Home » Ebooks » The state of ebooks: Anti-DRM sentiments at Worldcon 75

The state of ebooks: Anti-DRM sentiments at Worldcon 75

13 August 2017

From TeleRead:

The “State of Ebooks” panel at Worldcon 75 was one of the smaller but more eagerly followed panels at the con, with almost every seat taken.

. . . .

Irene Vartanoff became a convert to ebooks and self-publishing, she said, due to the portability of ebooks, and the economics and lead times of self-publishing, which underlined that writers no longer needed to wait around for traditional publishers. Nielsen Hayden recalled the early experimental days of ebook publishing in the late 1990s as a time when people joked about the huge number of man-hours of meetings spent on the medium compared to the few dollars of profit. “Things have changed since then.”

For piracy and DRM, Nielsen Hayden said that Tor has seen no loss of sales or business since it went fully DRM-free. He cited Bain Books’s policy of keeping books DRM free, and piracy as essentially a tolerable cost-of-doing-business. And if a show of (clapping) hands from the audience is any proof, the argument over DRM just isn’t an argument any more. No one wants DRM. When someone from the floor asked why publishers still insist on DRM, Nielsen Hayden said: “you’re asking the wrong publisher.”

. . . .

Nonetheless, publishers have come round to ebooks. “Publishers like them. They have fewer materials costs,” said Nielsen Hayden, though he also pointed out, “they’re not free to make; they’re certainly not free to make well.” And he maintained that books should still come out, and remain core to the business, while “to do something in e only is going to bring a kind of stigma.” Self-publishers of ebooks only, however, can still succeed, especially those writing in “a narrow but intense niche,” instancing “narrowly defined romance tastes… that appeal to a few people, but to those, it appeals a lot.”

. . . .

One strong argument for continued quality print publication everyone buys into is avoiding obsolescence of formats. Nielsen Hayden noted that a book published around 1600 could be dropped into the sea, left for hundreds of years, retrieved, and would still be readable.

Link to the rest at TeleRead

“One strong argument for continued quality print publication everyone buys into is avoiding obsolescence of formats.”

PG suggests obsolescence of traditional publishers is a much more likely issue.


41 Comments to “The state of ebooks: Anti-DRM sentiments at Worldcon 75”

  1. Mrph. “Obsolescence of formats.” Well, I’ll presume a water-tight container. Pure nitrogen atmosphere (however, considering that nitrogen wasn’t isolated as an element in the year 1600…). Acid-free paper? Possibly, acids weren’t used in paper production quite so much in those days. Inks, however, weren’t all that stable. Note that a volume published in 1600 is protected from contamination somewhat better than a patient on the operating table.

    But – how much of the “catalog” in 1600 is of interest to any but the most arcane of antiquarians? A very, very tiny percentage. Considering the volume of publication these days, that percentage is going to be even smaller in the year 2400 – even for my favored publisher, BAEN (not “Bain”) Books.

    Also note that, while I cannot run WordPerfect from the year 2000 on my system, I can still read documents created by it. Which would be converted to a modern format immediately – as is done for anything actually important to preserve. For the standard formats, like HTML, PDF, EPub, Kindle – all of those still read on modern devices and software.

    As for DRM – well, they were asking the wrong publisher there. The major users of DRM these days are textbook publishers who produce “new” editions (with the same content) every couple of years, and scientific journals in which one must be published to have any “credibility.” Those publishers have a monopoly position to protect.

    • All of the big publishers use DRM, though a few of their imprints might not. It’s another reason why I still buy paper books unless the ebook is much cheaper.

      The hilarious part is that, as a law-abiding person, the use of DRM then locks me into Amazon, which is supposedly the opposite of what the publishers want… whereas it can be trivially removed by those who are into piracy.

      • I stand corrected. I suppose that I didn’t know that because I have no interest in owning any of the sludge they produce, much less renting it (for a higher price than ownership).

  2. Every single Digital Rights Management method has been cracked or otherwise bypassed.

    The only people Digital Restrictions Management has ever stopped are those that actually ‘paid’ for a copy of whatever it was.

    And the best way to get someone to try to crack or bypass your DRM is to make it too expensive – or too hard to use in its DRM form.

    And books/audio/video are the easiest to crack because at some point all the bits have to be converted back into something a person can read/hear/watch.

    The only other trick they had was phone-home serial numbers and watermarking to tell them which ‘sold’ copy was being shared (or make the data worthless unless you buy a ‘key’ to use the dang thing, like for online testing.)

