After I made the linked post yesterday, I sent Mike (at the left) a heads up. We ended up having an interesting email exchange. As we very seldom, unfortunately, get the publishers’ side of the discussion here, I asked Mike if he would let me reprint the exchange. He graciously agreed and here it is:
Biba
I don’t know if you read us, but I though it was fair that I let you know about an article I published today:
Shatzkin
Seldom. Thanks for letting me know.
The consumer is voting with their dollars and saying they don’t really care whether the price is $9.99 or $12.99. Ebook sales haven’t been damaged one detectable iota by the price increases.
Or do you have any evidence to the contrary?
From my perspective, “the consumer wants it cheaper” is a dog bites man story. Allowing retailers to set the price will absolutely assure that we’ll end up with only deep-pocketed retailers with some other agenda that subsidizes their price-cutting of ebooks. Which is, after all, what we had developing very clearly.
Biba
Well, evidence on both sides is a bit thin. I know that I’ve received a lot of email from my readers, and we have a lot of comments on the site, saying that people have decided not to buy ebooks for a while. The problem is is that the market is growing and so sales will continue to increase no matter what. What I suspect is that sales would have increased more, and faster, if the publishers didn’t take this position. But we will probably never know.
We’ll probably just end up with a few monopolists who will gouge the consumer for whatever they can, ala Microsoft, until the market readjusts in a few years, or until the US government decides that enough is enough.
Shatzkin
Your readers constitute one of the most biased samples I could possibly imagine. The people who obsess on this stuff are not the public. Your readers are also all atwitter about DRM, which most people don’t know very much about. To the normal person, the idea that something would work on one device and not another would seem entirely normal and consistent with lots of prior experience. To the digerati, it’s a capital offense.
Sorry, the data is not ambiguous. Price increases have not dented the ebook business at all. April was a fantastic month for everybody across the board.
Biba
Well, be that as it may, my main problem is that it is monopolistic, anti-consumer, price fixing and all that other legal good stuff that we are supposed to have a government to protect us from. I don’t really care about sales or the profits of the monopolists, I care about our long tradition of protecting the consumer from anti-competitive activity.
I agree that my readers are not the norm, you are right there, but my real argument is not sales, it is that it is a shame that the “norm” are having its pockets picked and don’t even know it.
Shatzkin
Are you not interested in protecting your readers from the inevitably anti-competitive results of Amazon’s aggressive pricing, which will ultimately drive many other retailers out of the space?
Are you not interested in protecting the country from the highly destructive prevailing notion that “cheaper is better” in all things?
Biba
Nope – Amazon isn’t anti-competitive, it is simply the biggest and got there through hard work, not through collusion among a bunch of its competitors. If it indeed gets monopolistic there is a remedy for this.
Nothing wrong with “cheaper is better”, that’s the point of capitalism and the free marketplace. (But that doesn’t mean that the good stuff gets squeezed out – multiple markets. I wear a Rolex most of the time, but when I’m in my garden I wear a Citizen.) Especially when it comes to a commodity product like books – and that’s what they are, despite aura that seems to surround them. Because of the way the industry has developed most publishers have no brand name recognition, unlike Rolex, so the average consumer doesn’t care about them, only about authors. The authors aren’t commodities, in some cases, but the actual, physical product of the publisher is. So it should go for the lowest price.
Well, I guess both you and I are not too busy today :-), but I have to go out now and take care of a few errands. Happy to resume this any time. Haven’t had a good disagreement for a while.
Shatzkin
Paul, Amazon has about 90% of the device-driven ebook business and about 80% of the online book business. Very aggressive pricing which would feel predatory to all their competitors has helped them every step of the way. They are a monopoly in the only two segments of the book business that are growing. What remedy for competition do you see on the horizon except competition from others who, like Amazon, have an agenda unrelated to publishing? Namely Apple and Google. Retailer-set pricing is a formula to ultimately eliminate publishers and reduce writers’ incomes.
I’m headed out to lunch as well.
Editor’s Note: you can follow Mike on his Shatzkin Files blog here. Don’t miss reading his full article that sparked all of this. PB
An important point that’s rarely addressed around this is that Amazon got to 90% market share because the publishers let them get there. Amazon exploited an opportunity, and the major trade publishers let them have it by not fully leveraging all of the other potential sales channels for their ebooks (and I mean more than just providing files to Ingram Digital). The problem is exacerbated by the legacy of territorial rights, and until/unless that Gordian knot is cut, publishers without worldwide rights will struggle against market forces.
“Your readers are also all atwitter about DRM, which most people don’t know very much about. To the normal person, the idea that something would work on one device and not another would seem entirely normal and consistent with lots of prior experience. To the digerati, it’s a capital offense.”
