Media

Is Amazon Evil Because It Wants to Charge You *Less* for E-Books?

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Folks interested in the publishing industry know that Amazon, the world's largest online bookstore, has been in a pissing contest with Hachette, one of the planet's largest publishing houses, over e-book sales. The details have long been murky but all of the reporting suggested that Amazon wanted e-book prices to be lower than Hachette and other major publishers did. In fact, Hachette and four other major publishers recently settled a case in which they colluded with Apple to hike the price of e-books. (Disclosure: the founder of Amazon, Jeff Bezos, has been a supporter of Reason Foundation, the nonprofit that publishes Reason.com)

While negotiating new rates, Amazon slowed down its fulfillment of new Hachette titles (the house's labels include Grand Central, Little Brown, and Hyperion) and stopped discounting them too. That tactic earned Amazon the scorn of the literati, which likened the site to Russian autocrat Vladimir Putin and worse. Best-selling authors such as Malcolm Gladwell and James Patterson were livid at Amazon and their concerns were widely voiced by members of the elite media at places such as The New York Times. I wrote a few months ago that I thought it was really weird to see people go off on a business that was trying to keep prices low for customers. To my mind, Amazon wasn't the "bully." The big publishers and their authors were.

Now Amazon has issued a statement about the matter that lays out some numbers. It's pretty interesting reading and clarifying, too:

…e-books are highly price-elastic. This means that when the price goes up, customers buy much less. 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.

The important thing to note here is that at the lower price, total revenue increases 16%. This is good for all the parties involved:

* The customer is paying 33% less.

* The author is getting a royalty check 16% larger and being read by an audience that's 74% larger. 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.)

* Likewise, the higher total revenue generated at $9.99 is also good for the publisher and the retailer. At $9.99, even though the customer is paying less, the total pie is bigger and there is more to share amongst the parties….

That's a pretty interesting position, I think. And there's this: 

How does Amazon propose to share that revenue pie? We believe 35% should go to the author, 35% to the publisher and 30% to Amazon. Is 30% reasonable? Yes. 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. We had no problem with the 30%—we did have a big problem with the price increases.

Is it Amazon's position that all e-books should be $9.99 or less? No, we accept that there will be legitimate reasons for a small number of specialized titles to be above $9.99.

One more note on our proposal for how the total revenue should be shared. 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.

Read the whole thing.

Hat Tip: Twitter feed of Tom Standage, who writes "Amazon spills the beans on the Hachette dispute. It wants low prices for readers, more money for authors. Who loses?"

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  1. e-books are highly price-elastic

    I can 100% confirm this. A promotional rate drop from $3.99 to $0.99 more than doubled my volume. (Though my profits dropped, I regard it as an advertising expense).

    1. What’d you write?

        1. Sweet! congratulations of publishing a book! I hope a ton of Reason readers buy your kindle during the next 20 hours (or thereafter) and return to give you 5-star reviews.

          1. Thanks. (Though deep down I prefer full-price sales, I can always use more word-of-mouth advertising)

          2. ! I hope a ton of Reason readers buy your kindle during the next 20 hours (or thereafter) and return to give you 5-star reviews.

            What do you think this is, Unicef?

            1. What’s unicef?

            2. What do you think this is, Unicef?

              No, but I believe that I’ve produced an entertaining product that you should buy on its own merits.

              1. Well, you should pay this guy to be your publicist!

              2. You, you objectivist scum!

    2. You know who else used a Reason thread to shill for a book he wrote?

      1. Charles Hurst, author?

        1. Off offbeat stories?

      2. Hitler?
        Ooops; right answer to every question but this one.

      3. Matt and Nick?

      4. Lord Humungus?

  2. “Who loses?” Authors of books that aren’t viable at a $9.99 price point? niche topics, high research or production costs, etc. Those books simply won’t be written anymore. Great for Kim Kardashian biographies, not so hot for reference works.

    First rule of capitalism: stuff is worth what people will pay for it. Amazon’s pricing schemes pervert that. If you’re OK with that, or if there are viable alternatives to Amazon, then no harm no foul.

