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August 04, 2006

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Comments

Glenn Fleishman

Let be slightly naive and say that I'm unclear whether Lee and you and this researcher are talking about units sales, retail price, or net profit to Amazon or another service when discussing this problem.

If the 100,000 best sellers produce 80% of the unit sales volume, they might only contribute 40% of the revenue and 10% of the profit. As we have talked about before, Amazon.com's great innovation in the book business was exhaustiveness in that every book in print is as easy to order (but not as quick to receive) as any other book in print.

(Out of print books are sometimes easier because the book is shipped from a used book seller shipped directly to a customer out of their inventory, rather than from a publisher that takes 1 to 6 weeks to fulfill orders to the bookseller.)

Amazon charges list price and sometimes a $1.99 surcharge for a significant majority of its in-print titles and has (except the surcharge) since its inception.

Thus, Lee could be right about volume, you could be right about profit before taxes, etc. Is there a clear answer as to whether we're talking units, retail price, or the raw profit?

Chris Anderson

Glenn,

Excellent point. I do address the difference between viewing the Long Tail from a unit, revenue and profit perspective in the book. But unfortunately the current debate was started by Gomes, who has been unclear on definitions in his columns. And, as you know, definitions are everything.

FWIW, in my quantitative research I almost always use units exclusively. This allows for proper head-to-head comparisons between markets, even if their revenue and margin strategies are different.

Chris

Glenn Fleishman

That's interesting. I would expect that the $ amounts are actually more compelling than the unit amounts. I have long thought that Amazon essentially funds the discounts on popular books with no discount and surcharges on typically much more expensive, non-discounted titles.

Selling one copy of $100 at list price and demanding 55% off from the grateful publisher (and free shipping because you're ordering multiple items from them each time) plus $1.99 -- well, my math says that's $56.99 you've just netted before any other expenses. (Free shipping being one of them.)

Meanwhile, that $34.99 hardcover, which may be sold at 40% off list is purchased at 45 to 50% off list and then shipped free. That's, well, my math says that's nearly nothing.

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Tidbits

The Long Tail by Chris Anderson

Notes and sources for the book

FREE was available in all digital forms--ebook, web book, and audiobook--for free shortly after the hardcover was published on July 7th. The ebook and web book were free for a limited time and limited to certain geographic regions as determined by each national publisher; the unabridged MP3 audiobook (get zip file here) will remain free forever, available in all regions.

Order the hardcover now!