Can A Price Be Too Low? Thoughts on the eBook Price War
In the ebook pricing war between Amazon and publisher Macmillan, Amazon has come out the loser. They insisted on holding the price for ebooks at $9.99 while Macmillan wanted the price to be $15.00. You might be inclined to think that the consumer has also come out the loser. After all, a lower price is always better than a higher price. That is certainly what we have been conditioned to believe (one might call it the Wal-Mart mentality…lower prices are ALWAYS better…no matter what damage lower prices might cause). Here are two examples where lower prices might not always be better (at least, not better in the long run).
In Ken Auletta’s book Googled: The End of the World As We Know It
A book review by Malcolm Gladwell recalls the story of a discussion between the Dallas Morning News and Amazon. The newspaper would provide the daily content and Amazon would distribute the digital version of the newspaper. In addition, Amazon wanted to have all intellectual rights for the redistribution of the content. Further, they wanted to split the subscription revenue with 70% for Amazon and 30% for the newspaper publisher. So with the publisher bearing all the costs of producing ever-changing content, of maintaining a reporting staff and all its attendant costs, Amazon would keep the bulk of the subscription money and any residual monies that might be generated. The publisher did not go for this deal. But let’s suppose the publisher DID go for this deal. How would the publisher make a profit? How would the publisher maintain the quality of the product, namely, the news?
The point here is not to make Amazon into an ogre. However, it does make us pause for a moment. If the pricing for a product – like a book – remains too low, or the profit made by a newspaper publisher remains too low, what will happen to the quality of the product? How will a publisher be able to support a writer with all that is needed to produce a quality product? How will a newspaper cover local news if there is no profit in covering such news? The bottom line is this: is there a point when a price is too low to sustain profitability so that the only logical alternative, if one is to remain in business, is to reduce the quality of the product?
Links of Interest
- http://www.nytimes.com/2010/01/30/technology/30amazon.html
- http://www.techcrunch.com/2010/01/31/amazon-caves-to-macmillans-ebook-pricing-demands/
- http://whatever.scalzi.com/2010/02/01/all-the-many-ways-amazon-so-very-failed-the-weekend/
- http://booksquare.com/ebook-pricing-who-chooses/
- http://www.nytimes.com/2009/05/17/weekinreview/17rich.html
Here’s the view from Publisher’s Weekly
That Amazon is currently treating the bulk of Kindle editions as loss leaders—items it either breaks even on or loses on to build market share in e-book sales and to fuel the growth of the Kindle—is one of the worrisome aspects of the current system. The concern among publishers is that, at some point, when Amazon sells both the bulk of the digital reading devices and the bulk of digital books, it will refuse to pay the same discount on Kindle editions, forcing publishers to a lower price for digital editions. This scenario, the head of one of the major houses said, poses a major problem. “Right now the entire economic model for book publishing, shaky as it is, is in jeopardy from this low pricing,” he said. In this publisher’s view, lower digital prices will put pressure on publishers to increase royalty rates despite the fact that “there are no margins to do so.” Another option would be for publishers to drastically lower advances, something that would enrage authors and agents, who aren’t happy with the current split of e-book sales.
My thoughts exactly, Jeff. I was so struck while listening on the radio to Auletta recount that interchange with Brin.
It is too scary to think that this mogul, who is growing more powerful by the minute, has so little understanding of these issues’ larger implications. No empathy at all. And little real-world experience to provide a frame of reference. What he wants, he wants.
I was shocked to read all the one-star reviews of Game Change on Amazon — “protest” reviews by Kindle readers, who were up in arms that the Kindle version was not immediately available. So they sabotage the entire review system.
Publishers are squeezed in every direction these days, and being forced to meet the low-price demands of Amazon’s proprietary technology just can’t bode well for a diverse and vibrant industry.
Gee but I’m tired of narcissists.
If you really want to get frightened, read Auletta’s book.
The irony is Google’s motto: “Don’t be evil.” Of course…that doesn’t apply to them when they digitize a million plus books and claim de facto rights over many of them. Google has definitely done some great things in making information accessible but there are definitely much larger issues at stake here. And as you rightly note, Brin is completely oblivious to those issues.
It’s really bizarre that you’d write a blog post on the very issue (even the very passage in the book) that’s been nagging at me the last few weeks.
I’m afraid to read the book. My husband already listens to me ranting enough about these self-centered Silicon Valley Boy Wonders (and the occasional Girl Wonder, like Meg Whitman, who is now running for governor, and Carly Fiorina, who is aiming to oust Senator Barbara Boxer).
