While I believe they saw these numbers, specifically that lowering the price from $15 to $10 lead to a 74% increase in purchases, I don't believe that this is a good general rule of thumb. Here's the problem: there are only so many potential ebook readers out in the world, and they only have so much time. This means there will be market saturation at some point, or at least market movement. This elasticity is there, for sure, but the relationship between price and purchases is not going to stay the same, especially as <i>everyone follows this advice</i>. Basically, everyone will price their books at $10 and the playing field will be level. Then the advice will be to price your book at $7. Then at $5. Then at $2. Then at $0.99 cents. This is the problem we currently see with Apple's App store and the Google Play Store: too many apps, all priced similarly. For most apps, and probably for most ebooks it would almost be better to go in the exact opposite direction: one sale at $1000 is better than 10 sales at $1.<p>Also, why would Amazon care so much about how others market their content, to the point of trying to interfere? If your content is not worth $15, then nobody will buy it. If you suck at marketing, nobody will know to buy your (possibly great content). Why does Amazon get its hands dirty instead of simply giving you analytics-backed suggestions? Oh, that's right, because controlling the publishers is more profitable for them, and using their market position as leverage against publishers is a great way to do so.
<i>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.</i><p>That seems like a hard won data point, I'm surprised they threw it out to the public domain. It makes intuitive sense to me though. I buy a lot of ebooks and when they're really cheap I just buy them immediately rather than track them somewhere to go and purchase when I have time to read them later. My kindle has probably a half dozen books to read on it at the moment, and I imagine if they were $20-30 each I wouldn't be that flippant about it.
<i>In fact, the 30% share of total revenue is what Hachette forced us to take in 2010 when they illegally colluded with their competitors to raise e-book prices.</i><p>Shots fired
<i>We believe 35% should go to the author, 35% to the publisher and 30% to Amazon. </i><p>What do publishers even do with regards to e-book distribution? Are they going the way of the record label company?
Amazon is using language like "e-book(s) sold" when the reality is that they mean "e-book license(s) sold." The difference may be subtle, but if an e-book comes with DRM, the buyer certainly does not "own" it. Amazon even makes that point themselves, as they promote e-books as having "no secondary market."<p>This is an important point when you consider the vendor lock-in of the Kindle "ecosystem." Instead of "e-book," a better phrase might be "Kindle software."<p>Amazon should be careful of throwing stones about illegal collusion as they approach market domination. It will be very easy for them to make a mistake which runs afoul of anti-trust law.
This old blog post of mine needs a refresh, but there's nothing magical or permanent about $9.99: the average price of an e-book bestseller (= Amazon Top 100) has been trending down roughly by a dollar a year, and was already at $7 last year. Likewise, the share of $5 books in the top 100 is already close to 50%.<p><a href="http://gyrovague.com/2013/03/26/down-down-down-books-e-books-and-apps-all-trending-to-zero/" rel="nofollow">http://gyrovague.com/2013/03/26/down-down-down-books-e-books...</a><p>Some crappy code for pulling these stats from Amazon:<p><a href="https://github.com/jpatokal/amazon-price-watcher" rel="nofollow">https://github.com/jpatokal/amazon-price-watcher</a>
John Scalzi's response to this piece of self-serving agitprop is worth reading in full:<p><a href="http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/" rel="nofollow">http://whatever.scalzi.com/2014/07/30/amazons-latest-volley/</a><p>(Shorter Scalzi: Amazon are presenting as "good for authors" policies which, in fact, are only indisputably "good for Amazon"; the only authors they <i>might</i> be good for are those who cleave unto Amazon like limpets and don't do business with the other 70% of the book distribution business, and even then, it's somewhat questionable: Amazon's T&C's for authors publishing directly are invidious and include binding arbitration clauses and boilerplate giving AMZN the right to vary their terms unilaterally -- meaning AMZN basically have those authors by the short and curlies, in a manner that no real publishing company even attempts in their author contracts.)
