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Amazon's eBook Math
An anonymous reader writes: Amazon has waged a constant battle with publishers over the price of ebooks. They've now publicly laid out their argument and the business math behind it. "We've quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000." They argue that capping most ebooks at $9.99 would be better for everyone, with the money split out 35% to the author, 35% to the publisher, and 30% to Amazon.
Author John Scalzi says Amazon's reasoning and assumptions are a bit suspect. He disagrees that "books are interchangeable units of entertainment, each equally as salable as the next, and that pricing is the only thing consumers react to." Scalzi also points out that Amazon asserts itself as the only revenue stream for authors, which is not remotely true. "Amazon's assumptions don't include, for example, that publishers and authors might have a legitimate reason for not wanting the gulf between eBook and physical hardcover pricing to be so large that brick and mortar retailers suffer, narrowing the number of venues into which books can sell. Killing off Amazon's competitors is good for Amazon; there's rather less of an argument that it's good for anyone else."
Author John Scalzi says Amazon's reasoning and assumptions are a bit suspect. He disagrees that "books are interchangeable units of entertainment, each equally as salable as the next, and that pricing is the only thing consumers react to." Scalzi also points out that Amazon asserts itself as the only revenue stream for authors, which is not remotely true. "Amazon's assumptions don't include, for example, that publishers and authors might have a legitimate reason for not wanting the gulf between eBook and physical hardcover pricing to be so large that brick and mortar retailers suffer, narrowing the number of venues into which books can sell. Killing off Amazon's competitors is good for Amazon; there's rather less of an argument that it's good for anyone else."
While I feel your argument was probably not thought through well enough, I believe there is merit to it.
Here in Norway, we tend to suffer a great deal as consumers because of the publisher/distributor relationship. The pricing model of books is highly predatory and the book rights for Norwegian translations also allow the local publisher to own the rights to the original language within the country. This drives prices on the original language and the translation through the roof since the cost of translating is so high that unless it's a #1 best seller, all the profit has to be made on a few hundred... possibly thousand copies. What is worse is that Norway has a higher English literacy level than either the U.S. or the U.K. We don't need these translations. They are translating them for no apparent reason... and worse... as the availability of English books through Amazon or others increases, the Norwegian translation market shrinks and the quality of the translations shrink too.
Another major issue which I have is... I am willing to pay large amounts for Print-on-Demand if I need a paper book. In fact, I try to avoid purchasing books which were mass printed only to look good enough on display cases to attract sales.... then when the book cools down, they'll throw them away and recycle them. This practice is so fantastically stupid that I can't even imagine that the people who want to make this continue can even tie their shoe laces. I don't feel any personal need to help the printing business by printing documents which just don't need to be printed. Books should never be printed like that anymore. We have eBooks. I don't actually know anyone who prefers paper anymore... including wrinkle monsters.
I don't care what the eBooks cost, but here's a simple rule.... I under no circumstance am willing to pay for the printing of a book in my eBooks. Meaning if I assume the printing cost of one book to be $1 and that the idiot publisher is probably printing three copies of the book for each one he sells... so let's be fair (toss him a cookie) and say to cover his costs, he needs to pay $2.50 for the cost of printing. Then the eBook should never cost more than $2.50 less than what the printed book would cost on the shelf of a brick and mortar store which will discount the book immediately. So if the MSRP is $20, a store would discount that book 10-25% which is why we have MSRP (feels great to save that 25% right?), so $15... now, subtract $2.50 to cover printing costs... that's $12.50.
I'm willing to pay $12.50 for the eBook which is MSRP of $20.
You know what? I'm willing to pay $20 for the paper copy if it's printed on demand instead of just killing the planet for fun. Of course, I'm not going to demand that paper copy unless I need it for reference.