With all the news going on about the publishers raising the prices of ebooks, the discussion of how much ebooks and books should cost has been getting more and more attention. A lot of comparisons are made between the publishing industry, the movie-making industry, and the music industry. In my observation, people often align these different media too similarly. They are, in many ways, quite different.

The amount of money it takes to make a movie and the amount of money it takes to make a book, for instance, or a CD are exponentially different. Similarly, the investment required by the consumer to consume these different media are different as well. So the source of the value-added by the content-managers is different in nature from one to the next.

Movies in particular are an outlier. They require a huge amount of investment. Whereas I can talk blithely about how my entertainment choices wouldn’t really be hindered if the music industry went under, the same is very much not true of the movie-making industry. Albums can be produced by a guy in a garage at minimal expense but movies (well, except certain kinds of movies) can’t be. So the value added by the movie studios involves huge amounts of capital to produce the movie. The value added by the record industry has more to do with publicity and making sure the album gets heard. Well, I can find my own music. I can’t find my own movies if nobody has the money with which to make them.

Publishing is more like recording in this regard. I can find my own books. And like CDs, any joker can write a book and pay someone to edit it. But what “anybody” can’t do is make their book be taken seriously. As with CDs, except much moreso, one of the values added by publishers is that it at least theoretically meets a certain quality threshold by the fact that the publisher put their weight behind it. Further, the fact that the publisher put their weight behind it means that bookstores will consider carrying it. And if bookstores carry it, then consumers have reason to believe that it meets a certain quality threshold. If they go to some self-publishing archive, there is no such guarantee.

This guarantee is important because of where books differ from albums and movies. Albums and movies require minimal time-investment. A movie takes only a couple hours out of your life. A CD takes less than that and can be consumed while doing other things. Books, on the other hand, take several hours of your life. They can’t easily be done while multitasking. You can’t really do it while vegging. So when you’re asking someone to read your book in comparison to watching your movie or listening to your album, you’re actually asking something of them in addition to asking to be paid (assuming that you’re asking for that). So publishers and bookstores saying “this might be worth your time and investment” carries significant weight.

Also because of all of this, books live and die by reputation and marketing in a way that far exceeds that of movies and somewhat exceeds albums. Nothing positions a writer for success than already having been successful. If you write one good book that a lot of people like, the chances are far greater that your next book will do well. This is in contrast to one-hit wonders and the sophomore jinx phenomena in the recording industry. The publishing industry is also unique in that they sell not only (explicitly) creative work but also non-fiction as well. So you also have a series of books with success that rides on it being topical or written by a figure that is famous for reasons other than their writing. You do get some of that in the recording industry, though, with Lindsey Lohan and Oscar De La Hoya releasing records, but it’s not as prevalent as books written by Sean Hannity and autobiographies of famous politicians consistently reaching the best-seller lists.

Publishers then have two kinds of books, really. The first kind is those that they have to convince people to read. The author is new or unproven and/or it’s a memoir written by someone unfamous. These are where the publishers really earn their toll as the gatekeepers of quality and the salesmen of their authors’ works. Then you have the second group where the publishers have to pay millions of dollars upfront because the book more or less sells itself. It’s still worth it to Sarah Palin or Nora Roberts to go through a traditional publisher rather than try to rake it in all themselves through self-publishing and profile publicity because of distribution networks and publicity mechanisms already in place, but if the publishing industry were to completely crater, Palin and Roberts could still make money with their books fairly easily.

The problem with all of this as it relates to book pricing is that these books are all priced the same. That nobody has heard of my sister-in-law Ellie and has no idea if her self-published novel is any good does not earn anybody any sort of discount. Her book costs more than Scott Turow’s most recent. A lot of this can be attributed to economies of scale and all that. Once you have the printing press set up, printing out 10,000 copies doesn’t cost all that much more than printing out twenty copies. Printing out books one at a time, which a lot of self-publishers do, isn’t cheap.

This is where ebooks should provide some relief. It becomes easier to print limited-run books when you don’t have to worry about how many copies to print. If the book is not successful, the costs are relatively small. No excess inventory to deal with, among other things. Leaving out advertising, you pay the writer (or you don’t, upfront), you pay the editor, and you pay someone to package it (or the author packages it himself). These are all variable expenses where you can pay more or less depending on what your expectations are. If your expectations are small, you can get by pretty cheaply. And if it’s not successful, you can move on without being egregiously injured.

This gives publishers a degree of flexibility with new writers. Right now, they have to say “Try this book out, we think you’ll like it, and could we please have $20 for the honor?” That’s a tough sell on unproven writers. Especially when they can get John Grisham’s for the same price and even if they have not themselves read Grisham’s work they have at least heard about him and have reason to believe that he’s quite good. Instead, I wonder if a better pitch may be “You haven’t heard of this guy, but trust me when I tell you that he’s pretty good. In fact, we’ll only charge you a couple dollars to find out for yourself.”

