This Is What's Wrong With eBooks: Amazon Loses $2 On Every eBook Sold
from the but-we'll-make-it-up-in-volume dept
We've had stories about consumers complaining that ebooks are too expensive and about book publishers complaining that ebooks are too cheap. Guess who's getting squeezed in the middle? According to this unsourced report (so, perhaps take it with a grain of salt), Amazon is losing $2 per ebook sale, because publishers are wholesaling the books at $12, while Amazon wants to keep selling its ebooks at $10. The conclusion is the same all the way around, however: the publishers are living in a fantasy world if they think that $12 makes sense as a wholesale price for an ebook. Without the cost of printing, binding and distribution, the wholesale price should be a hell of a lot lower.
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Filed Under: ebooks, kindle, losses, wholesale pricing
Companies: amazon
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Doesn't amazon have the power here?
You want to be on Amazon "shelves"? Then charge a reasonable wholesale price.
Otherwise Amazon informs customers that they _want_ to stockl this book, but the publisher is not offering a fair price, and here are the phone number to call and complain. Crowdsource the harassment.
PS, publishers: You don't get to charge the same for ebook as you do for paper. Get over it. It's not going to happen.
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Re: Doesn't amazon have the power here?
Publishers will soon realize that $10 even for an ebook is not worth it considering you don't even own what they are calling a purchase, plus it's DRM locked and all.
Best bet would be to do a $5/mo all you can eat ebook strategy which would *SHUDDER* gain customers! What an idea! Can you believe it might even be more sustainable since the money comes in steadily? Oh right, that might lead to reality: books will end up free and distributed.
book publishers are even worse than mpaa/riaa in their sheer ignorance. They just want to keep a high price on their works as they think everyone will agree on the publisher's own value, but value is not something anyone ever agrees on.
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Re: Re: Doesn't amazon have the power here?
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Re: Doesn't amazon have the power here?
Then someone sues them for monopolistic actions like they did with Microsoft (plenty of reasons to hate M$ but not for including IE). It's stupid as f*%k, but the people that would sue are the same people who think they are entitled to sales.
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Re: Re: Doesn't amazon have the power here?
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Re: Doesn't amazon have the power here?
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They all deserve to go away
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Re: They all deserve to go away
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Re: They all deserve to go away
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Re: Re: They all deserve to go away
It takes government help to make it happen.
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---
Grammatically awkward to read.
Considerably instead?
Sorry. It just looks to weird not to comment on.
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to should be too :-)
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That's why i don't buy too many
If they come down in price to a reasonable level, considering I can't let someone borrow my copy, I can't sell it and they can disable things on it or remove it, I won't buy many.
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It's about Royalties
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Re: It's about Royalties
You are confusing "Amazon" with final customer. Publishers should be worried about the number of customers they are reaching, not how stupid of a price Amazon (just one of many book retailers) is willing to pay.
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Re: It's about Royalties
That sounds really, really low based on the contracts I've dived into. Who is your publisher, if you don't mind me asking? The reason I ask is that there are some really devious companies out there bilking authors (got taken in by one myself once), and I hate to see folks get taken advantage of because not enough writers are talking to one another....
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Re: Re: It's about Royalties
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Re: Re: Re: It's about Royalties
He said 8% for "published books", which I took to mean dead tree books, and 25% for "electronic distribution", which I took to mean eBooks. 8% flat rate on dead tree books is at a minium 2 points off, since standard rates are roughly 10% up to the first 5000 copies sold, and they go up from there, usually capping somewhere around 15-16%. That 8% number sounds like a Publish America contract, which ain't good.
25% on the eBook side isn't glaringly low, but standard rates, which are far more fluid in this case, tend to be closer to 50%, usually in the 30-35% neighborhood.
His contract isn't grossly terrible, but it isn't good. It might be one altered for a first time author consideration, but it's well below standard.
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Re: Re: Re: Re: It's about Royalties
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Re: Re: Re: Re: Re: It's about Royalties
Absolutely, but flat rate contracts are by nature HIGHER than tiered rate contracts. Either way, the standard contract numbers for DT/eBooks are 10%/35%, not 8%/25%. It doesn't sound like a huge difference, until you consider that it's a 20% cut in cost for DT rates and 29% for eBooks.
