A Message from the Amazon Books Team • Hacker News Board

Re: A Message from the Amazon Books Team

#51

Post by [deleted] » Sat, Aug 09, 2014, 5:45 PM UTC

baddox wrote: post #18

rjknight wrote: post #10

Earlier quoted context omitted.

It could just be bad writing, but Amazon's point about elasticity reads like a sleight-of-hand trick to me. They say: > 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. So, 74,000 people choose to buy the cheaper book. Great! But without the price cut, those people might have bought other books. Maybe some ot…

I think what you're missing is that Amazon's point, that lower ebook prices are generally good for all parties, applies to all ebooks. They do use the phrase "a particular e-book" in their example, but I assumed that the real desire is for all ebooks to get a similarly proportional discount. Of course, even if we just consider a price drop on a single ebook, it's still a valid point that this helps that ebook compete…

[deleted]

Re: A Message from the Amazon Books Team

#52

Post by rgbrenner » Sat, Aug 09, 2014, 5:54 PM UTC

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. The important thing to note here is that the lower price is good for all parties involved: the customer is paying 33% less and the author is getting a royalty check 16% larger and being read by an audience that's 74% larger. The pie is simply bigger.

This doesn't prove what Amazon wants to claim it does.

1) Authors don't just earn royalties from ebook sales. They also earn royalties from hardcover/paperback sales.. and if dropping the ebook price causes lowered paperback sales, then the authors could earn less.

So merely showing that lower ebook prices increase ebook sales does not prove Amazon's claim that lower prices increase authors' royalties.

2) Amazon's test may not even prove that it would increase ebook sales. Hachette earns money from the sale if the book is sold at BN, Amazon, or any retailer. If only Amazon lowers it's price to $10, then Amazon may just be getting additional sales that would have gone to other retailers. So the only thing Amazon's test proves is that Amazon would be better off in a fictional world where Amazon has the lowest price in the market -- 33% lower than any other retailer.

Re: A Message from the Amazon Books Team

#53

Post by DanBC » Sat, Aug 09, 2014, 6:16 PM UTC

lsaferite wrote: post #38

DanBC wrote: post #17

Earlier quoted context omitted.

Well, if I buy two books at $15 each I would probably buy three at €10 each. So the individual book has more readers and some other book has more readers.

Was the currency unit switch an accident?

Whoops, yes, sorry.

Two books at $15 each, or three books at $10 each.

Re: A Message from the Amazon Books Team

#54

Post by rwl » Sat, Aug 09, 2014, 6:30 PM UTC

jcanyc wrote: post #3

The movie ticket vs. book price example in the article above seems like it comes from the article below. This is a great read regarding the history of the paperback. I know this is a complex issue, but I really do feel Amazon is on the consumer's side. $15+ for a non-transferable ebook is ludicrous. http://mentalfloss.com/article/12247/how-paperbacks-transfor...

> I really do feel Amazon is on the consumer's side. $15+ for a non-transferable ebook is ludicrous.

Hmm. I agree that that price is in many cases too high. But as you say, that's because ebooks are non-transferable. Is creating and selling the devices and marketplace that make those ebooks non-transferable also on the consumer's side?

Amazon could have adopted EPUB for the Kindle instead of making their own ebook formats, and they could have pushed for higher-priced-but-transferable ebooks without DRM. They haven't done either at any point. It looks to me like Amazon is only on the consumer's side when they can strongarm the consumer into spending more money at Amazon.

Re: A Message from the Amazon Books Team

#55

Post by finder83 » Sat, Aug 09, 2014, 6:55 PM UTC

rgbrenner wrote: post #52

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. The important thing to note here is that the lower price is good for all parties invo…

The assumption here I think is that a book at $9.99 might attract people who wouldn't buy it at $14.99. I'm probably one of those people, particularly with fiction books (computer science books/math books/etc are another issue). There are so many choices that are far below the $14.99 price, that unless it's from a favorite author I'd happily pass up the higher price for another book, or another form of media (like a game). It doesn't matter what other retailers offer the price at, $14.99 is simply too high for an e-book, and I only read fiction books as e-books. I might be the minority, but given the expertise of Amazon at selling books, I think that Amazon probably has a valid point.

You're right though, that it doesn't completely prove the point, but I think it definitely makes a point. People who wouldn't buy the e-book at 14.99 are probably unlikely to go out and buy the same book from another retailer for 14.99. The question is if it really increases the market share of the book, or if instead lowering the price on amazon makes everyone who would buy the book would just go to amazon for the cheaper price. (Given that e-books cost nearly nothing to distribute, I would think that the price drop would pretty easily pay for itself though)

Re: A Message from the Amazon Books Team

#56

Post by InclinedPlane » Sat, Aug 09, 2014, 7:04 PM UTC

GFischer wrote: post #35

InclinedPlane wrote: post #25

Earlier quoted context omitted.

