Home » Big Publishing, Ebook Subscriptions, Pricing » PRH Still Doesn’t Like the Subscription eBook Model (The Fools!)

PRH Still Doesn’t Like the Subscription eBook Model (The Fools!)

26 August 2016

From The Digital Reader:

Penguin Random House has in the past denied that readers want an ebook subscription service.

What with Kindle Unlimited now paying authors and publishers more than the Nook Store, and possibly even more than Kobo or Google, that excuse was getting a little thin, but recently PRH changed its tune.

The global CEO of Penguin Random House, Markus Dohle, was speaking at the Global Top 50 Publishing Summit at Beijing International Book Fair in China earlier this week . According to The Bookseller, Dohle said that:

PRH had not signed its titles up for any subscription services, such as Amazon’s Kindle Unlimited, Mofibo or Scribd, because the ‘all you can eat’ models threaten to “devalue” intellectual property (IP) at a time when most authors can barely afford to earn a living.

In the US, Dohle said 40% of the readership accounted for 85% of publishers’ revenue, so “heavy readers” switching to subscription models would have a “huge impact” on the industry.

He explained that the industry’s existing publishing model, successful for over 500 years, was “robust” and “not broken at all”, and argued that subscription models were “not in the reader’s mindset”. If they became popular, they would ultimately lead to “lower prices” and “a huge devaluation of IP”, Dohle said.

“A la carte is not broken […] I don’t see us supporting subscription models, because we just don’t need it,” he said. “Somehow we have to protect the measure of our intellectual property. Take an e-book for $12, that’s entertainment for 15 to 30 hours. That’s a fair deal compared with a movie and other media formats. I think we have a very robust pricing model in the market and subscription would just change the whole dynamic.”

Link to the rest at The Digital Reader

PG says this is wrong on so many levels (several of which are discussed in the OP), but PG has to mention one because he’s heard it so many times before from European publishing executives.

The value of a product or service is determined by the customer, not the seller.

If the customer will pay $10 for a product, that’s the product’s value. If the seller prices a product at $15 because that’s the true value in the seller’s mind, but the customer is only willing to pay $10, the product’s value is still $10.

Perhaps it’s partially a consequence of minimum book pricing laws in some European countries where the publisher sets the retail price, but, unless a customer is forced to purchase an item at a specific price (hello, college textbooks), in a free market the customer determines the value.

If a price is too high, the customer will simply not buy a product. (PG will note that readers in countries with fixed-price book laws regularly utilize a variety of technical means to disguise their physical location so they can purchase books online at lower prices.)

The idea behind the “devaluing” argument is that customers can be easily manipulated by simply charging higher prices. PG believes this is an elite executive’s ignorant view of the proletariat’s “mindset” and the epitome of stupid short-term thinking. Heaven forfend that the serfs ever hear of a lower price for anything. Prices must always go up and never go down.

If a customer, even a “heavy reader”,  enjoys reading books, but books cost more than the customer is willing to pay, the customer will respond in any number of ways — borrowing, buying used, finding something else to do that is also enjoyable and costs less, etc., etc., etc. No consumer is obligated to remain a heavy reader.

Big Publishing, Ebook Subscriptions, Pricing

67 Comments to “PRH Still Doesn’t Like the Subscription eBook Model (The Fools!)”

  1. “The value of a product or service is determined by the customer, not the seller.”

    That’s the meat of the issue right there, and they still don’t get it.

    Amazon ‘gets it’ and is making fools of them all.

  2. For someone with a historical mindset, the assertion that the ‘existing publishing model’ has been around much less successful for 500 years is simply laughable.

    No. It hasn’t. It hasn’t been around for a century, much less five.

    • Slight correction: The “existing publishing model” has been around since the 1840s in England and 1870s in the US. It certainly hasn’t been around since Gutenberg.

      Indeed, this is one of my personal annoyances with discussion about the publishing industries — the true “traditional publisher” is a vanity press.

      • Indeed.
        It is the *retail* model that is less than a century old.
        Neither is anything close to an immutable law of nature.

