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What Amazon's ebook strategy really means

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Re: What Amazon's ebook strategy really means

#41

Post by malay »

The history lesson on Amazon's business model is important, but the OP has it a bit wrong. The business model innovation was about inverting the cash flow and holding cash instead of inventory. Amazon actually pays suppliers much faster than traditional book retailers, making it better for the suppliers.

Traditional book retailers pay suppliers 90 days after the book enters inventory whereas Amazon averaged about 58 days. The problem for traditional retailers is they held books in inventory (i.e. the book went unsold) for an average of 167 days versus Amazon's 16 days. This resulted in retailers carrying the cost of the book for ~78 days while Amazon was able to hold the float for ~41 days.

The end result of that type of inversion is that Amazon can accept a much lower margin, earn the float on the cash and live off much faster inventory turns than a traditional retailer. This was much more brilliant than "disintermediation" - as another poster has correctly noted, Amazon was an aggregator/replacement, not a true disintermediator.

Re: What Amazon's ebook strategy really means

#42

Post by nextparadigms »

I'm with Amazon in this battle, and this battle alone, because I want e-books to become cheaper, but in the same time we need to see what we can do about Amazon later on to make them adopt an open e-pub format. I say open e-pub format because others use e-pub, too, and it's still closed (like Apple with iBooks).

We need to get to a point where people can easily leave the Amazon bookstore if they wanted, and they wouldn't feel "locked in" within the Amazon ecosystem.

Re: What Amazon's ebook strategy really means

#43

Post by alanfalcon »

marquis wrote: post #21
noelwelsh wrote: post #12

I largely agree with the analysis in this essay, but I believe the book market can be more significantly disrupted than is currently being suggested. Here are the significant changes I see: - Screen technology will improve so that the distinction between e-paper and conventional displays becomes irrelevant. I really think the retina display on the iPad is good enough for most people in most situations, and that the i…

I'm looking forward to a world where some books return to their 1800s newspaper-style formats: short chapters published weekly, like we get some graphic novels on the web now. I WANT to pay the author, and look forward to this happening. It's definitely a great space to look into. It may exist already and I don't know about it? (again, leaving it open for some startup to make waves..)

This is happening to some degree in audiobook form with Podiobooks.com - many authors release episodes weekly, as they write and record them. This is likely happening in text form too, but I find that I listen to rather than read books these days. Also, Amazon bought the dominant digital audiobook distribution platform in Audible.com for what that's worth.

Re: What Amazon's ebook strategy really means

#44

Post by [deleted] »

dhimes wrote: post #17
Avshalom wrote: post #11

Earlier quoted context omitted.

Some new company acting as publisher/middleman isn't solving the problem, it's replacing the old answer.

Of course. I was thinking of a startup that helps authors self-publish, as (I presume- I've never done it) some blogging software is dead-simple for non-tech bloggers to use. By getting rid of the middleman, the authors will be taking on the new challenge of marketing their books- by no means an easy task, especially if you are unknown and not tech-savvy.

[deleted]

Re: What Amazon's ebook strategy really means

#45

Post by jseliger »

russell wrote: post #34

I'm curious about the economics of self-publishing. What does it cost for an editor to edit a 300-400 page novel written by a decent author? How about cover art? Marketing is an entirely different animal. I dont think you do book tours for ebooks.

It depends. Most seem to hover in the neighborhood of around $.01 – .02 per word; take someone like this guy, who I've thought about hiring: http://www.mikesirota.com/fees.htm . A typical novel will run about 85,000 words, so he'll probably charge about $1500. I think these guys: http://www.bookdocs.com/ charge similar prices. If you want to publish a 250,000-word epic fantasy novel, that's obviously going to cost more.

How about cover art?

About $500: http://www.extendedimagery.com/info.html . You can probably find people charging more money or less.

This is a topic of great interest to me because I'm probably going to take the plunge in the next six months, if not sooner.

Re: What Amazon's ebook strategy really means

#46

Post by bmelton »

noelwelsh wrote: post #12

I largely agree with the analysis in this essay, but I believe the book market can be more significantly disrupted than is currently being suggested. Here are the significant changes I see: - Screen technology will improve so that the distinction between e-paper and conventional displays becomes irrelevant. I really think the retina display on the iPad is good enough for most people in most situations, and that the i…

Regarding screens, I honestly don't know that making the screen better makes for a better reading experience.

I'm in LOVE with my Kindle eInk display and, while it isn't nearly as 'all around good' as a Retina display for anything other than reading, I can't read for nearly as long on a retina screen as I can on eInk. The only complaint I would posit for eInk is that page turns are fairly slow, but that's on my older model Kindle. My wife's newer Kindle is much faster, though still noticeably slower than an iPad.

Regarding the 'chapter-by-chapter' publishing, Leanpub[1] is doing this today to some degree. Not 100% sure on the chapter-by-chapter functionality, but at the very least, updates to leanpub books are pushed out automatically to anybody who has purchased a copy.

Raganwald is publishing his new book[2] there as well, which was the first I'd heard of them.

[1] - http://leanpub.com/

[2] - http://leanpub.com/stealthisbook

Re: What Amazon's ebook strategy really means

#47

Post by asr »

sgentle wrote: post #16

Har. Nice article and a well-made argument. However I suspect that the big 6 are going to accept a world without DRM the same way as the MPAA and RIAA before them: kicking, screaming and fighting until the last breath to prevent anyone from staunching the massive gaping wounds they've inflicted on themselves. In an ideal world, a world where media companies do what's best for themselves and their customers, I think p…

So, in your doomsday scenario, I get books for $5 and authors make more money? I'll take it.

The crux of Stross's argument for why we should fear Amazon's low prices is that it's "predatory pricing"--that Amazon was selling e-books below cost so they could jack up the prices later after they had their monopoly (or, equivalently, lower payments to authors after they were a monopsonist).

But apparently Stross didn't read the DOJ complaint, because it turns out Amazon's e-bookstore was consistently profitable! 9.99 bestsellers were just the equivalent of cheap milk at grocery stores--loss leaders.

The DRM prediction in the article is pretty good, but both you and Stross misunderstand why Amazon is winning. It's not because they're cheating--it's because they're more efficient and so can make money at lower price points.

Re: What Amazon's ebook strategy really means

#48

Post by kkreamer »

chromatic wrote: post #20
dhimes wrote: post #17

Earlier quoted context omitted.

Of course. I was thinking of a startup that helps authors self-publish, as (I presume- I've never done it) some blogging software is dead-simple for non-tech bloggers to use. By getting rid of the middleman, the authors will be taking on the new challenge of marketing their books- by no means an easy task, especially if you are unknown and not tech-savvy.

I've considered it, but automating all formatting is still troublesome and dealing with documents written in Word, of all things, is already a mess.

We (lulu.com) already do this, including printing from Word docs. And, putting a print book or ebook up for sale is free (including going to the iBookstore and the Nook store).

Note that while I work at Lulu, I don't officially speak for them.

Re: What Amazon's ebook strategy really means

#50

Post by mark_l_watson »

Charlie, while I basically agree with your article, from my perspective Amazon has been good for you: I bought one of your books for the Kindle platform after reading a comment you wrote on HN, liked it, and have bought several more. If the whole process was not so quick and easy, I might not have done the impulse buy and bought the first book. Sounds like a nice town to live in.
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