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As Competition Wanes, Amazon Cuts Back Discounts

nytimes.com

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Re: As Competition Wanes, Amazon Cuts Back Discounts

#2
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Re: As Competition Wanes, Amazon Cuts Back Discounts

#3
The penultimate paragraph compounds my confusion:

> For Mr. Hollock, the “Born to Lose” author, the issue is readers, not dollars. His award-winning book, published by Kent State University Press, had a steep list price of $35 to begin with. In the author’s view, Amazon is simply compounding the trouble by raising its price to more than $30 from $23.

Why is the author complaining about Amazon, when the list price is as high as $35? Yes, Amazon might have gone from $23 to $30, but that is still a 14% discount.

Why was the list price so high in the first place? Shouldn't the author be complaining about the press?

Re: As Competition Wanes, Amazon Cuts Back Discounts

#4
> Amazon, which became the biggest force in bookselling by discounting so heavily it often lost money

IANAL, but this sounds like a potential anti-trust case to me. "Predatory pricing practices may result in antitrust claims of monopolization or attempts to monopolize. Businesses with dominant or substantial market shares are more vulnerable to antitrust claims. However, because the antitrust laws are ultimately intended to benefit consumers, and discounting results in at least short-term net benefit to consumers, the U.S. Supreme Court has set high hurdles to antitrust claims based on a predatory pricing theory. The Court requires plaintiffs to show a likelihood that the pricing practices will affect not only rivals but also competition in the market as a whole, in order to establish that there is a substantial probability of success of the attempt to monopolize." (http://bit.ly/12pG6gq)

Re: As Competition Wanes, Amazon Cuts Back Discounts

#5
Maybe I'm hopelessly naive, but why don't the publishers drop their prices by 5-10%? Since Amazon is selling books at a percentage of the cover price, dropping the cover price should theoretically offset the decreasing Amazon discount. I know that books have the price printed on them, but what a great marketing project it could be: "Look, we're dropping our prices across the board by 5%. Go buy a book!"

Re: As Competition Wanes, Amazon Cuts Back Discounts

#6
post #3

The penultimate paragraph compounds my confusion: > For Mr. Hollock, the “Born to Lose” author, the issue is readers, not dollars. His award-winning book, published by Kent State University Press, had a steep list price of $35 to begin with. In the author’s view, Amazon is simply compounding the trouble by raising its price to more than $30 from $23. Why is the author complaining about Amazon, when the list price is…

I see we had the same thought! If prices are too high, supply and demand says you should be able to increase demand by dropping the price. Books certainly fall into the elastic demand (or did I get that backwards?) category.

Re: As Competition Wanes, Amazon Cuts Back Discounts

#7
This is poor journalism. From the article:

"Now, with Borders dead, Barnes & Noble struggling and independent booksellers greatly diminished, for many consumers there is simply no other way to get many books than through Amazon. And for some books, Amazon is, in effect, beginning to raise prices."

Now what they are really saying is that Amazon is pricing books closer and closer to "list price" which is the price that brick and mortar book stores can sell books at and survive (generally). So if Amazon were to suddenly sell every book for list price, there would be a great cheer heard from all the book sellers as they now had a viable business.

No question that Amazon has used its position to establish market dominance and its pricing has killed a lot of book stores. Amazon can't raise prices too far without allowing book stores to flourish. As the article points out, the publishers aren't changing their prices, Amazon is.

Re: As Competition Wanes, Amazon Cuts Back Discounts

#8
Amazon is intensely interested in finding the right price for everything. If you pay attention you can see small adjustments in the prices of a lot of products; they're most likely doing the equivalent of A/B testing to discover their most profitable point for every product. A product without competition will be less price sensitive, so they'll end up pricing it higher. An interesting question is whether Amazon could end up in legal trouble for what their pricing algorithm does.

A major theme of the small publishers and authors quoted in the article is that Amazon's price is higher than the publisher would want. If Amazon pays a fixed price for every book, then there's a fundamental conflict between the parties. Amazon wants to make margin, the publisher wants to make volume. If the publisher wants Amazon to keep their best interests at heart, they'll have to change the nature of their deal with Amazon so that their interests align.

Re: As Competition Wanes, Amazon Cuts Back Discounts

#9
Just seems like typical retailing to me. Non mass-market books don't get discounts. If someone is really searching to purchase "Jim Harrison: A Comprehensive Bibliography, 1964-2008", they're probably going to buy it with or without the discount attached.

Btw, Kindle price of "Born to Lose" is $9.34 at the moment. Seems like a good discount to me.

Re: As Competition Wanes, Amazon Cuts Back Discounts

#10
post #4

> Amazon, which became the biggest force in bookselling by discounting so heavily it often lost money IANAL, but this sounds like a potential anti-trust case to me. "Predatory pricing practices may result in antitrust claims of monopolization or attempts to monopolize. Businesses with dominant or substantial market shares are more vulnerable to antitrust claims. However, because the antitrust laws are ultimately inte…

It's definitely an anti-trust issue, but there is not a good record of proving predatory pricing in the courts (even when it's pretty obvious that's what's going on).
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