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Amazon's eBook Math

Soulskill posted about 3 months ago | from the there's-one-for-you-nineteen-for-me dept.

Books 306

An anonymous reader writes: Amazon has waged a constant battle with publishers over the price of ebooks. They've now publicly laid out their argument and the business math behind it. "We've quantified the price elasticity of e-books from repeated measurements across many titles. 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." They argue that capping most ebooks at $9.99 would be better for everyone, with the money split out 35% to the author, 35% to the publisher, and 30% to Amazon.

Author John Scalzi says Amazon's reasoning and assumptions are a bit suspect. He disagrees that "books are interchangeable units of entertainment, each equally as salable as the next, and that pricing is the only thing consumers react to." Scalzi also points out that Amazon asserts itself as the only revenue stream for authors, which is not remotely true. "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. Killing off Amazon's competitors is good for Amazon; there's rather less of an argument that it's good for anyone else."

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I like it. (3, Interesting)

Anonymous Coward | about 3 months ago | (#47570425)

It would be nice if some of the more expensive textbooks were priced at 9.99. They would probably end up growing the market and making more money.

Disengenous (5, Insightful)

Moof123 (1292134) | about 3 months ago | (#47570445)

When I read through Amazon's logic, they wanted to single-handedly re-write the relationship that already exists between the author and the publisher. It is a very thinly veiled move to try and cutout the publisher. While I abhor middlemen, it really struck me as not being Amazon's place to stick their nose into. I have less and less sympathy for Amazon. It is clear they want to be the 800 lb gorilla on too many fronts for my comfort.

Re:Disengenous (3, Interesting)

Anonymous Coward | about 3 months ago | (#47570481)

they wanted to single-handedly re-write the relationship that already exists between the author and the publisher.

Otherwise known as "building a better mousetrap".

You really want to keep the old system? Are you that worried that poor people will be seen reading your book?

Re:Disengenous (5, Funny)

rmdingler (1955220) | about 3 months ago | (#47570633)

I, for one, admire Amazon's chutzpah.

They're squeezing the entire book publishing industry, and asking authors and publishers what their problem is.

Look, we've done the math for you asshat. Why aren't you grateful?

Re:Disengenous (0)

Anonymous Coward | about 3 months ago | (#47570493)

Disingenuous? You gotta be kidding. Any company that does not post results in their favor is damaging themselves.

I'll bet you think it's good form to vote for someone besides yourself in an election too.

Re:Disengenous (1)

I'm New Around Here (1154723) | about 3 months ago | (#47570579)

I've never voted for myself in an election.

Re:Disengenous (-1)

Anonymous Coward | about 3 months ago | (#47570625)

Me neither, I get dead people, fake people, illegal aliens, and pets to vote for me. They don't have to show ID - who is the wiser?

Re:Disengenous (-1)

Anonymous Coward | about 3 months ago | (#47570961)

Fucking democrat!

Re:Disengenous (4, Insightful)

lgw (121541) | about 3 months ago | (#47570511)

I have no problems at all with Amazon using their muscle to get me lower prices, middle-men be damned, but it's an interesting question whether this means more or less money for authors.

What we've seen from Steam sales is that lower prices mean more revenue - often vastly more. Are books the same? I rather suspect so. Top-tier authors can demand the price they want, but there are only a handful of such in any genre. For the vast majority of e.g. SF authors, a SF book really is much like a $5 game: they aren't completely interchangeable, but I can find more that look good than I have time for.

Re:Disengenous (4, Insightful)

rogoshen1 (2922505) | about 3 months ago | (#47570549)

I'd rather not live in a world where the only places to shop are walmart, amazon, and maybe costco. using size and supply chain efficiency to force smaller guys out of business is not a good thing in the long run.

Re:Disengenous (1)

lgw (121541) | about 3 months ago | (#47570757)

Why? As long as there are 3 or more, why care about anything but price and selection? If you can find what you want, then it's just about price, no? At least, it is for me.

For physical goods it's important that there are places that sell more expensive goods, too, because sometimes there's too much quality sacrificed in the cheap stuff, but there's always someone selling the high-margin stuff. The price may be unappealing there, but, hey, what do you expect?

Re:Disengenous (2)

rmdingler (1955220) | about 3 months ago | (#47570777)

There is an undisclosed cost to be paid for operating on the sole advantage of being the lowest bidder for my Dinar.

If the customer is only loyal to price, she or he is only beholden to your retail outlet as long as you are the lowest. So to stay in business, that's what you'll always be...Shout Out to you Walmart.

If on the other hand, you use your marginally-profitable market share to expand product and service lines in a successful bid for brand loyalty, well you're officially crafty. Props to Amazon.

Re:Disengenous (2, Insightful)

Jodka (520060) | about 3 months ago | (#47570869)

...using size and supply chain efficiency to force smaller guys out of business is not a good thing in the long run.

Why is it bad for efficient suppliers to replace inefficient suppliers? And why bad in the long run but not the short run?

If efficient suppliers replaced inefficient suppliers, but then in the long run inefficient suppliers returned to dominate the market, than that would be a good outcome in your view.

Can you explain your reasoning?

Re:Disengenous (3, Insightful)

blackest_k (761565) | about 3 months ago | (#47571019)

cheaper books , good for me, but i also like going out to book stores to find something interesting.
in the long term, the book stores go out of business now its harder to find interesting books.

long term the prices will tend to rise as competition has been eliminated to a large extent.

Amazon is winning too much, it seems as if kindle is becoming synonomous with ebook reader. Thats not a good thing, no additional storage, no pdf support , no library support. Trouble is they do sell ebooks cheaper. I've jist picked up a sony their store has gone and the kobo book store app says i'm not living in a supported region. It runs a locked version of android, which could support the kindle app.
Which might be better for sony and me.
 

Re:Disengenous (1)

unrtst (777550) | about 3 months ago | (#47571331)

Amazon is winning too much, it seems as if kindle is becoming synonomous with ebook reader. Thats not a good thing, no additional storage, no pdf support , no library support.

Are you talking about eInk e-reader, or their tablet?
If eInk, good luck filling up the storage they give you with books. Pdf support is there (as far as I can tell), and you can borrow books from the library using overdrive (checkout is not built in, but it works).