    1. What a humorous comment.

      1. Invalidname,

        What do you make of Amazon’s statement: “Is it Amazon’s position that all e-books should be $9.99 or less? No, we accept that there will be legitimate reasons for a small number of specialized titles to be above $9.99.”

        You read that part, right? Are you just calling BS? I admit it’s possible Bezos (&Co;.) = straight up lying, but it would seem a rather bold lie to tell the world.

    2. Amazon doesn’t force everything to one price point, they aim to optimize revenue, with their larger dataset, they have a better track record of finding that optimal market rate.

    3. stuff is worth what people will pay for it

      There are two parties to the exchange. A title is worth something to Amazon as a means of making money, and by charging $9.99 (in this example), they are making more of it. If I published a book, my Mom would probably buy it for over $100, but not if she could get it for $9.99.

      Amazon is perverting nothing. It is doing exactly what it should do, and everyone wins in the process.

      Your concern about niche topics and high research or productions costs are unfounded. A publisher won’t give Amazon the rights to the title at a price that won’t cover the cost of producing that work. And I doubt Amazon would have a problem charging $14.99 if that is what was required to cover the costs of production.

      You’re also ignoring the possibility that production costs can be decreased. Competition with cheaper books provides an incentive to do that.

    4. Great for Kim Kardashian biographies, not so hot for reference works.

      If you can’t make money on your shitty research project involving smoking a lot of pot and laughing at pics of cats on the internet all day, maybe you should try making money doing something else.

      1. I just checked on Amazon and a textbook I co-wrote a few years ago is available for $96.33. There is no Kindle or e-book version, but it is eligible for free shipping and Amazon Prime!

        Writing textbooks may be for a number of reasons, but it is NOT for making money. For each edition that sells at between $90-$110, I’ve gotten a royalty check for $1.77.

        1. Right, because the publisher apparently thinks that proofreading, editing, cover art and page design is worth $40 per copy. And that the retailer should get another $50.

          This is reminding me more and more about what people used to say about the recording industry.
          The author gets dick, while supporting the livelihoods of a team of people who spend all day making the book look nice. Probably a bunch of liberal arts majors with nice condos in the East Village.

          You work your ass off so some dickhead who got a humanties degree can enjoy the New York lifestyle and party with the cool people.

    5. “Amazon’s pricing schemes pervert that.”

      Stupid statement.

    6. Amazon’s pricing schemes pervert that.

      I’d like you to provide evidence to support this claim, given there is nothing self-evident about it.

    7. Why would the market for those things suddenly evaporate because entertainment fiction is being sold for less?

      The people who consume such products haven’t gone anywhere, and they are still willing to pay the same price for those books they always were. But even the volume of those things might go up if there was even a *slight* drop in price due to the elimination of the need to publish a physical copy.

      1. Also, it’s directly contradicted by evidence. There are a metric SHIT TON of niche fiction stories being sold as e-books on Amazon at the $0.99 and $2.99 price points. It’s very likely that the vast majority of these books would have never been published had there not been the combination of self-published e-books and these low price points.

        The low price allows consumers to take a risk on an unknown author without risking a lot of cash, and self-publishing allows people who would never have made it past the big publishing houses to have a go at trying to be an author.

      2. Srsly. How is pricing “S Is for a Shitty Mystery” at $18.99 going to make someone more likely to buy “The Genetics of Social Dysfunction” for $18.99?

        1. You’re looking for logic!

    8. Funny – Jane’s Fighting Ship goes for something like $1,200 for the hardback while the online version sells for around $700.

      Seems even in that fairly narrow market (its mainly sold – in the US – to the navy and some enthusiasts who have a lot of money laying around) there’s room for *two* price points.

    9. This. Books are not quarts of oil where one size pretty much fits all. Nor should it be up to Amazon what the author (or his publisher) to decide what is a fair price of the book. If Amazon feels their take of the sale is not enough then they should raise their distribution fee (not that they are that much lower than the 50-55% normal for bricks and mortar).

      Anyone who thinks Amazon has the customers at heart is being completely naive.

  3. I’m curious about something.

    How can Hachette stop Amazon from selling E-books at any price they want to sell them at?

    The only mechanism I can see is that they refuse to sell THEIR E-books at that price to Amazon. If that’s what happening, I don’t see how they don’t have a right to do that.

