Posts tagged: Amazon

You Can’t Compete With Free (Based On Price)

By , June 15, 2010

The conventional revisionist line that meanders around the Internet says that people started downloading free music from services on the internet as some kind of consumer rebellion against the price of CD’s. That may be true in a sense, because music did cost money that could be spent on something else, but anything not free would have been too much. In the 90′s everybody liked CD’s and bought them like hotcakes, but ‘free’ was more appealing. And the hard lesson that seems like it is taking forever to sink in is that you cannot compete with free based on price.

What about iTunes? Isn’t that profitable? Wasn’t that profitablility driven by price? Well, first of all, it’s mostly not profitable. It’s a convenient service for iPod users which is meant to drive the sales of iPods, not music. The iStore service competes on convenience, not on price. It’s right there, and it’s how you interface with your new gadget. The same is true for the Kindle store, for that matter – a painless, instant and safe transaction. The more inconvenient the other options are, the more appealing the iStore option becomes – to users who value what the iStore represents.

If iTunes had been selling albums for 5.99 when Napster hit, I don’t think most people would have cared so much for convenience and safety that it outweighed the appeal of free. Downloading was something that was ‘dangerous’, ‘rebellious’ and you had to learn some small thing to be able to do it – all things that appealed to the primary music buying demographic of young people over ‘convenient’ and ‘safe’, which is the iTunes model. At the same time people who appreciated the moral implications of piracy or saw no need for it, who I bet tended to be a little older and had money of their own, either payed the price as they always did or generally went without.

If someone has already accepted the free option as an alternative, then any price will be one hundred percent more than they want to pay. There was always a little grumbling about prices on CD’s, but on balance people often decided to buy one instead of a pizza, which cost the same. The free music option afforded people the ability to have both for the same price, where dinner costs what it costs, and the soundtrack is free. Regardless, they’ve been heavily discounted for decades and now with the global used market all but the most in demand cd’s can be had for little more than the cost of shipping.

I think people tend to forget that there’s a reason that LP’s took over the market, because people bought them instead of singles. The LP’s with their ‘unfair pricing’, seen as a value at the time, allowed an industry to support riskier artists, and for those artists to support themselves and make more out of popular music than ‘doo wop ditty’. In the end we get what we pay for, though. There is a similair dynamic in popular literature and it would be a shame to see that change.

Thankfully the publishing business isn’t making the same mistakes as the music business did and they are moving to protect the price of their books. Maybe they aren’t as awestruck by technology as we all were ten years ago, or maybe the people who are giving them advice learned a few things as well (the model where publishers set the price is the iStore model, whereas the self defeating practice of selling singles for a dollar originated with apple as well.) Regarding the resultant consumer rage about the price of books, I’d be very surprised if the average selling price, not the list, for a hardcover was higher than it was ten years ago, especially adjusted for inflation. In that context, still, ‘not free’ will always be unfair to people who have already accepted the free option as a possibility. Even though those people are not customers in any sense of the word, their voice is heard the loudest. Because honestly, no one else is complaining.


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I Had To Wait

By , April 16, 2010

About twenty years ago I bought a rather rare and out of print book. I had to ask someone for help, someone who worked at a book store. She got a list of numbers. She called four people. I got a call two weeks later and the book was sold to me for twenty dollars.  

Last week I bought an OOP book by the same writer.  I got it off Abe’s when the Amazon copy  was too expensive. It cost thirty dollars, and I didn’t have to talk to anyone or go anywhere. Besides my own cost and convenience, what’s the difference?

All those people that helped me no longer have those jobs – they no longer exist. Most of the books they had in their stores are owned by fewer and fewer big online stores. Most of the money I paid instead of going to those people goes to subsidize the majority of books which the seller chooses to sell at a loss. But hey, I didn’t have to get out of my chair. I didn’t have to wait to buy what I wanted.

When the Internet was sold to us, we thought we were getting something like PC’s which empowered the individual. What we got was a perfect, unfettered market where all wealth flows towards the center, towards people who already have it – away from you and me. It’s happening right now – we don’t have to wait.


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Reflections on Macmillan vs. Amazon

By , February 18, 2010

It’s taken me a while to assimilate the ‘Amazon vs. Macmillan’ affair and most people have probably already forgotten it, but I think book buyers, sellers, publishers, writers and readers will be feeling the effects for a long time to come. It took them a while as well, but Amazon finally gave in to Macmillan and put all the books back, and accepted Macmillan’s ‘agency’ based pricing scheme for ebooks. I have a few thoughts on the underlying issues.

