11 ms·

Amazon/Hachette Business Interruption

173 points by jamesmoss 12y ago

hartator 12y ago
"It's also important to understand that e-books are highly price-elastic." Won't this mean actually the reverse?
krschultz 12y ago
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.
- SDGT 12y ago
  It's the steam model. "Why not buy this game if it's only $5?" 20 minutes, 10 purchases, and $50 later with another set of titles to stale in the library.
  - oddevan 12y ago
    But there's also the iOS model to consider: "Why buy this game if it's not $1?" I know there's other factors at work, but this is what publishers are (understandably) afraid of.
- WalterBright 12y ago
  Sure. I buy books by the bushel at $1 each (from ebay). I buy almost none at $14.99.
  - gknoy 12y ago
    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.
    - WalterBright 12y ago
      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.
    - riffraff 12y ago
      FWIW, I've gotten dozens of used books from amazon UK in the 2£ range, which is higher but still in the destroyable-without-drama range. I'd expect your local amazon has the same kind of resellers.
      - WalterBright 12y ago
        The minimum price for a physical book from Amazon is $4.00 plus sales tax. ($.01 for the book, $3.99 shipping)
  - deleted 12y ago
    [deleted]
- fpgeek 12y ago
  This kind information (and a lot more) is effectively public already via KDP Pricing Support (Beta): https://kdp.amazon.com/help?topicId=A22DBITFA52H1S https://kdp.amazon.com/help?topicId=A22DBITFA52H1S 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.
- nickporter 12y ago
  That's exactly the kind of stuff we calculate at 42. Hard to see this from mountains of data in excel, especially if you're scared of the math.
nsx147 12y ago
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. Shots fired
coryl 12y ago
We believe 35% should go to the author, 35% to the publisher and 30% to Amazon. What do publishers even do with regards to e-book distribution? Are they going the way of the record label company?
- krschultz 12y ago
  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.
  - JohnTHaller 12y ago
    The publisher can always sell directly as an unencrypted EPUB and MOBI (works on Kindle) to the consumer and set their own pricing and percentages.
    - notatoad 12y ago
      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.
    - lesterbuck 12y ago
      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. http://devblog.avdi.org/2014/04/02/why-does-amazon-hate-ebook-authors/ http://devblog.avdi.org/2014/04/02/why-does-amazon-hate-eboo...
WalterSear 12y ago
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.
- nnethercote 12y ago
  > Despite Amazon's talking points, they are relatively price inelastic. I'd be surprised if your data was better than Amazon's.
- joshAg 12y ago
  Well, this was a horrible way to discover that I'm not a people. If I stop collecting books, can I become a people? Is there like a specific process or licensing body?
  - lotsofmangos 12y ago
    I dunno. You could ask the firemen, they'll be able to tell you.
- RexRollman 12y ago
  People do collect books.
  - jonnathanson 12y ago
    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.
fpgeek 12y ago
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?
- jmedefind 12y ago
  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.
  - pyoung 12y ago
    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.
    - gknoy 12y ago
      Is there any way to find out when they're going to do this, so I can offer to buy a few? :D
      - mcguire 12y ago
        According to the agreements (that used to be) in place between publishers, distributors, and booksellers, that would be a very serious no-no.
    - mhd 12y ago
      Isn't this why you get the warning in every paperback book about covers being ripped off?
  - mcguire 12y ago
isomorphic 12y ago
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.
- idunno246 12y ago
  And one of the reasons they list for the value being lower is it cant be resold (ie, it has drm)
- rahimnathwani 12y ago
  DRM vs. no DRM Sale vs. licence These are two separate issues.
  - isomorphic 12y ago
    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.
    - rahimnathwani 12y ago
      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.
- mentat 12y ago
  It's trivially easy to strip Kindle DRM. They provide added value with WhisperSync and notes syncing in general that dissuade this.
ghshephard 12y ago
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.
- tedks 12y ago
  > 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. Does any company of that size care what's "fair"?
  - ghshephard 12y ago
    Not everyone realizes this. It's important to be somewhat cynical when evaluating the negotiating communications being made by megacorporations.
- shiven 12y ago
  Amazon/Bezos are ruthless - they could not care at all what is fair I fail to see how the authors getting 35%, unhindered by the publisher's whims, can be unfair.
IgorPartola 12y ago
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.
- ashr 12y ago
  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.
- walterbell 12y ago
  Yes, many are forgetting that one of the primary purposes of markets is ... price discovery. Not price floor&ceiling fixing and restraining.
- jamesaguilar 12y ago
  > Also, why would Amazon care so much about how others market their content, to the point of trying to interfere? They make $3 on every sale, so obviously it is in their interest to set the price to maximize revenue. Your whole bit about "everyone doing it" and "race to the bottom" is an instance of the zero-sum fallacy.
jpatokal 12y ago
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%. http://gyrovague.com/2013/03/26/down-down-down-books-e-books-and-apps-all-trending-to-zero/ http://gyrovague.com/2013/03/26/down-down-down-books-e-books... Some crappy code for pulling these stats from Amazon: https://github.com/jpatokal/amazon-price-watcher https://github.com/jpatokal/amazon-price-watcher
credo 12y ago
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.
- gergles 12y ago
  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.
- notatoad 12y ago
  They seem to be pretty explicitly stating their goals here: they want the vast majority of ebooks to sell for $9.99 or less. The publishers want more.
andor 12y ago
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.
- joedrew 12y ago
  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 http://www.nber.org/papers/w13573.pdf
deleted 12y ago
[deleted]
bambax 12y ago
The competitor of Amazon is Google. 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.
a3n 12y ago
> With an e-book, there's ... no lost sales due to out-of-stock Well, with Amazon there could be lost sales due to refusing to stock/sell.
hownottowrite 12y ago
The New Science of Retailing has a good section on elasticity. Anyone interested in data-driven retail will enjoy the book. http://newscienceofretailing.com http://newscienceofretailing.com
preinheimer 12y ago
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.
cstross 12y ago
John Scalzi's response to this piece of self-serving agitprop is worth reading in full: http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/ http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/ (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.)
- opendais 12y ago
  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.
  - cstross 12y ago
    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.
matthewowen 12y ago
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.