    I mean, it’s stupid, since they are losing sales that way, but if Amazon isn’t offering a price they want to sell at, tough luck.

    1. Hatchette owns the IP, if they refuse to deal with Amazon when Amazon sells below the demanded price point, Amazon has to stop selling or get sued for copyright infringement.

      1. I think that was Hazel’s point: Amazon has no right to the IP (under current rules…let’s not turn this into an argument over IP).

        But from what I can tell, Amazon wasn’t trying to use the force of law to obtain Hachette’s titles. They were just putting pressure on Hachette during negotiations. In other words, showing Hatchette what Amazon is worth to them.

        1. I was under the understanding that Hatchette broke off the business relationship with Amazon because Amazon didn’t want to go up to the requested price, which is why the titles got pulled, rather than Amazon pulling the titles as a ‘demonstration’ of anything.

          1. And then Hatchette said “Wow, we could be making lots of money instead of sitting here with our thumbs up our asses while Amazon continues to make billions.”

    2. How can Hachette stop Amazon from selling E-books at any price they want to sell them at?

      Pretty sure Amazon “leases” a certain number of licenses for redistribution. In the agreement is probably a clause that Hatchette wants to insert and Amazon doesn’t, the clause being “Each license will be distributed for no less than (x) dollars.”

    3. Historically, what Amazon did was sign a contract with the publishers, where Amazon would pay the publisher a fixed amount per title sold as the wholesale price. Then Amazon would turn around and sell the book for whatever Amazon wanted to sell it at on the retail market. You know, same as it would with any physical book. This was the “wholesale-retail” model. Sometimes Amazon was paying more to the publishers than they were retailing the books for, but that was entirely their business.

      But the collusion between Apple and the major booksellers was to put an end to that. In the new model, the publishers set the retail price in the contract with retailers (at a level agreed to with the other publishers), and anybody who wanted to sell ebooks had to sell them at that retail price. Anybody selling the book would then get 30% of the sale price. This was the “agency” model.

      (On a pure libertarian level I don’t have a problem with that, but the collusion of the big five publishers and a retailer Apple to raise ebook prices was blatantly illegal price-fixing under US law, thus the slam-dunk DoJ victory in the antitrust case.)

      Based on what I’ve been hearing of the negotiations, it looks like the “agency” model, where the publisher-Amazon contract sets the retail price, is here to stay, and the intense negotiation is over the rate Amazon gets paid and what the retail price in the contract will be set at.

      1. In the new model, the publishers set the retail price in the contract with retailers (at a level agreed to with the other publishers), and anybody who wanted to sell ebooks had to sell them at that retail price.

        But how would they enforce that? The only way the could enforce such a requirement is by refusing to sell books to anyone who didn’t take the contract.

        In which case, what is stopping a new publisher from getting into the market and agreeing to sell eBooks for lower prices?

        And if Amazon is asking that the publisher give a greater share of the profits to authors, what is stopping authors from jumping ship and going to this new publisher?

        In the ebook era, what does the publisher really do, anyway? You can make infinite copies at zero cost. If they aren’t printing physical books, the only expenses are publicizing and advertising.

        1. In the ebook era, what does the publisher really do, anyway? You can make infinite copies at zero cost. If they aren’t printing physical books, the only expenses are publicizing and advertising.

          Hazel, Hazel, Hazel… you are usually so much more informed and insightful than this. Publishers find the needle (a possibly successful book) in the miles of haystacks, and then edit it, and then design it. (Even ebooks involve font choices, covers, etc.) None of those things are trivial expenses.

          Back when I was involved in book publishing 30+ years ago, the rule of thumb was that a book should be priced at five times the cost of paper, printing, and binding. even with those costs eliminated, there’s still a lot to cover. I’m surprised that publishers can make a go of it at only $10 or even $15 per new ebook. But then advances for authors have been dropping quite a bit in recent years, and authors now often pay for their own publicity, which may be related to the rise of ebooks.

          1. Seriously? They need $10-$15 PER COPY to select a font and size the page margins?

          2. To be totally serious, isn’t all that stuff kind of fluff anyway? You could publish everything in Time New Roman, and it would barely make a dent in your sales. Doing all that only makes sense if you want a pretty looking physical book.