If you're referring to their tablet, just get a generic android tablet. You can install all the reader apps on it (Amazon Kindle, BN Nook, Kobo, FBReader, etc).

I do wish their eink kindle allowed other "app stores", so to speak, but I think that'd be entirely possible using the browser, and they do have app support (I have scrabble on mine).

Re:Disengenous (2)

Alrescha (50745) | about 3 months ago | (#47571199)

You're not the 'efficient seller' if you lose money at it. You're just burning cash to decimate the field.

A.

Re:Disengenous (3, Interesting)

ShanghaiBill (739463) | about 3 months ago | (#47570953)

I'd rather not live in a world where the only places to shop are walmart, amazon, and maybe costco. using size and supply chain efficiency to force smaller guys out of business is not a good thing in the long run.

I disagree. Small bookstores were crap. They had the bestsellers, and a small random assortment of other books. Amazon has a better deal on the bestsellers, and has millions of other books. This is not only far better for customers, but better for niche authors as well. The small booksellers are gone, and good riddance. Now the publishers are getting squeezed. Good. The fewer middlemen between the customers and the authors, the better.

   

Re:Disengenous (1)

rtb61 (674572) | about 3 months ago | (#47571305)

Sorry, but I have to side with the planet. Dead trees, energy waste and pollution all point to ebooks being preferable to the printed variety. The authors earn less and many would only be able to indulge their hobby part time, whilst working at another career, is just a normal part of social change. I'll have to admit to not having read a book for quite a long time, much preferring the interactivity of the internet and even computer games. Something like slashdot makes for a better read than a passive book and it contains as much non-fiction as any typical paperback ;D.

Re:Disengenous (1)

unrtst (777550) | about 3 months ago | (#47571313)

I'd rather not live in a world where the only places to shop are walmart, amazon, and maybe costco. using size and supply chain efficiency to force smaller guys out of business is not a good thing in the long run.

While I agree, when it comes to ebooks, there's no reason someone else couldn't capture that market. The only thing they have going is that the Kindle is somewhat locked down, however, anyone can make an ebook that works on it (with or without DRM). Those 3 big companies are where they are due to the awesome distribution work they have in place + size (negotiation power) + software. Those things don't matter nearly as much for ebooks.

I don't think Amazon should force a maximum price for ebooks, but I do think anyone selling both the ebook and the physical book on that same site (amazon in this case) should have the ebook at a lower price than the physical copy.

Re:Disengenous (1)

alen (225700) | about 3 months ago | (#47570897)

the games on sale make up revenue and profits on the DLC that some people will buy later at full price

there is no DLC for books, yet. and no IAP yet either

Re:Disengenous (2)

lgw (121541) | about 3 months ago | (#47570967)

There's very little DLC going on on Steam (this isn't the app store article, that one's that way --->). This was straight-up market experimentation. Game devs found that dropping their price from $20 to $10 could generate 10x or more as many sales, and a drop from $10 to $5 could generate another 10x increase in sales.

I'm sure part of that it getting below where some people are willing to pirate the game, but I suspect most of it is just getting to the impulse-buying threshold. $20 game I don't know much about? Even if it looks good, I'm going to read some reviews on meta-critic and think about it. $5 game that looks good from the store page? What the heck, easier to just play it and see.

Re:Disengenous (5, Insightful)

_Sharp'r_ (649297) | about 3 months ago | (#47571235)

As an author, I can tell you that Amazon and their eBook pricing means more money (overall) for Authors. Maybe not for the "best seller"s who don't actually sell many books, but their publishing house prints lots of them and sends them out to stores, so while they end up on the bargain rack or destroyed, they still make the NY Times list based on the lay-down. Yeah, the authors people don't actually want to read will ultimately make less money, but the real authors that people like and want to buy from will make a lot more.

There is currently a battle going on in the industry between the special favorites of the big 6 publishing houses and the midlisters and independents. There are very few authors who can get a reasonable deal out of one of the publishing houses. Everyone else is getting contracts which require them to sign away their works forever, sign away any future works in the same genre, sign away all electronic rights, etc... for a $5K advance on a one or two book contract.

The midlisters and indies are running to ebooks and small publishing houses as fast as they can. It's not a mystery why. Amazon will pay 70% on an ebook. A publisher will typically pay maybe 15% (on poorly documented bookscan sales numbers, even on eBooks, which should be exact!) Where they used to purcahse only limited publication rights, which expired after they took the book out of print, now they want contracts where the author will never get their book back, even if the publishing house isn't actually doing anything with it.

If you are a well-known celebrity, or you sell millions of copies, then a big 6 publisher may work with you on somewhat fair terms. Otherwise, they won't edit you (it's gotten much worse over the last few years), they won't market you and they'll barely make sure your latest book stays on store shelves for a month.

The big 6 publishers are not only an issue in terms of IP rights and author payments, but they are also a very bad gatekeeper. Ever wonder why so many old SF authors stopped publishing and much of what is out there now is crap? It's because they're being picked by a publishing house with a NY "editor" who probably doesn't even like SF. They literally drove popular authors (who wrote what people actually wanted to read) out of the business. If an author sold too much (i.e. more than the editor projected), did they reprint and push the book? No, they'd keep the same print run and just stop publishing it when it hit the number projected as the max, usually tiny. Baen was the only real exception of any size in the industry. Jim Baen also did eBooks right from the start (gave old ones away in order to promote newer books in the same series/by the same author). That's all just starting to turn around because of Amazon, on-demand publishing and eBooks. Old famous authors are even starting to put out the books their publishing house stopped selling, or that they couldn't get published in the first place because it wasn't the editor's latest fad.

Also, the big 6 publishing houses have a massively left-leaning bias. They've spent decades now killing the sales numbers of entire genres because the authors were required to toe the line of the latest politically correct movement. You can date books in some genres by the issues and characters the editors required. Many books that adults like have been pushed into YA categories, just because if it it's not "edgy" enough, the NY editors don't want to buy it. Forget about what will sell, they buy what they'll want to tell their NY publishing friends about at the next cocktail party.

Scalzi is the poster-child cheerleader for the big 6 publishing houses. He's on the "inside" of the publishing establishment and does everything he can to defend them. He could care less about SF authors, just about his publishing buddies.

