Dude, Bezos != Amazon. He is using his own money not Amazon's. You'll need to find some law that he is breaking in buying Washington Post. He can buy whatever he wants as a private citizen.
He is CEO of Amazon buying a Washington DC paper. No way this is because he thinks its strictly a good investment as papers have been losing money around the country for years.
I believe Amazon can't go back to the zero margin tactic.
Why not? That's the way their whole business is set up. They price to as close to zero margin or zero net profits as possible. Having someone else control prices is anathema to AMZN's modus operandi.
Why not? That's the way their whole business is set up. They price to as close to zero margin or zero net profits as possible. Having someone else control prices is anathema to AMZN's modus operandi.
Part of the agreement with the publishers doesn't allow retailers to take a loss on their entire ebook lineup, on some ebooks yes but there needs to be a profit overall. In essence the publishers were given a concession because they settled.
Part of the agreement with the publishers doesn't allow retailers to take a loss on their entire ebook lineup, on some ebooks yes but there needs to be a profit overall. In essence the publishers were given a concession because they settled.
The DOJ declared that AMZN's ebook business is and was profitable. So, how are we supposed to tell the difference between then and the future?
Also, I said "zero margin" or "zero net profits". That doesn't mean a loss.
But I also believe that you and tech boy are mistaken. As I have read it, agency model (which is not illegal per the DOJ) stands but the publishers have to give Amazon etc the control to change prices as the retailer wants for the next two years. And pay based on the selling price not the publisher desired selling price
An agency model in which the retailer sets the price? Sounds like an oxymoron.
The DoJ can say whatever they want about Amazon per eBook profitability. They were not on trial.
One more time. How do you know Amazon's eBook business was or is in the red? Then, how would you be able to tell in the future?
I don't think there's a problem whatsoever with Apple using the wholesale model for eBooks, and operating it at zero margin, just like Amazon is purported to do. The only problem is Apple's practice of always trying to make a profit, or at a minimum something just above break even like the iTunes store.
Was the DOJ lying about Amazon's eBook division's profitability? Who knows. If they were, and it was found out that Amazon's eBook business was actually operating at loss, then I think there will be some serious consequences at the DOJ. This court case isn't over yet.
The DOJ declared that AMZN's ebook business is and was profitable. So, how are we supposed to tell the difference between then and the future?
Also, I said "zero margin" or "zero net profits". That doesn't mean a loss.
Of course they were profitable, it was mainly the best sellers that they sold at cost or at a loss. The DoJ wants to make sure that Amazon doesn't abuse it by selling a publishers entire ebook lineup at cost or for a loss.
...Why favor one of your content providers (by buying it) while you distribute its competitors content also...
Its like Amazon buy a book publisher. Or Apple buying a music publisher.
No need to buy a publisher... Amazon is a print-on-demand book publisher! It's an amazing system - completely automated - that creates a paperback version of your book for no actual investment except your time and talent. A very good friend of mine has published two books so far (Kindle & Paperback versions... I did the covers and he did the rest.) Change/modify anything about the book at any time (I lightened some of the pics that were printing dark). Free ISBN and listing on Amazon, etc.
As the author he pays a heavily discounted price... even as a pure vanity press it is a spectacular system. BUT, it means that Amazon is a publisher. As much as I like their "no investment" system, there is something wicked in it in light of the DOJ's/trial's decision.
Of course they were profitable, it was mainly the best sellers that they sold at cost or at a loss..
Really? Care to provide evidence that their eBook business was profitable? And before you answer, note that their trailing 12 month EPS was -$0.23 so they entire company is losing money.
Really? Care to provide evidence that their eBook business was profitable? And before you answer, note that their trailing 12 month EPS was -$0.23 so they entire company is losing money.
Well didn't the average price of ebooks go down after Apple came into the market? I mean wasn't that the argument against the claims that Apple raised prices. So if the average price came it means that Amazon had the average ebook priced with a healthy profit. One that the agency model actually bought down. Simple cause and effect with a little 1st grade math thrown in. Does that make too much sense for your Ivy League head?