            If design is 80% of the cost of the book, this strikes me as a gross waste of resources. A publishing house shouldn’t be a jobs program for unemployed art majors.

            1. “If design is 80% of the cost of the book, this strikes me as a gross waste of resources. A publishing house shouldn’t be a jobs program for unemployed art majors.”

              How about if that sells the stuff and not spending it leaves the stuff sitting on the shelf?
              I mean, there are people who have sent years trying to move product; if you can do better, cheaper, they’d love to hear from you.

              1. As we’re seeing – they can.

            2. I’m not saying design is 80%. I’m saying finding the manuscript, editing it, pouring it into a designed template, tweaking it for widows/orphans/etc., proofreading it, designing a cover, and all the rest, are not trivial expenses. In other words, saving on printing and shipping saves you some, maybe even a lot, but not as much as you might think.

              Another issue is that ebooks are very easily pirated. Pre internet, it was rarely worthwhile for anyone to photocopy a book to avoid paying for a real copy. But ebooks are all over Pirate Bay etc. That cuts publisher income compared to dead-tree books. Ebooks are a very mixed blessing for publishers.

              1. As a self published author I fully agree with what PapayaSF has said. The time (cost!) of editing a manuscript is not trivial. Likewise, a professional publication is not done by taking your word doc and adjusting the margins. If it is a technical book there is probably additional review by an outsider(s).

                There is a lot more to getting a book out the door than most people realize. Those costs must be spread out over the estimated sales. Most books are niche and not selling 10’s of thousands, let alone millions, of copies. Likewise the author’s compensation too must be spread out over the lifetime estimated sales (and should be present valued).

                And for those claiming lower prices will magically make sales go to the moon – that assumes an unlimited (or at least very large) pool of interested buyers. That is often not the case and some subjects may have a very small pool of potential buyers where total dollar sales may be lower if price is cut substantially.

                1. There is a lot more to getting a book out the door than most people realize.

                  Compared to the work it took to write the book in the first place? What do you want to pay for, the content or the cover art ?

              2. I still don’t see how all of that, combined, costs more than a few thousand dollars.

                Putting a Word document into a template doesn’t take more than a few hours. The author could do it themselves.

                All of the design, editing, proofreading shouldn’t be more than 10-15% of the price of the book. The reader should be paying for the author’s content, not for the design.

                1. Please think about how long it takes to properly edit a 200-300 (or more) manuscript. Editing comes in more than one flavor – copy, content and line. And editing is not a one and done event. Changes are suggested/requested. Author revises. New edits. Depending on the material, peer review may be necessary.

                  Cover design is actually quite important to book sales and is not a simple as resizing a jpeg.

                  Speaking of which, you seem to think just dumping a book on Amazon is the end of the process, that the book markets it self. Not the case at all.

                  How about the author? How many hours did it take to go from start to finish? What is their compensation?

                  So the “cost” (ignoring the actual print or electronic distribution cost) might be 5% or it might be over 50% depending on the esitmated sales:

                  “in 2004, 950,000 titles out of the 1.2 million tracked by Nielsen Bookscan sold fewer than 99 copies. Another 200,000 sold fewer than 1,000 copies. Only 25,000 sold more than 5,000 copies.

                  1. Does it take longer to edit a manuscript than to write in the first place?

                    Compare how much the author is getting to how much the editor is getting. Why is the editor getting a bigger cut of the sale price than the author?

                    1. You’re basically saying that prices of ebooks need to be jacked up to compensate the editors – as if the editors are morally entitled to a fixed price for their labor. But the author might get jack. There’s no built in salary for authors that you want to be a mandatory part of the sale price here.

                2. The author could do it themselves.

                  Look at the covers of 10 self-published books (ebooks or dead tree). Now look at the covers of 10 books published by “real” publishers. There’s a reason why professional designers exist and are worth hiring.

                  1. Are they worth paying more than you get paid yourself?

                    If you’re the author and you expect to get $1 for every copy of the book that gets sold, then pricing the book at $3 per copy, is it worth paying the designer $9 per copy, and increasing the price to $12 per copy?

                    Also, who looks at the covers of eBooks?