You want the real scoop on Amazon and Authors? Go look at Mad Genius Club [google.com] , or According to Hoyt [google.com] .

Re:Disengenous (1)

mysidia (191772) | about 3 months ago | (#47571345)

What we've seen from Steam sales is that lower prices mean more revenue - often vastly more. Are books the same?

Maybe some, but not all books are the same. Perhaps the average book is the same.

There are many important books that will probably never sell very many copies.... such as the K&R book "The C Programming Language"

The authors need to be free to price their books accordingly and not have all books given a dictated price based on what the market will bear for the average book, when the is high variability in terms of "what a book is" and how big its audience is, and there are plenty of outliers.

Re:Disengenous (2)

mspohr (589790) | about 3 months ago | (#47570565)

I'm sure Amazon has the data to back up their economic argument of the relative sales at 9.99 vs 14.99 for most books.
They want to sell more books and generate more revenue. This helps them, the publishers and authors.
I don't see anything evil here.

Re:Disengenous (1)

Anubis IV (1279820) | about 3 months ago | (#47570717)

Precisely. There's also the question of how a lower price affects the sales curve in the long-term, since they never provided a time period over which that 1.74 number held true. For a publisher or author looking to maximize profits in the short-term, sure, lower prices are great, no doubt. But if you're trying to develop a sustainable business or career, saturating the market with a flood of cheap copies may not be a good thing, since it may mean that sales drop off faster. Or it may be a good thing, because it attracts more attention or produces an initial sales spike that's big enough to make up for the difference. Unfortunately, Amazon's numbers don't tell us definitively either way, though they try to phrase things such that it appears to be a universal truth that everyone should accept without question as being obvious.

As a quick aside, Amazon is particularly masterful at finding exactly the right set of numbers and statistics to paint the picture they want and then phrasing them so that they sound like a categorical victory, rather than one that has an asterisk next to it. They do it significantly better than Google, Apple, Microsoft, or their other competitors, so whenever they make a press release or financial report, you have to parse what's being said very carefully.

Re:Disengenous (1)

cob666 (656740) | about 3 months ago | (#47570753)

WHAT?

So, authors don't want to have a large price gap between a real book and an ebook? Do they NOT realize that with the real book you get an actual real book. With the ebook you get a limited, revocable license to read the book but only in the format you purchased your license for.

I'm still wondering why the price gap isn't larger.

Re:Disengenous (3, Insightful)

sublayer (2465650) | about 3 months ago | (#47570789)

... With the ebook you get a ... license to read the book but only in the format you purchased your license for.

This applies equally to physical books.

Re:Disengenous (0)

Anonymous Coward | about 3 months ago | (#47570879)

Ahh, but you can hand off the "real" book to a friend, they can then pass that on to another friend.

With an e-book, you can only "loan" it out to someone, if, and only if
A) The format supports loaning out
B) The person you want to loan it out to has the same piece of hardware and is at the same level as yours is.

Re:Disengenous (1)

tapi0 (2805569) | about 3 months ago | (#47571311)

depends where, I believe that here in the UK at least you are able to have the book read out and recorded, copied to a large print, converted to brail, even typed up into word for you to read on screen. Of course, you could just buy them in that format to start with, but there's nothing illegal about doing so (or paying someone to do it for you).

Re:Disengenous (0)

Anonymous Coward | about 3 months ago | (#47571259)

Baen ebooks have no DRM and are available in multiple formats for you to download at any time and transfer to your reader. More publishers should do the same. They have also released quite a few of their books for free which is how I came across David Weber. You have to hunt for some of the older Baen ISOs because of the agreements with Amazon and Barnes & Noble.

Re:Disengenous (1)

angel'o'sphere (80593) | about 3 months ago | (#47571353)

Since when is a license to read an eBook revocable?

Re:Disengenous (3, Interesting)

NoKaOi (1415755) | about 3 months ago | (#47570837)

When I read through Amazon's logic, they wanted to single-handedly re-write the relationship that already exists between the author and the publisher. It is a very thinly veiled move to try and cutout the publisher.

So what? Publishers have a similar role to record companies. Somebody else creates the product, they edit the product, but mostly they are just the marketing firm. Why should they be getting a bulk of the profits? When people suggest this sort of thing with music, you hear chants of hell ya, stick it to the record companies who are getting a lot more money than they deserve for what they do. Yet when it comes to book publishers, you're saying the opposite. Times, they are a changin'. No longer must an author rely solely on a publisher to create physical copies of their books and get them into book stores. E-Books can be sold on Amazon in a similar manner to how music can be sold on iTunes, at which point publishers are just the marketers. Obviously book publishers are going to fight to keep their massive piece of the pie, just as record companies do.

Did online music purchasing destroy music? Did they destroy record companies? Hell no, record company profits are up because people purchase more music. They have had a pretty big impact on physical retailers though.

Will selling e-books at an appropriate price on Amazon (and B&N etc) destroy book publishers? Why would it be any different from the record companies? They are already having an impact on physical retailers though, and that impact will likely only increase.

Re:Disengenous (0)

Anonymous Coward | about 3 months ago | (#47570849)

Fuck you. Straight up. If this was about the RIAA and their publishers you'd be modded a troll. It should be no different here. Writers and publishers enter agreements. Amazon shouldn't be punished for wanting to do better.

ballsy (0)

Anonymous Coward | about 3 months ago | (#47570461)

"publishers ... 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"
So basically coming right out and saying that publishers are trying to protect a dying business model. Color me unsympathetic.

some more data would be nice (2)

Trepidity (597) | about 3 months ago | (#47570471)

A distribution of the expected returns would be more useful than the mean expected return, which can be dominated by a handful of best-selling titles.

Re:some more data would be nice (1)

Bite The Pillow (3087109) | about 3 months ago | (#47570909)

This is an artful example of writing for your audience. You are not their audience, and people who know about such things are not their audience.

They are writing directly to the Hachette fans, and indirectly to the Hachette authors. People who prefer to write for a living, or even read for a living in many cases. Not for the quants in the bookkeeping department of Hachette.

So no, it would not be more useful to have a distribution. It would confuse the audience. More meaningful certainly, I only take issue with the word "useful", since from several perspectives it would be harmful to do so.