      • The “existing publishing model” has been around since the 1840s in England and 1870s in the US. It certainly hasn’t been around since Gutenberg.

        And even that isn’t entirely true, as I explain in my post. The model has changed several times in that period.

      • Yeah, the existing publishing model has really only been in place since the 80s, when Barnes & Noble got huge, agents became a bigger industry, and consolidation began. One could probably even argue that conglomeration changed it in the 90s, when places like St Martin’s Press and Grand Central folded up into their new mother companies.

        That’s the major reason I don’t like the term “traditional publishing” — seems like real traditions go back more than twenty or thirty years. I guess that’s long enough to hand down one generation to the next, but then again I’m cuspy Millennial and when I hear we do something just because that’s always been done, I’m always suspicious of it, anyway.

  3. … because the ‘all you can eat’ models threaten to “devalue” intellectual property (IP) at a time when most authors can barely afford to earn a living.

    I wonder if, just for giggles, Dohle might consider raising the royalty rates Randy Penguin pays out?

    • To 50% at least for all formats.

      • Random House is the originator of the 25% of net “industry standard” for ebooks. Before they suckered their authors with a 2% boost in pbook royalties (IIRC from early 2010 reports of 2009 actions) the standard was in fact 50%.

        It takes some gall to bemoan a condition you yourself inflicted.

    • I saw that line and the first thing that came to mind was something Kris Rusch wrote. On second thought I think it was everything Kris wrote about.

  4. If they became popular, they would ultimately lead to “lower prices” and “a huge devaluation of IP”, Dohle said.

    Correct. That’s what’s happening. It will continue to force down prices. Dollar value of IP will fall. He has accurately defined the challenge, but hasn’t said how he will meet it.

    • A complete misrepresentation of the meaning of the value of IP that has been going around, frequently challenged, for years and continues to pop up like a weed. Lower prices do NOT ‘devalue IP’.

      The value of my IP is NOT what I sell a single copy for. It is what I get for all of the sales of that IP. Is my IP more valuable if I sell 1000 copies at $9.99 each than if I sell 20,000 copies at $1.65 each?

      • +10

      • Nor does the unit price tell us anything about how an individual values the item. Unit price can’t tell us about the value of the utility the item gives the consumer.

        Computer prices keep falling, yet utility keeps increasing. I remember an article in Scientific American in 1981 speculating on whether computers could ever break the one gigahertz barrier. Millions were being spent to do it. I now have one in my pocket.

        So, value? Is it price or utility? Both are real econmic concerns, yet the distinction is rarely made.

  5. As a context note, Herr Dohle is from one of the nations that (until recently) refused to allow any discounting from publisher’s list price. <sarcasm> No, that has no effect whatsoever on his perception of how things work in countries that do. </sarcasm>

    • Also worth remembering: the company policy isn’t set in the US.
      Back in 2010, Random House stayed clear from agency, while Penguin et al jumped in eagerly, until forced by HQ to join in.

      Whether Dohle truly buys that silliness is irrelevant: he has to go down with the ship defending the Bertelsmann party line. For all we know he understands the folly of trying to apply euro policy in the free market US. But with his salary on the line…

  6. It’s true. Since I signed up for KU (a month after it launched), I’ve bought MUCH fewer books. There it is. I also buy much fewer CDs since I can listen to Amazon streaming and other such music services.

    I”m a consumer .I want more for less. Period. Heck, since I discovered ALDI’s a few months ago when it opened nearby, Publix and Whole Foods see much less of me. The only time I pay MORE, or much more, is if I’m pressed for time and have to take what I can get (doesn’t count with books or CDs, generally) or what I want is of limited edition or such uniqueness or higher quality that I’m willing to pay more to acquire it for collector, show-off, or emotional reasons. Or for health reasons or reasons of conscience or loyalty, perhaps. I’ll pay for 5.99 free range/pasture-raised chicken eggs and more for fair-trade coffee and Made in USA outfits for that last reason.

