Booktrope

The writing is really horrible.

Interactions of waves in plasma "conspire" to produce effects.

Electrons ride waves like "surfers".

Interesting findings, extremely badly presented.

Isn't it actually about market power? Apple controls a dominant share of the market for paid apps on phones, so it can use that power to extract more money from sellers of such apps. Google's market share is very small, so it can't impose this fee on sellers.

When you say, Apple treats their users as pawns, well, Google's ad business which generates most of their money, also treats their users as pawns. Both companies are amazingly effective at extracting extremely high profit margins from the business that they control.

In other words, primary goal of both companies is to extract as much money as possible from consumers and they're both extremely good at that, in their own way. Neither treats users as pawns, because, that would undermine their market position. Both are user-centric in the sense that they offer products that consumers (whether end-users or ad buyers) believe to be useful enough that they pay very high prices for them. And both companies are zealous in maintaining that relationship.

Apple seems to be slightly better at this, sitting on about $200 billion, but that's only after using hundreds of billions of dollars to buy back their own stock over the years. This treasury stock is hard to value, because it's unlikely Apple would actually sell it, except to buy some other big company. But it looks to me like Apple has enough treasury stock that it could be converted into something like a trillion dollars if they wanted to do that and were legally permitted to. (As an accounting matter, however, treasury stock isn't even counted as an asset, even though the company paid very real cash for at least part of it.) Google's also sitting on well over $100 billion and a bunch of treasury stock.

It raises some interesting social issues, but there's nothing very different about the way these two companies relate to their users, or indeed to society generally.

The main point about -ocracy is a really good one, but the article makes so many blanket statements without any real evidence that seem way off base. The Ivy League schools (and quite a few other liberal arts colleges that should be included in this argument) historically were playgrounds for the rich, with academics being one of the games. No, Texas elite weren't shooting for Baylor (unless they were of a particular religious stripe), the super-elites in Texas were shooting for the big Ivy's, and next category was Rice. (Or Vanderbilt in Tennessee, etc.) Stanford has been an important elite institution in the US for a long time.

Meanwhile, the Ivy's have moved in a dramatic way to be more inclusive with lots more minorities and scholarships. To the point about meritocracy, who cares? If you pick an -ocracy on a less discriminatory basis, it's still an -ocracy. I would argue that a less discriminatory -ocracy that's more socially mobile is somewhat better than a more racist one that's based more on accident of birth. Still possibly not good, but not as bad.

I'm sure there are companies where your job 5 years out of college still depends on where you went undergraduate, but really, you don't get a shot if you're not from one of the Ivy's? Hah. Most people are well aware that many public universities in this country offer great education to some or all of their students. Let's just mention UC Berkely, UCLA, Rutgers, Michigan, Wisconsin, North Carolina, Texas (Austin) and so forth. Degrees from these and many, many more institutions can be an entry to very lucrative and powerful positions. And please don't forget Cal Tech, Purdue, West Point or Anapolis, etc. etc. (Oh, and maybe include YC) Yeah, there's something of a pecking order -- for several decades all of our presidents came from Yale, for example (well they were Bushes and Clinton) and certainly there's a gradient of prestige. My point is, all this stuff about the "Ivy's" is overstated and weakens the argument, which actually depends in no way on the assumption that the country is run by graduates of the institutions designated as "Ivy's".

Someone said that the Ivy's developed their "holistic" admissions policy in the 30's to prevent the schools from being overrun by Jews. That's a stretch. My uncle, a Jew, actually managed to be admitted to one of the two (2) spots open to Jews at MIT at that time. (Remember, open discrimination was perfectly legal back then) He turned it down, incidentally, and went on to build a very large chain of stores. It was quotas and open racism and of course raw exclusion of women that were used to keep people out in the 30's, actually. Today's concepts of diversity were set up to avoid letting the Supreme Court's Bakke decision exclude large parts of our society from the elite academic world, not to exclude those people.

I mention this because the Ivy League institutions are less discriminatory today. You can equate the admission policy today to the 1930's but it's just not the same. Yes there are still biases, but purposefully much less. No the perfect system isn't at all perfect. But going for perfection usually leads to disaster. As Voltaire said, "The perfect is the enemy of the better."