He feels he must always point out the good things SV titans bring us, such as Facebook (which I do enjoy). But it’s very hard to observe these people in social settings and have any confidence that they are truly educated people with a strong foundation in history, the arts, philosophy, etc. They are, for the most part, engineers who’ve been told their little butts are made of chocolate. Heaven help anyone who tells them, “no.”
You hit the nail on the head here: “But it’s very hard to observe these people in social settings and have any confidence that they are truly educated people with a strong foundation in history, the arts, philosophy….” In addition, the Giants of Wall Street are also devoid of this background and, unfortunately, since a traditional liberal arts education fell out of favor beginning with the Reagan era, we have nearly two generations of people who lack this background.
These type of things might make an Author, or a person who might be considering being an Author, not taking the leap. Depending on that person’s ethics, when he/she knows that society in general will be helped (educated,comforted, or just likes to read books,fiction,biography’s, whatever). Weather it be for finacial gain, or a need to show the world what they think.
I still have my library card in my wallet, but I am afraid to use it, in case I forget to return a book(s) twenty yrs. ago. I would be willing to bet on that one.
To post an opinion on this, I would have to actually be interested in books. Okay, well I AM interested in books…but I'm MORE interested in why I don't like sitting down to read them
Like Scott, I don't use my library card…actually wait, I DO, I use it to access social science articles online, but I don't check out books. I checked out a book of short stories by Eudora Welty once from the Oakland CA Public Library and didn't return it for about two years. I was so embarrassed that I won't check books out anymore…which is pretty funny because I have a Masters in Library Science…oh sh*t, you filed this under non-ADHD items…damn, just like an ADHDer, lookit me making even things that aren't about ADHD alllll about it…. 
I used to be able to spend a lot more time reading books but, admittedly, I don't have the patience that I used to have. Currently…I go through various moods where I may read a whole bunch of books…and then go many months not reading any books. BTW…I purchase my books (as opposed to borrowing them) because, well, if I like a book I rather own it than borrow it.
Okay I'm going to comment as an MLIS candidate (walking in graduation in May…wheeee!). I am very torn about certain kinds of information access. Yes, authors should have control over their work, AND should be the ones to benefit financially from its "use".
My specialty is legal information. Because of that, I am VERY pro open access. I feel it is completely and utterly wrong to make any kind of laws or version of laws inaccessible to the public in any way. And yet there are databases containing historical legal information that are only accessible to those who are privileged enough to have access to the collections of private law libraries and ivy league law collections. Do most people even want that access? Nope. But it should be available.
BUT…this is not the type of information you're discussing of course…and I think that unfortunately, many do not consider that there are different "types" of information, and that they should perhaps be managed in different ways, appropriate to their origin, intent, and other peculiarities.
Quite frankly many people I have met in grad school don't really think too hard about these issues either…which is probably why we're required to take courses that leave us no other option.
Just the impact of the limitations of digital storage on the availability of information (and the ease with which digital information can be "modified") should be terrifying enough to provoke people who deal in information to think a little harder about impact…but…apparently some have higher gods in their totem poles.
To a degree you've circled back to the issue that Gina brought up, namely the lack of a foundation in what I referred to as a liberal arts education (art, history, philosophy, and so on) is why people don't make these kinds of vital distinctions. You don't HAVE to have a liberal arts background to understand these issues but I believe it helps to sensitize people to these issues as they arise.
One of my concerns with information being in mainly (only?) digital format is that the digitally written word can be easily changed without there being a trace of such change. A news item, for example, can make claim X in the morning but the following day the same item could make claim Y.
YES…this ability to just "make changes" is too convenient, particularly in the realm of government information. You wouldn't believe the changes, omissions, and deletions, both intentional and unintentional, that have occurred in the past ten years as our government processes information….information that should be permanent, transparent, and easily accessible.
If more Americans knew or cared, they would be very afraid. And I say that as someone who is not particularly disposed to government conspiracy theories…but I call bullshit when I see it, and I can smell it right here in my seat, don't even have to look far…
Oh man, after looking into this, I did’nt have to look very long, before I saw the corruption, and as Gina points out, the “narccicist” attitude of the Big Boys, who put themselves at the front of the line, with no knowlege whatsoever as to the quality of the product they will profit from.
The scariest thing about it to me, is that maybe they do have a knowledge of this, and will stop at nothing, and just enjoy looking at they’re own reflection, where they see themselves at the front of the line. And laugh at the little boys they deceived, and left to die.
A bit over-dramatic? Sorry, but we all lose here…..
What's scarier is that they do these things anyway and they DO NOT have the knowledge but they believe they do!!