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Re: Re: It's about Royalties
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Who needs them any more. They used to handle the Printing and Distribution.
With ebooks that is no longer required.
Sounds like the music biz
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Re:
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Re: Re:
Poor consumer.
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Re:
The only authors you will find that will call self-publishing a better option for most authors are those whose books are not good enough for a traditional publisher.
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Amazon Self Publish
The problem is that the publisher often requests all exclusivity to publishing, even though the author oftentimes gives up these rights. The only exception is if the publisher goes out of business, in which case the author can then gain their rights back.
It seems the work for marketing and developing the Kindle/Nook platforms and hardware is solely on Amazon/B&N, without input from the legacy print publisher. Thusly, Amazon/Nook in a way, is duplicating the digital publisher's work, and provides it on digital media, using a digital distribution system, they developed and all things not available to the legacy print publisher. It's weird because Amazon/Nook essentially developed their own printing press, their own binding capability, and their own covers by developing the Kindle, Nook, establishing relationships with wireless companies, and the like.
Ideally, Amazon/B&N would acquire a separate digital reproduction right from the author, separate from the print publisher. But this is not how the law is written. Exclusive is exclusive, even if the print publisher won't enter into an eBook marketplace.
So, in a way, it seems better for aspiring authors to use self-publishing platforms such as Amazon's http://www.createspace.com/ provided that you have editing and layout folks who can help.
I know I'm dreaming, but what would be best is for publishers to consider exclusive agreements that pertain to their specific business. If you're print, you negotiate print exclusivity. If you're digital, you negotiate digital exclusivity. Audio, you go for audio rights. See each as separate and stay focused in the area you are good at.
If you're an author, negotiate exclusivity to each media type for a period of 3-5 years. Otherwise, it will be for ever minus one day.
When Kindle is selling a $10 product at a $2 loss, it's seems because the rightsholder is using the new business media and business model to subsidize the old business.
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Re: Amazon Self Publish
Er, where are you getting that from? That's a self publishing solution you're talking about, and they rarely charge that anything close to that number. Traditional publishers do require payment by the author to publish their work. Publishers are supposed to pay authors, not the other way around.
"The problem is that the publisher often requests all exclusivity to publishing, even though the author oftentimes gives up these rights."
That's standard. It's part of the incentive for the publisher to publish. What's the problem?
"It seems the work for marketing and developing the Kindle/Nook platforms and hardware is solely on Amazon/B&N, without input from the legacy print publisher."
Absolute nonsense. Publishers don't promote printed works or eBooks exclusively; they promote the works themselves, regardless of format. Retailers, other than perhaps Amazon, tend to push paper versions more now because they want to get people into the stores to see/buy the other stuff they're selling (other books, CDs, DVDs, Coffee, Food, etc.).
"So, in a way, it seems better for aspiring authors to use self-publishing platforms such as Amazon's http://www.createspace.com/ provided that you have editing and layout folks who can help."
Here I tend to agree with you, though I have no experience with Amazon's service. But only because the traditional publishers are closing their doors more than ever. On average, it is still a better option for the average writer to publish traditionally when invited to do so. The reasons to self-publish are more preference oriented than business, usually.
" know I'm dreaming, but what would be best is for publishers to consider exclusive agreements that pertain to their specific business."
Impossible. Publishers wouldn't make money that way. They require rights for all the niches you mention because they aren't really niches, but different parts of traditionall publishing.
"If you're an author, negotiate exclusivity to each media type for a period of 3-5 years."
I'm sorry, I don't want to sound mean, but this is simply more nonsense. A standard publishing contract is good for somewhere between 4-5 years, not forever minus a day. The contract can only be renewed upon both party's consent. Even the really shady publishers like Publish America contracts only last for 7 years.
And trying to negotiate separate contracts or each media type would simply get you thrown out of the publishers office altogether. At that point you're better off retaining all rights and doing the duplicating yourself on a 3rd party contract basis.
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Re: Re: Amazon Self Publish
>>works or eBooks exclusively; they promote the works
>>themselves, regardless of format.
If this was true, then Publishers would find a way to partner with non-traditional outlets such as Google Books.