...As I have read it, agency model (which is not illegal per the DOJ) stands but the publishers have to give Amazon etc the control to change prices as the retailer wants for the next two years...
...And pay based on the selling price not the publisher desired selling price
Please correct me if I'm wrong... If my logic is correct -- the wholesale model means the Publisher sets their price with a suggested retail. Retailer sells it for whatever they like (anti-dumping laws apply in certain industries). For example: Publisher wholesales a book for $5 / Retailer sells for $8 (Pub: $5 revenue / Retail: $3 revenue). If Retailer decides to run a few loss-leaders (like milk at my local grocery store to get me in there vs. getting milk at Costco)... sells the book for $4 (Pub: $5 revenue / Retail: -$1 loss). Simple system that has been around forever.
I realize that high volume Retailers like Amazon negotiate lower prices in exchange for a promise of guaranteed volume. But in the end, the Publisher's product price has to be set (at least somewhat) by the Publisher. (Even in the example of Amazon's Print-on-Demand publishing -- the author has a minimum price they must set for their book -- depending on whether the inside has black/white pics [ie. $12.99] or color pics [ie. $21.99].)
Is this traditional Wholesale/Retail model gone? Are the publishers Mandated to take a percentage of actual sales price (agency)? Does Amazon REALLY have the POWER to DICTATE the price of the Publishers product? Yikes! It's not Amazon's product -- why should THEY have this power?
Please correct me if I'm wrong... If my logic is correct -- the wholesale model means the Publisher sets their price with a suggested retail. Retailer sells it for whatever they like (anti-dumping laws apply in certain industries). For example: Publisher wholesales a book for $5 / Retailer sells for $8 (Pub: $5 revenue / Retail: $3 revenue). If Retailer decides to run a few loss-leaders (like milk at my local grocery store to get me in there vs. getting milk at Costco)... sells the book for $4 (Pub: $5 revenue / Retail: -$1 loss). Simple system that has been around forever.
I realize that high volume Retailers like Amazon negotiate lower prices in exchange for a promise of guaranteed volume. But in the end, the Publisher's product price has to be set (at least somewhat) by the Publisher. (Even in the example of Amazon's Print-on-Demand publishing -- the author has a minimum price they must set for their book -- depending on whether the inside has black/white pics [ie. $12.99] or color pics [ie. $21.99].)
Is this traditional Wholesale/Retail model gone? Are the publishers Mandated to take a percentage of actual sales price (agency)? Does Amazon REALLY have the POWER to DICTATE the price of the Publishers product? Yikes! It's not Amazon's product -- why should THEY have this power?
It's not only Amazon, Walmart abused that power and now Rubbermaid is a shadow of it's former self. While we're on the subject of dictating prices didn't Apple dictate to the music industry the $9.99 album price undercutting their physical albums sales and putting all the B&M stores out of business?
...While we're on the subject of dictating prices didn't Apple dictate to the music industry the $9.99 album price undercutting their physical albums sales and putting all the B&M stores out of business?
I recall that Jobs fought long and hard to have the Music Publishers sell ALL of their songs for 99¢. I thought it was brilliant to have a simple concept like that. The album prices varied from the $9.99... with special editions, booklets, videos, etc thrown in to justify more that $9.99. But if you recall, CD's had gotten up to $19.99... $21.99 and up. Who was it that "forced" them to reduce CD's to $9.99? I'm not certain. It may have been the lack of sales. And, as you say, Dasanman69, digital piracy (then iTunes sales) took a HUGE bite out of their CD sales!
Fast forward a few years and there are at least 3 prices on the iTunes stores... and many other subscription services that average the price of a track to between 39¢ and 49¢ (for a monthly flat fee).
Well didn't the average price of ebooks go down after Apple came into the market? I mean wasn't that the argument against the claims that Apple raised prices. So if the average price came it means that Amazon had the average ebook priced with a healthy profit. One that the agency model actually bought down. Simple cause and effect with a little 1st grade math thrown in. Does that make too much sense for your Ivy League head?
Let's see:
You and your Apple-hating friends keep claiming that the price of eBooks went UP after Apple entered. So your logic is backwards. or you were lying when you said that prices went up. Take your pick.