Mark Down as Anonymous Troll... (0)

Anonymous Coward | about 3 months ago | (#47570499)

Well, Scalzi can argue whatever he wants, but I sure wouldn't pay more than $9.99 for one of his books. Amazon really can make money for writers as well as Amazon. If you've ever dealt with publishers, you might want to find a way to cut them out as well.
 
The future of literature does not involve paper, unless the reader wants the frivolous expense of printing. Likewise, editing will no doubt be AI assisted before too long.

Bricks and Mortar? (1)

MichaelSmith (789609) | about 3 months ago | (#47570501)

Come on. Nobody buys reading material from shops any more. The only bookshops which remain in my city sell junk. But I don't like the idea of buying everything through Amazon either.

Re:Bricks and Mortar? (1)

Moof123 (1292134) | about 3 months ago | (#47570839)

Come to Portland, experience Powell's Books.

Um, what does the publisher do? (1)

Deliveranc3 (629997) | about 3 months ago | (#47570507)

Maybe the agreement should be 70% (seems low anyway, BT is free!) for the Author and Publisher and 30% for Amazon (so when it's inevitably decided publishers aren't vital in Ebooks we don't have to go through this again!).

Re:Um, what does the publisher do? (3, Informative)

tlhIngan (30335) | about 3 months ago | (#47570691)

Maybe the agreement should be 70% (seems low anyway, BT is free!) for the Author and Publisher and 30% for Amazon (so when it's inevitably decided publishers aren't vital in Ebooks we don't have to go through this again!).

That was the agreement - 30% to Amazon, and right now, 35%-35% split for authors/publishers.

And no, publishers do a lot - the author's main job is to deliver a manuscript. Just a block of text.

it's the publishers job to take that block of text, add the necessary front and back matter (Tables of Contents, Indices, cover art, author bio, etc), then also format that block of text for print and electronic publishing (not as easy as it seems - authors can often have their own interpretations of how to format text), and also link in images and such. Oh yeah, and market it - because otherwise your book is just one amongst the thousands appearing daily. And maybe do a bit of editing on the side.

It's very rare that a self-published book is actually any good - most are just crap (because the author kept getting rejected), and spelling mistakes galore. You really wonder if the author is even literate at all.

Sure there are a few good examples and there are publishers that do get out of the way and let you do it all (and some very good examples), but those are the exception, not the rule.

Hell, you could even consider a publisher's job to help wade through the millions of crap manuscripts submitted daily to find the good works and reduce it down to thousands that have a chance of making money.

Re:Um, what does the publisher do? (1)

0123456 (636235) | about 3 months ago | (#47570771)

That was the agreement - 30% to Amazon, and right now, 35%-35% split for authors/publishers.

Ha-ha. You actually think that publishers split their royalties 50:50 with authors?

For Stephen King, perhaps. For Joe Newbie, it's typically 75% to the publisher, and 25% to the guy who actually wrote the damn book, who then has to pay 15% of that 25% to his agent.

Most writers would earn a lot more with a part-time job flipping burgers than from writing a book.

Re:Um, what does the publisher do? (2)

geekd (14774) | about 3 months ago | (#47570797)

There a plenty of great self published author on Amazon.

Laurence Dahners
Nathan Lowell
Elliott Kay
Christopher Nuttall

that's just off the top of my head.

Re:Um, what does the publisher do? (1)

McKing (1017) | about 3 months ago | (#47571125)

Hugh Howey. If you want to follow this from the author's perspective, try reading his blog. http://www.hughhowey.com/ [hughhowey.com]

Economics (0)

Anonymous Coward | about 3 months ago | (#47570515)

But as a business entity whose sole performance is based on sales, they are only working for their best interest. If someone could gather data on how many new authors come onto the market as a result of writing being a viable concern then maybe a case of declining authors might be an interesting talking point.

Just like Vinyl (0)

Anonymous Coward | about 3 months ago | (#47570527)

Paper books are obsolete, they're just a novelty.

Maybe the author needs to get out more (5, Insightful)

Sycraft-fu (314770) | about 3 months ago | (#47570537)

No dude, your books are not so incredible that people will buy them no matter what the price. There may be a few people who are like that, but most aren't. Price matters in entertainment. Turns out, when you make something cheap enough so that people don't need to think about spending the money and even more so they feel like they are getting a "Great deal" they'll spend very freely.

Steam has figured this out with videogames and siphons tons of money out of people's pockets, and has people thank them for doing it. People get drawn in by the "savings" of the sales and spend tons. I should know, I'm one of them. Not only do I have games I haven't played, I have games I haven't installed. I see something that I'm interested in that is a good price and I say "Oh man, I should get that," and I do. If they are more expensive, I think about it more, I wait until I really want a new game, I go and replay something I already enjoy.

Cheaper books will lead to bibliophiles just collecting the things. I know my mom would. You get them cheap enough and she'll drop hundreds a month on stuff she'll never read, just because she wants to have it.

Authors/publishers/developers/etc need to get over this idea of their digital goods being "worth" a certain amount. No, you need to figure out what you need to do to maximize your profits since there is zero per unit cost. Usually, that is going to mean selling cheap, but selling lots.

Maybe the author needs to get out more (0)

Anonymous Coward | about 3 months ago | (#47570787)

That's a pretty depressing and cynical techno-libertarian argument. You might ask yourself if it's an awesome thing that Steam has convinced you to clog up your hard drive with games you'll never play, and if it that is great for everyone, including authors, if the same happens for books. We're seeing this problem today in mobile apps, which it turns out also "interchangeable units of entertainment." It turns out that repeat and return customers are what matters in the apps game, just like for books, and if the books are interchangeable why would I care about buying another one from the same author?

  Pricing elasticity arguments work great if you're in the driver's seat.Amazon is. It is hilarious to see how they the magic of the market when they want to but use their lawyers to skate around anti-trust in every market they monopolize.

Re:Maybe the author needs to get out more (0)

Anonymous Coward | about 3 months ago | (#47570901)

I fail to see any point to your diatribe, if I want to buy books, and I can get the e-book cheaper than the real book, if it's something I really want, I'll still buy the real book.