    And the only people making money on Digital Restrictions Management are the ones selling Digital Rights Management to the idiots who think raising their prices even higher to pay for said DRM will bring them more sales.

    Or, they could simply do like BAEN and sell at a price-point that’s not worth stealing/copying (and none of the profits go to the DRM gang.)

    • “Every single Digital Rights Management method has been cracked or otherwise bypassed.”


      • Some just aren’t worth the effort.

        • this is true

          • Every single Digital Rights Management method CAN be cracked or otherwise bypassed and will if it becomes popular enough.

            • Big “If”.

              • Also, just because it can be done doesn’t mean it will be done.
                Or be of any practical value.

                In today’s gaming console business, hacking a console to play cracked software means ending up with a “pariah” console that cannot partake for long (or at all) in the online ecosystems. And, since the most desirable games all have online components that effectively doubles the price of admission; you need a clean box to play online and another that can run pirate software but only offline.

                The cryptography side is irrelevant because each box has a unique hardware identifier that is a product of the various components used. The services check for alterations everytime the console logs in. Some get away with it for a while but eventually the exploit is detected.
                Once it is banned it is banned until the end of time. And it’s not just the hardware but also the user account.

        • Exactly. Same applies to all cryptography– all can be broken; the challenge is to force the cost of breaking the lock to exceed the value of a broken lock, while keeping the lock itself affordable.

          I am looking forward to some bright souls developing a system of ebook ownership based on block-chain or block-chain-like distributed ledgers. I think a lot of the complaints about ebook lending and reselling could be resolved to the advantage of both authors and readers. Authors could get a slice that they could control of each resale and lend. Readers could exercise ebook ownership much more like paper book ownership. If you think about, such an approach would decrease the value of a broken lock because readers could buy discount used ebooks. I would expect the first owner would not be able to read a resold book.

          The time is coming for an independent author’s co-op clearinghouse for ebook ownership.

          • Transaction costs always have to be considered. It takes effort to secure a pirated copy. One has to learn how to do it, go through the steps involved getting the file, and then side load.

            Additionally one has to factor in the probability of getting a good file. Is it the real book, or a list of books showing a guaranteed way to make a million in real estate in two weeks?

            A good test case is Project Gutenberg. Free titles are available on Gutenberg, yet people still choose to purchase those books from Amazon. Gutenberg carries additional transaction costs that are not present with Amazon.

            Can we conclude that the Gutenberg is just not popular enough? Or is it reasonable to conclude people just don’t want to bother with it?

            • The Amazon version of a Gutenberg editions usually cost next to nothing and are more convenient. Especially for people for whom side-loading is a challenge. So I would argue that the Gutenberg transaction cost is too high.

              The same applies to cryptography– successful cryptography shoves the transaction cost of illicit decryption north of tolerable. A successful block-chain ownership clearinghouse would push the transaction cost of piracy beyond tolerable for enough readers and reduce the transaction cost of an author using the system to the point that authors would find the clearinghouse more profitable than current means of ebook distribution.

              Reducing piracy would not be a reason to bother with setting up a clearinghouse, but tapping into the used book business in a way that rationalizes used book sales the way ebooks now rationalize new book production, sales, and distribution is something else. It would give ebook buyers an opportunity to become ebook sellers, which many paper book buyers now are, and give authors a chance to take a sliver of the secondary sale. Potentially, it would disrupt the entire book sales ecosystem, including used book sales, as much or more than Amazon and ebooks have already disrupted the traditional publishing ecosystem. It would take a great big whack out of new book sales, but after a period of stabilization, books would be flowing more freely and I believe authors would reap the benefit.

              No mean challenge to set up such a clearinghouse and promote it, but I think the technology is present or close enough. I’m not interested in that kind of business any more, but I see an opportunity for someone. It could make the future much more interesting, and, to me, has the marks of an inevitable transformation.

    • The only people Digital Restrictions Management has ever stopped are those that actually ‘paid’ for a copy of whatever it was.

      Those are the people they are trying to stop. That’s exactly the group they are targeting. They want to prevent Aunt Becky from sending that great best seller to her sorority email list. After all, they all traded books back in college.

  3. > while I cannot run WordPerfect from the year 2000 on my system

    It’ll run in Wine. And there’s always VirtualBox.

    “All your OS are belong to us.”

    • A few years ago, I had to recover some old Word for Mac files, and modern versions of Word on Windows wouldn’t read them. I had an old version of Word from the Windows 3.0 era lying around, and was surprised to find it installed and ran on Windows XP (and loaded the files with no problem).

