Amazon Facing Heat From Third Publisher Over Book Price Issue

[Nemesis999]

Hardware depreciation is not included because the publisher typically doesn't own the hardware for pressing. A press company does. http://www.rrdonnelley.com/wwwRRD1/Markets/BookPublishing/BookPublishing.asp as an example.

You can hide a cost behind as many layers as you want. It still comes out in the final price. Having someone else print your books doesn't make the expenses magically disappear, it just moves it.

Medium differences are not the money, the data is. If we don't agree on this basic tenant, then the rest of this argument is moot. At the end of the day, this is "printed" vs "electronic". The electronic medium can have EVEN MORE value added than the printed at the end of the day too, because it'll never have pages go missing, or be damaged by the elements. It can be made searchable by keyword. You can adjust the font to work for you. On some books, the reader can even dictate it to you.

And this is the exact same kinda of fucked up logic that is killing music. Providing less does not make your product worth more. Period.

Amazon gets the same as any other tier 1 bookseller on printed books: 50%. I can't speak to the 30% number.

I can, it says right in the article. Macmillian is threatening to delay Amazon's shipments by 7 months if they don't accept a 30% cut.

Piracy is already in full swing in its current form. Check out newsgroups and bittorrent for a swath of books that are already being pirated.

"we've been driving straight towards this brick wall for years now. It's getting pretty close. Maybe we should just keep flooring the accelerator and see how it turns out."

There are A LOT of hands that go into a book from the author down to the guy sweeping the floor at the bookstore/warehouse, and they all like to get paid. I'm not certain how to convince you of this. If you can sort out a way for a writer to get paid well without all the hands and/or overhead, I'm certain that there are some publishers that would like to have a word with you. My speculation is that you think a large chunk of overhead magically goes away when you switch to an eBook setup, and sadly, that's simply not true. Perhaps with self publishing this may be the case, but the AUTHOR loses a bunch of things when they go that route: copy editors, ad execs who can really help them sell their book, sales weasles who can help them sell the book... And the time that goes into doing all this stuff is less time the author has to write. If the author is willing to lose these things, more power to them. Many have taken their books back (there is a process for this) and started reselling them privately after the publisher has deemed them "out of print". Some have made good traction with this.

You realize that using YOUR $3 number their margins still increase?

 

[jellisii]

You can hide a cost behind as many layers as you want. It still comes out in the final price. Having someone else print your books doesn't make the expenses magically disappear, it just moves it.

Um, if the press says "$3", they're probably not losing money at this point either. I don't know of any business that uses the "sell it all at a loss, we can make it up on volume" line of thought that is still in business.

Also, I didn't pull that number from my neathers. Here's an industry guy that quotes damn near the same I did: http://theharperstudio.com/2009/02/why-e-books-cost-money-to-publish/

And this is the exact same kinda of fucked up logic that is killing music. Providing less does not make your product worth more. Period.

Allright, this doesn't make any sense to me: My dead tree book can't dictate to me. My dead tree book can't adjust the font bigger (which would have been DAMN nice when reading "Atlas Shrugged"). My dead tree book can't be searched by keyword. My dead tree edition takes up a BOATLOAD more space than an ebook would. What part of this is "less"? The only way I'd be able to do this ANY of this is if I cut the binding off, scanned each page and piped it through an OCR program of some sort. At the end of the day, I still get something that I have to glue back together, and then may still have to deal with formatting stupidity when moving it to my ereader.

Yes, I do think it's annoying that I can't loan said book to anyone, or sell it later. That's part of the downsides to switching mediums. If you find that to be too high of a cost, don't go down that path. This is one of the reasons I DON'T buy into the ereader thing except for books from places like Gutenberg.

I can, it says right in the article. Macmillian is threatening to delay Amazon's shipments by 7 months if they don't accept a 30% cut.

The only place I see the "30%" number is with regard to ebook sales only. Gimmie a link since I'm obviously blind.

You realize that using YOUR $3 number their margins still increase?