If it's something that is in passing, and may only want to read it once, then hell, I'll get the ebook, read through it, maybe finish it, maybe not - but I won't spend anywhere near the cost of a real book on an ebook because there is NO substance to the ebook.

It's amazing to me that the publishers are given anything for ebook sales, as all they've done is for the physical book, the typesetting, formatting, etc - all for the physical book.

The authors need to have 2 sets of rights - material copyright, with limited resale license to the publisher and digital copyright, which they retain to allow them to publish as they see fit.

Why should any publisher make a fucking dime off of something they have ZERO investment in. Remember, 100% of their investment is for the "physical" book form. They never once negotiated for the digital rights and to let them claim them without a fight means that the authors that do allow them to are fucking retarded.

Re:Maybe the author needs to get out more (0)

Anonymous Coward | about 3 months ago | (#47571015)

http://www.macobserver.com/tmo/article/what-amazon-didnt-say-in-its-blog-post-about-hachette

But, we can see another "race to the bottom" that netbooks made..... where are they now ?

Hell TV is another race to the bottom , so now quality TV is almost dead. "Reality TV" (i.e. rubbish) is king as far as the Chiefs are concerned because it is cheap to spew out week after week.

Re:Maybe the author needs to get out more (2)

hey! (33014) | about 3 months ago | (#47571143)

No dude, your books are not so incredible that people will buy them no matter what the price.

Nobody's book is so incredible that people would buy them no matter what the price. If my only way to get Shakespeare was to pay a ten thousand dollar license fee I'd find a way to do without.

Authors/publishers/developers/etc need to get over this idea of their digital goods being "worth" a certain amount. No, you need to figure out what you need to do to maximize your profits since there is zero per unit cost. Usually, that is going to mean selling cheap, but selling lots.

You really shouldn't assume that anyone who disagrees with you does so because they're stupid. Publishers know their marginal and fixed costs and certainly have a pretty good idea of the price elasticity of their books. The situation is more complicated than you know.

You can't compare Hachette to Valve, because Valve owns the whole Steam ecosystem, and delivers its services to users' commodity PC hardware with no intermediaries (other than Internet service). In the case of Hachette v. Amazon, we're looking at a situation where Amazon owns the point of sale, and has more control over the users' devices than the user himself has. And yes, you can read ebooks on a PC but few people will want to do that. And yes you can download ebooks in non-proprietary formats like epub from sources other than Amazon, convert the format to .mobi, and use file transfer to move the converted file onto the kindle; but that's a significant barrier for most people.

So what we're looking at is a move by Amazon to take control of the book market in a way it cannot as long as paperback and hardback sales remain strong. Amazon *looks* like a friend of the consumer because they're calling for lower prices. If they get what they want, then ebooks may well make a significant market share headway against paper books.

You might think that's fine, but it's not *generic* formats and *commodity* hardware we're talking about. It's formats and hardware controlled by an inextricably linked to *one* company. And that may mean lower prices today, but what will it mean ten years down the pike when Amazon corners the market on books?

idiot asshole (0)

Anonymous Coward | about 3 months ago | (#47571359)

You obviously didn't understand what the author said.

Now stop channeling Ayn Rand and get rid of those delusions of John Galthood and try to actually read what the author wrote.

Amazon is right (4, Interesting)

vanyel (28049) | about 3 months ago | (#47570541)

In particular, I won't pay more for an ebook than the price of a paperback, but I also generally have $10 as the cutoff point - if it's more than that, I'll read something else until the price comes down. I really think ebooks ought to be $5 but that ship has sailed.

Re:Amazon is right (3, Interesting)

Daemonik (171801) | about 3 months ago | (#47570637)

I also refuse to pay $9.99 for an eBook copy of a book that has been out of print for 30 years. There are numerous scifi & fantasy books being re-released lately at this absurd price scale and it's ridiculous.

Re:Amazon is right (0)

Anonymous Coward | about 3 months ago | (#47570685)

Its the same with hotels really.

The ONLY additional cost for a hotel room being used is about $10 for cleaning. They pay the same rates, insurance, etc etc etc if it is used or empty.

Therefore I should be able to pay $11 for any room in a hotel and they are making money.

Re:Amazon is right (0)

Anonymous Coward | about 3 months ago | (#47570715)

In particular, I won't pay more for an ebook than the price of a paperback, but I also generally have $10 as the cutoff point - if it's more than that, I'll read something else until the price comes down. I really think ebooks ought to be $5 but that ship has sailed.

what do you mean the ship has sailed? Did something happen to make $5 ebooks impossible, now and in the future?

Re:Amazon is right (2)

McKing (1017) | about 3 months ago | (#47571169)

That's Amazon's whole point. They have the data that shows that $9.99 is pretty much the sweet spot for "major label" authors, and 5.99-7.99 for all other authors. Publishers would make a lot more money if they priced the ebook at $9.99, but they have to protect their print sales so they generally price the ebook at $14.99 so that the $12.99 paperback looks attractive.

The other forgotten point in this discussion is that traditional publishing houses "cannabalize" their back catalogs and stop printing older paperbacks when they go out of print in order to promote their newer authors and/or new "bestsellers". Ebooks never need to go out of print so it doesn't make sense to do that, but they do it anyway. They drop a book for a while, and then reprint it right when the royalty deals with the author expires, extending the deal and their "ownership" of the copyright. It's pretty shady stuff.

Read it from the indie author's view: http://www.hughhowey.com/ [hughhowey.com]

Corporate lies! (1)

sgt scrub (869860) | about 3 months ago | (#47570581)

They argue that capping most ebooks at $9.99 would be better for everyone, with the money split out 35% to the author, 35% to the publisher, and 30% to Amazon.

That couldn't possibly be true. Authors never get a 50:50 split with a publisher.

Re:Corporate lies! (2)

Z34107 (925136) | about 3 months ago | (#47570615)

It's almost like Amazon is aware of that:

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.

Re:Corporate lies! (2)

ohieaux (2860669) | about 3 months ago | (#47570933)

Seems like Amazon might be fishing for authors to self publish and take the 70% of the $9.99. I'm sure Amazon would be glad to take a few extra percent to proof, layout and market the ebook for an author.

