How Much Is That Writing on a Kindle?

After several years in a will-they/wont-they purgatory, the digital revolution in publishing has finally become more a matter of when than if, where “when” seems to be 2010. Apple’s launch of the iPad–which featured five of the big six corporate publishers as partners and only ignored the sixth because someone within the company had outed the device the day before official launch–got the ball rolling and demonstrated that ebooks were not just a novel trend but rather new media for novels and all sorts of other forms of storytelling. In late August, Amazon’s third-generation Kindle, with its improved screen and form factor and its lower price, effectively killed the counterargument. The only thing left to really argue about is price.

But really, that’s fodder enough.

Since Apple got all those publishers on board and got its iBookstore rolling (or did it? Has anyone heard anything about the iBookstore? All I hear about are the devices–Kindles, nooks, iPads. Not so much about the stores), there’s been a debate about what’s a “good” price for ebooks. One common idea discussed when the iPad launched was the so-called “agency model,” which basically meant that publishers got to set their own price. Tech Eye mentions that this is in opposition to allowing, say, the vendor to decide the price. In other words, it’s the difference between, say, Harper setting the price of its books and Amazon doing so.

Publishers, of course, want high prices. This was why $10 ebooks were so common during the beginning of last year. Right after the iPad? Seems like publishers–corporate and otherwise–got a little high off the power of the partnership and suddenly decided that the right price for ebooks was between ten and fifteen bucks. The New York Times discussed the phenomenon.

To really get into the discussion, though, we have to consider factors regarding price. There are myriad.

The biggest argument against high pricing is that it’s a friggin’ ebook publishers don’t actually have to, you know, print–because it’s all ones and zeroes and magic on a screen; publishers immediately counter with the fact that printing is only a portion of the cost.

I see a lot of people who argue in terms of cost and price alone, breaking down the price of a given book, but I think that’s folly. No man is an island, and no book is an iBook–er. I guess that’s not true now. But you take my point.

People talk about content and transmedia and stories and such, but I think that misses a point.

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In earning my MBA, I’ve come to realize that part of my perspective, with regard to business, is that everything is, technically, a service industry. That there’s no such thing as a product. When businesses sell products, they’re not selling products so much as the services those products provide.

What I mean is that, if you take Nike as an example, sure, Nike sells shoes. But what Nike really sells is a means to run better. A means by which people can improve athletic performance.

Pepsi doesn’t sell a beverage. Pepsi, rather, sells a solution to thirst.

Advertising, I think, gets this. Ads tend to work in a couple of really simple ways, one of which is that they provide a solution to a problem.

When businesses realize they provide solutions rather than sell products, they start to realize their true market.

Now take a publisher, and a book. Is a book a story? Could be. It contains a story. Is a book a bound, physical object made of pages on which ink has been used to depict symbols? Well, that’s been what we call a book, but now my Kindle contains the same exact content without all the physical gobbledygook. So probably not.

We’re not really talking about books. What we’re talking about is information. That information conveys content.

Information is service. Information provides a means by which knowledge about experience can be gleaned. A story is information about characters living some plot. We gain experience not solely by having it but also vicariously; we have empathy, which gives us the ability to share in others’ experiences without actually having them.

So if Nike provides its users a way to run better, publishers then provide users a way to know better, and more.

And how much is that worth?

Well. Like Mastercard says, that’s priceless.

Consider: how do you put a monetary value on Shakespeare’s plays? How do you put a monetary value on Beethoven’s symphonies?

How do you put a monetary value on running better and increasing athletic performance? How do you put a monetary value on better on-court traction?

Maybe it’s the wrong question to ask. Why are we selling those things? Because people need them. But if people need them, why aren’t we just giving them to people? Because we’re not charities, and we have to live.

Are there better questions to ask?

Well, maybe. If we stop thinking as writers and publishers and start thinking as readers. I’m not saying that’s the way to go. I’m not sure Nike thinks of the dude jogging at 7 am when it determines how to price its shoes.

But I’d wager it is.

As a reader, I’ve bought several $10 ebooks. Probably ten overall. I’ve never spent more on an ebook, probably because, as a reader, it’s always pissed me off when a paperback costs more than seven bucks, regardless of its format. As a reader, I don’t pay full price for a hardcover, either. I pay either a steeply discounted “member” price at Barnes & Noble (rare), or I pay the remaindered price at Barnes & Noble (also rare), or I go on Amazon and order it through the marketplace and generally pay $4 (including shipping) (usually). This works for me, and it’s through Amazon but generally goes to someone who needs it, sometimes an indie bookstore.

The $10 ebooks I’ve bought: several were by Neil Gaiman. I already owned the books in (signed) hardcover, and have read them multiple times, but I wanted them on my Kindle, which I take everywhere (which I don’t say about any given book at all). They were easy. I bought Richard Kadrey’s Kill the Dead for–oh, this is the exception–$10.99, but I don’t think of it that way, because I picked up Sandman Slim free, so I justified it as having spent $5.50 on both books. Which I still do. I bought James Kaplan’s Frank Sinatra biography–which I’ve now been reading for, like, six weeks, so I guess I got my money’s worth there.