Which is why they're pushing the agency model. It works out for everyone in the end. The author still makes a reasonable living on first run writing, Amazon still makes money (which is a change from the past when it comes to first run books sold via Kindle), all those people who have to handle the DATA can still get paid, and the end user can still have their ebooks. They've also said that the pricing will go down, which I suspect will be identical to the "Hardcover -> Paperback -> Trade Paperback" progression. So those who feel that the ebook pricing is too much will merely have to wait for it to come down. See http://www.mediabistro.com/galleyca...roup_to_transition_to_agency_model_151128.asp for a blurb from Hatchette concerning this. Further reading: http://nielsenhayden.com/makinglight/archives/012168.html#012168

I suspect part of the reason why this all came to a head was because Amazon wanted to not eat $4/book on their Kindle sales, and began to lean on the publishers to lower the ebook prices to the $10 level.

Besides, it's not written that ALL ebooks would be a flat $15. The Agency model allows for flexibility, just like the idea of Hardback -> Paperback -> Trade Paperback. Some (a lot probably) will start out a lot lower, for the same reasons that a lot of books don't get the hardback editions.

 

[Nemesis999]

The only place I see the "30%" number is with regard to ebook sales only. Gimmie a link since I'm obviously blind.

...

Where's the confusion? You claimed the publisher receives $10 after Retailer/Author/Printer payments. Using your $3 figure, their new model has them receiving $10.50 in revenue.


You seem to miss the overall point here.

The model is DEAD.

Selling information for high prices is dead. It is no longer on a physical medium. Piracy is an accepted practice worldwide. It doesn't matter what the publishers want to pocket. It doesn't matter what the authors want to pocket. It doesn't matter what the retailer want's to pocket. It really really doesn't even matter what is "fair", because in the end, people just don't fucking care.

The only reason the model ever worked is because you could force high prices since reproduction was difficult. This allowed for a large author's marketplace. Since you can no longer control reproduction (No, you can't. Ever. Accept it publishers.), there isn't the slightest chance in hell you can maintain those prices.

There is only one option for information suppliers in the future, and that is large-scale low-price distribution. People want it now, and they want it cheap. It can be given to them cheap, or they can take it free. It's the publishers choice.

Yes, it may mean there are less jobs for authors. In fact, it probably does. But guess what? Markets change. People are forced in and out of markets constantly. Authors are no exemption.

 

[bacon]

Allright, this doesn't make any sense to me: My dead tree book can't dictate to me. My dead tree book can't adjust the font bigger (which would have been DAMN nice when reading "Atlas Shrugged"). My dead tree book can't be searched by keyword. My dead tree edition takes up a BOATLOAD more space than an ebook would. What part of this is "less"? The only way I'd be able to do this ANY of this is if I cut the binding off, scanned each page and piped it through an OCR program of some sort. At the end of the day, I still get something that I have to glue back together, and then may still have to deal with formatting stupidity when moving it to my ereader.

Yes, I do think it's annoying that I can't loan said book to anyone, or sell it later. That's part of the downsides to switching mediums. If you find that to be too high of a cost, don't go down that path. This is one of the reasons I DON'T buy into the ereader thing except for books from places like Gutenberg.

The publisher/author or who the hell ever didn't innovate anything you just mentioned. Amazon or Sony did its in the software, and we have paid for it when we bought the reader. So yea no added value, its still just fucking words. That once bought can't be sold, or traded. How is that value?

As I said it is the same shit the recording industry tried to pull, and they will get the same results. So I will get ready for years of teams from yet another business model that is unwilling to change with technology.

 

[auspexd]

...
Selling information for high prices is dead. It is no longer on a physical medium. Piracy is an accepted practice worldwide. It doesn't matter what the publishers want to pocket. It doesn't matter what the authors want to pocket. It doesn't matter what the retailer want's to pocket. It really really doesn't even matter what is "fair", because in the end, people just don't fucking care.

Winner, winner, chicken dinner. Sorry, I just had this discussion and raised this exact point, albeit less ranty, with a colleague of mine from the dept of econ. He just couldn't wrap his tiny little business school brain around an economic model that doesn't assume ethical behavior on behalf of all parties. I just laughed and went back to playing with my jailbroken iphone and he went back to typing out of so important emails on his blackberry.