Re:Corporate lies! (2)

McKing (1017) | about 3 months ago | (#47571183)

Amazon works very well for self-published authors. A lot of them went the traditional route and went self-published and made a crap-ton more money as self-published as they ever did, plus they retain the ownership of their own works. http://www.hughhowey.com/ [hughhowey.com]

Re:Corporate lies! (0)

Anonymous Coward | about 3 months ago | (#47571167)

So wait let me see if I get this right.

The Author spends a lot of time researching and writing the book and get 35%

The publisher spends a lot of time editing the book , typesetting the book, managing the authors, paying royalties etc and gets 35%

Amazon employes minimum wage slaves doing unskilled work and expect to basically get the same as the skilled people while doing nothing ?

Perhaps they could boost the writer/publisher income to 95% by only taking 5% , their share of the value of the sale.

How about $5 and 100% to the author? (0)

Anonymous Coward | about 3 months ago | (#47570591)

enough said

Equally suspect (4, Informative)

Z34107 (925136) | about 3 months ago | (#47570601)

Even if you don't have a background in economics, nothing in Amazon's statement should be particularly controversial. Price elasticity [wikipedia.org] isn't something they pulled out of their ass, and the idea that lowering prices could make you more money (by selling even more units) is something the thinking slashdotter should be able to intuit form first principles. "Books aren't perfectly interchangeable units of entertainment" is a nice straw man, but it doesn't change the fact that entertainment spending is highly discretionary, or that his $20 e-book has an entire universe of competing alternatives vying for your attention.

Yes, publishers and middlemen have all kinds of rationalizations for trying to kill e-books, but calling any of them "legitimate" is shilling so hard you could pence a crown.

Re:Equally suspect (2)

Jodka (520060) | about 3 months ago | (#47570719)

...the idea that lowering prices could make you more money (by selling even more units) is something the thinking slashdotter should be able to intuit form first principles.

Or from ever having posted an eBay auction with a large reserve price which then closed with no bids.

Re:Equally suspect (1)

Z34107 (925136) | about 3 months ago | (#47570761)

Exactly! Or from seeing Valve's success with their Steam sales, or Apple's success with lower iTunes prices, or from any other number of things obvious to you and I and everyone but John Scalzi.

Re:Equally suspect (0)

Anonymous Coward | about 3 months ago | (#47570731)

The same applies to Cellphones.
And yet Apple takes about 90% of the profits.

Selling at a loss and making up for it in volume does not seem to have worked for all the other phone manufacturers. And Apple is selling at a premium.

So will reducing a price of a book make any difference to what I read. NO.

In REAL terms, have books dropped in price over the last 20 years, hell yes.

This is all about Amazon trying to kill off ALL competition, at which point the jack up prices. Even better if they kill off publishers so Amazon gets 65% of the revenue and the author gets 35%

Re:Equally suspect (1)

Z34107 (925136) | about 3 months ago | (#47570793)

John Scalzi isn't selling iPhones; he's selling e-books. Those actually do earn more profit--for everyone involved--when they don't cost more than a hardcover.

Re:Equally suspect (1)

mcl630 (1839996) | about 3 months ago | (#47570903)

The same applies to Cellphones.
And yet Apple takes about 90% of the profits.

Selling at a loss and making up for it in volume does not seem to have worked for all the other phone manufacturers. And Apple is selling at a premium.

Tell that to Samsung... they're doing just fine. And LG, and Motorola, and Lenovo, etc... Only HTC is hurting, and even they just turned a profit for the first time in awhile.

Re:Equally suspect (1)

CrimsonAvenger (580665) | about 3 months ago | (#47570747)

but calling any of them "legitimate" is shilling so hard you could pence a crown.

I'm trying to figure out the source of the expression "pence a crown" (old British money, obviously, but I'm missing something), and wondering whether the use of "shilling" earlier in the sentence was an intentional or unintentional play on words re:"pence a crown"....

Re:Equally suspect (1)

Z34107 (925136) | about 3 months ago | (#47570773)

Unlike price elasticity, autorectogenesis is entirely responsible for that tortured non-expression and the verbification of "pence." Idea was that there hasn't been that much shilling since before decimalization.

Re:Equally suspect (2)

taustin (171655) | about 3 months ago | (#47570935)

Scalzi is right that (entertainment) books are not necessarily interchangeable. If one wants the latest Stephen King novel, and it is too expensive, one may very well not be willing to substitute another author.

HIs error is in thinking (or at least implying, I think he knows this) that no other form of entertainment will substitute equally well for a book. If I can't afford the latest King novel, maybe I'll watch TV instead, and spend the $9.99 on some beer.

People who have enough of a passion for books to become professionals in the industry often do not understand just how little they mean to most of their customers, when it really comes down to it. Books may not be fungible by author, but entertainment overall is.

Re:Equally suspect (1)

tompaulco (629533) | about 3 months ago | (#47571065)

Yup. Someone at Amazon went to Econ 101. I'm kind of surprised that everyone is treating this as some sort of business epiphany.

Re:Equally suspect (1)

hey! (33014) | about 3 months ago | (#47571271)

Yes, publishers and middlemen have all kinds of rationalizations for trying to kill e-books, but calling any of them "legitimate" is shilling so hard you could pence a crown.

All the arguments based on classical economic theory only work if the assumptions of classical economics hold, particularly the assumption that there is a free market.

Amazon is arguing for its freedom to set prices it charges in its ebook store; that would be no concern of the publishers if we lived in a world where ebook users could simply buy books in non-proprietary formats from any Internet storefront they wanted. But we don't live in such a world. We live in a world where most ebook readers are controlled by Amazon and inextricably linked to its store. It wouldn't have been hard for Amazon to build the Kindle that way. Define some public book trading protocols, bootstrap the standard by building those protocols into the Kindle and Amazon's online store, and instantly the world is a better place for everyone except printers and bricks-and-mortar bookstores with no Internet presence. But Amazon didn't do that, because the Kindle is designed to tie the user to Amazon, the way the iPad is designed to tie the user to Apple.

So what we're looking at is a maneuver by Amazon to corner the market on books *in general* by killing off the traditional paper book trade. Preserving the ability to buy most books from someone other than Amazon seems like a legitimate reason to me.

