While I believe they saw these numbers, specifically that lowering the price from $15 to $10 lead to a 74% increase in purchases, I don't believe that this is a good general rule of thumb. Here's the problem: there are only so many potential ebook readers out in the world, and they only have so much time. This means there will be market saturation at some point, or at least market movement. This elasticity is there, for sure, but the relationship between price and purchases is not going to stay the same, especially as everyone follows this advice. Basically, everyone will price their books at $10 and the playing field will be level. Then the advice will be to price your book at $7. Then at $5. Then at $2. Then at $0.99 cents. This is the problem we currently see with Apple's App store and the Google Play Store: too many apps, all priced similarly. For most apps, and probably for most ebooks it would almost be better to go in the exact opposite direction: one sale at $1000 is better than 10 sales at $1.
Also, why would Amazon care so much about how others market their content, to the point of trying to interfere? If your content is not worth $15, then nobody will buy it. If you suck at marketing, nobody will know to buy your (possibly great content). Why does Amazon get its hands dirty instead of simply giving you analytics-backed suggestions? Oh, that's right, because controlling the publishers is more profitable for them, and using their market position as leverage against publishers is a great way to do so.
The reason is: paper. Dead tree books weigh a lot and waste space. Therefore owning a library is a cost. Costs to move, costs storage space, costs effort to collate and maintain and protect.
E-books do not have that cost. Having a hundred e-books in your purse is a normal thing. Having a thousand? Well, it might make sorting through your personal equivalent of a branch library a little more fussy, but it won't weigh more or waste space.
People may not have more time, but they can divert time to books, and they can divert re-reading time to new-book reading time.
Owning a library has a higher value than owning a library of ebooks: social, decorative, nostalgic, works without power, easy share, can resell, etc. It more than evens out. But there is Steam effect - people will stockpile ebooks they don't read.
This is subjective and not monetary value. The only people that care about social, decorative, and nostalgic value of books are also the people who probably wont resell books.
> works without power
finding a place to charge your device is easy and ereaders last months without recharging
> easy to share, resell
Sure but the money you save by reselling a book is probably less than what you save by buying the ebook
Space and weight are real, expensive costs. Owning a library has negative monetary value. Owning a library of ebooks doesn't. It's stored on the internet and you can access it from anywhere.
Basically, if your books aren't furniture and you aren't sharing your books multiple times a month ebooks provide more value.
"Sure but the money you save by reselling a book is probably less than what you save by buying the ebook"
This is what I had hoped for when Kindle came around and Amazon started pushing Ebooks - but unfortunately it just isnt true. The difference between ebook and paperback is currently low enough that if you maintain your paperbacks well - you'll still end up spending less (net) on the book - in quite a few cases. (Heck you can even resell the paperbacks using Amazon ;))
Yet oddly enough Amazon seem to have gotten stingier with the flash memory on a Kindle. 2 GB? Just give me a damn microSD slot so I can bump that up to a level I'm happy with. A few biggish PDFs (e-Textbooks come to mind) will obliterate that space.
I don't know exactly what you mean by market saturation in this case, as your logic seems to imply that each book has a finite market of N customers, and enough of a subset of them, M, are willing to pay $1000 (or whatever), such that M(1000) > N(5).
The error in your logic is that the size of the market for a given book actually depends on the price of that book. There's millions of books out there. Why would I pay $1000 for one when I can get so many others for $5? By lowering the price of books, Amazon increases the market size of each one.
There's also some behavioral economics involved, as I would assume people are far more likely to make a $5 impulse purchase (and look at that, Amazon has "one click send to Kindle!") than a $15 one.
> Why would I pay $1000 for one when I can get so many others for $5?
Let me ask you this: would you rather buy one of the first 100 prints of Djikstra's "A Discipline of Programming" for $1000 or would you rather buy 200 Nancy Drew novels at $5/book? Books are not, to some extent, able to be substituted. Yes, if you are looking for a good vampire erotic fiction novel and are choosing between two unknown authors and one is priced at $15 and the other at $10, sure you would get the one priced at $10. But if both are priced at $10?