There are definitely problems with being ruled by an -ocracy, but what alternative is actually being proposed, other than doing what's practical and sensible to open the -ocracy to broader participation and trying to limit its inevitable excesses of power?

Looks like, you can only access articles via a simple, and pretty useless, word search.

As you say, capital gains are not "only" due to speculation, but just sometimes. You also assumed that your risk capital was originally "earned" implying that you paid full tax rates on it. Unless your original earnings were from investment or, ahem, luck of birth (I mean, inheritance).

Do you consider being lucky enough to be born into a wealthy family to be doing something productive?

Or perhaps, VW exec hopes full self-driving cars may never happen, because it would imply a fleet approach where transportation would be a service instead of cars being a prized possession. That, of course, would mean far less cars. So don't expect a traditional car manufacturer to lead the way.

This is incidentally one reason for Tesla's huge market value. The company actually has a plan to transition from individual ownership to fleet, so when this happens it will be prepared to deal with a new manufacturing reality.

Just try to imagine VW without all those ads to sell a positive self image because you drive a sexy cool car they make.

This story is 4 years old. No update?

Wait! These figures are not inflation adjusted. Inflation has been about 15X since 1928. So, the $382,000 shown on the chart for 2018 is now worth about $26,000 in 1928 dollars, against $143 value sometime in 1928. That is, in constant dollars, about 180 x over 90 years, not a bad return on investment, but, not what's shown on this chart!

However, if you start your comparison with 1932 instead, market average value has increased from about $50 into about $26000, or 520 times return over investment over 86 years, a dramatically better result! Illustrating the second most basic rule of investing: buy low.

Consider, if you'd invested in a market fund in 1999 instead, you'd have turned $156,000 into about $253,000 (inflation adjusted) or a gain of about (uh-oh) much less than 2x over almost 20 years. In other words, ROI of much less than 10% per year. Investments not so good in this century, even with the huge stock market run-up of the past few years!

Just for comparison, a plumber in the US seems to have made about $1.25 an hour or so in 1928, compared to about $27 an hour in 1998 (according to BLS). In constant dollars, wages seem to have less than doubled. So, long term, investors did much, much better than workers, that's for sure!

And since 1997 plumbers have just kept up with inflation, according to BLS (going from $17.50 an hour in 1997 to to $27 an hour in 2019 -- equivalent to $17.50 in 1997 dollars).

So, big news. Invested capital has increased much faster than compensation of labor in the US, both long and short term. Well, if you think plumbers are typical.

Obviously in the past 20 years, hacker pay has done much better than plumber pay! In fact, hacker pay has increased much more than return on investment! Does this mean, capitalists should fight for lower hacker wages? Or does it mean, we have met the enemy and it is us? Only time will tell...

This isn't true for most small publishers and self-published books. Libraries can get lots of great books from these sources, but they usually don't.

Librarians complain it's too hard to find good books unless they buy them from the big publishers. Libraries even hire a company called Baker & Taylor to tell them what to buy -- B&T is a distributor that's deeply connected to big publishers and won't even handle most small publisher's books. When a small publisher tries to get library sales, usually librarians say it's too much work to evaluate their books. This doesn't of course always happen -- there are ways that small publishers can sell to libraries, but it is often too costly and difficult and I know of many small publishers who've just given up on doing business with libraries. It's a disservice to readers and authors who aren't in the big publisher system, but it's how libraries do business.

Now big publishers are starting to say, libraries are in competition with them. It's ridiculous - books become popular because of word of mouth, and libraries can be very helpful in this sort of "dandelion" marketing. So hopefully more authors will wise up and look for alternative publishing approaches. And maybe libraries will start actually looking for other sources of books, but, librarians are by and large a very traditional and hide-bound lot, especially when it comes to picking books, and probably will resist changing their approach no matter how badly the big publishers treat libraries.

The effect mentioned in this article is certainly not suffocation. 2000 ppm of CO2 is about 0.2% of the air, and doesn't signficantly reduce oxygen levels. It's a real problem, but calling it suffocation is pretty dumb.

