Amazon: Publishers Strong-Armed Us On E-Books

Nerval's Lobster writes "Strengthened by an agreement with Apple that set the prices for their respective e-books higher, publishers strong-armed Amazon into giving them similar terms, an executive for the online retailer has testified in Manhattan federal court. The U.S. Department of Justice has taken Apple to court over the alleged price-fixing, after reaching out-of-court settlements with five publishers (HarperCollins Publishers LLC, Simon & Schuster, Hachette Book Group, Penguin Group, and MacMillian). Apple, which competes with Amazon in the e-book space, refused a similar settlement. "Certainly if someone offered reseller, we would have taken them up on that offer," Russell Grandinetti, Amazon's vice president for Kindle content, testified before the court, according to Reuters. "Reseller" means a company sells goods to a retailer for a particular price (usually wholesale), allowing the retailer to set the actual sales price. Under the terms of that model, Amazon could sell e-books for super-cheap, even if it meant going beneath the publisher's wholesale price. Macmillan and Amazon ended up in conflict over the issue, with Amazon temporarily yanking the publisher's e-books from its digital shelves. "We will have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books," Amazon wrote in a statement at the time. "Amazon customers will at that point decide for themselves whether they believe it's reasonable to pay $14.99 for a bestselling e-book." But Amazon eventually relented to Macmillan's demands, along with those of other publishers, and submitted to the agency model, in which publishers have a heavier hand in setting retail pricing."

Comments

What is wrong with these folks?

[h4rr4r]

Why do they want even more than for a the paperback?
I am getting less in that I cannot resell it and no physical copy, yet they want even more. On top of that their costs are reduced, since they need not print, ship or deal with any of that.

I just end up not buying those books. It seems though all media folks are just too greedy for their own good, books the same as movies.

Re:What is wrong with these folks?

[Anonymous Coward]

Because it works. Most people buy into it. Why should I pay $20+ for a BluRay? Oh, because it comes with the DVD and a Media file. But I don't want the DVD and Media file!!!! Too bad. You can't buy it any other way (than used.) So consumers buy anyway. And the sellers sit back rub their hands together with a MUAHAHAHA!

As soon the majority just buys into it, it doesn't matter that the price level is higher.

Re:What is wrong with these folks?

[crutchy]

why was parent downmodded? it might be ugly but it's still the truth

Re:What is wrong with these folks?

[Anonymous Coward]

Its another form of Microsoft tax, because the ebook publishers know that the lacklustre programming of Windows means that an errant DLL could crash and upload a user's ebooks to the internet, and also because if someone accidentally loads a long ebook in Microsoft Word it will crash the word count function.

Re:What is wrong with these folks?

[PhrostyMcByte]

Take your pick:

1. Ebooks open the floor to self-publishers wanting to reach a mass audience, which cuts out the established publishers entirely. This is already quite prolific on Amazon. Making the popular ebooks expensive is an effective way to kill off a platform before it starts -- why would anyone buy a Kindle when the books they know are significantly more expensive on it?
2. Ebooks are certainly more profitable, but they've already invested a lot in physical manufacturing and distribution. Becoming popular too quickly might force them to scale down operations at too fast a pace, and pricing is a way to artificially dampen it.
3. They're money-grubbing whores and trying to pass the ebook experience off as a premium one because you can carry around hundreds of them, highlight passages, and dozens of other features that 90% of people won't use, while ignoring the core reading experience which is still sub-par even when comparing to cheap mass-market paperbacks.

Re:What is wrong with these folks?

[Zerth]

Because they want to keep you buying paper where publishers have all the control. In a digital book market you no longer need financiers able to absorb the cost of printing and distributing 10k copies and you don't need a marketing/sales department that can get your book onto an endcap at bookstores. You still want the people that work for publishers(editors, artists, etc) but you can contract for those directly.

If everyone switches to digital, the publishers' advantage of having a huge bankroll to be able to bet on multiple authors while keep the lion's share of the profit on the few winners is negated when Amazon will sell for anyone and the contract work can paid for like saving up for a car down-payment.

Re:What is wrong with these folks?

[DougOtto]

Part of the problem is that licensing models haven't kept up with the media, especially in textbooks, where Macmillan has a big play. Licensing of stock photography in those books is based on unit sold. While production costs go down because there's no paper, they're still paying for the content. It's really not much different than the pain the music industry went through.

Re:What is wrong with these folks?

[steelfood]

tl;dr: to kill the medium before it can be born.

They're scared of it. They don't know what to do, or how it will affect their bottom line. They don't want it. They want people to stop using it. They want their control of the industry back.

The only way they know how to do this is to price the new way above the old way. Because they're still living in their old world, where supply is physical and limited physically. And in that world, changing the price of things changes demand.

Re:What is wrong with these folks?

[Anonymous Coward]

Because it costs a certain amount of money to write, edit, proof, print, and distribute a book. Eliminating the printing costs (already a small amount of the overall cost) doesn't reduce the cost of producing the book that much.

The costs of producing the book are generally recouped in the higher margins of the "early adopter" sales - hardcovers. Margins on paperbacks are smaller, and cost to produce them is lower, so they can afford to sell them cheap.

Now with e-books, you're eliminating hardcovers and paperback sales, and so the cost of sustainably producing a book must be amortized over the sales of a single edition of e-book. Most books don't see millions of copies because they've been endorsed by Oprah. From doing a little reading via google, it appears that the "average number of books sold" equals somewhere in the order of 20,000 - 50,000 copies for a "successful, major-publisher book."

Assume an average price of $10 for an ebook. That means a person selling 50,000 copies of a $9 ebook (a successful book!) nets $450,000. Wow, that's a lot, right!? Weeeeelllll...... not so much after you deduct author's living expenses while writing the book, the salaries of editors, typesetters, and other people involved in the production of that final .epub file, and less still after you calculate the distributor's cut - Amazon, Apple, B&N, and others don't sell that book for free.

When you consider the costs of something, you have to consider the total costs of producing the original, not the marginal cost of reproducing it. It's never been THAT expensive (relative to the retail price of the book) to print 50k paperbacks. It is, however, expensive to produce the first copy of the book that you're going to make copies of and sell.

Stop being cheap.

Re:What is wrong with these folks?

[wolrahnaes]

Because in a lot of cases they own the facilities that print the books. The parts of the business that e-books either render obsolete or reduce the need for are parts where the big companies involved still make money. They see e-books as a threat to that part of their business and thus their profit margins. They've also seen what happened with music, if you are a content producer it's getting easier and easier to bypass most of the middlemen. The "big content" companies are the middlemen, so while I don't think anyone believes they'll win they'd still prefer to drag out the battle as long as possible. Doing anything in their power to reduce the appeal of e-books is part of that strategy.

Re:What is wrong with these folks?

[hairyfeet]

Look at the emails written by Jobs and you'll have your answer, one word...GREED, especially greed on behalf of Apple regarding how big a slice they would get. I don't see how anybody could read the emails and not accept its blatant price fixing, I really don't. He was about as subtle as a freight train and this really shouldn't surprise anybody who has looked into Jobs history because the man really was a sociopath.

I'm sure i'll get hate for saying that about St Steve but its a fact, sorry. he fucked over his friends, even when he had more money than them such as fucking Woz out of his share of the games they sold,sold out his friends when he got caught selling blue boxes, go read up on his history folks, he was NOT a nice man.

So the only question in my mind is does the DoJ have any teeth left and will they do fuck all about it, as we have already seen companies like Intel that really REALLY should have been busted for price fixing walk away scott free and after reading the emails if the DoJ doesn't bust their asses i think we can accept that corps can just do what the fuck ever they want in this country. Again do NOT take my word for anything, please go read the emails for yourself, they are just as damning as the Halloween documents from MSFT or the heads of Dell and Toshiba saying the profits they made in several quarters were nothing but Intel kickbacks, again he was NOT in any way subtle about the whole plan.

Re:What is wrong with these folks?

[Anonymous Coward]

People are willing to pay it because of the "impulse buy" mentality.

They *could* get the product for cheaper elsewhere, but that would mean them hopping the the car and driving to the book store, hoping that they have it, and then heading home... Or they could buy it online and get it in a week... Or they could press a button and be able to start reading it right now.

Re:What is wrong with these folks?

[Anonymous Coward]

ehm... TPB has it cheaper.

Re:What is wrong with these folks?

[Nyder]

Because it works. Most people buy into it. Why should I pay $20+ for a BluRay? ....

I'm going to point out that when DVD's were newish, they were $20 new. And you are getting a much higher quality video in Bluray format then you are in DVD format. Give it 10 more years or 4k movies becoming popular to see the price of Bluray movies going down. VHS movies used to cost alot when new also, way back when.

And oddly enough, what you could do is buy a cheaper DVD version of a movie, then download a bluray version to watch. Sure, it's not legal, but you are paying what you feel the movie is worth, just not as much as they want.

Re:What is wrong with these folks?

[Anonymous Coward]

Shipping and Printing in bulk are not high costs, adding perhaps $1 to the cost of books.

For example, in New Zealand we often get US grown fruit for NZ$2-50/kg thats about US$1.40 a pound, sometime we pay less than that. Now these are grown, picked, packed, shipped in refrigerated containers, sold at wholesale, shipped to the supermarket by land and put on the shelf. Now I doubt anyone is making a loss in this whole chain, but is shows how cheap bulk shipping actually is.

Likewise printing, where I work we pay NZ 3c per page which covers the cost of the paper, the toner and the lease of the high end Fuji/Xerox printer/photocopiers
and for bulk printing we pay MUCH less than that.

Server Farms cost, they cost a LOT. They cost a lot to build, they cost a lot to run, they cost a lot to maintain.
Trying to compare your home computer to a Server farm is like comparing your home car to a race car, conceptually same idea but the costs are way different.

Now, equally unlike your home computer, when you starts running ecommerce there is regulation and compliance to go with it, for example notification of users if you are hacked, this requires a lot of back end systems that have nothing to do with just the server supplying the books. Also the home network switch you have is a toy, start looking at fibre switches and how you are going to connect thousands of machines, then how much heat they generate and how much its going to cost you to cool them, and how much physical and other security is going to cost, add in lawyer/accountancy, public liability insurance cost etc etc etc. Add in the cost of high end RAID arrays, someone swapping dead drives every day.

So no the electronic version is probably no cheaper really than the printed one, its only because you can copy it yourself without having to bear any of the costs does it seem cheap.

