Macmillan vs Amazon

[grumbler]

I can't claim to have studied this in depth, but it seems to me that Amazon's original strength is their ability to sell and distribute physical books in a way that's cheaper than traditional bookstores.  I don't reallys see how that strength transfers that much to e-books.

Inertia. People are used to buying books on Amazon.

Also, Amazon has the books, has the reviews, has the customer feedback, has the methodology for collecting money, has high consumer satisfaction and confidence, and has the relationships with all of the publishers.  I really don't see any strength anyone could have in distributing e-publishing that Amazon lacks.

[The Minsky Moment]

I can't claim to have studied this in depth, but it seems to me that Amazon's original strength is their ability to sell and distribute physical books in a way that's cheaper than traditional bookstores.  I don't reallys see how that strength transfers that much to e-books.

They offer the most titles, and they still (for the time being) control the most popular hardware platform.

I don't think that Amazon conceives of their principal capability as being in warehouse operation and shipping; but rather as optimizing customer experience.  To the extent the latter can be achieved by making shipping faster and cheaper, they invest in that.  To the extent it can be achieved by building a superior digital distribution platform they invest in that.

[Barrister]

I gather that the physical cost of printing a book is almost negligible when compared to the cover price.  So when Amazon lists a book for $9.99 that lower price is almost certainly coming out of the publisher's pocket.

No, not negligible at all, though the margins for the publisher are small (and, given that the seller can remainder unsold copies at any time), not available to the publisher until the distributor actually sells the volume.  Publishers should be jumping all over e-distributing, because it solves almost all of their cash-flow problems.  The actual cost of writing, editing, and layout is small compared to the cost of printing, binding, and distributing.

I tried to find hard numbers (but couldn't) but I still have my doubts grumbler.  I know I've read several times that the cost of physically printing and shipping a book are very marginal in modern publishing, and that the savings to the publisher of e-books are quite low.  The significant costs aren't editing and layout, but rather marketing (and royalties to the few mega-authors who sell so many books).

Edit: I understand you are involved in a publishing project yourself, and from what I know of it I you're emphasizing high-quality printing and productin.  That, plus the niche nature of your product, probably does mean that the costs of physical production are substantial.  However I doubt the economics are at all similar to the latest Dan Brown or JK Rowling blockbuster.

[grumbler]

I tried to find hard numbers (but couldn't) but I still have my doubts grumbler.  I know I've read several times that the cost of physically printing and shipping a book are very marginal in modern publishing, and that the savings to the publisher of e-books are quite low.  The significant costs aren't editing and layout, but rather marketing (and royalties to the few mega-authors who sell so many books).

You seem set and happy in your belief, so I will leave you to it, then.

[ulmont]

I tried to find hard numbers (but couldn't) but I still have my doubts grumbler.  I know I've read several times that the cost of physically printing and shipping a book are very marginal in modern publishing, and that the savings to the publisher of e-books are quite low.  The significant costs aren't editing and layout, but rather marketing (and royalties to the few mega-authors who sell so many books).

Printing -> 3-10% of price.
Shipping -> often 0%, paid by the distributor/retailer.

Sources: authors and a small press operator.
http://blog.laptopmag.com/ebook-price-war
http://scottwesterfeld.com/blog/?p=2138

[grumbler]

Printing -> 3-10% of price.
Shipping -> often 0%, paid by the distributor/retailer.

So printing (10% of cover price) is not significant?  Given that the total cut by the publisher (after paying royalty) is likely to be 35%, we are talking about printing being something like a 1/4 to 1/3 of the publisher's share of the total take.  Add warehousing and distribution (another 10% or so) and the costs of the physical edition to the publisher dominate the financial side of publishing.

[Jacob]

Inertia. People are used to buying books on Amazon.

I don't think inertia is an unassailable strength.

[The Minsky Moment]

Shipping -> often 0%, paid by the distributor/retailer.

Even if the publisher doesn't pick up shipping costs directly, it doesn't follow that 0 percent of the incidence falls on the publisher.

[The Minsky Moment]

Inertia. People are used to buying books on Amazon.

I don't think inertia is an unassailable strength.

I can't think of any business that has an unassailable strength.  That is why successful businesses have to keep innovating and executing better than competitors.

[Jacob]

Also, Amazon has the books, has the reviews, has the customer feedback, has the methodology for collecting money, has high consumer satisfaction and confidence, and has the relationships with all of the publishers.  I really don't see any strength anyone could have in distributing e-publishing that Amazon lacks.

I'm imagining a model where if you want to buy an e-book, you go directly to the publishers portal.  Because it's online, it's not like it's particularly strenuous to get there compared to having to go to a different store.  Perhaps I'm underestimating the strength of online-customer loyalty, but I don't think it's an impossible challenge to overcome.

I mean, if there's a book you're interested in it's not like you won't purchase it just because it's not on Amazon, is it?  Assuming you're made aware of it's existence.

But it doesn't look like anyone's doing what I'm imagining, so there may be some real obstacles in the way.  Perhaps designing and operating an e-book sale site is prohibitively expensive for even big publishers?  Or perhaps there's some sort of legislation that forbids it?  Or maybe Amazon really drives sales enough that it would be a big risk to forego those sales as you try to redirect e-book customers to the publisher's site?  I don't know.

[ulmont]

So printing (10% of cover price) is not significant?

Barrister asked for hard numbers, I offered the numbers I had recently seen.  Significance or lack thereof was not at issue.

[Jacob]

They offer the most titles, and they still (for the time being) control the most popular hardware platform.

Interesting.  If I was a publisher, I'd still be gunning for them; especially as competing hardware platforms come up.

I don't think that Amazon conceives of their principal capability as being in warehouse operation and shipping; but rather as optimizing customer experience.  To the extent the latter can be achieved by making shipping faster and cheaper, they invest in that.  To the extent it can be achieved by building a superior digital distribution platform they invest in that.

That makes sense, but that certainly a setup that's open to challenge.

[ulmont]

But it doesn't look like anyone's doing what I'm imagining

I think Baen is.

My problem with the model is I don't want to have to have 6 different e-readers.  Right now, I have 3 different ones on my iPod - Kindle, Stanza (for Baen or general pdfs etc.), and Barnes and Noble (have yet to use this one).

The great part about the Kindle bit is that practically all my books can go there.  If I have to start searching 6 different publisher sites and then looking at 6 different e-readers, it's annoying.

Now, Amazon v. Apple is doable, but more than that is bleah.

[Grey Fox]

Wait until Google decides to show up. Now, that's going to be a clusterfuck.

[grumbler]

Barrister asked for hard numbers, I offered the numbers I had recently seen.  Significance or lack thereof was not at issue.

Sorry, delete my comment.