Free! Why $0.00 Is the Future of Business

[Trenien]

Originally Posted by Richard Herley

I agree. The example in the article of the band that gives away CDs to promote its live shows is fine, but what about intellectual "product" (like ebooks) that may not generate any other revenue stream?

So far the only ebooks' economical model that I've heard of having any kind of success (i.e. that earned a living for the author) was the one where the ebooks are free to download and considered advertising toward the sales of physical books.

Fact: whatever its medium (a number on your account on the bank computers, bills, gold coins) money will remain scarce.

On the other hand, an ebook is just a file on your computer/reader, where you can (never mind DRM) copy it at will. Hence for most people its effective value is nil - they may decide to give money to get it, but make no mistake, the main reason probably is convenience - buy it quickly from a store online instead of hunting it down on Darknet and then reformat it to whatever you need (that's the iTune model, folks).

NB: By the way, before we get down a path that we trod before. I'm not arguing morals here, just stating things as I feel they are.

[Steven Lyle Jordan]

Originally Posted by Trenien

On the other hand, an ebook is just a file on your computer/reader, where you can (never mind DRM) copy it at will. Hence for most people its effective value is nil - they may decide to give money to get it, but make no mistake, the main reason probably is convenience - buy it quickly from a store online instead of hunting it down on Darknet and then reformat it to whatever you need (that's the iTune model, folks).

This is one of the reasons that I think the TV/radio advertising model would work: If the product is free to be obtained and passed around, ultimately that means more eyeballs will see it. And advertisers will pay per eyeball (assuming you have data to back up how many eyeballs are watching... that's the sole reason the Nielson ratings still exist).

Originally Posted by Trenien

NB: By the way, before we get down a path that we trod before. I'm not arguing morals here, just stating things as I feel they are.

It's cool.

[Trenien]

Originally Posted by Steve Jordan

This is one of the reasons that I think the TV/radio advertising model would work: If the product is free to be obtained and passed around, ultimately that means more eyeballs will see it. And advertisers will pay per eyeball (assuming you have data to back up how many eyeballs are watching... that's the sole reason the Nielson ratings still exist).

I don't think we see this quite the same way. For me, the ebook is the advertising, for one good only, the hardcopy version of the book (because, among other thing, that allows not to care one bit however the ebook version gets passed around).

Have you ever considered trying this out with your novels? Putting up one to download for free with clear links to the way to buy a hardcopy (print-on-demand services come to mind).

[Xenophon]

Originally Posted by Trenien

So far the only ebooks' economical model that I've heard of having any kind of success (i.e. that earned a living for the author) was the one where the ebooks are free to download and considered advertising toward the sales of physical books.

SNIP

Um.... Baen has shown that eBooks are nicely profitable in their own right, even when they pay their full share of the fixed costs of publication. When sold as part of a WebScriptions bundle (everything Baen publishes in a particular month, minimum four books never before in bits, for $15) both publisher and author do somewhat better than on a paperback sale in the bookstore. At the single-copy price of $6, publisher and author do better than large-format paperback, and almost as well as hardcover.

They're not yet selling enough bits to run the business without any dead trees, but the eBooks are generating "more revenue than all non-US sales combined." Actually, they hit that point about three years ago; sale of bits has continued to climb since. Other numbers suggest that non-US sales make up something between 15% and 25% of the total, which lets us infer something about the size of electronic sales as well.

Plenty of authors have commented that Baen is the only company from which the royalties on eSales (over one 6-month royalty period) buy more than a Big Mac. One author described the e-sales part of her royalty statement as "more than meal money, not yet mortgage money... call it car-payment money."

Xenophon

P.S. eSales have also helped drive paper sales, as has the Baen Free Library. Some argue that this is the more important effect overall, but I've not heard that particular argument from insiders with real numbers at their fingertips. Nevertheless, sales of eBooks are certainly both profitable and a significant part of the total income picture at Baen.

[Steven Lyle Jordan]

I have not seriously considered POD, because of the high cost of individual books printed, the need to use paper, transportation costs, etc... it's a highly wasteful process, and you're defeating the purpose of an e-book that way.

As I've said before, it's not the product on paper, or even the collection of electrons, but the literature it contains, that is the product. I do not see my ultimate goal as being "in print," just in "being read." And if given the choice between the two... honestly... I'd rather my books were e-books than printed books.