Furthermore, you never provided any evidence to back up your claims, anyway. And even at its very best, Amazon was never all that profitable.
You and your Apple-hating friends keep claiming that the price of eBooks went UP after Apple entered. So your logic is backwards. or you were lying when you said that prices went up. Take your pick.
Furthermore, you never provided any evidence to back up your claims, anyway. And even at its very best, Amazon was never all that profitable.
I never said the price went up the DoJ did. Just because I'm critical of Apple doesn't mean I hate them. I own several devices and more often than not it's the product I recommend to friends whenever I'm asked for advice. FYI I don't agree with the DoJ verdict, (I have stated on numerous occasions that I didn't believe Apple was guilty) nor do I agree with the punishment they've suggested.
I realize that high volume Retailers like Amazon negotiate lower prices in exchange for a promise of guaranteed volume. But in the end, the Publisher's product price has to be set (at least somewhat) by the Publisher. (Even in the example of Amazon's Print-on-Demand publishing -- the author has a minimum price they must set for their book -- depending on whether the inside has black/white pics [ie. $12.99] or color pics [ie. $21.99].)
Is this traditional Wholesale/Retail model gone? Are the publishers Mandated to take a percentage of actual sales price (agency)? Does Amazon REALLY have the POWER to DICTATE the price of the Publishers product? Yikes! It's not Amazon's product -- why should THEY have this power?
The publisher's problem is that hardcover books generate most of their revenues. These hardcover books are typically $15 to $25, with typical sell-in to the wholesaler/retailer at $12 to $15. The publisher's arrangement for ebooks were likely similar, they sold ebooks to Amazon at around $12, probably thinking that Amazon would sell them for one or two dollars cheaper than brick and mortar retailers selling hard covers, like they usually do for hard covers.
With Amazon selling bestselling ebooks at $10, it basically killed hard cover sales at brick and mortar stores which were selling them for more, sometimes 2x or more. Publishers got their money and weren't hurting like the brick and mortar retailers, but they were then looking down the barrel of gun with their revenues decreasing as it was doubtful to them that Amazon would continue to sell $12 ebooks at $10. Eventually, Amazon would have come calling to have the wholesale price to them reduced to $6 or $8 or something. This was what the retailer was worried about, and that Amazon was killing their distribution network.
I don't think this is an unusual tactic for Amazon, and this may be one of their strategies to always get the best wholesale price possible. Amazon has quite the negotiating power as they are the dominant paper book seller too, a divorce from Amazon would be very costly to them, and the publishers are basically wimps. By the time of Apple's entry into the eBook market, was Borders still alive? Don't recall, but suffice it to say, brick & mortar book retail was dying and B&N is in its death throes. With them dead, what negotiating power would the publishers have against Amazon?
Maybe there is an argument that cheaper prices meant more people would read (novels, books, etc). But Steve Jobs was right about people not reading books anymore. Before the digital revolution, reading books was a much bigger thing. There wasn't many things competing for your time. Now, everything competes for your time. Low demand definitely means the prices of books were going to go down regardless of models. Yes, the DOJ is basically the Javert character from Les Miserables here. Well, at least before he developed a conscience.
Comments
Yep. No judge is going to rule against the DOJ. It would be career suicide. Same with the appeal.
Right. So the government has never lost a lawsuit?
Take off your tin foil hat.
He is CEO of Amazon buying a Washington DC paper. No way this is because he thinks its strictly a good investment as papers have been losing money around the country for years.
I will take off my hat if you open your eyes.
Quote:
Originally Posted by dasanman69
I believe Amazon can't go back to the zero margin tactic.
Why not? That's the way their whole business is set up. They price to as close to zero margin or zero net profits as possible. Having someone else control prices is anathema to AMZN's modus operandi.
Part of the agreement with the publishers doesn't allow retailers to take a loss on their entire ebook lineup, on some ebooks yes but there needs to be a profit overall. In essence the publishers were given a concession because they settled.
Quote:
Originally Posted by dasanman69
Part of the agreement with the publishers doesn't allow retailers to take a loss on their entire ebook lineup, on some ebooks yes but there needs to be a profit overall. In essence the publishers were given a concession because they settled.
