WSJ: E-Book Sales Fall After New Amazon Contracts

[murg]

Originally Posted by DiapDealer

Same place you are right now. At the mercy of a retailer you can't possibly survive without.

Amazon will eventually have everything they want from BPHs. Their delaying tactics are only delaying tactics. Instead of innovating, they've decided to bank on the idea that they only need to drag their feet until Amazon messes up or goes away. I understand the "We've got to do something" mindset. I just don't think ebook agency IS that something. Now Amazon is simply heavily discounting their print books. You know ... those things that ebook agency pricing was supposed to be protecting the value of in the first place?

Once consumers get used to the idea that print books (BPHs self-proclaimed "bread & butter") should be dirt cheap--maybe cheaper than ebooks--what then?

At some point, one of the publishers will break ranks.

Probably due to their corporate overlords appointing a non-publishing CEO (probably a finance guy) to head it when the profits go down due to agency.

Once the maverick shows a profit due to pricing, without a blockbuster, all the other publisher's corporate overlords will notice, and we will be back to non-Agency.

[fjtorres]

Originally Posted by ottdmk

I'm saying I can understand the reluctance of an industry that is based on substantial profit margins to not fully trust a company that has a model of using much smaller margins to chase continual growth.

Actually, publishing itself is a low margin business.
Their net profit runs in the single digits *despite* the high margins of ebooks.

The aggregate net for the Five BPHs (which BTW are *not* representative of the industry as a whole--most other publishers are happy selling wholesale) has been flat for seven years despite massive growth in ebook revenue and mergers up the wazoo. And that is without factoring in inflation.

Just consider that the typical ebook--no warehousing or shipping costs, no returns, infinite shelf life, has a 50% gross margin vs a maybe 20% gross margin for print. Then add in the facy Manhattan digs for companies that choose to house their *data center* in places like the Flat Iron building.

Print is *at best* a break even business.
That is why they pray for (or should it be prey upon?) lottery winners, because without them they *need* to publish tens of thousands of titles to equal the profits of one 50-Shades.

NYC publishing is inherently a low margin business, sprinkled with occasional high margin accidents. And by seeking to reduce sales of their high-margin product to increase sales of the low margin version they are making it a lower margin business for *them*. They are also making themselves less representative of the industry.

There is a whole lot of publishing going on outside their little shrinking domain.

[SteveEisenberg]

Originally Posted by fjtorres

Tradpub will survive but the longer term trends are all back to the future; small specialty houses.

As a reader, I'm neutral on this. There's a certain kind of businessperson who likes large canvas reorganization. If acquisition isn't possible, they'll try divestiture.

Originally Posted by fjtorres

Actually, publishing itself is a low margin business.

Gee. That sounds like something I would say. It then looks to me that they are aren't likely to be overpricing.

Originally Posted by fjtorres

The aggregate net for the Five BPHs (which BTW are *not* representative of the industry as a whole--most other publishers are happy selling wholesale) has been flat for seven years despite massive growth in ebook revenue and mergers up the wazoo.

It then looks like book publishers are handling the digital transition much better than newspapers and magazines, despite the hundreds of thousands of indie books self-published annually, at low prices, in recent years.

[eschwartz]

Originally Posted by issybird

Duly noted.

Please don't hurt me!!!

[MikeB1972]

Originally Posted by murg

At some point, one of the publishers will break ranks.

Probably due to their corporate overlords appointing a non-publishing CEO (probably a finance guy) to head it when the profits go down due to agency.

Once the maverick shows a profit due to pricing, without a blockbuster, all the other publisher's corporate overlords will notice, and we will be back to non-Agency.

Hard to say, Amazon's pricing works best for Amazon.
I'm not convinced it is in the best interests of the big 5.
You have to bear in mind that Amazons margin is, essentially, all profit on ebooks so they want more money through the door and their preffered $5-$9.99 may do that.
The Big 5 have more outlay and risks, they would need a massive best-seller to make any money on a $5 title, I suspect the fact that they are all part of huge conglomerates mean that someone with more talent than I has looked at the figures and is convinced that Amazon's pricing structure would be detrimental to them, as it stands all their books will drop into the Amazon Preferred range sooner or later (Probably when the MMPB is released) so I assume it in their best interests to get the higher amount for the newly released titles while they can.
Just to add, I don't buy ebooks at hardback prices myself but many do, and even with my limited brain I can see that it is a bit dim to ignore those higher profits while you can get them.

[pdurrant]

Originally Posted by pwalker8

I rather doubt that Fictionwise or Feedbooks was damaged by Agency pricing.

Personally, I bought loads from Fictionwise before agency pricing, and almost nothing afterwards. I remember comments from many other customers along the same lines.

