Tuesday, October 04, 2011

Race to the Bottom Part 2

Back in August, I wrote a post about the supposed race to the bottom with ebooks, refuting some nonsense written by an establishment bonehead.

This meme won't die. People are still convinced that new ebooks are going to be priced at ten cents, and writers will starve, and this will cause a second Great Depression where banks will close and people will be forced to buy Kindles with food stamps, and then the earth will enter another ice age where all the bunnies will freeze to death.

Lots of doom and gloom here.

Barry Eisler has a non-ebook post on his blog about establishments, and how people within establishments serve one of two functions: those who work to further the actual goals of the organization, and those who work to sustain the organization itself. The latter are those who wind up running the organization.

Publishing is a perfect example of this behavior. This industry began as a way to bridge the gap between readers and writers. That was its goal. But somewhere along the line, legacy publishers began to worry more about sustaining themselves than connecting readers with books.

That's one of the reasons power corrupts. You begin to believe your own hype, which leads to a disconnect between your decisions and their results. If you have the power, you must be infallible, right? And even really stupid business practices, such as treating your content providers badly, allowing full credit for returns, never doing focus groups or pre-release testing, using purposely obtuse accounting practices, windowing titles, DRM, erights grabs, the agency model, etc. can't possibly hurt you, because You Da Man.

Publishers began to really believe that they were essential. And they managed to convince a lot of unpublished authors of the same thing. There are a whole bunch of people in the publishing industry, and trying to get into the publishing industry, who are confusing acceptance by that organization with what the original goal was: getting books in front of readers.

But publishers have always been middlemen, even though they had a lock on distribution and a filter on content. And middlemen tend to eventually get streamlined out of the Circle of Money.

Their locks and filters are now disappearing, and this is naturally scaring them. It's also scaring a lot of the brainwashed writers who work in the industry, or have been struggling to break into the industry. No one wants to believe the god they've been worshiping is about to die.

Enter the memes. Publishers, and their supporters, keep trotting out the same old BS about how the future will be bleak without them.

"You'll be nothing without me!" is the mournful whine of every jilted lover.

One meme is that the lack of gatekeepers will result in a tsunami of crap. Another is that writers can't succeed on their own. The meme I want to focus on is that continual price dropping will result in all ebooks being free and no writer able to make a living.

Let's look at some of the flaws in the race to the bottom meme.

1. There are still plenty of ebooks priced over $4.99 on the bestseller lists. Check any genre list, and they're there. So while it is true people would rather pay less than more, there are plenty of people willing to pay more. But, as we'll see, not too much more.

2. The sweet spot for ebooks may be changing. I've been charging $2.99 for novels because I've been making a lot of money. But I may be doing myself a disservice and leaving some money on the table. The goal is to find that perfect point that balances sales and profits. That means experimenting. In the past, I've been against charging more, because my own experiments showed it didn't work. But I've now seen other authors who it is working for, and that encourages me to experiment some more.

3. Some people may be conditioned to avoid lower-priced ebooks. Maybe they got burned on a shitty 99 cent novel. Maybe they equate higher price with higher quality (something we're all guilty of.) As long as there are folks willing to pay more for something they perceive is better, some authors will be able to charge more.

Another way of putting it: even if all ebooks are fungible and created equal, there can still exist a spectrum of prices. Take Blu-Rays. Some are $4.99. Some are $39.99. How new something is, how popular it is, the extras it has--people will pay more for these things.

4. If all ebooks become free, we'll still make money. There has been a lot of talk about subscription models, or ebooks funded by ads. Either way, the content creators (the writers) are still the essential part of the business. We'll find a way to get paid.

5. Legacy publishers aren't helping anyone but themselves by pricing ebooks $9.99 and over. This high price is to protect print sales, and suck as much money from readers as they can before the house of cards collapses.

Readers don't want to pay $9.99. They've been very clear about this for several years. The $9.99 boycott, and associated 1 star reviews, is still widespread. As a result, books priced at $9.99 or higher don't sell as many copies as they could, and the author misses out.

$9.99 isn't the sweet spot.

6. There can't ever be a true race to the bottom, because books aren't in competition with each other. This isn't a zero sum game. Never has been. When readers find something that interests them, it is never either/or. If they find two books to be interesting, they read both books. And since ebooks are cheaper than paper, and it has been widely reported that those with ereaders buy and read more, the pie is actually getting bigger. We can sell to a smaller percentage of ereaders and still make a killing.

Sure, we all have limited leisure time. We all have limited lifetimes.

But if you like reading, you fit it into your life. Just like you fit anything else you like into your life. I've never met a single reader--and I've met thousands--who said, "Well, I can read this OR that, but I'll certainly never have time to read them both, because time is finite."

That "not enough time" meme is bullshit.

Now, we're still in the early adopter phase of ereader sales. The prices haven't sorted themselves out yet. Which is why experimentation is essential. As self-pubbed writers, we need to try different price points, and compare notes, in order to find that sweet spot. I just released a 35k word novella, EXPOSED, for $2.99. My next novel will be $3.99.

Lower prices may sell more copies, but they leave money on the table because people would have paid more. Higher prices may have a larger profit, but they also leave money on the table in missed sales.

Your goal, as a self-published writer, should be to keep an open mind, and always remember this is a business, not an ideology.

The is no race to the bottom. It's just a bunch of scared people who need to regurgitate false memes in order to feel safe.