>>That's standard. It's part of the incentive for
>>the publisher to publish. What's the problem?
The problem is that many publishers lack an online presence and ability for books to be searched and found. The problem is that the current system doesn't work. It needs to be fixed.
>>I know I'm dreaming, but what would be best is for
>>publishers to consider exclusive agreements that
>>pertain to their specific business.
>Impossible. Publishers wouldn't make money that way. They >require rights for all the niches you mention because they >aren't really niches, but different parts of traditionall >publishing.
Then what's your solution?
>A standard publishing contract is good for somewhere
>between 4-5 years, not forever minus a day.
Not necessarily true. Many publishers negotiate for lifetime exclusivity. This may lead to books being orphaned yet rights are still held by the publisher.
>And trying to negotiate separate contracts or each media
>type would simply get you thrown out of the publishers
>office altogether.
If it's not a media they're good at, why sign that right away?
>At that point you're better off retaining all rights and
>doing the duplicating yourself on a 3rd party contract
>basis.
Could this be why HP is getting into the book business? Granted, 20¢ a page is real high, but if they manage a virtual storefront, can assign an ISBN, and an author can retain rights, their service may be worth it. Plus, the 20¢ a page cost will inevitably come down.
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Re: Re: Re: Amazon Self Publish
Well, that's sure as hell what they SHOULD do, but they don't. Why? Well, it's just my opinion, but no media industry is so entrenched in their ways coupled with an overinflated opinion of themselves as the publishing industry. Even the news industries have been more flexible than publishers. They're just the ultimate example of East Coast, set in their ways businessmen that see themselves as "artists". In other words, it's a cacophany (sp?) of factors that equal oddness and nepotism.
"The problem is that many publishers lack an online presence and ability for books to be searched and found. The problem is that the current system doesn't work. It needs to be fixed."
Yes, but the publishers that focus SOLELY on eBooks aren't any better at it. I don't know why, but there is no popular repository of eBooks. There's no literary version of iTunes. And don't say Amazon, they're not even close in terms of being user friendly or popularity in terms of purchasing percentages for their art form. So the niche publishers can't do it either.
"Then what's your solution?"
A 3rd party innovative company cataloguing and selling eBooks at prices clearly set to subsidize their ridiculously powerful and satisfying eBook hardware, ala iTunes/iPod/Apple, at least at the beginning.
"Not necessarily true. Many publishers negotiate for lifetime exclusivity."
I said standard, and with a quick stipulation that most of my knowledge and experience comes in fiction publishing, I'll stand by that. 4-5 years is the norm/standard, and perpetual terms are incredibly rare.
"If it's not a media they're good at, why sign that right away?"
Because the good publishers don't negotiate that way, and even if they're not good at one particular form of media, they're good overall. Does Baen do a great job with audiobooks? Nah. Is that going to keep me from accepting a publishing contract with an advance of $10,000 when they require the rights for audiobooks to even consider me? Hell no! They're Baen, overall, they know what they're doing.
"Could this be why HP is getting into the book business?"
If they did two things, HP would make a crazy amount of money.
1. Get that pricing down to something reasonable, perhaps partnering with local digital shops.
2. Exactly like you said, but streamline the processes of assigning an ISBN, but do more. Why isn't HP, the world's largest computer hardware manufacturer, making an eBook? Why isn't HP doing for eBooks what Apple did for eMusic. They're perfectly positioned to do it, and they could make money from hardware, eBook subscriptions, and/or authors that want to self-publish in both eBook and DT book works. I'm kind of shocked they haven't done this already....
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Re: Re: Re: Re: Amazon Self Publish
"A 3rd party innovative company cataloguing and selling eBooks at prices clearly set to subsidize their ridiculously powerful and satisfying eBook hardware, ala iTunes/iPod/Apple, at least at the beginning."
287 note/entry) Add the required accounting, catalog, and web services for e-book sales
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Re: Re: Re: Re: Re: Amazon Self Publish
No problem, just consider calling your eBook reader "The Helmet"...
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Re: Re: Re: Re: Re: Re: Amazon Self Publish
Long time, we have had this discussion before, and i think most of the points you bring out have merit...
