“The DoJ has issued a subpoena to Sony Optiarc America (SOA), which supplies CD, DVD and Blu-ray-based products to North American customers, as it looks into possible anti-trust regulation violations. The general situation in such cases is that a group of suppliers co-operate to artificially drive up prices for a product.”

So, maybe in the real world, Justice will not look that carefully at booksellers that lower prices…maybe they will look at the publishers (especially the textbook publishers) for pushing higher prices?

But, as they say; “you can’t teach an old physicist new tricks; you have to take’em out back, shoot’em, and hire a young physicist.”

They’re just delaying the inevitable.
We’ll just have to bide our time until the dinosaurs die off.

When a publisher sends Amazon an ebook it takes 1 cent of space to store. And every time Amazon sends a copy to a Kindle it costs 2 or 3 cents to transmit. Ebooks are almost pure profit.

When a hardcover bestseller is purchased from Amazon for $15 my guess would be that a couple of dollars goes to the author, maybe a buck of profit goes to the publisher and maybe a buck of profit to Amazon. The rest is eaten up in production and distribution costs.

But ebooks have essentially zero production and distribution costs. So, with honest pricing, an ebook of the same bestseller should cost $5 and everybody scores the same profit. But publishers refuse to price ebooks honestly because it would cut into their paper book sales. They are in exactly the same place that the record companies were in five years ago – vainly trying to protect an outmoded distribution system.

My guess is that, in five years, ereaders will cost fifty bucks and ebooks will cost two bucks. But the book publishers will fight the inevitable trend every miserable step of the way.

The big publishing companies, like most content industries, use a lot of accounting tricks such as promotional fees, returned merchandise charges, etc to move money around. Get past the smoke and mirrors and the end cost probably bears no ressemblance to what they announce to the world.

It’s not all that different from the “instant rebates” retailers use to sell products for less while bulking up their reported gross sales numbers to prop up their stock value. It lets them report the list price in gross sales and hide the discount in cost-center category.
Hollywood plays those tricks in reverse; they inflate costs to offset the net they report.

Smart money says that once all the accounting tricks are in, the $13 book cost a lot less than even the nominal discounted price. And everybody “profits”.

Just a thought.

Rob Preece
Publisher

Any investigation into book pricing needs to establish that there is actual “dumping” going on. Which means the retailer’s costs and margins will have to be revealed and since the real problem the independent bookstores face is the publisher’s reliance on volume discounts to move product…

Does anybody still doubt that Amazon and Walmart have significantly lower overhead and operational costs than the independents? That the publishers afford *both* massive undisclosed discounts? That both are still making tidy profits even in the midst of the “bloody price war”?

Nothing to see here; move along, move along…

However, I’d bet Justice would pretty much ignore e-books, as they are still such a small proportion of the market, and concentrate on the effects of printed book pricing.

Of course, I’d hate to see small bookstores vanish, as well. But the developing digital market will force significant change upon them, and if they can’t adapt, they probably will perish, and faster than the Big Book Chains will. I hope they can adapt.