Bezos defends model of keeping 65% of (kindle) book revenue(nytimes.com)
nytimes.com
Bezos defends model of keeping 65% of (kindle) book revenue
http://www.nytimes.com/2009/12/06/magazine/06fob-q4-t.html
9 comments
New York Times: You have to pick just one person? What are you saying? It’s like “Sophie’s Choice”?
Bezos: It is “Sophie’s Choice.” Very nicely done.
Sophie had to choose which of her children would be murdered. By Nazis.
Bezos: It is “Sophie’s Choice.” Very nicely done.
Sophie had to choose which of her children would be murdered. By Nazis.
I did wonder if the meant Hobson's choice.
That follow up question and the end of the article makes the author look like a complete bozo. They should have edited it out.
She's just a terrible interviewer. Here she is, arguing with Umberto Eco about stuff most people learn in Middle School:
http://www.nytimes.com/2007/11/25/magazine/25wwln-Q4-t.html
http://www.nytimes.com/2007/11/25/magazine/25wwln-Q4-t.html
I disagree. The point is to get an insight into the subject. The last question and the way that Jeff concludes the interview is very helpful there.
Yeah it sure does. Why do you keep so much? Because I can.
I want to stick a picture of Bezos in a zip-loc bag. And then drop it into the toilet. And then send Jeff to the beach.
I want to stick a picture of Bezos in a zip-loc bag. And then drop it into the toilet. And then send Jeff to the beach.
"There are more items in the book category than there are items in any other product category. One of the things it was obvious you could do with an online store is have a much more complete selection."
Interestingly books are perfect for online sales for other reasons, they have a high markup and a high price to weight ratio. The former made them easy to discount beyond B&M bookstores (who, by the way, would happily order you any book they don't have in stock and get it rather quickly, even in 1994) and the latter made the cost of shipping not untenable.
Books in 1994 (and even today) were one of the few things you could sell for 30% less than the chains, add in $2 for shipping, and still both make a profit and decrease the cost for the consumer. There really aren't many things that fit that description, and I think it's why they were online shopping's first killer app.
Interestingly books are perfect for online sales for other reasons, they have a high markup and a high price to weight ratio. The former made them easy to discount beyond B&M bookstores (who, by the way, would happily order you any book they don't have in stock and get it rather quickly, even in 1994) and the latter made the cost of shipping not untenable.
Books in 1994 (and even today) were one of the few things you could sell for 30% less than the chains, add in $2 for shipping, and still both make a profit and decrease the cost for the consumer. There really aren't many things that fit that description, and I think it's why they were online shopping's first killer app.
... and you don't have to try them on.
Books don't have a high markup. Most book stores (online/offline) who are not @ amazon scale make tiny percentages on the total cost of each book.
It might be more than the amount of royalties that most paper book publishers give, but distribution costs are so much lower with e-books that they could probably afford to give even more than 35%.
Right now they don't have to, but as competition heats up for e-books, it wouldn't be surprising if royalties went up (unless there's a cartel situation).
Right now they don't have to, but as competition heats up for e-books, it wouldn't be surprising if royalties went up (unless there's a cartel situation).
Distribution costs include subsiding the Internet connection of Kindles for the life of the device. And maybe subsidizing some of device's costs.
Book royalties are around 10%. Amazaon has already "afforded to give them more". Three times more.
Book royalties are around 10%. Amazaon has already "afforded to give them more". Three times more.
Book publishers also provide things like design, layout, and editing.
Anyone knows if the people who are self-publishing for the Kindle (basically uploading the finished product on Amazon) are getting more than 35%?
yes, it is too bad that the interviewer didn't bring up the question of distribution costs when Bezos made the comparison
If your starting point is: Amazon exists and has a huge amount of customers, and a bunch of Kindles have been sold, sure the distribution cost is low. But that's not Bezos' starting point, is it?
Well, I'm not 100% sure he's referring to the Kindle here. Amazon Also operates CreateSpace where you can send them your text/ music/ movie plus cover artwork and have them turn it into a book/ CD/ DVD, which can be sold either through Amazon.com or your CreateSpace 'e-store' - not very customisable and crap looking, but you do keep a larger share of the revenue. If intended for sale, copies are then produced on demand, as they are ordered.
I have used the service a few times for short runs of things that needed a professional look but only a small number of copies, and the quality is good. There's an adjustable pricing scale whereby the printing/duplication cost is fixed and then Amazon takes their large percentage based on the profit above that, so it's less good value than having your copies pre-printed and selling them yourself (eg CDs if you are in a band), but being able to offload all your fulfillment and distribution to a retailer with very high brand integrity (ie that so many people trust with their payment info) is worth it in my view. If you have a niche market and know how to reach it, it may be a better deal than trying to interest a publishing company.
Incidentally, it's also a handy thing for cheap specialist printing, eg documentation or a pile of disparate research material that you'd like to have in book form but may not need that many copies of, for which a regular printing company would charge a ton in setup costs.