Re:What is wrong with these folks?

[Anonymous Coward]

ignoring the core reading experience which is still sub-par even when comparing to cheap mass-market paperbacks.

This is, of course, subjective. I have a Nook, and in a lot of ways I prefer the "core reading experience" on the Nook to my mass-market paperbacks.

For one, I get to choose the font size (and font face, although this isn't so important since most paperbacks have a fine font). Font size is great, because I have some books with tiny type that is annoying to read.

Now, if the argument is that the editing on some ebooks is really, really awful, I will definitely grant that. There are some clear OCR-and-sell books out there.

Next, I don't ever have the problem of the print being too close to the margins, which can be a real problem with fat paperbacks.

I'm not sure how exactly you're defining "core reading experience", so I won't go into more detail. Suffice it to say, the act of reading itself on my Nook is at least as nice as reading a paper book. I never stop and think about the fact that I'm reading on a device; I just read.

Re:What is wrong with these folks?

[Anonymous Coward]

Even worse, if you do what I did and stop buying movies on discs (I'll wait til they show up Netflix), you are part of the "decline of sales that proves billions of dollars lost to piracy" ... even if you never pirate a goddamn thing. :/

Re:What is wrong with these folks?

[Anonymous Coward]

NB: I don't actually believe that.

Thank you for that qualifier. My brain was about to a'splode.

I really cannot fathom why this seems so hard for people to grasp - the cost of producing the original copy of a work is many, many, many orders of magnitude higher than the cost of producing subsequent copies. Driving the "cost to copy" to zero does not mean that the 'cost to produce' also goes to zero.

For the people that want to support Creative Commons and self-published authors, great - have at it! I'll support them too - there's nothing to say that a well-written book MUST cost money. But I'm not going to be "first world problem-y" enough to suggest that $9 for a book which gives me dozens of hours of enjoyment is somehow a ridiculously overpriced experience, just because the cheap pulp paperbacks which fall apart after two reads (sometimes during the first read) can be sold for $4.99.

Re:What is wrong with these folks?

[BronsCon]

So let's assume, for a moment, that producing a digital copy and sending ig across the interned costs as much as producing a paper copy and shipping it to a store. This ignores the costs involved in writing the book, editing it, licensing included content, and all of that, as we're already in agreement that those costs are equal regardless of format, so let's just remove the remaining variables and say the productions and distribution costs are equal as well. Why the fuck does the e-book edition that I can't resell, can't copy pages from for reference, and can't put on the shelf for decorative purposes when I'm done reading it cost more than the paperback that allows me to do all of these things?

Now let's snap back to reality, where creating a digital copy once the initial works has been done costs nothing and sending it cross the internet costs less than a penny. Still admitting that writing, editing, and licensing costs are the same, why the fuck does the cheaper-overall-to-produce-and-distribute e-book edition cost more?

Re:What is wrong with these folks?

[0123456]

Wow, that's a lot, right!? Weeeeelllll...... not so much after you deduct author's living expenses while writing the book, the salaries of editors, typesetters, and other people involved in the production of that final .epub file, and less still after you calculate the distributor's cut - Amazon, Apple, B&N, and others don't sell that book for free.

Uh, what? A writer whose e-book sells 50,000 copies at $9 with a typical trade publishing deal makes about $68,000 after giving $12,000 to their agent. Amazon makes about $135,000. That leaves $235,000 to the publisher.

Do you really, seriously believe that editing a book, formatting it as an .epub and sticking a cover on costs $235,000?

Oh, apparently you do.

Re:What is wrong with these folks?

[BronsCon]

That's fine. If the paper copy costs 50 cents to print and distribute, charge 25 cents less for the e-book edition. Hell, charge the same price, I don't care. Don't fucking charge more, though.

Well, actually, as someone who resells books when I'm done with them, I do care. If you want me to buy the e-book edition, it needs to be priced at least close to (price of paperback - what i can sell it for when I'm done).

DERP.

Re:What is wrong with these folks?

[interval1066]

So consumers buy anyway.

Not me.

Re:What is wrong with these folks?

[ducomputergeek]

This is what a friend of mine is doing. He's released 3 books and a collection of short stories ranging in price from $.99 - $2.99. He's sold about 8K copies thus far this year. When I asked him about it he said if he had accepted an advance from a publisher, about $3,500 since he was a new author, he'd still have to do all the marketing and promotion work himself. He figured if that was the case he'd rather do it all himself and cut out the publisher entirely. As he said the 70% Amazon gives him is a better deal.

An an extra $16k in his pocket really helps his family as that's about half what his wife earns per year. He enjoys writing and is hoping in a couple years that his wife will be able to afford to stay home with the kids. Which is rather important because one has special needs.

Re:What is wrong with these folks?

[jader3rd]

Because it works. Most people buy into it. Why should I pay $20+ for a BluRay? Oh, because it comes with the DVD and a Media file. But I don't want the DVD and Media file!!!! Too bad. You can't buy it any other way (than used.) So consumers buy anyway. And the sellers sit back rub their hands together with a MUAHAHAHA!

My parents don't have a BluRay player. My mom went to buy some DVD, and had to ask the store if they had it just as a DVD (instead of the combo pack) and the teenage store worker said that they did have just the DVD, but the combo pack is a better deal. My mom asked if the combo pack was cheaper than just the DVD, and they said 'No', but still insisted that it didn't make sense for my mom to buy the DVD because the combo pack was a better deal. My mom couldn't convince the teenager that a combo pack isn't a better deal if you can't use the other disks. So now she kind of holds it as a badge of honor that she's able to confuse the store clerks by getting just the DVD.

Re:What is wrong with these folks?

[Anonymous Coward]

Why should books that are 50 years old costs $10 for the ebook? And then they contain many OCR errors.

Stop being naive.

Re:What is wrong with these folks?

[sjames]

That doesn't explain why ebooks cost MORE than printed books. At most it could explain ebooks costing nearly as much as printed books.

Re:What is wrong with these folks?

[sixsixtysix]

Why should I pay $20+ for a BluRay?

Who is paying $20 for blu-rays? Of my 99, over 75% were $10 or less, the rest were all under $20*. Maybe a handful were used. Plenty contain additional dvd versions that I can either sell, barter or give away**. Then again, I suppose someone has to be buying those $22.99 [and not even newly released] discs at Barnes & Noble.



* Box sets are broken down into individual price points. For example, Indiana Jones @ $75 on release day, is, with the fourth movie's negative culture value aside, $18.75 per film.

** While it does seem that selling the digital copy codes has been squashed, doing the same with the dvds only might be legit?
Find out next week on...
Slashdot Poster!!!
*cut to credits*

Re:What is wrong with these folks?

[Anonymous Coward]

Because Servers (and don't compare your home computer to a proper server farm) cost money, lots of it, to set up, to run, to maintain.
This is also why Racing cars cost a lot more than the car you drive to work. In principle they are sort the same thing, in practice they are built to a much higher standard. Printing and shipping are a small part of the book price.

Now compare the price of a book to a live concert, you can't resell it, you can't reread it, its a one off event that may or may not be any good and it generally costs a hell of a lot more than buying a CD, and if you have to travel and pay accommodation then the costs add up massively to the point where you could probably buy that performers entire CD/DVD collection cheaper, and yet people still pay and go yet it represents appalling value for money.

So, the next question you should ask is if someone in China is doing the same job as you for a MUCH lower wage, why is your employer paying you so much more ?

Re:What is wrong with these folks?

[Anonymous Coward]

Simplistic. You forgot to mention the other 1000 books they were sent that had to be looked at and rejected, that did not come for free, the publisher paid staff to do that. You then for got about the other 100 books that were accepted but went through a lot of editing back and forth until it was publishable, which then left probably 99 of those books selling a few hundred copies. There would be checks made before publication for plagiarism etc. Did you notice how there was a hell of a lot of expenses going on all of the time from people who made them no money.

Meanwhile the publisher still had to pay their staff to handle EVERYTHING that came in, not just for the 1 writer who made them a lot of money.

Re:What is wrong with these folks?

[neonmonk]

E-books should still not be more expensive than the paper-back. Why is this so hard to fathom?

Re:What is wrong with these folks?

[Anonymous Coward]

And exactly how much does it cost to set up, run, maintain a proper server farm that is available 24/7
Add in the ecommerce backend that too is available 24/7
It best be auditable by the publishers so they can confirm all sales of all books
Oh yes, best add in sales taxes that must be accounted for, they too will need an audit trail by shipping address and you will need to keep al of this
available for what is it 11 years or so.
Dont forget the costs like the multi megawatt cooling needed to keep the servers cool, and the RAID arrays, and switches, and Fibre networking
Better add in the expensive firewalls, then what happens in case of fire, can't use water, so Nitrogen or CO2 systems arent cheap
Lawyers / accountants at corporate levels cost, and investors want a return on the money they have put in.

And even if you dont sell 1 book, you still have all those costs.

So exactly why should ebooks cost less, oh I see its because you can copy a file from your hard drive to a USB flash drive and believe it is the same thing.

Re:What is wrong with these folks?

[Anonymous Coward]

Wait, 50,000 copies!? That's a success. That's a book the publisher should be making a good profit on to fund the advances to authors that aren't as successful.

Re:What is wrong with these folks?

[Lodlaiden]

The ebook costs more because they are likely to sell more copies, meaning more royalty fees. The have to raise the price on the e-book version to cover these increased costs.

Re:What is wrong with these folks?

[tibman]

servers are more expensive than a physical supply chain? you're crazy

Re:What is wrong with these folks?

[tibman]

The costs increase right along with revenue and profit. There's no need to raise the price.

Re:What is wrong with these folks?

[tibman]

That wouldn't make the ebook cost more. Those are costs that both versions share equally.

Re:What is wrong with these folks?

[tibman]

If you have multi megawatt cooling and fibre networking then i think you aren't a book publisher. You are a data center that other businesses will pay to host their sites.

Re:What is wrong with these folks?

[Anonymous Coward]

Fuck them in the ass. Just pirate. And the money you save, donate it to poor kids in africa

Re:What is wrong with these folks?

[CodeBuster]

VHS movies used to cost alot when new also, way back when.