    I find I do much less of the emotional reasons, status reasons, collector reasons than I was prone to in some phases of my life. I used to buy books out of the gate just to support an author, full price, even if I was only mildly excited. Now, I look for bargains. Hell, I’ll buy used.

    So, PRH better start planning and strategizing better on how to live in the New World.

  7. I think there’s a lot of room to improve on the KU subscription model. Amazon’s fundamental flaw is their payout system in KU, which KU 2.0 hasn’t fixed. I don’t think we’ve seen the Netflix of ebook subscription models yet. I think WattPad is poised to become more successful than KU if they can help monetize more authors in a fair and consistent way without getting bogged down by scammers.

    • No, we haven’t seen a true Netflix model. And when it comes to pass folks will pine for the good old days of per-page payouts.

      You do realize that Netflix licenses content for fixed units of time, not for fixed units of consumption? They pay an upfront lump sum for an infinite number of viewings over a fixed period of time. It is not a particularly large sum per licensed episode. That is how *they* fix their costs and not only stay in business but earn a profit.

      KU fixes their costs through the funding pool size which is most likely set as a function of the number of subscribers and the average number of pages read per month. Whether this results in profit, breakeven, or a strategic loss is undetermined but their subscriber base is increasing, their catalog size and total payout is increasing. And none of the other ebook services seem to be doing either. Of the two biggest ones is gone and the other has been trying to fix costs by reducing value.

      Don’t expect any viable future subscription service to be any better than KU when it comes to author payout.

      • *You do realize that Netflix licenses content for fixed units of time, not for fixed units of consumption? They pay an upfront lump sum for an infinite number of viewings over a fixed period of time. It is not a particularly large sum per licensed episode. That is how *they* fix their costs and not only stay in business but earn a profit.*

        My biggest problem with KU is that there isn’t a fixed cost. The payout pool is a guessing game. It allows scammers into the subscription system, too. If Amazon paid upfront for KDP authors to belong to KU–a fixed rate, maybe even for a fixed time so they could rotate content–they’d have a stronger model. For one, every book in KU would effectively turn into an Amazon featured book. Amazon’s publishing arm has grown a lot, and they clearly have set their publishing platform up to reward Amazon author exclusivity. The model Netflix has does well from a creator and consumer standpoint.

        • “If Amazon paid upfront for KDP authors to belong to KU–a fixed rate, maybe even for a fixed time so they could rotate content–they’d have a stronger model.”

          Only on something already ‘proven’, otherwise they could be paying for books nobody reads.

          And if you thought KU(1) was a scammer’s dream, they’d love what you’re suggesting. It would all come down to how many books each writer could get in KU, not how many people would actually read it as in KU, or how many actual pages were read as in KU2.

          On the ‘good/great’ books the writers would get less per read the more people read them while the scammer that managed to get in a thousand books of junk gets paid for just having those thousand in KU.

          “The model Netflix has does well from a creator and consumer standpoint.”

          Only because Netflix vets everything they add/offer and is pretty sure they’ll get a good ROI. So hey, do we now want Amazon to gatekeep KU and only allow the ones they think will make them money? Or do we leave it as is and let the readers decide — and pay the writers holding the most readers’ attention more than the ones that don’t?

        • The pool is exactly a fixed cost: Amazon knows exactly what it will cost them to run KU each month when they set the pool. They also know to a high degree of certainly how much revenue (subscription fees) KU will earn them. There is some variability because of subscribers dropping out or signing in but subscriptions tend to be a relatively stable revenue stream on a short term basis.

          You seem to be confusing author payments with the cost of running the business. Not the same thing.

          Oyster was done in by running their service the reverse of KU: their author payouts were fixed but their operating costs (reader consumption) weren’t. Scribd faces the same problem and is trying to contain costs by reducing the catalog size and feeding readers as much permafree and public domain material as they can.

          Any viable “all you can consume” service, whether for food, video, or ebooks needs cost certainty to survive. And, for media, it needs suppliers to understand that rentals do not generate the same per unit revenue as a sale.

