Smashwords Moves to Agency Model

[andrewburt]

Originally Posted by leebase

The publishers saw the hurt coming and acted to head it off. The make money selling books for $25. Amazon was putting their customers out of business with their $9.99 price. Once Amazon put the competition out of business, destroys the market for hard back books, you think Amazon was going to continue giving publishers $12.50 for books they sell for $9.99?

No, Amazon would then say that the publishers would get $7 or so, and there'd be now way to stop them.

Lee

You've got two very powerful forces who were at play there, but Amazon wasn't an irresistible force in that equation. Under the prior, list price pricing model, Amazon was obligated to pay the publishers the wholesale cost of whatever they sold, regardless what Amazon sold the products for, i.e. some contractually agreed percent of the list price. If that was $12.50 and Amazon wanted to eat $2.51 to sell for $9.99, the publishers were still getting $12.50. Under that model, Amazon could not have said No, we're only paying you $7 now. The publishers had (and even today still have) the upper hand because they control the creation of the product.

Both Amazon and the publishers would be hurt if they don't cooperate. Ultimately both sides want to make the most money they can, so they find ways to work together.

Publishers are facing a lose of power -- but it's as the share of revenue from ebooks rises, and that power they might lose will not be not flowing to Amazon, but to authors and others who can do the same things publishers do with ebooks (risk money up front for marketing, for instance). If ebooks become the dominant money making format and paper isn't a big issue, then authors will have a lot of choices, and publishers will have to scramble to show they're the best place to provide those other services. Good competition.

Monopolies are usually bad, and lucikly in this case, I don't see any player being able to hold a monopoly in an ebook-dominated world. On the contrary, I think we're facing an explosive blossoming in (e)books as large or larger than Gutenberg's printing press.


--Andrew Burt
My ebooks

[Sil_liS]

Originally Posted by DMcCunney

Did you not read what I wrote? Amazon released it.

But didn't Amazon get the ebooks from the publishers?

[murraypaul]

Originally Posted by DMcCunney

Kindle/Kindle app users have the selection they like at a price they are willing to pay, and don't see this as an imposition...now. What happens if Amazon does obtain a monopoly on ebook sales (or even a strong majority of the market? Want to bet they won't raise prices, because you don't have an alternative and they can, if they think they need to?

Amazon already have a strong majority of the eBook market.
For that matter, don't they also have a majority of the pBooks market?

What they initially pressed Amazon to do was delay the availability of the ebook version to give the hardcover time to sell, for the same reason there is a year delay between the hardcover and the mass market paperback release. Amazon declined, and even dropped the price of some Kindle editions to $7.99 in a node thumb at the publishers.

You've already withdrawn from this claim in another thread. If the publishers wanted Amazon to delay selling eBooks, they could have simply not given the eBooks to Amazon to sell. Amazon cannot sell eBooks that they have not been given to sell, so the publishers have absolute control over when they start being sold.
What they wanted was to change the price that they were being sold at.

[BearMountainBooks]

One thing that rarely gets discussed in the Amazon/publisher model is that Amazon proved (purposely or otherwise) that there is a huge market for lower priced books. By lowering prices, they not only helped ebooks gain acceptance, they also discovered a pricepoint where people were willing to buy a LOT more books == essentially eating into the USED book market (a market for which Amazon has a lot of data).

By watching what happened with lower prices, I think Amazon realized it was to their benefit to encourage library-goers and used book buyers back into the active market. I write cozies; a HIGH proportion of readers in this market are older, fixed-income and/or habitual library goers and frugal-bin shoppers. I know this from spending a lot of time on forums with people who buy my books--they are attracted to paying a price they were already paying (under 5 dollars.)

The publishers have not had to cater to or really deal with this market--they gave up on it long ago because it was legal to resell print books. Perhaps they don't even believe there is a market there where money is to be made.

While I know publishers feared and fear price erosion, I think the aggregate could actually be positive. There are more people looking to buy books--because they are cheaper or perceived as cheaper.

I'm biased to some extent from working in a library and BEING a used book buyer. These days I can stay within my comfort zone and buy a lot of authors.

I've also learned (as Amazon and others know) about the impulse buyer/shopper. A certain percentage of book buyers buy for the sake of buying. Like quilt makers and other hobbiest they won't actually get around to reading the books, but they are buyers quite often. The lower price-point is an ongoing sale. They can buy bargains even by name-brands! Unlike authors, Amazon and other retailers don't care if the buyer ever becomes an actual reader of said material.

I apologize in advance for typos. I'm on a netbook with an extremely small keyboard...

[lilac_jive]

Originally Posted by BearMountainBooks

Here's 10 percent off Lunch -- Good for the next two days:

WH56V

Another cozy (stand alone) Catch an Honest Thief:

CS44N


20 percent off Under Witch Moon:

VY89K

Note: There will be a giveaway for Under Witch Moon next week. Two e-copies will be given away at: http://fictionfordessert.blogspot.com/ Entry to the contest is usually pretty challenging and consists of "leave a comment on the blog." This is my latest novel and the first in a series, so on this one the price does vary from time to time as I run specials. I'll post a reminder about the giveaway on my thread in the promo area when it starts (I think Wed).