Indeed they did. In fact, it was this high cost that spawned the rental market for movies in the first place. At that time, most people weren't going to watch a film enough times to justify paying more than $20, and VHS tapes had no "extras", so it made sense to rent the film for 1 to 5 dollars instead (early 1980s dollars). As a teenager I worked in a video rental store and I can remember the store owner telling me that he paid $100+ for each of those tapes. One of the first VHS releases to break this trend was Top Gun which was priced at around $20-$30 when it was released. At the time that was an incredible bargain since most other films cost well over $50.00 if they could even be found offered for retail sale (remember that this was the early to mid 1980s so there were no downloads or even digital copies of films).

Re:What is wrong with these folks?

[drinkypoo]

I am getting less in that I cannot resell it and no physical copy, yet they want even more.

There are sellers all over eBay selling illicit copies of other people's copyrighted media. For example, you can buy many virtual machines stuffed with automotive service manuals... Of course, you can also cut the binding off of a book and feed the pages into a sheet-feed scanner, so that's a bullshit argument, but I bet it's the one they'll use.

Re:What is wrong with these folks?

[Anonymous Coward]

Those are costs that push up the overall publishing service cost for everyone. what the publisher charges has to cover his real expenses for that book and then an additional added set of expenses for the average cost of non profitable books and rejected books (risk or overhead or whatever you want to call it, but still a real cost) and then make money on top.

Re:What is wrong with these folks?

[Anonymous Coward]

you have yet to offer a reason why other than "i think it should cost less."

Ebooks are a fundamentally different model: you don't have an "early adopter, more durable" hardcover edition to sell to people for a large profit, and then a follow on, barely-profitable paperback that you push out hoping to sell in larger quantities to price-conscious readers.

You have one ebook. You have a series of fixed costs, with ebooks only really affecting the *reproduction costs,* which are a small part of your overall cost when you're talking about tens of thousands of copies. If you expect to sell 20,000 copies of it, and it costs you $200,000 to produce, then $10 per copy is *break-even.*

Why is this so hard to fathom? If you sell all your products at a loss, you will go out of business. Ebooks aren't breaking new ground - sale of an ebook will cannibalize sales of paperback and hardcover books. I buy books frequently - I've bought almost no "physical" books since I got a Kindle a couple years ago.

Re:What is wrong with these folks?

[Anonymous Coward]

Which is a COST back to the publisher , or do you propose that books get published electronically without a data centre ?

Re:What is wrong with these folks?

[Anonymous Coward]

Do you seriously believe that there are no costs to running a "typical trade publishing" house other than paying for the time of the single editor to edit a single book?

Do you seriously believe that every book a "typical trade publishing" house is profitable, or even breaks even?

Do you seriously believe that adding "edit and publish an epub" to the list of "edit and publish hardcover, and softcover versions of the book," means it's somehow *less costly* for them?

Do you seriously believe anything you wrote? Or are you using your argument as a thinly veiled excuse for stealing?

Re: What is wrong with these folks?

[Mabhatter]

Because the publishing cost of a $14 plain bestseller is about $3. The rest goes to the author, publisher and reseller. So a few dollars off is reasonable... Amazon selling $14 books for $3 was NOT reasonable.

It's insulting that people only think of the lowest cost, not the VALUE of something. Amazon was tying sales of ebooks to sales of paper books.. Then eating a big LOSS. That's not entirely legal when they do it to ALL the publishers on the FIRST day of release. That's an ILLEGAL MONOPOLY -making tactic. And it worked quite nicely for Amazon until Apple came along as the scapegoat for the publishers to get out from Amazon's thumb.

Of course the book publishers used Apple to do to Amazon what record labels used Amazon to do to Apple on music pricing.

As far as the LAW, you have to look at who is the bigger monopoly? 6-8 publishers trying to stop prices from falling, it ONE online, tax-free retailer dumping books from ALL THE PUBLISHERS on the market below cost.

Re: What is wrong with these folks?

[Mabhatter]

Most hardcover books are more like $20. An ebook sale CANABALIZES that extra $5 in the publishers pocket... It has to come from somewhere.

The bankers want 10% returned on their money to invest in the publisher... They got stockholders to please.. Stockholders that want profits in CASH this quarter, not pretend profits in the future.

So the first x units of an ebook need to directly count as sales of full price new hardcovers. That is why they cost do much. The secomdsry purpose is to give paper book sellers a chance to move their wares... They cannot do that without some kind of blackout period before an ebook hits "clearance sale" price.

In the new world there is no clearance sale price. Just like games on Steam, there is a minimum cost per unit they want, and a minimum they want for their products
"Class"

Re:What is wrong with these folks?

[Telvin_3d]

Why pay hardcover price for an ebook? Because you get it same day the hardcover comes out. If you want to pay paperback prices, wait a couple years for the paperback to come out and the ebook prices typically drop at the same time.

How much of a hardcover price do you really think is physical costs? A 400 page hardcover is equivalent to 100 pages of double side letter paper. I can print that for 5c a page (or less) on a decent laser printer. So as a guy with basic consumer equipment my costs for for printing a hardcover book are $5 or less. Of course, a publishing house can do it for less. On a big run, I suspect their costs for printing, binding and shipping combined probably don't top that same $5.

The rest of the hardcover costs? Pays for things like editing and typesetting (which is more work for a ebook than a traditional one) and keeps the author fed so they can write more books. You don't see paperback editions of anything until all the above costs have long been paid off. And if you feel that feeding authors and their editors is unreasonable, then fuck off.

Re:What is wrong with these folks?

[cpt kangarooski]

Why do they want even more than for a the paperback?
I am getting less in that I cannot resell it and no physical copy, yet they want even more. On top of that their costs are reduced, since they need not print, ship or deal with any of that.

Well, it helps to understand that to a book publisher, the reason for having hardbacks and paperbacks has little or nothing to do with the costs of the physical copies. It's just a reader-palatable substitute for breaking the market into two groups: readers who will pay a lot for a copy of the book immediately, and readers who will pay less and are not in a rush. If not for the tradition of publishing books in different formats, and concern over how well people would take it, I'm sure they'd be happy to release books in only one format and just charge people different prices according to whatever the most was that they'd pay.

For newly published books, ebooks come out before paperbacks do, and therefore, the publishers want to charge high prices for them. It's not the cost of materials that matters, and frankly there's usually little difference between paperbacks and hardbacks in terms of material costs anyway.

Re:What is wrong with these folks?

[Anonymous Coward]

Blame your representatives for instituting a never-ending copyright scheme.

Don't blame the publishers for setting a reasonable price at the time of purchase for a new novel.

Re: What is wrong with these folks?

[Anonymous Coward]

But the real bottom line truth, if you'll forgive the pun, is that there is NO NEED anymore for the existence of publishers. Referencing the breakdown given in a comment above that $450,000 dollars of revenue generated from sales of a book will provide the author $68,000 and the publisher $235,000 -- what on earth could justify this? Only in a sick culture where venture capitalists are heroes to the common people and the middleman is the man on top would this be regarded as anything other than obscene.

Re: What is wrong with these folks?

[Anonymous Coward]

Dude,
      The guys with all that horrendous overhead are clamoring to sell the books for less. The publishers are not eating those costs.

Re:What is wrong with these folks?

[Anonymous Coward]

Because Servers (and don't compare your home computer to a proper server farm) cost money, lots of it, to set up, to run, to maintain.

Amazon has to run servers for their physical books as well. Even looking at just computer equipment costs, it's not evident that physical items are cheaper than eBooks. Remember that there are servers in the warehouse too. The warehouse servers need to track what inventory is where and direct the workers' handhelds to the items. They need to synchronize with the web servers. That computer equipment is not free either.

We can even price out how much it costs Amazon to deliver an eBook. How? Amazon sells downloads as a separate service on S3. They charge $.0000004 per GET request. They charge $.12 per GB for bandwidth (and that's their highest price; it drops down to $.05/GB with scale). Note that the typical book is less than a MB. So we're currently at $.0000124 for a download. Double that, since Amazon has to proxy the S3 request to avoid giving access to everyone and we have $.0000248. Ongoing storage costs $1.14 per year per GB (again, that drops down to $.66 with scale). That's $0.00114 per year per MB. So there's seven years for $.01 (actually $.00798, but we want to have some left over for the download). A book that sells once every seven years can be downloaded for less than a penny.

And of course, that totally ignores the cost of workers at the warehouses, rent on the warehouses, transport from the warehouses, transport to the warehouses, and physical printing costs. Are you saying that all those things cost less than a penny?

Re:What is wrong with these folks?

[rahvin112]

Cutting down trees, pulping them, bleaching the pulp, processing the pulp into paper, shipping this paper across the country, typesetting, printing, assembly, packaging, shipping, stocking, clearance of unused stock, returns, retail markup.

Just to name a few. There's millions of dollars in those items, yes spread across lots of books, but the fact remains that millions in cost is negated. Distribution costs falls to pennies rather than multiple dollars. Producing new copies of the book is essentially free, your only fixed costs are the editors and very little in the way of marketing (in comparison to paper books) along with the writers advance and any royalty per book (which is deducted from the advance).

No one pays the authors living expenses while they are writing other than the author. Advances to authors are deducted from future royalties, even for the biggest of authors. Advances are calculated and paid based on projected sales such that most authors will never see future royalties and the publisher will get back the advance plus interest from the deducted royalties and that's the good authors. Advances for unknowns are small fixed fees with little or no royalties.

On top of this the massive used book market is completely eliminated by digital publishing. Every single sale is an original sale, this increases sales significantly. The lack of used book market probably adds 50% additional sales. The lack of libraries being able to loan copies means there are no loaners either.

You're argument is garbage and you know it. It's the reason the justification for the higher prices keeps jumping around, because there is NO justification for higher prices. You have to be utterly brain dead to think the cost of a digital copy which costs nothing to duplicate costs more than printing and shipping dead trees around. The only thing the publishers have EVER argued is that editing and marketing still costs the same and the royalties are essentially unchanged but they've never said what percentage of the cost of a paperback that is. The biggest hints they've given point to 30% of the price of the paperback.

Even if you factor in the lost opportunities with hardbacks and don't take into account the additional sales due to no libraries or used books and you still have a product that should be in the range of 50% of the cost. And amazingly that's about how much cheaper eBooks were than paperbacks before Apple destabilized the market in cahoots with the publishers. That's also the reason publishers saw record revenues in the years after Apple doubled the prices. These are all cold hard facts.

Re:What is wrong with these folks?

[chrismcb]

Because it costs a certain amount of money to write, edit, proof, print, and distribute a book. ... Stop being cheap.