      Don’t think it would have worked on Windows 7 or later, because it was probably a 16-bit app, and 64-bit Windows won’t run them.

    • Good to know. I might have a bit of a problem finding 5-1/4″ floppy drives, however…

      • I think the Smithsonian has some… 🙂

      • eBay has some. Both PC and Apple IIc. I think I saw an Atari 8-bit drive, too. Might’ve been a hallucination.

        Now, new external 3.5 usb drives are readily available for less than a BPH ebook at Amazon.

  4. BAEN (not “Bain”) Books

    The fact that Paul StJohn Mackintosh, the writer of this piece, did not know the name Baen enough to spell it right and did not bother to check the spelling speaks worlds to me about his inability to accurately report facts.

  5. Nonetheless, publishers have come round to ebooks. “Publishers like them. They have fewer materials costs,” said Nielsen Hayden, though he also pointed out, “they’re not free to make; they’re certainly not free to make well.”

    No, but the cost to make an ebook well by paying a contractor is in the low three digit range. No publishing costs accrued after that. I don’t know if Amazon charges BigPub “storage” fees (I assume they do), but that’s a fraction of the cost as well.

    There’s simply no cost comparison of ebooks to print, and no reason not to price ebooks more reasonably and still get a decent profit. Of course, when you’re owned by an international conglomerate with a bottom line and stockholders, well… yeah.

    • Cost and price are not inextricably linked.

      Expecting ebooks to be priced low *solely* because they are cheaper to bring to market is like buying into the non-chain bookstore claims that Amazon pricing pbooks below *their* costs should be illegal.
      Amazon has lower costs. Period.

      Then they, separately, choose to pass on part of their savings to consumers not because their costs are lower, but because the somewhat lower price results in much higher sales and bigger profit.

      How much in savings they pass on is a floating variable. Like last year, Amazon wanted to take advantage of Agency ebook pricing to grow its share of BPH pbook sales. So tbey grew the discount, selling pbooks cheaper than their ebook counterparts, and took business away from Apple, Google, and Kobo as well as other pbook sellers. Later in the year, they cut back the discounts even though their costs remained the same.

      Indie authors do that all the time. Costs are up front and fixed. By the time the ebook is online the cost is fixed in history. The price remains free to float: down when there’s a sale, up afterwards.

      The general rule of thumb in business is to indentify how high a price the market will tolerate for a product and then price somewhat lower. With “somewhat” being specific to each supplier.

      In ebooks the BPHs think *their* market will bear a $15 price. And, to the extent that some people do pay it, they aren’t wrong. The problem is that the number of people willing to pay a $14-15 price is a *lot* lower than those willing to pay $10. And way lower than those willing to pay $5.

      Worse yet, the people willing to pay $15 aren’t willing to do it for just any book. The name brand authors, yes. One or two true favorites, too. But a new-to-them midlister? A debut author without a reputation? Hail, no!

      And that is where their pricing scheme is breaking down.
      Not only are they losing unit share to Indies and smaller tradpubs, they are also driving away the math-savvy midlist authors. Short term gain, long term issues that will come back to haunt their sucessors.

      They should price ebooks lower becsuse doing so would yield more money for them and thrir authors. Not because ebooks cost less to produce.

      A smart price scale might be $5, $10, and $12, according to the author’s reputation.

      • Pricing for a rational publisher would key on his total revenue and profits from all books. This is the aggregate rather than the revenue and profit from any specific book. He may be able to make more on Product-A by lowering price. But if that means he loses more on Product-B, then it’s a bad move.

        It’s a big linear programming model, where the publisher has to balance thousands of items. This is very different from what the independent author does with a few.

        But, independents do something similar. For example, an independent may lower the price of book-1 in a series because he finds it generates more sales of subsequent books. Would one criticize him because he could make more revenue from book-1 with a higher price?

        • It’s a form of portfolio management.

          The issue many folks, especially in Manhattan, ignore is that flat-rate ebook pricing is not good portfolio management. All books aren’t created equal, all authors aren’t created equal, all genres aren’t created equal.

          The optimum price point for a given book will vary from its brethren. Variable pricing accepts that the optimum price for a Stephen King DARK TOWER title is deadly for a Neil Newcomer title. They “optimize” for maximum bestseller returns and in the process end up with way suboptimal pricing on everything else. And they have vastly more of the latter than the former. They are leaving massive amounts of money on the table.

