Amazon and Hachette have been having an ongoing dispute for several months over terms of a new contract. Negotiations haven’t gone well, and both companies have resorted to calling each other out publicly—to the point where the whole thing has turned into a huge spectacle.
Amazon has stopped taking pre-orders for books published by Hachette, and are stocking less inventory of print books to place more of a burden on Hachette to hold their own inventory and fill orders in a timely manner.
Knowing Amazon, they’re not going to cave on this matter, so it’s going to be up to Hachette to work things out. Amazon continues to hold ground on their terms. This week Amazon posted an announcement in their Kindle forum that provides some specific information about their objectives regarding the Hachette dispute.
Amazon never releases any sales figures regarding its Kindle devices or Kindle ebooks. Anytime they release sales numbers it reads like a complicated math problem, giving only percentages and comparison numbers with no real information.
This time around Amazon is trying to convince Hachette that their ebook prices are too high. Amazon wants Kindle ebooks to be priced at $9.99 or less. But many are being release at $14.99 and even $19.99.
Amazon won’t say how many ebooks they sell at a given price point, but they do reveal some interesting statistics regarding ebook sales.
According to Amazon, ebooks priced at $9.99 sell more copies and generate more overall revenue than the same title priced at $14.99. It goes like this:
We’ve quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000.
It would be nice to see some actual sales numbers and some specific examples, but those are some interesting numbers nonetheless. Amazon views ebooks priced at $9.99 as a win for all parties involved. Customers pay 33% less, publishers sell more copies, and authors make 16% more and reach 74% more readers.
Amazon is clearly trying to get authors from Hachette on their side in regard to this matter. Amazon even goes on to say that they think Hachette isn’t sharing enough revenues with authors. They think it should be an even split at 35% each, with Amazon taking 30%.
Both companies have dug their feet in and don’t appear to be making any headway with negotiations, so it’ll be interesting to see how this all plays out. Amazon is usually portrayed as the bad guy in these type of affairs, but it’s hard to disagree with them wanting lower ebook prices for customers. $14.99 is way to high for regular text-based ebooks; publishers are being overly greedy. Like Amazon says, ebooks should be less expensive with no printing required, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market because ebooks cannot be resold as used books.
Totally agree that eBooks shouldn’t be as expensive.
But Amazon’s skewed maths don’t stack up, I believe, from Hachette’s point-of-view:
A % of people at a $14.99 eBook price point would instead opt for the similarly priced physical copy, which I imagine equates to more profit to Hachette. Thus, Yes, eBook sales figures would differ at $9.99 versus $14.99, but not overall sales or profit of a book.
Sneaky maths from Amazon. It’s all about each party trying to grab the lion’s share of the profit–not what is best for the customer, or the industry, or the author.
Good points. Amazon is all about using sketchy math and meaningless percentages to better their arguments. I’ve seen it many times before.
I’m with Amazon. Above $10.00 I’ll wait for the book to be available from the library or for the price to come down. Under $10.00 and above $2.00, I’ll download a sample unless the author is someone I know. Under $2.00, it’s almost a no brainer.
Amazon’s reasons the eBooks should be priced lower are spot on. Except I would argue that , especially for books over 1 year from their original release date, they should be under $5.00. Lets use “A Skeleton in God’s Closet” by Paul Maier as an example. The book was originally release in 1993 (more than 20 years ago) and the last printing of paperbacks was 2012. Why should an electronic copy of such a book be $7.99? The author and publishers have already gotten their money from the book. I can see $9.99 for a new release, you pay a premium for getting the book “hot off the press”, but after a year or two for most books, the price should be $4.99 or less for the eBook.
A $15 ebook would drive me to get a print copy. Even if the $15 price is a severe discount, like say a print copy costs $30, I’d probably wait for a discount, or buy a print copy used off of the marketplace.
Amazon is an interesting company. I’ve read two books about it and they are shrewd and will cut off their nose in the short term to put someone else out of business. Jeff is a smart guy and I’m sure he’ll prevail.