The point is that books are not bought as a simple commodity. Nobody says "I am low on books, let me go grab a random handful, based solely on price." No, people buy books with good reviews and by recommendation. When you are viewing volume book sales from Amazon's point of view, sure they all look the same. However, taking a closer look, a publisher might be able to price books more efficiently. If Amazon has helpful data to add to this, why don't they open it up and let everyone, publishers included, see it to help price the books better? Presenting a single data point in the huge possibility space of book prices is not a valid argument. Even if you let go of all the economics involved and stop thinking about how people buy books, don't you think that that ratio of 1.74 would be different for books priced at $12 and $17? Does this vary by month? Do certain genres have different price elasticity? Amazon is not trying to be helpful here. They are trying to squash publishers, gain control of the market and dictate prices, which they cannot currently do.
Many factors are involved here. On one hand, you're right about Dijkstra (Is $1000 an option? I never actually got my copy signed (sigh), but....) and Nancy Drew, but on the other I think it's likely that most of the money involved involves "mass market" books: thrillers, Oprah's picks, the stuff on the New York Times list. At some point it does boil down to the marginal situation of "two unknown authors" (or two approximately equivalent ones) that really are semi-commodities. Think of a reader who has read everything that has been suggested or is from their favorite authors, and is looking for something new.
Also keep in mind that the "mass" entertainment market is not competing with speciality books, but is competing with other entertainment options: Netflix, movies, drunken debauchery, etc.
Then there is the price levels we're talking about. Everyone (probably) has some price X below which they will have no problem impulse-buying. Then there's a price Y below which they're willing to take chances, with information, and then there are prices above that, which require actual consideration. And for most people, at least those buying ebooks, we are definitely arguing in this range. For my inner economist, publishers want ebook prices up in the high segment, above Y, while Amazon wants them roughly between X and Y.
"If Amazon has helpful data to add to this, why don't they open it up and let everyone, publishers included, see it to help price the books better?"
The specifics are very likely competitive trade secrets. Don't forget Amazon gets to deal with Apple, B&N, and a host of other retailers. I'm surprised they released the one number they did. On the other hand, judging by negotiations I've been in, I would not find it unplausible that Hachette is aware of those numbers.
"They are trying to squash publishers, gain control of the market and dictate prices, which they cannot currently do."
Yes, just like the publishers are trying to squash Amazon, gain control of the market, and dictate prices. Heck, this isn't even a particularly new situation: I'm sure the negotiations between publishers and distributors that led to the lovely "stripping" practice were just as entertaining.
Anecdote, not data and all, but for me at least, if I hear about a book that might be interesting, I look it up and if it's below some cutoff price point (I'm not sure exactly what it is, probably around $10-$15), I just click buy and be done with it. I don't put it on a wish list or bookmark it, just get it. As a consequence, the (metaphorical, they're on my kindle) pile of books that I own but probably won't ever get around to read is bigger than ever, and my total spending on books is probably a lot higher than it would be if I carefully considered each more expensive purchase.
Yes - but a person looking to buy the Malcolm Gladwell book - willing to buy it at 10$ - but who can only buy it at 15$ or more - will probably end up then either borrowing it from a friend or in the worst case downloading it as a PDF illegally. Both of which are a lost sale for the publisher and author.
I mean, I know that with e-readers book piracy is now potentially practical but is it really a concern for publisher? I'm really curious to know how mainstream it is.
I wouldn't be surprised if the main cause of piracy for ebooks was not the price but rather that the book is not available on a particular platform or only in paperback. Besides the demographics for book readers owning an e-reader is probably older and more wealthy than the average movie pirate.
The only numbers we have are those given by amazon, but we don't know exactly which books they used to make their statistics. We also don't know what the people who didn't buy the 15$ ebooks ended up doing, maybe they didn't buy anything at all, maybe they just bought the paperback...
A kindle costs <50$ - load it up with free PDFs downloaded via Torrents or other means and the notion : "book readers owning an e-reader is probably older and more wealthy than the average movie pirate" falls flat.
I dont have numbers to back it up - but plenty of anecdotal evidence and just common sense too. I myself have borrowed that malcolm gladwell book or the other - because the cheapest I could buy it was 20$ - and while I was interested in reading it - not enough to spend that much. Had it been 10$ - it would be worth it for me to just buy it rather than ask around friends if someone had a copy I could borrow. (You can also "borrow" books from friends on Kindle)
Yes, but someone who is looking for a non-fiction book, with no author preference, is more likely to buy a $5 Michael Lewis book than a $15 Malcom Gladwell book.