173 points by jamesmoss 12y ago

"It's also important to understand that e-books are highly price-elastic." Won't this mean actually the reverse?

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.

SDGT 12y ago
It's the steam model. "Why not buy this game if it's only $5?" 20 minutes, 10 purchases, and $50 later with another set of titles to stale in the library.
- oddevan 12y ago
  But there's also the iOS model to consider: "Why buy this game if it's not $1?" I know there's other factors at work, but this is what publishers are (understandably) afraid of.
WalterBright 12y ago
Sure. I buy books by the bushel at $1 each (from ebay). I buy almost none at $14.99.
- gknoy 12y ago
  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.
  - WalterBright 12y ago
    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.
  - riffraff 12y ago
    FWIW, I've gotten dozens of used books from amazon UK in the 2£ range, which is higher but still in the destroyable-without-drama range. I'd expect your local amazon has the same kind of resellers.
    - WalterBright 12y ago
      The minimum price for a physical book from Amazon is $4.00 plus sales tax. ($.01 for the book, $3.99 shipping)
- deleted 12y ago
  [deleted]
fpgeek 12y ago
This kind information (and a lot more) is effectively public already via KDP Pricing Support (Beta): https://kdp.amazon.com/help?topicId=A22DBITFA52H1S https://kdp.amazon.com/help?topicId=A22DBITFA52H1S 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.
nickporter 12y ago
That's exactly the kind of stuff we calculate at 42. Hard to see this from mountains of data in excel, especially if you're scared of the math.

nsx147 12y ago

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. Shots fired

coryl 12y ago

We believe 35% should go to the author, 35% to the publisher and 30% to Amazon. What do publishers even do with regards to e-book distribution? Are they going the way of the record label company?

krschultz 12y ago
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.
- JohnTHaller 12y ago
  The publisher can always sell directly as an unencrypted EPUB and MOBI (works on Kindle) to the consumer and set their own pricing and percentages.
  - notatoad 12y ago
    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.
  - lesterbuck 12y ago
    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. http://devblog.avdi.org/2014/04/02/why-does-amazon-hate-ebook-authors/ http://devblog.avdi.org/2014/04/02/why-does-amazon-hate-eboo...