 

[jellisii]

This is where the phrase "Going Galt" comes into play: If people cannot be paid what they feel is fair for their work, they will not produce it. The simple matter is that "everyone has to eat", and spinning wheels hard on something for little return will in the end cause at the minimum indifference, at the worst hatred of the system.

I sincerely hope that Rand is wrong.

 

[IRSmurf]

Thank you, Apple!

It fills me with contempt to watch you raise the prices of books so you can sell your iPad.

I'm not buying an iPad and neither is anyone else I know. Even so, that doesn't stop your back-room bargaining from affecting my friends and family who own Kindles.

Apple just took a giant dump on readers.

Besides, who is going to read a book on an LCD screen? It's not going to be very comfortable. ePaper is the only way to go.

 

[Nemesis999]

This is where the phrase "Going Galt" comes into play: If people cannot be paid what they feel is fair for their work, they will not produce it. The simple matter is that "everyone has to eat", and spinning wheels hard on something for little return will in the end cause at the minimum indifference, at the worst hatred of the system.

You don't think people making cars want to continue making cars?
And TV repairmen from the 70's wanted to keep fixing TVs?
And Luddites wanted to keep manually operating looms?

Just because the old model supported a glut of authors is no reason to think that the current number of authors is "right", or sustainable, or even better then a smaller number.

If 100M books are purchased at $3 each instead of $15 each that simply means that the public has an additional $1.2B to spend elsewhere. The total wealth is greater then the old model, and more jobs are created elsewhere to support the spending of this newly freed wealth.

The only information model showing any kind of promise is mass low-cost distribution, and if it can't support the current number of authors, then the number of authors will shrink to an appropriate level.

 

[Nemesis999]

Winner, winner, chicken dinner. Sorry, I just had this discussion and raised this exact point, albeit less ranty, with a colleague of mine from the dept of econ. He just couldn't wrap his tiny little business school brain around an economic model that doesn't assume ethical behavior on behalf of all parties. I just laughed and went back to playing with my jailbroken iphone and he went back to typing out of so important emails on his blackberry.

The real issue is the fundamental divide is perceived value.

The average person buying a hardcover book sees it as paying $15 for the book and $2 for the content. The publishers see it as $2 for the book and $15 for the content.

In the end, writing is just entertainment. It is no different then movies or TV or music or a football game or hanging out at the bar with your buddies. It simply isn't that valuable to most people because their are so many cheap/free options (Legal or otherwise). The publishers will never win the fight because people don't place anywhere near the value on entertainment as entertainers do.

 

[jellisii]

From a successful author: http://yuki-onna.livejournal.com/563086.html
I think she sums up the good and the bad with the current system. No one claims that any of it is perfect. Many claim that "it does work". The fact that the dumb masses think that entertainment or art should be free doesn't mean that they're not wrong. Many are still working out how to change the perception that the artist's time is not free, nor should it be by any stretch. Responses to these kinds of questions beget systems like Steam. I'm not quite certain that I'm completely comfortable (despite the fact that I use and appreciate Steam) either.

Music is a different beast. Artists can create shows of making and reproducing music with their own hands. Putting on shows of writing a 400 page novel... perhaps not quite so interesting. Oh wait.. that's what Hollywood is supposed to do... Riiiiiight... They have an OUTSTANDING track record of doing that in an awesome manner every time.

 

[Nemesis999]

The fact that the dumb masses think that entertainment or art should be free doesn't mean that they're not wrong.

You continue to miss the point.

Value is a human concept. If people place no value on something, it has no value. There is no inherent difference between the Mona Lisa and the giant penis I built with snow last winter. The only value is that placed on it is that of the people who desire it.

People as a group CAN NOT be wrong about the value of an item because people's perception is the ONLY valid measure of value.

The fact that authors and publishers think their work is worth more then public doesn't make them not wrong. In fact it makes them 100% unquestionably and undoubtedly wrong. That's what you're missing here.