There is no book I can think of at the moment that I'd buy for $1000. There are plenty I'd buy at $20 to $50 in preference to a comparable dollar value in $5 ebooks (or other inexpensive editions).
Some books have only so much market. Amazon could declare an August special, The Critique of Pure Reason, leather cover, sewn binding, acid-free paper, yours for $5 and free shipping. Do you think that this would rocket it up on the charts?
And your evidence that this isn't a zero-sum game, is, exactly, what?
All of the evidence points to the fact that people have more than sufficient entertainment options and have set their budgets at a fixed point.
It wasn't piracy that killed music. It was the fact that the prime purchasers of music had a fixed entertainment budget and switched to buying video games aka. zero-sum market.
My take: the zero-sum game is not solely about people having a fixed entertainment budget in purely financial terms -- incomes go up and down and it depends in the aggregate on the economic cycle. Rather, people have a fixed entertainment budget in terms of leisure hours per week that want filling. You can get a pay rise, but you can't get 5% more hours in the week than the 168 that your clock gives you.
Another issue is that some recreational products are rivalrous of time; you can't read a book and play a computer game simultaneously, or combine one of those with doing the ironing or cooking dinner. You can watch a video or listen to music while you're doing something else. Oh, and some products are use-once, while others are use-many-times (and in some cases this varies from individual to individual: do you re-read books, or read them once and discard?).
TL:DR; There's a zero-sum game in the picture but nailing it down is a whole lot more complicated than it looks at first sight.
At a minimum, books can compete against other forms of entertainment. Books can also compete against other types of consumption, like cars, food and houses. Until I see some compelling evidence that the book market writ large is of a fixed volume, regardless of price, I assume that the size is dynamic, like almost every other market.
And your evidence that this isn't a zero-sum game, is, exactly, what?
Me probably. And all the folk I know with reading habits like mine who have not bothered getting an ebook reader yet, despite having problems seeing the floor for books sometimes.
edit - I think Amazon are complete and utter [redacted] over DRM, the 1984 debacle, their general attitude, etc. That said, I think they are probably right that everyone would make more money if the price dropped on ebooks. They are going about it in a very [redacted] way, of course. And even if they are right, their tactics seem pretty [redacted]. But that's Amazon being Amazon. Just because they are behaving like [redacted] doesn't mean that their economics isn't accurate.
Isn't the fact that we're still discussing a single screw up that was immediately rectified from 5 years ago evidence that Amazon is actually going about this DRM business in a pretty sensible way? Also, Amazons complete lack of interest in "fixing" the very easy DRM removal process seems to provide further evidence to the same end.
Sure, it'd be better if there was no DRM, but there's the perfect world and then there's the world we actually live in.
FWIW, I just bought a book (sequel to "a fire upon the deep" by vernon vinge) on kindle yesterday and it came with a "this book has no DRM at the request of the publisher" disclaimer.
So maybe we should complain about publishers rather than amazon at this point?
We can complain all we want, but I struggle to see how we can place meaningful pressure on publishers.
I wanted to say that it's like iTunes and the switch to non-DRM, but I think the dynamic is different with Amazon as there isn't any meaningful competition on the e-reader device market as there was (and is) on the MP3 player market, where DRM was a major pain and thus a driver for DRM-free.
Short of Amazon pressuring publishers to drop DRM (which could well happen, but there's not a lot of business upside to it, although do downside either), I guess it will take a viable competitor to the Kindle that Amazon can't or won't provide an app for for DRM to get pressured out by end user market force.
Either you can say the word or you can't. Luckily our language has ways of working around saying certain words, so you don't have to put in [redacted].
Maybe Amazon cares so much for the same reason Apple/Jobs cared about the pricing of music: too high a price point encourages piracy.
Once piracy becomes an easily accessible and socially acceptable mainstream habit, it's going to be very hard to claw back market share.
Right now, ebook piracy is by far not as easy and convenient as video or music. That could change as long as ebooks remain overpriced compared to physical books, and DRM impaired to boot. (Sooner or latter the general public is going to find out the hard way how much DRM devalues their "property".)