There needs to be something like an audit trail for this type of material. I remember that there was something at Huffington Post where it kept track of any edits made on a post and you could go back and view those edits. (Wikipedia has something like that.) This type of audit trail should be mandatory for any case where we are dependent on the quality of the information and we need to assure that no one has altered data when our backs were turned.
"Today, Stanford University threw its hat into the ring for Google by expanding an earlier agreement with the search giant and agreeing to digitize the University’s library. The move comes amidst legal controversy over the Google Book Search engine." See: http://mashable.com/2010/02/03/stanford-offers-up...
Don't forget that Stanford Univ is the Alma mater of both Brin and Page.
Well that’s just dandy!! Now Brin can have access to digitalize all the books that had useless information about business ethics. Our children who are lucky now to be able to use Google to access S.U. library, won’t have read all that useless information now!
I’ll make sure to give my kids my dictionary, so they can look up the definition of sarcasm, in case they google me, and read this comment. My dictionary is not digitalized by Brin.
Katy, it’s kinda funny what you said about this being posted as a non-ADD type of post and bringing ADD into a comment you made, but as usual, I think about things in a funny way. This post is Jeff’s ADD Mind posting it. And you are definitly an ADDer. So don’t feel silly about that…(chuckle).
Gina, you mentioned how your husband feels like he must always point out the good things. I do the same thing to my wife when she rants about thing’s, even if I see her point, I can’t stop myself from trying to show her another way to look at things. I just thought was kinda funny(she may not …lol).
Now, as for Google, when I said something about my kids Google’ing me…,While was in my own narcissistic state of mind, I did Google myself, and did find almost every comment I have ever made here. Also I found alot of Scott Hutson’s that were well thought of, for they’re abbility’s as Author’s,Dr.s,and so on….And visa-versa, some realy bad guys. Which is scary to me, to know that these guy’s could do what Jeff said about X and Y, and actualy destroy a persons reputation,career,etc…Just for they’re own well being, just as they have or will if we let them do this to books. It’s a very serious problem IMHO.
Hi Scott,
I actually do listen to my husband, and he makes good points. Technology's gifts to me personally have been immense.
But that doesn't mean I don't see the mixed bag. And he tends not to see that "darker" side of things technological, perhaps because studying the larger societal issues Jeff touches on here was not really a focus of his hard-science education. As a Mass Communications/print journalism major in college, I did study these issues., and as a journalist they were often at the core of my work. It's not that he's not well-educated or well-read; he certainly is. But his first impulse, though, is always to admire the technology.
Maybe, too, I am just better at predicting consequences — at seeing down the road.
I remember a road trip where we visited Arcosanti, probably 1993, when we'd just started dating. We were sitting in this dump of a diner, having a protracted conversation predicting the Internet's effect on news.
He predicted all good things. I predicted some good things but also the dangers of any knucklehead with a keyboard posting "news" (this was before Matt Drudge), the "lifting" of newsstories, the propensity of the American public to prefer free to paid (and largely lacking the critical-thinking skills to know the difference in content), and all the rest.
Many geeks just get so excited by the technology, I think, that they are blinded to the tedious after-shocks. That's the view from Silicon Valley, anyway.
Sorry to toot my own horn but…back in the early days of PCs, I had discussed with my professor at the time that, the way things were going with technology, one day the government will know what books you borrowed from the library and will use it as evidence against you. At the time I said it, I did preface it by saying…"You may think I'm crazy but…." Turned out I was just 15 years ahead of my time because, as a result of the Patriotic Act, the Bush administration was clamoring to look at the types of books that people were borrowing from the library.
Check out this prediction from…1967!!
"But such a Data Center [i.e., massive computer data centers] poses a grave threat to individual freedom and privacy. With its insatiable appetite for information, its inability to forget anything that has been put into it, a central computer might become the heart of a government surveillance system that would lay bare our finances, our associations, or our mental and physical health to government inquisitors or even to casual observers."
See: http://blog.modernmechanix.com/2008/03/31/the-nat...
On a more prosaic note, I'm not concerned about the price of ebooks. I'm concerned about the price of ebook readers. I'd gladly pay fifteen dollars for an ebook if my readers cost under fifty dollars.
I didn't use the library for many years, for the usual ADD reasons, but then I moved to Rhode Island, which offers an easy online interface with the state library system. A few taps of the keyboard and I know what I have out, and when it's due. At any one time I'll have 15 or more books out, and thanks to the emails sent from the library (your book is overdue), my fines are modest ones.