The first book I bought was Lev Grossman’s The Magicians, and that may be actually why I balk at $10 ebooks unless by a known quantity. Because it’s such a risk. Even if the sample’s great–Grossman’s was–the book can derail–Grossman’s did, leaving you out ten bucks for a book you didn’t like anyway.

As a reader, I know that feeling, which means, as a writer, I’m sensitive to it. I’ve come to a happy place where I’ve realized I’m not going to please all readers all the time, and I should give up trying to in favor of writing better, more honest books.

Same with prices. Can’t please everyone.

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Things get tricky. Amazon won’t let authors who use the direct publishing platform price their books at less than 99 cents, so I automatically have a minimum price of just less than a buck. A buck isn’t a bad price. Apple thinks songs are worth a buck. I get thirty cents if I sell a book for a buck, and Amazon keeps the rest. Which, fine. They’re a business, and have to pay to deliver the content over connections.

And honestly, consider: how much does Apple keep on every iTunes song sale? 70%? Or 30%? All the remaining goes to the label, who pays a lot of other people before anything ever gets to the artist, right? So am I getting more selling “Struck by the Light of the Son” than Lady Gaga did every time someone downloaded “Bad Romance”?

Not sure. Possible.

But consider publishing, now. Authors generally get approximately ten percent royalty (lower at first, higher later, depending on books sold, generally, and variably by contract). So when a publisher sells an ebook for $9.99, an author might get a dollar. Maybe more, maybe less.

When authors choose to sell their books for at least $2.99 on Amazon direct, Amazon reverses the royalty, so they take only 30%. Leaving 70% for the author. So when I sell a copy of Meets Girl for three dollars, I keep just north of two dollars.

No corporate publishing contract ever gave 70% to the author. Actually one of the reasons I’ve been remaining independent; I don’t want to give up digital rights of my work. As a businessman, it doesn’t make sense to me. If I sold the rights to Meets Girl to, say, Harper, I’d have to yield those digital rights, and when Harper sold the ebook, they’d probably sell it for $9.99.

Which, I don’t know, to me, as a reader, just feels too high. Some people argue it’s the price of an album on iTunes, but I never buy those, either, because I think they’re egregiously overpriced, too.

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In checking for some links to include in this exploration of the discussion, I found this post by a guy who goes by Evil Genius (which alone would be enough to make me read), in which said Evil Genius uses science–well. Maths, anyway–to break down the argument. He notes he’s not a business guy or an MBA, but he is a scientist. I’m pretty much both, and I think he totally nailed it. He examines sales specifically related to J.A. Konrath, but has some great points overall. I think my favorite might be:

Every single time I’ve heard anyone defend higher ebook prices, they cite the fact that “just because the publication is electronic, that doesn’t eliminate costs.” This fact is what I like to call “true but useless.”

Because it is.

Because what the price discussion finally comes down to is that anything at all is worth solely what people will pay for it. Will people pay $10 for an ebook?

Some might. But the thing is, it seems like lately, more books are becoming available for under five bucks. Not just books by indie authors, either; two of Stieg Larsson’s Millennium Trilogy books are five bucks right now (with the third at ten). As that becomes more common, readers’ perception of the actual cost–not value, mind–of ebooks will continue to decrease. What I mean is that more readers will come to see ten dollars for a digital file as cost prohibitive, and fewer will pull the trigger.

Evil Genius notes–using graphs–that just over three bucks is where revenue maximizes.

He clarifies, in an update:

It’s a failure of clarity in my original article, but I’m not advocated for $2.99 as the perfect One True Price for all ebooks forever. That was true for this data set, which is already a year old. This might well change over time, differ from author to author, genre to genre or publisher to publisher.

That elasticity is important. As is another salient point he makes, regarding digital traction and how little of it there sometimes is.

There’s no one true price. My experience with Meets Girl has demonstrated that; I set the price at 99 cents to reward early adopters/true fans/better readers and then introduced it officially at $2.99. Over a week at Christmas, it was 99 cents again, to return to $2.99 with the New Year (where it remains, and will remain, for the foreseeable future). Promotional pricing can work. Chuck Wendig’s doing it with his book Irregular Creatures. Simon Smithson and I set Sparks‘ four stories at a dollar, but sparks always have a limited life span before they burn away, and now my stories from the collection will be available for a dollar each.

Point is, as a reader, there may not be one true price, but more than five bucks is generally too high. There will be exceptions, but I think publishers are going to realize–with much chagrin–that desire though they may, they don’t get to tell readers what those exceptions are. I have a feeling a lot of worthy books are going to fail to find traction digitally because their price points are too high, but I don’t think that will matter to readers, who will find other worthy books to enjoy, anyway.