Harry Potter is no more valuable then donkey scat porn if people don't say it is. An author's delusions of self-worth don't make self-worth. The model makes self-worth, and the model is dead.

Music is a different beast. Artists can create shows of making and reproducing music with their own hands. Putting on shows of writing a 400 page novel... perhaps not quite so interesting. Oh wait.. that's what Hollywood is supposed to do... Riiiiiight... They have an OUTSTANDING track record of doing that in an awesome manner every time.

Sucks for them. It doesn't change the facts. That's what you and the publishers continue to ignore.

The new playing field has been laid. Publishers and authors can bitch and moan all they want. In the end, the model DOES NOT WORK ANYMORE. Period.

If there are too many authors to meet the new price point, the number of authors will decrease until the market re-balances. This the no different then any other of the thousands of market shifts that have taken place in human history.

 

[krupted]

duh guys... a digital copy is MUCH more high tech then a paperback. e-books therefore MUST cost more because they are 'fancy'. sheesh...

 

[auspexd]

Value is a human concept. If people place no value on something, it has no value.

Right again, good sir. This statement is all that should be needed. It is also why the majority of people fail courses in philosophy and logic: I tutor undergrads in this respect and see it everyday.

Value and worth are separate categories of definition. The example I use with my students is the difference between weight and mass. Setting aside the issue of relativistic mass and the speed of light, mass is for all intents and purposes unchanging as opposed to weight, which is effected by gravity. Worth is analogous to mass as value is to weight. The Mona Lisa has historical worth as well as the material worth (canvas and paint) associated with it. I propose that is unchanging. Its value, however, is relative to the viewer or society at any given time.

The Albrecht Durer 'artist as god' model is dead. Sorry, art for arts sake artists. You had the bad luck to be born in a time of easy commodity distribution. You could either make the live element critical to your work such as making some large sculptures, light installations or something or you could embrace the new model. The choice is yours.

 

[jellisii]

To say that I "don't get" the idea that value is a human concept would be mistaken: I *do* get that. I happen to think that the general public *thinks* they're entitled to free entertainment all the time. I also happen to think that line of thinking is a complete crock of crap: For most entertainers (of any sort) to be good, they need time to get there.

People complain about the cost of entertainment all the time. Cost of movies, cost of CDs/DVDs, cost of books. I guess I don't understand the entitlement they feel they have to someone else's life, because they STILL watch movies and dvds, listen to music on CDs, and read books.

 

[Nemesis999]

To say that I "don't get" the idea that value is a human concept would be mistaken: I *do* get that. I happen to think that the general public *thinks* they're entitled to free entertainment all the time. I also happen to think that line of thinking is a complete crock of crap: For most entertainers (of any sort) to be good, they need time to get there.

People complain about the cost of entertainment all the time. Cost of movies, cost of CDs/DVDs, cost of books. I guess I don't understand the entitlement they feel they have to someone else's life, because they STILL watch movies and dvds, listen to music on CDs, and read books.

It's not a sense of entitlement, it's a sense of not giving a damn what the entertainers want. People associate 90% of the value with the physical object. Entertainers associate 90% of the value with the content. As soon as the physical medium is removed people feel "cheated", "scammed", "ripped-off", etc... by the greedy producers.

In one sense, they're right. The producers have been given a free reign to reproduce the content infinitely and free, and they choose to continue high margins. They seem to be under the impression that they can change public opinion on where the product value is placed... Good luck. Big Music/Hollywood/etc are now suffering a backlash from their own ultra-extravagant behavior. Everyone sees actors and musicians as rich people who are just trying to get richer.

Unlike physical production, with digital entertainment you CAN make up for any expense with sufficient volume. Instead the same producers want to take advantage of the vastly increased market, the vastly reduced production cost, and keep more or less the same prices. The net result is simple, people would rather rip-off the producer then be ripped-off.

In a world where 80% of people will happily spend $2-4 through their phone/eReader without thinking, anything that can be in that range, should be in that range. It's just a good business model. People will buy your product without thinking of the actual cost.

