5 ms·

Amazon swallows the loss. For example, with eBooks, they were purchasing wholesale from the book publishers for $15, and then selling them to customers for $9.

Amazon swallows the loss. For example, with eBooks, they were purchasing wholesale from the book publishers for $15, and then selling them to customers for $9.99. As much as I love my Kindle, and Amazon, and as much as I realize that the publishers probably extract more value from the entire chain than is reasonable given their contribution (as compared to the author, who I believe should be rewarded a great deal more) - I realize that we will face dark times in the future if Amazon is able to corner the eBook market.

pbhjpbhj 12y ago
>Amazon swallows the loss. For example, with eBooks, they were purchasing wholesale from the book publishers for $15, and then selling them to customers for $9.99. // What were the books selling for in paperback? I'm guessing less than $15 - I know it's priced to the market and the utility improves the value, and thus a higher price can be attained. But, I didn't think that Amazon would let publishers rip them off in this way - paying more for something that costs less to produce. Amazon if ebooks are even marginally above paperback costs should just buy the paperback, format shift to ebook, sell the paperbacks as pulp. I don't think anyone wants to hand over the ebook market entirely to Amazon; all the publishing houses needed to do was not be evil and not try to squeeze the system dry ... oh well. Death and taxes and human greed can always be relied upon.
- ghshephard 12y ago
  I remember when "Under the Dome" was selling wholesale (Hardcover) for $13 and I ended up buying it from Walmart for $6.99 - because (A) it was $3.00 less than the eBook, and (B), well, I then could, in theory, resell the book. It's odd watching two book sellers compete with each other to sell a book at loss. But, your comment, "Amazon would let publishers rip them off in this way - paying more for something that costs less to produce." brings to mind Scalzi's comment, http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/ http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/ "(This is where many people decide to opine that the cost of eBooks should reflect the cost of production in some way that allows them to say that whatever price point they prefer is the naturally correct one. This is where I say: You know what, if you’ve ever paid more than twenty cents for a soda at a fast food restaurant, or have ever bought bottled water at a store, then I feel perfectly justified in considering your cost of production position vis a vis publishing as entirely hypocritical. Please stop making the cost of production argument for books and apparently nothing else in your daily consumer life. I think less of you when you do.)" Think about the software that I purchase online that costs $0.001 to deliver and I pay $595 - it costs 1/10,000th what the old version with paper books, and CDs, and nice glossy boxes. I agree with Scalzi - the argument about "it costs less to produce" is bogus. Something should be worth whatever value it has to the person buying it intersecting with whatever price the person willing to sell it wants, plain and simple. The cost of creation is not particularly interesting.
  - ganeumann 12y ago
    Scalzi is arguing that the packaging is the important thing, not the contents, which is a funny thing for an author to argue. Because if the content is the important thing, then there is now a system that delivers the exact same thing more efficiently. We, as consumers, should definitely push to benefit from that efficiency with lower prices. To do otherwise would be irrational. Aside from being a straw-man, Scalzi's just wrong. We pay less for a soda at the fountain than we do in a bottle. That's the comparison that should be made. When you buy Coca-Cola, you are buying more than just the raw ingredients processed. Otherwise you'd be buying Store Brand Cola.
    - ghshephard 12y ago
      Yeah - I thought his examples were actually not very good. The other one is water - you pay a certain amount of money for bottled water (which presumably doesn't have the crappy lead / metals from the pipes, and ideally will store well, and be available in a disaster, etc...) - but you pay less when you fill up your water containers at the store, for water of roughly the same quality.
    - UnfalseDesign 12y ago
      I agree. If Scalzi is saying that the cost of production should not alter the price of the product, then I would ask him why paperback and mass market prints of books are less than hardback books in regards to the price. According to his argument, paperback books and hardcover books should be set at the same price regardless of what it takes to produce them.
      - voyou 12y ago
        The difference in price between hardback and paperback books is not due to the difference in production costs (which is minimal). The difference in price is because it provides a way to capture consumer surplus. Some people are willing to pay $20 to read a given book, and some more people are willing to pay $15. If you charge everyone $15, you get the largest number of sales, but you don't get the extra $5 that some people would have paid. But you can give people an excuse to pay that extra $5 which they would have been happy to pay for the regular version of the product, by providing a slightly superior product at the higher price.
- graeme 12y ago
  It's amazon's choice to sell for less. The publishers didn't want to price e-books low. So they refused to sell at a $9.99 price. Which is their right. Amazon believe a low priced e-book market would generate more profits overall. So they priced low anyway. That, in turn, was their right. I don't see how the publishers are evil in that situation. What would you do if a reseller was convinced your product was priced too high, and they wanted you to slash prices? The standard advice on Hacker News is "raise your prices". Amazon appears to have been right, but it was hardly obvious. And low pricing may not apply to all books. For instance, I don't release my books on kindle because of the low pricing structure for self published books. (Amazon gives 70% royalties for kindle books priced $2.99-$9.99, but only 30% for pricing above and below that, IIRC. The optimal price for my books on my own site is above $9.99, so I don't want that deal)
  - pbhjpbhj 12y ago
    >I don't see how the publishers are evil in that situation. // [Some made up numbers!] The paperback costs $10. The publisher removes virtually all the direct production costs of creating the book itself (but obv. not the author, editor, type-setting, marketing and such which remain the same or lower). The publisher puts up the price of books because, hey, why use technology to open access to arts and information when you can use it instead to increase the wealth gap. Yes, as I indicated, there may be extra utility in ebooks and that enables them to increase the price. But, with no price increase they still make more profit. Yes, it's just capitalism; it's evil.
    - res0nat0r 12y ago
      Capitalism is now evil?
      - Joeri 12y ago
        No, it's a tool, and like any tool it's intrinsically amoral. The morality is derived by the wielder. When capitalism is used as an excuse for immoral behavior, the tool becomes how it is wielded.

