I have a small pile of friends in publishing, so I'll take this from the other side. The reasons for the publishers' apparent insanity are:<p>* Contrary to popular belief, physical production is <i>NOT</i> the single largest part of a book's cost. In fact, even before ebooks, the cost of paper and ink and shipping was actually a pretty negligible part of the final cost.<p>Most of the cost of a book is the highly-skilled labor involved (writing, editing, copyediting, proofreading, designing, typesetting, marketing, selling) and these critically don't go away or even get much cheaper in an electronic world. Even ebooks need specialized design and typesetting, and I have some examples which did not get that love which will make your eyes bleed if you don't believe me.<p>Salaries in publishing have for decades been nosing around the minimum the market will bear---as just one example, freelance proofreaders get paid a penny per word; the good ones get two. Many freelance proofreaders are also editors, copyeditors, and authors in their own right, and hustle their asses off to make incomes that, coming from tech, we wouldn't consider starvation wages.<p>* Price is an important signalling mechanism, and so---given the costs of book production---it's important to the publishers not to drive the perceived fair cost of books down below, no matter whether Amazon is currently subsidizing that or not.
The comments to this post are really interesting - one comment claims that (according to an agent) agency pricing was Amazon's idea, not the big 5, even though, the big 5 very publicly insisted on agency pricing. It's really absurd. Of course, agency pricing for ebooks was first pushed by Apple, part of what got them and the big publishers in trouble for antitrust conspiracy (when the publishers agreed to withhold books from Amazon if Amazon kept discounting)<p>The the comments about Amazon and publishing, Amazon has a very major publishing operation (called, suprise!, Amazon Publishing). It's grabbing market share very quickly. If you want information about this check authorearnings.com (which provides industry sales estimates that include self-publishing) Of course the big story in the publishing business is that self-publishing is rapidly eclipsing traditional publishers in the ebook space.<p>Amazon is not only doing Netflix for books. It's doing Netflix for film and TV. The big competitor to Netflix is not any network or studio -- it's Amazon.
> The sales that would go to that $15.99 book are going to lower-priced books from indie authors and self-published authors, like me.<p>> They actually proved the consumer will buy the cheaper option, but okay<p>I find it alarming that an indie author does not seem to be concerned with cheap product flooding the market. Amazon's attempts to lower barriers to entry means more aspiring authors competing for a piece of the pie. Look at how the race to the bottom in the App Store is destroying indie iPhone developers.
><i>That sounds thoroughly reasonable, and it sort of is, but please let me explain because the crazy is in the details. What was happening was that Amazon was discounting the price of the ebooks, and it may seem like this is something the Big 5 would want to stop, except the markdown was coming off of Amazon’s end. In other words, if Hachette wanted to charge $15.99 for an ebook, and Amazon marked it down to $9.99, Hachette was still paid their cut of the full price of the book. More people will buy a book at $9.99 than at $15.99, so essentially, the Big 5 was coming out ahead in this arrangement in every conceivable way. They collected royalties at an unreasonably high price point while moving the number of units that corresponded to a lower price point.</i><p>Sounds good, unless you factor in other Hachette customers that get the shaft, because a company with deep pockets like Amazon uses their cash reserves to undercut them with unhealthy margins (actually negative margins).<p>This is downright monopoly behavior. Why should they accept it?<p>And of course those other outlets will complain to Hachette or ask for the same prices.<p>It's also a good way to screw the customers in the long run, as they get their cheap books from Amazon first, and then when the other stores with lesser means have died (unable to keep up with the negative margins), they can jack the prices again...
Anybody with the slightest interest in this topic should read Charlie Stross’ (cstross on HN) series of essays on the publishing industry: <a href="http://www.antipope.org/charlie/blog-static/2010/04/common-misconceptions-about-pu-1.html" rel="nofollow">http://www.antipope.org/charlie/blog-static/2010/04/common-m...</a>
Hachette isn't stupid. Amazon has a publishing arm, and of course, more importantly, has the Kindle. By lowering the prices Amazon gets people to buy into their eco-system . As a publisher you don't want a single distrubutor controlling your market.
It seems that all creative/intellectual industries are caught in some sort of race to the bottom (e.g., software, publishing, music).<p>This is sad.
So apparently the publishers trying to prevent a monopoly-grabbing maneuver from Amazon is insane. On the contrary, it would be insane if they let Amazon drive all other booksellers out of business and ruin the market.
The behavior does look irrational if you ignore the fact that publishers also want to sell their books in to other retailers and those retailers will not order books if they believe Amazon will deeply undercut them for the same titles. So they ask the publisher to put in place a deal with all the retailers through which the book will be sold that guarantees no one retailer will offer the book below a certain price. This is, of course, quite a <i>lot</i> like price fixing, but seems to be how it's been done in many areas of retail for just about ever.
I'm often laughed at when I suggest it, but I think the publishing world needs to look at what's happening with free to play games.<p>You remove the barrier to entry so that as many people as possible will try your product (free).<p>You identify those people who really enjoy your book and want to consume more of the same.<p>You provide them with so much content that they can spend as must as they like.<p>It's not unreasonable for people to spend 100's of dollars a month enjoying their favorite pastimes.<p>Why put a $15 cap on it per book.
If the ebooks many want to read are expensive electronically, maybe many won't buy a kindle, but still buy the printed books ? And without a kindle, they won't buy cheaper books from the competition ?<p>And maybe this will slow Amazon's success for a few profitable years, more profitable than current loses ? And maybe by that time the publishers will find an ebook strategy that will work(hard to believe, but maybe).<p>Also,let's look on the other side - what happens if ebooks fully kill print ? can publishing even make money in such state of affairs ?
If Amazon really wanted to twist the knife, they would look into making the first-sale doctrine apply to ebooks. They might have to limit it to Kindle-to-Kindle sales at first, but Amazon would be able to take a cut of every book transfer in perpetuity.<p>My guess is that it would drive authors into services like Kindle Unlimited, since they would be able to create a long-term income stream unlike physical books or non-transferrable ebooks.
I can see the rationale of the publishers - they don't want Amazon to become a monopoly. Their counter-strategy will fail, but that is besides the point.<p>What is really puzzling is the many authors who thought the publishers are fighting for them and stated public support for their publishers. Especially since the publishers blockade apparently cost them a lot of sales.
> Often, the prices were higher than the price of the print edition, which is just fundamentally insane.<p>Why is this insane? An ebook has more value to me than the print one as it's more convenient. Since it has more value to me I'm prepared to pay more.<p>The physical copy could be free and I'd still pay to get the ebook instead in most cases.