This is possibly even a more serious problem in tightly weatherized bedrooms. I was in a rehabbed house tightly weatherized by the contractor (to meet a typical building code). It had radiant heat. When my wife and I sat in the bedroom for 1 hour, a calibrated CO2 sensor showed levels rising to 1600 ppm. (Humans put out lots of CO2). Sleeping 6 - 8 hours in that environment is very likely to cause cognitive impairment the next day. So if you're in a "tight" house, make sure to sleep with the windows open!

Raising the question of course, of why then tightly weatherize the house? Well, so we can say, we're being environmentally responsible, of course!

Where are you shopping? Most US supermarkets have lots of fresh fruits and vegetables, as well as a meat counter and often recently-thawed fish. ("Fresh" fish can't actually be distributed without days of delay unless you live very nearby to where it's caught.) There's also always fresh high-quality bread, though there may be some excessively processed carbs as well Deli's usually don't provide very healthy food -- it's all processed. When I was in Italy a few years ago, supermarkets were very similar to those in the US.

There's even more interesting research indicating that context of support is crucial. (Gable, et al, Safely Testing the Alarm: Close Others’ Responses to Personal Positive Events, Journal of Personality and Social Psychology, 2012, Vol. 103, No. 6, 963–981)

This interesting study provides strong evidence, it's much easier to support a partner in context of a positive event than in context of a negative event. Context appears to play an even more important role than responsiveness or sensitivity of the person giving support. In fact, even if a partner recognizes that he or she received helpful support for a negative event shortly after the event occurred, by several weeks later the support is not generally remembered as positive.

If you want to support your partner in a helpful way, make sure you're supporting them when good things happen, and don't count on rescuing someone when things go wrong.

This article is a good example of stupid tech reporting. Someone who's supposed to be a knowledgeable reporter does some speculating, without bothering with any actual data, and comes up with a so-called "problem" and idiotic suggestion for "solution".

The article suggests that, though self-driving cars don't crash into other cars, they "cause" crashes (mostly fender-benders) by driving in a different manner than humans. No evidence that they cause more fender-benders than humans, who drive all sorts of different ways. Apparently, the author thinks this is so obvious, no data is required.

Then, the article seems to propose that self-driving cars should be like humans, who allegedly violate laws in a "safe and principled" way. This ridiculous statement ignores the tens of thousands of people killed in crashes caused by human-driven cars every year, and the many tens of thousands severely injured, by these "safe and principled" violation of driving laws. Most accidents do not involve complying with traffic laws, actually. That's why we have traffic laws -- to prevent this carnage. Individually, however, we still tend to believe that even if we engage in risky behavior like speeding or running lights, we're not the one personally who will crash.

As to some people who think self-driving cars should speed because so many people speed, please check the mortality rates for accidents at various speeds (they're widely published) -- survival rates go down lots as speed goes up, especially if a pedestrian is involved. On the other hand, if you do the math, on most trips the amount of time actually saved is much smaller than the exhilarating sense of going faster than the next guy you get from even moving a couple of mph faster. This is why many major cities are reducing speed limits and taking other steps to reduce traffic speeds. Speeding, the most common rule violation in driving, is neither safe nor reasonable, and the author, supposedly an expert on driving, cannot provide any evidence to indicate that it is. Well, except that he seems to assume that tens of thousands of traffic deaths are acceptable and unavoidable.

Perceptive readers will notice that I haven't cited stats to support my assertions in this comment. That's because it's a comment and I'm not holding myself out as a journalist who's done sufficient research to report on issues of motor vehicle safety. I'm a mere commenter, but be sure, if you do the work to find out what the real numbers are (regarding both driving safety and actual driving times) it bears out what I'm saying.

So this makes me wonder, why would anyone bother to write about Marcuse's critique of Wittgenstein. Don't tell me our armchair radical academics are once more so enamored of facile concepts like "repressive tolerance" that Marcuse is again being taken seriously! The Philosophical Investigations is crucial is you want to think seriously about how language works, and to use it. Marcuse on the other hand offers what Orwell so incisively called a "smelly little ideology".

Nothing like a little oversimplified, half baked Marxism, when you want a one-idea panacea for society's problems. Ugh!

If you go read the study, there is a potentially rather severe experimental flaw.

My wife has what seems to be fairly severe gluten intolerance, which shows up approximately 3 days after she consumes even small amounts of glutinous. She had this for years before trying an elimination diet and discovering this effect. Please note that it shows up even if she does not know she has had gluten -- we sometimes are able to sort out ingredients after the fact, and if she has the reaction, it will show up if we look deep enough.