pbhjpbhj 12y ago

>Amazon swallows the loss. For example, with eBooks, they were purchasing wholesale from the book publishers for $15, and then selling them to customers for $9.99. // What were the books selling for in paperback? I'm guessing less than $15 - I know it's priced to the market and the utility improves the value, and thus a higher price can be attained. But, I didn't think that Amazon would let publishers rip them off in this way - paying more for something that costs less to produce. Amazon if ebooks are even marginally above paperback costs should just buy the paperback, format shift to ebook, sell the paperbacks as pulp. I don't think anyone wants to hand over the ebook market entirely to Amazon; all the publishing houses needed to do was not be evil and not try to squeeze the system dry ... oh well. Death and taxes and human greed can always be relied upon.

ghshephard 12y ago
I remember when "Under the Dome" was selling wholesale (Hardcover) for $13 and I ended up buying it from Walmart for $6.99 - because (A) it was $3.00 less than the eBook, and (B), well, I then could, in theory, resell the book. It's odd watching two book sellers compete with each other to sell a book at loss. But, your comment, "Amazon would let publishers rip them off in this way - paying more for something that costs less to produce." brings to mind Scalzi's comment, http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/ http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/ "(This is where many people decide to opine that the cost of eBooks should reflect the cost of production in some way that allows them to say that whatever price point they prefer is the naturally correct one. This is where I say: You know what, if you’ve ever paid more than twenty cents for a soda at a fast food restaurant, or have ever bought bottled water at a store, then I feel perfectly justified in considering your cost of production position vis a vis publishing as entirely hypocritical. Please stop making the cost of production argument for books and apparently nothing else in your daily consumer life. I think less of you when you do.)" Think about the software that I purchase online that costs $0.001 to deliver and I pay $595 - it costs 1/10,000th what the old version with paper books, and CDs, and nice glossy boxes. I agree with Scalzi - the argument about "it costs less to produce" is bogus. Something should be worth whatever value it has to the person buying it intersecting with whatever price the person willing to sell it wants, plain and simple. The cost of creation is not particularly interesting.
- ganeumann 12y ago
  Scalzi is arguing that the packaging is the important thing, not the contents, which is a funny thing for an author to argue. Because if the content is the important thing, then there is now a system that delivers the exact same thing more efficiently. We, as consumers, should definitely push to benefit from that efficiency with lower prices. To do otherwise would be irrational. Aside from being a straw-man, Scalzi's just wrong. We pay less for a soda at the fountain than we do in a bottle. That's the comparison that should be made. When you buy Coca-Cola, you are buying more than just the raw ingredients processed. Otherwise you'd be buying Store Brand Cola.
  - ghshephard 12y ago
    Yeah - I thought his examples were actually not very good. The other one is water - you pay a certain amount of money for bottled water (which presumably doesn't have the crappy lead / metals from the pipes, and ideally will store well, and be available in a disaster, etc...) - but you pay less when you fill up your water containers at the store, for water of roughly the same quality.
  - UnfalseDesign 12y ago
    I agree. If Scalzi is saying that the cost of production should not alter the price of the product, then I would ask him why paperback and mass market prints of books are less than hardback books in regards to the price. According to his argument, paperback books and hardcover books should be set at the same price regardless of what it takes to produce them.
    - voyou 12y ago
      The difference in price between hardback and paperback books is not due to the difference in production costs (which is minimal). The difference in price is because it provides a way to capture consumer surplus. Some people are willing to pay $20 to read a given book, and some more people are willing to pay $15. If you charge everyone $15, you get the largest number of sales, but you don't get the extra $5 that some people would have paid. But you can give people an excuse to pay that extra $5 which they would have been happy to pay for the regular version of the product, by providing a slightly superior product at the higher price.
graeme 12y ago
It's amazon's choice to sell for less. The publishers didn't want to price e-books low. So they refused to sell at a $9.99 price. Which is their right. Amazon believe a low priced e-book market would generate more profits overall. So they priced low anyway. That, in turn, was their right. I don't see how the publishers are evil in that situation. What would you do if a reseller was convinced your product was priced too high, and they wanted you to slash prices? The standard advice on Hacker News is "raise your prices". Amazon appears to have been right, but it was hardly obvious. And low pricing may not apply to all books. For instance, I don't release my books on kindle because of the low pricing structure for self published books. (Amazon gives 70% royalties for kindle books priced $2.99-$9.99, but only 30% for pricing above and below that, IIRC. The optimal price for my books on my own site is above $9.99, so I don't want that deal)
- pbhjpbhj 12y ago
  >I don't see how the publishers are evil in that situation. // [Some made up numbers!] The paperback costs $10. The publisher removes virtually all the direct production costs of creating the book itself (but obv. not the author, editor, type-setting, marketing and such which remain the same or lower). The publisher puts up the price of books because, hey, why use technology to open access to arts and information when you can use it instead to increase the wealth gap. Yes, as I indicated, there may be extra utility in ebooks and that enables them to increase the price. But, with no price increase they still make more profit. Yes, it's just capitalism; it's evil.
  - res0nat0r 12y ago
    Capitalism is now evil?
    - Joeri 12y ago
      No, it's a tool, and like any tool it's intrinsically amoral. The morality is derived by the wielder. When capitalism is used as an excuse for immoral behavior, the tool becomes how it is wielded.