[chatmasta]

I don't know exactly what you mean by market saturation in this case, as your logic seems to imply that each book has a finite market of N customers, and enough of a subset of them, M, are willing to pay $1000 (or whatever), such that M(1000) > N(5).

The error in your logic is that the size of the market for a given book actually depends on the price of that book. There's millions of books out there. Why would I pay $1000 for one when I can get so many others for $5? By lowering the price of books, Amazon increases the market size of each one.

There's also some behavioral economics involved, as I would assume people are far more likely to make a $5 impulse purchase (and look at that, Amazon has "one click send to Kindle!") than a $15 one.

[IgorPartola]

> Why would I pay $1000 for one when I can get so many others for $5?

Let me ask you this: would you rather buy one of the first 100 prints of Djikstra's "A Discipline of Programming" for $1000 or would you rather buy 200 Nancy Drew novels at $5/book? Books are not, to some extent, able to be substituted. Yes, if you are looking for a good vampire erotic fiction novel and are choosing between two unknown authors and one is priced at $15 and the other at $10, sure you would get the one priced at $10. But if both are priced at $10?

The point is that books are not bought as a simple commodity. Nobody says "I am low on books, let me go grab a random handful, based solely on price." No, people buy books with good reviews and by recommendation. When you are viewing volume book sales from Amazon's point of view, sure they all look the same. However, taking a closer look, a publisher might be able to price books more efficiently. If Amazon has helpful data to add to this, why don't they open it up and let everyone, publishers included, see it to help price the books better? Presenting a single data point in the huge possibility space of book prices is not a valid argument. Even if you let go of all the economics involved and stop thinking about how people buy books, don't you think that that ratio of 1.74 would be different for books priced at $12 and $17? Does this vary by month? Do certain genres have different price elasticity? Amazon is not trying to be helpful here. They are trying to squash publishers, gain control of the market and dictate prices, which they cannot currently do.

[mcguire]

Many factors are involved here. On one hand, you're right about Dijkstra (Is $1000 an option? I never actually got my copy signed (sigh), but....) and Nancy Drew, but on the other I think it's likely that most of the money involved involves "mass market" books: thrillers, Oprah's picks, the stuff on the New York Times list. At some point it does boil down to the marginal situation of "two unknown authors" (or two approximately equivalent ones) that really are semi-commodities. Think of a reader who has read everything that has been suggested or is from their favorite authors, and is looking for something new.

Also keep in mind that the "mass" entertainment market is not competing with speciality books, but is competing with other entertainment options: Netflix, movies, drunken debauchery, etc.

Then there is the price levels we're talking about. Everyone (probably) has some price X below which they will have no problem impulse-buying. Then there's a price Y below which they're willing to take chances, with information, and then there are prices above that, which require actual consideration. And for most people, at least those buying ebooks, we are definitely arguing in this range. For my inner economist, publishers want ebook prices up in the high segment, above Y, while Amazon wants them roughly between X and Y.

"If Amazon has helpful data to add to this, why don't they open it up and let everyone, publishers included, see it to help price the books better?"

The specifics are very likely competitive trade secrets. Don't forget Amazon gets to deal with Apple, B&N, and a host of other retailers. I'm surprised they released the one number they did. On the other hand, judging by negotiations I've been in, I would not find it unplausible that Hachette is aware of those numbers.

"They are trying to squash publishers, gain control of the market and dictate prices, which they cannot currently do."

Yes, just like the publishers are trying to squash Amazon, gain control of the market, and dictate prices. Heck, this isn't even a particularly new situation: I'm sure the negotiations between publishers and distributors that led to the lovely "stripping" practice were just as entertaining.

[bsder]

> Why would I pay $1000 for one when I can get so many others for $5?

Because market data suggests that most people won't switch. They will buy book from "the new, hip writer X" or they won't buy at all.

Someone who intends to buy something by Malcolm Gladwell is unlikely to buy something from somebody else just because it's a little cheaper.

Amazon wants to maximize sales volume whereas the distributors and authors want to maximize profit. The two are often correlated, but not always.

[mseebach]

Anecdote, not data and all, but for me at least, if I hear about a book that might be interesting, I look it up and if it's below some cutoff price point (I'm not sure exactly what it is, probably around $10-$15), I just click buy and be done with it. I don't put it on a wish list or bookmark it, just get it. As a consequence, the (metaphorical, they're on my kindle) pile of books that I own but probably won't ever get around to read is bigger than ever, and my total spending on books is probably a lot higher than it would be if I carefully considered each more expensive purchase.

[fpgeek]

> Because market data suggests that most people won't switch. They will buy book from "the new, hip writer X" or they won't buy at all.

Which is why publishers don't care whether or not stores like Amazon discount their physical books. </sarcasm>

[kamakazizuru]

Yes - but a person looking to buy the Malcolm Gladwell book - willing to buy it at 10$ - but who can only buy it at 15$ or more - will probably end up then either borrowing it from a friend or in the worst case downloading it as a PDF illegally. Both of which are a lost sale for the publisher and author.

[simias]

Do you have any numbers to back that up though?

I mean, I know that with e-readers book piracy is now potentially practical but is it really a concern for publisher? I'm really curious to know how mainstream it is.

I wouldn't be surprised if the main cause of piracy for ebooks was not the price but rather that the book is not available on a particular platform or only in paperback. Besides the demographics for book readers owning an e-reader is probably older and more wealthy than the average movie pirate.

The only numbers we have are those given by amazon, but we don't know exactly which books they used to make their statistics. We also don't know what the people who didn't buy the 15$ ebooks ended up doing, maybe they didn't buy anything at all, maybe they just bought the paperback...

[kamakazizuru]

A kindle costs <50$ - load it up with free PDFs downloaded via Torrents or other means and the notion : "book readers owning an e-reader is probably older and more wealthy than the average movie pirate" falls flat.

I dont have numbers to back it up - but plenty of anecdotal evidence and just common sense too. I myself have borrowed that malcolm gladwell book or the other - because the cheapest I could buy it was 20$ - and while I was interested in reading it - not enough to spend that much. Had it been 10$ - it would be worth it for me to just buy it rather than ask around friends if someone had a copy I could borrow. (You can also "borrow" books from friends on Kindle)

[WalterBright]

Bestsellers are the books that normally wind up in the thrift store for a buck. Ironically, it's the obscure books that wind up being pricey.

[chatmasta]

Yes, but someone who is looking for a non-fiction book, with no author preference, is more likely to buy a $5 Michael Lewis book than a $15 Malcom Gladwell book.

[cafard]

There is no book I can think of at the moment that I'd buy for $1000. There are plenty I'd buy at $20 to $50 in preference to a comparable dollar value in $5 ebooks (or other inexpensive editions).

Some books have only so much market. Amazon could declare an August special, The Critique of Pure Reason, leather cover, sewn binding, acid-free paper, yours for $5 and free shipping. Do you think that this would rocket it up on the charts?

[mkal_tsr]

> The error in your logic is that the size of the market for a given book actually depends on the price of that book.

This is only part of the picture. You're missing genre / topic which is a huge component.

[mcguire]

For the genre/topic/market in question, I'm not sure about that.