I dunno about the US, where Amazon is king, but in most countries ebook adaption is stagnating and price is quoted as the #1 reason.
I initially thought as you do: cheaper ebooks cannibalize the more expensive. But remember books are competing with social networking, tv, radio, iphone games, console games, computer games, the outdoors, friends, pot, bars, etc. While a controlled study would be interesting, I bet books can steal some time share.
All I see in your argument is preconceived opinions with speculative statements and nothing to back them up. Sorry but you did not add anything to this discussion, not even in the form of new questions or pointing out flaws in the post's arguments using evidence.
There is also the problem of cannibalization which is not mentioned in Amazon's post; it's obvious that some of the people who buy eBooks when they're <$10 would have bought the paper book instead if it were cheaper, or even the same price.
So the "total revenue" figure is pretty abstract; publishers (or authors, or distributors, or anyone, really) don't need to consider media as completely separate; what matter is total sales, including paper, on-demand, and ebooks.
> specifically that lowering the price from $15 to $10 lead to a 74% increase in purchases
So, if Amazon takes $5, then whoever provided the book lost money on that deal. (Profit went from $10 to $5 while sales did not double). In fact, if Amazon takes more than about $4, it's a wash (which is actually a loss because some of those 75% more customers would likely have bought the book later at a different price point). If, Amazon takes $3, profit goes up by about 2% maybe 3%, if and only if that 74% increase occurs. If that increase doesn't happen, sucks to be the publisher, but Amazon's profit went up.
If Amazon wants to move more Ebooks, why doesn't Amazon reduce the amount they take? Simple, because it doesn't pay in profit. So, Amazon wants somebody else to eat the price drop. Not exactly altruistic.
All of the arguments about Ebook (less distribution cost, marginal volume cost, etc.) apply MORE to Amazon than the publishers. The publishers at least have to find authors. Amazon does, what, exactly, to justify taking $3 an Ebook? Um, right, it provides the market domination that is effectively a monopoly to the point that it thinks it can dictate pricing to publishers.
You also assume that amazon is free to price ebooks however they want provided that they pay the publisher the right amount. They are not. This is one of the reasons that this conflict has developed. Amazon has traditionally been happy to sell many physical books at a loss. They are not permitted to do this with ebooks.
For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000.
That seems like a hard won data point, I'm surprised they threw it out to the public domain. It makes intuitive sense to me though. I buy a lot of ebooks and when they're really cheap I just buy them immediately rather than track them somewhere to go and purchase when I have time to read them later. My kindle has probably a half dozen books to read on it at the moment, and I imagine if they were $20-30 each I wouldn't be that flippant about it.
That sounds like an interesting model. Do you have tips you'd be willing to share? I wouldn't mind having books to read which I won't mind my young kids destroying accidentally.
Go on ebay and search for "vintage sci fi book lot". You can usually get a box of 'em for a buck each, and if you're patient, even $.50 each.
Your local thrift shop often has a pile of books for sale, and if you take a load of them off their hands, they'll usually give you a deal. I sometimes fill a couple shopping bags with sci fi books that way.
The fun thing about buying them by the bushel is poking through them, and discovering great sci fi you never knew existed. I enjoy the lurid artwork on the older ones, too.
I imagine there's some sort of non-disclosure agreement attached to specific results (which is why I said effectively), but the universe of people that have access is so large (every KDP author), I don't think that matters much in practice - especially for general data points like this one.
In fact, the 30% share of total revenue is what Hachette forced us to take in 2010 when they illegally colluded with their competitors to raise e-book prices.
They are giving people advances so that they can live while they write the book full time. An example is someone who used to be a journalist can use their success as a journalist to sign a book deal and work on that. It's similar to raising a seed round.
IMO they are going the way of the record label. Some publishing houses and record labels will continue to add value, while larger ones who used to use their brand to add value and had scaled to a point where that is their main value proposition are going to have a hard time, as we are seeing right now in OP.
The publishers and record labels are doing the same thing they were before - curation and editing. The book printers & CD burners are out of the mix, but they were never that expensive anyway. There are still fixed costs associated with a book (editor) or an album (studio time), not to mention the marketing costs.
Are they worth 35% of the profit? I don't think so. But probably more than 0%. I personally think it should be 70% author, 20% publisher, 10% Amazon.