The DOJ declared that AMZN's ebook business is and was profitable. So, how are we supposed to tell the difference between then and the future?
Also, I said "zero margin" or "zero net profits". That doesn't mean a loss.
The DoJ can say whatever they want about Amazon per eBook profitability. They were not on trial.
Quote:
Originally Posted by snova
The DoJ can say whatever they want about Amazon per eBook profitability. They were not on trial.
One more time. How do you know Amazon's eBook business was or is in the red? Then, how would you be able to tell in the future?
I don't think there's a problem whatsoever with Apple using the wholesale model for eBooks, and operating it at zero margin, just like Amazon is purported to do. The only problem is Apple's practice of always trying to make a profit, or at a minimum something just above break even like the iTunes store.
Was the DOJ lying about Amazon's eBook division's profitability? Who knows. If they were, and it was found out that Amazon's eBook business was actually operating at loss, then I think there will be some serious consequences at the DOJ. This court case isn't over yet.
Of course they were profitable, it was mainly the best sellers that they sold at cost or at a loss. The DoJ wants to make sure that Amazon doesn't abuse it by selling a publishers entire ebook lineup at cost or for a loss.
Quote:
Originally Posted by snova
...Why favor one of your content providers (by buying it) while you distribute its competitors content also...
Its like Amazon buy a book publisher. Or Apple buying a music publisher.
No need to buy a publisher... Amazon is a print-on-demand book publisher! It's an amazing system - completely automated - that creates a paperback version of your book for no actual investment except your time and talent. A very good friend of mine has published two books so far (Kindle & Paperback versions... I did the covers and he did the rest.) Change/modify anything about the book at any time (I lightened some of the pics that were printing dark). Free ISBN and listing on Amazon, etc.
As the author he pays a heavily discounted price... even as a pure vanity press it is a spectacular system. BUT, it means that Amazon is a publisher. As much as I like their "no investment" system, there is something wicked in it in light of the DOJ's/trial's decision.
Really? Care to provide evidence that their eBook business was profitable? And before you answer, note that their trailing 12 month EPS was -$0.23 so they entire company is losing money.
Well didn't the average price of ebooks go down after Apple came into the market? I mean wasn't that the argument against the claims that Apple raised prices. So if the average price came it means that Amazon had the average ebook priced with a healthy profit. One that the agency model actually bought down. Simple cause and effect with a little 1st grade math thrown in. Does that make too much sense for your Ivy League head?
Quote:
Originally Posted by charlituna
...As I have read it, agency model (which is not illegal per the DOJ) stands but the publishers have to give Amazon etc the control to change prices as the retailer wants for the next two years...
...And pay based on the selling price not the publisher desired selling price
Please correct me if I'm wrong... If my logic is correct -- the wholesale model means the Publisher sets their price with a suggested retail. Retailer sells it for whatever they like (anti-dumping laws apply in certain industries). For example: Publisher wholesales a book for $5 / Retailer sells for $8 (Pub: $5 revenue / Retail: $3 revenue). If Retailer decides to run a few loss-leaders (like milk at my local grocery store to get me in there vs. getting milk at Costco)... sells the book for $4 (Pub: $5 revenue / Retail: -$1 loss). Simple system that has been around forever.
I realize that high volume Retailers like Amazon negotiate lower prices in exchange for a promise of guaranteed volume. But in the end, the Publisher's product price has to be set (at least somewhat) by the Publisher. (Even in the example of Amazon's Print-on-Demand publishing -- the author has a minimum price they must set for their book -- depending on whether the inside has black/white pics [ie. $12.99] or color pics [ie. $21.99].)
Is this traditional Wholesale/Retail model gone? Are the publishers Mandated to take a percentage of actual sales price (agency)? Does Amazon REALLY have the POWER to DICTATE the price of the Publishers product? Yikes! It's not Amazon's product -- why should THEY have this power?
It's not only Amazon, Walmart abused that power and now Rubbermaid is a shadow of it's former self. While we're on the subject of dictating prices didn't Apple dictate to the music industry the $9.99 album price undercutting their physical albums sales and putting all the B&M stores out of business?