                    1. Are they worth paying more than you get paid yourself?

                      You’re looking at that the wrong way. Yes, the author puts in the most work. It’s like asking “Does the landlord deserve more money than his retail tenant?” Ideally no, but sometimes retail businesses fail, and the landlord makes more money than the business.

                      Also, who looks at the covers of eBooks?

                      People browsing ebooks on Amazon. People who download the ebook and look at it on a Kindle or a Nook or in iTunes.

          3. This is the same sort of thing that music publishers have been saying. Its the same sort of thing that tv and movie producers have been saying.

            Its the same sort of thing constantly decreasing production costs have been showing to be increasingly irrelevant.

        2. In the long run, nothing’s going to stop new publishers from entering.

          In the short run, the thing is that people who want to be published want to be published in paper, which mean that the Big 5 are going to dominate books for a while. There’s a deeply dysfunctional set of industry standards around things like returns that mean you need existing contracts or lots of money to publish in paper.

        3. In the ebook era, what does the publisher really do, anyway?

          Editing and proofreading.

          1. The publishers do not always do a very good job of this. I remember reading a book way back before e-books, that had presumably gone through the entire editorial and design process, published by a major paperback house, that was riddled with typos and crummy grammar.
            I recently purchased a copy of “A Confederacy of Dunces” to replace a copy I had lost, and the new edition had two glaring “corrections” clearly made by some illiterate buffoon at Grove Press who didn’t know that “gyre” is a real word.

            1. Sadly true.

  4. I actually didn’t know (or didn’t remember) that Bezos donated to Libertarian causes. No wonder Amazon’s done so well.

    While negotiating new rates, Amazon slowed down its fulfillment of new Hachette titles (the house’s labels include Grand Central, Little Brown, and Hyperion) and stopped discounting them too. That tactic earned Amazon the scorn of the literati, which likened the site to Russian autocrat Vladimir Putin and worse.

    Aahahahahaha, fuckwads. “Waaaah! You won’t do what we want you to do and you want to do what makes you money!”

    1. How do you slow down fulfillment? “This title is no longer eligable for prime”? The stock guys and the eBook servers can’t tell the difference between favored and unfavored product. Unless they simply ordered fewer physical copies from Hatchette during negotiations, resulting in backorders. I wish there was more detail on that part.

      1. I think “fulfillment” includes non-physical copies of works as well, but I could be wrong; which would imply that amazon deliberately slowed implementation of Hatchette’s e-books.. which (for me) significantly reduces demand. If I can’t have it right now, fuck you, keep your hard copy.

        1. If there’s a dispuite on price, adding new eBook titles at a list rate not agreed upon could expose Amazon to liability, so delaying new titles involved in the dispute seems more prudent than punitive.

          1. Yeah, but that’s not how Hachette would see it.

      2. They ordered fewer physical copies from Hachette, as you suggested.

        1. Was there aver a price dispute on the hardcopies?

          1. Not that I know of, but it’s still leverage and furthermore, from what I have been able to gather physical books and ebooks are covered under a single contract.

            Also, I don’t know if this applies to the negotiations with Hachette, but there have been reports that Amazon wants publishers to allow it to print hard copies on-demand in its own facilities if they run out.

            1. , but there have been reports that Amazon wants publishers to allow it to print hard copies on-demand in its own facilities if they run out.

              I can’t figure out why any publisher would turn that down.

              “Wait, let me get this straight, you’re going to do pretty much all the work for me and all I have to do is collect a check? Sign me the fuck up.”

              Also, I wanted to add that Amazon “slowed fulfillment” by basically telling Hachette to go fuck themselves when it came time to re-stock, and encouraged its customers to buy Hachette books elsewhere if they really wanted em.

              1. On-demand printing tends to be lower quality. I suppose the art directors hate it.

                Also, publishers are deathly afraid of Amazon, for legitimate reasons. Amazon is now a publisher. A traditional publisher who outsources more and more to Amazon risks losing their entire business.

                1. They’re going to lose it all anyway. They may as well maximize revenue while they can.

        2. That could be either Hatchette or Amazon doing that…

          1. Amazon has very few reasons to succumb. They sell half the worlds books (that is, every e-book, physical book, etc). Losing some shitty harry potter bullshit is irrelevant, to amazon.