          KU is a rental service: readers receive no proprietary interest in the books they download. So it is unrealistic to expect comparable per read payouts. That some (many?) authors do receive comparable earnings is fortuitous and probably a result of their sale pricing.

          Allen’s points are spot on.
          Only thing I can add is that if Amazon did move to a fixed per year payout, the payout would be the average of all books enrolled and evefybody would be getting peanuts, both the ones tst prev ve a lot of action and the ones tst recieive none.

          • Make that: “both the ones that receive a lot of action and the ones that receive none.”

            To elaborate: KU currently has a catalog of a million titles and is on pace to pay out $200M or an average of $200 per year per title. Scammers would love getting $200 per year but popular authors would decamp immediately, or sooner.

            Amazon would have to move to graduate payouts and guess upfront which book gets what level. Extra work. Extra cost. And the average would still be $200 per title.

            Not a good business move.

            As is, KU payout is a function of pages read. The longer the reader is engaged, the more money the title earns. Perfectly reasonable because the subscriber only has a finite amount of time to read so they vote their wallet by reading time. It also makes Amazon a neutral player in the decision. No gatekeeping.

    • Wattpad? You have to be kidding. It’s a lovely place, mostly full of teenagers and young adults, and they don’t buy anything.

      They read, but they drop out of reading anything paid because there is so much free stuff.

      Wattpad is not monetized – and the only thing I’ve seen so far is pushing a few contest winners toward Harlequin (a horrible thing to do to the writers, if you ask me).

      I don’t even see ads (desktop + Adblock) – but I don’t spend as much time there as I used to. Possibly the phone ads pay for the servers – there are a LOT of members.

      ‘Poised’ to be better than Amazon, starting twenty years later? I don’t think so – and I like KU2 much better than KU1 – a borrow nets me about the same as a sale. The scammers screaming that their schemes don’t work haven’t been as loud lately.

      • I registered for Wattpad because some friends upload there, but I can’t even remember the last time I visited.

        I wonder if it adds anything at all to writers’ bottom lines. Does it get folks to buy what they have for sale, or is it just a place for free reads? At least KU pays for reads…

  8. Take an e-book for $12, that’s entertainment for 15 to 30 hours.

    Should I tell him I read The DaVinci Code in 20 minutes?

    • Don’t bother. Dohle and the other publishing CEOs have made it clear that real reader experiences are irrelevant to their business.

    • I’d think most readers can finish that in the lower end, if not faster. The question is: how many of those 12 dollar books do they finish?

      It’s easy for me to finish a 90 min to 2 hour flick. Not much of an investment. (I haven’t been to the movies since 2009. I watch films at home on my 55 inch HD Smart TV from Amazon, Netflix, DVDs, Comcast On Demand, and streaming J- and K-dramas.) If I just wait a few months to a year, that movie will be rentable for 6 bucks or I can wait for it to be on Netflix or Amazon Prime. I really feel very little incentive to go to the movies. Too loud. Chatty moviegoers. The stink of popcorn (I hate that fake butter smell with the corn smell).

      Not many films make me go, “Oh, I have to see that as soon as it’s out.” Not anymore. Too much entertaiment. No rush = save money.

  9. I wish the idea were true: that consumers set the prices.

    Maybe in entertainment, but prob not. I want $1 admission to feature films in theatres on big big screen. Not happening. I want that toothpaste to be .19 cents. Wont happen. I can take my chances on toothpaste made in china with no oversight, for .25 branded as Colgate with complete counterfeit packaging. I would like to buy Tom Ford tobacco and vanilla cologne for 35 dollars. Did, and it was also a rank counterfeit. I’d like to pay 99 dollars for two epi-pens. But they are now nearly $1000 for two, as the pharmaceutical company ramped up the prices, letting us know that we the consumers do not set the prices. We tried to go another route, the FDA closed them down. Either live desperate or pay the price the big pharma want. I dont know, I just got a new iphone, and they wouldnt accept my offer of $100 for a brand new one. I went to Target and they wouldnt lower their prices on anything just cause I told them I’d go to china and get the same thing knocked off for ten cents. ”

    In the meantime, if one wanted to know the actual values of PRH, it’s not the vapid Dohle, nor is it the name ‘Bertalsmann’. Look to the Mohn family in Germany who owns an entire load of it all. Look at their values, who of the family is deeply involved in the whole mess, and then you will be able to see. Dohle imo is like a loose cuticle on a very very long snake.

