Kindles for sale through independent bookstores

[HarryT]

Originally Posted by fjtorres

Every last one of the bookstores (and device manufacturers) pays Adobe, which either comes out of their profits or jacks up the price. That Adobe tax is paid on every ebook sold forever and ever and amounts to a significant slice of the *profit* in an ebook sale. (It is a fixed amount, not a percent, so for cheap ebooks it can run 10% or more of the retailer's gross margin.)

22c per purchase, to be specific.

Not every ePub bookstore uses Adobe's DRM, BTW. Apple don't, for example.

[fjtorres]

Originally Posted by HarryT

22c per purchase, to be specific.

Not every ePub bookstore uses Adobe's DRM, BTW. Apple don't, for example.

Thanks. I keep forgetting the exact amount.
On free promo ebooks it *costs* the retailer when the publisher runs the promo.

[hansl]

Originally Posted by fjtorres

That Adobe tax is paid on every ebook sold forever and ever and amounts to a significant slice of the *profit* in an ebook sale.

What is Amazon's price for the publishers?

Originally Posted by fjtorres

everything Adobe does, they already do. And in some respects, they do it better. (Direct wireless shopping and delivery, device registration and management, standalone PC-less operation.)

I can do and did the same with my T3.

Originally Posted by fjtorres

So Amazon paying for Adobe DRM is paying Adobe to do things they can do themselves in-house and cheaper. That is the very definition of free ride: getting paid to provide unnecessary services.

Unnecessary for Amazon but not for eInk Kindle Users who might want to buy also from other stores or read ebooks from other sources than Amazon without conversion fuss (except for mobi).

Originally Posted by fjtorres

And the proof lies in the results: Amazon does just fine without Adobe.

This is the proof for Amazon, yes. But I am not an Amazon shareholder.

Originally Posted by fjtorres

The only reason why Amazon would want to waste hundreds of millions of dollars a year paying Adobe would be to try to absolutely positively kill all competing ebookstores. That would be true monopolistic behavior and would draw the attention of the antitrust regulators faster than a speeding bullet. No way does Amazon want that. And neither do we.

So they lock away their customers in order to give them shelter against their potential monopolistic behavior?

Originally Posted by fjtorres

As is, Amazon now runs a legally clean competitive operation. It is cheaper to run than their generic competitors and they choose to pass on the savings to consumers as lower prices.
Consumers get a clear choice: buy into the Amazon ecosystem or buy interoperability. Either choice has its pros and cons but that is life. *Everything* in life is a trade-off. TINSTAAFL!!

No doubt about that. Except that the ADEPT cost is ridiculous on a per book basis and is hardly the source of significantly higher prices.

But I finally get the feeling that no ADEPT on Kindle isn't the real problem. If Amazon would license their DRM to independent bookstores in order to enable them to sell Kindle compatible books, Amazon would make an additional profit and Kindle users could buy where they want (ok, you will say that's what the users are doing already ).
Or is this the case which would wake up the anti-trust regulators? Personally, I think it would be best to separate DRM providers and booksellers and create competition for Adobe on the DRM provider market.

[AnemicOak]

Originally Posted by HarryT

22c per purchase, to be specific.

Plus the thousands to run Adobe Content Servers, plus the extra cost of providing customer support.

[HarryT]

Originally Posted by AnemicOak

Plus the thousands to run Adobe Content Servers, plus the extra cost of providing customer support.

Yes, indeed.

[fjtorres]

Originally Posted by hansl

No doubt about that. Except that the ADEPT cost is ridiculous on a per book basis and is hardly the source of significantly higher prices.

Or is this the case which would wake up the anti-trust regulators? Personally, I think it would be best to separate DRM providers and booksellers and create competition for Adobe on the DRM provider market.

1- Amazon has stated for years that they are willing to license Whispernet, etc to other device manufacturers but nobody has signed up. Probably because there is no money to be made selling Kindle clones. Once they moved to near-cost pricing on the hardware (responding to Nook) they make their money when people use their devices, not when they buy them. That model leaves no room for clones.