    2. No, it’s even better: “Waaaah! You won’t do what we demand you do and that makes you the autocrat!”

      1. The irony being that they’re effectively competitors; Amazon for “e-publishing” and Hachette for shitty publishing.

        I dunno about you, but if my date of death were posted on the wall I’d take whatever money on the table and run.

  5. Plus 1 Diamondhead.

  6. total revenue increases 16%.

    The author is getting a royalty check 16% larger and being read by an audience that’s 74% larger.

    The customer is paying 33% less.

    Looks like a win, win , win. Clearly they are an EVUL, PROFITZ-SEEKING KORPERASHUN.

    1. Looks like a win, win , win.

      Yeah, it’s just Hachette trying to charge more than the market will bear cause they know they’re all out of jobs in the next 5 years.

      1. wouldin’t the maximum revenue price point wring the most from the market rather than pricing yourself out of it?

        Oh, wait, they’re French, they don’t understand economics.

        1. they’re French, they don’t understand economics

          *Disclaimer, some French do, but as a rule of thumb, the French have proven a lack of understanding that is surpassed by few.

          1. I believe there was just a sterling example of it published for somewhat more than 9.99 just recently.

            1. And I think one of the guys who praised it is looking for a job.

    2. That’s what confuses me about Hatchette’s position. Amazon is in business to make money, they are not going to lower the price just to thumb their nose at the French (though sometimes that’s reason enough). They’re going to aim for the price point that maximizes revenue flow. That also maximizes revenue for Hatchette. What is the matter?

      1. It’s tactical. Hatchette doesn’t want to become dependent on Amazon for their revenue and existence. If they did, Amazon could start squeezing them in the future. Therefore they want to keep physical book sales viable. And that means pricing ebooks high enough to protect physical book sales, even if it means less revenue.

        1. This.

          I think that book publishers are on the way out.

          If ebooks take over, there is no reason for publishers to exist and get ANY cut of the revenue from ebook sales. Authors will just sell their books directly to Amazon. You can make a PDF copy of a book with the click of a button. There is absolutely no need for a middle-man.
          And even blogs and social media will do the work of advertising. Why pay a publisher?

          Reminds me of that article about how self-publishing was evil narcissism, and publishers are needed to help tell the vulgar commoners what they should read.

          1. Tony would like to weigh in on this, but looks like his mom forgot to pay the intertoob bill again.

          2. I do not want to see the death of bookstores, especially used bookstores.

            1. Not before i sell all my used books to them.

            2. There will most likely continue to be a market of some sort for physical books. It just won’t be nearly as large.

            3. Just buy used ebooks.

              1. A store selling used ebooks would be no fun at all.

        2. You got it!

  7. The wife and I went to a book fair last year where an author, who had a book on the NYT bestseller list, described her remuneration. It was mind boggling how little she made for writing a book. A bestseller book, at that.

    1. Sounds like she fucked up.

      1. No, it’s not unusual.

        1. For a bestseller? (A real bestseller?)

  8. Amazon doesn’t seem to give a damn about making a profit.

    Yeah, that’s creepy in a predatory kinda way.

    Whether the government should get involved is another question entirely.

    1. “Whether the government should get involved is another question entirely.”

      What’s the question?

      1. Whether this is some sort of monopolistic behavior.

        And the answer, so far, is no.

        1. Ken Shultz|7.30.14 @ 10:46PM|#
          “Whether this is some sort of monopolistic behavior.”

          Ever seen a monopoly that wasn’t a gov’t sponsored one?
          (excluding the one outlier, Alcoa)

          1. Tariffs kept foreign aluminum out and Alcoa had many aluminum processing patents.

    2. Bezos is a libertarian. All he cares about is profit!

      /prog

      In seriousness, Amazon is simply strong enough to bleed a little now in order to gain something else it wants down the road. Hachette, being in a dying business, doesn’t have that luxury.

      1. “Amazon Posts Record Profits, But Shares Tumble”
        http://www.huffingtonpost.co.u…..00600.html

        I kinda figure that Bezos is looking a bit beyond then next quarter.

        1. They didn’t make a profit for 20 years.

          That’s extremely unusual.

