Assorted links


For those interested in oil price debates: Hamilton, Kemp, and me:

Thanks. I'm interested.

Steven - how would your analysis look if the Middle East, Russia, Argentina, North Africa and much of Asia were not closed to IOC's but open to all comers like the US? The big problem in the oil industry is that most of the supply is artificially constrained by Governments (and in the case of North Africa, political instability). I don't mean that oil fields are deliberately being choked back, but that exploration and development of potential resources is much less than it would be otherwise due to non geological reasons. The areas that the IOCs are allowed to work are a small fraction (5%?) of the potential resources, generally the highest cost and most technically challenging (see deepwater GOM). But they must do this with the risk that, at any moment, the taps could be turned on elsewhere by a source at a fraction of the cost base.

Since this is a miscellaneous thread, has anyone else's MRUniversity login stopped working this week?

The key paragraph in Amazon's letter is this:

"One more note on our proposal for how the total revenue should be shared. While we believe 35% should go to the author and 35% to Hachette, the way this would actually work is that we would send 70% of the total revenue to Hachette, and they would decide how much to share with the author. We believe Hachette is sharing too small a portion with the author today, but ultimately that is not our call."

Amazon's strategy here is clear: to pry the authors apart from the publishers by painting the publishers as the greedy parties. Now I wonder what percentage Amazon offers its own authors when acting as e-publisher as well as e-retailer.

Short answer: at least 35% of the list price.

GW - " Now I wonder what percentage Amazon offers its own authors when acting as e-publisher as well as - e-retailer."

They offer 70% royalty to authors. - Source ->

You really have to ask what services publishers are really providing in the digital age. Most distribution, contracting, and printing services that publishers previously offered to provide value is obsolete. Is the value added for editing and marketing really worth the same financial contribution as writing the whole entire book? A 35%/35% split between author and publisher seems strange to me but to be honest I am completely ignorant about the nitty gritty details of the industry

I might clarify.

They offer 70% royalty to authors less $0.15/MB for delivery costs ( I imagine this is for providing free global WhisperNet service and other costs ). – Source ->

To put this charge in perspective, the Complete Works of Shakespeare are something like 2.3 MB or $0.35 delivery cost.

"Is the value added for editing and marketing really worth the same financial contribution as writing the whole entire book?"

I think it depends on the author. In many (most?) cases, the original book is nowhere near ready to print. A good editor can make the difference between a flop and a bestseller.

Further, marketing is pretty pricey and risky, as well. So, there's some premium in there for bearing the risk.

Historically, I believe publishers got much more than authors due to the printing risk they had to bear. I think 35%/35% is actually an improvement, but I could be wrong on that.

4. Hachette claims it is fighting Amazon's monopoly of the book market, and it is outraged that Amazon is refusing to provide the fantastic service to Hachette products that has made Amazon the market mover and it is outrageous that WalMart, B&N, local bookstores, are now providing better and faster service for Hachette customers and reducing Amazon's monopoly.

And evil Amazon is using dismal and evil microeconomic theory to justify higher return on investment by lowering prices and profit margins toward actual production costs to increase total sales and profits because of the high elasticity of the product demand.

Hachette is clearly anti-capitalist and opposed to increased profits by selling books to the masses who do not deserve to get access to the books, because as socialist central planners Hachette knows who deserves to read its authors: those who value their author enough to pay a high price. They are fighting Amazon devaluing authors by lowering the price, and price equals value, and then dumping cheap goods on the masses.

It is simply a war between the conservative Bezos and leftist Hachette and its authors.


#4: Joshua Gans:

Re: price elasticity in E-books. I skimmed, but did Amazon consider the impact of sales on printed books as well, and, why exactly should I automatically trust the numbers of a major corporation (that has a P/E of like a million)????

My thought as well. If ebook sales cannibalize physical books, that's probably no good for Hachette and probably very good for Amazon.

If? The future has already happened.

If Amazon really wants the authors to earn more, why not disappear the middle man? If Amazon were an editor of boring texts and a selector of successful authors they could just split 50-50 between the author and Amazon. Problem here is that Hachette does a job that Amazon doesn't want to and doesn't know how to do. Hachette does a valuable job indeed. To keep the good perception on Amazon, they need a villain who to blame. They'll tight the rope around the villain's neck but not enough to kill it. If they kill him, they become the villain.

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