10% is far too little. Amazon is R&D'ing and manufacturing tablet/e-reader devices, handling payment/currency, and all the dirty work necessary to get the device in the hands of the customer in the first place.
If it was, there would be a healthy e-reader market with competing devices and choices for consumers, which would deprive Amazon of business leverage over content distribution.
Barnes & Noble had a brief moment of glory when their first Nook color tablet was cheaper, better and unlocked. Devs were selling rooted Android SD cards on eBay. If BN had opened up the hardware, they had a chance of gaining the scale needed to compete with Kindle. Instead, BN went the other way, locked down Nooks, created their own App Store with poor selection and the rest is history.
Apple has managed to charge premium prices for devices (enabling a market for many cheaper competitors) AND keep leverage on app/content distribution.
Digital publishing needs to separate distribution from payment. Convert "pirates" into "free logistics services" and focus on customers connecting more closely with authors. Why can't authors accept elastic (value-based, pay-what-you-want) bitcoin payments?
A big problem with the competing device market is that books aren't portable between Amazon and alternatives (but they are between the alternatives). So, if you've bought a number of e-books on Amazon, switching becomes much more difficult.
Not exactly. Turns out you can sell via Amazon, or you can sell directly, but if you use the undocumented Amazon-only tool to construct your .mobi, you can't sell that directly. And Amazon is now blocking the output of many/all other ebook construction software so you can't use Send to Kindle or email. USB is the only option to load a book.
Just yesterday I used http://epub2mobi.com/ to convert a public domain ePub file to MOBI, then sent that to my Kindle's email address. It was delivered wirelessly to my Kindle. Are you sure this hasn't changed? Or is epub2mobi doing something to circumvent this?
Do you know which publisher sells for all your favourite authors? I certainly know for some of them, but not others. What about when you just hear about a book from someone? This is why people go to bookstores.
I'd be a lot happier if everyone went to no-DRM or at least interchangeable DRM so you could move to a different e-reader. Amazon and iBooks are the odd ones out. iBooks doesn't have a big marketshare, but Amazon definitely does.
they can, and many try, but for the most part people don't buy books outside of their chosen e-reader platform (ibooks, kindle store, kobo). Amazon has significant value to add that they've built up over time and that publishers can't easily get: recommendations, integration with e-reader devices, a huge amount of traffic, and a huge number of people with one-click purchasing already set up.
I think this is one of those points where a lot of people on HN will think in terms of COGS, but because Amazon is effectively offering your products at such a large market, the 70% of revenue you'll get through amazon is worth a lot more than the 100% you'd get without going through them (and by definition, more than the 30% they're getting).
First of all, ebooks still make up only a fraction of the book market (especially outside the US). Most big publishers will have to support hardcover, paperback, and ebook version in parallel and price them so that they make a profit for everything combined. Hardcover and paperback versions are not going to go away anytime soon, either.
Second, publishers also make losses on books that don't sell and that they have to recover. The majority of books don't actually sell a whole lot of copies, so the fixed costs associated with producing a book can be a pretty high percentage of revenues for the average book.
Finally, publishers provide editing, translation into foreign languages or negotiation with foreign publishers (assuming your agent didn't retain translation/foreign publication rights), production, marketing, accounting and sales services, distribution, and warehousing (for dead tree books).
Note also that you can equally ask what Amazon provides with regards to ebook distribution: In the end, it's just another middleman that got a head start because it was first to market with the Kindle, but is otherwise unnecessary. In some markets, publishers selling directly to readers (on non-Kindle platforms) makes up a significant part of sales.
Amazon is using language like "e-book(s) sold" when the reality is that they mean "e-book license(s) sold." The difference may be subtle, but if an e-book comes with DRM, the buyer certainly does not "own" it. Amazon even makes that point themselves, as they promote e-books as having "no secondary market."
This is an important point when you consider the vendor lock-in of the Kindle "ecosystem." Instead of "e-book," a better phrase might be "Kindle software."
Amazon should be careful of throwing stones about illegal collusion as they approach market domination. It will be very easy for them to make a mistake which runs afoul of anti-trust law.
Theoretically yes, but technologically no. I can't "own" something with server-based DRM on it. DRM creates a right (or an ability) of revocation for the seller.