The report says, the test was done by rotating diet every 3 days. If my wife were in the study, her reaction would show up in the next food rotation. So to measure the effect we see with my wife, the experiment would need to measure reactions with approximately a 3 day delay- otherwise it would look like the sensitivity was random. The article does not indicate that this approach was taken so I wonder about error.

As for my wife, her health improved dramatically after eliminating gluten from her diet, though it's pretty clear that she doesn't have ciliac.

Perhaps it's something else in the gluten containing foods (and not in other foods) besides gluten that's having this effect, but if so, avoiding gluten is a very good marker for whatever this gluten-containing-food substitute might be.

This article repeats the canard that Amazon has been selling ebooks at a "loss", using this as a key example for its thesis. In actuality, Amazon wanted to discount ebooks, but the big publishers wanted no discounts so they could maintain ebook prices higher than paperbacks generally. Take the example in the article, where the publisher set an ebook price at $12.99. The standard publishing contract required a retailer to pay the publishing company about 50% of this amount, or about $6.50. Amazon paid approximately this royalty, and retailed for $9.99, making a gross profit of about $3.49 per unit. This is clearly not selling the item at a loss. The author of the article, claiming to be an expert on business, thinks that any discount from list price is selling at a loss - in other words, the article author, who claims to propose a better way to approach a fundamental part of business law (antitrust) doesn't understand the first thing about retail business. Discounts are not selling at a loss, unless the retailer sells for less than its cost.

I suppose you could try to make some argument that it cost Amazon more than $3.50 a ebook over and above the cost of the product itself, but the author makes no effort to do so. And Amazon clearly has not been selling its products below cost generally, though in a business of its size, of course its likely that there are some exceptions. Consider, if Amazon really was selling books and other products below its cost, losing money on each transaction, where would the money come from to invest in all the new businesses like AWS, production of films and TV shows, etc, that the article's author thinks are such a problem?

So here's a proposal for a "better" idea for antitrust law based on an article demonstrating lack of understanding of the first thing about business.

He calls it "The Conscience of a Liberal" and then says "So yes, I’ve been wrong. Let those who are without error cast the first stone." Krugman is a good example of what's gone amiss with liberalism.

Even worse than his many errors, is his hypocrisy. He very loudly accused Amazon of being a "monopsony" during Amazon's most recent dust-up with the big publishers, on grounds that its market power would enable it to hurt consumers, although he acknowledged, Amazon hadn't used its economic power that way. https://www.nytimes.com/2014/10/20/opinion/paul-krugman-amaz...

The impetus for Krugman's column was, Amazon's resistance to big publishers using their market power to overprice ebooks. Krugman was on the side of the big publishers for obvious reasons I think. Krugman's own widely-assigned economics texts provide some of the clearest examples of big publishers using monopsony to overprice ebooks. His publisher, presumably with Krugman's support, sells ebooks of these texts for $100 - $200 a copy. A great example of mmonopsony - because students are assigned Krugman's books and therefore don't have choice, Krugman's publisher extracts monopsony profits. This isn't just a little convenient opportunism -- as Krugman surely knows, overinflated textbook prices are a significant burden on many students, who are leaving university with huge debt. Yet, Krugman goes along with this exploitation, and presumably banks very large royalties for himself at student's expense.

I say presumably a couple of times, because I've not seen anything from Krugman explaining or apologizing for the prices of his own books and the way this exploits students.

While this indicates that there are lots of people who never read ebooks, it does not actually say whether more ebooks or print books are being sold and read. The Pew survey notes that the mean number of books read is 12, while the median is 4. This means that one-half of all readers surveyed read no more than 4 books a year, so the other half of all readers must average over 16 books a year. It's probably even more skewed than that, although numbers are hard to come by. This skewing of the book market probably accounts for the fact that ebooks are far greater than 28% of book sales, although accurate figures are hard to come by for several reasons (sales reports from industry groups don't include self-published authors, the fastest growing part of the business, for example). However, it looks like people who read fewer books are probably much less likely to switch to ebooks, possibly because the change costs time or money, possibly because people who read fewer books are probably on the whole less technologically adept than people who read more. Also, print books are still assigned from an early age in most schools, with ebooks being a secondary alternative in education, meaning that people still start with print books and that nearly everyone reads some print books unless they are very uneducated.

