting that all of the B&M stores will special order an Amazon title; all they are doing is refusing to stock them on the shelves.

Another logical reason why no outrage is that authors recognize that there is limited shelf space available and thus none of the B&Ms carry all of the titles published by any of the major publishing houses -- they pick and choose. The B&Ms have simply chosen not to shelve Amazon imprints in the absence of the right to sell the ebooks, too.

How many b&m bookstores actually *sell* ebooks? Your logic holds true for Barnes and Noble, and for...well, that's it, actually. (at least in the US) There are some independent booksellers that are affiliates of either Kobo or Google, but they could have the same deal with Amazon if they wanted to.

Shari

[Barcey]

Originally Posted by rhadin

The reason there is no outrage -- or at least one reason based on discussions I have had with a few authors -- is that the reason the B&M stores refuse to physically carry those books is because Amazon will not also let them sell the ebook versions. It is also worth noting that all of the B&M stores will special order an Amazon title; all they are doing is refusing to stock them on the shelves.

Another logical reason why no outrage is that authors recognize that there is limited shelf space available and thus none of the B&Ms carry all of the titles published by any of the major publishing houses -- they pick and choose. The B&Ms have simply chosen not to shelve Amazon imprints in the absence of the right to sell the ebooks, too.

1) Blocking access to Amazon paper books because you want to sell ebooks is a negotiating tactic. This is worse then what Amazon is doing. They have removed them (delisted them).

2) The B&M stores will special order them direct from Amazon, you just have to wait. This is exactly what Amazon has done.

3) Amazon has limited physical space too. They've chosen to use it to stock books from publishers they have contracts with.

Another more likely explanation is that the Authors United are a bunch of hypocrites. They claim to not be taking sides yet formed Authors United specifically to take sides.

[gmw]

As a self-published author, I was amused when I got my email from Amazon asking me to write to Hachette. What exactly do they think is in it for me? Why should I want BPH books to be cheaper?

If Amazon were to offer me 100% of sales then maybe I'd be a bit more enthusiastic in my support . Even just the right to discount my books occasionally on Amazon without going exclusive would be a nice incentive. But no, this is just big business playing games with public opinion. I doubt if things will change much for me, whichever way this eventually comes out.

(This may sound a bit mercenary, but then the whole dispute is based on self-interest - no point kidding ourselves that Amazon are doing this "for the readers", they're just trying to sell it that way. As a reader I may like to see some books available cheaper ... but then, I live in Australia, so that's not going to happen in a hurry whatever Amazon and Hachette decide.)

I'm not specifically pro BPH, nor specifically pro Amazon. If I had to pick a side I'd go with Amazon from the self-interest perspective that it has done a lot to make self-publishing a viable alternative. ... But in this dispute? Meh. I accept that both sides are in it to make as much out of it as the market will let them. Paperback releases have been delayed in order that bigger margins could be made on hardcovers going to those that can't wait. I don't see the ebook price thing that much differently. I'll let the big boys fight it out and live with the result (as if I had a choice).

[eschwartz]

Originally Posted by rhadin

I don't know what "secret sauce" you are referring to but the big advantage Amazon has had is Wall Street's willingness to let it continue to lose money and not pay dividends, something Wall Street has been unwilling to do for any other company. As I wrote earlier, I suspect that Amazon's recent aggressiveness with Hachette and Disney is a direct result of Wall Street's change in tune and the now requirement that Amazon produce profits and dividends just like other companies are required to do.

Give dividends, yes. Make profit, no. Amazon makes plenty of profit, which is reinvested in the business rather than forming a useless war chest. Wall Streeet doesn't want profit they want dividends, so their upset is both reasonable and understandable. Why some people live in a delusion that that means Aamzon has been losing money by existing all these years, I do not know.

[ApK]

Originally Posted by gmw

As a self-published author, I was amused when I got my email from Amazon asking me to write to Hachette. What exactly do they think is in it for me? Why should I want BPH books to be cheaper?

According to that email:

1. To see a boost to the reading culture, thereby increasing your indie value and market along with the BPH's.
2. To show solidarity against using authors as pawns in the dispute, which would, ostensibly, be remembered by Amazon if a KDP/indie dispute ever comes up.

Regardless of whether you think they are right, or have ulterior motives, I thought they were pretty clear on what they thought was in it for you and why you should want it.

ApK

[HarryT]

Originally Posted by rhadin

I don't know what "secret sauce" you are referring to but the big advantage Amazon has had is Wall Street's willingness to let it continue to lose money and not pay dividends, something Wall Street has been unwilling to do for any other company.