What kind of idiotic argument is that? Do I expect a DVD from Sony to play on Toshiba DVD Player? You bet your ass I do. If your mobi or epub file works on Nook, it should also open on Kindle, Sony Reader and anywhere else.
> Retailer-set pricing is a formula to ultimately eliminate publishers and reduce writers’ incomes.
And that is exactly what you would expect a publisher to say. Because publishers have never been concerned at all about profits, but only maximizing writer’s incomes.
> Your readers constitute one of the most biased samples I could possibly imagine. The people who obsess on this stuff are not the public. Your readers are also all atwitter about DRM, which most people don’t know very much about. To the normal person, the idea that something would work on one device and not another would seem entirely normal and consistent with lots of prior experience. To the digerati, it’s a capital offense.
The “normal person” has never bought an e-book, held an iPad, and has only a vague idea of what a Kindle is. I think at this point it is safe to assume that the “digerati” are the ones who bought most of those e-books that sold in April. Pitting one statistically insignificant sample, Teleread readers (and I found this actually through a Techmeme link) and another, e-book consumers, may just be putting the cart before the horse a bit too far.
Apparently Shatzkin doesn’t know what a Monopoly is. Being the biggest or best doesn’t make one a Monopoly. Since I have a choice to buy my books at Amazon, Border, B&N or Walmart. To qualify for a monopoly, I quote from another web site:
“This would happen in the case that there is a barrier to entry into the industry that allows the single company to operate without competition.”
I’m sorry… Amazon operates in an industry that has competition. Don’t confuse market leader with monopoly.
BOb
What is the source for the Statistic that Amazon has 90% of the ebook market? I also would like to know what eBook fans don’t know about Teleread, Mobileread, and the like? Maybe the general public doesn’t know, but they aren’t buying ebook readers, frankly. I am still the only one I’ve come across who actually has one (one of my students briefly had a Sony).
“Shatzkin
Your readers constitute one of the most biased samples I could possibly imagine. The people who obsess on this stuff are not the public. Your readers are also all atwitter about DRM, which most people don’t know very much about. To the normal person, the idea that something would work on one device and not another would seem entirely normal and consistent with lots of prior experience. To the digerati, it’s a capital offense.”
Perhaps Shatzkin could explain why Apple dropped DRM from iTunes music? Was it because that tiny little sample, the digerati, influenced them that much?
Yeah, I didn’t think so. People are smarter than he gives them credit for. And the digerati, which he clearly holds in great contempt, did a lot to educate the masses about iTunes and their DRM atrocity.
DRM-free ebooks will happen once people start trying to switch devices and get mad enough to start the same riot they did with Apple.
My mom is a “normal person” (and not a reader of this blog). She’s a 60 year old woman who reads a ton and bought a Kindle, so she could purchase books easily, change font sizes easily, and buy new books “cheaper” than hardcover prices. She refuses to pay more than $9 for an ebook. I have to imagine there are many more like her out there! She also doesn’t like DRM (whether or not she knows by that name the reason why her Kindle ebooks can’t be read on another device like a Nook if she buys one).
So yeah, my mom and I are only 2 people…but I have to think we’re not the only ones who refuse to pay outrageous prices for ebooks. (And yeah, to “normal” people – $12.99 for something that you can’t even lend to someone else, or resell at the used bookstore, or could possibly not be read in the future if your device breaks – IS outrageous.)
Lets see, now: understanding technology, having a grasp of economics 101, and recognizing a corporate spin job from 5 miles away is being biased?
You know, I can live with that.
I want to see a publisher address the stupidity of geographical restrictions (yes, let’s turn AWAY customers who want to pay us money!) and books which cost more in digital than in paper (I am looking at you, Stephen King).
> Your readers constitute one of the most biased samples I could possibly imagine. The people who obsess on this stuff are not the public. Your readers are also all atwitter about DRM, which most people don’t know very much about.
Yeah, it may be possible that today’s new Kindle, iPad, Sony Reader, or nook owner doesn’t know DRM. It doesn’t stop those new people from posting on sites like this or Mobileread – or finding me while I’m reading my Sony at lunchtime – asking why the book the bought at Bookseller A doesn’t seem to work on their gadget.
As kerry mentioned, they may not know the frustration they face is called “DRM”, but I’m seeing more and more questions about this every day.
And why does this topic (Agency price-fixing) keep focusing on only the hardback prices? I personally don’t mind the difference between 9.99 and 12.99 on a newly released “hardback”. But the same prices for “paperbacks” is just plain greed.
You might be interested in a recent post on “Redlines and Deadlines” (an epublisher’s blog) which talked about ebook pricing and the $9.99 mark. [Can’t direct-link from here, sorry.]