Amazon's eBook Math 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."
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."
I like it. (Score:3, Interesting)
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.
Re:Disengenous (Score:3, Interesting)
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?
Amazon is right (Score:5, Interesting)
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 (Score:4, Interesting)
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.
Amazon is OK (Score:4, Interesting)
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:Disengenous (Score:4, Interesting)
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 (Score:4, Interesting)
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.