Clickbait based on a 5-year old source which actually says, "Twelve trials were included in this review which reported data on two outcomes (dental plaque and gum disease). Trials were of poor quality and conclusions must be viewed as unreliable. The review showed that people who brush and floss regularly have less gum bleeding compared to toothbrushing alone. There was weak, very unreliable evidence of a possible small reduction in plaque. There was no information on other measurements such as tooth decay because the trials were not long enough and detecting early stage decay between teeth is difficult."

So studies showed flossing helps prevent gum bleeding. This is not what the article reports.

Are there studies of effectiveness of tooth brushing? Imagine the control group - people who don't brush their teeth at all!

For a remarkable fictional exposition of this, read The Confidence Man by Herman Melville one of the truly great American novels. Many of the examples described in this article are brought to life, and used to generate a very funny, strange and interesting kind of literary and intellectual experience.

The book doesn't have one main character -- instead, it describes a riverboat trip where various avatars of the confidence man appear one after the other, although at one point two avatars appear at the same time and try to con each other. It was written in the mid-19th century but so advanced that Melville couldn't get it published -- it finally got into print about 50 years after he died.

Plus, if you want to understand the historical roots of Donald Trump, try the chapter in this book called "Some account of a man of questionable morality, but who, nevertheless, would seem entitled to the esteem of that eminent English moralist who said he liked a good hater."

Consent of the governed does not mean, agreement of the governed to specific measures. No does it mean majority rule, which can easily be tyranny of the majority (possibly, the worst kind of tyranny, because it's possibly the strongest kind). One can easily consent to something without actively participating. The author of this oversimplified piece doesn't seem to even acknowledge a category of decisions that people might consent to, even if they disagree with them. It's obviously foolish to say that government is acting without consent, if it makes decisions that you do not agree with, although you are willing (and may even actively choose) to live under the system for making decisions. Nor, of course, does consent always mean actively choosing; it can mean accepting things. The concept of consent of the governed was articulated most effectively by Locke, whose philosophy was a key inspiration for the American revolution. To Locke, consent of the governed had nothing to do with whether or not people agreed with specific laws. Rather, consent of the governed was the foundation of civil society -- that is a society governed by rules and laws. Locke identified the alternative as a state of war -- government by bare force, unconstrained by the rules of civil society. When the consent of the governed is lost, it means that the people no longer accept the legitimacy of the government (sometimes stated as: government has lost the mandate of heaven, or some other revolutionary slogan). It means, change of the form of government, not just the laws and not just the holders of power. It usually doesn't come out well. But (rarely) it creates something new, and better.

The comments to this post are really interesting - one comment claims that (according to an agent) agency pricing was Amazon's idea, not the big 5, even though, the big 5 very publicly insisted on agency pricing. It's really absurd. Of course, agency pricing for ebooks was first pushed by Apple, part of what got them and the big publishers in trouble for antitrust conspiracy (when the publishers agreed to withhold books from Amazon if Amazon kept discounting)

The the comments about Amazon and publishing, Amazon has a very major publishing operation (called, suprise!, Amazon Publishing). It's grabbing market share very quickly. If you want information about this check authorearnings.com (which provides industry sales estimates that include self-publishing) Of course the big story in the publishing business is that self-publishing is rapidly eclipsing traditional publishers in the ebook space.

Amazon is not only doing Netflix for books. It's doing Netflix for film and TV. The big competitor to Netflix is not any network or studio -- it's Amazon.

In the various reviews I've seen for this store, no one seems to have raised the question of, how would a store like this be profitable? It's selling books at the same prices as Amazon online, but with the added overhead of being in a very high-rent space in an upscale shopping center. There seem to be lots of employees for a book store. At the discounts that Amazon offers, their margin on books is thinner than most bookstores. Sales would need to be very high to make this pencil out, from what I can see.

This might be a play like the old Crown Books stores which sold only best sellers at a big discount with the idea of making it up on volume. But Crown did not last long. Amazon does have good data about what people buy, so perhaps they could maximize revenue per square foot by packing popular sellers in. On the other hand, one departure of this store from typical bookstores is that books are all facing out on the shelves, meaning fewer titles and probably less revenue per square foot.

