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Apple, publishers sued over e-book pricing as sales jump - Page 2

post #41 of 44
Originally Posted by zoetmb View Post

A few things:
- contrary to popular hype, sellers such as Amazon do not get better pricing because of what they buy overall - they can only get better pricing based upon the number of copies of a single title placed in a single order. There was a lawsuit against the publishers about 10-15 years ago by independent booksellers objecting to discounts given to the chains and the independent booksellers won. But how this applies to ebook (non-agency model), I'm not sure, since that pricing is probably based upon number of downloads and I don't know if Amazon's pricing structure (pre-agency model) was originally tiered.

- you don't need the Agency model to control pricing, because the Supreme Court ruled several years ago that manufacturers can indeed set not only "minimum advertised price", but "minimum selling price" although few have elected to do so. So you don't need an agency model to force everyone to sell at list price. (Apple gets everyone to sell at their list price by making the margins so short, you don't really have a choice.)

- the publishers objected to Amazon's discount pricing because Amazon was selling e-book titles at a loss in order to gain a market for the Kindle and to gain overall market share. They were afraid that this discounting would decrease the value of books in the customers' minds. What they probably should have done was compromised and let the backlist sell for less than the frontlist.

- in many cases, publishers did not have automatic ebook rights from authors. And under the wholesale model, where Amazon could sell an ebook at any price, even below their cost, authors would receive minimum royalties and therefore, would not give the publishers the rights. That's one of the reasons some publishers also pushed for the agency model - it was the only way to get the ebook rights.

- while low selling prices might benefit consumers in the short run, they don't necessarily benefit consumers in the long run because if the publishers (in this case) can't make a fair profit, they stop publishing and trade publishing has never been very profitable in the first place, which is why the largest U.S. publishing companies have been bought and sold numerous times in the last five decades. Bertelsmann, a German conglomerate, owns Random House (which was owned by RCA from 1965 to 1970) and Bantam-Doubleday-Dell, comprising over 20% of U.S. trade publishing and CBS now owns Simon & Schuster. (CBS used to own Holt, Rinehart & Winston, part of which was sold to Harcourt around 1986. Harcourt was sold to General Cinema in 1991, to Reed-Elsevier in 2001 and most pieces to Houghton-Mifflin in 2007).

- And for those who think that a decline in major print trade pubishing will never happen, look at the recording industry, which is now less than half the size it was at its peak. While the recording industry shares some of the blame, the main factor in its destruction aside from the fragmentation of the market and the demise of decent radio is that the download market is primarily a singles market, which is economically unfeasible both from a cost perspective and from the standpoint that music prices have in no way kept place with inflation. In the mid-1960s, a 45-rpm single (albeit a 2-sided single) listed for $1 and generally sold for 64 to 66 cents. That 64 cents in 1965 is the equivalent of $4.46 today. The labels are dumping back-catalog CD albums (with up to 20 tracks) for $5.

- So it's a mixed bag: there are advantages and disadvantages to both the traditional wholesale model and the agency model. But the lawsuit is completely bogus and should be dismissed. There's nothing illegal about the agency model and it's certainly not price-fixing. What would be price fixing is if the big publishers got together and said, 'let's charge $22.95 for all front list ebook titles from major authors." But they would never do that. I've been at negotiations with distributors and the FIRST thing that's always said in the meetings is that "we cannot talk about retail price in any way."

You've got it exactly right.
post #42 of 44
Originally Posted by AppleLover2 View Post

How does that work? If you estimate sales of 100,000, why would it matter if many more or none more are copied?

Because if the book is copied, instead of selling 100,000, they may only sell 50,000.
post #43 of 44
Originally Posted by brucep View Post

apple could charge 1/half of what it charges today and still make a profit .

except the other concerned parties don't want apple to under cut them .


Bruce, you know this, how?
post #44 of 44
Originally Posted by svnipp View Post

I simply don't understand why an eBook should cost more than the paperback equivalent??? I would think that an eBook should cost the same as a paperback if not significantly less. I mean, there is no physical book to print and distribute. Electronic distribution is obviously MUCH more cost effective.

I would love to buy eBooks, but there are very few instances when I would be willing to pay the upcharge just to have a specific novel on my phone or tablet.

*could* be that for an electronic distribution you have to have server space online 24x7 just in case someone may download a copy and pay for bandwidth to delivery it - while a physical book only needs to ship once and then it is on the bookstore or news stand to pay for the shelf space and lights and personnel etc to try to sell it. plus - when distributing physical media the product is paid for up front by the retailer whereas for electronic dist no $ comes in until a copy is actually purchased. Of course there are likely far more credits back for unsold books (and magazines etc) in the physical distribution channel than in the electronic channel.

Overall the point is that the cost of doing business under one model may have wildly different components and unit prices and vagaries of market value of those components (cost of gas vs cost of internet service for example) does not mean that one is necessarily better or worse than the other. It would *seem* that electronic distribution would be able to achieve economies of scale and reach a wider audience that physical distribution - and that the cost to deliver 1000 copies would only be nominally higher than delivering a single copy in the electronic world - and that you could reach places that would other wise be prohibitively expensive or would add shipping cost to physical media.

Or I suppose the overall point is - that unless someone here actually knows real numbers for each supply chain - then we are all just speculating.
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