Hardcovers? What about paperbacks?? (4, Insightful)

Daemonik (171801) | about 3 months ago | (#47570609)

Why is Scalzi only bringing up hardcover prices when at $9.99 the ebook is HIGHER than the paperback release, which will sell more copies than the hardcover as well. How can he argue that there is "a legitimate reason for not wanting the gulf between eBook and physical hardcover pricing to be so large that brick and mortar retailers suffer" when paperbacks sell for $6.99-$7.99?? If brick and mortar retailers can survive cheap paperbacks, why can't they survive eBooks priced $2-$3 higher? For that matter, I have never heard anyone in the publishing industry who can explain why eBooks should be priced higher than paperbacks.

Re:Hardcovers? What about paperbacks?? (1)

taustin (171655) | about 3 months ago | (#47570895)

The most profitable part of a book release is the hardcover phase for a new book. The profit margin on hardcovers is higher than on paperbacks, mass market or trade. If you undercut your own prices on the hardcovers with your ebooks, you lose the more profitable sales.

It's an outdated business model, and one that doesn't work with ebooks very well at all, but it's the one that has run the publishing industry for a century and more, and it's not going down without a fight.

Re:Hardcovers? What about paperbacks?? (1)

tompaulco (629533) | about 3 months ago | (#47571079)

So in other words, better not to sell the book at all than sell the edition of the book which has a lower profit margin?

Re:Hardcovers? What about paperbacks?? (0)

Anonymous Coward | about 3 months ago | (#47571221)

One could show that by dropping your income to about 10% of what it currently is would make everything you do cheaper, and therefore cost the end consumer less, there fore they would buy more and you would be busier.

It would also stop the jobs from being exported to India and China.

So, now I am trying to understand why wages in the USA are higher then 90% of the worlds population. Is this simply greed ?

If 90% of the worlds population can survive on low incomes, why should this business model not be forced of US wages. We are a global economy now and US workers are simply trying to protect an outmoded business/ wage model.

Amazon is OK (3, Interesting)

Jodka (520060) | about 3 months ago | (#47570645)

Even if Amazon's argument is flawed, their attempt to persuade by using reason and presenting facts is nonetheless admirable. As opposed to the feces hurling which accompanies most public disputes these days.

It builds a solid foundation for a researched and reasoned response in opposition. As opposed to picking up the monkey dung and throwing back.

   

Re:Amazon is OK (0)

Anonymous Coward | about 3 months ago | (#47571335)

Amazon is feeding you a line of BS that sounds plausible and with zero thinking people are accepting it at face value. As they say, the best lies are ones that contain a enough of the truth to make them sound plausible.

Amazon is using extremely selective data, and don't supply the data. Is their "proof" based on just 1 book ? What about different price points, why not $10, or $11, or $12 ?
Is the price point one where they have calculated they would make the same money by higher volumes of sales through Amazon because it has killed off the competition, but over all will reduce the income of most authors and publishers ?

How will this impact hard cover sales (where the most profit is made) ?
Will this force further cuts in price for less popular authors thus reducing the income for the majority of authors ?

How does Amazon justify their 30%, they do the least out of writer / publisher / reseller and have over all the least costs and the least skills. Would reducing their cut to 10% not see a reduction in price and therefore an increase sales and and increased payments to the Authors/Publishers ?

Amazons "facts" are unverifiable and are right up there with Vaccinations cause Autism. They are designed for one thing and one thing only, Amazons gain even if it means loss of variety, and quality of books as they race to the bottom.

I've got a better modell (0)

aliquis (678370) | about 3 months ago | (#47570667)

98% to the writer.
2% to the distributor.

(Maybe more if you pay for advertising of your product too.. Cover bandwidth and server cost whatever is needed, 5%?)

Re:I've got a better modell (1)

Anonymous Coward | about 3 months ago | (#47570795)

In your model, it's beautiful you can get so many people to work for a mere 2% of the total revenue. This includes:
- the editor
- the copy editor
- the proof reader
- the cover/graphic designers
- the photographers
- the layout people
- the marketing people
- the lawyers, if necessary
- management
- the printer
- the accountants
- the customer service (used by stores)
- the IT department
- the building janitors/maintenance
- the delivery people
- the shipping and receiving people
- the store managers
- the store clerks
- the restocking people
- the ISBN fees
- the rent, hydro, etc on the publisher's building
- the rent, hydro, etc on the store's building
- the delivery truck's amortization and fuel expenses.
- the conversion to digital format (and associated fees for software)
- store website and database people

Out of curiosity, just how much do you believe that authors/artists make?

Re:I've got a better modell (4, Informative)

taustin (171655) | about 3 months ago | (#47570911)

People who actually work in the industry, including award winning authors [accelerando.org] will point out that as much work goes in to turning a manuscript in to a book as goes in to writing the manuscript. That's today, with the crappy level of editing and proofreading.

What you want is no editing, no proofreading, and overall shit quality. You can get, literally, millions of books like that for free all over the internet. Enjoy.

Should we care about... (2)

thieh (3654731) | about 3 months ago | (#47570675)

Brick and mortar bookstore doesn't sell books with DRM so you can sell it or donate it at your pleasure?

Re:Should we care about... (2)

uCallHimDrJ0NES (2546640) | about 3 months ago | (#47570727)

Brick and mortar bookstore doesn't sell books with DRM so you can sell it or donate it at your pleasure?

You forget, comrade, that paper books are much harder to alter after publication than electronic ones. How will we control history if we let the literate middle class continue to hold us accountable for the past? We must encourage the elimination of paper as quickly as possible. Then the people will be free from the burdensome moral responsibility of keeping track of their rulers and histories, and therefore, happier.

Re:Should we care about... (1)

MichaelSmith (789609) | about 3 months ago | (#47570893)

Paper eliminates itself over time but I would agree that content from Amazon is not immune to fiddling in the back end.

Looks good for the author (1)

blogagog (1223986) | about 3 months ago | (#47570701)

"there's rather less of an argument that it's good for anyone else." Making $3.50 per book is a fantastic deal for, say a fiction writer.