I do have an idea i am thinking about pushing forward on this format and would love to get your reading on it, but im not sure how to best go about shooting an email to or from you...
I could hit you up on your blog if you wish...
later,
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Re: Re: Re: Re: Re: Re: Re: Amazon Self Publish
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Re: Re: Re: Re: Amazon Self Publish
>> partner with non-traditional outlets such as Google Books."
>Well, that's sure as hell what they SHOULD do, but they
>don't. Why? Well, it's just my opinion, but no media
>industry is so entrenched in their ways coupled with an
>overinflated opinion of themselves as the publishing
>industry.
No, actually, it's that the media industry along with many industries have people that they need to keep. Unlike many big technology companies, which often reorganize on a yearly basis, media has not had the experience of a full-out reorg. Reorgs are good. They keep people on their toes and new ideas are able to be built, new connections are made. The running joke at one company was that reorgs were based on astrological signs. The Media industry as a whole hasn't been privvy to full-on reorgs. I've worked for three Fortune 500 companies that have yearly reorgs. The companies that do yearly or bi-yearly reorgs were tops in their field. Reorgs, by their nature keep politics from becoming the modis operandi. Those with ideas are promoted, not stifled.
>They're just the ultimate example of East Coast, set
>in their ways businessmen that see themselves as
>"artists". In other words, it's a cacophany (sp?) of
>factors that equal oddness and nepotism.
This can be addressed with regular ReOrgs.
>>"The problem is that many publishers lack an online
>>presence and ability for books to be searched and found.
>>The problem is that the current system doesn't work. It
>>needs to be fixed."
>Yes, but the publishers that focus SOLELY on eBooks aren't
>any better at it. I don't know why, but there is no
>popular repository of eBooks. There's no literary version
>of iTunes. And don't say Amazon, they're not even close in
>terms of being user friendly or popularity in terms of
>purchasing percentages for their art form. So the niche
>publishers can't do it either.
They exist. Recently, Amazon acquired a company called LexCycle which has a product called Stanza. You should look into them. I'm sure they're not complete with their integration. This probably won't be done until Ol' Jeff B yanks the purse strings and moves and consolidates the LexCycle business from Austin and Portland to Seattle.
Additionally, B&N has a reader app on the iPhone/iPod Touch platforms. If the FTC wouldn't have said B&N couldn't buy Ingram in 1999, I imagine they'd have more titles from independent authors to feature via Ingram's Publish America business.
>I said standard, and with a quick stipulation that most of
>my knowledge and experience comes in fiction publishing,
>I'll stand by that. 4-5 years is the norm/standard, and
>perpetual terms are incredibly rare.
Good. Many authors are not lawyers and don't understand the idea of perpetual terms. They see "Exclusive" and through the magic of today's advertising, may believe they're getting an "Exclusive deal", not knowing the legal definition.
>>"Then what's your solution?"
>A 3rd party innovative company cataloguing and selling
>eBooks at prices clearly set to subsidize their
>ridiculously powerful and satisfying eBook hardware, ala
>iTunes/iPod/Apple, at least at the beginning.
Surely you looked up Lexcycle as I pointed out above. They're already in that space.
>>"If it's not a media they're good at, why sign that
>>right away?"
>Because the good publishers don't negotiate that way, and
>even if they're not good at one particular form of media,
>they're good overall. Does Baen do a great job with
>audiobooks? Nah. Is that going to keep me from accepting a
>publishing contract with an advance of $10,000 when they
>require the rights for audiobooks to even consider me?
>Hell no! They're Baen, overall, they know what they're
>doing.
Exactly. Copyright is the right of the holder to say "NO". When you sign that right away, or have a publisher file copyright on your behalf, you loose the ability to say no.
Let's say the publisher is the best in the business at printing books but as part of your deal, they agree to file the copyright on the author's behalf. What's wrong with limiting their use? Copyright allows the holder to say NO.
If I want to make an audiobook, I want the best damned company to make my audiobook.
If I want to sell an eBook, I'm going to seek out the best damed eBook company to sell my eBook.
If I want to sell a print book, I will take it to the best printer I can find.
Problem is, many people don't understand that owning exclusive copyright keeps the author from pursuing these routes. This is a fundamental problem with copyright: no one understands what they gave up until it's too late.