That's why I can look at e-books in the same way as a TV show, which is its own product, and which carries advertising of other products or services, or patronage, to support it.

This is not to say that others can't produce e-books to advertise print books. But if that's your intention, I can't see the need to create an e-book at all... just a really nice electronic advertisement of the book. Because face it, those who have already read the entire book in electronic form, don't have the same incentive to buy the printed book, do they?

[Trenien]

Um.... Baen has shown that eBooks are nicely profitable in their own right, even when they pay their full share of the fixed costs of publication. When sold as part of a WebScriptions bundle (everything Baen publishes in a particular month, minimum four books never before in bits, for $15) both publisher and author do somewhat better than on a paperback sale in the bookstore. At the single-copy price of $6, publisher and author do better than large-format paperback, and almost as well as hardcover.

Agreed, but when I was talking about "earning a living", it's Baen I had in mind. One author (I don't remember who) did say he got a nice income from the Baen ebook store, but the amount wouldn't have been enough by itself (around $2000 if I remember well).

eSales have also helped drive paper sales, as has the Baen Free Library.

My point exactly.

Some argue that this is the more important effect overall, but I've not heard that particular argument from insiders with real numbers at their fingertips.

A couple of real life examples would tend to indicate that is true.


As a whole, I feel like the Baen ebook store is probably making money because of the convenience I talked about in a previous post:
- The books aren't too expensive
- No DRM
- They are in quite a lot of of format, many of which are easy to convert if you need to.

I have a counter-example as well: my wife is Japanese, an avid reader but can only really enjoy it in Japanese only (for now). We recently moved from Japan, which meant she wouldn't have an easy access to books (in Japanese).
My librie could natively read/display Japanese characters, so I gave it to her and bought myself a sony reader (the prs500 being relatively cheap). We expected her to buy/rent books from the sony store (for those who don't know, the other main difference between the librie and the reader is that the librie reads lrs/lrf files only). Problem solved, I thought.
Wrong! Dead wrong!
Unfortunately, we both run linux on our computers. Since the sony store exclusively allows you to download the books you buy through their windows only software, that means having to jump through hoops to be able to buy any book - never mind the fact that it actually would be much more convenient to just download the book and upload it on the memory card, as opposed to having to plug the librie to the computer as it is now.
End result: she expected spending around 5000/10000 yens a month at that store and ended up not buying one book (and I sure as hell won't buy another sony reader if I have a choice).

[Trenien]

Originally Posted by Steve Jordan

This is not to say that others can't produce e-books to advertise print books. But if that's your intention, I can't see the need to create an e-book at all... just a really nice electronic advertisement of the book. Because face it, those who have already read the entire book in electronic form, don't have the same incentive to buy the printed book, do they?

Doctorow would call you mistaken. Actually so would Neil Gaiman.

I have not seriously considered POD, because of the high cost of individual books printed, the need to use paper, transportation costs, etc... it's a highly wasteful process, and you're defeating the purpose of an e-book that way.

As I've said before, it's not the product on paper, or even the collection of electrons, but the literature it contains, that is the product. I do not see my ultimate goal as being "in print," just in "being read." And if given the choice between the two... honestly... I'd rather my books were e-books than printed books.

That's why I can look at e-books in the same way as a TV show, which is its own product, and which carries advertising of other products or services, or patronage, to support it.

Isn't your ultimate goal "earning money from being read"? If it was "being read" only, you'd just give your books away and that'd be it, wouldn't you?

Where I think you're mistaken is in thinking that somebody reading an ebook without paying for it means one lost sale period. In the realm of books, the example given above and a few indirect evidences from Baen tend to show that's not true. As far as I know, there's no data for movies, but plenty with music that show the same thing.

Now, of course, it appears you're favoring ebooks not only because of the convenience for self-publication, but also out of other, more ecological concerns. In that case your problem seems to figure out a model where you can use the essentially free distribution to your advantage. To be clear: as I understand, you don't earn enough from your books to live off of them, which seems to indicate your current "I sell ebooks and only if you buy one copy should you be able to read it" isn't good enough.

[Steven Lyle Jordan]

Originally Posted by Trenien

Isn't your ultimate goal "earning money from being read"? If it was "being read" only, you'd just give your books away and that'd be it, wouldn't you?

Yes, earning money is good. I simply meant I'd rather make money with my stories... and I don't care if they're bound in paper.

