Amazon's eBook Math

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."

Equally suspect

[Z34107]

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:Um, what does the publisher do?

[tlhIngan]

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:I've got a better modell

[taustin]

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.

Re:Disengenous

[LostMyBeaver]

While I feel your argument was probably not thought through well enough, I believe there is merit to it.<br><br>Here in Norway, we tend to suffer a great deal as consumers because of the publisher/distributor relationship. The pricing model of books is highly predatory and the book rights for Norwegian translations also allow the local publisher to own the rights to the original language within the country. This drives prices on the original language and the translation through the roof since the cost of translating is so high that unless it's a #1 best seller, all the profit has to be made on a few hundred... possibly thousand copies. What is worse is that Norway has a higher English literacy level than either the U.S. or the U.K. We don't need these translations. They are translating them for no apparent reason... and worse... as the availability of English books through Amazon or others increases, the Norwegian translation market shrinks and the quality of the translations shrink too.<br><br>Another major issue which I have is... I am willing to pay large amounts for Print-on-Demand if I need a paper book. In fact, I try to avoid purchasing books which were mass printed only to look good enough on display cases to attract sales.... then when the book cools down, they'll throw them away and recycle them. This practice is so fantastically stupid that I can't even imagine that the people who want to make this continue can even tie their shoe laces. I don't feel any personal need to help the printing business by printing documents which just don't need to be printed. Books should never be printed like that anymore. We have eBooks. I don't actually know anyone who prefers paper anymore... including wrinkle monsters.<br><br>I don't care what the eBooks cost, but here's a simple rule.... I under no circumstance am willing to pay for the printing of a book in my eBooks. Meaning if I assume the printing cost of one book to be $1 and that the idiot publisher is probably printing three copies of the book for each one he sells... so let's be fair (toss him a cookie) and say to cover his costs, he needs to pay $2.50 for the cost of printing. Then the eBook should never cost more than $2.50 less than what the printed book would cost on the shelf of a brick and mortar store which will discount the book immediately. So if the MSRP is $20, a store would discount that book 10-25% which is why we have MSRP (feels great to save that 25% right?), so $15... now, subtract $2.50 to cover printing costs... that's $12.50.<br><br>I'm willing to pay $12.50 for the eBook which is MSRP of $20.<br><br>You know what? I'm willing to pay $20 for the paper copy if it's printed on demand instead of just killing the planet for fun. Of course, I'm not going to demand that paper copy unless I need it for reference.