Amazon vs. Hachette Update - It's About Price

[Kumabjorn]

Originally Posted by darryl

It seems quite apparent that the BPH seek at almost any cost to preserve an obsolete business model which I suspect very few of us want. Like tubemonkey I see no reason whatsoever why other readers should subsidise the writing of Chinese history books few will ever read.

Those few who do read a book like that however might perhaps go on to negotiate Apple's contracts with Foxconn resulting in better and cheaper iPhones for everyone. The short term private good may not always correlate with long term communal good.

[darryl]

Originally Posted by Kumabjorn

Those few who do read a book like that however might perhaps go on to negotiate Apple's contracts with Foxconn resulting in better and cheaper iPhones for everyone. The short term private good may not always correlate with long term communal good.

Or perhaps inspired by Chinese history they may lead a revolution in the US and create a totalitarian state with much bloodshed.

We can fantasize all you like. But honestly, this sort of argument is meaningless.

[tubemonkey]

Originally Posted by darryl

Like tubemonkey I see no reason whatsoever why other readers should subsidise the writing of Chinese history books few will ever read.

FTR, crossi said that; I was just agreeing.

[tubemonkey]

Originally Posted by ST-One

Or you could say that Amazon is using their dominant market-position to force everyone to do it their way or go and take a hike.

So true; and it's time for Hachette to get out their hiking boots

[rhadin]

Originally Posted by JSWolf

If Amazon makes more money at $9.99, then the publishers would make more money as well.

Not necessarily true. The publisher and the author bear all the upfront costs and risks; the only thing Amazon bears is a bit of cyberspace. Every ebook sold by Amazon is profit to Amazon, whether the selling price be $1 or $15. That is not true for publishers or authors.

The breakeven number for a publisher might be 100,000 sales so that a profit first occurs with sale 100,001. In contrast, Amazon's first profit is with the sale of the very first unit.

If your statement is meant only to reflect that a publisher may make a larger gross via volume sales at the $9.99 price point, that is unproven. Although Amazon has given us an aggregate overview, that is, Amazon will sell from its entire catalog 174,000 at $9.99 for every 100,000 units priced at $14.99, Amazon hasn't separated out of those gross sales all non-big-5 books.

To know whether Amazon is right or wrong for anyone but Amazon, we need to know the differential for Hachette sales at $9.99 and $14.99. And that differential should be of the same items, that is, sales of, for example, the newest Rowling book at each price point. It might well be that Amazon's numbers hold up, or it might be that Rowling will sell only 1,000 more units at the lower price point and thus no benefit to either the publisher or Rowling.

Amazon's data are so incomplete that they amount to little more than puffery, contrary to what some seem to believe.

[ApK]

Originally Posted by tubemonkey

FTR, crossi said that; I was just agreeing.

I thought I said it, and you and crossi were agreeing with me.
(I only get agreed with so often around here, I'd hate for one to be missed! )

[rhadin]

Originally Posted by crossi

And I don't particularly care if your chinese history book never gets written. I'm not going to read it. And if having it means all the books I do read are higher priced I actively hope it doesn't get written. I'm not altruistic enough to support your tastes by paying higher prices on my stuff.

The problem with that perspective is that I see no reason to support your tastes. I prefer nonfiction and rarely read popular fiction. I certainly never read romance or westerns or erotica or horror or zombies or comics or myriad other types/genres yet I am asked to support those books by paying a higher price for nonfiction.

The "genius" of the system in its current form is that a few major bestsellers -- the James Pattersons, Stephen Kings, Tom Clancys, and similar mega authors -- provide enough profit to allow the publishing of new authors and low-volume sellers, thereby making books that interest you and interest me available. Without the mutual support, none of us would have the books that we do want.

The other "genius" of the system is that enough variety is published to induce readers like me, who buy 4 or 5 hardcovers a month, along with a number of ebooks, to continue buying at that pace. If the book industry had to rely solely on the occasional reader or on libraries (or other tax-supported institutions), we'd be lucky if 5% of the books currently published were published.

And the answer is not self-publishing. Most self-published books go undiscovered by more than family and friends. They cannot make up for the books put out by the BPHs. The very successful self-published ebook is a rarity when compared to the number of self-published ebooks published.