Quote:
Originally Posted by dasanman69
...While we're on the subject of dictating prices didn't Apple dictate to the music industry the $9.99 album price undercutting their physical albums sales and putting all the B&M stores out of business?
I recall that Jobs fought long and hard to have the Music Publishers sell ALL of their songs for 99¢. I thought it was brilliant to have a simple concept like that. The album prices varied from the $9.99... with special editions, booklets, videos, etc thrown in to justify more that $9.99. But if you recall, CD's had gotten up to $19.99... $21.99 and up. Who was it that "forced" them to reduce CD's to $9.99? I'm not certain. It may have been the lack of sales. And, as you say, Dasanman69, digital piracy (then iTunes sales) took a HUGE bite out of their CD sales!
Fast forward a few years and there are at least 3 prices on the iTunes stores... and many other subscription services that average the price of a track to between 39¢ and 49¢ (for a monthly flat fee).
Let's see:
You and your Apple-hating friends keep claiming that the price of eBooks went UP after Apple entered. So your logic is backwards. or you were lying when you said that prices went up. Take your pick.
Furthermore, you never provided any evidence to back up your claims, anyway. And even at its very best, Amazon was never all that profitable.
I never said the price went up the DoJ did. Just because I'm critical of Apple doesn't mean I hate them. I own several devices and more often than not it's the product I recommend to friends whenever I'm asked for advice. FYI I don't agree with the DoJ verdict, (I have stated on numerous occasions that I didn't believe Apple was guilty) nor do I agree with the punishment they've suggested.
Quote:
Originally Posted by H2P
I realize that high volume Retailers like Amazon negotiate lower prices in exchange for a promise of guaranteed volume. But in the end, the Publisher's product price has to be set (at least somewhat) by the Publisher. (Even in the example of Amazon's Print-on-Demand publishing -- the author has a minimum price they must set for their book -- depending on whether the inside has black/white pics [ie. $12.99] or color pics [ie. $21.99].)
Is this traditional Wholesale/Retail model gone? Are the publishers Mandated to take a percentage of actual sales price (agency)? Does Amazon REALLY have the POWER to DICTATE the price of the Publishers product? Yikes! It's not Amazon's product -- why should THEY have this power?
The publisher's problem is that hardcover books generate most of their revenues. These hardcover books are typically $15 to $25, with typical sell-in to the wholesaler/retailer at $12 to $15. The publisher's arrangement for ebooks were likely similar, they sold ebooks to Amazon at around $12, probably thinking that Amazon would sell them for one or two dollars cheaper than brick and mortar retailers selling hard covers, like they usually do for hard covers.
With Amazon selling bestselling ebooks at $10, it basically killed hard cover sales at brick and mortar stores which were selling them for more, sometimes 2x or more. Publishers got their money and weren't hurting like the brick and mortar retailers, but they were then looking down the barrel of gun with their revenues decreasing as it was doubtful to them that Amazon would continue to sell $12 ebooks at $10. Eventually, Amazon would have come calling to have the wholesale price to them reduced to $6 or $8 or something. This was what the retailer was worried about, and that Amazon was killing their distribution network.
I don't think this is an unusual tactic for Amazon, and this may be one of their strategies to always get the best wholesale price possible. Amazon has quite the negotiating power as they are the dominant paper book seller too, a divorce from Amazon would be very costly to them, and the publishers are basically wimps. By the time of Apple's entry into the eBook market, was Borders still alive? Don't recall, but suffice it to say, brick & mortar book retail was dying and B&N is in its death throes. With them dead, what negotiating power would the publishers have against Amazon?
Maybe there is an argument that cheaper prices meant more people would read (novels, books, etc). But Steve Jobs was right about people not reading books anymore. Before the digital revolution, reading books was a much bigger thing. There wasn't many things competing for your time. Now, everything competes for your time. Low demand definitely means the prices of books were going to go down regardless of models. Yes, the DOJ is basically the Javert character from Les Miserables here. Well, at least before he developed a conscience.