Thursday, April 28, 2011

The Case for Low-Priced eBooks

You might think that being in my 50s, I’d be one of those “I love the look/feel/smell of paper” people (really? smell? really???), but I’ve embraced eBooks — maybe a little harder than I should — for various reasons. For one, my shelves are overflowing and I have a lot of books in boxes. I was going to turn The Boy’s bedroom into a library while he was gone, but Mrs. Fetched managed (as usual) to throw wrenches until he came back. For another, FAR Manor is in a rural area. The nearest indie bookstore is 30 miles away. The nearest Barnes & Noble is another five miles down the road from there. The nearest Borders is 10 miles beyond that, and closing anyway. Thanks to eBooks, I can buy a book as easily as a Manhattanite.

Recently, there’s been a fair amount of discussion in the circle of writers that I belong to about eBook pricing. Icy Sedgwick kicked it off last week with her blog entry E-book Pricing — Icy priced her own books at 99¢ each and thinks maybe she short-changed herself for various reasons:

I think the problem is that people don't attach much value to something if it's too cheap, and they become unwilling to pay if it's too expensive. To me, the $2.99-$4.99 bracket is just right - the e-books are still cheaper than paperbacks, and they're also cheaper than everyday luxury consumables.

This week, John Wiswell weighs in with High Book Prices Are Good for You. He starts with the example of Patrick Rothfuss (or rather, his publisher) releasing Wise Man’s Fear and pricing the Kindle edition at $14.99 (or $11.99 for a pre-order). John says:

Cheap shouldn’t be the standard for our industry. … What [Rothfuss] charges makes up the price ceiling for the industry. … This is the most that my work is allowed to cost.

The point that John is making, of course, is that extreme prices in the bestseller list allow independent authors a huge price advantage while avoiding the “bargain bin” stigma of the 99¢ bracket. I can get behind that. While Amanda Hocking and John Locke have done extremely well at that price point — these are two of the “Kindle Millionaires” you may have heard about — John W, Icy, or I may or may not find that kind of success. Of course, Amanda Hocking has accepted a major publisher deal: four books, $2 million. Kind of hard to argue with those numbers.

As someone who both reads and writes, eBook pricing (or heck, any kind of book pricing) is a difficult subject to resolve. I’d love to be able to quit my day job and make a living writing stories that people enjoy. But I’ll be honest here: I’d need sales well north of 50,000 books a year to make that happen. Between the senior technical writer’s salary and — ever more important as I skid into middle age — health benefits that I get from my day job, a more realistic expectation is a solid supplementary income that I can use to pay off bills and contribute toward that ever-elusive retirement. But given all the people my current income supports, I don’t have tons of spare change floating around to buy a bunch of books at full retail. And so:

Cheap eBooks are good for readers, and good for authors.

There, I said it.

The economy sucks right now. Mrs. Fetched hasn’t had much video work in the last year or so (one short but solid job and a couple small things). It’s only a little pinch for us though, especially compared to millions of people who lost good-paying jobs since 2000 with only a couple of feeble twitches of recovery in between. You think any of those folks are paying $12.99 for a book, period? If they’re reading new material at all, they’re either going to the library, borrowing from friends, or hitting the used bookstores.

Readers are already revolting against high eBook prices: I took a skim through Amazon’s Top 100 Monday night, and 42 of the titles are priced at $5 or less (free eBooks have a separate list). Amazon’s royalty structure encourages a price range between $3 and (I think) $7, by offering a 70% cut of sales in that range. This makes sense — I think eBooks should cost less than paperbacks, for several reasons:
  1. It’s difficult to pass an eBook around. At my workplace, and where my mom lives, there are shelves of used books (paperback and hardcover). Anyone can grab whatever book they want, or leave one for anyone else. I've read several books that way recently. What lending features do exist are too restrictive.
  2. Then there’s the issue of resales — while I might get only a buck for a used paperback, I’m forbidden by license to do even that much with an eBook.
  3. Publishers almost always use DRM options. One wonderful exception is O’Reilly. A DRM’ed eBook can’t be (easily) converted to another format — which means if you trade in your Kindle for a Nook, or an iPad for your Kindle, you either lose your purchase or have to crack the DRM (which is technically illegal in the US). When I had to switch Kindles recently, my backup copies of Kindle purchases wouldn’t work on the new Kindle. Amazon let me re-download them, but I should have been able to transfer my library en masse from my computer.
  4. Yes, I know that printing is cheap, but over thousands/millions of paperbacks, the costs add up. Then there’s shipping to bookstores and disposing of remainders to consider. You don’t have any of that with eBooks.

