5 ms·

No, what I'm saying is that, of the $16 net price you pay for a hardback, you might think that the lion's share goes to the publisher and the author gets 10%, b

by cstross 17y ago

No, what I'm saying is that, of the $16 net price you pay for a hardback, you might think that the lion's share goes to the publisher and the author gets 10%, but the reality is that 70% goes to the distributors and booksellers while the author and publisher split 30%. What Amazon have done is to sneak up on the distributor/bookseller pipes and merge them into one lucrative hose, and now they're playing both ends for their own benefit. Amazon squeeze their suppliers, just like Wal-Mart. Amazon is already corrosive -- if you're a small supplier.

jonknee 17y ago
So they'll fare better with the Kindle--70% of $9.99 with no printing or shipping expenses.
- cstross 17y ago
  Ah, but the devil is in the small print ... (which is a lot less favourable than that headline figure suggests).
  - Kejistan 17y ago
    Could you elaborate? AFIK the "fine print" is the requirement that the ebook be at least 20% cheaper than the dead-tree version, that it be priced under $10, that you don't price it lower on some other store and that you enable stuff like text-to-speech. Maybe I'm not thinking like a publisher but that all sounds pretty good.
    - cstross 17y ago
      You missed out "and Amazon can set the price they sell it at". So: you (the publisher) guarantee not to sell ebooks for less than $9.99 elsewhere, and not to publish a dead tree edition for less than $12 ... and Amazon are free to cut their competition off at the knees, sell books for $6, drive their competitors into extinction, and then can raise their price to whatever the market will pay. Meanwhile, as the author's royalties are a percentage of the SRP, that 10% of SRP cut they're due -- $1.20 of a $12 title -- comes out of whatever Amazon pays you -- $4 in the case of a book they choose to sell for $6 on Kindle. The SRP is set to reflect the price at which the publisher expects to sell enough books to gain sufficient sales to break even -- assuming a 40-50% discount. If the discount goes to 70%, they're in the stinky stuff up to their eyeballs. That $12 ceiling is forced on what was formerly a $24 SRP, and a $14-16 expected sale price. The money has to come from somewhere, and it ain't going to come out of Jeff Bezos' wallet ...
  - jonknee 17y ago
    Sure they'll have to give up some control, but they'll sell more units and make more money on each. All without having to fire up a printing press. The future is moving on with or without print book publishers, they should hop on while they have the chance.
Lazlo_Nibble 17y ago
That hardcover which I paid $16 for likely has a list price of between $25 and $30. If the publisher was only paid 30% of that $16 sale ($4.80), that means they sold it to the distributor at a wholesale discount of over 80% off list. Are any publishers really offering those kinds of terms, even to Amazon?
- cstross 17y ago
  Hardcover list prices are pretty much pegged at $24 in the USA, ever since word went out within Borders (or was it B&N?) about eight years ago to stop buying hardcovers with SRP over $24. Yes, Tesco (in the UK) and WalMart can and do demand discounts up to 70%. I have heard hearsay reports (I can't cite sources, due to confidentiality) of Amazon demanding 80% discounts off ebooks from British publishers -- which is why they only launched Kindle in the UK about three months ago: nobody would take them up on it.
  - Lazlo_Nibble 17y ago
    But even if some resellers are getting titles for 70% off list price, that doesn't translate to them retaining 70% of the revenue from the sale unless they're selling the title at list price. No reseller with the market muscle to demand a 70% wholesale discount is selling those titles at list price! Personally I think your figures ($24 list price, 70% wholesale discount) are edge cases, and don't represent a typical sale. But even if we take them at face value, in your example the publisher/author get $7.20 of my $16 and the distributor/reseller get $8.80. That's a 55/45 revenue split, not a 70/30 split. This also assumes I'm buying at 1/3 off list, which is on the low side. Amazon is discounting bestsellers by at least 45%, with a select few going for 60% off or more. Example: Going Rogue, list price $28.99, sale price $13.50 (53% off). If Amazon's getting a 70% wholesale discount, HarperCollins gets $8.70 and Amazon keeps $4.80. That's a revenue split of 65/45 in the publisher's favor. So: when I buy a hardcover that's been discounted down to $16, the actual reality is that the distributor/reseller is not making twice as much on the sale as the publisher/author -- it's more like a 50/50 split. None of which is to say I support Amazon OR Macmillan's position in this particular battle (they're both wildly overreaching, IMO). I just think your example inappropriately conflates two different things.

