Amazon Saturday

[rolanni]

Today is Amazon.com’s bounty-hunting day. If you’d like to read more about what other folks think of this adorable trick, here’s what American Booksellers Association has to say.

Here’s the link to the petition, again, for those who are interested.

There’s also a cogent discussion of Amazon’s Thrilling! New! Project! KDP Select.

As it happened, Steve and I had some shopping to do on Waterville Main Street today, so off we took ourselves, to the post office, which was a Zoo; to Joka’s; to Juliet’s Bakery — which were, thankfully, not a Zoo; to The Framemaker’s where Bill admired the Dragon Ship art, and suggested The Perfect Frame.

Now, I want to pause here and say that, indeed, it was the perfect frame. Right up to the point where Bill came back from running the numbers, looking a little shaken, and said, “This is the most expensive frame we have in the store. I’m not kidding.”

So, we three put our heads together again, found a very nice, and appropriate! frame, and settled on a price for mat, glass, frame, and labor that came in a couple of pennies less than one-third of what it would have cost for the frame alone of the other stuff.

That pleasant chore accomplished, we walked down to Barrels to renew our annual membership and chat with the crew. After that, it was Hannaford, and some moderate food shopping, then home to a quiche-and-green-salad lunch, and so to the desks.

…now back after a cookie break. Juliet? Makes a darn good gingerbread cookie.

I wanted to touch on something that first came up during the autographed books discussion we had a couple weeks ago. There seems to be a belief among people who don’t work in bookstores, or as publishers, or as writers, that Amazon’s prices are the norm and that indie bookstores mark their books up to an outrageous level, and that’s um…just not now it works.

How it works is like this: Rolanni Publications publishes Living High on SciFi by S. Lee. Based the cost of art, typesetting, copy editing, what the market will bear, &c, &c the publisher sets the price and prints it on the cover. This is called the “cover price” or “retail price.”

Now, in order to get LHSF into bookstores, the publisher offers it at a “bookstore discount.” This discount has been, for as long as I’ve been aware of these things, 40% of cover. This means that, if the cover price for LHSF is $30, the bookstore will pay $18. The
bookstore will then sell the book to you for cover price, thus earning $12 per book sold.

For the purposes of this discussion, we’re not going to get into returns and all the rest of bookselling’s arcane and endearing little traditions. We’re just going to do arithmetic.

So, are we clear on the above? — $30 cover price, publisher places with bookstores at 40% discount, bookstore takes the difference between 40% discount and cover price as their income (i.e., the cash that’s used to keep the lights on, the heat up, the employees and the owner paid).

Hokay. So, that’s how it works, normally.

Enter Amazon.

Amazon doesn’t want to take a 40% discount. They need to earn more money than that, so they can pay lawyers to help them avoid paying sales tax to the states in which they do business. Amazon wants a 50, 60, and I heard from at least one small press, a 65% discount off of cover. And they’re huge. If you’re a publisher, you’ve got to move books, so you hope to ghu that you can earn enough on volume to make this work. If your publishing enterprise is big enough, of course. A 60% off cover bookseller discount would be unsupportable at Rolanni Publications. Just sayin’.

Now. Amazon, having scrod the publisher on the discount, then turns around and sells the book to you at a price significantly less than cover price. This is, a DISCOUNT. It is not the natural price of the book; the natural price of the book is the one printed on the cover.

So, yes. You will pay more at your local bookstore for LHSF — unless the store is having a sale — because you will be paying cover price. But that is not because Amazon’s price is the Real Price and your local bookstore is trying to rip you off. It’s because Amazon is willing to go to quite extraordinary lengths to be the last player left standing at the end of the game.

Originally published at Sharon Lee, Writer. You can comment here or there.

Comments

[attilathepbnun.livejournal.com]

Great Ghu. People who can read really think that? *is stunned*

Ellen says...

[(Anonymous)]

I have worked for a number of big publishers. And it is a fact that the deep discount for Amazon is not a new thing. Chain brick and mortar stores like B&N and Borders also received deep discounts. It's an economy of scale thing. You may remember Tom Hank's character in You've Got Mail making this point about the super store's ability to support deeper discounts than Meg Ryan's Little Shop Around the Corner.

