[Macworld]

Post your comments for The price is right? The debate over ebook pricing here

[Swift2]

"I don’t want movie studios setting the prices on multiplex tickets..."

But they do, by making the deal the way they do. They leave the local theaters with no option but let the ticket price creep upwards as the industry insists, and they have little option but $8.00 popcorn, because that's the only money they can keep aside from the fixed amount on ticket sales.

[bastion]

Swift2, on 12 April 2012 - 08:49 AM, said:

"I don’t want movie studios setting the prices on multiplex tickets..."

But they do, by making the deal the way they do. They leave the local theaters with no option but let the ticket price creep upwards as the industry insists, and they have little option but $8.00 popcorn, because that's the only money they can keep aside from the fixed amount on ticket sales.

Don't forget the increasing presence of paid advertisements that come before the previews.

[sportyguy209]

Maybe it's just me, but, as a small publisher, I don't want Amazon telling me what they are going to sell my books for, and thus, what they are going to pay me.

Right now, I set the price of the book. Let's say it's $10. Apple and Amazon sell the book for that price, pay me 70% ($7) and keep 30% ($3).

However, if Amazon were able to sell the book for whatever price they wanted, they could sell it for $2 which might help them sell more Kindles, but I would only receive $1.40 (70%).

I don't know any industry that allows the retailer to determine the price of a product and then pay the manufacturer accordingly. While a lower retail price is great for the consumer, it is not fair to the publisher.

To be fair to both parties (consumer and publisher), we would need to go back to the old way of doing business. The publisher would set the MSRP and sell the book to Amazon or Apple for a set price (usually a 40% discount from MSRP). Then, Amazon or Apple can, in turn, choose to sell the book for MSRP or any other price they like.

[spinoza2]

I really can't believe there are people defending the actions of these publishers and Apple, it's ridiculous that they can collude to set up a quasi monopoly *against* another company. The laws against doing this in a free market society are clear, there's really nothing to debate.

Apple had not problems setting the prices for music that *it* wanted to impose on the music industry, why can't Amazon do this for books? What kind of hypocrisy are we talking about here?

[Dan]

"DM: Sure. What worries me is consolidating the power in the form of a retailer that seems to have a stronghold on the market. To me, the publishers compete with each other for the consumers' money."

I thought Publishers signed deals with Authors.
If this is the case, then a single Author is available through a single Publisher. To stabilize pricing, I would think the retailer should control it; they are the distribution channel and all Authors would continue to have a fair shot at the market. If Publishers controlled how much you pay for a Stephen King book vs a Anne Rice book, it likens to professional sports contracts. What happens to the good Authors who are relatively unknown and don't have "Star" power? The Publishers get to choose what we get.

If you look at Apple's business model for music, you can see that a neighborhood band has as great a shot at selling their music as anyone. When music distribution was controlled by the major recording studios, this was far from the case. They were Publishers too.

[eyemahsource]

The article and discussion avoid addressing the more fundamental element in this discussion. That is what the cost/price relationship is for print vs. cost/price relationship for digital. Until I see a genuine investigative reporter digging into these highly secretive numbers, I'll reserve judgement. Why has nobody done the needed analysis. Having worked in publishing print, I suspect the whole industry is blowing vast amounts of smoke to cover the fact that digital books should cost a fraction of even Amazon's pricing.

[jdb8167]

spinoza2, on 12 April 2012 - 09:21 AM, said:

I really can't believe there are people defending the actions of these publishers and Apple, it's ridiculous that they can collude to set up a quasi monopoly *against* another company. The laws against doing this in a free market society are clear, there's really nothing to debate.

Apple had not problems setting the prices for music that *it* wanted to impose on the music industry, why can't Amazon do this for books? What kind of hypocrisy are we talking about here?

I've read multiple analyses and none seemed to think this is a simple case. Perhaps the fact that you do says something about your knowledge of the issues at hand?

[trip1ex]

Ebooks are ridiculous. I want to buy them but can't when paperbacks are cheaper than ebooks. Let us not talk about used books either which (the elimination of) is another savings to publishers.

This is all about greed. Publishers want to train consumers to pay more money so they can make more money.

Amazon loves the ruling because they owned the physical book market and they can leverage those customer relationships to get everyone into Kindle with below cost prices until they accomplish dominance in ebook retailing as well.

And Apple wants the agency model so they can sell more hardware and keep their margins. Apple doesn't like to put anything on sale.

All I see is the consumer loses except for that the consumer will experience fewer back problems in college and when moving.

This post has been edited by trip1ex: 12 April 2012 - 10:53 AM

[bartm]

spinoza2, on 12 April 2012 - 09:21 AM, said:

I really can't believe there are people defending the actions of these publishers and Apple, it's ridiculous that they can collude to set up a quasi monopoly *against* another company. The laws against doing this in a free market society are clear, there's really nothing to debate.

Apple had not problems setting the prices for music that *it* wanted to impose on the music industry, why can't Amazon do this for books? What kind of hypocrisy are we talking about here?

If anything Amazon is the monopoly here, and Amazon is selling below cost. I like my free Kindle books as much as the next guy, but how are others supposed to compete against that?

Apple has arguably created the much-needed legitimate (and successful) market for digital music, and has also set up a platform for (very) cheap smartphone apps without screwing anybody, so I would not be so fast to accuse Apple of collusion to raise prices for any content. Apple is just trying to compete with Amazon. It seems quite unbelievable that the DOJ is trying to prevent that, thereby solidifying Amazons dominating position and thus promoting a lack of competition in the market.

