Amazon vs. Hachette Update - It's About Price

[DiapDealer]

Granted.

[Fbone]

Originally Posted by DiapDealer

Nobody really thinks Amazon is still paying for all physical books up front (before the sale), do they? Perhaps maybe with publishers they currently have no contract with (ahem), but other than that ... I don't believe for a second that they're "buying" BPH pbooks in advance. The publishers are using Amazon's warehouses for mass pbook storage and then Amazon is evening up with them (based on sales) at a later date. Just like they do with ebooks (the "later date" part, not the "storing in warehouses" part).

Amazon has a warehouse a few miles away from Hachette's. I'm sure that's not a coincidence. It also doesn't explain the 3-4 week delivery "delays" to receive Hachette titles.

[tubemonkey]

Originally Posted by Fbone

Amazon has a warehouse a few miles away from Hachette's. I'm sure that's not a coincidence. It also doesn't explain the 3-4 week delivery "delays" to receive Hachette titles.

If you don't have a contract, then why would you continue to stockpile product?

[Fbone]

Originally Posted by tubemonkey

If you don't have a contract, then why would you continue to stockpile product?

Amazon sells many Hachette titles without delay and all their ebooks so there must be some contract clause in effect.

[tubemonkey]

Originally Posted by Fbone

Amazon sells many Hachette titles without delay and all their ebooks so there must be some contract clause in effect.

I'm sure some of it has to do with leverage during negotiations. Also, how many warehouses does it take to store ebooks?

[Fbone]

Originally Posted by tubemonkey

I'm sure some of it has to do with leverage during negotiations. Also, how many warehouses does it take to store ebooks?

Certainly.

I have no knowledge of how ebooks work.

[DiapDealer]

Originally Posted by Fbone

Amazon has a warehouse a few miles away from Hachette's. I'm sure that's not a coincidence. It also doesn't explain the 3-4 week delivery "delays" to receive Hachette titles.

I wasn't trying to explain the delays. Only trying to point out that Amazon's "wholesale" purchasing/reselling of physical books (with a BPH they have a contract with) is no different than the purchasing/reselling of BPH ebooks (sans agency). Neither involves paying for a certain sized "lot" of products and then buying another lot when that one is all sold. BPHs puts a crap-ton of books in Amazon's warehouses and let them sell them pretty-much any way they see fit. And up until agency, ebooks worked pretty much the same way. Any difference in "models" was semantic-only.

They don't seem to care how much Amazon discounts their "bread & butter" (hardcovers by their own admission). They only care that cheap ebooks make their bread & butter look less attractive to consumers. And rather than actually come up with a REAL plan for the eventual--and inevitable--demise of their current business model, they'd rather stall by inflating the price of ebooks in hopes that someone--anyone--comes along, slays the dragon for them, and allows them to eke out a little more time with their outdated business model and bloated infrastructure (which is still doomed even if Amazon closes its doors tomorrow).

[SteveEisenberg]

Originally Posted by DiapDealer

And rather than actually come up with a REAL plan for the eventual--and inevitable--demise of their current business model, they'd rather stall by inflating the price of ebooks in hopes that someone--anyone--comes along, slays the dragon for them, and allows them to eke out a little more time with their outdated business model and bloated infrastructure (which is still doomed even if Amazon closes its doors tomorrow).

This next Random House Penguin link certainly seems to me to be such a plan. I dislike the plan -- it amounts to having the author pay for services previously paid for by readers -- but it's a plan:

http://www.authorsolutions.com/Default.aspx


Questions:

1. Of the hundreds of US publishers, are there any which you do think have a "REAL plan?" And can you name for me your favorite book, not self-published (since you say you want big publishers to survive) which was improved by said plan?

2. What is is that you most fear if the big publishers are doomed to withdrawal from the US, or other, markets due to not having followed your advice? Economic harm to New York City? Lack of up-front advances to fund book research? Anything else?

P.S. Last night I finished this Hachette page-turner that's somewhat relevant to this debate:

Factory Man: How One Furniture Maker Battled Offshoring, Stayed Local - and Helped Save an American Town

The lesson may be that when almost everyone is saying that the old business model is totally broken, and needs to be thrown onto a slow boat to you know where, sometimes all the old model needs is some tweaking, and a relentless focus on quality.

[AnemicOak]

Originally Posted by SteveEisenberg

This next Random House Penguin link certainly seems to me to be such a plan. I dislike the plan -- it amounts to having the author pay for services previously paid for by readers -- but it's a plan:

http://www.authorsolutions.com/Default.aspx

Ahh yes, I forgot about them buying that particular vanity publisher. Don't know if they're any better now that the Randy Penguin owns them, but in the past most authors knew to stay far away.

[DiapDealer]

Originally Posted by SteveEisenberg

The lesson may be that when almost everyone is saying that the old business model is totally broken, and needs to be thrown onto a slow boat to you know where, sometimes all the old model needs is some tweaking, and a relentless focus on quality.

