[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.