>>"Could this be why HP is getting into the book business?"
>If they did two things, HP would make a crazy amount of
>money.
>
>1. Get that pricing down to something reasonable, perhaps
>partnering with local digital shops.
Precisely. If companies could outsource their printing operations to HP, we'd all be better.
>2. Exactly like you said, but streamline the processes of
>assigning an ISBN, but do more.
No. The process of book publishing is still very hands-on and requires soft skills as the manuscript moves through the publication process. Any publisher worth their salt can get an ISBN. This should be a part of their overall capability as a publisher. Publishers need to become Agents and literary agents need to become writers, just as John Hodgeman did.
>Why isn't HP, the world'slargest computer hardware
>manufacturer, making an eBook?
They are. It was shelved.
http://gizmodo.com/260744/hp-e+book-reader-design-fakes-turning-pages
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Re: Re: Re: Re: Re: Re: Amazon Self Publish
If they were bought by B&N, things probably would have been different.
If they have problems working with publishers, maybe they should all get together and file a class action lawsuit against them.
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Re: Amazon Self Publish
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yeah but your new formula of
X * $5 > Y * $Z
is lacking some info, because even at an attach rate of 1 best seller ($9) per month they are almost doubling the "all you can eat strategy" with less likelihood of the service being abused.
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but-we'll-make-it-up-in-volume
Amazon should have stayed out of the "hardware" business. They will live to regret the day they used their leverage in online retailing to underwrite their mission to make ebooks successful.
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Re: but-we'll-make-it-up-in-volume
Agreed. What they seem to be doing is trying to be the Apple of e-book publishing. With all the better more open e-readers out there its not going to happen.
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Re: Re: but-we'll-make-it-up-in-volume
Right, and they're the wrong company to be trying that. HP is the right company. Amazone is neither content publisher nor a company whose business is hardware manufacturer. The iTunes/iPod thing worked because Apple made a great piece of hardware. No hardware provider has yet done the same thing with eBook readers (don't even try to tell me about Sony)...
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Never work
Nope, sorry, will never work for books. You might get away with this for music, tv, or movies, but never for books. People dont read entire books frequently enough to justify a monthly expense. They read a book, then put it away and maybe read it again later, like 1-2 years later. The would have to keep that monthly payment up indefinitely to "keep" their books. No one, and I mean NO ONE, will be interested in maintaining a monthly fee for books they might only read every few years. And few people read enough to justify the cost at all, let alone on an ongoing basis
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Re: Never work
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Re: Never work
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Re: Re: Never work
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Re: Never work
Huh? That's precisely the reason that it DOES make sense. If you read regularly at all, $5 a month is worth it. You're not paying to "keep" a certain book. That's paper book thinking. You're paying for instant, unlimited access to a huge library of books. If you read at least one book per month, it's well worth it. Even a single paperback costs more than that.
I would absolutely pay $5 a month for unlimited ebooks. So, there goes your "no one, and I mean NO ONE" claim. Think before you spout.
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In a rational world...
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What are the real costs?
I also understood that the cost of printing and distribution of paper books makes up a very small portion of the actual cost of producing a book.
If my two understandings are true, perhaps the 'production cost' is not nearly as low as people assume it is.
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Re: What are the real costs?
The problem is that most publishers don't see their major income coming from actually selling books anymore, save for a few bestsellers. They, like many authors today, are trying to leverage film deals, either by directly negotiating the deals if the author is unagented or if the publisher is a conglomerate that also owns a studio, or else they're trying to use the movie to sell books.
What this means is that publishers don't want to sell lots of works in small runs. They want to sell few works in HUGE runs, and that makes it nearly impossible for new authors to break in without some kind of nepotism involved.
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Re: What are the real costs?
That's a fixed cost. Perhaps they're just as expensive as paper books in fixed costs, but in a competitive market that doesn't apply to the sale price. That is to say, the price will tend toward the marginal cost of production. And the cost of producing one additional copy of an eBook is zero.
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Good Policy Wonk, But Bad Economist
Talk to a publisher before you spout off on things outside your sphere of knowledge. Recruitment, editing, formatting, copy-editing, and marketing don't happen for free. Self publishing is a great way to go if you don't mind missing out on all of these - or do them yourself.