WalterSear 12y ago

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.

nnethercote 12y ago
> Despite Amazon's talking points, they are relatively price inelastic. I'd be surprised if your data was better than Amazon's.
joshAg 12y ago
Well, this was a horrible way to discover that I'm not a people. If I stop collecting books, can I become a people? Is there like a specific process or licensing body?
- lotsofmangos 12y ago
  I dunno. You could ask the firemen, they'll be able to tell you.
RexRollman 12y ago
People do collect books.
- jonnathanson 12y ago
  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.

fpgeek 12y ago

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?

jmedefind 12y ago
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.
- pyoung 12y ago
  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.
  - gknoy 12y ago
    Is there any way to find out when they're going to do this, so I can offer to buy a few? :D
    - mcguire 12y ago
      According to the agreements (that used to be) in place between publishers, distributors, and booksellers, that would be a very serious no-no.
  - mhd 12y ago
    Isn't this why you get the warning in every paperback book about covers being ripped off?
- mcguire 12y ago

isomorphic 12y ago

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.

idunno246 12y ago
And one of the reasons they list for the value being lower is it cant be resold (ie, it has drm)
rahimnathwani 12y ago
DRM vs. no DRM Sale vs. licence These are two separate issues.
- isomorphic 12y ago
  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.
  - rahimnathwani 12y ago
    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.
mentat 12y ago
It's trivially easy to strip Kindle DRM. They provide added value with WhisperSync and notes syncing in general that dissuade this.

ghshephard 12y ago

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.

tedks 12y ago
> 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. Does any company of that size care what's "fair"?
- ghshephard 12y ago
  Not everyone realizes this. It's important to be somewhat cynical when evaluating the negotiating communications being made by megacorporations.
shiven 12y ago
Amazon/Bezos are ruthless - they could not care at all what is fair I fail to see how the authors getting 35%, unhindered by the publisher's whims, can be unfair.

IgorPartola 12y ago

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.

ashr 12y ago
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.
walterbell 12y ago
Yes, many are forgetting that one of the primary purposes of markets is ... price discovery. Not price floor&ceiling fixing and restraining.
jamesaguilar 12y ago
> Also, why would Amazon care so much about how others market their content, to the point of trying to interfere? They make $3 on every sale, so obviously it is in their interest to set the price to maximize revenue. Your whole bit about "everyone doing it" and "race to the bottom" is an instance of the zero-sum fallacy.

jpatokal 12y ago

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%. http://gyrovague.com/2013/03/26/down-down-down-books-e-books-and-apps-all-trending-to-zero/ http://gyrovague.com/2013/03/26/down-down-down-books-e-books... Some crappy code for pulling these stats from Amazon: https://github.com/jpatokal/amazon-price-watcher https://github.com/jpatokal/amazon-price-watcher

credo 12y ago

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.

gergles 12y ago
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.
notatoad 12y ago
They seem to be pretty explicitly stating their goals here: they want the vast majority of ebooks to sell for $9.99 or less. The publishers want more.

andor 12y ago

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.

joedrew 12y ago
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 http://www.nber.org/papers/w13573.pdf

deleted 12y ago

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bambax 12y ago

The competitor of Amazon is Google. 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.

a3n 12y ago

> With an e-book, there's ... no lost sales due to out-of-stock Well, with Amazon there could be lost sales due to refusing to stock/sell.

hownottowrite 12y ago

The New Science of Retailing has a good section on elasticity. Anyone interested in data-driven retail will enjoy the book. http://newscienceofretailing.com http://newscienceofretailing.com

preinheimer 12y ago

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.

cstross 12y ago

John Scalzi's response to this piece of self-serving agitprop is worth reading in full: http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/ http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/ (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.)

opendais 12y ago
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.
- cstross 12y ago
  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.

matthewowen 12y ago

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.