I'm not complaining about the cost of purchasing the story. I am complaining about the cost of the ebook. If I have a choice of going to B&N and buying a paperback for 10% of cover price, OR I can buy an ebook for the cover price of a paperback or MORE. Presumably purchasing the paperback helps defray the cost... and yet it is less than the ebook. Why should I get the ebook?
One argument is ebooks cut into hardcover prices. Then charge more for the ebook, then when you release the paperback, lower the cost of the ebook. Otherwise I'll get the paperback.

Re:What is wrong with these folks?

[Anonymous Coward]

to add to your "even worse"

Along with the profit from the ebook they are also gathering information and selling it off to advertisers.
Google even has a brand new version of Google Analytics for ereaders and other "occasionally connected" devices.
Kobo comes with the google spyware installed,
Amazon and I assume everyone else is doing it as well.

Re:What is wrong with these folks?

[Anonymous Coward]

How does a server farm compare with shipping (in a container on a ship, or on a plane, or even in a truck) 100,000 copies of a book?

Now multiply that by the number of the top 10% of books. How does that cost compare with a server farm?

Re:What is wrong with these folks?

[Znork]

The gp was of course joking. However, the correct action when selling more of something is indeed to raise the price or you're not maximizing your profit. (You don't raise prices because you need to, you raise them because you can).

In a free market someone else would then enter the market, undersell you and take part of the profit. In a monopoly market with copyrights that won't happen, which means you can keep raising prices, preferably combined with sinking a lot of the revenue into marketing which will be much more valuable as there is no competition.

Re:What is wrong with these folks?

[Anonymous Coward]

You've got that backwards.

Expensive tapes didn't create the rental market. The tapes were expensive because they were intended for the rental market and most of the cost was for the rental right. You couldn't buy a non-rental VHS at any price.

Re: What is wrong with these folks?

[michelcolman]

But why would anyone care if Amazon was selling their books for $3? They are still getting the same wholesale price, right? If someone bought tons of copies of my products for a reasonable price and then sold them to loads of people for much less, eating the loss themselves, I couldn't be happier!

Of course it becomes a problem once Apple adds the "most favored nation" clause, because Apple would then start selling the books at the same ridiculously low price and give the publishers a slice of that lower price instead of their normal fee, but the argument existed before that. Jobs actually convinced the publishers to join his model because they were fed up with Amazon offering their books for ridiculous prices. Why? Amazon was eating the loss, not the publishers. Every book sold at those low prices gave the publishers their full wholesale price.

Re:What is wrong with these folks?

[Anonymous Coward]

It's cheaper for me to steal my groceries every week too, doesn't mean you should do it.

Re:What is wrong with these folks?

[Anonymous Coward]

My favorite story about Jobs was how he would purchase a brand new Mercedes(valued at $130,000) every 6 months so he wouldn't have to get license plates on his car. He also regularly parked in handicapped parking spaces, because there's no way to ticket a car that's not registered. He also parked in handicapped spots on Apple's campus. Because putting in a parking spot for the CEO would be absurd. It's far easier to just throw the middle finger at someone in a wheelchair than it is to put up a sign that says "Reserved for Steve Jobs".

Re:What is wrong with these folks?

[stdarg]

Why pay hardcover price for an ebook? Because you get it same day the hardcover comes out. If you want to pay paperback prices, wait a couple years for the paperback to come out and the ebook prices typically drop at the same time.

According to this it used to be about 1 year, and has actually decreased due to pressure from ebooks.

But really, even when paperbacks are out, it often costs more for an ebook today than the paperback version, which is ridiculous and probably what OP was referring to, not paying cheaper-than-paperback prices on release day.

How much of a hardcover price do you really think is physical costs? A 400 page hardcover is equivalent to 100 pages of double side letter paper. I can print that for 5c a page (or less) on a decent laser printer. So as a guy with basic consumer equipment my costs for for printing a hardcover book are $5 or less. Of course, a publishing house can do it for less. On a big run, I suspect their costs for printing, binding and shipping combined probably don't top that same $5.

Okay you've covered printing costs. You're forgetting major costs like physical distribution and storage which are nearly free for ebooks. Then the overhead at every retailer for physical storage. Then the deals that let sellers return unsold books to the publisher.

The rest of the hardcover costs? Pays for things like editing and typesetting (which is more work for a ebook than a traditional one)

Yeah right. I call bullshit. Let's look at some numbers.

On a typical hardcover [...] For cover design, typesetting and copy-editing, the publisher pays about 80 cents. Marketing costs average around $1 but may go higher or lower depending on the title. Most of these costs will deline [sic] on a per-unit basis as a book sells more copies.
[...]
So on a $12.99 e-book, the publisher takes in $9.09. Out of that gross revenue, the publisher pays about 50 cents to convert the text to a digital file, typeset it in digital form and copy-edit it. Marketing is about 78 cents.
[...]
At a glance, it appears the e-book is more profitable. But publishers point out that e-books still represent a small sliver of total sales, from 3 to 5 percent.

It costs less for ebooks than hardcovers. Now this article was written in early 2010 using numbers from 2009 -- since then the share of sales for ebooks has grown. According to this report for the entire year of 2012, ebook sales represented 20% of the market instead of 3-5%.

You know what that does to fixed costs? Instead of 50 cents per sale, it's like 10 cents per sale or less now.

I don't know why you thought editing and typesetting an ebook would be MORE expensive than what it costs for a physical book. That defies common sense, and real numbers seem to confirm that you're wrong. I'm curious if you have a source for your belief?

And if you feel that feeding authors and their editors is unreasonable, then fuck off.

If authors and their editors can't buy food, they need to get new jobs and write/edit on the side. Guess what, plenty of authors do have other jobs, or depend on support from family. That's life.

But I don't think that's more likely due to low price ebooks (which are much cheaper to produce), you're just exaggerating ridiculously to try to make an emotional point.

Re:What is wrong with these folks?

[tibman]

They are not paying the entire cost of the data center to host their two/three servers. At worst, hundreds per month per server.

Re:What is wrong with these folks?

[Anonymous Coward]

What is this? Wow! We can pirate it for free! Quick, mods, upvote this comment. This is surely news to everyone on slashdot. I don't know whether it is insightful, informative, or funny as I've heard this comment made before!

Next you can tell me how you don't see ads when you browse.

Re: What is wrong with these folks?

[tibman]

I buy Steam games on sale all the time. They even notify me if a game on my wishlist has gone on sale. But i'm not trying to argue about that, lol. I do agree with what you are saying about hardcovers. I don't see why that wouldn't be possible with ebooks as well? The first month or 10k copies has some sexy cover art and costs 15-30$ (what i usually pay for a hardcover). After that they can drop it down to 8-9$ for the next 5-10 years. That would match the existing physical book model, right? They can't charge hardcover price for the paperback version forever, like they are now. People will get pissed.

Re:What is wrong with these folks?

[Anonymous Coward]

That was why I subscribed to pay channels back in the day. Taped the movies I wanted because I did not want to pay $70 for one movie. And they may not have been recorded on quality tape.

Re:What is wrong with these folks?

[ryanmc1]

I just resell the DVD and media file. I can usually get $5 each which brings my total cost of ownership down to just $10.

Re:What is wrong with these folks?

[David_Hart]

Why should I pay $20+ for a BluRay?

Who is paying $20 for blu-rays? Of my 99, over 75% were $10 or less, the rest were all under $20*. Maybe a handful were used. Plenty contain additional dvd versions that I can either sell, barter or give away**. Then again, I suppose someone has to be buying those $22.99 [and not even newly released] discs at Barnes & Noble.

I find that I don't go to the movies as much as I used to. Every time a movie comes out that I want to see, it seems that it is gone from the theater before I get some free time. So, I buy the Blu-Ray when it is released at the $20 to $24 price. However, it has to be a movie that I know that I will see multiple times over it's lifetime. Movies that I don't plan on watching more than once will be rented at Red Box for $2.25 or watched on HBO, etc.

Re:What is wrong with these folks?

[minstrelmike]

E-books should still not be more expensive than the paper-back. Why is this so hard to fathom?

It's probably the same reason people don't fathom how economics actually works.(I'm snarking at you now).
A free market means a seller can set a price and buyers can choose to buy or not.
Of course, it's a lot more complicated than that because publishers don't sell paper books to readers; they sell them to distributors.
When publishers are able to sell directly to readers, then they think they can cut out that middle man of the distributor and reap all those profits. But to the reader, now I have to go each separate publisher to find books and it makes marketing really, really hard. But the publishers hold on the copyright makes them think they have something more valuable than it 'really' is.
The real value is determined by sales in the free market, or in the distributor market.

Re:What is wrong with these folks?

[minstrelmike]

Why does it cost more to see a first-run movie at the theater than it does to see it at the dollar theater 3 months later?
It's the same exact film I'm watching.

Why does it cost more to buy a dvd or game the first day it is released than it does to buy the same dvd or game 6 months later?
Asking questions like that help you answer questions about the cost of entertainment thingamajigs.

Re:What is wrong with these folks?

[Quirkz]

Maybe both? I remember even when tapes were prevalent there was still an expensive early release intended just for rentals, and a later public release. When 'Fear and Loathing' came out on tape I tried to get my hands on it and was told it was $100 for the earliest copies. If I waited another three months for the public release it would be a more reasonable $20 or whatever.

Re:What is wrong with these folks?

[Phoghat]

Why do they want even more than for a the paperback? I am getting less in that I cannot resell it and no physical copy, yet they want even more. On top of that their costs are reduced, since they need not print, ship or deal with any of that.

I just end up not buying those books. It seems though all media folks are just too greedy for their own good, books the same as movies.

Google magazines sometimes wants double what a print version costs

Re:What is wrong with these folks?

[suutar]

I'm reaching the point where even if I'm pretty sure I'll watch it again I don't buy it til the second viewing, because sometimes I'm wrong. I have discs bought years ago that are still wrapped because I loved the movie in the theater but haven't pulled it back out. (At least one of those, however, I have watched since... on netflix streaming.)
Plus if I don't buy them I have something to put on birthday/xmas lists so my wife/mother can't say I'm impossible to shop for :)

Re: What is wrong with these folks?

[suutar]

because the only reason to take a loss like that is to kill off competitors.

Re:What is wrong with these folks?