It's not DRM that prevents you from owning the book. It's the licence. The DRM just makes it easier for the licensor to enforce the terms of the licence.
I 'buy' DRM-free books from O'Reilly. The lack of DRM means that O'Reilly won't ever be able to remove my ability to read those books on a new device. However, I still don't own the books, and have no second-sale rights.
This old blog post of mine needs a refresh, but there's nothing magical or permanent about $9.99: the average price of an e-book bestseller (= Amazon Top 100) has been trending down roughly by a dollar a year, and was already at $7 last year. Likewise, the share of $5 books in the top 100 is already close to 50%.
(Shorter Scalzi: Amazon are presenting as "good for authors" policies which, in fact, are only indisputably "good for Amazon"; the only authors they might be good for are those who cleave unto Amazon like limpets and don't do business with the other 70% of the book distribution business, and even then, it's somewhat questionable: Amazon's T&C's for authors publishing directly are invidious and include binding arbitration clauses and boilerplate giving AMZN the right to vary their terms unilaterally -- meaning AMZN basically have those authors by the short and curlies, in a manner that no real publishing company even attempts in their author contracts.)
"Amazon’s assumptions don’t include, for example, that publishers and authors might have a legitimate reason for not wanting the gulf between eBook and physical hardcover pricing to be so large that brick and mortar retailers suffer, narrowing the number of venues into which books can sell."
So Scalzi and Hachette want me to subsidize Barnes & Noble? Mighty nice of them.
"...it appears to come with the ground assumption that books are interchangable units of entertainment, each equally as salable as the next, and that pricing is the only thing consumers react to."
That's an interesting statement to appear next to the Kirkus review of Lock In: "...yet more evidence that Scalzi is a master at creating appealing commercial fiction." My impression is that Amazon is more correct than Scalzi concerning the specific market in "commercial fiction".
Further, I'd be a little more sympathetic to him if he didn't include the argument, "...then I feel perfectly justified in considering your cost of production position vis a vis publishing as entirely hypocritical," if the publishing industry had not made that same argument for all of the price increases in the thirty years previous."
And then, of course, there's the bit about "Which is to say that between my publisher and Amazon, one of them gets to utter the immortal Darth Vader line “I am altering the deal. Pray I do not alter it further” to authors doing business with it and one does not."
It contrasts entertainingly with the fact that neither he nor his publisher are operating under the terms of the Kindle Direct agreement with Amazon, although I suspect his publisher has more authority than he admits, if he wants to get anything new published. Also with the fact that "Amazon is just 30% of the market."
Scalzi, like usual is ~90% correct and what little he is off about is easy enough to ignore. ;)
I easily see #3 resulting in the bottom end selling at $5 and the top end selling at $9.99 because I suspect the reason Amazon picked that number is, overall, it generates more total sales [by dollar volume]. One of the few things Amazon is good at is accurately pricing products to maximize gross revenue.
That being the case, I don't think its likely to be the disastrous price point Scalzi thinks it is even if it squeezes the publisher's margins on the higher end books. Ebooks, once created, are a sunk cost...not an ongoing one so maximizing gross revenue works in everyone's favor.
Ebooks, once created, are a sunk cost...not an ongoing one so maximizing gross revenue works in everyone's favor.
What you're missing is that, from the author's point of view, ebooks are not interchangeable. A unit of my sales is not usefully interchangeable with a unit of Scalzi's. To Amazon we're fungible produce, but to us we're suppliers of bespoke one-of-a-kind products. The Amazon move squeezes those of us who are able to sell at a higher price point -- like me (current lead title priced at $12.99 on Amazon and selling jolly well; and at £7.99 in the UK, and doing well there, too).
Amazon's proposed $9.99 guillotine on pricing would basically impose a 30% cut in my income if sales volume of my titles remains static. And I haven't seen any evidence that the price elasticity of demand for novels by Charles Stross will respond to crude pricing signals the way that aggregate demands for all books will do across the board.
> What you're missing is that, from the author's point of view, ebooks are not interchangeable.
> we're suppliers of bespoke one-of-a-kind products
People who make specialty designer products all think this way, it isn't just authors. I'm well aware of the mindset, I just don't subscribe to it. Many software products are as unique as two different ebooks, however, they meet the same general need/desire for products of that category and are ultimately interchangeable under the right market conditions.
