Nathan Bransford is a bright guy and insightful commentator on all things publishing.
However, I think he misses some important factors in a blog post that went up this morning discussing 99 cent book pricing. Contra my usual format, I’ll insert an excerpt from Nathan first and my thoughts afterwards.
Tragedy of the $0.99s
Thought experiment. Let’s say that everyone sold their books at $0.99. Stephenie Meyer, J.K. Rowling, James Patterson, J.A. Konrath, Amanda Hocking… everyone.
What would that publishing world look like?
Well, for one, more books would probably be sold overall. But not an exponentially greater number. There’s an important constraint that limits the number of books that can be sold: readers’ attention.
At the end of the day, there are only so many people in the world who read books and only so much time in the day they spend reading them and so much money they’re willing to spend for them. People do buy a few more books than they end up reading, but not that many more.
So basically in this hypothetical you end up with a situation where no one makes much money per copy sold and a good bulk of the readership that would probably have paid more if they had been required to. Unknown authors would no longer derive a benefit from the discounting.
If you think of discounts as resources, those discounts could end up depleted when the early movers drive down prices, and no one is able to derive benefit from them anymore.
And when book prices are $0.99, there would be still more pressure to give books away for free to try and build an audience. It’s not that hard to envision a price race all the way down to free for debut authors.
Here’s what I think Nathan misses.
In the present US market (and I suspect elsewhere), if you consider the number of times a book is read most of those “readings” generate no revenue for publishers, authors or bookstores. How does this happen? Somewhere authoritative (can’t locate at the moment) I read that two-thirds of all the books people read don’t cost them anything because they’re borrowed from libraries or friends.
If you had a problem giving books away free, you would never, ever sell a book to a library. In fact, you would never sell a printed book to anyone. You would license each book and limit its use to the original purchaser. Every major software company on the planet does this. To be clear, Passive Guy is not advocating this, he’s just demonstrating that Big Publishing gives away most of the “readings” it sells for free.
Absent the type of copyright license I mentioned, a printed book is inherently a delivery mechanism that encourages multiple people to read a given copy of the book. After a single read-through, the book is almost like new. Even the most cheaply-produced paperback is good for 20-25 free reads.
Speaking of the supposed damage 99 cent pricing can do, when Nathan says “there are only so many people in the world who read books,” he’s thinking about books the way publishers think about books – how many physical books go out the door, not how many times people read those books. If J.K. Rowling’s publisher sells a million physical Harry Potter books, it is, in fact, selling several million “readings” of those books. The real “readings” market for Harry Potter books is much, much larger than the number of physical books sold.
Ebooks change the “readings” dynamic in a significant way. Under its present terms, Amazon allows you to lend an ebook you purchase to one person for 14 days, then no more lending. When a Harry Potter ebook sells on Amazon, the publisher is selling no more than 2 “readings.” I would guess that the percentage of Kindle books that are lent is very small, so each sale is pretty close to one reading.
How does this work for pricing? If a library buys a hardcover book for $20 and 100 people check it out before it falls apart, the publisher has sold a “reading” of that book for 20 cents. If Amazon sells one of the 99 cent indie books that worry Nathan so much, the author has sold a reading of that book for pretty close to 99 cents.
But wait, there’s more!
Let’s pull a quote from Nathan and look at it:
[T]here are only so many people in the world who read books and only so much time in the day they spend reading them and so much money they’re willing to spend for them. People do buy a few more books than they end up reading, but not that many more.
This is missing one of the results of disruptive change, including disruptive pricing like 99 cent books.
“People do buy a few more books than they end up reading, but not that many more.” If a book costs $20, you’ll read most of the books you buy. If you buy a steak for $20, you’ll eat most of the steaks you buy. If you buy a hamburger for 99 cents from the dollar menu at McDonalds and it doesn’t taste so good, you throw it away without finishing it. If you’re still hungry, you buy something else off the dollar menu. A 99 cent book is an impulse purchase. You don’t think twice about buying it and not reading it. In fact, hard core Kindle users typically have lots of books they haven’t read on their ereaders.
“only . . . so much money they’re willing to spend for [books]” Only so much money people are willing to spend for $20 hardcovers is a different thing than only so much money people are willing to spend on 99 cent ebooks. First of all, if the budget is the same and strictly followed, instead of buying one printed book, the purchaser buys 20 ebooks.
But study after study of consumer behavior shows that people underestimate how much they spend on impulse-priced items they consume regularly. 99 cent ebooks are like potato chips. If one tastes good, you eat ten more. It’s easier to pry 99 cents out of a consumer’s pocket twenty times than it is to get them to spend $20 once.
Even the Arabs are disrupting! With $4.00 gas, you may be able to buy a 99 cent ebook cheaper than you can drive to the library.
Let’s return one more time to Nathan’s quote, “[T]here are only so many people in the world who read books.” How big is the market for English language ebooks? I blogged about an estimate that Mike Schatzkin quoted: “the world has 600 million native English speakers and 1.4 billion English speakers in other countries. If that were true, the US would have less than a sixth of the total within its boundaries.”
With physical books, there are country rights and long traditions of high prices for foreign books in many different countries around the world. With ebooks, in five minutes, I could show anybody with an internet connection anywhere in the world how to connect with Amazon US in a way that made it look like they lived in Iowa and download those 99 cent ebooks. No waiting, no VAT, no government-enforced prices on printed books, just a bunch of disruptive electrons squirting all over the place.
Link to Nathan Bransford Author