Re: Ellen says...

[rolanni.livejournal.com]

It is true that Sears gets a larger discount from its suppliers than Main Street Furniture, yes. The point regarding Amazon's business practices still stands, I think.

You may remember Tom Hank's character in You've Got Mail making this point...

Actually, no. Don't get to many movies.

Thank you, I'm spreading this far and wide

[(Anonymous)]

That was very succinct - ta muchly.
And yes, Attila, you'd be surprised at what folks
believe these days. Sigh.
Lauretta@ConstellationBooks

[rdmasters.livejournal.com]

Which neatly sums up the three intertwined practices of loss-leading, monopsony, and monopoly when applied to the distribution level.

Company A has a large war-chest and can afford to absorb loss generating business for an extended period. They also control a substantial portion of the retail sales. This gives them a large degree of control over the supply chain. So, they start to heavily discount their retail sales, so as to increase their suppliers' dependency on Company A's purchases, and then use that dependency to dictate purchasing conditions on the suppliers.

A short-term retail loss results in a long-term reduction in the cost of business, and the initial loss is then turned into a long-term profit position at the new (lower) retail price point. At which point the cycle can be restarted at the 'dictating of terms' point, as the dependency is now self-sustaining.

Eventually, Company A is in a position to either force the suppliers to sell-out to them, giving them monopoly control of the supply chain, and thus preventing other retailers from entering the market, or the suppliers of similar production merge to create a monopoly supply situation as a defence.

In either case, the long-term impact for retail customers is bad, for obvious reasons.

It is for this reason that most countries have laws regarding the abuse of monopoly positions. Unfortunately, these laws usually kick in when it is already too late, and are often able to be circumvented by a number of means, including (but not limited to) extra-territoriality, extortionate collusion, lobbying for softening of laws, and legal delaying tactics.

A few countries have more proactive legal frameworks around such behaviours, but these (in a modern environment) are often easy to circumvent via extra-territoriality. I will cite, for example the difference between USA and Australian law in this example, where under Australian law even the appearance of such behaviour is sufficient to prompt investigation and enforceable mandates, versus American law, where the use of abusive trading to establish a monopoly is not illegal, only the (provable) abuse of an actual monopoly position. In this circumstance, Amazon, if incorporated in Australia, would be likely already under investigation, whilst as it is incorporated in the USA it would only be investigated after establishing (at a minimum) a de-facto monopoly retail position, and have a complaint brought against it for abusing that position.

Disclaimer: I am not a lawyer, or economist, although I have an interest in the interaction of both fields. I am not claiming that any specific company is engaging in any specific behaviour. I am using the example above to illustrate a particular economic behaviour.

[mbarker.livejournal.com]

So where can we get this Living High On Sci Fi book? Is it available in ebooks? Sounds like a real page-turner, with lots of ups and downs, and probably some real cliffhangers.

mark-up

[(Anonymous)]

As a small indie booksellers spouse, thank you for clarity on the "small bookseller profit" issue. We offer a discount to our regular customers, and typically make less per book than Amazon does. Yet no one believes we are not raking in a huge profit because we are charging more than the big sellers (at some point B&N makes similar profit). May you continue to have a fiar return on your hard work.
Jean Eelma

Re: mark-up

[aspidites.livejournal.com]

Heh, I was going to mention that my independent bookseller (Between Books, Claymont, DE) has always offered a discount off cover price, albeit not as large as the discount Amazon, Devourer-of-Worlds can offer (it's 10%)... but I *know* how tight margins are on brick-and-mortar bookstores, so it would never occur to me to expect Greg to give me a larger break on the price.

books

[(Anonymous)]

Probably should just call it Walmarting and leave it at that. Toy stores went out of business because of just that sort of biz.

Nanette

Amazon

[sam marks (from livejournal.com)]

Wow, so Amazon is the big bad wolf? I remember buying your Meisha Merlin editions at the local Science Fiction and Mystery Bookstore. They even had chapbooks, which I picked up.

Several years ago, the bookstore, like many others, closed. At the time people blamed the mega-stores BN and Borders. As much as I missed the bookstore, I enjoyed the mega-stores. They had large inventories and I could shop without having to drive 30 minutes. Plus they offered discounts which let me buy more books.