[suutar]

I'm surprised. I would have thought typesetting for an item which can get displayed on essentially an arbitrary size/shape "page" would be more work than for a fixed target. But I would find it very hard to attribute the 30 cent difference entirely to cover design. Thanks for the pointer.

Re:What is wrong with these folks?

[Steve_Ussler]

Amazon tries to dominate every and I mean EVERY market. They seems to be more guilty than not guilty.

Re:What is wrong with these folks?

[Anonymous Coward]

Because in a lot of cases they own the facilities that print the books.

Uh, no. Book publishers rarely own printing facilities. They contract it out to specialists. This and the rest of your argument depends strongly on you imagining how things work rather than actually bothering to find out.

Re:What is wrong with these folks?

[BronsCon]

I work with servers day in and day out. Hell, I even run a couple in a rack at home. I know what they cost to operate and maintain, thank you. You, on the other hand, seem to be of in fucking la-la land.

Re:What is wrong with these folks?

[BronsCon]

Oh, I've also spent more than a few days on the track, so I know about race car pricing, as well.

Got any other shit analogies for me? Yes, I'm a jack of all trades; I figure if I'm gonna be a know-it-all, I probably should, if ya get me.

Re:What is wrong with these folks?

[hairyfeet]

Honestly if that is true it really would not surprise me in the least. He was one of the richest guys on the planet yet gave practically nothing to charity, you read his history and it might as well be called "How to become rich by being the biggest backstabbing douchebag on the planet" because he fucked EVERYBODY, he fucked Woz, he fucked all his friends, he fucked the guys he made blueboxes with, as well as fucking whom he sold them to, the guy was a giant bastard of the first order.

That is why I hope to God that scene in "Pirates of Silicon Valley" is true, because just the thought of Gates using Jobs massive ego to fuck him over like he fucked so many of those around him just makes me smile. I mean you read those emails...what a douchebag, what a greedy little douchebag that didn't give a flying fuck about anything but squeezing every last penny he could out of those dumb enough to buy his products...it really pulls back the curtain and shows what the asshole was REALLY like, especially how some of the publishers balked at screwing the customers THAT badly and he was like "bah, I think we can easily go 30% higher than that" and his "Get on board or get left behind"...what an arrogant little prick!

Re:What is wrong with these folks?

[Anonymous Coward]

I was talking about the early years. After a few years they started doing retail tapes and, as you say, they came out some time after the rental versions.

The Oil industry does it daily

[ackthpt]

But you can't fix prices on books...

Well, e-books anyway.

Dead trees are still highly variable.

Re:The Oil industry does it daily

[h4rr4r]

Please elaborate. My understanding was oil is sold on an open market and is a heavily traded commodity. What makes you think price fixing by oil companies inside the USA is occurring.

Mind you OPEC can do what they like since our laws do not apply to them.

Re:The Oil industry does it daily

[crutchy]

hahahahahahha!!! next you're going to tell me that the bond market isn't being manipulated, even though the yield is less than (real) inflation (which means any honest bond investor is losing money on bonds). how about gold? yeah that definitely isn't being manipulated. pffft.

anyone who buys anything on the open market is a fool. its just unfortunate that we're all forced into playing a role because in many countries superannuation is compulsory, and super (or 401k or whatever you call it in your country) is the biggest cash cow ever for these manipulative market speculators who love nothing more than gambling with other people's money with no risk

Re:The Oil industry does it daily

[Anonymous Coward]

I don't think that's how the price of oil is set. But that's just speculation.

Re:The Oil industry does it daily

[doubledown00]

Mod this up.
I too would like OP to explain how the oil industry sets about mandating price on the fungible commodity that they sell. I'm not saying the commodity market is rational, mind you. I'm just saying if a producer tried to strong arm these kinds of tactics, the market buyers would respond with a very loud and heartfelt FOAD.

Re:The Oil industry does it daily

[doubledown00]

OP didn't say manipulated. It said "price fixed". Big difference there.

The bond market of which you speak (and the financial markets in general) can be gamed by conglomerates of individual entities. However the prime difference here is that these combinations affect the *secondary market* and are *not* related to the companies that float the bonds. That is, the company that floated the bond does not benefit directly from any support the security receives in the secondary market.

E-books on the other hand are different. The publishers attempted to directly price fix what was charged for their product at the point of primary sale. This of course resulted in additional profits directly into their pocket. It is a different scenario from securities.

Re:The Oil industry does it daily

[Anonymous Coward]

Yeah! Oil isn't price-fixed at all. Well, barring the fact that most oil is produced by a cartel of companies whose sole existence is to fix prices and ensure a rapaciously profitable market!

Re:The Oil industry does it daily

[Anonymous Coward]

You answered the question already: OPEC can do whatever they want, and OPEC currently produces ~40% of the world's oil. That means, effectively, they set the price. The OP didn't specify countries in the US were colluding to set prices. They don't have to: all they have to do is set it to whatever OPEC does (natural market trading dictates they should anyways), and it produces the same result.

Re:The Oil industry does it daily

[HornWumpus]

You might want to look at how Treasuries and the Federal Reserve are working these days. There is _no_ market on T-bonds. The rate is set by the Fed and the government. Many bonds are prices at federal funds rate + x%.

Re:The Oil industry does it daily

[HornWumpus]

OPEC has the same problem as all cartels, cheating (producing more then their allotments, overestimating reserves to get a bigger % of production etc etc).

Re:The Oil industry does it daily

[Anonymous Coward]

Ask Apple about price fixing books.

Re:The Oil industry does it daily

[gutnor]

They did it by agreeing the level of production each OPEC member was allowed to produce. Most visible they caused the oil crisis, see http://en.wikipedia.org/wiki/1973_oil_crisis and others later.

Over the time, after the various oil crisis, western governments started to find other OPEC free source of oil, so OPEC influence started to decrease somewhat. Since 2004-ish, the influence of OPEC is greatly reduced. We are at peak capacity and not producing enough oil, so the relationship between controlling the oil taps and price / influence is a lot more subtle than before.

promoting piracy

[Anonymous Coward]

Is it just me or is everyone doing mental calculations of how many books I should pirate to get my money back?

grow some balls

[slashmydots]

If I was Amazon, I wouldn't have caved. If any of my vendors up the price even a penny above what I think, I go to their competition and they're dead to me. Systemax (aka Tiger Direct and Infotel) gave me 5% off at my volume so gooooodbye Newegg. They aren't seeing my $50,000 in inventory and custom build purchases anymore.

If it's a vendor that ups the price, same deal, in that I just don't carry them. For example, OCZ Vertex 4 SSDs. They were $80-100 all the time. Then suddenly their press release says they're done "being competitive" and guess what, I ordered zero after that when they hit $140-150. Now I sell Samsung 840's and Kingston Hyper X 3K's.
I think Amazon should have done the same. None of this "oh but I like them and we want to do business with them and want money." You have to have an iron fist until the company gets a clue. OCZ is now on the verge of bankruptcy. Clue much? You would think, but no, same old prices.

Re:grow some balls

[_UnderTow_]

That's all well and good when you're selling things for which equivalents can be easily found. For books if you want (say) the newest Neal Stephenson book, and you don't like the publisher's prices you can't just say "Well screw them, I'm going to get Neal's new book from this other publishers".

Re:grow some balls

[Anonymous Coward]

Since when can I get the same book from 2 different publishers?

Re:grow some balls

[dadelbunts]

And anyone who doesnt want a Neal Stephenson book should be tarred and burned.

Re:grow some balls

[Anonymous Coward]

Its more like:

I don't like the publisher's prices so I can just say "Well screw them, I'm going to find Neal's new book on the internet somewhere".

Everyone has a price point where they will pay up or go around the purchase process.

( Ever noticed the mess outside pay toilets? )

Re:grow some balls

[PRMan]

Offtopic, but OCZ is on the verge of bankruptcy because they have become known as a company that puts 1% more speed over the reliability of your data. People have finally realized that 1% more speed doesn't matter, but data reliability is king when it comes to hard drives.

Re:grow some balls

[_UnderTow_]

Absolutely, but that's not really relevant to my comment or the one I replied to. He was saying that when computer parts manufacturers raise prices, he just buys his parts from someone else. And that works fine as longs as those parts are completely interchangeable (memory, hard drives, etc). But if you're selling ebooks, and you don't like Neal's publisher, then you simply can't sell his books unless you cave to their demands.

As Amazon said, the publishers have a monopoly on works by their authors.

Re:grow some balls

[Anonymous Coward]

As Amazon said, the publishers have a monopoly on works by their authors.

That's a disingenuously oversimplified view -- but what else would you expect from Amazon?

Publishers compete between themselves for authors, negotiating with authors' agents for contracted rights to reproduce the authors' work. Note that they do not buy the copyright, the legal construct which grants its owner a time-limited monopoly. Copyright ownership remains with the author.

Authors can even sign deals with multiple publishers at once -- usually the only thing publishers insist on is market exclusivity (e.g. publisher A might sign a contract for exclusive North American printing rights for the next 5 years, leaving the author free to sell European-market printing rights to Publisher B).

Marketwide exclusive printing and distribution rights don't equate to monopoly power. If one publisher is doing bad things (and non-optimal pricing strategy is a very bad thing from the author's perspective), that publisher will put themselves at a disadvantage when bidding for future books.

Amazon undrestands books, publishers only control.

[intermodal]

Amazon has made a fortune by understanding the marketplace. Publishers only care about controlling the works they release. I think often they forget that the reason people purchase books, and just assume they'll buy them. There's a reason I frequent used bookstores and only pick up ebooks for free or for a very, very low price. I like lending my books, I like selling my books if I don't like them, and I like not having to worry about whether my device is charged.

People know when they're getting ripped off. $15 to copy a file which can be sold an unlimited number of times by the publisher with no further cost or effort is ridiculous, especially when compared to the price of waiting for a physical paperback or a used copy.

Egon was only half right.

[doubledown00]

"Print is dead." But we pay market rates anyway.

Long live the all holy business model.

Re:Egon was only half right.

[Anonymous Coward]

That's fascinating. I read a lot myself. I think it's a wonderful way to spend my spare time. I also play raquetball. Do you have any hobbies?

I collect spores, molds and fungus.

(Ya think I've seen that movie a few times? haha)

Re:Amazon undrestands books, publishers only contr

[Anonymous Coward]

$15 to copy a file which can be sold an unlimited number of times by the publisher with no further cost or effort is ridiculous, especially when compared to the price of waiting for a physical paperback or a used copy.

