Young and Full of Fluff

See, this is what I've been saying:

Even as Amazon became one of the largest retailers in the country, it never seemed interested in charging enough to make a profit. Customers celebrated and the competition languished.

Now, with Borders dead, Barnes & Noble struggling and independent booksellers greatly diminished, for many consumers there is simply no other way to get many books than through Amazon. And for some books, Amazon is, in effect, beginning to raise prices.

From a follow-up article:

“Discounting, and especially inconsistent or shifting discounting, really messes with a publisher’s ability to price a book fairly and accurately to its cost,” he added. “You have to consider the fact that whatever price you put on the cover, Amazon is going to reduce it by as much as half — unless they don’t — or they may, but only for a while. But in short they’re going to make your book look like a thing with a cost lower than the one you placed on it.

“So do you raise the price, knowing they’re going to lower it, so that the price will then appear closer to what you need it to be? But if you do that then you’re screwing the more honest retailers who can’t discount. And we’ve gotten a long way from recognition of the fact that publishers have costs in making books, and that should have something to do with the price.”

What they don't mention here is that when a retailer like amazon buys from a publisher, they negotiate a bulk discount. For most publishers, this goes straight to author royalties, through something called "overdiscounting." The author doesn't get a fixed percentage of list price. If the book is discounted over a certain percent, the royalties are reduced.

So having such a huge portion of the book market controlled by one entity with wildly fluctuating prices makes it very hard for publishers to have any control over what they make off of books, or what the consumer pays.

Amazon plans to acquire Dorchester. Remember that potential future I predicted for publishing? It's here. Avalon was a peewee. Dorchester is not. Granted Dorchester hasn't been a going concern for a while now, and I think this is probably the best thing that could happen for its authors, since any deal would mean Amazon had to pay all the back royalties. But. I think Amazon's strategy is pretty obvious at this point, and they're being aggressive about it.