2- The Adobe tax isn't the only reason the generic ebookstores are more expensive.
The Kindle supply chain runs: publisher -> Amazon -> reader.
For the generics, it tends to go publisher -> distributor -> ebookstore -> Adobe -> reader.
The distributor gets a cut.
In addition, the ecommerce site host has to get paid, and in many cases the ebookstore is just a front for a company like Txtr, Bluefire, or Overdrive. All those folks like getting paid.

Finally, Amazon is a cheapskate company that can thrive on low single digit margins so they don't need to price at what the market will bear. The way I hear it, their book business runs on a 28% gross margin from list but they can prosper at 3% net. They can theoretically discount all books 20-25% and still make money (they don't) but any generics matching that would be running in the red.

When you hear competitors whinge that Amazon sells below cost, what they mean is Amazon sells below the *competitor's* costs, not Amazon. The reason Amazon runs an enviable ebookstore is because they run a proprietary, do-it-yourself ebookstore that is not interoperable.

Interoperability is a great feature but it doesn't come for free.

What it comes down to is that the first choice a newcomer to ebooks makes is whether they want access to Amazon's bookstore or they want interoperability. If you want into the Kindle world you need their hardware or their reading apps; that is the price of admission. If you want interoperability you pay the price in other ways.

This is no different from what Apple, Google, Sony, Microsoft, Nintendo, or any cable or satellite TV company do. Closed systems are neither monopolistic nor illegal nor against the laws of nature. It's a standard business practice; if you want to play Halo or Titanfall, you get an XBOX--you want to play Mario or Metroid, you get Nintendo.
That's how the game is played.

[QuantumIguana]

Originally Posted by hansl

If they don't buy my ebooks anymore because I invited them to buy the ebooks somewhere else, I'd say it's a short-sighted profit. Also I wouldn't want to live from the charity of a giant. I mean, I help my strongest competitor to sell more books. Is that resonable? But since Amazon is too big to sense myself as competitor it's even more careless to tempt my few customers to move on.

Not many people are likely to abandon paper books because a bookstore sells Kindles. It's not charity, both Amazon and the bookstore gain from it. There are people who read both e-books and paper books - does the bookstore want their business or not? Some bookstores are hostile to those with e-readers, but all this accomplishes is to chase away potential customers.

If someone reads both paper books and e-books, the bookstore is not going to succeed in making them buy paper books by berating them. Surely getting some of the customer's business is better than getting none of it. If you chase away customers who read both paper books and e-books, you get nothing. But if they come to you for their paper books, you at least get some sales. And if you're getting 10% from their sales of e-books, that's good too.

[carpetmojo]

Originally Posted by HarryT

No problem - it's understandable

I find it difficult to shed a tear for Waterstones, given that they are themselves responsible for the demise of a great many truly independent bookshops.

I have to agree - but the High Streets around me would/will seem strange with just Smiths dreary presence !
But........... a nearby town still has a true "old fashioned" bookshop, which has hung on for dear life, through 3 changes of ownership over the last 20 years.
So there is some hope, albeit on a smaller scale, in this instance.

[carpetmojo]

[QUOTE=fjtorres.................................... .................................................. ...................... If you want into the Kindle world you need their hardware or their reading apps; that is the price of admission......................[/QUOTE]


Not strictly true .............

[hansl]

Originally Posted by QuantumIguana

Not many people are likely to abandon paper books because a bookstore sells Kindles.

I was not writing about paper books. That case is a medium change and something entirely different.

[fjtorres]

Originally Posted by carpetmojo

Not strictly true .............

Alf, of course.
But if you're on speaking terms with him you don't care about the "great divide", right?

[Xanthe]

Originally Posted by fjtorres

Those in love with interoperability and all the superior features of epub would never give money to Amazon and thus won't mind a higher price.

It's nice to think so, but.....Error, error!

If they have any concern for their budget, like me, they buy the cheaper Kindle book, strip the DRM and convert it to epub.