I don't understand. Are you saying $15 for an instant copy of a file is ridiculously good compared to the time wasted waiting for a more expensive physical copy?

If not, could you perhaps rephrase that last part?

And this is why I do not do "E-Books"

[denis-The-menace]

PDF yes.

E-Books? too expensive and locked to a "reader". (Kobo, etc)

In 5 years, that "e-book" is a useless file.
My money is long gone and I can't sell it or even give away the "E-book".
Giving it away could be illegal (WTF!)

"Right to read" was a prophecy of doom but it's becoming reality.

Re:And this is why I do not do "E-Books"

[Ralph Spoilsport]

Do what I do - covert them to pdf or epub. There are lots of ways to do that.

Re:And this is why I do not do "E-Books"

[MrHanky]

Cracking the DRM and converting between epub and mobi is trivial. PDFs suck on e-readers, and tablets suck for reading.

Re:And this is why I do not do "E-Books"

[lister king of smeg]

calibre seemes to be able to convert them all fairly well to pdf though I perfer epub or .html.zip

Re:And this is why I do not do "E-Books"

[Anonymous Coward]

My nexus 7 is great for reading. I use Google books which lets me upload PDF or epub and view it in the online reader. That way the NSA can read along. But the text is really smooth and it adjusts brightness well.

Here, have a real article

[RyoShin]

The link in the summary is /. masturbation, so here's the Reuters article that it links to, no extra ad impressions needed. (wtf is "Slashdot Cloud"?)

Re:Here, have a real article

[Solandri]

Here's the DOJ site for the case and the DOJ court filing.

The court doc has a dramatic graphic which shows you exactly what happened to ebook prices while this was going on. All the colored lines are publishers who conspired with Apple to switch to agency pricing the first week of April 2010, except for Penguin (beige) who switched the end of May. The two grey lines are publishers who stuck with wholesale pricing (Random House and other non-majors).

More importantly...

[raehl]

You don't set your price based on what it costs you to make/provide something. You set your price to maximize profits.

So it doesn't matter that eBooks are cheaper to make/distribute than hard copies. What matters is whether people are willing to pay the same price for an eBook as they are for a hard copy. eBooks are arguably better than hard copy books, so it stands to reason people will pay at least as much, if not more, for them.

Now, in a free market, you would expect a competitor to enter the market at lower pricing - but books are copywritten, so it's not exactly a free market. Even then, the justice department is examining whether competitors in the market illegally colluded to force the agency model on eBook retailers.

Re:More importantly...

[Anonymous Coward]

cheaper to make/distribute than hard copies.

They are cheaper to "copy and distribute." They are not any cheaper to "write and edit."

I'll give you two guesses which pair above drives the vast majority of the book's price. Hint: it's not "copy and distribute."

Re:More importantly...

[NatasRevol]

You haven't operated a printing press & delivery system then.

Re:More importantly...

[spire3661]

And this is the ammunition needed to greatly change copyright. Americans firmly believe that there should be a relationship between cost and price. The longer digital media attempts to completely ignore cost when pricing, the stronger the argument to change copyright becomes.

Re:More importantly...

[BronsCon]

I'll grant you that, but you have to admit that they're not more expensive to write and edit either, since that work was done already for the paper edition. In fact, no, I won't grant you that, because that work was done already for the paper edition. If there was, at a minimum, price parity between the paperback and e-book editions, nobody would be complaining that the product that costs less to produce and distribute, while providing fewer benefits to the end user, costs more. Yes, they'd be complaining that the prices were the same, but they'd still be right.

Re:More importantly...

[swillden]

but books are copywritten

FYI, you mean "copyrighted".

Re:More importantly...

[Anonymous Coward]

Yeah, it surprises me how hard it is for Americans to get run-of-the-mill Capitalism. And what's Amazon whining about? You negotiate and you strike a deal.

The publishers may or may not be shooting themselves in the foot, but that's perfectly within their legal rights.

(I'm for abolishing the copyright altogether, but that's a whole other story.)

Re:More importantly...

[Anonymous Coward]

It would appear that being granted copyrights and patents requires some regulation. As long as there are copyrights and patents there can't be a free market. Therefore, the normal effects of the free market are skewed and regulation becomes essential. Since government sponsored monopolies skew the market it makes sense that other monopolies would as well.

Without copyrights and patents, monopolies could still form over control of resources. If that's the case then it would appear that property rights skew the free market too. Hmmm, free markets depend on property rights. It would seem that free markets are an abstract idea that logically can't exist.

Re:More importantly...

[similar_name]

Explain why The Grapes of Wrath is $9.99 for the Kindle.

Re:More importantly...

[Austerity Empowers]

Because students, particularly in california, are required to read it for school, and thus the price of an otherwise uninteresting book by an overrated author is inflated to hold some kids hostage.

Re:More importantly...

[travbrad]

They may set their price to maximize profits, but in some cases I'm not sure that is actually what they are achieving. By making a product cheaper you will also generally sell more of that product (whether it makes up for the lower prices depends on a lot of factors). Just look at PC game download services like Steam (or ironically Amazon). They have regular prices most of the time, but have occasional sales to attract buyers who wouldn't have otherwise bought the games. For example I recently picked up Dark Souls for $7.50, a game I would have never tried at it's full price. $7.50 is a lot more than $0.00

Re:More importantly...

[Anonymous Coward]

Sadly, public schools are responsible for the rampant aliteracy you see so much of these days ("They're are to many book's in school!") because of just that. A kid who is forced to read stories that he finds mind-numbingly boring is going to hate reading. Schools should be trying to instill a love of reading and learning but do the exact opposite.

Twain said it a hundred years ago - a person who does not read has no advantage over a person who can not read.

BTW, "aliterate" wasn't a misspelling. An aliterate can read, but doesn't.

Re:More importantly...

[minstrelmike]

cheaper to make/distribute than hard copies.

They are cheaper to "copy and distribute." They are not any cheaper to "write and edit."

I'll give you two guesses which pair above drives the vast majority of the book's price. Hint: it's not "copy and distribute."

It is exactly the same issue in restaurants. You are paying for the food, but the preparation and serving and cleanup is what costs money. Food is the cheapest cost in a restaurant. Printing is a standard same-cost operation now. Editing and marketing are not.

Re:More importantly...

[Quirkz]

I'm starting a movement to have it changed to "copywrought" because I think it sounds nicer.

Re:More importantly...

[Anonymous Coward]

And you have?

I haven't either, but I've paid attention to insiders who've written about the topic. The costs of printing and shipping are a tiny fraction of the total retail price of a paper book, either hardcover or paperback. It's in the range of 10%.

Re:More importantly...

[Anonymous Coward]

The publishers may or may not be shooting themselves in the foot, but that's perfectly within their legal rights.

It's not within their legal rights. That's the point. The existing copyright system in US law violates a number of fundamental rights arising under the 9th Amendment. For example, a right to ethical government is violated by this system, as the seemingly endless extensions to the period of copyright were paid for by what a reasonable person would have to consider bribes. Also, the excessive complexity of the system violates the 9th Amendment right to ethical legal practice, which requires that laws affecting the public be clear, simple, few in number, and straightforward. Similarly, a right to not be subject to monopoly for more than a few years could readily be asserted under the 9th Amendment as a consequence of a number of other rights that can reasonably be asserted under that Amendment.

These issues have been discussed numerous times on Slashdot, and the problems with US "intellectual property" law are well understood. Further, many good ideas for fixing things have been floated. Good luck in getting the corrupt incumbents (and by that I most definitely include the judges as well as the legislators) to change anything.

US copyright law (and, for that matter, a large portion of the current legal system) represents exactly the kind of stupid, short-sided, corrupt, and greedy manipulation of government and the legal system that the 13 Colonies rebelled against England to get away from.

James Madison was wise enough to make the Bill of Rights open-ended to allow such nonsense to be blocked, which is why we have rights "retained by the people" and "reserved to the people".

Hence, it is appropriate to view the existing US copyright system as an illegal body of law (much like the so-called "separate-but-equal" laws of the South were in fact illegal laws). By using this illegal system to abuse people, the publishers are actively and knowingly participating in a massive violation of other people's rights. The publishers don't look all that different from the German industries that supported the Nazi party pre-WW2, all in the noble name of capitalism.

What the legal professionals involved in supporting this system are doing is even worse, from a moral and ethical perspective, than what the publishers are doing.

This is not to say that the work of a creative person should be free, but such people can be protected by a reasonable system, one that doesn't result from corruption, doesn't create artificial business for the legal profession, and doesn't routinely stomp on everybody else's rights in the holy name of greed on the part of middle-men and third parties not actually doing the creative work.

Unfortunately, as long as these businesses can make large political donations, the current abuses are likely to continue. It took many years to destroy the evil of slavery, then it took many more years to destroy the "separate-but-not-actually-equal" system. It will likely take just as many years to fix the current problems.

Re:More importantly...

[NatasRevol]

Yes, actually. Worked at a the printing headquarters of a group of newspapers.

Printing is a HUGE cost because the initial investment for that scale is HUGE. Probably not factored into your costs.

Re:More importantly...

[Anonymous Coward]

From what I've read, there is a lot of formatting writers that self e-publish have to put into each format they support to make it look right, much like you would do in paper printing. So just because the "writing and editing" of the text is complete doesn't mean all the rest of the work is clicking upload.

Lose, Lose

[Logger]

When Amazon says that they'd like to sell some books below wholesale, and claims that the agency model prevents that, they are lying their asses off. They could easily get around that restriction. The simplest way being by offering an account credit on certain books. The problem with that approach from Amazon's perspective is that it would reveal how large the subsidy is. Doesn't matter to the consumer, but it is competitive information they wouldn't want public.

On the other hand, if the agency model prevents Amazon from negotiating a different wholesale price than Apple pays, then that is collusion. I'm not sure it rises to the level of needing a government crackdown, but it is slimy none the less.

And the flip side of this is that Amazon of course would be happy to subsidize book sales and Kindles to drive people to the Amazon store to buy other things. Which in turn could have the anti-competitive effect of making tablets from Apple, Samsung, and others over priced by comparison and push them out of the market.

It doesn't matter which way the courts rule on this one, the consumer loses.

Re:Lose, Lose

[countach]

The agency model for Apple doesn't prevent Amazon from negotiating a different wholesale price to Apple. It's just that once they've done so, if they choose to sell it at a lower markup to Apple, Apple can effectively go back to the publisher and get a further discount. It's not collusion unless Apple and Amazon lock themselves in a room and work all this out.