First of all, the great all seeing Internet seems to be a little myopic on this issue, as it often is with anything that has to do with gadgetry. I realize that ebook sales have doubled this year, but we’re still talking about one or two percent of the market here, depending on who you ask. After all these years of talking about ebooks, not too many people are reading them. That’s a very very slow adoption rate for a technology product, or any media product. Paperback books had much deeper penetration, far more quickly. I’m pretty sure ebooks will continue to grow as a market, but how much, who can say.

Testing the water of internet blogs and forums, though, you’d think nobody would buy a paper book ever again as of yesterday. A lot of ebook buyers and evangelists typically blame the ‘outmoded’ publishing industry for all of it’s own problems and assert that if they’d only cut out the ‘middle men’ they’d be fine – the middle men, which for some reason includes ninety percent of the people who get a book to market but not Amazon. Retail consolidation, which Amazon is a part of, has more to do with the problems the publishing industry is facing than the ‘antiquated’ practices of paying editors, proofreaders and marketers and trying to deliver a professional product that people will like. Not to mention the agents and lawyers who also work with the publishing companies.

One of the problems that all those people at the production end of things are having is that one of the middle men, Amazon, preferred to sell ebooks at a loss in order to sell more of it’s own product, the Kindle. One of the side effects of this is that it depresses the value of hardback books, in an environment where they are already being sold at huge discounts by big box retailers. I think it goes without saying that the less money the business can make off of hardbacks, the less writers will make, and the fewer books will be developed. So in this case, it’s not so much a ‘disruptive technology’ that’s a catalyst for change, it’s just the same old song and dance of retailers and suppliers battling over price.

One solution to the problem of fitting ebooks into the spread of publisher’s products would be aggressive ‘windowing’, which in industry parlance means waiting to release one product while giving another one time to sell. The industry waits to release a paperback if a hardback comes out first, and in this instance they’d be waiting to release the ebook until the paper editions of the book have had a little time to sell. That strategy has worked to keep the parallel worlds of hardback and paperback alive and each have their benefits and devotees. You could have a much lower ebook price, if people are willing to wait to let the book make money, and in return they basically get what most feel are less durable goods of a lower quality. If the paperback has had time to sell, even five dollars is not an unreasonable price given that it can be kept in print indefinitely.

But, I think we can gather from the general uproar that the customers that want ebooks want them right away. The voice of the grand and total ‘net can’t seem to accept the idea of waiting for something they want. Has anyone ever heard anyone really complain about waiting for a paperback? I always thought the wait was kind of exciting, if I noticed it. What is it that stops people from accepting the wait for a *piece of entertainment* that even in hardback costs less than a delivery from the pizza place? Where does this sense of entitlement come from? With all the hand-wringing from customers you’d think there was more at stake for them than waiting for a book to come out or a price to come down. Anyway, there is actually a lot at stake, however, for writers and their publishers if Amazon gets to control the supply chain.

Amazon desires to be and is becoming the Wal-mart of bookstores. And we all know what wonders Wal-mart did for manufacturers, the quality of goods, and customer choice. If Amazon gets to dictate to it’s suppliers, it will mean less variety and lower quality, just like what happened to most products after Wal-mart took over retailing. One of the many reasons the music industry ate dirt was that the big retailers started dictating terms and the product became a loss leader. The music was devalued, and companies had to put out fewer artists and have bigger hits to keep the money coming in. Fewer products and fewer outlets meant they were more vulnerable to things like piracy and recession, or just to a bad decision about what to put money behind, and that’s exactly what publishers are trying to avoid.

The only way to deal with a powerful and belligerent retailer like Amazon or Wal-mart is to take pricing out of their hands. The ‘Agency’ model does just that. Ever wonder why a Nintendo Wii is the same price everywhere? That’s the agency model in action – and not only does it allow Nintendo to make profits, it allows them to set prices based on customer demand and not the short term needs of a retailer. For instance, If Wal-mart controlled Wii pricing, they could sell them at cost and mark up all the accessories, meanwhile all the other retailers would have to lower costs, and pretty soon Nintendo has to lower it’s price to meet consumer expectations, then bang, no more Nintendo and no more Wii.

With the ‘agency model’, its not necessary for the publishers to tolerate being taken advantage of, and breaking retailer’s choke-hold on the book industry will prevent it from crashing like the music business did. A healthy business can put out a wider and more varied selection of books. I think a lot of ebook prices will end up lower in the long run, minimizing the role of the middleman between publisher and consumer. The consumer will still dictate the price over time. And, the benefits aren’t just for consumers, but for innovative entrepreneurs. Right now, the power and practices of mega-retailers like Amazon make it incredibly hard for small sellers to get in the game. But if you have an ‘agency’ model, it could mean you’ll have more stores – small e-bookstores can compete on things like niche appeal, community forums and reviews instead of price.

