Cui Bono? The Kindle
John Scalzi makes a clear case that Amazon’s determination to subsidize the Kindle is coming at the expense of Authors’s and their Publishers:
This asinine jockeying over electronic book prices has very little to do with what’s actually good or useful for anyone other than the manufacturer of a piece of hardware… who also happens to be a book retailer.
Since this model is the same one as is used by cell phone providers, we come back to Stan Collender’s question of two weeks ago:
That begs an interesting question about my existing phone and contract: Since my existing phone was paid for over the past 24 months, why doesn’t my current Verizon bill fall by the monthly amount that was priced in to my payment 2 years ago? Isn’t that a rip-off as well?
Yes. It’s called monopoly profits.
UPDATE: Charlie Stross correctly piles on:
Amazon.com can kiss my ass. Shorter version: they’re engaging in monopolistic practices that damn well ought to be illegal, in an attempt to use their near-monopoly position to fuck over authors and bring publishers to heel.
Which is more concise than what I said below. That’s why he gets, and earns, the Big Bucks (well, Quintessential Quid, in his case).
UPDATE 2: Via Felix’s Twitter feed, Marion Maneker at The Big Money corrects Henry Blodgett:
Books are, within reasonable limits, demand-inelastic. Just as movies are. Demand comes from the quality or popularity of the book, not the price. We know this because the great transformation of the book business over the last two decades has been to shift readers from mass-market paperbacks to hardcovers sold at discounted but still higher prices. Readers have been paying more for James Patterson and Dan Brown, not waiting for the cheaper mass market paperbacks.
Consumers trade money for time. And publishers should have the freedom to set their prices at what the market will bear, not what suits Amazon’s–or Apple’s–needs.
The pricing pressure in books comes not from customer demand but from retailers fighting over market share. That’s what Barnes & Noble (BKS) did to independent bookstores and Costco did to Barnes & Noble. Now Amazon’s doing it Costco with the Kindle.
Via Patrick, of course.
Monopolies are bad in capitalism. and oligopoly in the news leads http://newsaffair.org/?p=670 and even the referral to it as news and its legitimization in our media.
Its not as bad when its cell phone companies or kindles, the connection is just more apparent.
Now with the added devices, you will see a wider range of e-book pricing. Apple is already allowing a higher price point than Amazon, specifically to attract more books – because publishers/authors will be able to earn more. Also the whole e-book model is still young, and just like emusic will evolve (emusic pricing is still evolving).
I have not seen much info, but what happens if authors begin to bypass publishers with e-books? Is Amazon the monopolist, or are the publishers conspiring on pricing?
The textbook area will be interesting, how much discount, and will students be able to trade in their e-books for money?
Just found this Amazon is allowing authors to bypass for a bigger cut:
I think Amazon is finding itself well and truly screwed with the release of the iPad. Amazon is betting that people will continue to buy content for a device that is essentially limited to the single task of rendering novels.
I don’t care how easy the i-ink is on your eyes or how the 16 shades of grey available makes for perfect gray-shade effect, people are not going to want to read National Geographic in black and white. Or people magazine, or any given Dr. Seuss book. And it would be literally impossible to use a black and white Kindle to read a huge share of academic textbooks and journals, who exactly wants to browse through a black and white Astronomy or Biology text.
Apple’s e-book application may not kill the Kindle for easy of reading right out of the box, but the ability to display color illustrations, maps and charts leaves the Kindle in the dust from day one. To say nothing of all the other functionality built into the iPad. The gray-scale Kindle DX retails for $486 at Amazon. Who exactly is not going to pay $9 bucks more and get GPS, a full color media player, a built in MP3 player which also works as a game machine.
Two weeks ago all the informed opinion has iPads starting at $800 which gave Kindle some room to breath, after all a combo of a lower end Kindle an an iPod Nano could be had for $400 and a Kindle DX plus a 16 GB iPod for maybe $600. But slipping a $500 color iPad into the mix is a game changer.
So all of this furor over book pricing and monopolistic practices may just be a tempest in a tea-pot once the iPads start shipping in March, certainly my desire for a Kindle and its closed in vender model is dead, dead, dead.
Contrary to popular belief, the primary source of Amazon’s profits in this mess is selling books, not hardware. We see this in Amazon’s willingness to provide free software to read its ebooks on as many other platforms as possible. Amazon’s competitive edge will be a combination of prices and delivery, if they can maintain that edge.
While Amazon’s negotiating action of temporarily pulling McMillan’s (sp?) product from its catalog understandably upsets authors and others who may suffer collateral damage from the conflict, this effectively is no different than a labor union going on strike, with large third party injuries as the union attempts to give up short term economic losses in return for larger long term economic gains.
I’d like to have an iPad. Still, the four-year cost of ownership of an iPad with data plan would equal or exceed that of a 6″ Kindle 2 and a refurbished MacBook Air. Besides, I already have a Kindle 2, which fits nicely into a Ziplock bag for reading in the tub. 🙂
The pricing issue shows the whole problem of how to price a good with essentially zero variable cost. An e-book is essentially such a product, while a physical book there is a cost associated with each copy. I believe Amazon may look at a model where they will print and bind an ebook for those like me that don’t want electronic books, but like the physical version. The competition in the physical book space right now is intense and in some of the best seller areas, Amazon is coming close to variable cost pricing for these as well.
If the authors set the royalties and fees for ebooks where they want them, other than for pride purposes why should they care what the price is, (set the royalties and fees to be the same as on the physical book to cover the author and the editing and prep work, essentially the first copy cost). It seems if you assume the fictious homo economicus that their interest is to maximize their royalities and fees not the final sales price.