Re:Lose, Lose

[Anonymous Coward]

The collusion is between the publishers and apple. and it definitely IS collusion. apple automatically gets the rights to the reduced price if amazon try to undercut them, thus removing market competition based on price as Apple are assured of always receiving the best price while still maintaining margin. This is bad for consumers and really really bad for any business that wants to compete on price.

Re:Lose, Lose

[michelcolman]

So any store that advertises "guaranteed lowest price" and offers to lower its price if you can find the same product cheaper elsewhere, is colluding to increase prices?

Wait MONOPOLY what?

[Anonymous Coward]

> Macmillan has a monopoly over their own titles

That's not a monopoly. Wait, I guess Disney has a monopoly on a single Mickey Mouse statue, amirite? Amazon scumbag lawyers.

Not to defend Apple, but...

[webdog314]

Amazon's model isn't much better. They make their money by setting the price for a best-seller high, and everything else ridiculously low. And this seems reasonable to a "supply and demand" society, but there's an endless supply of ebooks. More over, that means that authors aren't going to make enough money to keep writing unless they happen to have a best-seller - and the market ends up flooded with garbage like Twilight and 50 Shades of Grey. It's a CostCo mentality. The consumer doesn't know any better, and hey, they're getting most of their books for 99 cents! Seems great from their perspective. But that model kills publishing in general. Anyone who thinks the only cost to publishing a book is the time it takes to write it, has never published a book. Even for a bare-bones self-published ebook, you need at the very least an editor. For anything serious, or that crosses over into the print world, then you need a cover artist, a designer, marketing, and probably someone who knows how to bring it all together... they call those people publishers.

Have you seen the absolute garbage that gets "self published" on Amazon? The ability to put a book out there on Amazon's site *for free*, is perhaps the biggest danger to the publishing industry ever. There are thousands upon thousands of "books" that are nothing more than $.99 scams. Some are literally garbage text or word for word rip off's of someone else's work with a new title. They might only get a few suckers, but they do this *thousands* of times over.

Re:Not to defend Apple, but...

[ducomputergeek]

And it also opens up opportunity. I have one friend who elected to do Amazon self-publishing. Ended up on Good Reads and got some glowing reviews, about 30 last I checked, and has sold 6k of his first book. He just released his second book and a collection of short stories and talking with him over memorial day he's made about $16k so far this year. Much better than the $5,000 advance the publisher offered and he would have had to do his own marketing anyway. That doesn't sound like much, but his wife makes $30k a year and he makes around $50k. An extra $16k with two young kids makes a difference.

Re:Not to defend Apple, but...

[webdog314]

Certainly it can be done, and frankly, I think the publishing industry in general must change the way it does things or it's dead in the water. But most of publishing is about getting seen by the right people. You can do that as an author if you have the time (it takes gobs!), and most publishing firms do a crappy job of this anyway. Just like Amazon, they are going to put their real money and time on the books that they know will sell. If you're a first time author (or even mostly unknown) then you get a minimal effort. My wife literally sold more copies of her first book than the publisher did.

Amazon provides a place to be seen, but unless you're somehow able to get the right eyes to read you, you are just a very small fish in vast ocean of other small fish. What sucks is that so many of those other small fish are just bait.

Re:Not to defend Apple, but...

[Anonymous Coward]

and the market ends up flooded with garbage like Twilight and 50 Shades of Grey. It's a CostCo mentality. The consumer doesn't know any better, and hey, they're getting most of their books for 99 cents!

Twilight is many things, but available for $.99 it is not. The eBooks are about the price of the mass market paperback. Twilight is not a product of eBook pricing. Twilight is old school publisher pricing. It may be garbage (although I kind of liked the first book), but it's not a result of cheapest price. Meyer makes just as much money off it as much better writers make off theirs.

Re:Not to defend Apple, but...

[Anonymous Coward]

Have you seen the absolute garbage that gets "self published" on Amazon? The ability to put a book out there on Amazon's site *for free*, is perhaps the biggest danger to the publishing industry ever. There are thousands upon thousands of "books" that are nothing more than $.99 scams. Some are literally garbage text or word for word rip off's of someone else's work with a new title. They might only get a few suckers, but they do this *thousands* of times over.

This.

If nothing else, publishers are a quality control filter on the market. When you pay money for a book publishing by a real publishing house, there's a reasonably high probability that the book will not be full of typos, bad grammar, crappy or plagiarized ideas, etc. The system isn't perfect and some garbage does get through--usually coming from the smaller publishing houses--but there's at least some assurance the book meets good production values. You might not like the story or the writing style, but that's another problem

Amazon self-publishing, OTOH, is turning into a vast sea of poorly written, unedited garbage. And Jeff Bezos expects you to pay for the privilege of wading through the cesspool to pick out the few gems while he pockets 30% of every sale.

Re:Not to defend Apple, but...

[minstrelmike]

sorry but you applied the concept of "supply and demand" to two different things.

There is the supply and demand of actual books, whether paper or electronic.
However, books are entertainment and in the entertainment biz, the big demand is for a supply of "newness."
We pay more for brand-new titles than for stuff that's not quite so new anymore.

They're Hurting Themselves

[Philotomy]

The relatively high price of many e-books drastically reduces the number of e-book purchases I make. I'd be much more inclined to purchase more e-books if they were more reasonable (especially since what you're purchasing is usually more like a license to read it, rather than owning a permanent copy of the work). One side-effect is that I've purchased more self-published or small-publisher e-books than I would have otherwise.

Because they have a monopoly.

[Anonymous Coward]

No, sales are down, "piracy" up and the reason? Because it doesn't work. Because most people DO NOT buy into it.

But they have a monopoly and you will not get their titles except through them at the price they set.
Or you don't buy.
Or you avoid the legal route and just take it.

These are the only choices they have given you.

Re:Amazon undrestands books, publishers only contr

[Anonymous Coward]

Amazon has made a fortune by understanding the marketplace.

Considering their huge revenue, not really. Barely $5 billion since 2003. And last year they lost $39 million, while having a revenue of over $61 billion. They may understand the marketplace, but not making money.

Pricing is based on utility as well as cost

[MattW]

Pricing can be based on utility, rather than cost; see http://en.wikipedia.org/wiki/Utility. I completely agree with you in principle, but I've found I am now just buying ebooks, even when I could get a paper copy for less, because:

- I get it instantly
- I tote my entire library around on a device that weighs 11 ounces
- I can read on multiple devices and it syncs my position automatically

And I recently gave >1000 books to the library when moving, so I know that despite my fears that Kindle as a platform might die, I'm not necessarily keeping all my books forever. (Although since my daughter is 11 and I'm now giving her books I bought when I was a kid... there is definitely some merit to it. If anything, this is the one thing that keeps me occasionally buying paper books; the loaning and hand-me-down factor.)

I'll be honest - I hate myself a little for capitulating, because on principle I completely agree with you. But I also drop $6 on triple lattes frequently and I just feel too busy to feel any rage over a few bucks here or there. I applaud everyone who goes for the cheaper option even if they'd prefer the e-book at that price.

The equivalent crap happens in movies as you point out. HD movies on iTunes being $15 instead of $10, or $20 instead of $15, say, seems fairly absurd, since the difference is perhaps $.02 of bandwidth. TV shows even more crazy, being $3 instead of $2.

The reality is, publishing is a completely shitty business. Macmillan's parent company (a publishing conglomerate) made a whopping 6.7% on 2.1B Euros in 2005 (BEFORE taxes). (2010 they were up to 2.25B euros)

That's not exactly rolling in the dough.

Copyright isn't capitalism.

[Anonymous Coward]

Copyright is the opposite of the free market of "run-of-the-mill Capitalism". And what are you whining about? Someone complaining about the one-sided contract being unfair?

THAT'S WHAT YOU'RE SUPPOSED TO DO.

If you can't negotiate a contract, it isn't a contract. "take it or leave it" is not a "meeting of minds".

the entire market is inflated and rigged

[Anonymous Coward]

For centuries we had Libraries where people didn't have to buy books. This was because books were had printed and insanely expensive.
Then the printing press and modern book binding was invented and books became distributable.
Then cheap high volume printing happened and books became... cheap.
Anyone could own one. Woah! Now instead of selling to the wealthy, Universties and Libraries you can sell to ANYONE.
And people will PAY good money for them. Then in the 60's and 70's and something started to happen. Printing and publishing got cheaper and cheaper and distribution started getting wider and wider and people started thinking that new books are better than old books ( in Fiction anyway )
Why go to the library when you can buy your own? It's a New York Times Best Seller! ( which translates somehow to "it's good" )
Then in the 80's and 90's publishers realized that you have to sustain the image of a book being valuable and even rare... you start seeing $30 and even $40 hardbacks with $10 paperbacks. All the while, the actual cost to produce the books gets less and less.

Now the cost of creating an ebook and distributing is is next to nothing... there's an initial infrastructre investment necessary, but it does even remotely approach the cost of packing and shipping physical books.

So the publishers are riding out the fact that you *think* books should cost more money because that's what books cost. You pass up that $5 Bluray of Terminator 2 at Bestbuy, but you'll buy any number of $9 Kindle titles. Because... you know.... books are expensive.

Re:the entire market is inflated and rigged

[itsdapead]

You pass up that $5 Bluray of Terminator 2 at Bestbuy, but you'll buy any number of $9 Kindle titles. Because... you know.... books are expensive.

Or maybe because you've already seen Terminator 2 once at the cinema and several more times on TV or video, and pretty much know all the words. If it were a recently released film, it would be much more than $5 on Blu-ray and that would be after they'd had a cinema release at $10 seat (with advertising and overpriced snacks paying the theatre's rent), then they'd have more bites at the cherry with pay TV, streaming and network TV.

...and that's for something that will keep you amused for two hours, while a $9 book will provide bedtime reading for a whole week.

Meanwhile - Amazon are accusing of Apple of anti-competetive behaviour because Apple's deal with publishers interfered with their right to put competitors out of business by dumping popular books on the market below cost. Wuh?

Amazon Strong-armed?

[Anonymous Coward]

I have a hard time believe amazon was being strong-armed by anyone, let alone book publishers.

I work for magazine publisher (top 25 on amazon's digital editions) and we are constantly being push around by amazon and have very little say in how our magazine is presented, reported, priced, etc.