          It’s the price of gigantism: the corporate types merged dozens of competently run small and mid-size publishers seeking “efficiencies” (read: higher margins or in classical economics, higher rents) and consolidated away the ability to effectively manage (the mythical “nurturing”) individual author catalogs. In other businesses, they develop advanced automated tools to help cope with deep product catalogs and supply chains. This the BPHs have failed to do. They have no market intel operations, no idea of the adoption curve for any given title. So they fall back to random shotgunning and primitive category pricing schemes that were old and superceded in their grandparents’ days.

          And yes, Indies and small tradpubs have smaller, easier to manage catalogs, but bear in mind they start out *knowing* they *have* to manage them. Loss leader pricing, stairstep series pricing, price jogging, and the other tricks tbat Indies have evolved are all near realtime management tricks that could be easily automated, much like commodities and stock trading operations automated their transaction systems decades ago. Until somebody writes affordable software to do this for Indies, they *have* to do it manually. The BPHs can easily afford to develop their own proprietary solutions but it simply isn’t in their world view to even think of needing a tool like that. With them it’s all about their guts.
          They think bulk, they manage bulk.
          Fine grained thinking is not in their corporate skillset.

          Calling them dinosaurs is not inappropriate.
          Something in the apatosaurus family: big, slow-moving, tiny brain to bulk ratio. Ready prey for the rest of the food chain. If they don’t evolve they will wither.

      • A large part of ebook pricing on the part of BPH is sunk costs in physical books. Because of economies of scale, they have a vested interest in having consumers buy hardcovers.

        • I think the vested interest is in the promotional advantage they get from paper books. That promotion carries over to eBooks.

          In a world without paper, what competitive advantage would big publishers have?

          • That would depend on whether they still intended to carpet bomb the market into submission or they chose to cut back output by an order of magnitude to properly market and monetize their captive IP.

  6. There’s simply no cost comparison of ebooks to print, and no reason not to price ebooks more reasonably and still get a decent profit.

    Sure there is. It’s the demand curve. Consumer demand shows what people will pay for the goods. The producer prices his goods where he can make the most total profit. The producer is stuck with the demand curve. Consumers create it.

    Put another way, he tries to price where an incremental price increase, and an incremental price decrease, will both result in a fall in revenue.

    Independent authors do the same thing the international conglomerates do. Both try to maximize revenue and profit.

  7. “Both try to maximize revenue and profit.”

    A Traditional publisher selling the paperback for $3 less than the ebook is doing neither.

    • A Traditional publisher selling the paperback for $3 less than the ebook is doing neither.

      What price would max total revenue and profits?

      • there’s a lot of room to debate what the best price is.

        But pricing your goods so that the prices encourage people to buy the one that costs you more to produce (and therefor generates less profit per copy) is not the way to maximize your revenue or profits.

        The format that costs less to produce can be priced lower than the one that costs more to produce and still generate more profits per copy, as well as moving along the price/demand curve to increase the demand

        Personally, I think the place to start pricing e-books is where they produce similar profits per copy to paper books, but as I understand things, they could be priced to produce double the profits per copy as paper books and still be significantly cheaper than paper books.

        • Unfortunately, when you are accounting and running balance sheets, and justifying expenses to corporate overlords, the bottom line isn’t the end all/be all.

          If they see you are taking a loss on physical books, because you didn’t sell enough to cover the cost of manufacturing them, warehousing them, and the prorated portion for the year of the capital investment the corporation made for you 15 years ago to roboticize your warehouse (you know, the $100M you spent prior to this whole ebook thing taking off), then C-level employees get fired. Even if they made up the difference on ebook sales.

          • It costs roughly the same to produce and sell the first copy of an ebook as a paper book. The difference is the marginal cost; the costs of selling the second copy and every subsequent copy of paper and ebooks are vastly different. The cost of manufacturing, storing, shipping, displaying, and selling each paper book is substantial, involving resources like paper, ink, diesel fuel, and real estate for warehouses and B&M stores. Distributors and book store owners all must get their cut. The marginal cost to sell subsequent copies of ebooks is very low. For ebooks, as soon as the writing, editing and designing is done, there are almost no more costs.

            In software, since we started downloading instead of using physical media, the marginal cost of software so small, it is hard for the accountants to measure. In fact, they now tend to just throw all marginal costs into overhead and not even try to account for it as part of unit sales.

            The key business revolution in software development in the last twenty-five years has been to quit trying to sell software and shift to making money from software in other ways.

            IBM, HP, Oracle and others basically give away the software away they write and sell support services. It may not be immediately apparent, but for the most part, if you are willing to do your own support, you can get almost any software as free open source, which was written largely by employees of large vendors. If the marginal cost of software were not almost nothing, that would not be the case.