> Amazon's proposed $9.99 guillotine on pricing would basically impose a 30% cut in my income if sales volume of my titles remains static. And I haven't seen any evidence that the price elasticity of demand for novels by Charles Stross will respond to crude pricing signals the way that aggregate demands for all books will do across the board.
The number of authors I don't buy on price is a very, very small list compared to the majority of my ebook purchases. FWIW, I've never bought any of your books precisely for this reason.
So, if you accept Amazon's premise that aggregate demand for all ebooks will increase, that leads to the basic question of:
Why should I specifically value the net outcome for Charles Stross over any other author that benefits from the increase in demand?
"A unit of my sales is not usefully interchangeable with a unit of Scalzi's."
You sure about that? I haven't read anything by either one of you. You both have a bunch of good reviews and some interesting titles. Or, I could just go get a new paddle leash for the price of your book and go kayaking.
While I buy into many of the arguments being made here, Some of these points don't make sense. For example,
". And that 74% increase in copies sold makes it much more likely that the title will make it onto the national bestseller lists. (Any author who's trying to get on one of the national bestseller lists should insist to their publisher that their e-book be priced at $9.99 or lower.)"
Well, that's all well and good until everyone prices their e-books at $9.99 or lower, at which point we're back to square one. Unless the objective is to then have people who want a leg up to price their books at $8.99...
Also got a bit nasty when they mention, "ilegally colluded with their competitors" - was this ever established? I thought the publishers settled before it went to court, and only Apple was found guilty.
Finally, Love how Amazon is now trying to drive a wedge between the publishers and authors - "While we believe 35% should go to the author and 35% to Hachette, the way this would actually work is that we would send 70% of the total revenue to Hachette, and they would decide how much to share with the author. We believe Hachette is sharing too small a portion with the author today, but ultimately that is not our call."
This is Amazon turning up the heat on the publishers. Remember, Amazon/Bezos are ruthless - they could not care at all what is fair - but they are going to use every tool in their kit to win at this negotiation.
The point I'm trying to make is that Bezos is suggesting that number because it drives a wedge between the authors and the publishers. It's entire purpose is to weaken the solidarity (such as it is) that exists between hachette and their authors.
If you read the John Scalzi piece on this, it's not working with him.
Everyone is talking about the price, but that's not the only thing they're negotiating. We've heard about some of Amazon's demands from some of their other negotiations, so I'm not surprised that Hachette is holding the line.
> Remember, Amazon/Bezos are ruthless - they could not care at all what is fair - but they are going to use every tool in their kit to win at this negotiation.
In what sense? In the sense that we know to a fairly high degree of certainty that it happened? Yes. In the sense that you would never lose a libel suit for saying that it happened? Also yes. In the sense that a final judgment was entered in a trial case to this effect? Only then would the answer be no.
Well, that's all well and good until everyone prices their e-books at $9.99 or lower, at which point we're back to square one.
No. At least not according to OP. They suggest that books compete against other forms of information and entertainment and that below $9.99 a larger share of that market would be occupied by ebooks.
I'm a bit surprised that Amazon said listed "no returns" as one of the differences with ebooks. I have personal experience with their incredibly generous ebook return policy (right in line with their other generous return policies).
Is this an implicit admission that Amazon is eating the cost of those returns? Or do they mean something specific like the physical infrastructure for returns?
When I worked at a bookstore we would ship boxes full of un-sold books back to the publishers every month (Mostly consisting of cheap Romance novels). I imagine having to track and handle all of that to be a major cost to publishers.
Publishers don't want paperbacks back, they just want proof that the book didn't sell. That was always just the front cover. You may have shipped the books to someone who did the stripping, but I very much doubt the publisher ever saw the text block.
I believe I re-call an internet comment (most likely on HN) about how some publishers would instruct bookstores to shred the unsold copies. Apparently it was cheaper than shipping them back and trying to re-sell them somewhere else.
I've written a book, it's available on Amazon (including kindle).
What % I get when it's sold (kindle or dead tree) is absolutely none of Amazon's business. I negotiated with my publisher (not Hachette), I'm happy with the results, I don't need other people telling me what's best.