          And their behavior in so many ways suggests that they’re going for market share–constant quest for more market share–at the expense of profit.

          Some companies do that for good reason. Bezos has been doing it for decades.

          I think that’s highly unusual.

          1. “I think that’s highly unusual.”

            I do, too, but now, even when wife asks about saltshakers for the sea-salt she prefers, we both nearly instantly said ‘Amazon’. And, yes we got one.
            Probably 4-6 buys the last month, only one for books.

          2. Some companies do that for good reason. Bezos has been doing it for decades.

            I think that’s highly unusual.

            I think he thinks he can still grow or at least did for 20 years.

            Why seek profits when you already have a ton of cash from the IPO?

            He has money but he does not (or did not) have a business as big as he wanted.

      2. Where is the convincing evidence that Bezos is libertarian? I’m not saying it doesn’t exist, just that I haven’t seen it yet.

        1. Well, he supports the Reason Foundation. Maybe that’s not convincing evidence, but it’s evidence.

        2. Pretty sure he donates to l’arian orgs, like this one.
          Dunno if that makes him ‘libertarian’, sorta like Mackey.

    3. Predatory pricing is a fake concept.

  9. The more I think about this, the more convinced I am that Amazon isn’t telling the whole story.

    Amazon has something Hachette needs–readers–and something Hachette would really like–a way to make more money.

    Hachette has something Amazon needs–books.

    If that was all there was to it, then there would be a deal.

    I’d guess that Amazon (which doesn’t need Hachette as much as Hachette needs it) is trying to get something else from Hachette. Evidently that something wasn’t worth an extra 16% to Hachette, but Amazon is betting that it is worth the good will of the public.

    1. The more I think about this, the more I think publishers are just like the dying record industry. You have this vast infrastructure of people dedicated to publishing physical books. Is there a place for them in the world of eBooks? Is there any reason you need a middle-man between the author and the consumer?

      1. How many children will starve when all of those middleman jobs are lost? Why can’t you think of the children?

      2. The greatest costs in traditional publishing are editorial (which includes determining what to take a chance on in the first place) and marketing. The physical production part represents a relatively minor share of costs.

        There will always be a place for sifting mechanisms. Maybe someday it will be automated and very nearly free, but we ain’t there yet.

        1. What are the publishers risking in publishing an e-book?

          With the internet, you can publish literally _everything_ and just see what catches on. Absent physical publishing, what’s the downside in listing a title on an electronic download site?

          1. You’re risking your brand. You can either publish almost anything (which Amazon does), or you can build a brand by taking the time to select manuscripts and help authors polish them up before you publish them under your brand. Many people will pay more for an ebook from a publisher with a good reputation in a genre than for an indie title. (Likewise, big-name authors will generally share some of the loot with an agent and a brand-name publisher in order to benefit from agent’s and publisher’s marketing services.)

            1. This is very true. Readers will often trust a publisher. E.g. you like military SF, and here’s one by a new author, but it’s from Baen and you’ve liked their books before so you trust that they aren’t selling you garbage.

              1. How many people, really, care what publishing house a book comes from?

                Be realistic.

                If the purpose of the publishing house is to act as filter, you can get the same service by reading book critics online. There are tens of thousands of people who will review books completely for free. Just find a book review site you trust.

                1. Branding and reviews aren’t quite equivalent. Neither can really replace the other.

          2. “literally_everything_”

            Dinosaur erotica says hi!

            http://www.amazon.com/gp/aw/d/…..ot_redir=1

    2. The way physical book sales (and promotion and the rest) are set up contractually (with returns and such), it takes either pre-existing relationships or a shit-ton of capital to become a viable mass-market publisher. On the other hand, it doesn’t take shit to become an ebook publisher. You can publish ebooks in Podunk, Mississippi with lit majors who graduated from Mississippi State and no serious industry contacts, just some space on Amazon.

      So the big five publishers don’t want to do anything that would undercut physical book sales, because that’s the place where their incumbency is an advantage.