[jcwelch]

eyemahsource, on 12 April 2012 - 10:24 AM, said:

The article and discussion avoid addressing the more fundamental element in this discussion. That is what the cost/price relationship is for print vs. cost/price relationship for digital. Until I see a genuine investigative reporter digging into these highly secretive numbers, I'll reserve judgement. Why has nobody done the needed analysis. Having worked in publishing print, I suspect the whole industry is blowing vast amounts of smoke to cover the fact that digital books should cost a fraction of even Amazon's pricing.

well on the electronic side, the cost is highly variable.

Storage in terms of space is cheap. storage in terms of paying for the servers controlling it, the HVAC/Power/Mangement infrastructure, managing reliability & redundancy is not.

Bandwidth, contrary to popular belief is not cheap either. THe problem is, people see the dreamhost model and think that's how much it actually costs. It doesn't. Dreamhost et al can charge WELL below cost, because they oversell their bandwidth.

Dreamhost sells the same finite amount of bandwidth to every customer. It is not "unlimited". That's not even polite fiction, that is simply a lie. But, because they know, and the data backs this up, that 99.99% of customers will never even come CLOSE to using up "all" the bandwidth, they can do that. What happens if you're one of the .001 actually eating major bandwidth? You get told to pay more, a lot more, or find a new host. Dreamhost's ToS states they can term you at any time with a 14-day notice, no reason needed.

They also make no claims about uptime, etc. That doesn't cut it for a business that needs to be a giant file server with at least 4 9s of uptime, possibly more.

When you get into the realm of "downtime isn't acceptable" and "I'm going to serve millions of ebooks to customers" not only will the dreamhost model and costs not work, Dreamhost at least explicitly bans that:

Quote

What’s not allowed in “Unlimited”?

Basically, sites whose essential purpose is to use disk or bandwidth.

When making a website, you should be thinking about “How can I make an interesting site for my visitors while minimizing my server storage, bandwidth, file system, memory, and cpu impact as much as possible?”

The result will be a better experience for your visitors, your web host, and yourself!

Here are some specific examples of things not allowed:
Copyrighted content to which you do not hold usage or distribution rights.
File upload / sharing / archive / backup / mirroring / distribution sites.
A site created primarily to drive traffic to another site.
Making your account resources available (whether for free or pay) to the general public.

So yeah, no ebook site for you. Now you're paying real money. You get *far* better service, support, and reliability, but that whole "it's almost free" stuff? Myth.

In addition, the more popular you are, or your books are, the more this can cost you, and quite often that curve is not linear, because radical jumps in bandwidth can cause the purchase of things like high-end routers, which need more power, cooling and humans.

Making paper isn't free either, but it's fairly predictable. You know how many books you're going to publish in a run, you know what that will cost to print, ship and store them. Storing books, especially short term is pretty cheap compared to a server farm. It will cost the same regardless of sales. Selling the entire run will not cost you a penny more than selling two copies, you've already paid that. Storage costs for unsold might go up if you keep unsold copies for a long time, but that's a solved problem in the publishing world.

In addition, what costs DON'T change:

authors
editors (all kinds)
cover artists
layout people

In fact, things like layout and cover can be more complex for ebooks. You can't lay out a kindle like you would an iBooks version or an ePub for random devices.

(unless of course, you don't care about quality and are spinning out text files from the author with no oversight at all. In which case, you probably won't sell much anyway, so who cares.)

This idea that professional grade file serving happens for a penny a file is so ignorant as to border on stupid, yet people believe it like they believe in gravity, only with considerably less proof.

[BrianMeyer]

So let me get this straight.

Amazon the largest online retailer of books, it says books are 9.99, publishers you either get on board or just get squeezed out of the market. Amazon controls most of the book sales and is basically saying we pay you this much, and want to be able to discount books to nothing if we feel like it. It seems like this is what apple did to the music industry.

So the publishers instead of going ok, yes sir, we do what you command, and instead of being pushed into it one by one, they go and talk to each other and try to maintain their own pricing model - each publisher being able to set their own prices on a per book basis ( which is exactly what EVERY publisher, music label, etc. seems to want to be able to do). But since they are forming a consortium, they are now colluding to raise prices.

Then you have Apple, decides it can enter the book market, uses the pricing model from the App store, publishers can set prices at .99 or 12.99. While it's not a monopoly in the book market, it is in the music market, and likely can be one in the book market as well. The only real concern here is that they have a clause that no MSRP can be cheaper anywhere else, thus preventing any bargain type website, but this forces everyone to compete on features and not just on price.

To me it seems they are ALL 800 pound gorillas, and that as such they are engaged in robust competition. It seems like the DOJ stopping the deal apple has, is just going to create another bigger issue by allowing amazon to control the ebook reader market. Prices being cheaper on Amazons part is no different than how Standard Oil lowered gas prices in order to shut down competitors, and this ends up being a lot more expensive.

[dgrant]

Quote

I don't know any industry that allows the retailer to determine the price of a product and then pay the manufacturer accordingly. While a lower retail price is great for the consumer, it is not fair to the publisher.

To be fair to both parties (consumer and publisher), we would need to go back to the old way of doing business. The publisher would set the MSRP and sell the book to Amazon or Apple for a set price (usually a 40% discount from MSRP). Then, Amazon or Apple can, in turn, choose to sell the book for MSRP or any other price they like.

Your first example is not what is being proposed. Your preferred method is exactly how Amazon and the publishers used to do things pre-iPad/Apple. DOJ seems to be agreeing with you that the previous method was best for consumers.

[quakerotis]

Mr. Friedman misses the point that Amazon sells many items besides books at loss leader margins in order to attract customers. They can be predatory on pricing for the sake of customer retention. they can involve a whole product mix into this strategy. Ultimately, the DOJ doesn't have much of a case here unless it can be proven that the publishers actively discussed face to face this price structure. Their case against Apple is even more tenuous; since Apple did not and does not set the price of its offerings in the iBook store.