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"There is no such market segmentation or opportunity to capture the consumer surplus with e-books" What? If anything, it's MUCH easier to do so with e-books, w
by GFischer 12y ago
"There is no such market segmentation or opportunity to capture the consumer surplus with e-books"
What? If anything, it's MUCH easier to do so with e-books, with elastic pricing. Maybe it's not Amazon's current proposal, but I disagree with that part of your argument.
You do make a good point about consumer surplus.
Edit: I'm pretty sure e-book publishers can get creative ways to add to consumer surplus (be among the first 100 to buy the "premium" edition and get a character named after you in the sequel!), maybe something like kickstarter's model.
- InclinedPlane 12y agoWell, yes and no. The price can be allowed to fluctuate and it can be held at one level while encouraging people to buy during a deeply discounted sale (the Steam model), and that captures some of the consumer surplus through segmentation based on availability. Though most of the gains there are actually in volume (during the sales), especially since it's a virtual good. In terms of capturing the entirety of what everyone would be willing to pay, it falls short. Compare the amount of revenue per sale on a hardcover novel vs an e-book, for example. On the one hand the publisher and author may take home tens of dollars, on the other it's unlikely to be more than 10. With e-books using the Amazon model basically all of the consumer surplus from anyone willing to pay hardcover prices is lost. Is that made up for by volume? We don't know. As for alternate e-book models, as you point out, there are many. And actually crowd funding is a major way to capture that latent consumer surplus (which is one of the big reasons behind its success), but even that is not necessarily a panacea.