Now people are upset at Amazon. Amazon is doing a great job. They are making more content available to more people at lower prices. That is a good thing.

Unfortunately there will be winners and losers going forward. The local bookstore will most likely go the way of the record store.

Does Amazon have a monopoly. I don't think so. I buy all your new books at Baen for $6.00. The local bookstore and Amazon can't compete with that price for a paperback, much less a hardcover. Is that bad? The low price lets me buy more books the month they are published instead of having to wait a year for the price to drop.

The publishing industry is certainly changing. Some authors now sell their books directly to the public. I can buy Diane Duane's books from her at the price she sets. C. E. Murphy tried selling a novella on Kicstart and raised over $20,000. I don't know whats going to happen in the future, but there is one thing that is likely to be true. More stories will be available to more people at lower prices.

[conuly]

And when they're the last ones, they'll jack up all the prices. (To this day, my mother won't shop at an A&P for just that reason.)

[intuition-ist.livejournal.com]

add the amounts they're extorting from the publisher to the *ridiculous* prices they're charging for Kindle-format books (1), and it looks to me like they're making a fortune.

Howsomeever, most consumers see: a) a very large "inventory", b) a fairly easy way to get free shipping, and c) a way to shop that doesn't require a 2-hour chunk out of their day to go, fight traffic at the mall, visit 3 bookstores, none of which have the book they're looking for, and go home again in frustration. The bookstores need to find some way to work with Amazon that profits them
both. I'm not sure that's possible, but neither is their current business model.

[intuition-ist.livejournal.com]

(1) i fail to believe that a novel's worth of bits costs anywhere near $14.99 to produce. if they were reliably selling Kindle ebooks for half that or less, and allowing me to scan a barcode of a book i already owned to download the e-version, I would have spent So Much Money on the Kindle by now. as it stands, i refuse to have anything to do with it or the Kindle format ebooks.

[thejunebug.livejournal.com]

I work in a library, and we run across this confusion too when dealing with lost/damaged items. People think they should only have to pay the price on Amazon, not the list price in the item. We always have to explain the difference between list price and discounted price.

[kk1raven.livejournal.com]

In my opinion Amazon is a big bully. I prefer not to do business with bullies. Doing so to save a little money isn't worth it.

Apples, Oranges, Grapes

[claire774.livejournal.com]

Amazon is one thing, your neighborhood B&N is another, a friendly neighborhood indie bookstore is another, the second hand book store is another, the e book is another. And so on.

If you are lucky you have a bookstore in your neighborhood or town or whatever. I don't. I have to drive 1 1/2 hours to my nearest B&N bookstore which I don't like cause they're buying books for their shelves by the foot and don't have anyone in the store who actually knows anything about books or authors. zof course it is an oppportunity to see some real live books and might improve if it gets a handle on what folks in St. George UT actually prefer.

The nearest second hand bookstores are in Salt Lake City where there are lots of good ones but that's a six hour drive. The folks that live there have a very good deal.

I buy most books used from whichever web sites there are to be honest I've found the merchants on Amazon are the most reliable. The second hand book being still cheaper than Kindle, etc.

At this time since their old publisher went out of business I buy Lee and Miller books from Unlce Hugo's because they are signed and what the hey....More expensive but worth it.

I buy other fave books from Amazon because the stupid B&N bookstore is likely not to carry those.

I noticed that a highly rated sci Fi author on Amazon is only available now on e-reader format. . Don't have an e-reader yet so I can't read those books. Interesting and Oh well.

A friend self published a book recently and is trying to distribute and sell the book herself. I have a question about that. I'll put it in a different post.
C.

Self Published Book

[claire774.livejournal.com]

My friend of the self published book wants to put out an audio book now with herself reading. She asks does anyone know what exactly is involved with that? How does on actually DO that?

I have a question too. Would it be better to go for the audio book first or go and see if one could get the book on Kindle first?

Thanks muchly.
C.

Re: Self Published Book

[rolanni.livejournal.com]

Well, it's certainly easier to format a book for the Kindle. Doing an audiobook strikes me as a tremendous amount of work -- the time to read it, alone! And the technical details! Unless she has access to a studio or a white room and she has a trained voice...Nope, I'd definitely try it as an ebook first.