Okay, readers have spoken. They know that restrictions on eBooks they’ve purchased make them a lesser value. Therefore, they want lower eBook prices, and are willing to buy indie books to get them. What about authors?

Late last week, iReaderReview.com told the tale of one John Rector, who:

did really well with his indie novel. The Grove used to be around #300. Perhaps it even hit the Top 100 (not 100% sure as didn’t track it). People really, really loved it.

He got a book deal. Everyone was happy for him.

Now he has -

1. The Cold Kiss. Price: $7.99. Sales Rank: #12,726. Reviews: 4.5 stars on 25 reviews.
2. The Grove. Price: $7.99. Sales Rank: #26,038. Reviews: 4 stars on 80 reviews.

There’s no other way to put it – Signing a book deal was a huge mistake.

I don’t know what the difference in sales numbers from #300 to #12,700 is, but I’m sure it was a big hit. I think he was selling his indie edition of The Grove at 99¢. I wonder how much he earns from his “published” edition, but I’m guessing he’s actually making less money with his books selling at $8 than they did at 99¢. That might be offset by any print sales, and he could actually doing very well at it, but without hard numbers it’s hard to say either way.

In the current regime, it’s the mid-list authors who are getting whacked. I think $8 is a pretty typical eBook price for a mid-list author’s work. But without a big marketing push from the publisher, that mid-list’er is pretty much mired there — a relative unknown, decent sales but either keeps her day job or supplements his spouse’s income. Joe Newkindle comes along, sees the A-list author selling for $10 or even $12, decides to look for something cheaper. If they’re both getting good reviews, which unknown is he going to take a chance on: Mary Mid-list at $8, or Irv Indie at $3?

The Kindle Millionaires have a formula: offer a quality product, and lots of it, for dirt-cheap — for once, “make it up on volume” isn’t the punchline to a joke. In her this is why I took the book deal blog post, Amanda Hocking said she has 18 titles on Amazon, plus 18 more coming — even more telling, the $2 million book deal is for a four book series. To me, it’s clear that being prolific (and good) is the way to go if you’re working the impulse buyers. Suck in readers with the low price, make it worth their while, then make sure they have plenty of opportunity to give you repeat business. After all, even the nearly broke often have 99¢ laying around — and more of a need to escape than the rest of us. But if we’re not that prolific, we need a different formula and a different metric of success.

Expectations are a difficult beast to tame, especially when they’re someone else’s, but I can talk about mine. Wearing my author hat: as I said above, I don’t expect to be able to quit my day job and write stories for a living (I’d be delirious if it happened though!). I don’t have 18 novels in my head waiting for me to pour them out into my MacBook and roll them out at once, so I can’t make it up on volume. The 99¢ option probably wouldn’t bring in enough for me to report at tax time, let alone make me a Kindle Millionaire. I’d be happy to clear a few grand a year, after paying for editing and cover art.

Wearing my reader hat: I’m going to expect more from a $3 eBook than from a $1 eBook. For $1, I’m okay if it’s a novella or short anthology — but not a preview. I’ll put up with some editing issues — but if you use “there” in place of “their,” or don’t spellcheck, I’ll show no mercy. For $3, I’ll expect a full-length work with at least a little polish. I won’t fuss over a couple of typos, you’ll find them in traditionally-published work (especially nowadays), and at least you’ll be able to fix and re-release. That’s the standard I’m going to hold myself to.