It’s unlikely that, with this model, very much money will be made. But what it could do is build a degree of brand loyalty. People that like the ebook will then be encouraged to have a real copy of the book on their bookshelf. They may or may not take advantage of that. But if they really like the book, they’ll want the next book by the same writer. That book will cost more. So then you have two sets of readers. The first set that pays a marginal price for the first book to see if they like the author or like the series, then the second set that pays a premium because they already have good reason to believe that they will like it.

People will pay a premium for a product that they have strong reason to believe that they will like. They’ll do that before they will take advantage of free samples of things that they are not sure of. People can be extremely reluctant to invest (in time or money) in things that they have no idea whether they will like it or not. I have serious doubts that people will just continue to buy first-books because they’re cheaper. If that were true, everybody would stick with their library card and go to Half-Price Books instead of Barnes & Noble. People just aren’t that price-conscious. While this could be (and is) said as an argument against lowering the prices of ebooks, I don’t think that extends nearly as much to material they don’t know that they’re going to like and, in publishing, I don’t think that they’re quite as adventurous when it comes to investing $10 and several hours of their lives.

Entertainment is becoming cheaper and cheaper. It’s hard for content-producers of any stripe to command really high prices in the hopes that people will pay them just to evade boredom. The Internet has a lifetime supply of anti-boredom content. A single subscription to Netflix is enough for a lifetime of entertainment at the low price of $9/month. But people don’t gravitate towards these things because now they are choosing between entertaining things and when it comes to things that they know will entertain them, they’ll pay for it even while they could get less worthwhile or less convenient entertainment through a subscription or library card they already have.

What I’m proposing here really isn’t radical. The publishing industry already does it to an extent with hardbacks and paperbacks. They try to get the already-invested fan to pay more for a hardback while they let others try it out at a cheaper rate on paper back. I am merely proposing that ebooks should be a third variation on that, of sorts. An even cheaper way to get people hooked on their product.

Ordinarily, when people talk about what content-providers should do, such as turning a blind eye towards piracy, give their product away for free, or whatever else, I get a little skeptical. I point out that it’s easier to talk about what others should do when our livelihoods are not threatened by its failure. But this is a case where I am seriously considering putting my (potential) money where my mouth is.

Though I do a lot of novel-writing, I haven’t decided exactly what path I am going to take when I am wanting to take it to the next level. I’ll probably try to go the traditional publisher route simply because that’s the way to get the most people to read it, but I may not. If I self-publish, you can bet that I am going to utilize a whole lot of the ideas I’ve outlined here. I’ll probably plan a series of novels, the first I will practically (or perhaps literally) give away in digital form. I’ll basically consider it advertising for buying the hard copy and for buying the second book in the series. Depending on the level of success I have, each subsequent ebook will cost a little bit more. Anybody who doesn’t want to pay $7 for my third novel is free to try out the first at minimal cost in order to see if it’s something that they want to invest their time and money into. Given that I’m asking for both, it seems like a pretty fair way to go.

Category: Theater

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9 Responses to The First Hit’s Free

  1. web says:

    Regarding why movies are expensive to make: less than half the “cost” of making most movies is spent on the moviemaking process. The amount of money paid to “star” and un-star actors, and director/producer, is downright ridiculous.

    In some respects this has a parallel in professional sports. It’s pretty much a given that pro sports players are far, far overpaid. I lost all sympathy for the NBA Players’ Association, for instance, during the 1998-99 strike when one of the benchwarmer players was spouting off about how a guy “just can’t live on” a quarter-million dollars a year. I suspect the fans would be very heartened to hear that player salaries were cut by 50% or greater, if the corresponding alteration meant that teams (a) had to pay for their own damn stadiums (I’m getting sick and tired of paying taxes for a basketball stadium I never go to) and (b) that ticket prices would come down to somewhere in the neighborhood of the price of a movie ticket. I suspect this might also help revitalize flagging attendance and popularity numbers for some of these sports.

    As far as your novel idea, there is a prototype for this. A number of novelists in recent years have been experimenting with releasing the first couple chapters of their books in PDF or other format: the hope is that interested readers will start reading, get hooked, and then go out to buy the book.

  2. trumwill says:

    Movies are expensive to make regardless of how much you pay the actors, though. You can count on enough people to have a spare thousand or two to write a book or make a CD. You can’t count on them to have a million dollars. Some movies can be made for (significantly) cheaper, but only particular sorts of movies and not every movie can be Clerks. Even if you cut the cost of movie-making in half, they’re still extremely expensive. Production values can become quickly apparent and a movie without a significant budget has to make significant cuts either in terms of production values or the movie’s content.