[DuckieTigger]

What I am wondering is: are the declining ebook sales lost or is the market share of the big 3 with agency for ebooks simply shrinking? I don't really see how all of a sudden pbooks are more attractive unless they are made that way. I can see how Amazon is playing really smart (some might say dirty) by driving pbook prices down. Soon enough the big publishers might get the real dumb idea to implement agency pricing for pbooks.

[Barcey]

Originally Posted by DuckieTigger

What I am wondering is: are the declining ebook sales lost or is the market share of the big 3 with agency for ebooks simply shrinking? I don't really see how all of a sudden pbooks are more attractive unless they are made that way. I can see how Amazon is playing really smart (some might say dirty) by driving pbook prices down. Soon enough the big publishers might get the real dumb idea to implement agency pricing for pbooks.

Have you seen data that shows Amazon started discounting hardcovers more after the latest contracts? What I've observed is that they've been consistently deep discounting bestselling hardcovers (before and after agency) and matching the pricing of the big box stores (Walmart). All that changed is the conspirators raised the price of the ebooks so they are only a penny cheaper and took away Amazon's ability to discount.

[JSWolf]

Originally Posted by pwalker8

I rather doubt that Fictionwise or Feedbooks was damaged by Agency pricing.

I cannot speak for Feedbooks, but Fictionwise was hurt big time by agency. Fictionwise had a successful way of selling eBooks that involved discounts, club pricing, and credit back. None of that was allowed under agency. So Fictionwise was unable to do business in the way they used to do business. So don't say nobody was hurt by agency. Fictionwise was hurt big time.

[DuckieTigger]

Originally Posted by Barcey

Have you seen data that shows Amazon started discounting hardcovers more after the latest contracts? What I've observed is that they've been consistently deep discounting bestselling hardcovers (before and after agency) and matching the pricing of the big box stores (Walmart). All that changed is the conspirators raised the price of the ebooks so they are only a penny cheaper and took away Amazon's ability to discount.

So if nothing changed concerning how and how much pbooks are discounted, then the decline in ebook sales is due to the move back to agency alone?

[darryl]

What decline in ebook sales? I don't know for sure, but I certainly suspect strongly that the real decline is only in traditional publishing ebooks which are priced ridiculously. And I also strongly suspect that most of the money is going to Indies with Amazon picking up a very healthy share. Certainly this is what has happened with me. I can't remember the time I last bought a Big 5 title. My favourite traditionally published authors whose books I would once buy I now borrow from the library, even if I have to wait. And I begrudge the Big 5 even the money that they rip-off from the library. I'm sure I'm not typical but I doubt very much that I am alone.

[DuckieTigger]

@darryl: the decline in the WSJ article that is mentioned.

“The new business model for e-books is having a significant impact on what [the big] publishers report,” said one publishing executive. “There’s no question that publishers’ net receipts have gone down.”

And:

Amazon says e-book sales in its Kindle store—which encompasses a host of titles that aren’t published by the five major houses—are up in 2015 in both units and revenue.

Now that with a grain of salt as Amazon is only one ebook seller. A big one, yes, but not the only show in town.

[darryl]

Understood Duckie. Unfortunately there does not seem to be any really reliable source of figures that takes in everything. I find the assertion that the overall ebook market is shrinking very counter-intuitive, though I have no doubt that the traditional publishers are losing significant market share as their agency adventure has really backfired so far.

There are of course other sources of Indies, and I haven't seen reports on how these are going. However, Amazon in a sense pioneered this market and I suspect their share of it is likely a very large proportion indeed. And how do we factor Kindle Unlimited into this equation. It must certainly be impacting on Indie sales, both of books in the program and other Indie books. But I wonder what share of the revenues foregone by Traditional publishing have made their way to Kindle Unlimited.

I believe, but cannot prove, that more Indies ebooks are being read than ever, and am very skeptical about reports of a declining overall ebook market.

[Phogg]

Originally Posted by JSWolf

I cannot speak for Feedbooks, but Fictionwise was hurt big time by agency. Fictionwise had a successful way of selling eBooks that involved discounts, club pricing, and credit back. None of that was allowed under agency. So Fictionwise was unable to do business in the way they used to do business. So don't say nobody was hurt by agency. Fictionwise was hurt big time.

And this puts those of us who were customers of Feedbooks and Fictionwise in a position to point out that the big five parallel the Menendez brothers.

You don't get sympathy for being an orphan when you murder your parents, and you don't get sympathy for Amazon dominating ebook distributors when you drove their two biggest competitors out of business. Instead you get mockery and quite properly so.

[DuckieTigger]

Good point about KU. I doubt it would be under the increase in sales of ebooks Amazon mentions, but additionally. Out of first hand experience I can say that KU has drastically reduced money spent on books per year overall and almost eliminated purchases for me. But consumptian is way up. If the urge to buy a book suddenly hits out of nowhere I usually don't have to worry about cost. Before KU? Always had to make compromises (usually me telling my wife that no, she cannot have all of the books she picked out).