To be clear: when I say the current business model is broken. I'm referring mainly to their habit of relying on the sales generated by a relatively small number of huge, blockbuster hardcover releases to subsidize everything else they do. If they find that a large percentage consumers are willing to pay the $13-16 agency price for ebooks, then they seriously need to consider whether they want to hang on to that "hardcovers are our bread & butter" mantra.

I know "it costs money to produce ebooks" too, but many of those costs are shared with its hardcover counterpart's production costs. A hardcover + ebook doesn't cost twice as much to produce as a hardcover alone. They'd be wise to research ways to bring down the costs of producing ebooks even more. It's not beyond the realm of possibility that a standard fiction ebook could basically be a byproduct of the "let's make a pbook" process. And then the money spent on research, marketing, PR, editing, proofing, etc... won't care if you buy the ebook or the pbook.

Just stop fighting so hard to only make money a certain way--the old way. And stop trying to shove ebooks into pbook-shaped holes.

[rhadin]

Originally Posted by shalym

If that were actually the way it worked, the ebooks would be stored on the publisher's server until sold by Amazon. Do you really think that this is the way it works?

Shari

Yes, that is the way it works. Think about how indie authors sell their ebooks on Amazon. They upload the books to Amazon and every so often (monthly or quarterly) Amazon tells them that x copies of the ebook were sold and they are owed $y. Amazon doesn't say "We expect to sell 20 copies of your book so here is advance payment for 20 copies. Now you can upload your ebook."

It works -- for ebooks -- exactly the same way with traditional publishers.

pBooks work on a completely different model (the wholesale model) not only for historical reasons but because there is a physical product. Publishers determine how many copies to print based on the number of copies ordered by retailers. If Amazon thinks it can sell 20 copies it orders 20 copies and pays for those 20 copies and the publisher prints those 20 copies and sends them to Amazon.

Of course, in pbooks publishers print more copies than are ordered by retailers. But the number that is printed is initially based on the number ordered by retailers, which is why the preorder button is such a big deal for pbooks, but not for ebooks.

[rhadin]

Originally Posted by DiapDealer

I wasn't trying to explain the delays. Only trying to point out that Amazon's "wholesale" purchasing/reselling of physical books (with a BPH they have a contract with) is no different than the purchasing/reselling of BPH ebooks (sans agency). Neither involves paying for a certain sized "lot" of products and then buying another lot when that one is all sold. BPHs puts a crap-ton of books in Amazon's warehouses and let them sell them pretty-much any way they see fit. And up until agency, ebooks worked pretty much the same way. Any difference in "models" was semantic-only.

On what do you base this that Amazon doesn't pay for the pbooks?

I grant that in reality money doesn't go from hand to hand and that it is an accounting matter, but when Amazon gets 20 copies of Hachette pbook, it shows on Amazon's account books as a debit. Eventually Amazon does exchange the cash, but because Amazon is on the accrual method and not cash basis, the debit is the same, in practical terms, as paying immediately.

The terms are usually 90 days (although that may have changed since I was last involved in these matters), which is why bookstores would go through their inventory at the end of 90 days and return unsold copies for a credit against the debit. When the credit is issued, a check is issued for the balance owed. But all along the store's accounting books show that the store owes the publisher for the full number of copies "bought".

It is just like buying something using a credit card. Until the invoice comes due, you owe for what you have bought -- it is a debit pending payment or credit for a return. But you have "bought" the item in the interim.

[eschwartz]

Originally Posted by pwalker8

Well, I'm a consumer and from my point of view, I don't want to see books and ebooks treated as a race to the bttton, generic commodity. I buy books from specific authors, not generic "parts is parts" ebooks.

Same here -- what's your point?

Amazon is not in a race to the bottom; on the contrary, they believe in minimum price points.

Amazon sells and markets specific books, not "parts is parts". They have spent a lot of money investing in a system to figure out which specific books people want. If the consumer wants a fork, Amazon doesn't want to futilely try selling them a spoon.

Speaking as a consumer interested in the future of books as a quality product, I call FUD.

[eschwartz]

Originally Posted by JSWolf

I didn't say unreasonably low. I said REASONABLE price. Of course there will be piracy. But there will be LESS piracy if eBooks are sold at a REASONABLE price. Agency is unreasonable.

Agency is not a type of price...

Agency can involve any price point, even ones far lower than you dream of.

Agency has nothing whatsoever to do with how reasonable prices are. Lack of competition does.

(Agency does happen to be unreasonable too, but that has nothing to do with prices either.)

[Manabi]

Originally Posted by eschwartz

Amazon sells and markets specific books, not "parts is parts". They have spent a lot of money investing in a system to figure out which specific books people want. If the consumer wants a fork, Amazon doesn't want to futilely try selling them a spoon.

Oh I don't know, I've managed to confuse Amazon so badly on my account that they recommend all kinds of weird stuff to me that I'm not remotely interested in.