    • You’re right, and wrong. It’s a difference of ‘must have’, ‘want’, and ‘would be nice to have’.

      Things we ‘need/must have’ they can control the price and it’s as high as they can squeeze us for (your medical needs). Wants we have some control over, as in whether you leave the iphone at the store for one of those pay as you go tracphones. Foods the same, there’s poor/nice/overpriced depending on your ‘wants’.

      But we’ve already shown who is in control of ebook prices, and it ain’t the qig5. If they price it too high people just don’t buy. We find something else we think is more worthy of our money (or go to the library or find it used.)

      Oh, had you by chance noticed gas isn’t too bad right now? They discovered the hard way that if it’s too high people make fewer trips and don’t do long drives on their vacations, which means they were spending even less money on those trips they didn’t take. We have ‘some’ control by our actions of their control.

      • Allen thanks. Re gasoline. if people only knew how our own gov’t in the usa has manipulated gas holding, while claiming it’s the fault of people across the world. Frankly when gas was higher priced than now, most had no choice in our end of the woods, had to get to work, take care of critters, drive the livestock etc.

        Food? Preposterous positions of not allowing by code, for people to grow their own, would rather have a lawn they cant eat. Fresh produce is not a treat, its a right by our old rancher/farmer sights.

        There are many behind the scenes nefariousnesses [sp, lol] that go on regarding controlling food supply and giving people c nutrition that is expensive even tho it appears oh so cheap. Might as well eat dirty-dirt as we call it when the soil is contaminated. Most persons unless they work in the govt layer that makes such fiats, never realize how they are being taken while thinking they are ‘getting a deal.’

        Out here in the boonies, re food, the extension people from the ag unis used to come out and teach how to use the same $20 to buy decent food even though higher priced, rather than buy MORE cheap food for $20 that had c nutritional value. But then, still here, people look store bought certain items as suspicious.

        Scuse me, I got to go black my boots now afore the light goes.

      • Also, if the price is too high and stays high it provides an umbrella for competitors to come in, ramp up their business/tech, and by the time the cartel notices their leverage is all gone and the new competitors are in tostay.

        Substitute OPEC for the BPHs, US wildcatters with frakking for indie ebooks, and you see oil and ebooks map just fine.

        Some of the worst players in the world are now reaping just deserts in both arenas.

    • I wish the idea were true: that consumers set the prices.

      More accurately, they set a downward sloping demand curve indicating how many units will be sold at each price level. Suppliers are stuck with it.

      The curve results from the aggregate of consumer preferences. No single consumer has the power to change it. But, even the consumer who bids $100 for an iPhone contributes to the units that would be sold at the $100 price point.

      • I wish you’d explain that to the people at the apple store who keep wanting a humongous amount of bills for most anything less than a year old. lol

        • No, you and others have to explain it to the apple store by ‘not’ buying their phones at that price. The problem is there are too many fanboys and girls that just have to have the latest from that fruity company. You complain, but you buy it anyway, thus proving they haven’t priced it ‘too high’.

          With ebooks, there is so much free/cheap/low priced (and some of it’s pretty good, YMMV) out there that the qig5 can’t pretend to be apple — unless they happen to have an author that you just can’t wait to read their next e/book.

          • you are seriously a clever fellow: “that fruity company” … you seriously crack me up. You ARE writing, right? Books, I mean. You have a wicked and kindly way, very rare.

          • Actually, hubby had to get a new phone this year. We had originally planned to replace our iPhones with new ones (we’re kinda an Apple family), but their removal of software support for 4s (we own 2 from 2012) pissed us off. So, hubby got a Samsung. And I have to get a new one (nothing wrong with phone itself, but the software is slow and clunky now due to Apple being shits). I am not inclined to get an iPhone.