The goal for any publisher should be to push the eReader model and try to increase net literature consumption rather then increase profit margins, because it simply will never work. In 5 years when there could easily be a billion smart-phone and eReader users and many of them will sit on public transit on a daily basis. Hell, in 5 years a basic eReader will probably cost you $20. The goal should be to increase adoption, not cripple it with high prices.

 

[jellisii]

It's not a sense of entitlement, it's a sense of not giving a damn what the entertainers want. People associate 90% of the value with the physical object. Entertainers associate 90% of the value with the content. As soon as the physical medium is removed people feel "cheated", "scammed", "ripped-off", etc... by the greedy producers.

This is crap: I can sell a blank book/CD/DVD all day at the same price of a media release, but no one in their right mind would purchase it. Just because "people" associate the value with a physical medium does not mean the content is worthless. Well.. in most cases... "Dude, where's my car?" makes a case for the content sometimes being worth less than the medium, but I digress . Just because people *think* an idea right doesn't *make* it right, unless you buy into complete moral relativism, which is another story entirely. How to rectify that perception problem is another matter entirely, that I have no solution for. I think there are probably a lot of people working on that as we speak.

In one sense, they're right. The producers have been given a free reign to reproduce the content infinitely and free, and they choose to continue high margins. They seem to be under the impression that they can change public opinion on where the product value is placed... Good luck. Big Music/Hollywood/etc are now suffering a backlash from their own ultra-extravagant behavior. Everyone sees actors and musicians as rich people who are just trying to get richer.

And? EVERYONE is trying to make more money. Anyone who says "Sure, I'd turn down more money if it was given to me for no extra effort" is lying.

Making money off of work isn't a bad thing. Making money off of past work isn't a bad thing. The fact that release prices typically go down as time moves on shows that the system works. The content loses value as it ages.

Unlike physical production, with digital entertainment you CAN make up for any expense with sufficient volume. Instead the same producers want to take advantage of the vastly increased market, the vastly reduced production cost, and keep more or less the same prices. The net result is simple, people would rather rip-off the producer then be ripped-off.

In a world where 80% of people will happily spend $2-4 through their phone/eReader without thinking, anything that can be in that range, should be in that range. It's just a good business model. People will buy your product without thinking of the actual cost.

This gets into the "the only way you can sell enough stuff to make it profitable for the creators is to dumb it down enough to have mass appeal and move a hojillion units". I'm not completely certain I'm comfortable with that. The movie "Avatar" is a great example of this: Yes, it's sold a HUGE number of tickets, but really, it was a mediocre movie with some very nice special effects. This is, of course, my opinion. Perhaps I don't fit the mold of the masses well enough.

How about the Twilight series of books for something a little closer to the subject at hand?

The goal for any publisher should be to push the eReader model and try to increase net literature consumption rather then increase profit margins, because it simply will never work. In 5 years when there could easily be a billion smart-phone and eReader users and many of them will sit on public transit on a daily basis. Hell, in 5 years a basic eReader will probably cost you $20. The goal should be to increase adoption, not cripple it with high prices.

The goal of the publisher (any business, really) is to make money. The vehicle selected should be the most profitable one available. Pushing one thing or another at the expense of profit is a recipe for disaster. Business (like money) is amoral: It's a vehicle to make all the people associated with it money. Morality is in the people who RUN the business and their decisions.

At the end of the day, we all work because we get a paycheck, not because of some deep seated need to be busy. Entertainers just have more fun at their work than many do. I don't fault them for it, but I do envy them.

ALL of that said, I do agree that I think the ereader IS a good thing. I use Stanza on my phone on a regular basis, usually stuff from Gutenberg. Thing is that, if I want to move to an ereader full time, I want GOOD content to be on that reader. The publishing houses right now help me by identifying and publishing that good content for me, instead of me trying to sort through a large pile of dross to find diamonds. They pay the authors well for that good content. I'll never say that they bat 1.000 (see: Twilight), but I will say that the imprint "TOR SF", "RandomHouse", and others like it give credence to the books who carry them.