by cstross 17y ago

jonknee 17y ago

So they'll fare better with the Kindle--70% of $9.99 with no printing or shipping expenses.

cstross 17y ago
Ah, but the devil is in the small print ... (which is a lot less favourable than that headline figure suggests).
- Kejistan 17y ago
  Could you elaborate? AFIK the "fine print" is the requirement that the ebook be at least 20% cheaper than the dead-tree version, that it be priced under $10, that you don't price it lower on some other store and that you enable stuff like text-to-speech. Maybe I'm not thinking like a publisher but that all sounds pretty good.
  - cstross 17y ago
    You missed out "and Amazon can set the price they sell it at". So: you (the publisher) guarantee not to sell ebooks for less than $9.99 elsewhere, and not to publish a dead tree edition for less than $12 ... and Amazon are free to cut their competition off at the knees, sell books for $6, drive their competitors into extinction, and then can raise their price to whatever the market will pay. Meanwhile, as the author's royalties are a percentage of the SRP, that 10% of SRP cut they're due -- $1.20 of a $12 title -- comes out of whatever Amazon pays you -- $4 in the case of a book they choose to sell for $6 on Kindle. The SRP is set to reflect the price at which the publisher expects to sell enough books to gain sufficient sales to break even -- assuming a 40-50% discount. If the discount goes to 70%, they're in the stinky stuff up to their eyeballs. That $12 ceiling is forced on what was formerly a $24 SRP, and a $14-16 expected sale price. The money has to come from somewhere, and it ain't going to come out of Jeff Bezos' wallet ...
- jonknee 17y ago
  Sure they'll have to give up some control, but they'll sell more units and make more money on each. All without having to fire up a printing press. The future is moving on with or without print book publishers, they should hop on while they have the chance.

Lazlo_Nibble 17y ago

That hardcover which I paid $16 for likely has a list price of between $25 and $30. If the publisher was only paid 30% of that $16 sale ($4.80), that means they sold it to the distributor at a wholesale discount of over 80% off list. Are any publishers really offering those kinds of terms, even to Amazon?

cstross 17y ago
Hardcover list prices are pretty much pegged at $24 in the USA, ever since word went out within Borders (or was it B&N?) about eight years ago to stop buying hardcovers with SRP over $24. Yes, Tesco (in the UK) and WalMart can and do demand discounts up to 70%. I have heard hearsay reports (I can't cite sources, due to confidentiality) of Amazon demanding 80% discounts off ebooks from British publishers -- which is why they only launched Kindle in the UK about three months ago: nobody would take them up on it.
- Lazlo_Nibble 17y ago
  But even if some resellers are getting titles for 70% off list price, that doesn't translate to them retaining 70% of the revenue from the sale unless they're selling the title at list price. No reseller with the market muscle to demand a 70% wholesale discount is selling those titles at list price! Personally I think your figures ($24 list price, 70% wholesale discount) are edge cases, and don't represent a typical sale. But even if we take them at face value, in your example the publisher/author get $7.20 of my $16 and the distributor/reseller get $8.80. That's a 55/45 revenue split, not a 70/30 split. This also assumes I'm buying at 1/3 off list, which is on the low side. Amazon is discounting bestsellers by at least 45%, with a select few going for 60% off or more. Example: Going Rogue, list price $28.99, sale price $13.50 (53% off). If Amazon's getting a 70% wholesale discount, HarperCollins gets $8.70 and Amazon keeps $4.80. That's a revenue split of 65/45 in the publisher's favor. So: when I buy a hardcover that's been discounted down to $16, the actual reality is that the distributor/reseller is not making twice as much on the sale as the publisher/author -- it's more like a 50/50 split. None of which is to say I support Amazon OR Macmillan's position in this particular battle (they're both wildly overreaching, IMO). I just think your example inappropriately conflates two different things.