If I missed something you want, (or anyone else who expresses interest) let me know here or PM (don't want to OT this thread!!!). I'm traveling this week so my responses might be delayed. PMs always welcome if you think I missed a question or post.

Lilac--thank you for your interest and for being so nice!

Maria

The coupon for Lunch was expired, but I bought it anyway. Actually I bought all three Thanks!!

[DMcCunney]

Originally Posted by Sil_liS

But didn't Amazon get the ebooks from the publishers?

Yes, they did. Read the rest of what I wrote, about being asked to delay release and refusing.

At that point, the publishers did cut off supplies.

(If you want to accuse the publishers of stupidity in not anticipating something like what happened would occur, I won't argue.)
______
Dennis

[DMcCunney]

Originally Posted by murraypaul

Amazon already have a strong majority of the eBook market.
For that matter, don't they also have a majority of the pBooks market?

A qualified yes to the first, and no to the second. They'd like to have the majority of the pbook market. But there are these outfits like CostCo and Sam's Club, and Walmart and Target, not to mention small fry like B&N and Borders in the way. I believe Amazon the largest individual share, but not a majority of the total market.

(It's a qualified yes to the first because Amazon has a majority of the market, but I don't know offhand how strong it is. B&N is certainly pushing hard to close the gap, and there are other ebook retailers out there.)

You've already withdrawn from this claim in another thread. If the publishers wanted Amazon to delay selling eBooks, they could have simply not given the eBooks to Amazon to sell. Amazon cannot sell eBooks that they have not been given to sell, so the publishers have absolute control over when they start being sold.

See what I said earlier. They probably should have simply delayed releasing the ebooks to Amazon until sometime after the HC was released. I don't think it occurred to them that Amazon would choose to retain the $9.99 price point on those books. (Should it have? Quite possibly. I don't think either side has covered itself in glory in this affair.)

What they wanted was to change the price that they were being sold at.

Yes. They did. The Agency Model was the mechanism to force it.
______
Dennis

[BearMountainBooks]

Originally Posted by lilac_jive

The coupon for Lunch was expired, but I bought it anyway. Actually I bought all three Thanks!!

Ack!!!! I'm very sorry about that. I'm traveling and must have messed my dates up. I can't keep track of what day or hour it is -- I'm out of my normal routine. Thank you though for being brave enough to give them a shot even with a goofy author coupon!!! Much appreciated!!! I'll have to make certain I email you a coupon for the next book!!!

M

[murraypaul]

Originally Posted by DMcCunney

Yes, they did. Read the rest of what I wrote, about being asked to delay release and refusing.

Well that only covers books they had already released.
Did they not continue to supply eBooks alongside new hardcovers?

At that point, the publishers did cut off supplies.

Of all eBooks, not just eBooks of newly released hardbacks.

[Sil_liS]

Originally Posted by DMcCunney

Yes, they did. Read the rest of what I wrote, about being asked to delay release and refusing.

At that point, the publishers did cut off supplies.

(If you want to accuse the publishers of stupidity in not anticipating something like what happened would occur, I won't argue.)

But it makes no sense. If we assume that the publishers thought that Amazon would just sell the ebooks at HC price range, and they were wrong, they have no moral or legal leg to stand on. And the solution was simple, and comes with two options: charge Amazon more for ebooks or give the ebooks for sale later than the HC. And that doesn't mean cut off supplies.

[Andrew H.]

Originally Posted by DMcCunney

Indeed. What happens if Amazon does obtain a monopoly on ebook sales (or even a strong majority of the market? Want to bet they won't raise prices, because you don't have an alternative and they can, if they think they need to?
Dennis

Sorry, people always talk about this in reference to iTunes, Microsoft, Walmart, Amazon...and other companies, too, I'm sure. In point of fact, this *never* happens (with the exception of Standard Oil in the 1890's). The reason it doesn't happen is pretty well understood by economists: (1) the barriers of entry in most markets are low enough that other competitors can come in if the prices are too high; and (2) people will substitute other goods for the pricey goods.

If Amazon had 90% of the e-book market (which they almost do in the US) and jacked up their prices, new e-book vendors would enter the market almost immediately with lower prices (although probably not as low as Amazon's originally low prices). Some people would simply opt not to buy the more expensive e-books and would go back to reading paper books. Other people would buy DVDs or use their entertainment money elsewhere: books are only one entertainment option (and one that is struggling for its share of the entertainment dollar at present).

Amazon would (and already does) use it's market power to try and keep publisher costs down so as to keep prices for the consumer low. I'm not a publisher and I don't have a particular problem with this. If prices get too low for publishers, they will find other outlets: they aren't required to sell to Amazon, and if they want to set up their own online sales system, they are certainly able to do so. Due to the internet, publishers and authors are in a much better position vis-a-vis retail outlets than they were when B&N and Borders had a lock on retail.

[Standard Oil was able to enforce monopoly pricing because it controlled both the entire supply of oil as well as all of the distribution channels. (I.e., it controlled the supply, the distributors, and many of the retailers). If books are too expensive, you have a lot of other options; this was not (and still is not) the case with oil.]