[tubemonkey]

Originally Posted by ApK

I thought I said it, and you and crossi were agreeing with me.
(I only get agreed with so often around here, I'd hate for one to be missed! )

You did. Sorry about that. I stand corrected.

[fjtorres]

Originally Posted by JSWolf

If Amazon makes more money at $9.99, then the publishers would make more money as well.

They would.
And they do.

Here is what the AuthorEarnings DataGuy posted:

Here’s what the authorearnings.com data from July can tell us about comparative sales at different Kindle ebook price points:

Taking the Top 500 Best Sellers at each price point and eliminating the top 10 from each, we see:

$9.99 ebooks outsell $14.99 ebooks by a huge margin in units

http://authorearnings.com/wp-content...rice-point.png

$9.99 ebooks outsell $14.99 ebooks by a huge DOLLAR margin, too, despite their lower price

http://authorearnings.com/wp-content...rice-point.png

Even when looking only at the Top 10 (outliers) for each price point, the pricing sweet spot at $9.99 or above seems to be $10.99 (with $9.99 running a close second).

The Top 10 bestselling ebooks at $12.99 and $14.99 generate fewer gross DOLLARS (as well as selling fewer units) than the Top 10 at $9.99 and $10.99.

http://authorearnings.com/wp-content...t-outliers.png

But… $4.99 beats $9.99 in every category. It sells more units AND brings in more gross DOLLARS than any other price point. This is true even for the Top 10 Best Selling outliers at each price point.

The Top 500 Best Selling Kindle books priced at $4.99 are out-earning those at $9.99, $10.99, $12.99, $14.99, and every other price point.

(Below the Top 10, $3.99 runs a close second to $4.99.)

Which aligns perfectly with what Mark Coker of Smashwords reported on his own data.

There really is more money (gross revenues, not just author earnings) being made at the lower price points.

Amazon ain't lying on this one.

[darryl]

Originally Posted by tubemonkey

You did. Sorry about that. I stand corrected.

As do I. Sorry APK. In that case I agree with you to.

[darryl]

Originally Posted by rhadin

The problem with that perspective is that I see no reason to support your tastes. I prefer nonfiction and rarely read popular fiction. I certainly never read romance or westerns or erotica or horror or zombies or comics or myriad other types/genres yet I am asked to support those books by paying a higher price for nonfiction.

The "genius" of the system in its current form is that a few major bestsellers -- the James Pattersons, Stephen Kings, Tom Clancys, and similar mega authors -- provide enough profit to allow the publishing of new authors and low-volume sellers, thereby making books that interest you and interest me available. Without the mutual support, none of us would have the books that we do want.

The other "genius" of the system is that enough variety is published to induce readers like me, who buy 4 or 5 hardcovers a month, along with a number of ebooks, to continue buying at that pace. If the book industry had to rely solely on the occasional reader or on libraries (or other tax-supported institutions), we'd be lucky if 5% of the books currently published were published.

And the answer is not self-publishing. Most self-published books go undiscovered by more than family and friends. They cannot make up for the books put out by the BPHs. The very successful self-published ebook is a rarity when compared to the number of self-published ebooks published.

So on the one hand you are paying a higher price for non-fiction to subsidise fiction, but later in your post you refer to Tom Clancy and others selling enough to subsidise new authors and low volume sellers. Then, finally, you refer to mutual support. There is no such thing in this context. Either each category stands alone succesfully, or one subsidises the other. Sorry, but you can't have it all ways. In your third paragraph what you seem to be saying is that without the subsidies from books that do sell the books that can't break even wouldn't be published. If this is in fact what you are saying, so what.

There is no genius in the system at all. I and others have no wish to subsidise your reading habits.

As to your earlier post questioning Amazon's figures, I refer you to the excellent post by fjtorres above in response to JS Wolf.

[Barcey]

Originally Posted by fjtorres

Amazon ain't lying on this one.

I have no question about Amazon's data on this:

1) There isn't a benefit for them to lie.
2) They're in the best position to have this data across all ebooks and publishers.
3) Their entire business (beyond ebooks) is built on knowing this type of data.

The publishers should have this data as well but only for their own books. They have enough popular authors that write generic books and have a relatively stable fan base that they can compare how many units sold at $9.99 versus when the tried jacking up the prices.