I have used the service a few times for short runs of things that needed a professional look but only a small number of copies, and the quality is good. There's an adjustable pricing scale whereby the printing/duplication cost is fixed and then Amazon takes their large percentage based on the profit above that, so it's less good value than having your copies pre-printed and selling them yourself (eg CDs if you are in a band), but being able to offload all your fulfillment and distribution to a retailer with very high brand integrity (ie that so many people trust with their payment info) is worth it in my view. If you have a niche market and know how to reach it, it may be a better deal than trying to interest a publishing company.
Incidentally, it's also a handy thing for cheap specialist printing, eg documentation or a pile of disparate research material that you'd like to have in book form but may not need that many copies of, for which a regular printing company would charge a ton in setup costs.
With a physical book, since it (1) costs money to make the book, and (2) rapid iteration of content is difficult, there's a huge infrastructure (editors, agents, proofreaders) to select the "good" from the "bad".
With electronic publishing, you just let the crowd do the selection. And it costs virtually nothing to store each additional book.
I hope we move to a web-like world for e-books where an author can publish and charge for a book after eliminating the middleman.
Think about it: without the "Amazon tax", e-books would cost only 33% of what they do now (eliminating Amazon's cut).
Also the percentage-based commission makes no sense. It costs Amazon the same to store/tranfer a book that costs $100 and a book that costs $10. A $1/book "shipping fee" would be more reasonable.
The situation is ripe for an execution-oriented company like Google to move in and kick Amazon.
With electronic publishing, you just let the crowd do the selection. And it costs virtually nothing to store each additional book.
I hope we move to a web-like world for e-books where an author can publish and charge for a book after eliminating the middleman.
Think about it: without the "Amazon tax", e-books would cost only 33% of what they do now (eliminating Amazon's cut).
Also the percentage-based commission makes no sense. It costs Amazon the same to store/tranfer a book that costs $100 and a book that costs $10. A $1/book "shipping fee" would be more reasonable.
The situation is ripe for an execution-oriented company like Google to move in and kick Amazon.
I think it's the perfect time for authors to organize and to do something to push the future book platform to their direction.
If they organize they would have a huge marketing clout , and combine that with some company that works with some business model that they like , and offers distribution etc... could make a very powerfull offer.
If they organize they would have a huge marketing clout , and combine that with some company that works with some business model that they like , and offers distribution etc... could make a very powerfull offer.
What concerns me is whether a pattern similar to the distributor's downward price pressure that you rightly illustrate will be mirrored for content creators, be they authors, musicians, software developers, etc.
The kindles might cost more and come with recurring subscription though.
Lulu charges a flat fee of $1.99 per copy (or 2.98 for DRM'ed edition).
My guess is that book publishers will get roaylly pissed if ebooks got too disruptive (too cheap or too much oryalty going to authors) and then would strong-arm writers into not doing any digital sales at all.
It's better to wait till more books are sold in electronic form than dead-tree form and then dictate your own conditions to publishers.
At least that's what I want to think, Bezos seems like a nice fellow so I feel like finding a good reason for him keeping 65%.
It's better to wait till more books are sold in electronic form than dead-tree form and then dictate your own conditions to publishers.
At least that's what I want to think, Bezos seems like a nice fellow so I feel like finding a good reason for him keeping 65%.
Digital publication is going to kill the B&M industry, at least as it exists now, anyway.
The purpose served by the publishers, for the author, was to invest in a young, talented author's career. Publishing houses knew that they were losing money, but the purpose of doing so was to build a relationship so that, once the author had built a reputation and was a money-winner, the investment would pay off.
Now, advances are at McDonalds rates and publicity budgets are nonexistent. The only thing they have to offer is distribution, and that can be handled electronically.
The purpose served by the publishers, for the author, was to invest in a young, talented author's career. Publishing houses knew that they were losing money, but the purpose of doing so was to build a relationship so that, once the author had built a reputation and was a money-winner, the investment would pay off.
Now, advances are at McDonalds rates and publicity budgets are nonexistent. The only thing they have to offer is distribution, and that can be handled electronically.
I disagree the B&M's provide services that people like. Browsing, reading, social space. Been to an Barns & Noble lately, very much like Starbucks. In that they are selling a lifestyle and environment more than they are selling coffee. When books are distributed and produced digitally they will get POD and service the niche that still wants paper.
Publishers and distributors, they are Dodo's. They cost more and aren't as good as digital distribution/production.
Publishers and distributors, they are Dodo's. They cost more and aren't as good as digital distribution/production.
> Been to an Barns & Noble lately, very much like Starbucks.
Question: why can't Starbucks replace them then? It's a serious question - why can't Starbucks' have a e-book kiosk, where you can browse and buy books for your Kindle/Sony Reader/Nook/etc? Seems like that would include the best of both worlds - the environment to socialize and read, and the efficiency of digital distribution.
Question: why can't Starbucks replace them then? It's a serious question - why can't Starbucks' have a e-book kiosk, where you can browse and buy books for your Kindle/Sony Reader/Nook/etc? Seems like that would include the best of both worlds - the environment to socialize and read, and the efficiency of digital distribution.
Why on earth would I want an "e-book kiosk" when I can browse and instantly purchase books on my laptop, my phone, and my Kindle.