I'm wondering how this approach to bookstores could pay off for Amazon, except by putting competitive pressure on any other bookstores in the area. But Barnes and Noble closed the store it had in this shopping center quite some time ago. Is it advertising, an attempt to upscale Amazon's brand? Amazon has the number one favorable brand among consumers from what I've read, and it's certainly where most people go these days for books -- last report I saw said over 80% of book buyers use Amazon. So what the business purpose of this store is, unclear to me. But it's Amazon, and surely they're just a few steps ahead of what I can see.

Good point. It's a piece about traditional publishers (especially the big 5) not book sales in general. Also buried in the article is head of Kindle ops saying, Amazon's ebook sales are continuing to increase. It's not only possible that ebook sales are going up, there's very strong evidence of this. Check out the authorearnings.com site if you want to see just how fast the ebook market is moving away from traditional publishers to self-publishing and alternative approaches.

More bad information about the publishing business from the NY Times. Ebook sales aren't declining generally; it's big publisher ebook sales that are declining. Ebook sales for self-pubbed authors and indie publishers are growing rapidly. If you have any doubts about this, check out the authorearnings.com website, which tracks sales of ebooks on Amazon and other platforms.

Buried in the article is information from Amazon that ebook sales are continuing to rise. But this article isn't about ebook sales -- it's about big publisher ebook sales.

The article also says that dedicated ebook reader sales have declined. This is true but not because of a shift away from ebooks. It's that ebook reading is shifting to tablets and phones, a trend that is widely recognized in the industry, but not in this article.

The reason that big publishers (and some smaller publishers following the traditional model) are losing ebook sales is that, in the big Hachette - Amazon dustup last year, the big publishers won the ability to keep ebook prices ridiculously high and to prevent discounting by Amazon. So big publishers routinely price ebooks about the same or higher than paperbacks. Of course their ebook sales are suffering! But self-pubbed and indie publisher books are priced much lower than print books, and are of course gaining market share very quickly.

The NY Times reports on publishing are all biased toward big traditional publishers - after all, that's essentially what the Times is. (To the Times' credit, they have a public editor who critiques their stories, and the public editor has said that the last two major stories in the Times about Amazon failed to meet journalistic standards.) They ignore information like what's on authorearnings.com because they're trying to get people to believe there's a trend away from ebooks. There certainly are some people who decide what kind of book to buy according to what they think the latest trend is. But if you're looking for accurate information about the book business, don't expect it from the Times.

It's much more than you are saying. If you start with the retail price of the book (which your referenced article does), there's 50% off the top generally for wholesale discount (that is, the retailer pays about 50% or so). There's an additional 15% for a distributor's share (this means a company that has a sales force, generates orders, etc.; if you don't use a distributor, you need your own internal sales department which will cost almost as much). You don't need a distributor for ebooks. You have returns -- at least another 20% or so of your revenue will be eaten up there for most titles.) No bookstore returns for ebooks. There is printing, shipping, warehousing. (Normally estimated at about 15% of the cost of print books) No printing, etc. for ebooks. There's capital costs associated with doing print runs -- you put money up front and then have to wait for return while books sell, and also you run the risk of printing books that never even ship to stores. Hard to estimate but another cost that doesn't apply to ebooks. If you add it up, 15% for distribution. 20% for returns. 15% for printing etc. These print book only costs come to about 50% of the wholesales price. It's just not so that ebooks cost almost the same as print books.

Traditional publishers still have a business model that depends upon bookstore sales. The real problem for traditional publishers is, if ebooks are priced much lower than print books, it's an obvious problem for an important part of their business model. So they struggle mightily to keep ebook prices high and to persuade people that the costs of ebooks and print books are the same. As the article indicates it's not working -- self publishers and non-traditional publishers can produce ebooks at a much lower price point, because the ebooks cost less to produce.