If you're an author the absolute best you can hope to get is 35% of the sale price -- that is, the price your readers are willing to pay to read your work. Usually, it's even much less.
The publisher keeps at least 35%; the distributor, 30%. It's unclear to me what value these actors are offering, for this amount of money.
Disintermediation hasn't happened yet (what happened is, Amazon took the place of bookstores, and publishers are still around).
But disintermediation will happen eventually; when that day comes this discussion will sound silly and strange.
It's also important to understand that e-books are highly price-elastic. This means that when the price goes up, customers buy much less.
But what is the alternative for those customers: do they maybe buy the paperback
version instead? If that's the case, Hachette might miss out on revenue, but
they also keep their paper-based business running and stay somewhat independent
of Amazon.
They don't buy, or they buy something else. If there's one thing that economics has taught us, it's that people will reduce their consumption when prices go up; even water demonstrates price elasticity: http://www.nber.org/papers/w13573.pdf
Amazon has mastered the art of saying nothing with a lot of self-serving words :)
Their post is titled "Update re: Amazon/Hachette Business Interruption". However, they don't state what their specific demands are and why the business was (in their words) interrupted.
Amazon's proclaimed objectives aren't as important as knowing what their specific demands (from Hachette) are. I'm not a book-author, but as a developer, I set the prices of the software products I develop (Apple and Google let me do that, Amazon doesn't). So my sympathies are with the book publishers, but even if they weren't, I'd still like Amazon to explicitly spell out their demands instead of using self-serving pricing elasticity theories to sway public opinion.
You set your wholesale price. You don't get to set retail prices. If I want to buy something from you at $1000 and resell it at $1, that's my business. eBook publishers have this delusion where they get to set retail prices, and it's backwards and wrong.
From the perspective of the publisher and author, this analysis is somewhat meaningless because it doesn't factor in any impact on sales of the book in other formats.
Books aren't video games. People don't collect them. I don't consider a game I don't finish to be a failure, a waste of my time. I do so a book.
Despite Amazon's talking points, they are relatively price inelastic. Perhaps, right now, they aren't, since people are still dealing with market novelty, but over the long term, time is a bigger sink than money, when it comes to books.
People don't have business relationships with software, apps, content, games, photos, websites. People have business relationships with people.
Ever "follow" someone on social media because you like their writing? Collecting books from an author is like that, except that you're also feeding the author, so they can write more books for you to read. So you get 64,000 words in a book instead of 64 words in a tweet.
A lower starting price increases the initial pool of people who are exposed to an author's fiction or non-fiction worldview. Authors need more input into the price curve which modulates growth of their community of readers. Neither publisher (old boss) nor Amazon (new boss) is maximizing the use of technology to improve relationships between reader-people and writer-people.
Not only do people collect books, but in fact, more people collect books than read them. A lot more!
I'd bet your average book consumer, with rows and rows of beautiful, trendy, or important books on his shelves, has read maybe 10% of those tomes. If that. 10% is probably a generous figure. Even true bibliophiles have read maybe 25-50% of their books.
There is a long and well-known phenomenon in the publishing world, which I'll call "trophy collecting." It's the process by which someone buys and conspicuously displays popular or well-regarded books on his shelves, mostly for the social esteem of being seen to have them. This is, more or less, how most literary fiction and wonky nonfiction gets sold.
God know I still have all the O'Reilly books dating back to the 90's that I refuse to throw out. (They are in a back room not on a bookshelf although they were on a bookshelf at my old office mid 00).
But here's the thing. How do you do that with ebooks? No physical object to collect. Much different. Nothing to display.
time is a bigger sink than money, when it comes to books
I'm reading less at the moment than I used to, but I regularly have periods of reading around three novels a week. If it were not for the existence of libraries and second hand book stores, I would find money to be a far bigger restriction than time, especially when I was a teenager.
Also, why would Amazon care so much about how others market their content, to the point of trying to interfere? If your content is not worth $15, then nobody will buy it. If you suck at marketing, nobody will know to buy your (possibly great content). Why does Amazon get its hands dirty instead of simply giving you analytics-backed suggestions? Oh, that's right, because controlling the publishers is more profitable for them, and using their market position as leverage against publishers is a great way to do so.