            Google and Facebook give away their services and sell ads. Amazon doesn’t sell software, they write and use it to make profits retailing stuff. Only a few companies still generate their revenue by writing software and licensing or selling it.

            I think the analogy between ebooks and software is fairly strong. I expect that books will go the way of software. In ten years or so, ebooks will be nearly free and authors will be making money from their writing in other ways. I can’t say how it will work in the future, but that almost zero marginal cost in a free market will take us in odd directions. The traditional publishers may be able to slow down the process, but I haven’t seen that they, like King Canute, have been very successful so far.

            • In ten years or so, ebooks will be nearly free and authors will be making money from their writing in other ways.

              In ten years the supply of immediately and easily available titles will be far greater than it is today, and the eyeball hours devoted to reading them will not be much greater than it is today.

              Books currently available will still be available. New books will swell their numbers. And the back list will continue to convert to eBooks.

              When supply increases at a far greater rate than demand, price falls. It always does. Books aren’t special.

            • The comparison between software publishing and book publishing can make for a fun and very long discussion.
              In general, you’re right.
              There are many parallels, especially if you look at it solely as a content creator, but there are significant differences. The fun lies in the subtleties that emerge when you look at it from the bottom up, instead.

              Now, any meaningful comparison needs to start with the obvious; that there are many software markets and many publishing businesses, all different. Matching the textbook business with, say mobile gaming isn’t going to be too useful.

              One thing both categories have in common is that both are split between short session use and long session use products. A disk defragger has very different use cases than a video editing app. The former you fire up, run for a few minutes, and move on. The latter you run for hours at a time, day after day. Similarly, an online blog is a place you pop in, read/comment on a few articles and move on. Very different from a novel you sit down with for an evening or three. Short session vs long session is one thing that separates the various user modes.

              User modes are key.
              Users pay the freight, after all.

              Long discussion there.
              Let’s just say that each individual market has its own value proposition and its own pricing floor. The floor for some software is zero but not for all. Different users see value in different ways. One obvious example is Office Suites where for all the quality in the Open Office forks, MS office has rolled merrily along unfazed by the free competition growing into a multibillion dollar business unto itself. (Another long story.)

              The short story for today is the very very strong parallels between ebooks and console gaming and the pricing exampkes they offed.

              Both are walled garden oligopolies.
              Both rely primarily on long session products.
              Both are primarily entertainment markets.
              Both have parallel physical media and digital download distribution channels.
              And both have multiple categories of content providers.

              Consoles are the more mature business and as such it shows where ebooks might go. (More so if as publishers insist on DRM.) In consoles, publishers break out into five categories:

              First Party games are developed by studios owned by the platform owner and as such the games are exclusive to their console. (APub titles are defacto Kindle exclusives because of the boycott.)

              Second party games are developed by independent studios that contractually agree to platform exclusivity. It might be permanent exclusivity or it might be temporary. (KDP Select is the Kindle equivalent.)

              Third party games are developed by independent studios that choose to support multiple platforms. (Going wide in ebook terms.)

              And then there is the Indie contingent of small developers, often single person “studios” trying to ramp up into the mainstream by going direct to consumers on the platform. (KDP)

              One difference between ebooks and consoles is that consoles are nominally locked down and sideloading of games is not allowed and everything is vetted to one degree or another.

              In the XBOX360 days, Indie games (typically priced at $0.99 to $4.99, oddly enough) were vetted by the other Indie developers before going live. Currently on the XBOX One there are two Indie game channels: one vetted by Microsoft and a newer unvetted one. Or, vetted by consumers, I suppose. Interesting experiment, that one.

              That is the developer story, of course.
              The consumer story is different.
              Consumers really only see two types of games:

              Big games, typically available on disk and played on long sessions for extended periods.

              Arcade games, typically played on short sessions. How short will depend on skill.

              Indie games tend to be arcade class more often than not but some are narrative stories that run extended sessions and not just mechanics-driven challenges.

              Pricing, which is our topic (I haven’t forgotten) generally varies by title and session type, not by developer category. Big studio, small studio, or indie operation doesn’t dictate price. The market does. The product does.

              Some big studio games come in low, some come at the grudingly accepted $60 launch. Arcade games run around $10-15.

              A publisher does not even dream of going high simply because they are a big publisher. They *know* consumers will not stand for it. An Arcade class game at even $20 will get pushback. Anything higher will be DOA. They don’t even try.