Re:Amazon Strong-armed?

[viperidaenz]

I would say Macmillan is a little bit larger than your magazine publisher.
They're 170 years old, have offices in 41 countries and in 2010 their parent company had revenue over 2.2 billion euros. 10% of that was digital media.

Ebook's main advantage is price

[Anonymous Coward]

eBooks are arguably better than hard copy books

There are 3 advantages for Ebooks over paperback
1. Size (no extra weight 2 carry), so can carry a whole library.
2. Searchable (not very useful for novels, somewhat useful for textbook, very useful for reference)
3. PRICE. ---- The main advantage.

The downsides?
1. Usually lower res
2. Requires power to run
3. Book reader easier to damage
4. Can't resell
5. DRM restrictions limit where you can read
6. Arguably harder to read in bed falling asleep

You also compete with "free" Ebooks which cost nothing more than a tiny chunk of bandwidth and usually a small amount of room on your device. There is almost no such thing as a free paperback. Very cheap yes, but free physical books are much rarer than free Ebooks.

So like the rest of the media "industry" these middle men are greedy jokers.

Re:Ebook's main advantage is price

[haystor]

More advantages for ebooks:
4. Instant delivery
5. Reading form factor - ebook lies flat on its own, resize text, no curve to the page, etc...
6. Updates

Burn the Books :-)

[Anonymous Coward]

I read more ,purchase more ebooks then i ever did paper books. I love Amazon that they have lots of great books from Idie authors that might have never seen light of day otherwise. I feel that if the big publishers cannot keep up there will just be less of them. I am just not going to purchase a ebook for 14.99.

First Sale?

[viperidaenz]

What happened to that old thing?
The publisher sells to Amazon and should have absolutely no say in the price Amazon then charges when they resell it. It's not the publishers concern as to how much profit/loss Amazon make. Anything otherwise is pretty much the definition of price fixing.

Re:First Sale?

[rahvin112]

That's exactly what Apple wanted to kill. Amazon was willing to sell eBooks with 5% profit margin because it cost them nearly nothing to sell them. Apple wanted 30% and they saw an opportunity to raise the prices and get more profit for Apple and the publishers. The 5 Publishers that have settled with the government all had record profits after they colluded with Apple to fix prices.

The funny thing is this is ALL in the emails, the intent to raise prices marketwide. The intent to limit competition so Apple could gain marketshare without price competition. The intent to raise prices more than the 30% margin so the publishers could rake in even more money than they do on paper books. It's all there, the government has all the evidence and that's the reason the Publishers all settled after denying they would. The publishers lawyers took one look at all the information the government has and told the publisher to settle or they would get killed in court.

Price fixing is illegal and if the government has the evidence to prove it you will get nailed. The reason you see so few prosecutions is the government rarely has good documentation, the collusion is often done orally behind closed doors with no notes or records of the conversation. Job's probably believed he had enough chutzpah to avoid a prosecution or he believed he was above the law. He was an egotistical asshole that didn't give a rats ass about ordinary people.

Re:First Sale?

[Anonymous Coward]

I hate to break up a good rant, but have you been following the actual trial? The government's case is falling apart. In fact, one Amazon exec just admitted on the stand that after the publishers signed on with Apple and Amazon decided to adopt its own agency model, it asked for the exact same terms that Apple was getting from the publishers.

The *exact* same terms. Same Most Favored Nation clause. Same 30% cut. Same everything. The exec refused to answer direct questions about the meeting with Jeff Bezos where the decision was made that Amazon would switch to an agency model. And the Apple lawyer put up a graph showing that the number of publishers engaged in e-book publishing *tripled* after Apple entered the market offering more favorable terms than Amazon's. Gee, how could a cabal conspiring to fix prices result in the number of producers outside the "cabal" tripling?

This is looking more and more not like Apple and the publishers colluded but like Apple and the publishers were engaged in monopoly-busting against a thuggish company that was talking about "declarations of war" and whatnot.

Re:First Sale?

[michelcolman]

I understand what Apple wanted to do, a 30% profit margin on books is certainly a great deal, but why did the publishers care about Amazon's 5% profit margin? Why would they rather have 70% of $10 instead of getting $7 from Amazon and letting Amazon sell those books for whatever price they wanted? OMG Amazon bought my book for $7 and then sold it for $3, the bastards! How dare they lose money on my book! They're selling them by the thousands and giving me $7 for each one!

Of course, once the contract with Apple was in place, with the Most Favorite Nation clause in it, that provided a very strong incentive for publishers to force Amazon to change their model, making loss-making sales impossible. But I still don't see what the publishers initially had to gain by signing with Apple. Want more money for your book? Just increase the wholesale price! Who cares what Amazon sells it for afterwards?

Re:First Sale?

[Anonymous Coward]

Publishers afraid of amazon developing a monopoly on book sales both physical and electronic. Look at the fortunes of brick and mortar bookstores these days.

(It's also interesting that predatory pricing on amazon's part is also illegal although rarely prosecuted. )

Re:First Sale?

[michelcolman]

So Apple was helping booksellers keep Amazon from getting a monopoly, and this is considered collusion? I'm starting to understand why Apple is fighting this rather than settling.

Re:First Sale?

[Anonymous Coward]

I understand what Apple wanted to do, a 30% profit margin on books is certainly a great deal, but why did the publishers care about Amazon's 5% profit margin? Why would they rather have 70% of $10 instead of getting $7 from Amazon and letting Amazon sell those books for whatever price they wanted? OMG Amazon bought my book for $7 and then sold it for $3, the bastards! How dare they lose money on my book! They're selling them by the thousands and giving me $7 for each one!

Because they, unlike you, weren't willing to ignore the future. They saw the writing on the wall -- once Amazon succeeded in its bid to monopolize ebook sales to consumers, Amazon would be coming for them. They'd already seen Amazon do so on the physical-book side of the market. (Once Amazon got big enough, it started demanding extremely deep price discounts, particularly on the bestsellers which make up a high percentage of the profits in the industry. They were responsible for such a large percentage of physical-book sales that threatening to not carry any given book was basically threatening to tank its sales, so the publishers had no choice but to capitulate. This also helped Amazon crush brick & mortar bookstores, which didn't have enough leverage to demand high discounts.)

Of course, once the contract with Apple was in place, with the Most Favorite Nation clause in it, that provided a very strong incentive for publishers to force Amazon to change their model, making loss-making sales impossible. But I still don't see what the publishers initially had to gain by signing with Apple. Want more money for your book? Just increase the wholesale price! Who cares what Amazon sells it for afterwards?

Well, you see, by the time Apple came in the picture, the worries about Amazon exploiting its monopoly position were no longer all that theoretical. Amazon was already pushing revenue splits similar to 70/30 -- in Amazon's favor. So duh, it's not a surprise that publishers leapt at the chance to reverse that split.

The point of would-be monopolists using dumping practices (selling at a loss) to take market share isn't to keep bleeding money forever. It's to set themselves up to extract monopoly profits in the future.

Re:Amazon undrestands books, publishers only contr

[neonmonk]

Gotta spend money to make money.

WTF flippity fuck

[Anonymous Coward]

"McMillian has a monopoly over their own titles."

Yeah, that's how copyright works, that is in fact the entire purpose of copyright. Exercising your perfectly legal rights isn't "strongarming", hell what Amazon is doing, trying to force publishers into a business model it wants is strongarming. Having too much clout, so as to be able to refuse a copyright owners demands is what's wrong here, that's called a monopoly and any halfway intelligent economist would call for it to be broken up.

Now if there was provable COLLUSION, between the various publishers, THEN that's illegal. But the email alone, between Murdoch and Jobs, does not prove anything. In fact, if they just went in and offered a better deal for a big market (i-books) to the publisher than they were giving Amazon, then that's perfectly legal and all well and good. So the entire thing hinges on provable collusion and conspiracy, or at least should. No accounting for what the US government feels like doing or thinks should and shouldn't be punishable at the moment.

Re:Amazon undrestands books, publishers only contr

[Stuarticus]

That's my fucking time, maybe I like going to the shop and browsing books. Are you saying they deserve to be paid extra for giving me the "luxury" of sitting on my arse all day? It's a cheaper product. You're clearly the same bullshit AC that's all over this thread shilling for someone. At least have the balls to give yourself a pretend name so we can properly respond to you instead of jumping in telling everyone they're lazy or greedy for thinking (rightly) they are getting screwed on ebook prices!

Dissatisfied

[Anonymous Coward]

I will only buy an e-book if it's in DRM-free cbr/cbz or pdf format. The prices for the things in the article are too high.

I'm actually grateful to Apple for Agency

[ottdmk]

Don't get me wrong... Agency has downsides. Lots of them. It's tremendously annoying that there are no sales on Agency books. Kobo (my preferred store) gives out lots of discount codes, but they're of limited use because they don't apply to Agency books. And those publishers that choose to price their ebooks above the paperback price are extremely frustrating (although a few of them seem to be getting a clue. Tor, for example, prices Robert Jordan's Wheel of Time books at a decent discount from paperback. DRM free too.)

But without Agency, it's entirely possible we'd be living in a Kindle-only world.

Amazon was using ebooks as loss-leaders to sell Kindles. $9.99 for the latest bestseller. The publishers hated it because it cannibalized their hardcover sales. But the danger went a lot further then that.

One of the boards I read (I think it might be mobileread.com) introduced me to the concept of a monopsony. Call it the flip side to a monopoly. There existed a very real possibility that Amazon would become the only practical retailer for ebooks, thanks to their willingness to take a loss to build market share (and the deep pockets to enable taking that loss.)

I much prefer the current, varied ecosystem in ebook retailing. I like owning a Kobo Touch, which lets me read ebooks from anybody selling epubs (as long as they don't use customized DRM, but hey, it's a pain getting Barnes & Noble to sell to a Canadian anyways, so who cares.) Amazon wouldn't work nearly as well for me. Canada is an afterthought market for Amazon.

The trial is proving interesting. CNN/Fortune has really good coverage on their Apple blog.

Simple really....

[Anonymous Coward]

When your five co-conspirators settle, your guilty!!!!!

Their is a better way!

[Xzing_Quippo]

Go to the fucking library! Its a resource you're already paying for and nowadays they have other perks too.

That's rich

[thetoadwarrior]

This coming from the company trying to monopolise e-books so they can strong-arm publishers.