Random House ‘caves’ on Kindle price policy?
TechFlash and the Wall Street Journal are reporting that Amazon has closed a deal with Random House to release the Kindle version of Dan Brown’s next book, Lost Symbol, at its favored price point of $9.99. (Amazon.com press release here.) There had been some speculation over whether Random House would balk at this low price, given that Amazon will sell the hardcover for $16.17.
The next book whose pricing is being watched is Stephen King’s Under the Dome: the hardcover is listed at $35 standard retail and $23.10 (hardcover) on Amazon, but no Kindle edition pricing has been announced. The lack of a Kindle edition for this book is interesting given that King took part in the Kindle 2 launch event and even wrote a novella specifically for the e-book device.
As a commenter on TechFlash notes (and I have mentioned on TeleRead in the past), Amazon is still treating the Kindle e-books as loss leaders—paying Random House half of the $30 standard retail price for each $9.99 e-book it sells, thus losing $5 with every book. This incredibly low price point serves to make the Kindle more attractive to would-be e-book device buyers (some of whom insist they will “boycott” any Kindle e-book priced higher than $9.99).
However, many industry observers are worried that Amazon might, at some point, force the publishers to accept less money for their e-books in order to continue selling them at the $9.99 price point and make a profit—and perhaps threaten to stop carrying those publishers’ books altogether if they do not acquiesce.
As TechFlash points out, Amazon “is still a critical sales channel for hardcover.” If it comes down to a choice between losing some money on Amazon sales and losing all Amazon sales, publishers are going to have a tough decision to make.
August 20th, 2009 at 2:48 am
About Stephen King issue. You see, I think those are the kind of things that happen when you force one company to give the prices you impose. If that book costs 23,10 how on earth are they going to give more than the half of it for free? Even assuming that there is not paper costs, there’s still all the other costs in. And 13,10 is a big cut isn’t it?
So at the end, to have a blind boycott on EVERYTHING it doesn’t benefit the final user (because the publisher wants to avoid problems, and won’t release an ebook version). I think it should have been tought better.
August 20th, 2009 at 4:26 am
chris said:
> many industry observers are worried that
> Amazon might, at some point, force the publishers
> to accept less money for their e-books in order to
> continue selling them at the $9.99 price point and
> make a profit—and perhaps threaten to
> stop carrying those publishers’ books altogether
> if they do not acquiesce.
extremely poor logic, chris.
amazon will not “force” publishers to do anything.
and amazon surely won’t stop carrying any books!
what amazon _will_ do is to stop eating the loss…
so, using the stephen king book as our example,
with a $35 hardcover list-price, amazon priced at
$23.10 for the physical-book, the kindle version –
let’s assume a 50% discount, to make the math easy
– will come in at $17.50.
this means amazon won’t make _any_ money on it,
since that whole $17.50 will go to the publisher, but
then again, amazon won’t lose anything on it either.
of course, a kindle edition at that price will encounter
extreme customer price-resistance, thus low sales…
but whose fault is that?
in other words, amazon will just pit the publishers
against the customers (who are the real “deciders”,
as amazon knows, and the publishers often forget.
amazon is much more in touch with our budgets;
they’ve studied our price-points quite thoroughly.)
nor will the publisher do any better by refusing to
issue a kindle edition, since that will only engender
a customer backlash. (and it is good to remember
kindle owners are heavy book-readers/purchasers,
hardly the group that a publisher wants to piss off.)
also, when you consider that kindle sales constitute
35% of the total sales when combined with p-books,
giving up that much money in the here-and-now is
going to be a tough nut for publishers to swallow…
(since they know sales deferred are often sales lost.)
all of this, of course, is a _good_ thing, because
publishers have been pricing their books too high
for some time now, gouging their customers, and
supporting their bloated corporate infrastructure,
so this bezos intervention is doing them a big favor.
whether they like it or not is a different matter, sure.
the choice for publishers then will be quite clear:
price your books so customers buy, or lose sales.