Originally Posted by Trenien

Where I think you're mistaken is in thinking that somebody reading an ebook without paying for it means one lost sale period. In the realm of books, the example given above and a few indirect evidences from Baen tend to show that's not true. As far as I know, there's no data for movies, but plenty with music that show the same thing.

I do realize that such people may recommend me to others... but so do people who pay for books, who, I might add, may be a bit more discerning about a product they had to pay for. In addition, on this forum we've heard from plenty of people who have obtained an e-book without paying for it, but have not gone out and bought the printed book... even when they said they planned to. So, having someone read a book for free doesn't guarantee a single sale, either.

Life's too short, and I'm just one guy. I'd rather concentrate on paying customers, and numbers I can track, instead of invisibles I can't track.

Originally Posted by Trenien

Now, of course, it appears you're favoring ebooks not only because of the convenience for self-publication, but also out of other, more ecological concerns. In that case your problem seems to figure out a model where you can use the essentially free distribution to your advantage. To be clear: as I understand, you don't earn enough from your books to live off of them, which seems to indicate your current "I sell ebooks and only if you buy one copy should you be able to read it" isn't good enough.

It's good enough for me, as it's just supplementary income at this point. Since I don't have to do this just to pay my mortgage, it's cool. If someday I decide I need more, I would find a publisher, patron, or advertiser, set up a contract, spend all my time writing, and that would be my life. In the future, it just might be.

For me, this is future speculation: "Let's see if I can get this to pay off during my golden years." It's not panning out yet... neither did a lot of authors, who took years to make it big enough to give up their day jobs. But I've got time to try a few things and see what works, and if I play my cards right, I might at least earn a nice supplementary nest egg for retirement. No pressure.

Almost forgot:

Originally Posted by Trenien

Doctorow would call you mistaken. Actually so would Neil Gaiman.

Neil and Cory are already famous, are already dedicated to selling printed books, and see e-books as a promotional tool. If you're not printing, that model won't work for you. And even Neil understands:

I'm one of those authors who is fortunate enough to make my living from the things I've written. If I thought that giving books away would make it so that I could no longer make my living from writing and be forced to go out and get a real job -- or that other authors would be less likely to be able to make a living -- I wouldn't do it.

[moz]

I'm a big fan of eBooks, and want to stop buying paper ones soon. But right now it's all a bit hard since so many pbooks aren't available for purchase. I suspect that by the time they are available I will have either scanned the copies I have or found them on the darknet. But for new books, I can't imagine why an author would not also release an electronic version with the paper version, or even before the paper version. I like to think the authors I read are smart people, but when they sell the digital rights to a publisher who has no intention of using them I do wonder.

[Trenien]

I've got so many things to say to that, I'm not sure where to begin...

Ok, first, about Doctorow and Gaiman. Sure, the later was famous before but as far as I know - and I've taken a few minutes to look it up - Doctorow became famous because of the model he's chosen.

This being said, and before I comment on each of your points specifically.

On one side, you have an abundance of goods ready to consume both of your ressources: books, movies, music, you name it. Note that for each of these, digital version are available. Furthermore, getting access to darknet versions is pretty much trivial, which means you can access all of these for free, but it may take a while (time-factor, it's important).
Again, I'm not arguing morals either way, but don't forget that beside the illegal releases of goods you're supposed to pay for, there are quite a lot of things their author release for free. The easier it is to make on your own, the more you find things their authors released for free

On the other side, there are things that for most people are very much in a finite amount: money and leisure time. That means that when you pay for something to use during that time, you want to waste neither. So what happens?

If you pay for something, you want to make sure you're not wasting your money or, more specifically, you want to make sure the money you spend will be worth your time
. Or you may take the risk of wasting your time, but in that case, you'll go down the cheapest path.

Ok, so why is this relevant? on to the comments.

Originally Posted by Steve Jordan

Yes, earning money is good. I simply meant I'd rather make money with my stories... and I don't care if they're bound in paper.

I do realize that such people may recommend me to others...