I have a couple irons in the fire, and (unless I’m offered a non-exploitive book deal) I’ll probably roll them out at $3 — but offer an introductory price of $1. There are people who will go “BARGAINZ!” and buy at the “special price” even if they wouldn’t have bit if it “retailed” for $1. Not pricing at the bottom lets me play around some: nobody will complain if I drop the price, or return to “retail” after the introductory period expires, but they would if I raised the price. I could probably get away with going to $4 on the next book, assuming people are comfortable knowing they’re going to get a worthwhile read for the price.

This whole eBook market is still in the stage where people are feeling around, trying to get some idea of the “right” price to pay. Personally, as both an author and a reader, I think that price is a lot closer to $3 than $13.

6 comments:

  1. Wow, these are some astounding facts, FAR! I guess it's less and less interesting to publish traditionally if you consider only the financial aspect.

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  2. I agree with you for the most part- lower prices but not too low (bargain bin status). Unless I know the author, I think $3 is about right, though I'm willing tio pay more for an established author I already love. And even then, more than $10 is excessive if I don't get a physical copy.

    Good points in your post. Thanks for sharing!

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  3. The only thing I've noticed no one has been paying attention to is that yes, e-books are cheaper to purchase, but unless readers are content to use things like Adobe Digital Editions or the Kindle App, then they have to pay a large sum of money for a device on which to read these cheap e-books. Those devices in themselves carry a massive cost, both in financial terms, and environmental terms. Maybe when the price goes down, more people will buy them and selling cheap e-books will finally become profitable.

    ReplyDelete
  4. Hi all!

    Mari, it seems like publishers are doing everything they can to give independent writers an advantage. It may be a deliberate strategy: identify successful indies and offer them book deals, in hopes that they get a sure bet. The question is whether those writers' fan bases will be willing to pay more than double the price for the next book.

    Ganymeder, I agree that paying more for a "sure bet" is easier to do than paying that for someone you don't know. And as far as I'm concerned, once the eBook price exceeds the paperback price I'm not likely to buy either one.

    Icy, very good point. I've said before that eBook readers are following the same curve as calculators did. In 1974, they were $300 and did four functions plus (maybe) square root. Now they’re $10 in supermarket checkout aisle racks, built into watches, and so forth. That curve leads me to believe that low-end eBook readers will be $49 in 2015, and will have some enhancements over the present-day Kindle. High-end readers will be $99 and do much more. By 2020, they'll be $19. That's less than 10 years. Knowing how to produce now is going to be a big advantage as the decade proceeds.

    Thanks all!

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  5. FAR, I don't really get the look/smell/feel issue of books. When I read something engrossing (with any medium - even audio books - I'm totally lost in it. And I don't know if I'm holding a book or watching a movie. Which made it pretty dangerous the few times I tried listening to audio books when i was commuting.

    And the space thing ... OMG.

    But speaking as a reader, the money thing is an issue. It's so easy to buy an ebook. Which is great (in a way) when you're sick and have zoomed through everything on your unread shelf.

    But, I can't keep buying books at the rate I've done the in the year that I've had my nook. It's too crazy.

    And my library's Overdrive collection is way to small to keep up with me.

    So, the cheap ebooks are looking better than ever.

    My problem is finding good-cheap ebooks. It would be good to find ones that aren't just cheap come-ons to multi-book series.

    ReplyDelete
  6. Hi KB, I've missed you!

    That *does* sound dangerous, getting lost in a story while commuting. I've listened to audiobooks before, and several podcasts I subscribe to are for short stories, and it appears I can focus on the road and listen to a story. whew

    I mentioned iReaderReview.com in the post — they have links to discounted eBooks all the time, many of which are discounted to $0. Most of the deals are at the Kindle Store of course, but many of them are at Smashwords and you can get ePub (and several other formats) there. They include ratings in the listings and mention whether they thought the book was a clunker, so it's a good place to load up. Has the Nook Store scarfed up the Gutenberg library like the Kindle Store did? Free classics.

    ReplyDelete

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