              They also know that, like it or not, the value of a game declines with time. No matter how good the game, consumers expect price drops and many won’t buy until it does. Typically the price drops by a third after the launch window and by half after a year. After that popularity will determine how fast it gets to a third of the launch price (after the second year most often) and to $9.99 after that.
              It never gets even close to zero.

              Arcade games have their own pricing schedules but they rarely drop much except on sale.

              It’s not a pure free market but consumers vote their wallets and publishers accept it. They make no grandiose claims of cultural preservation. They understand their job is making sure the buyer has a fun time. Period.

              I would hardly expect ebook publishing to follow Big Game price drop practices across the board but the BPHs might want to consider it with their brand name authors. (And, of course, BAEN does exactly that. Their ebook price varies according to whether the cheapest print edition is hardcover or massmarket.)

              I really don’t expect ebook prices to ever hit zero as anything other than loss leader promos because there are few viable alternatives to discrete sales and subscription services and Indies won’t have access to the more speculative ideas floating around, anyway (No, ad-supported ebooks won’t work. The ads ruin immersion.)

              As the IrascibleHarlanEllison™ says: “Pay the writer.” 🙂

              As far as the Indie sector goes, I think that price-wise, what we see is what we’ll get for the near term. And tradpubs will either end up in the $8-12 range or withering ever more.

              Disruption will continue but not in pricing.
              $0.02 worth.

              • All useful. I have not studied the gaming industry much at all. To the chagrin of my children and grandchildren, I would rather write a game than play one and there is other code I would rather write.

                I don’t disagree with you at all, but I am going in a different direction. In the 70’s and 80’s when I was starting out in software, I could not imagine a world where developers were not supported from revenue from selling or licensing software, unless you were writing system code to sell hardware. But that has changed completely. Now both system code (read Linux and BSD) and application code (read Apache, LibreOffice and much else) is written by developers paid by big vendors and given away as open source. Even Msft, the citadel of software sales, seems to be trending toward revenue models that give the software away (viz. free Msft Office for schools, teachers, and students.)

                Ebooks today seem comparable to software in the late nineties when the bottom dropped out of the marginal cost of software. Software marginal costs were always low, but when the Internet began to kick in, a single developer could distribute a product with a pocket change investment and that is when open source began to get traction. Publishing seems to be at the same point today.

                When I looked at the software business in 1995, I would not have dreamed that the business model would have changed so dramatically. I may have been dumb, but I haven’t gotten that much smarter in the intervening decades, so my conclusion is that drastic change is likely, but I don’t know what the new state will be.

                I don’t expect readers to put up with a model like Google or Facebook and I don’t see authors paying the rent from live performances like musicians. Patreon-like models might work, but it’s early times.

                Mr. Ellison says “Pay the writer,” and I venture not much will be written if the the writer is not paid, but it is not clear at all to me how the writer will be paid in the future.

                Nevertheless, I’m optimistic. Readers have big appetites for new books and those appetites will feed the writers who supply new books. Some way or other!

          • then C-level employees get fired. Even if they made up the difference on ebook sales.

            And eBooks then take on a larger share of the amortized costs of that robot program from 15 years ago? Good accountants know how that works. So do the overlords.

        • The format that costs less to produce can be priced lower than the one that costs more to produce and still generate more profits per copy, as well as moving along the price/demand curve to increase the demand

          We don’t know that unless we know the price elasticity at that price. If price is reduced by 10%, and unit sales increase by more than 10%, then that product generates more revenue.

          However, if price is reduced by 10%, and unit sales increase by less than 10%, then the product generates less revenue.

          In both cases prices were reduced, and in both cases unit sales increased. But in one case revenue goes up, and in the other revenue goes down.

          And that’s just for a single product. Now figure the cross price elasticity. When we lower the price of one good, what is the effect on some other good? For example, if we lower widget prices, what is the effect on zingles?

          • you are missing my point.

            If format A costs $4 to produce/ship/sell and format B costs $1 to produce/ship/sell you can sell format A at $6 each and format B at $3 each and make the same profit per copy, while still moving to the demand side of the curve by selling at half the cost, which will translate into more copies sold, it doesn’t matter if it translates into 1% more sales or 90% more sales, any additional sales due to the price reduction are pure gravy.

            But in any case, pricing format A at $6 and format B at $8 is stupid, because it encourages people to buy format A and not format B. Even pricing them the same would be better as you don’t discourage people from buying the version that you make more money on.

Sorry, the comment form is closed at this time.