Not actually so. The canard that print books are not more expensive than ebooks comes from traditional publishers trying to justify high prices for ebooks, but it's not so. Costs for print books that are higher than ebooks: printing, shipping, warehousing, capital costs (sunk costs of a large print run meaning investment in books that might take years to sell or never sell). Another huge factor in the print book business is returns -- nearly all bookstores are consignment shops and regularly return up to 30% or more of the books shipped to them. It's the custom in the book business (to avoid shipping costs) that "return" means, the retailer actually destroys the books that aren't sold and gets a refund for them from the publisher. (Really!) Returns can add another 30% or more to the effective cost of print books sold in bookstores. (Returns are a smaller factor for bestsellers, one reason why traditional publishers are so focused on that corner of the business.) Remarkably, Amazon is one of the few retailers that tries to minimize returns -- they try to get smaller shipments from publishers so that they can avoid overstock.

So why do traditional publishers say that ebooks cost as much as print books? (Booktrope is an online publisher focused on ebooks and print-on-demand paper books, and we certainly do not say that ebooks cost as much as print!) For traditional publishers, low ebook prices can undermine print sales. A big part of their business model is selling print books at high prices through bookstores. Lower ebook prices obviously are a problem for that model. Also, traditional publishers are used to a world where they have great connections with tastemakers and can persuade people their product is "better" than the competition. If you can do that, you can keep your retail price high -- like Apple does in the phone/tablet/computer world. But it's not working -- there are lots of great books being self-published and coming from non-traditional publishers these days, so, as the article says, big publishers are really starting to suffer from their own pricing policy of trying to keep ebook prices artificially high.

The quote is on its face silly. The author of the article got mixed up. Publishers set a retail list price of $14.99. Of course Amazon doesn't pay retail list price for books it sells - it pays wholesale. (As do other retailers including Apple and Google) Amazon pays more like $7.50 for the book and then offered a discounted consumer price of $9.99. This was not selling below cost. It was aggressive discounting which is a common feature in retail markets.

Discounting is an especially good retailer strategy with overpriced ebooks. A retailer only pays list price for an ebook after it receives payment from the consumer, so the optimal price for a product like this is the one that generates the most gross profit basically (sales times margin). Amazon optimized. Apple and Google could certainly follow suit, and in fact, Google also aggressively discounted ebooks like Amazon during the time period in question. Apple's strategy seems to be to keep prices and margins very high on all products it sells, in my view, because most of those products are physical things that do have marginal cost.

In any event, it is completely unreasonable to say, publishers were concerned about Apple and Google losing money, because publishers knew that Amazon was making money on each sale, not losing money. Publishers wanted to keep retail prices high out of a short-sighted belief that this would protect print book sales and that it would keep their own margins high. They're now paying the price in lost sales, and it's their own outrageous pricing that's the problem.

The posted article has some huge errors. It actually says, "Amazon was willing to buy a title for $14.99 and sell it for $9.99, taking a loss to grab market share and encourage adoption of its Kindle e-reader." That is complete poppycock. No retailer pays list price for books; they pay wholesale price, which in the book business is usually about 50% for print books; sometimes higher for ebooks. (It depends on the publisher/retailer deal) During the time when the lawsuit was pending, the standard wholesale price for big publishers was more like 50%. So when Amazon buys a book that lists for $14.99 they paid $7.50. Marginal cost of selling an ebook is not very large. If Amazon bought a product for $7.50 and sold it for $9.99, they marked up the product about 33%. This is not "selling at a loss"

Big publishers did not object to Amazon selling for below list because it would impact Apple. They objected because they thought selling books at a discount would cause consumers to expect a lower price and they would no longer be able to sell higher-priced books. This is just what's happening right now. Amazon prices books very effectively and even more signficantly, Amazon has opened the marketplace for book sales to self=published authors and to independent publishers who are trying new models. For example I'm CEO of Booktrope which has a new model that produces ebooks that can be sold in the range of $2.99 to $9.99. (We pay a higher percentage royalty of authors in view of the lower prices.)

Amazon primarily but also Apple and Nook have opened up huge markets to us and our books are available broadly to readers. It means that big publishers will face competition from us, publishers like us, and self-published authors, and it's not going away.

The only way for the big publishers to avoid that would be to somehow block out competition including self-published authors and smaller, more efficient publishers who can produce ebooks at a lower price point. It's not going to happen so big publishers are at a crossroads and we should expect them to adjust or they will face continuing decline in sales.