Re: Self Published Book

[pedanther]

It's not something I've ever done myself, but the Audiobook Creation Exchange (www.acx.com) strikes me as something your friend might find helpful.

Re: Self Published Book

[claire774.livejournal.com]

Thanks for the suggestion. I'll pass it on.
Happy HJlidays,
C.

Typos

[claire774.livejournal.com]

Sorry for all the typos. Am too much in a hurry.
C. .

[(Anonymous)]

>Based the cost of art, typesetting, copy editing, what the market will bear, &c, &c the publisher sets the price and prints it on the cover. This is called the “cover price” or “retail price.”

Also known as "complete fiction". If the publishers don't like the "standard model", they have only themselves to blame since they're the ones who set it up (and de facto enforce it) in the first place. Selling straight to Amazon must make them money (ie. they're still in the black) or they just wouldn't do it. You talk about bookstores going under.. how many _publishers_ have gone under?

[rolanni.livejournal.com]

Please sign your name.

Then, tell me what on EARTH you're talking about.

Thanks.

[(Anonymous)]

I'm a-wondering too...and starting to count on my fingers which
publishers have gone under (it's greater than zero)
Lauretta@ConstellationBooks

[(Anonymous)]

My first point is this: Retail price is a made-up number somewhere north of the actual price of the production of the book, including author royalties. If the publisher sets it lower than the sum of all that, they lose money and quickly go out of business. And I bet they're not losing money on even physical books no matter what kind of squeeze Amazon is putting on them. To think they're losing money on e-books is laughable since e-books have _zero_ marginal cost since they shift the burden of distribution (and the longer-term burden of account maintenance, etc) to the retailer.

Second point: Amazon isn't hurting your local bookstore, the publishers are: they could give all the local bookstores the same discount they give Amazon, if they wanted... or they could refuse to give Amazon quite so large a discount. Publishers have thus _chosen_ to shift the burden of cost to the small bookstores; why lay that at Amazon's feet?

--zd

[rolanni.livejournal.com]

To think they're losing money on e-books is laughable since e-books have _zero_ marginal cost

You may of course laugh and be wrong at the same time...

or they could refuse to give Amazon quite so large a discount.

Wow, this is a lot like that conversation I had a couple months ago with a guy who assured me that as an author I could refuse to sign over my erights to publishers said guy didn't approve of for one reason or another, and if the publisher then refused to go to contract that was fine by him. And if it didn't happen to be fine by me, then I deserved all the scorn and abuse he could heap on my head, which he would continue to do until I changed my bad habits. Like eating, one presumes.

Amazon doesn't care if it carries Publisher A's books. If a customer complains, they just say that Publisher A is a Bad Guy who want play by Amazon's rules. Amazon is a huge market, publishers need to be there, if they want to sell books. I doubt, too, that they're losing money on books, but they're not making as much per each, which means they have to sell more books, and! That's not a given; it's a gamble.

why lay that at Amazon's feet?

Because Amazon is a predatory bully? It just doesn't bully its suppliers; it also bullies its customers by making them pawns in its various Dramatic! Power! Plays!

Big retailers have been able to co-exist with little retailers in before. Amazon has chosen a scorched-earth policy with regard to its competitors. It wants to be the only retail out and it's not picky about how it gets there.

Amazon

[claire774.livejournal.com]

By the way thanks for answering my question about the self published book and Kindle.

As for Amazon.....with books that are out on the market or recently out on the market (so you can't get them cheaper or used yet) I would much prefer to be able to go in to a real bookstore and see the real life book, read the dustcover, etc. before I buy the book. So I think there will always be a place in the big cities for real bookstores. they may have to be very big to survive like B&N or well established and specialized like Uncle Hugo's though. I really don't think it's fair to use such a store as a catalog and then go buy on Amazon.

I forgot another alternative for books. I am a long time member of the Science Fiction Book Club ...a mail order company/website. I feel obliged to buy from them even though they are definitely expensive in order to fairly receive their mailings. that's where I find out about a lot of what's being published in sci Fi and fantasy. I don't think that I've seen your books in SFBC. I don't know why.
C.