Thank you for the well reasoned dialog, by the way. It's refreshing. We may not agree, but at least there's no insults being hurled.

 

[Nemesis999]

This is crap: I can sell a blank book/CD/DVD all day at the same price of a media release, but no one in their right mind would purchase it. Just because "people" associate the value with a physical medium does not mean the content is worthless. Well.. in most cases... "Dude, where's my car?" makes a case for the content sometimes being worth less than the medium, but I digress . Just because people *think* an idea right doesn't *make* it right, unless you buy into complete moral relativism, which is another story entirely. How to rectify that perception problem is another matter entirely, that I have no solution for. I think there are probably a lot of people working on that as we speak.

If it were just a plain blank CD you might not get much.
if it looked 95% similar to the original you'd get much more.
if it were identical to an original you'd be able to get quite a bit for it.

Changing public perception is a dead-end. The best they could do is spend a couple decades pushing this new perception on youth and wait for the older people to die.

And? EVERYONE is trying to make more money. Anyone who says "Sure, I'd turn down more money if it was given to me for no extra effort" is lying.

Making money off of work isn't a bad thing. Making money off of past work isn't a bad thing. The fact that release prices typically go down as time moves on shows that the system works. The content loses value as it ages.

Of course they are, but the model isn't working. People have clearly demonstrated that they are unwilling to pay anywhere near what the industry is demanding.

This gets into the "the only way you can sell enough stuff to make it profitable for the creators is to dumb it down enough to have mass appeal and move a hojillion units". I'm not completely certain I'm comfortable with that. The movie "Avatar" is a great example of this: Yes, it's sold a HUGE number of tickets, but really, it was a mediocre movie with some very nice special effects. This is, of course, my opinion. Perhaps I don't fit the mold of the masses well enough.

How about the Twilight series of books for something a little closer to the subject at hand?

No it doesn't. Simply having Twilight available at the press of a button to a billion people would vastly increase sales. Whether or not they reach the same profit levels as the old model is anyone's guess, but one thing you can be sure of is that the old model won't reach the same profit levels as it used to and it's gonna get worse as time goes on.

You've got to remember. People go and pay $2 for a 20 second ringtone. Any good mass business model needs to rely on only 3 facts.

1) People, in large groups, are fucking morons.
(I just assume that's a given )
2) People are fucking lazy.
- Did you know Starbucks has found that placing shops on ALL 4 corners of an intersection barely results in cannibalization of their own customer-base? People are too fucking lazy to cross the street to pick up a coffee. Given a chance most people would pay $2-3 for a eBook instead of pick it up from a library.

3) People, being fucking morons, have trouble grasping the value of a few dollars.
- Seriously. The US is an entire country of people that spend fortunes a couple bucks at a time then wonder where the money went. They seem to be completely incapable of adding even a few small values together to determine where they spent their money in a given day. Small amounts of money are shockingly abstract for many people.

When it's an eBook, selling 100,000 copies at $2 each is just as profitable as selling 10,000 copies at $20 each. You don't have to reduce the quality of the editing, or the content, you just need to make it more available and more affordable.

The goal of the publisher (any business, really) is to make money. The vehicle selected should be the most profitable one available. Pushing one thing or another at the expense of profit is a recipe for disaster. Business (like money) is amoral: It's a vehicle to make all the people associated with it money. Morality is in the people who RUN the business and their decisions.

At the end of the day, we all work because we get a paycheck, not because of some deep seated need to be busy. Entertainers just have more fun at their work than many do. I don't fault them for it, but I do envy them.

I don't disagree, nor is making money a bad thing. But just like the music industry 10 years ago, they're desperately clinging to a model that, while it may be profitable now, and has been in the past, it sure as hell won't be in 5 years. In the world of $15 eBooks everybody and their grandmother will just pirate them.

The music industry spent a decade trying to fight this reality, and just made it worse and worse. The $0.99 MP3 in the year 2000 would have kept piracy firmly in the "things bad people do" category instead of "things everybody does" category.

This has happened to essentially every industry in human history. The companies that adapt are the ones we know today. The ones that don't are the ones we've never heard of.