They don't need to pay a dividend: investors are making money through the relentless increase in the share price: up from $20 in 1997 to $320 today.

Amazon don't really lose money, of course. They make boat-loads of money - they simply reinvest it all in infrastructure (building distribution centres, etc).

[gmw]

Originally Posted by ApK

According to that email:

1. To see a boost to the reading culture, thereby increasing your indie value and market along with the BPH's.
2. To show solidarity against using authors as pawns in the dispute, which would, ostensibly, be remembered by Amazon if a KDP/indie issue every comes up.

Regardless of whether you think they are right, or have ulterior motives, I thought they were pretty clear on what they thought was in it for you and why you should want it.

ApK

Of course they have ulterior motives ... although "ulterior" is probably not the right word, since it is pretty obvious: making money.

I don't see dropping ebooks from $14.99 to $9.99 as making a significant difference to the "reading culture". (Or probably even noticable, especially since $14.99 is quite an exaggeration of reality according to Hachette's response.) It's not like, as Amazon cited, the order of magnitude difference between hardcovers and paperbacks when they were first released.

How exactly is using me, as an author, in Amazon's big business dispute with Hachette, supposed to show "solidarity against using authors as pawns in the dispute". Isn't there something just a little skewed with that? Or is it just me?

Thanks for trying, but I'm still not convinced that there's anything in it for me (whichever way it goes).

[ApK]

Originally Posted by gmw

Thanks for trying, but I'm still not convinced that there's anything in it for me (whichever way it goes).

As I said, you can disagree with them, I just thought, in answer to your question
"What exactly do they think is in it for me?"
it was pretty clear what they were CLAIMING was in it for you.

How exactly is using me, as an author, in Amazon's big business dispute with Hachette, supposed to show "solidarity against using authors as pawns in the dispute". Isn't there something just a little skewed with that? Or is it just me?

An ally is not the same thing as a pawn.
A queen might make the same move as a pawn. That doesn't make them equal.

Amazon wants KDP authors as allies, against "Authors United" who purports to be Hachette's ally.

The pawns, in Amazon's view, are Hachette's authors, who's sales will suffer if Hachette doesn't negotiate or accept Amazon's offers to take them out of the equation during the dispute, and those authors have no control or say in the matter.
Again, you can disagree with their view.

[gmw]

Originally Posted by ApK

[...]An ally is not the same thing as a pawn.[...]

True enough. But we should bring this back to what Amazon actually said:

We recognize that writers reasonably want to be left out of a dispute between large companies.

This in an email asking writers to take a part in the dispute. Given the help they've already been receiving (presumably unsolicited, but I don't know), the email seemed inappropriate. Even more so when it is unclear that Amazon's demands are doing any favours for self-published authors - and could be quite the reverse.

[ApK]

Originally Posted by gmw

True enough. But we should bring this back to what Amazon actually said:

Surely, you could tell from that phrasing that there was a 'but...' coming.

They did later say

We’d like your help.

And you are free not to give it if you don't think it's in your best interest, of course.
Or even if you thought it was.
I happen to agree with Amazon, and I'm still not writing Hachette.

Of course, my status as "a KDP author" barely moves the needle in to the "technically true" range so I doubt anyone cares.

[petrucci]

Originally Posted by SteveEisenberg

Note that just 659 theatrical films (produced in all countries) were released in the United States last year.

This compares to 15,000 plus titles annually released by Penguin Random House alone, and not including the Author Solutions self-publishing subsidiary.

Right now I am reading this Simon & Schuster autobiography of a man who escaped North Korea:

http://books.simonandschuster.com/De.../9781476766577

This kind of book has such a small audience compared to a theatrical film that there would be no hope of recouping costs at the price point you suggest. Having said that, it will indeed be much cheaper than a movie ticket -- in a couple years.

You may say that you read bestsellers. But the great majority of big publisher bestsellers sell far fewer copies than the number of people who watch the average big studio film. Even if the price of the book was 99 cents, more people would watch the film, because most people read few books. Unless you want no non-indie books to exist, the lower sales numbers have to considered in the book price charged during the first year or so after release.

Several pages back I made a post regarding price. In it, I mentioned that books with lower volume sales have justification for higher prices. I also stated that it was ironic that many of the expensive books are the ones that sell the best. It is the indies and low volume works that tend, as a whole, to cost less.

[DuckieTigger]

Originally Posted by petrucci

It is the indies and low volume works that tend, as a whole, to cost less.

And you are so sure that the indie titles are low volume sellers based on your gut feeling? And your gut feeling also told you that the lower cost ebooks do not outsell the expensive ones? For traditional publishers ebooks do not sell in higher volumes than pbooks (yet).