While I buy into many of the arguments being made here, Some of these points don't make sense. For example,<p><i>". And that 74% increase in copies sold makes it much more likely that the title will make it onto the national bestseller lists. (Any author who's trying to get on one of the national bestseller lists should insist to their publisher that their e-book be priced at $9.99 or lower.)"</i><p>Well, that's all well and good until <i>everyone</i> prices their e-books at $9.99 or lower, at which point we're back to square one. Unless the objective is to then have people who want a leg up to price their books at $8.99...<p>Also got a bit nasty when they mention, <i>"ilegally colluded with their competitors"</i> - was this ever established? I thought the publishers settled before it went to court, and only Apple was found guilty.<p>Finally, Love how Amazon is now trying to drive a wedge between the publishers and authors - <i>"While we believe 35% should go to the author and 35% to Hachette, the way this would actually work is that we would send 70% of the total revenue to Hachette, and they would decide how much to share with the author. We believe Hachette is sharing too small a portion with the author today, but ultimately that is not our call."</i><p>This is Amazon turning up the heat on the publishers. Remember, Amazon/Bezos are <i>ruthless</i> - they could not care at all what is <i>fair</i> - but they are going to use every tool in their kit to win at this negotiation.
I'm a bit surprised that Amazon said listed "no returns" as one of the differences with ebooks. I have personal experience with their incredibly generous ebook return policy (right in line with their other generous return policies).<p>Is this an implicit admission that Amazon is eating the cost of those returns? Or do they mean something specific like the physical infrastructure for returns?
I've written a book, it's available on Amazon (including kindle).<p>What % I get when it's sold (kindle or dead tree) is absolutely none of Amazon's business. I negotiated with my publisher (not Hachette), I'm happy with the results, I don't need other people telling me what's best.
The competitor of Amazon is Google.<p>If you're an author the absolute best you can hope to get is 35% of the sale price -- that is, the price your readers are willing to pay to read your work. Usually, it's even much less.<p>The publisher keeps at least 35%; the distributor, 30%. It's unclear to me what value these actors are offering, for this amount of money.<p>Disintermediation hasn't happened yet (what happened is, Amazon took the place of bookstores, and publishers are still around).<p>But disintermediation will happen eventually; when that day comes this discussion will sound silly and strange.
<i>It's also important to understand that e-books are highly price-elastic. This means that when the price goes up, customers buy much less.</i><p>But what is the alternative for those customers: do they maybe buy the paperback
version instead? If that's the case, Hachette <i>might</i> miss out on revenue, but
they also keep their paper-based business running and stay somewhat independent
of Amazon.
The New Science of Retailing has a good section on elasticity. Anyone interested in data-driven retail will enjoy the book.<p><a href="http://newscienceofretailing.com" rel="nofollow">http://newscienceofretailing.com</a>
Amazon has mastered the art of saying nothing with a lot of self-serving words :)<p>Their post is titled <i>"Update re: Amazon/Hachette Business Interruption"</i>. However, they don't state what their specific demands are and why the business was (in their words) interrupted.<p>Amazon's proclaimed objectives aren't as important as knowing what their specific demands (from Hachette) are. I'm not a book-author, but as a developer, I set the prices of the software products I develop (Apple and Google let me do that, Amazon doesn't). So my sympathies are with the book publishers, but even if they weren't, I'd still like Amazon to explicitly spell out their demands instead of using self-serving pricing elasticity theories to sway public opinion.
From the perspective of the publisher and author, this analysis is somewhat meaningless because it doesn't factor in any impact on sales of the book in other formats.
> With an e-book, there's ... no lost sales due to out-of-stock<p>Well, with Amazon there could be lost sales due to refusing to stock/sell.
Books aren't video games. People don't collect them. I don't consider a game I don't finish to be a failure, a waste of my time. I do so a book.<p>Despite Amazon's talking points, they are relatively price inelastic. Perhaps, right now, they aren't, since people are still dealing with market novelty, but over the long term, time is a bigger sink than money, when it comes to books.