Penguin: Publishers need the e-book to survive

[GregS]

Sorry to keep intruding. There is an important difference between store system, and a general payment, or cash system. Unless the money can be moved independently of vendor it is trapped.

Transaction costs are minimal, they can be considered free. After all that is involved is a small piece of encrypted information to travel through to a server. The processing is negligible as well, for it is the overall costs of having the servers, the software and the bandwidth which in this way are all fixed capital.

Maintaining the service 24/7, with security, is another fixed cost. The fact is that it makes no real difference whether a few thousand transactions are dealt with in a week, or a billion a day, so long as the processing and bandwidth support the higher amount of traffic.

So when banks complain of costs of transactions, they are basically lying, there are no variables, just fixed costs which would be there regardless of the number of electronic transactions. What they are doing is double-dipping, they use your funds to invest and profit from that, and then charge you for using your own money.

Remember electronic transactions mean more money actually spends more of the time resting in the bank - in the old days it would be taken out, spent and only later processed back in, from the banks point of view, this meant it left the system - most of our money stays in the banks hands most of the time, and when convenient the differences between banks is reconciled.

What costs in other words adhere to transactions themselves, or even accounting for them? Practically none.

Given a big enough account in a real bank, earning just normal bank interest, there is more than enough capital to keep transactions going without customers or vendors paying anything.

The trick is to grow the account to the point where it is paying for all that is needed, don't believe a thing about the costs of transactions, they long stopped the practice of little men flying about the world with briefcases chained to their hands, and rows upon rows of accounts processing through calculators - then transactions had a real cost interestingly the charges did not exist as the banks absorbed these as part of doing business and attracting depositors.

[Steven Lyle Jordan]

Originally Posted by NatCh

...the lower the better, obviously.

Well, until it reaches the point where the author isn't getting enough from the transactions to pay their own bills.

Although I can see micropayments for many kinds of information, I suspect that books will always be considered art, and as such, will command higher prices than other products. Full-length novels may never become objects of micropayment due to that reality--unless a patronage system or advertising support is standardized, paying the artist's way and making income from their books supplementary only.

[nekokami]

The micropayments might apply to the advertisements, actually. But I think much of the point of the micropayment system for books would be to reduce the transaction fee. We started this by noting that systems such as PayPal charge a minimum of US$.30 per transaction, as well as a percentage of the sale price, and noted that this amount is much too high for low-priced items.

Or maybe I got lost somewhere in the thread....

[NatCh]

Originally Posted by GregS

Sorry to keep intruding.

You're not intruding, you're participating! And making good points besides.

Originally Posted by Steve Jordan

Well, until it reaches the point where the author isn't getting enough from the transactions to pay their own bills.

By "the lower the better" I meant the costs of the transactions on a per transaction basis. The lower that cost per transaction gets the less it eats into the money being transfered and the less of a bite it takes from the author's portion -- I think you and I agree on that point: the author should and must be able to profit from his labor.

Of course GregS's points on the actual transfer/transaction costs come into play more there. I think you may be missing some variables, GregS, or weighting them too lightly, but that's nit-picking. I think you are correct that the interest on a large account would far out-strip the transfer costs.

I'm not sure that applies for the "average" account, though, the last statistics I encountered on the matter held that most Americans (I've no idea on the rest of the world) keep very little cash in bank accounts for any length of time, so those transaction fees may be more important to banks on "typical" accounts than on a large one like you're talking about.

That being said, I do notice that my bank charges me to use their Bill Pay solution, but they don't seem to charge me for using online payment options for my credit cards, insurance payments and mortgage. And they charge me for using someone else's ATM, but not for using my card for Debit purchases, even when I get cash back. So something's ... odd there somewhere.