Price elasticity is only part of it. Another major factor is consumer surplus. Consumer surplus manifests itself in book sales largely through hardcover sales. The existence of hardcover editions and the fact that they are initially first to market (typically by many months to a year) provide a window of opportunity to tap the consumer surplus in the market, which they do. You'll notice that many hardcover editions a…

"There is no such market segmentation or opportunity to capture the consumer surplus with e-books" What? If anything, it's MUCH easier to do so with e-books, with elastic pricing. Maybe it's not Amazon's current proposal, but I disagree with that part of your argument. You do make a good point about consumer surplus. Edit: I'm pretty sure e-book publishers can get creative ways to add to consumer surplus (be among th…

Well, yes and no. The price can be allowed to fluctuate and it can be held at one level while encouraging people to buy during a deeply discounted sale (the Steam model), and that captures some of the consumer surplus through segmentation based on availability. Though most of the gains there are actually in volume (during the sales), especially since it's a virtual good. In terms of capturing the entirety of what everyone would be willing to pay, it falls short. Compare the amount of revenue per sale on a hardcover novel vs an e-book, for example. On the one hand the publisher and author may take home tens of dollars, on the other it's unlikely to be more than 10. With e-books using the Amazon model basically all of the consumer surplus from anyone willing to pay hardcover prices is lost. Is that made up for by volume? We don't know.

As for alternate e-book models, as you point out, there are many. And actually crowd funding is a major way to capture that latent consumer surplus (which is one of the big reasons behind its success), but even that is not necessarily a panacea.

Re: A Message from the Amazon Books Team

#57

Post by russell_h » Sat, Aug 09, 2014, 7:07 PM UTC

wiredfool wrote: post #49

clickok wrote: post #8

It's regrettable that some of the authors are losing sales, but I think that Amazon is basically in the right, for the following reasons: 1. Their arguments with regards to price elasticity are supported by (admittedly, Amazon's) data, and are intuitively plausible. Cheaper books sell more, yielding more revenue. The cost of production is substantially lower for ebooks, so passing on some of the savings to consumers…

Giving Amazon pricing power over your product, whatever that is, is a bad idea. The publishers would like to set a price. That is their right. Amazon can pay that or not. That is their right. What's happening now is that a near monopoly on book distribution is throwing their weight around. The little players on the margins are going to get hurt.

Publishers can choose what to charge Amazon, but publishers have no right to choose the retail price.

Re: A Message from the Amazon Books Team

#58

Post by rgbrenner » Sat, Aug 09, 2014, 8:45 PM UTC

finder83 wrote: post #55

rgbrenner wrote: post #52

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. The important thing to note here is that the lower price is good for all parties invo…

The assumption here I think is that a book at $9.99 might attract people who wouldn't buy it at $14.99. I'm probably one of those people, particularly with fiction books (computer science books/math books/etc are another issue). There are so many choices that are far below the $14.99 price, that unless it's from a favorite author I'd happily pass up the higher price for another book, or another form of media (like a…

You may be one of those people (where a price decrease would induce a purchase), but your personal value judgement is not relevant here. Personally, I don't read fiction, so the value of a fiction book is $0. Does this mean that the appropriate price for ebooks is $0? Obviously not.

Amazon has put forth a number that is an aggregate.. it takes into account your value judgement, mine, and 100,000 other peoples judgement of the value of an ebook.

Which reminds of a 3rd case that could affect Amazon's test: people do not purchase a generic ebook. They purchase a specific ebook, and the value of that ebook very much depends on the content. A poorly written book is worth less than a well written book.. and a book on a popular subject is worth more than a book on an unpopular subject.

If the book (or books) Amazon tested were more mispriced than the typical book (so they showed a larger increase in sales because $10 was closer to the actual value of the book.. whereas maybe $12 (or $20) represents the value of the average book).. then when all books are lowered in price, the result may be a decline for Hachett and the authors.

So I've put forth 3 cases that may affect Amazon's test. If just 2 in 13 people are affected by ANY of these 3 cases, then Amazon's conclusions are wrong, and the net result would be a decrease in revenue.

Re: A Message from the Amazon Books Team

#59

Post by helen842000 » Sun, Aug 10, 2014, 12:21 AM UTC

jcanyc wrote: post #3

The movie ticket vs. book price example in the article above seems like it comes from the article below. This is a great read regarding the history of the paperback. I know this is a complex issue, but I really do feel Amazon is on the consumer's side. $15+ for a non-transferable ebook is ludicrous. http://mentalfloss.com/article/12247/how-paperbacks-transfor...

$15+ isn't that ludicrous. For a fiction book sure, but what about a technical ebook? Something that saves a team of $150 per/hour developers multiple hours of work each - shouldn't that have value based pricing.

Amazon isn't just encouraging lower ebook pricing, they are actively penalising authors that try to sell books above this level. Try to sell something over that price and the revenue split flips to 70/30 in their favour! They are removing the choice.

To have such a huge retailer force authors into such a cheap price bracket really devalues the content and sets consumer expectations.

Re: A Message from the Amazon Books Team

#60

Post by wiredfool » Sun, Aug 10, 2014, 5:15 AM UTC

russell_h wrote: post #57

wiredfool wrote: post #49

Earlier quoted context omitted.

Giving Amazon pricing power over your product, whatever that is, is a bad idea. The publishers would like to set a price. That is their right. Amazon can pay that or not. That is their right. What's happening now is that a near monopoly on book distribution is throwing their weight around. The little players on the margins are going to get hurt.

Publishers can choose what to charge Amazon, but publishers have no right to choose the retail price.

They could, but that is something that Amazon is trying to change with their new contracts.