And anyone that interested in the formats will have informed themselves of that ability to have their cake and eat it too.

[hansl]

Originally Posted by fjtorres

Closed systems are neither monopolistic nor illegal nor against the laws of nature. It's a standard business practice; if you want to play Halo or Titanfall, you get an XBOX--you want to play Mario or Metroid, you get Nintendo.
That's how the game is played.

I mostly agree with your description of market mechanics, but I don't like it for the reasons I laid out before. The laws of nature promote monopolies up to a critical size. But so what, the laws of nature will kill us anyway some day. And, thank God, Amazon is not illegal. I disagree with the game analogy because Amazon is in most cases not the publisher of the ebook content which they distribute.

[speakingtohe]

Originally Posted by hansl

For me this is incremental suicide. For how long will booksellers remain independent if they get lots of money for nothing from the world's biggest bookseller.

If I would find a Kindle in an independent bookstore I would turn around and run. And never drop a Euro in this shop again. Except if they pay me 10% for each book which I don't buy with a Kindle. This is the suicide part. And in the end I'd buy a Kindle somewhere else.

Cheers,
hansl

I truly don't see how selling kindles in a paper book store will cut down on paper book sales. It is not like kindles can't be bought elsewhere.

It's not like Amazon is giving the customer a discount. They are paying the stores a commission.

The store stands a pretty good chance of making an ongoing profit for a couple of years with no risk or even effort for most of it.

Lots of people have switched to ebooks, but that has and will continue to happen.

I'm thinking that the majority of adults have decided by now, and the market for ereading devices will decline, but many holdouts would be more comfortable buying from a bookstore they are familiar with than online, or in an electronics store. Still if they want one they will get one, so with a profit on the reader and two years commission, plus the initial money back guarantee it would be foolhardy not to give it a try.

Helen

[fjtorres]

Originally Posted by hansl

I mostly agree with your description of market mechanics, but I don't like it for the reasons I laid out before. The laws of nature promote monopolies up to a critical size. But so what, the laws of nature will kill us anyway some day. And, thank God, Amazon is not illegal. I disagree with the game analogy because Amazon is in most cases not the publisher of the ebook content which they distribute.

Microsoft isn't the publisher of Titanfall.
Or many others of their exclusives.
Some are merely timed exclusives like the CALL OF DUTY DLC that launches first on XBOX and only shows up on PlayStation weeks later or the Skyrim DLC that never quite showed up on PS3.
They merely secured an exclusive deal.
Ditto for a lot of their digital-only XBL ARCADE exclusives.

On the business model side there is exactly zero difference between Kindle and Gaming consoles; on both ends you have first party, second party, and third party exclusives and cross platform content. You have digital only and dual format releases. You have big publishers, small publishers, and (at least on XBOX) self-published indies.
And on both sides you have hardware sold at near cost, relying on content revenue to balance the books. The only difference is that in ebooks the platform owner is also the retailer and thus collects their cut upfront and in consoles they get their cut on the back end in the form of royalties. And on the ADEPT side, not even that difference: the platform owner is Adobe and their model is identical to the consoles, with distributors and retailers adding friction (and cost) to the transaction and their cut coming behind the scenes as royalties and licenses.

As Nintendo proved decades ago, the economics of subsidized hardware require tight content control. But they invariably beat non-subsidized systems. Which is why multi-vendor systems like MSX, CD-I, and most prominently: 3DO, lost to Nintendo.

Going with near-cost pricing on ebook readers wasn't Amazon's idea originally but they correctly understood that once one player brings subsidized hardware into the industry you either flow suit or perish as ATARI, INTELLIVISION, COLECO, BANDAI/APPLE, and PANASONIC/3DO discovered.

Like it or not (and I'm not exactly thrilled about it myself), the ebook industry has evolved into a collection of proprietary platforms at the consumer level. That is the reality everybody has to face and adapt to. For vendors, survival hinges on adapting.
For readers it isn't that critical but understanding how and why we got here will save us money and aggravation; salmon runs may be spectacular but the fish don't generally come out well.