Wednesday, March 19, 2014

Jeff Bezos must be Smarter than I Am

There are  no arbitrage opportunities, but here is an arbitrage opportunity:  Rick Perlstein's Nixonland is available on Amazon Kindle for $9.99 (or "with audio/video" for $11.92).  It is available as Audible audio for $27.97.  But buy the Kindle version and you can then download the audio for $4.49.

So it never makes sense to by the audio alone, right? Because you get it audio and Kindle together are cheaper than the audio alone, right?

Isn't this an arbitrage opportunity?  What does Jeff Bezos know that I don't know?

[And it's not just Perlstein.  On casual scan, this anomaly seems to occur with a whole bunch of audio offerings.]


Daniel Efosa Uyi said...
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mike shupp said...

My sneaking suspicion is that these prices fluctuate over time, so the bargain you see now may not be available in a few months ... or even a few hours. And Amazon does track its signed-in customers -- the price you see may not be what the average joe who just wants a paperback may see.

Anonymous said...

Actually, an arbitrage opportunity is not just a difference in prices (or even a negative prices). It is a risk free trade.

For this to qualify, amazon would have to sell you both together - but later *buy* the audio from you at the individual price. Since you can not sell at that price, this is not arbitrage

Buce said...

Good point, Anon, although my wife and I do occasionally "sell" our fully loaded iPads to each other. But even so--now tell me why the hell he is doing it.

Ken Houghton said...

You could, however, theoretically find an Audible user who would buy it from you for something between $11.92 (or $14.48, if you buy them separately) and $27.97 as a win-win.

Bezos knows two things: (1) people who buy the Audiobook as their primary source don't buy the ebook as their source [market segmentation] and (2) the secondary market for Audio books is very thin [informational asymmetries--real, not McArdlian, ones--abound].

I suspect as well--and you can check this now--that you could find Audio versions of not-current books (Nixonland is nearly six years old) at someplace like Strand's Bookstore for around $5.00. And that most of the books you are finding that fall into that "anomaly" are older releases where any sale by Audible at the full price would be lagniappe for them.