They are neglecting over time proffit (2)

oic0 (1864384) | about 3 months ago | (#47570709)

Its likely best to start a book at 15 and slowly drop it down, just like like every other entertainment medium.... and like they already do by releasing hard backs first. The price thing is true though. I read a lot, I probably buy 2 or 3 books a week and when I am digging for books to buy I give a lot more consideration to cheap books. More expensive books are given much lower priority when I am considering what to buy. I wouldnt even consider a $15 book and a $10 is barely within consideration. $3 is more like it and $6 being a stretch.

Re:They are neglecting over time proffit (3, Insightful)

tompaulco (629533) | about 3 months ago | (#47571107)

Yes, when I see a new hardcover book, I make a mental note to check back in 6 months when it has gone to paperback. I just don't need to spend 50% more for the same content just because it is hardbound. In my experience, paperback books last at least as long as hardbound. Which is to say, I have yet to have a paperback book fail on me, and I have some that are over 50 years old. I've had a few hardbound ones fail, because they are generally heavier and less likely to be able to stand up to their own weight.

Enough is enough (2)

Guspaz (556486) | about 3 months ago | (#47570729)

I'm sick of paying $16 for eBooks when the hardcover version sells for $12... I'm with Amazon on this one.

Pots and kettles (1, Insightful)

taustin (171655) | about 3 months ago | (#47570883)

Scalzi whines (and he's a very good whiner) that Amazon is acting out of pure self interest, with any benefit to anyone else being coincidence, but I note that Scalzi, by his own accounting, makes a six figure income from the traditional publishing industry, so by his own logic, every single word out of his mouth (or keyboard) must necessarily be assumed to be for his own pure self interest, with any benefit to anyone else, including us, the readers, being coincidence.

The bottom line is that the entire publishing industry is very, very broken, desperately trying to cling to a centuries old, thoroughly outdated business model. Amazon is the new, disruptive innovation, forcing change whether their competition, or the market, is ready for it or not. That is pretty much the only difference. Both sides are huge, publicly traded companies required by law to care more about profits than anything else, both sides are doing whatever they can to protect their shareholder's interests and CEO's egos. With the technology changes in the last 20 years, the conflict is inevitable. It cannot be avoided. The winner will be whoever is best at creating the new business model, and history says that will very likely be Amazon. For publishers, it's adapt or die.

Thing is, pretty much all that is true of authors, too. They, too, are businessmen who are out to protect their own interests. The professionals - the real professionals, like Scalzi, who make their living off writing - are not about to let the fans' interests get in the way of their mortgage payments. Those who are part of the traditional industry, like Scalzi, will naturally see the logic of their publisher's arguments. The growing handful of those who have made it big self publishing through Amazon will naturally see the logic of Amazon's arguments. And us, the buyers of books, will naturally see whatever propaganda is packed up in the skimpiest bikini with the biggest boobs.

Re:Pots and kettles (1)

tompaulco (629533) | about 3 months ago | (#47571123)

If a business does not act in its own interest, who is going to act in their best interest for them. In fact, everyone acts in their own best interest. When people act in others best interest, it is because they believe it is in their best interest to do so.

Re:Pots and kettles (2)

Rockoon (1252108) | about 3 months ago | (#47571355)

In fact, everyone acts in their own best interest.

True on average I suppose, but not in general. Morality and/or integrity frequently trumps self-interest... at least this is true for people with morals and/or integrity.

Re:Pots and kettles (0)

Anonymous Coward | about 3 months ago | (#47571147)

Everything you've said is anecdotal at best and nonsensical at worst.

So what if Scalzi is currently tied to the publishing industry? If he could find a way to make more money from e-books, do you think he'd simply refuse it? As the content creator, he stands to make the most benefit from any attempts of cutting out middle men.

>the real professionals, like Scalzi, who make their living off writing - are not about to let the fans' interests get in the way of their mortgage payments.

Conveniently ignoring some of scifi's biggest names of the last few years - Greg Egan, Charles Stross, Corey Doctorow - who release large swathes of their work online, for free.

Re:Pots and kettles (0)

Anonymous Coward | about 3 months ago | (#47571149)

Assuming that Amazon's data isn't cooked, their model is better for authors. What we are seeing is people who don't understand data/economics shilling for their employers.

I don't need clutter (0)

Anonymous Coward | about 3 months ago | (#47570923)

I love to read to my kids and I used to read a lot. My major was english lit. The thing is, I don't want shelves and shelves of book that collect dust. Yes, the tactile feeling of a book is nice, but taking up space and gathering dust isn't. I just donated several boxes of books to the library because I was tired of having them clutter the house.

ebooks are more friendly to me. I can search it, carry it all in my tablet or laptop. The prices the publishers are charging isn't reasonable and I choose not to play their game. They can go screw themselves and the way they abuse authors.

One market? I think not! (0)

Anonymous Coward | about 3 months ago | (#47570941)

I might sell my boon on 'England' for £10 but £1 in China.
There are huge cultural differences which make a nonsense of Amazon's 'formula'.

same thing again (2)

Jodka (520060) | about 3 months ago | (#47571025)

Amazon's pricing argument is one instance of the same general phenomenon that gross expenditures, under some conditions, increase in response to price decreases. The effect has different names in different contexts:

With taxation, people sometimes refer to the Laffer Curve [wikipedia.org] , which for levels of taxation to the right of the peak of the curve, reducing tax rates increases tax revenues.

For technology, Jevons Paradox [wikipedia.org] explains why, as the efficiency of home appliances increases, so does energy consumption.

My grandfather, an economist, had an amusing story about a toll bridge authority attempting to taper down revenues as the bond which funded the bridge was paid off. They lowered the toll price to reduce revenues and revenues shot up as customers responded to the lower toll price by crossing the bridge more frequently. So they lowered the toll price again and revenues shot up further. As I recall the story goes that it worked the third time.

     

9.99 (2)

blackfeltfedora (2855471) | about 3 months ago | (#47571059)

I for one flat refuse to pay more than $9.99 for an ebook and I will never forgive Steve Jobs for causing this mess in the first place.

books are interchangeable units of entertainment, (1)

Anonymous Coward | about 3 months ago | (#47571217)

Not in my case. I buy 'the book' often because its the only one available on the topic. If its priced too high I have to put it off until the price is reasonable. In some cases that is never. If a book is available as an ebook its even better. I have a Kindle that reads to me while I commute. Obviously I can't read a paper book while driving.

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