            Ticking off customers–like the currently angry EpiPen buyers–is not good.

            • Well, yeah, the 4s is five years old now. With all the hardware advances — not to mention those of security — I mean, the SE is pretty close in form to the 4s and light years ahead.

              Meanwhile, Samsung’s just-released latest and greatest had software that was up-to-date for literally a weekend before the new version was released by Google, and there’s no word on whether the new handsets will get upgraded.

              • I bought an iMac and a MacBook Pro the same year I bought the 4s and they still work fine. I expect a 4 y/old phone that wasn’t cheap to be supported.

        • Apple knows this stuff, and has chosen to operate at a specific point on the demand curve. If you will pay only $100 for an iPhone, you are located to the right of Apple’s chosen point, and they don’t care about you. They don’t operate in that section of the curve.

          • very interesting point. I wonder how apple figures out their ‘chosen point.’ A strategy, or just guessing, or?

            • Their traditional rule of thumb was 300% profit margin (for Apple) going back to the original Macintosh. Documented at the time. The Mac128 had a $300 build cost, listed at $2500, and was “discounted” to students to $1000.

              Haven’t seen recent pricing breakdown but the 3x multiplier seems to hold on phones and tablets.

              • Samsung must have a similar profit margin. That Galaxy Edge 7 we got a few months ago (not the new Note) was more expensive than the iPhone’s current model on sale. (Not the one about to be released.)

                • Samsung is operating under the umbrella that Apple has set (to borrow the phrase a few comments ago).

                  At the same time as those new models were coming out, Amazon ran a tremendous sale and I picked up a Motorola at the low end of the upper scale, a well-reviewed model that had almost every feature of the latest Samsung, for a fraction of the cost.

                  And that’s how Amazon penetrates that umbrella and sets up for disruption.

                • Yup.
                  Pricing umbrellas help competitors.
                  Or, on occassion, partners: Microsoft uses their Surface line as showcases of Windows innovation and prices them low enough to bring in significant sales without pushback from the customers but high enough that Dell, Acer, and ASUS can make money with similar models at lower prices. It’s a balancing act.

                  In ebooks we see the umbrella effect all the time: with the BPHs determined to set ebook prices north of $12 other tradpubs selling at $8-10 look positively customer friendly. And Indies at $4-6 look like a bargain.

                  That is why the BPHs have been the biggest unit share donors to Indie, Inc. 🙂

          • $100 smartphones don’t exist. Even the “budget” phones Amazon is offering through Prime with Special Offers (a BLU and a Moto G) are $150 and $200, respectively.

            They don’t even exist with carrier subsidies anymore, because those don’t even exist, either. So far as I know, the four major carriers have all moved to installment pricing — which Apple offers independent of them, anyway (in other words, if you want a new iPhone, you can get it, via monthly installments, through either Apple or AT&T).

            Installment pricing for the iPhone SE, 6, and 6S are $13, $22, and $32 per month.

            • Prime w/special offer Moto G – $150. That’s what I paid. It has a single discreet ad. Very happy with it. No carrier contract required (suitable for AT&T, my carrier). I was already a committed Prime subscriber, so I don’t attribute any Prime cost to this purchase decision.

              Upgrading to the latest iPhone or Samsung for my carrier is about $30+/month, for 30 months (up from 24), making it a total of $360+.

              $150 is less than half of $360, therefore “a fraction of the price”. The phone is a great deal more like 80% of the value of the top of the line units, one of which I used to own (Samsung 5, fancy sports version whose brand name designation escapes me).

              • Heh. Well I was right before the current promo — the Blu and Moto G with Special Offers are now $50 and $150, respectively. It looks like neither appears likely to get the latest Android update, but $50 for the Blu could be a goo deal. I’ve heard okay things about the brand. Never anything great, but never anything terrible, either.

                I’m on AT&T, as well. Upgrading to the latest iPhone (technically the SE) is $13 per month. For twenty months. Which is still $260, so you’re still at a fraction of the price.