Effectively, the Kindle makes everywhere a bookstore.
Effectively, the Kindle makes everywhere a bookstore.
I was talking about B&M publishers, not bookstores.
Bookstores will find a way to adapt, especially because the major publishing houses aren't going to die; they're going to be like IBM and Microsoft-- too big and important to disappear, but less important.
Bookstores will find a way to adapt, especially because the major publishing houses aren't going to die; they're going to be like IBM and Microsoft-- too big and important to disappear, but less important.
And Amazon keeps 65 percent? That sounds like a lot.
Does it? You’re an author, what does your royalty check look like? Are your royalties 35 percent?
I think it'd be incredible to allow more authors to self-publish on an entirely open e-book platform. We've started to see this move in the music industry (e.g. - Nine Inch Nails grossing $750k from their own music sales - http://www.techdirt.com/articles/20080304/162842435.shtml ) and I think it could be coming to publishing too.
I think it'd be incredible to allow more authors to self-publish on an entirely open e-book platform. We've started to see this move in the music industry (e.g. - Nine Inch Nails grossing $750k from their own music sales - http://www.techdirt.com/articles/20080304/162842435.shtml ) and I think it could be coming to publishing too.
Is it possible to sell PDFs (or some other format) on your own website, and let the users download them onto their Kindles directly?
Sure. PDFs are natively supported in Kindle 2's and DXes. You can convert PDF's to a supported format for older Kindles. Also, you can sell .mobi files and they work just fine on any Kindle.
Once you have a file, you can put it on the Kindle over USB for free or you can send it to an email address Amazon gives you for file transfer (15 cents per some amount of file size...I forget how much). The Kindle store uses DRM, but the Kindle certainly doesn't require it on the files it will let you read. It's like an iPod in the pre-iTunes Plus era.
Once you have a file, you can put it on the Kindle over USB for free or you can send it to an email address Amazon gives you for file transfer (15 cents per some amount of file size...I forget how much). The Kindle store uses DRM, but the Kindle certainly doesn't require it on the files it will let you read. It's like an iPod in the pre-iTunes Plus era.
Just a note: PDF's are not natively supported on the Kindle 2, just the DX.
The latest firmware addresses that. Only the original kindle lacks PDF support now.
http://www.amazon.com/gp/help/customer/display.html?nodeId=2...
http://www.amazon.com/gp/help/customer/display.html?nodeId=2...
Oh nice...I need to update :)
The authors get the pure profit of 35% from "revenue", not "profit." That seems huge. That means the profit of those authors may be better than Amazon, which has to cover the expenses on development, distribution, marketing, maintenance, or any other costs relevant to Kindle business.
Another thing to note, authors get 35% of list price, and when Amazon discounts books (for example, http://www.amazon.com/gp/product/B002U4XPK6 lists for $26.99 and is selling for $9.99) the author will still get 35% of the list price (or $9.45). In this case, Amazon is getting 54 cents.
Authors usually have houses and bodies and cars to feed, educations to pay for, possibly children, and no social life for months at a time. Their creativity and life are invested in their work.
Amazon invests in a web page (form) for the author and supports that with the same software and hardware that sells diapers and plastic race cars. Anyone could do that, but Amazon's just prominent.
Repeat: anyone could do that ... and giving Amazon a run for their money would make them underdog media darlings. I'm fairly sure you could open a new "DIY author" bookstore on Twitter and make pretty decent money at it, depending on what authors you could get on board.
Bezos appears to be getting cocky. He's about due to become the Gates of online retailers.
Amazon invests in a web page (form) for the author and supports that with the same software and hardware that sells diapers and plastic race cars. Anyone could do that, but Amazon's just prominent.
Repeat: anyone could do that ... and giving Amazon a run for their money would make them underdog media darlings. I'm fairly sure you could open a new "DIY author" bookstore on Twitter and make pretty decent money at it, depending on what authors you could get on board.
Bezos appears to be getting cocky. He's about due to become the Gates of online retailers.
Yes. You're right. Anyone can copy some webpages overnight and sell every kind of stuff tomorrow. That's the very nature of online retailers. However, because of that homogeneity, prominence is all that matters. People can remember only one or two places of a category as they're so similar to each other. That's why Amazon can charge that fee and authors and publishers are happy to bring their books in Kindle editions. Plus, it's distributing all the platforms necessary to read and purchase the books. In essence, it created a new market. Amazon definitely deserves its current margin and I don't think most of authors can be better off with "DIY" stuff even if that means 99% margin. If not, Kindle business is total nonsense and couldn't come into the current status at all.
Even Apple gives you 70%.
Bezos: "I’ll tell you what I do. I take a one-gallon Ziploc bag, and I put my Kindle in my one-gallon Ziploc bag, and it works beautifully. It’s much better than a physical book, because obviously if you put your physical book in a Ziploc bag you can’t turn the pages. But with Kindle, you can just push the buttons.
New York Times: "What if you dropped your Kindle in the bathtub?
Bezos: "If it’s sealed in a one-gallon Ziploc bag? Why don’t you try that experiment and let me know."
A good interview for giving a glimpse into the personality of an entrepreneur.