  3. web says:

    Meh. If there were less movies, there’d probably be more of a market for live theater again.

    At least with live theater, the actors are getting out there and working every day.

  4. Brandon Berg says:

    Meh. If there were less movies, thereā€™d probably be more of a market for live theater again.

    Because what the world really needs is for more people to pursue careers in acting.

  5. trumwill says:

    I’m not sure how much it would help live theater, actually. It seems to me the remaining films would be exactly the kind that would compete with theater. Theater productions and low-budget character films occupy overlapping terrain in entertainment preferences. People wanting to see Iron Man are probably going to drift towards something else rather than going to see some live production.

    I think that if movie revenues were slashed, there would be a fair amount of movies but almost no big budget pictures. Small budget movies have their place and I often prefer them to big budget extravaganzas, but I like at least some of the latter. Particularly as it pertains to superheroes :). I want it to be so that movies like Lord of the Rings can be profitable because I want them to make movies like Lord of the Rings for my occasional consumption. Sometimes it gets out of hand with movies that have big budgets just because they have big budgets and want to show off the cool visuals, but you can’t really have one without the other.

  6. trumwill says:

    Regarding the “first two chapters are free” trend, I think that’s a good start but it’s not enough. I don’t want a sample, I want a product. I want something that, even if I don’t decide that I want to buy the book (or another book), I at least feel that my time wasn’t wasted. If I can be guaranteed that, I am more likely to experiment and in the end probably more likely to buy stuff.

    That does bring up an interesting possibility, though. Maybe instead of novels, they can release novellas or short stories about the characters at first. Someone to give the reader an idea of the writer’s style and plotting and all of that but competing less with the product for sale. Something like the 24 movie that came out last year. It was its own story, but it set up the next season.

  7. Abel says:

    I like a lot of your marketing ideas. I think they’d work well for new writers.

    The problem is that making a book is more expensive than most people think. By the time you add up the time and resources it takes for a publisher to review a mansuscript (and for every one they accept they reject 10+), engage in contract negotiations, hire someone to prodcue cover art, edit it (several times), and print it. These costs are borne by the publisher, not the author. And the book pubishing industry is one of the few remaining places where a store can return a product after 90 days if it doesn’t sell. That means a publisher can print 10,000 copies of Book X, and be stuck with 9,000 returns. The author may only see a small royaltiy check from the 1,000 sales but the publisher looses a lot of money.

    The only cost that ebooks don’t bear are the printing, distribution and return costs. Should they be cheaper than books on the shelves? You bet. But publishers should be able to have the flexibilty to set that pricing and live or die by the market. Would it be good to set a low price point for new authors to get people to read their books. Probably. Will all publishers do this? Sadly, no.

    As for the price of ebooks, Amazon wanted to force publishers to sell their ebooks for a certain price and take a big chunk (70%) of the sale. That’s unfair to publishers. The only reason they relented is because Apple and others ebook sellers were allowing pubilshers flexible pricing and a smaller percentage of the sale.

    In the end I think publishers will experement with prices and see what people will be willing to pay. I think prices will come down but it might take a year or two for that to happen.

  8. Abel says:

    I don’t know how it works in the recording industry but in the publishing world, it’s book distributors NOT PUBLISHERS (except maybe some small presses), that decide what books end up in what stores.

    Successful publishers have good relationships with book distributors. Publishers sell the book to a distributor and the distributor sells it to the stores. If you have a distributor that is excited about the book, he/she can really make it a difference in what stores it appears.

  9. trumwill says:

    The manuscript reviewing process you describe tracks somewhat closely with what record labels do. For publishers, the primary service they provide to the consumer is content selection and promotion. This is in contrast to the movie industry, where they have the crucial role of bankrolling projects that cost in the millions of dollars.

    That’s not to say that editing is not important. But it’s something with costs that are in a completely different league than movies and more on-par with music recording.

    I do think, though, that as the price-point is pushed down that more of the responsibility will be pushed to the writers for some of the other things you talk about. Less attention will be given to new writers until they’ve demonstrated some sort of track record. My position here is actually as much anti-writer as anti-publisher. Not only would I be expecting writers to shoulder more of the burdens with less in the way of advances, but one of the main thrusts of this is that I also think that they should be giving content away.

    Thanks for the correction on the distinction between distributors and publishers. I knew that there was a distinction, but I had thought that the distributors tended to be subsidiaries the publishers.

    Are you sure about Amazon’s 70% cut? My impression was that Amazon wasn’t actually taking much of a cut from the individual books because they made their money selling the readers and wanted marketshare. I’ll have to look into that.

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