            • if you want a new iPhone, you can get it, via monthly installments, through either Apple or AT&T).

              The same model Bell/Western Electric used for years with home phones, but you never owned it. An equipment rental charge was on the monthly bill. For a long time, you couldn’t walk into a store and buy a phone. They weren’t sold like that. They were hard wired and didn’t have the GE plugs that allow one to swap them out at will.

    • But when consumers get pissed and act–boycotts and pushbacks–something can happen. If every theater-goer said, “We’re not going to see your movies until they’re five bucks,” I bet they’d find a way to make them five bucks.

      Right now, Mylan, makers of EpiPen, have a PR firestorm due to their price hikes, which weren’t apparent to consumers until deductibles rose and health plans paid less to cover some items. Their CEO has had to justify their gouging and Congress is said to be looking into it. Consumers are talking “generics” and wanting options.

      I checked my own insurance and want to get a non-EpiPen option. I’m too pissed off at Mylan to support them.

      If consumers band together ,holler, and demand action….we might actually have some benefits. 😀

      • Consumers voting their wallets have immense power. Much more than old school businesses and multinational conglomerates want them to know.

        Classic example: New Coke. 😉

        Another, less obvious one: FOX NEWS. The Murdocks noticed all TV news operations, and CNN in particular, had a strong left wing tilt most notable in *what* they chose to cover. They thus chose to counterprogram the competition and discovered there was much more money in being the only news operstion with a right wing tilt than in being one of twenty with a leftish tilt.

        The beauty of open competition is that you don’t have to go toe to toe to with a competitor and play their game to beat them. You can win by playing your own game.

        • i wish felix that were true for text books and their d codes. Dont know what it will take to disrupt that scheme

          “Consumers voting their wallets have immense power. Much more than old school businesses and multinational conglomerates want them to know.”

          • Captive markets aren’t really consumers, though.
            They’re victims. 🙂

            More seriously, consumers have a certain degree of freedom. At a minimum, to consume or not to consume. Even in textbooks, they have the option of paying or pirating. That is less true in matters where government forces you to buya product or service.

      • If consumers band together ,holler, and demand action….we might actually have some benefits.

        Consumers do that all the time. Anyone pay $100 for an eBook? That’s a result of aggregate demand. It isn’t there at $100.

        I’m not sure about the EpiPen. I don’t know that market. But it may be a case of short term monopoly pricing. When there is only one producer, he can reduce output and increase price to max profit.

        Prices get relief when someone else offers a competing product for less.

  10. “I don’t see us supporting subscription models, because we just don’t need it.”

    This was the interesting part of Dohle’s comments. Why don’t they need it? Is this mere bitter grandstanding for effect or was the statement based on PRH’s bottom line?

    Seems like PRH believes the industry is in a fine dining vs. all-you-can-eat buffet pricing model. Around here, some fine restaurants do very well, others, eh, not so much. But the buffets are always packed.

  11. The BPHs they are still commited to their high margin pricing, unit sales be damned. Given that subscription revenue in most other digital sectors is added revenue and only slightly cannibalize sales slightly, ignoring subscriptions is leaving money on the table.

    Now, Ebook subscriptions are still new so it’s not totally clear how much cannibalization is going on: sales seem to still be growing but there’s no way to know if they might not be growing faster if KU did not exist or if KU is bringing in people who otherwise wouldn’t be buying at all. But the aggregate net of sales + KU seems to be higher than where we would be without it since KU is looking to be about 10% of the size of Kindle sales and I doubt Kindle could sustain a 10% higher sales growth at this point.

    (Again, KU is to an extent a replacement for permafree and an alternative to libraries. So not all KU reading is displacing sales.)

    The video folks, in particular, understand that bulk licensing content to Netflix, Amazon, and hulu is primarily cannibalizing broadcast and that it is a net gain over relying solely on sales. Their concern over those licensing terms is strictly a matter of getting their “fair share” of Netflix profits generated by their content, not about getting sale-equivalent payout. They may ripoff creators as much as the BPHs but unlike their NYC counterparts they understand consumer behavior a lot better.

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