Hachette is in a contract dispute with Amazon over the price of ebooks, and honestly, I think their executive management are complete fools.
I’ve said it before, I’ll keep saying it…
Price doesn’t have to be the only part of the “money for value” equation.
If you have a small bricks and mortar business, and you compete with Wal-Mart as a whole, you’ll lose and end up closing the doors. Wal-Mart will simply keep lowering the price because it can afford to.
Amazon has the same strengths (when it comes to price).
The solution for the bricks and mortar business? Quit competing with Wal-Mart. Do something better, more valuable than Wal-Mart does.
Sell mismatched socks, sell jeans at a premium price and offer light tailoring for free … sell auto parts and offer to install wipers and offer lifetime warranties … etc…
You’ll win more often than not, and have a chance of building a business that way (offering something valuable that Wal-Mart doesn’t).
So, Hachette wants the price for ebooks to stay high enough for profitability, because of production costs?
They are, as a wholesaler, not going to accomplish that. They cannot have their cake (as a wholesaler) and eat it too.
Now, if they want to compete with Amazon directly, and sell their own product (books and ebooks) DIRECTLY, competing with Amazon on price and offering THEIR OWN distribution…
… I say let them. They’re complete morons for trying, and Amazon will do what Wal-Mart does to their competitors (on price), and cannibalize them (absorb them). Amazon is simply too big (even compared to Hachette), and they will win.
But Hachette doesn’t have to keep prices high as a wholesaler either. If they were smart, they would use Amazon as a distribution channel, and then sell something else valuable to the book purchase through their own website (marketed through a card in their books etc…).
They don’t even have to manufacture anything, they could partner up with other companies who already sell and manufacture something else, offer their distribution (which they get through Amazon) … and share profits with that other company (sometimes called a strategic alliance or joint venture).
Big companies do this all the time, and profit BIG.
They (Hachette) can make as much profit as they want, if they would just open their eyes and work at it.