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Re: Good Policy Wonk, But Bad Economist
Indeed, but those are fixed costs, not marginal costs. They don't change for physical books or printed books. But the marginal costs of the digital books are significantly less, and as any good economist will tell you, it's the marginal costs that matter.
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Hey, wait a minute
- Ebook wholesalers want $12
- Amazon wants to sell for $10
- Amazon covers the extra $2
Now, I'm a down on the publishing industry as anyone, but if Amazon's actually paying the premium, isn't this a case of *smart* business by the publishers in extracting some of Amazons' profits? What would be their advantage in selling to Amazon for $10? It's not like they'd move more volume, since it wouldn't change consumer pricing.
So, yeah, fantasy world and all that... but it seems to be working, at least at the moment. What am I missing? Why shouldn't they cash in on Amazon's willingness to take a loss to buy market share?
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Re: Hey, wait a minute
Because you're thinking short term rather than long term, and that's going to get you into trouble. Today Amazon doesn't have a stranglehold on the dead tree or eBook retail market, but if they're allowed to gobble up enough marketshare this way, they could literally bring the publishing world to its knees by demanding certain cost restrictions. Amazon isn't doing anything wrong by doing this, IMO, but from the publisher's perspective, they're heading for a world of trouble.
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Re: Re: Hey, wait a minute
Do you really think the publishers should unilaterally lower their prices to $10, knowing that Amazon will buy the same quantity and sell at the same price to consumers?
I mean, the "I'm thinking long term" handwave is nice and haughty and everything, but that's really not much of an argument for this particular case. Given the facts as presented (which, again, I'm skeptical of), this is smart business from publishers.
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Re: Re: Re: Hey, wait a minute
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Publishers...
If you read a lot of ebooks (like I do), these things are not trivial. It is easy for people to self-publish, but most books really do need other sets of eyes.
Also, I've seen a lot of self-published books where the font sizes or line spacing is off, chapters aren't linked in the TOC, etc etc.
eBooks *should* be cheaper, but there is a lot of pre-production that goes into just the digital copy. Or at least there is on quality content. It's what happens to that PDF *after* all that I don't want to pay for: Printing, shipping, storage, re-shipping, re-storage and destruction of un-purchased Dead Tree Books.
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Both Amazon and the Publisher are Unrealistic.
Reputable author's agents traditionally take a modest percentage, ten or fifteen percent. Given the simplification of electronic publishing, I don't see why an agent could not take over the business of dealing directly with major booksellers such as Amazon. An established author could reasonably expect to get about sixty or eighty percent of what Amazon pays. The traditional formula for subsidiary rights, eg. paperback rights, is a fifty-fifty division of the gross income between author and publisher. In the case of Amazon, this is still overly generous to the publisher. Amazon deals with self-publishing authors on reasonably equitable terms, provided that they agree to use its preferred distribution systems (Kindle, and Amazon's print-on-demand system).
Of course, it might be objected that the publisher has to make high gross profits, before overheads, in order to subsidize the publication of unremunerative works. The answer is that, in the age of the internet, the authors of unremunerative works, instead of applying for what is, in effect, a kind of charity, simply go and publish their books for free on websites, and no longer enter into the publisher's calculations. The big commercial publisher stops receiving unsolicited manuscripts or queries, and only looks at those websites it thinks worth following up on. Therefore the publisher doesn't need a sizable acquisitions department. Commercial publication is a device for the collection of royalties, and is irrelevant unless the author expects, realistically, to make substantial royalties.
As "CR" noted (Dec 8th, 2009 @ 9:46am), Amazon is trying too hard to pump up the Kindle market, deliberately running a loss in the hope of eventual market domination. However, that will not happen. Everyone and his dog is entering the E-book reader market, selling things at a loss. It's like game consoles.