  10. Amazon should just start or buy a publishing company and split the revenue 60/40 with the authors.

    That’ll really piss off Hatchett

    1. Amazon is already the biggest vanity publisher in the world.

  11. I love e-books. Now, I love books that I put on my book shelves also. I have a lot of them. In fact, I have so many that most of them are packed away in plastic totes in my storage space, because I don’t have room for all of them in the house. I wish I did, but I don’t.

    I haven’t bought a paperback or hardback book in about 7 years, and I haven’t read one of either in 5 years or so. The reason is two fold. First, my kindle is a lot easier to hold and read in bed and I don’t need to keep the light on if my wife is already asleep, just to read. The 2nd thing is my reading habit and convenience. When I get in a mood to read, it will just occur to me one evening, hey, I want to read something. So I’ll go surf Amazon, find a book, and 2 minutes later I am happily reading it. I never plan that I’m going to read something and then go to a book store and buy that book so that I can read it. It doesn’t work that way for me.

    Saying that Amazon is evil for whatever their business strategy is, is just lazy and stupid thinking. They’re just a business, with the goal of making money, like every other business, and I really appreciate a lot of what they offer. I buy a lot of stuff from them. Not everything, but when they can offer me the best variety, price, and convenience, then why go elsewhere?

    The only time a business is evil is when the government gets involved via cronyism.

  12. To my mind, Amazon wasn’t the “bully.” The big publishers and their authors were.

    Why does either side deserve to be called a bully? Neither side can coerce the other. Each side is just leveraging what it has to offer in an effort to get the other side to change its position. Nothing wrong with that.

    1. I agree, but do be fair, which one is the dinosaur?

      Amazon provides are real service to consumers and authors. Hachette takes a huge cut, for doing what? Providing the spell checker? Converting from Word to PDF?

      1. That’s for the market to work out. Nobody’s forced to buy Hachette’s titles.

        1. No, but if Hachette has their way, they will be forced to pay $9.99 for titles that Hachette doesn’t even publish.

    2. If Hachette colluded with other publishers and another retailer to set prices, tried to force Amazon into that scrnario, and then tried to use the court of public opinion to get all pissed off at amazon, I’d say they constitutes bullying.

  13. No one has pointed out the real reason so many people (as in, mostly the leftwing type of people) are worked up here.

    See, publishers are the underdog business being losing profit. Amazon is the new corporation on the block making an actual profit. It’s also a hipster thing. Real books are just better than e-books. Add in the fact that so many in the media find themselves with a broken business model over the same issue (a flawed and out-dated business model), and you have your answer as to why there are such harsh critics.

    1. Right, I mean they hang out with these people at swank New York cocktail parties.
      Nobody wants to see their friends get canned.

    2. Real books are just better than e-books.

      Not needing to charge the battery of my book = better

      Also they don’t tend to break when I drop them.

      It is not a “just better” hipster thing.

      1. I prefer physical books too, but if the price differential were large enough I might change my mind about that.

        Also, I like the way my bookshelves look in my home, but I don’t like having to cart boxes of heavy books around with me every time I move.

        1. “I don’t like having to cart boxes of heavy books around with me every time I move.”

          I don’t move often and that run of shelves is ‘ECON’, that one is ‘WWII’, that one is ‘BIOS’, etc.

    3. …”Add in the fact that so many in the media find themselves with a broken business model over the same issue”…

      The lefty columnists in the SF Chron are ragging on Amazon over this. No surprise; they’ll have to look for a job soon.

    4. I had a cockroach infestation in my last home and when i found out they eat the glue used to bind books, I had to throw away most of my library. A hundred or so. Still have all my ebooks.

  14. I am a barnes and noble customer. I like my nook app on my android tablet and intend to keep it that way. So amazon can do whatever they like, and it effects me exactly not at all. It also makes me INCREDIBLY unsympathetic to Hatchette. They need to stop crying, and either playball with their channel partner or make a better deal with B&N if their IP has value and use it as a strategic control point.

    The problem is IP is worthless, curation is even more worthless, and editing is counter productive. The value in the modern market place is content filtering, if you sell content, finding the content people want is where the value is. Its why netflix gets $8 a month, and virtually nobody pays for content online.

    Amazon knows whats up. B&N is selling an integrated experience for content consumption, and old media people are trying to find ways to protect margins.

    I prefer E-books for my leisure reading and physical books for my technical reading.

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