which is the way that it should be…
-bowerbird
August 20th, 2009 at 11:51 am
publishers should just die, roflmao!
i’ll get an e-reader in future once the price goes down a little, much like cell phones in the past…
August 20th, 2009 at 2:02 pm
bowerbird, I think you’re quibbling over semantics. Whether Amazon “forces” them by insisting they take a lower cut of the retail price so they can keep selling the books at $9.99, or Amazon forces them by no longer selling the books at $9.99 and letting the consumers stop buying in droves, the publishers are still going to be forced to drop their price. And I’ve seen dozens of of places where publishers say that having to lower their prices even a little bit would be a catastrophe as they’re already running on a razor-thin margin.
Now, granted, it is the publishers themselves saying that, so you could just accuse them of lying through their teeth. But on the other hand, it is true that we don’t know as much about the publishing business as they do. It’s one thing to call books overpriced because they cost more than you personally want to pay for them. But from an economic standpoint, they may not be overpriced at all in terms of the equilibrium price that will let the publisher stay afloat.
I am reminded of the loud complaints coming out of the role-playing sector that “RPG books are overpriced” because they cost more than hardcover fiction books—ignoring the fact that the RPG market was so much smaller that fixed costs of each print run had to be split among many fewer units sold—thus driving the price up. But did gamers care? No, they just said, “These books are overpriced” because they cost more than they personally were willing to pay—and so they went off to download them from peer-to-peer.
August 20th, 2009 at 2:44 pm
books are priced “correctly” now — in terms of
supporting the bloated corporate infrastructure.
but who promised corporate publisher dinosaurs
that their business model would go on forever?
they decided to price themselves out of business,
and they’re now facing the consequences of that.
in competition with the scads of _free_content_
on the web, corporate books are too expensive.
and things will get worse for dinosaur publishers.
new authors who self-publish are getting brash,
and that’s bad enough. but mid-list authors are
getting the message now too, and they cannot
be swept aside with “amateur” innuendo so easily.
they’ve already received a stamp of authenticity,
and have fans, so they can’t be branded as hacks.
moreover, as these self-published e-books flood
the marketplace, they’ll soon create a _very_low_
price-point — maybe a request for donations? –
and the corporations will not be able to compete.
so they will fold their tents, and quickly move on.
because that’s exactly what the corporations do
when the profits dry up. that’s how they operate.
this will be _long_ before many people are willing
to give up their paper-books. (indeed, it will be
reminiscent of how computer manuals vanished.)
but, given their inability to muster an audience of
any size, publishers will rely on print-on-demand,
and they’ll lose the economy-of-scale obtained by
large print-runs, so p-books will double in cost…
and then triple… and then quadruple…
to the point that readers simply can’t afford them.
so even if we could prop up corporate publishers
in the short run — and why would we, anyway? –
it would not stave off their long-term extinction…
besides, the world will be better off with ‘em gone.
authors will start giving away their books, as gifts,
and fans will return the favor with monetary gifts,
and this new gift-exchange culture will be able to
overturn the greedy selfish capitalist mentality that
poisons our planet and our interpersonal relations,
and — if we avoid extinction ourselves as humans –
we’ll be able to create a new, non-exploitive world…
-bowerbird
August 20th, 2009 at 2:46 pm
Yeah, we don’t know as much about the publishing business as the publishers.
But to hear their constant whining and FUD about ebook pricing one would think they don’t know much to start with.
Aren’t they the ones who for the last 50 years have been constantly raising prices because of “increasing print costs?”, “increasing gas and transport costs?”, “Increasing inventory costs?”. Aren’t they the ones cutting back on inhouse editing, proofing, and slush-pile reading (content acquisition, no less!) because*all* those print costs were eating them up alive in their fancy Manhattan, Toronto, and London glasshouses?
And now that they have a way to deliver their product without any of those obnoxious added costs they’ve been bemoaning for decades it suddenly turns out that book pricing isn’t *really* dependent on those things at all?
Riiighhhttt…!