In the last analysis, one must never forget that the publishers' biggest source of revenue is textbooks-- and intellectually undistinguished textbooks at that, things like College Algebra and Freshman Spanish. The one time when I myself had a compelling case for something like a kindle was over thirty years ago, when I was carrying around twenty pounds of textbooks in my backpack, viz. Calculus, Physics w/ Lab, German, and a freshman history course, every single book for a full year of courses. The way the books were bound, and the way the classes were scheduled, I needed nearly every book every day, so I got a big camping pack, with an aluminum frame, to conveniently carry everything around. Ah, Youth! Of course, for that kind of thing, a laptop computer would make more sense nowadays, and for math and languages, interactive software probably makes more sense than textbooks.
The most serious threat to the publishers is something they cannot do anything about, at least while continuing to be publishers.
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Re: Both Amazon and the Publisher are Unrealistic.
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Rubbish. Publish America books are not sold in brick and mortar stores. Did you mean on B&N website? That's where they're sold, but PA does no mention-worthy marketing, and they do not discuss any sales figures whatsoever, which is something only done by shady publishers that make most of they're money not from selling books to readers, but by selling books to authors.
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amazing how, to use a new technology, we have to give the rights we had with the old technology.
When they make books drm free and cheap, i may switch. until then, i will be buying my books made from dead trees.
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Just crunching some numbers and thoughts
Production cost (est): $185
Profit: $74
Assumed hit: $2
Number of books before going negative: 37
Okay, so I know this doesn't hold up very well (if at all) in the real world but I think you get my point. Hardware sales can minimize this hit quite a bit, especially if people like me buy Kindles as opposed to reading on a computer or other alternatives. I mean, I can't say I've ever read 37 real books in my 20 years of breathing. And then there will be new versions of Kindles with larger storage capacities, etc. like we see with iPods, which will (try to) entice people to buy a new Kindle after 2 years.
I'm not sure how I feel about ebook readers to begin with. I haven't used one but the thought of it reminds me of digital picture frames. I guess given a few more years I'll warm up to both ideas more and by then maybe pricing for ebooks will adjust, which reminds me that people pay a premium for new tech. Ebooks = new tech => high prices at time=0? *shrug*
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Re: Just crunching some numbers and thoughts
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Re: Just crunching some numbers and thoughts
To the extent that Amazon loses money on actual ebooks (which I'm very skeptical of), it's going to be because they see it as buying market share and establishing the company as the preeminent ebook retailer, and they figure that the long term profits will offset short term losses (perfectly reasonably business).
However, I really doubt the accuracy of this report, or at least the implication that it's the average across all ebooks. *Maybe* some high profile publishers/books represent a loss for Amazon, since they have a lot of leverage. I'd be shocked if that were the case across the board.
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Re: Just crunching some numbers and thoughts
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As we have seen from the recording industry, the newspaper business, and the movie industry, they run their businesses on a quarterly basis. The goal is profit now, not how can we create a sustainable model for the future. The book publishers will follow the same route. Afraid to take the leap until its to late, afraid to lower prices, afraid to sell e-books without DRM. All of this will cause them to have reduced profits short term and long term other solutions will become available, causing them to fail.
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http://www.baen.com/library/defaultTitles.htm
I'll buy the paperback of a book I want to read and then download the txt version of that book for my reader (almost any Chinese PMP will read text books with bookmarks). No publisher will be getting $10-$12 from me for an ebook. I don't have to worry about them deleting my books off their overly priced readers either.
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It's also the case that the Kindle, for the most popular brand of a consumer electronic in its 2.5 generation, is fairly expensive. As such, if Amazon is in fact paying above sale price for its eBooks, I don't doubt that they are curtailing their loses somewhat on what they charge for the hardware.
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Amazing!
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I can think a way this is good business.
Supermarkets often sell certain items below cost to attract eye balls to other things(it works great), when you are shopping online do you buy only one item? or do you look at the adds in the page and recommendations? I don't know the answer to that but Amazon may have glimpsed and is leveraging that, maybe.
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It is really loosing money?
They buy something and pay latter then they invest the money and that can cover if not all most of the projected losses.
It works so well for supermakets that they even make a profit out of it.
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cost of e-books
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ebooks
amazon is just a retailer and sells what wholesalers provide.
amazon should not have any voice on the cost.
second the cost of a book is what the market will bear.
if $12 is too much don't buy it.
third what you are principally paying for is intellectual property, not the
cost of production.
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