(And then there is the ideological thing that I do not want to pay anywhere near full price to rent a book, nor do I want to support that business model by paying and breaking the DRM.)
]]>My understanding is that Macmillan have done exactly that.
(Whether their rivals are listening is, well, another question ...)
]]>I already own all the books in paperback now I'd like them on my Kindle!
]]>AIUI Amazon's Kindle contracts with publishers assert that they're not a retailer, they're a publisher licensing platform-specific sub-rights. They forbid publishers from selling cheaper ebook editions via other retailers -- price fixing. And Amazon have engaged in all sorts of very dubious dumping activities -- selling books at a loss and paying the publishers out of their own pocket just to build market share. If that's not a good picture of predatory monopolistic practices I don't know what is!
]]>Price wars are self limiting, a retailer cannot continue making a loss without going out of business, it also is not contrary to the interests of consumers to obtain a product for a lower price.
Dumping doesn't seem to happen in practice, it might work if the barriers to entry are very high and the entrants much smaller. Otherwise you either can't keep new competitors out and recoup the losses by charging a monopoly rent. Book retailing has a number of potential competitors that are far too big for dumping to work on, namely the supermarkets. At the moment they sell books but not on a large scale. If Amazon started trying to exact monopoly rents that would present an obvious opportunity.
What Amazon actually appear to be doing is being very efficient and operating on extremely narrow margins. That allows them to make a profit at a price their competitors cannot match without making a loss.
First mover advantage is, like dumping, theoretically possible but doesn't seem to happen much, the advantage just isn't that big. Visicalc lost dominance to Lotus 123 which in turn lost out to Excel. Wordperfect lost to Word. Having a dominant position doesn't give that much protection from losing it.
]]>So Amazon is taking a hit right now to build up a customer base that is locked into its ecosystem, with the consequence that the barrier to entry for new players becomes a lot higher than it otherwise would/should be.
The obvious answer, of course, would be for publishers to drop DRM like a hot potato, as it runs counter to their long term interests - but good luck getting that particular idea to fly at the likes of Hachette any time soon. (Our Good Host has already covered that can of worms in detail, so I'll refrain from further comment on the subject.)
]]>The DRM is an option chosen by the publisher Amazon make it available as several publishers insist on it. It doesn't really help amazon as the DRM terms limit the number of copies available to each customer (typically you can download to five installations or devices), which has a negative impact on the convenience of the cloud.
In practice that network effects aren't much of a lock in. Look what happened to MySpace.
]]>They also strong-arm publishers by removing their front-list titles from search results returned to customers if the publishers don't cave during price negotiations; I've been hit by this several times. Personally. It burns: folks searching for my books don't find titles by a given publisher, so the theory is that the authors will pressure the publisher to surrender to the borg, or go find another publisher.
Amazon's business practices stink.
]]>That's only part of it.
Back in the 00's, market research I saw for Computer Shopper indicated that 75% of punters who bought a PC through an ad in that magazine never installed any software on it -- the process of buying and installing shrinkwrap software was too intimidating. Today, the curated smartphone app store has broken that barrier -- but buying content for a third-party app like an ereader is still fairly intimidating.
(The real scandal with Apple is the enforcement of the company store policy -- the requirement to go through the iTunes Store to buy in-app purchases or content such as ebooks. But the iTunes Store started as a way to get people to buy hardware, back in the day, by providing cheap content, and Amazon made an end-run around it by simply dropping in-app purchases from the iOS kindle app and making it a pure reader. Want books on your iPad as a Kindle? Go to the web storefront. And so on.)
But I digress. The DRM and the number-of-downloads limits are separately enforced by Amazon -- most publishers who mandate DRM dropped limits on downloads some time ago when they realized customers were buying new ereaders once or twice a year. The toxic synergy between DRM and a walled garden e-reader platform turns out to be very effective at pursuading customers to stick within the walled garden that they know. And AMZN amazingly seems to get away with murder where the DoJ is concerned -- both with tax avoidance practices that verge on criminal evasion, and with predatory pricing and monopolistic dumping activities.
]]>Squeezing suppliers into providing their product at a lower cost is not normally a matter of concern to competition authorities.It is (or should be) when the purchaser is effectively a monopsony, or near to one. There are plenty of examples of suppliers being squeezed by, for example, Walmart to the point where they went out of business, because they couldn't keep up with the never-ending demands for more and more ever-cheaper products. It would not surprise me if that's the sort of direction Bezos was intending to take Amazon's ebook business. ]]>