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A Message from the Amazon Books Team

readersunited.com

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Re: A Message from the Amazon Books Team

#21

Post by 300bps »

rjknight wrote: post #10
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…

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…

But without the price cut, those people might have bought other books.

As the article says:

But in reality, books compete against mobile games, television, movies, Facebook, blogs, free news sites and more

Amazon has data that shows eBooks are better sold at lower prices because books aren't just competing with books. If that is not good enough, basic fairness states that a virtual good with no manufacturing, spoilage or delivery costs without a secondary market should be sold for substantially less than a physical good with manufacturing, spoilage and delivery costs with a secondary market that competes with new goods sold.

Re: A Message from the Amazon Books Team

#22

Post by jawns »

Author here. My publisher is one of the "big five" (not Hachette), and although my books are not affected by this dispute directly, it could be only a matter of time before they are.

The problem, as I see it, is that Amazon has so much of the market share not only for e-books but for regular books that they can dictate terms that are highly favorable to them.

While you could argue that those terms also benefit the reader -- for now -- the fact is that ultimately, consumers aren't served when one monolithic company gets to effectively call the shots. It may not be a monopoly in the legal sense, but in practice, it has many of the same negative effects.

Re: A Message from the Amazon Books Team

#23

Post by wavefunction »

Torn wrote: post #20
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…

Steam Sales have already proven that lowering prices leads to more overall profit

Some goods are price elastic and some aren't. All Steam Sales have proven is that lowering prices of video games -over time- leads to a larger total profit. You shouldn't try to apply one item's price elasticity to another, especially since it is also highly dependent on the buying audience.

Re: A Message from the Amazon Books Team

#24

Post by allworknoplay »

jawns wrote: post #22

Author here. My publisher is one of the "big five" (not Hachette), and although my books are not affected by this dispute directly, it could be only a matter of time before they are. The problem, as I see it, is that Amazon has so much of the market share not only for e-books but for regular books that they can dictate terms that are highly favorable to them. While you could argue that those terms also benefit the re…

You're entirely correct. The difference between their historical analogy and the present case is that the present dispute has nothing to do with the technology (e-books have already been pretty universally embraced), it has to do with who benefits from its use.

They're using the domain "readersunited" to imply that it's readers who benefit, which is only true in a very zero-sum way because Amazon is keeping all the power to cut author/published margins so hard in the future, and not at all true in the typical sense that a new technology can cut costs and introduce benefits for everyone.

Re: A Message from the Amazon Books Team

#25

Post by InclinedPlane »

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…

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 are often discounted extremely after the paperback comes out, sometimes to nearly comparable values.

There is no such market segmentation or opportunity to capture the consumer surplus with e-books, so potentially that money is just lost. Does greater volume of sales make up for that? Who knows, Amazon hasn't provided enough data. On the plus side, Amazon is incented to maximize their own revenue and since authors get a percentage of the book sales revenue in theory that means Amazon should be incented to maximize author revenue as well. Though, as always, it's not quite so simple.

Re: A Message from the Amazon Books Team

#26

Post by bryanlarsen »

The best source of 'cheap' books is the library. The only cost is a little bit of inconvenience. Yet library usage is dramatically down over the last few decades. This suggests to me that there is little demand for cheaper books.

The biggest 'cost' to reading a book for many is not the money spent to acquire the book, it's the several hours of leisure time required to read the book, time that could be spent doing something else.

This suggests to me that the overall book demand curve is fairly inelastic.

That Amazon sees more elasticity is not surprising: they're conducting experiments on part of the market. Price has a big influence on what book people buy and where they buy it; but I hypothesize that it has little effect on whether or not they actually buy a book.

Re: A Message from the Amazon Books Team

#28

Post by ghshephard »

bryanlarsen wrote: post #26

The best source of 'cheap' books is the library. The only cost is a little bit of inconvenience. Yet library usage is dramatically down over the last few decades. This suggests to me that there is little demand for cheaper books. The biggest 'cost' to reading a book for many is not the money spent to acquire the book, it's the several hours of leisure time required to read the book, time that could be spent doing som…

GoG and Steam have more than tripled my purchasing (and many other people's purchasing) of games by reducing prices. Look at the billions of dollars that Apple has made by radically reducing the app price. It's very rare that I ever spend more than $9.99 for an App these days, even though it might be something that I spend hundreds of hours a year with.

Amazon is competing for my leisure time with Apps, Netflix, etc.. It's no wonder that higher priced books are losing out.

Re: A Message from the Amazon Books Team

#29

Post by dbecker »

bryanlarsen wrote: post #26

The best source of 'cheap' books is the library. The only cost is a little bit of inconvenience. Yet library usage is dramatically down over the last few decades. This suggests to me that there is little demand for cheaper books. The biggest 'cost' to reading a book for many is not the money spent to acquire the book, it's the several hours of leisure time required to read the book, time that could be spent doing som…

If you include the value of your time, the library is a more costly option to acquire a book than Amazon for many affluent readers. And most libraries have a small fraction of the books one might want.

The fact that people are choosing an efficient way to get the books they want is hardly evidence of inelastic demand.

Re: A Message from the Amazon Books Team

#30

Post by bryanlarsen »

dbecker wrote: post #29
bryanlarsen wrote: post #26

The best source of 'cheap' books is the library. The only cost is a little bit of inconvenience. Yet library usage is dramatically down over the last few decades. This suggests to me that there is little demand for cheaper books. The biggest 'cost' to reading a book for many is not the money spent to acquire the book, it's the several hours of leisure time required to read the book, time that could be spent doing som…

If you include the value of your time, the library is a more costly option to acquire a book than Amazon for many affluent readers. And most libraries have a small fraction of the books one might want. The fact that people are choosing an efficient way to get the books they want is hardly evidence of inelastic demand.

You're saying that time is valuable. The cost of the book is the dollar price + the time to acquire + the time to read it.

You're saying that the middle cost is significant. That suggests that the latter cost is also significant. Therefore lowering the dollar price of the book has little effect on the total in the above equation.

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