Information will always be pliable and manipulated. It will always be available for modification and nefarious uses. The digital age goes deeper, but it also provides deeper access for the common citizen — when the government or big business commits a crime, we're in a better position to catch it. I think of the rising tide analogy, the lifting of all boats. The powerful are more powerful, but so are the citizens.
Mark,
I think we'll probably see these ebook readers hit, say, the $99 dollar price range…maybe a bit lower. (Buy one reader!! Get the second one at half-price!! And if you order within the next 20 minutes….!) Even though technology prices do drop over time – with a concomitant increase in quality – there does reach a point where the price is too low and the quality is, well, not really there.
when they do that two for one sale, let's do it together. That way I'll get my fifty dollar reader.
Gina, yes it a “mixed bag”. I certaintly have received many gifts from technology. And I am better informed about many of things that concern me personaly. Just being able to read and comment here is a perfect example. I think anyone here that knows me would agree with that. It’s very hard for me to see this technology that has improved my quality of life, be abused by the some of the same people that have been helped by this technololgy.
I feel helpless and frustrated, when the people with the power to send our brothers,sisters, and children to die for something that only these people with power can control. We are only given the imformation that they think will be accepted by us. Then later we find out we had only been told an edited version of the imformation. “Better late than never” is not good in this case, and won’t be I fear, when the whole truth about this Google use of information is reveiled. But I won’t stop hoping that a Change will come about before it is too late and can never be healed,
In light of the technology discussion, there is a fascinating review of two books that look at Facebook. I think we've quickly forgotten that Facebook was really created for students in elite universities, like Harvard. In its current incarnation, Facebook has the potential for major disruption since it has very detailed social data on 350 million people. (If you are a Facebook user, you may have already noticed some of the targeted advertising.) See: http://www.nybooks.com/articles/23651
One more thought.
There was a very perceptive comment in another blog that concerned Goldman Sachs and its veiled antipathy toward the Volcker rules and banking/investing regulation in general. (You'll see the tie-in to the current subject in a moment. Hang in there.) The Volcker rules, or principles, can be summarized as follows:
"The most straightforward and appealing application of the principles behind the Volcker rule is: Do not allow financial institutions to be too big to fail; put a size cap on existing large banks relative to G.D.P., forcing these entities to find sensible ways to break themselves up over a period of three years." Source: http://economix.blogs.nytimes.com/2010/02/04/bett...
Okay…so now the interesting comment.
"It seems we are witnessing the end game of the chess match started in the 80’s by Ronald Reagan and his minions. His spectral presence hovers around this like stink on s**t. The “left”, liberals, Democrats, whichever you choose to use, have been outmaneuvered (or complicit) in every political and economic move of the last 30 years that has brought us to the edge of this precipice."
Source:
http://baselinescenario.com/2010/02/05/goldman-sa...
So…how does this tie into the current discussion about Google? Well, this really goes back to Gina's comment about our ignorance of history. The thread that ties the Reagan Revolution to the current crisis is apparent to anyone who REMEMBERS history. But to remember history requires learning about that history, requires remembering that history, requires…well…a human mind. Google is of no help here other than as a tool to verify the accuracy of one's memory. (If you don't read history, if you don't remember history…you won't know what you need to Google.) However, our mass delusion is that since we have facts so readily available to our fingertips via Google…we MUST be smarter. If anything, we're probably dumber. Imagine if someone said, "Look at all those digits you have access to. They are all around you and easily accessible. You must be a great mathematician." The folly of this statement is real obvious but how many times have we heard people claim that we are "smarter" because Google allows us ready access to lots of facts? (http://discovermagazine.com/2009/feb/15-how-googl... and here is the counter-argument: http://www.theatlantic.com/doc/200807/google )
I'm beginning to think that the "G" in Google really stands for gavone. In a recent item in the NY Times (http://www.nytimes.com/2010/02/11/technology/comp... they report that Google is going to sponsor some demo projects of super highspeed WiFi (1 gigabyte). "Google said it planned to build and test a high-speed fiber optic broadband network capable of allowing people to surf the Web at a gigabit a second, or about 100 times the speed of many broadband connections. This trial could be offered in several communities and extend to as many as 500,000 people." Google says they are not interested in becoming broadband providers but are simply looking to show what can be done. Well…maybe now it makes no sense for them to become a broadband provider but, watch out…when it makes economic sense they may move into that realm.
I have a feeling that these comments will continue to grow and grow since, well, Google just keeps dishing up new stuff that violates it's "Don't be evil" mission statement.
Source: http://bits.blogs.nytimes.com/2010/02/13/google-alters-buzz-to-tackle-privacy-flaws/