Comment by skolor | Hacker News Reader

Comment by skolor | Hacker News Reader

I haven't really been following this situation, and I'm far from an economics expert, so I have a few questions for anyone who understands this stuff better than I do:

First off, I'm not quite sure about what the issue is. I seem to remember that Amazon said they wanted a hard ceiling, no books selling for >$10. The article claims that what the publisher wants is the ability o change book prices based on demand. Correct me if I'm wrong, but I thought that all Amazon was saying was "You know the $10-15 range you wanted to price eBooks at? You can't do that."

Second is more of an economics question. The article mentions Price Fixing in relation to gas prices, and how fixing the prices caused gas prices to go up due to hoarding. How does that work in a Monopoly, where the publisher not only controls the only source of the books, but can also make more of a single work at a negligible cost? (Yes, I understand that there is an outlay at the beginning, but after that the cost of producing additional copies of the eBook is nearly non-existent. You don't have to keep a stock of the eBooks that you can potentially lose money on, you don't have to pay in advance to have each copy produced. This changes things, but I don't know how.)

> I thought that all Amazon was saying was "You know the $10-15 range you wanted to price eBooks at? You can't do that."

What do you mean by "all Amazon was saying"? That's the crux of the issue: whether publishers will allow themselves to be told by Amazon that they cannot sell over a certain price in their market, or whether they will be allowed to sell at whatever prices they choose.

It's a fundamental question about how the online book market, so dominated by Amazon, will work.

Your second paragraph doesn't have a clear question; what exactly do you want to understand? I'll try anyway:

The marginal cost of producing eBooks doesn't really effect the price-fixing problem. The OP's point is that publishers need the flexibility to try out pricing schemes on the Amazon marketplace to discover what works, but Amazon won't let them. Ultimately, he claims, this will lead to worse results for the consumer because Amazon will be an inefficient marketplace due to the inability of the publishers to recoup costs on books with high initial prices which they can then follow with low prices later.

The "All Amazon was saying" is because, reading the article with little-to-no outside information about the situation, the author makes it sound like Amazon isn't setting a price ceiling, but an absolute price. I was trying to verify that that was the case, since the article seems to be saying that the only price point will be $9.99.

I seem to remember a price point being thrown around in one of the threads here that The Publisher/Author share 30% of the price of the book, the distributor takes ~40%, and the marketplace (Amazon, bookstore) takes 30%. From what I've read from these posts, it seems like the Publishers were fighting over the wrong thing entirely. If Amazon is acting like both Distributor and Marketplace, they currently take 70% of the sale price of an eBook. Why are Publishers arguing about the total price, rather than their cut of it?

Looking at the recent move, Amazon now offering 70% to the publisher, with the requirement that they get the lowest price point, and that that price point is less than $10, it seems like that should have been what the publishers were fighting for the entire time. If both distribution and selling of the book are being by the same company, for the same effort as just selling the book, there's no real reason for them to be double-dipping and taking that huge of a portion of the sale price.

The article mentions Price Fixing in relation to gas prices, and how fixing the prices caused gas prices to go up due to hoarding.

The gas price fix caused shortages at the pump, not higher prices. Because most rational sellers won't sell something for less than they have to pay for it unless they make it up elsewhere, which most gas stations don't.

And this author is saying the same thing may happen for eBooks. He doesn't think he can make enough money on eBooks to make a living, so many people in his situation may not write as many books, which may lead to the there being less new books in the world.

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