A Message from the Amazon Books Team

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 seems fair, and further, so long as a literate public is seen as a good thing, there's intangible benefits to consider as well.

2. It's a dispute between two businesses, and Amazon has a legal right to not list/stock books. Honestly, it's like a caricature out of Atlas Shrugged-- you have to sell our books at these prices (of which authors get 3. The "authors" are the only really sympathetic characters in this drama, but they appear to have no agency of their own. Why not move to a different publisher, or publish on Amazon? Because Hachette won't let them out of their contract? I can see why they would want to group together to avoid getting trampled between the two companies, but why side with Hachette? Unless their objective is "fewer books sold, higher prices, and smaller royalty payments", their collective bargaining power would seem to be better put towards forcing Hachette to either agree to terms or release them to find other representation. Agitating on Hachette's behalf is probably the easiest way to get money flowing again, but it's hardly the right thing to do.

Given that Amazon's suggested model could be more profitable for all parties, why are the publishers resisting? I suspect that it comes down to the fact that if ebooks become the main method of book distribution, the value of being a publisher would decrease substantially. Amazon (or similar businesses) could handle the printing and distribution, marketing, editing, type-setting, and similar tasks could be passed to firms whose sole purpose is that task.

Regardless of how this shakes out between Hachette and Amazon, I can't really see a future for monolithic publishers.

> 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 other $9.99 book, maybe some $12.99 book, maybe none at all. Growing the market for an individual book is only impressive if you're selling the book to people who would not have bought a book at all, not if you're competing with other books on price.

> The pie is simply bigger.

The 'pie' they're referring to here is not publishing revenues in total, but revenues for a single book. This feels sneaky because when people refer to the 'pie' as an economic metaphor, they generally mean the total across a sector or the economy as a whole. That's probably not codified anywhere, so it's not possible to say that Amazon's usage is definitively wrong, but it's something that can be easy to misinterpret in a way very favourable to Amazon's argument.

Now, maybe Amazon really does mean that revenues across the whole industry would go up if prices were lower, as books take market share away from other sources of entertainment and information. If so, their example case is a bad one, because it doesn't demonstrate this. It feels a bit like they're talking a big talk about promoting books against other forms of entertainment, but when talking facts and numbers they're giving a subtly different story.

EDIT: I should say that I broadly agree with the rest of the OP. Ebook pricing does look high to me, and I would like to see lower prices. The general 'vision' that the OP puts across is one that I like, I'm just not sure how much it aligns with the reality of what's happening.