Free Doesn’t Work for Every Company
From Peter Brantley: Hank Williams of Why Does Everything Suck? does an informal economic critique of Chris Anderson’s “things tend to free” hypothesis:
“Some of you will argue that Google does fine based purely on advertising. But just because one company can commoditize everyone else’s work and make pennies on things that used to generate dollars, is that sustainable across the whole economy? Or would we really be reducing the overall amount of money flowing into the digital market and therefore to the overall labor force?” (Continue reading …)
An Educated Guess at Kindle’s Impact
Kindle sales figures aren’t available and the devices are still sold out, but the Associated Press notes a connection between the Kindle’s Nov. ’07 release and an uptick in ebook sales across the industry:
Publishing officials are reluctant to discuss sales figures, but say that they have seen double digit increases in e-book sales since the Kindle’s release, including renewed interest in downloads on the Sony Reader.
Independent Booksellers and Chains Face Big-Box Competitors
Looks like the “enemy of my enemy is my friend” maxim is coming in to play with the increased attention big-box retailers are giving to books. Small indie booksellers and chain stores, such as Borders and B&N, are feeling the pinch from big-box store markdowns. From the Washington Post:
Costco, Target, Wal-Mart and Sam’s Club aren’t just moving in for the kill with big discounts on the latest Stephen King or John Grisham page-turners. They are also engaging the culturally connected, targeting readers who delight in cocktail or book-club conversation about the latest titles. About 34 percent of book buyers made purchases at such locations last year, according to the Simmons National Consumer Survey.
Publishers and Amazon Locked in Price War
The UK’s Times Online says Penguin, Bloomsbury and other publishers are trying to woo customers with steep discounts on their own Web sites. Amazon isn’t happy about the cuts:
There are fears that Amazon may retaliate by regarding a publisher’s online price as the recommended retail price and applying its trading terms to that. If a publisher discounts a £20 book to £15 online and Amazon has a contract for a 50 percent discount on the full price, Amazon would pay the company £7.50 instead of £10. Publishers say that this would be unfair and could ultimately drive up prices.
Borders has revised its $42.5 million loan with Pershing Square Capital Management. According to The Bookseller, the loan interest rate has been reduced from 12.5 percent to 9.8 percent. Pershing has also boosted its backup offer for Borders’ international operations to $135 million.