What Amazon isn't saying is that this is looking at ebooks in isolation. The publishers are arguing that they're trying to protect their higher margins on hard cover editions. The heavy discounting (actual competition) on hard covers means that Amazon is probably making a lot less then 30%. They also have to inventory, manage and ship it so I suspect they make more money selling the ebook at $9.99. Like any smart business man will say though, your profit margin is my opportunity. Amazon is in the business of giving the customer what the customer wants. The publishers are in the business of giving the customer what the publishers want. We'll see who wins.

[fjtorres]

Originally Posted by Barcey

Amazon is in the business of giving the customer what the customer wants. The publishers are in the business of giving the customer what the publishers want. We'll see who wins.

I've said before that the corporate publishers do marketing (though very little of it is effective for midlisters) but do no market research. That is why they throw stuff at the wall to see what sticks and then stampede to me-too anything that sticks for a second.
They have no idea what consumers want next, just what consumers wanted last year or last month. Other, smaller, publishers have closer ties to their readers but the big boys are locked up in their glass towers more worried about internal politics and making their quarterly numbers than about what readers want to read.

One thing the Amazon report has already achieved with their statement is to get the "Authors" Guild (and other BPH apologists) to finally and openly admit for all to see that high ebook prices (and low ebook royalties) are to slow down ebook adoption and to protect the pbooks-on-shelves business model, not to protect literature or subsidize non-fiction or anything worthy. It's their own goldplated overhead they're protecting.

http://online.wsj.com/news/article_e...MDIwOTEyNDkyWj

The Authors Guild, at least, didn’t appear to be mollified. It criticized Amazon’s suggestion for lower retail prices. “Lower e-book prices aren’t necessarily the best thing for writers,” said Roxana Robinson, president of the Authors Guild. “We get a percentage of the price as a royalty. You also have to take into consideration the price of the hardcover. Yes, it’s cheap to make a digital book but it’s expensive to present a book in hardcover.”

Good to know the price you pay for what you want is artificially inflated to prop up what you don't want, huh? To paraphrase Bezos: "Your overhead is my competitive advantage."

Check this one:

http://barryeisler.blogspot.com/2014...is-amazon.html

As I starting pointing out about three years ago, “The current business imperative of legacy publishing is to preserve the position of paper and retard the growth of digital.” Why? Because although the legacy industry offers various value-added services (at least in theory), the only critical service they’ve ever offered — the only one an author couldn’t get any other way — has always been paper distribution. Paper distribution is the foundation on which the legacy industry built its agglomerated business model. That is: “You want distribution? Then you’ll have to take all the services you could have outsourced for a flat fee elsewhere (editing, jacket design, etc) along with it, and you’ll have to pay 85% of earnings for the agglomerated package.”

But in a digital world, authors don’t need distribution services from publishers. In digital, individual authors have exactly the same distribution reach as any corporate publishing partner, and for the same flat rate of 30%. Digital is changing the role of publishers from something authors needed to something authors might, for reasons separate from distribution, merely want.

Having the nature of your business go from “I’m a business necessity and the only game in town” to “If I can prove my value, authors might still want me” represents a cataclysmic change for legacy players.

[Barcey]

One thing that I like about Amazon's statement is that it makes it easy to pick out the articles that are being fair and objective versus the ones that are trying to spin it.

I'm amazed at how many articles compare gross and net percentages.

[rant] If you're trying to present a comparison you use a common unit of measurement. If you don't you're lazy, stupid or trying to obfuscate. [/rant]

[tompe]

Originally Posted by rhadin

The "genius" of the system in its current form is that a few major bestsellers -- the James Pattersons, Stephen Kings, Tom Clancys, and similar mega authors -- provide enough profit to allow the publishing of new authors and low-volume sellers, thereby making books that interest you and interest me available. Without the mutual support, none of us would have the books that we do want.

The other "genius" of the system is that enough variety is published to induce readers like me, who buy 4 or 5 hardcovers a month, along with a number of ebooks, to continue buying at that pace. If the book industry had to rely solely on the occasional reader or on libraries (or other tax-supported institutions), we'd be lucky if 5% of the books currently published were published.

I wonder why people ignore that very true point all the time.