The publisher’s decision to wrest control of prices from mega-retailers is also in the interest of writers. Many readers don’t seem to make the connection that what a book costs has direct effect on the lives of writers. Right now, authors enjoy better contracts, more rights and more freedom than any other creative professionals. If people get used to paying peanuts for books compared to what it costs to produce them, writing deals get worse. The change to the ‘agency’ model also apparently frees up some money for writers, Tor writers are now getting a better deal on ebook rights as of a couple weeks ago. So in my mind, what it means is more and more varied bookstores, books and writers. However big the nascent ebook business gets, we have to keep the writers fed, clothed and housed if we want the books. Otherwise they’d just be milling about the streets trying to hustle some change to buy old paperbacks.


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Ebook Sales In Relation To Kindle Sales

By , February 7, 2010

I’ve been puzzling over something and maybe my numbers are off, but if Amazon says it sold half a million or a million Kindles (something like that, right?) and it only takes sales of 2000 or so to crack the upper reaches of the kindle chart, what the hell are people reading? Because in books, there are usually hits just  like in other media, where you get a book that’s embraced by a wide swath. Are early adopters that varied in their tastes, are Kindle owners shopping in a number of different stores, are they not buying at all? All of the above? I’m not really familiar with how book sales usually look so I can’t tell if this ratio that I think seems abnormal is actually par for the course.


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The End of The Author’s Guild vs. Google Settlement?

By , September 22, 2009

Here’s some interesting developments in the AG vs. Google settlement, which seems to be in Limbo as of now. The DOJ has just weighed in with this:

“A global disposition of the rights to millions of copyrighted works is typically the kind of policy change implemented through legislation, not through a private judicial settlement. If such a significant (and potentially beneficial) policy change is to be made through the mechanism of a class action settlement (as opposed to legislation), the United States respectfully submits that this Court should undertake a particularly searching analysis to ensure that the requirements of Federal Rule of Civil Procedure 23 (“Rule 23″) are met and that the settlement is consistent with copyright law and antitrust law. As presently drafted, the Proposed Settlement does not meet the legal standards this Court must apply.”

Which, as far as I can tell, but maybe I missed something, means that the settlement is illegal. Oops. Continue reading 'The End of The Author’s Guild vs. Google Settlement?'»


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True Facts About The Amazon Kindle

By , July 7, 2009

In trying to navigate all the FUD and hype and BS about the Amazon Kindle I’ve managed to find out a few hard cold facts:

1) It costs a lot. It costs fifty dollars more than an iPod classic and it costs the same as the 16GB iPod touch. Except the Kindle is for reading books.

2) You can only load a Kindle book on six devices at once. That’s the DRM. If you want to use a seventh device, you have to cancel one of the ones you already have – not just delete the file, go to Amazon and cancel it. Also, if you’re being silly and download the book over and over again in a short period of time, what seems to happen is that Amazon’s automated system thinks you’ve hacked it and are distributing the book on the net, and it tells you that you can’t download any more. Anything else people say about this issue is pure FUD and most likely ideologically or religiously motivated.

3) If Amazon terminates your account, you are kind of screwed. Apparently, it does happen. So if you are a buyer and return all of your stuff or trying to scam somehow, using Amazon as a dropshipper for your ebay business, or are a seller with a history of mostly negative feedback, then you should probably not have a Kindle under your own name. Use your moms or something.

4) You CAN look at your free books on the Kindle and that’s that. If you have plain text or ANSI books you just load them up, if you have anything else common (.doc, .pdf, etc.,) you email it to the converter and it emails it to you, then you load it to the reader via USB. Some people have described this as a pain in the ass, as they email their friends all day and load songs on to their iPods with a usb cable. Frankly I think these people are either religiously motivated and disingenuous or they are cows. Moo. USB hard. Moo.

5) A legitimate complaint is that you can’t load all those Mobipocket books you bought to read on your Palmpilot back in the day onto the Kindle mostly because of the Mobipocket DRM flags being incompatible – and Amazon’s desire to phase out the Mobi technology they now own. There is good news, you can batch convert the Mobi files so they can be read on your Kindle. You have to download and run an application. Moo. Snort.

