Re: It's really simple
Agreed, to a certain extent.
I disagree somewhat in the total leisure market figure, since leisure spending is not only price elastic, but also time elastic. A book may be valued more or less depending on how long it takes you to read it. £10 for an hour seems expensive. £10 for 5 hours seems a bargain, yet that could simply be a factor of reading comprehension.
Hardcovers however are valued for two main reasons. One is initial access - they come out first in the traditional publishing chain, and people WANT IT NOW. The second is durability - they physically last a lot longer, so are better value for libraries etc. Even when the book has been out long enough to be reprinted in paperback, there is a small quantity reprinted in hardcover for the rental market.
Not that I particularly like artificial scarcity - I only buy paperbacks as that's the size of my shelves - but that's how the system works across all industries.
Ebooks should be priced higher than paperbacks initially - that's the access part of the quote. They should then reduce in value over time, that's the long tail kicking in.
The problem is who controls the pricing of the book - and whether the manufacturer (the publishers in this case) has the right to set a price or if they have to follow the price set by their retailers.
At the end of the day, the manufacturer of the work should be able to set any price they like. It might not sell very well, but they should have the right to bankrupt themselves. Amazon, or any other monopsony middleman (I knew there was a word for it!) should not have the ability to dictate the price at which a good is sold to them, only a price at which they are prepared to buy. It's a fine distinction, but quite an important one, especially when a lot of smaller suppliers are being squeezed out of business by such practices.
Amazon is frequently trying to use books (and music, and other leisure goods) as a loss leader in order to keep control of the ecosystem and ensure people buy the goods with a better profit margin (such as fridges) through Amazon as well. The problem is they also try and force those losses back up the chain, which is where I have a problem. If they sell it for too little, that is their problem, not the supplier.
Tesco is very similar. The big supermarkets have been in a price war over milk for the past few years. Which is fine - milk is a good way to lure in customers. Yet they have used this to bludgeon down the price paid to their suppliers, which means only the larger suppliers can economically stay in the trade, and quality has dropped. That should be looked at, since security of the food supply is a national importance. Inefficiency should be punished, I agree, but the race to the bottom has few winners.