More to come as I find out more…. everybody that knows me knows that I think books aren’t going anywhere any time soon, no matter how badly media conglomerates would rather sell files. But the idea of having the entire canon of world literature up to 1900 on a low power device is increasingly appealing… as is loading all those pirated text files I downloaded back in the 90′s onto something that doesn’t cause eyestrain.


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Reading Rights Coalition Protests, Wants Access to Derivative Works

By , April 7, 2009

The Reading Rights Coalition, an organization consisting of advocacy groups for the visually impaired, is protesting today in front the Authors Guild offices – of all places. They feel that Amazon should have gone ahead with the Kindle’s TTS feature, which allowed people to hear an audio reading of a Kindle book. Frankly, it’s naive to blame the AG for Amazon’s decisions – publishers have their own rights and opinions about them as well, and not only that, Amazon owns several audiobook companies. Why are writers the fall guys?

This whole issue seems a little strange, because blind people can’t use the Kindle’s interface without assistance, so how many were using Kindles? Kurzweil’s devices are far superior, specifically designed for people with impaired vision and can read any book in print.

Aside from the existence of perfectly good reading devices that ought to be accessible for the blind, it doesnt seem too far fetched to create a device with braile keys, audio menuing and no display that can play ebooks specially coded for TTS – and not eye-reading. Created for people with disabilites, the device could be covered under medicare and medicaid, the Kindle is not and it is unlikely that it will be – it’s a general purpose device and medicare only covers devices specifically created for the disabled.

Most of the popular arguments we’re hearing against the AG’s position are spurious. The idea that the TTS is a non-issue becuase the TTS feature is still primitive is misleading. A few more generations of voice emulation and it will sound close enough to an audiobook for a lot of people. It’s best to deal with this now rather than later, IP law is like the law of the sea, if you don’t protect your rights you lose them.

Copyright is a thorny issue and the concept of derivative works is especially complex and easy to oversimplify in the light of emerging technologies. A perfect illustration for that – the website for the RRC specifically disallows derivative works. Too bad they don’t want to extend those rights to Authors.


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Amazon 4q vs. Borders 4q

By , April 3, 2009

Amazon doesn’t break out seperate numbers for it’s book sales, but on the surface it might appear that a lot of people were shopping online for Amazon’s discounted titles as opposed to visiting the bookstore.

Amazon’s 4q Numbers

Borders’ 4q Numbers

It may be that book buyers are still moving from browsing to surfing, especially in overseas markets, but the change isn’t as rapid or as drastic as is often portrayed. True, Amazon’s sales were up eighteen percent from a year ago, borders’ sales were down fifteen percent. This doesn’t mean that people necessarily went to Amazon instead of Borders for books though – Amazon has a lot of revenue from different products and they make a growing amount of money selling web services as well. The media sales were up ten percent for the year – but that includes CD’s, DVD’s, MP3′s, the Unbox store, Kindle books, and video games, and they didn’t divulge media sales growth for the 4th quarter specifically.

I think the lion’s share of sales loss at Borders is due to the closing of 84 Waldenbooks stores. Borders’ same store sales decrease of five percent is similair to Books-A-Million and Barnes and Noble. Again, this doesn’t necessarily mean that Americans are flocking online as fast as they were a few years ago – unless it is only to Amazon specifically. Barnes and Noble also reported a decline in sales at it’s web store.


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Kindle TTS Debacle Resolved… For Now

By , March 19, 2009

As soon as you look away from somthing, it changes. Certainly, a  lot has happened on the Authors Guild / Amazon issue since my last post. That’s what I get for not paying attention!

Amazon Backs Off Text-to-Speech Feature in Kindle

I don’t think Amazon would have done this if there wasn’t a legal reason to do so, though it could merely be an issue of not wanting to worry their suppliers. While the complaint was made by the Authors Guild, I can’t imagine that publishers were particularly happy with Amazon either. The AG had the advantage of having a better profile with the internet public, as opposed to those rather faceless corporate publishers – and at least in Net-land, opinion tends to sway against any kind of protections on content. It’s more difficult to dismiss the concerns of ’Greedy Writers’ than it is ‘Greedy Media Companies’.

An issue that is still hanging wide open has to do with access to books by the blind. Needless to say, the National Federation of the Blind liked the TTS feature, although there are much better devices available that allow a blind person to access any book the want. Their position is that  “The blind and other readers have the right for books to be presented to us in the format that is most useful to us”.  As legally dubious as that may be, the Author’s Guild’s response is pretty dubious and noncommittal as well – ‘We can work it out’. In all actuality that’s something that publishers will have to do and the AG has not much involvement in the matter.


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