We are here exactly in the situation I described above: why would anybody pay to read one of your books in ebook form:
- They don't know how good you are and as you're "self-published", they know you didn't go through the process of being screened by an editor. They are quite a few authors in the same spot relative to them who offer their books for free. So far, the only plus you may have over them is that you have a dedicated site and properly formated ebook.
- Word of mouth works only if you have a fanbase. If your fans may only be people who bought ebooks from you, that can only devellop veeery slowly (at best).
No offense meant, but I've never read any of your books, nor do I intend to do so (Unknown+money to spend). On the other hand, there are at least ten authors I've known through fanfiction whose book (original or otherwise) I'd buy without a second thought.

but so do people who pay for books, who, I might add, may be a bit more discerning about a product they had to pay for.

I honestly doubt that. And even if it's true, you don't want discerning people as an author. You want people who either like what you write, or at the very least don't shoot it down when speaking of it to others.
Whether you paid or not for a book won't change your ability to tell if what you're reading is crap or not. It may change your mood about it. Case in point, a few months ago, I downloaded the "Catastrophe's Spell' ebook the author had made available, and didn't find it to my liking (to the point I stopped reading it after the first couple of chapters). I may go back to it at one point or the other, but I doubt it. That said, I'll never tell anybody it's utter crap - I don't think it is - and may pass the file around for people to make their own mind about it.
On the other hand, a few years ago I bought a pbook from one author whose name I'll charitably not mention here. That book was crap. Because I paid for it, I read it to the end, which angered me even more. Now that author I'll never buy another book from, and I'll make damn sure everybody around me knows my feeling about him and about what he commits to paper.

In addition, on this forum we've heard from plenty of people who have obtained an e-book without paying for it, but have not gone out and bought the printed book... even when they said they planned to. So, having someone read a book for free doesn't guarantee a single sale, either.

Ah, the point isn't that somebody who read and liked the book is going to automatically buy it. The point is that the book is going to get passed around, and among those who read it, some will buy it, and others from the same author. Again, word of mouth. The easiest it is to pass a book around, the fastest word of mouth about it and its author goes.

It's not only the two writers I've quoted who say it: the worst thing for an author isn't that somebody is reading his book(s) without paying for it, it's that nobody is reading his books.

Life's too short, and I'm just one guy. I'd rather concentrate on paying customers, and numbers I can track, instead of invisibles I can't track.

It's good enough for me, as it's just supplementary income at this point. Since I don't have to do this just to pay my mortgage, it's cool. If someday I decide I need more, I would find a publisher, patron, or advertiser, set up a contract, spend all my time writing, and that would be my life. In the future, it just might be.

Slight problem. Readers are only a percentage of the population and among them those, such as us, who read through an electronic medium are an even smaller part. And (in my opinion) you're making things even harder for yourself right now.

May I ask which order of magnitude the income you get from your books is right now, over one year - tens? Hundreds? Thousands?
Do note that whatever the answer is, I don't think it has much to do with the quality of what you write.

For me, this is future speculation: "Let's see if I can get this to pay off during my golden years." It's not panning out yet... neither did a lot of authors, who took years to make it big enough to give up their day jobs. But I've got time to try a few things and see what works, and if I play my cards right, I might at least earn a nice supplementary nest egg for retirement. No pressure.

So if I understand properly (and from your signature), you believe that in the future most people will read ebooks instead of pbooks. I don't disagree with that, but I don't think that it'll be sufficient, in itself, to generate sales for you.

[Richard Herley]

This discussion is fascinating, if I may say so. What needs to be taken into account also are the changes in the publishing trade. These were evident as long as thirty years ago: now they're impossible to avoid.

In 1970, most publishing houses were fairly small concerns, run by and large by people who enjoyed what they did and cared about books. Yes, they made money, and yes they had to be hard-nosed, but they were prepared to take a chance and invest in a new author. They also carried an author's backlist, sometimes keeping titles in print that only sold 100 copies a year.

Repeated takeovers, starting in the late seventies, have left the industry dominated by a few big companies. Random House is a perfect example: it's huge, encompassing many different imprints. Accountants tend now to loom large in their strategic decisions, and the imprints themselves have less and less leeway in signing new talent. They want best-sellers, because the economy of scale makes one J. K. Rowling, selling 10,000,000 copies, a much more profitable prospect than 100 writers selling 100,000 copies each. And these days, 100,000 copies would be a very respectable print-run indeed.

From a new author's point of view, it's incredibly hard to break in, and not just for that reason. Before word-processors were invented, it was at least physically quite difficult to commit 75,000 or 100,000 words to the page. Even on an electric typewriter, that's quite an achievement, especially if -- as is always the case -- your MS needs repeated drafts.

Nowadays the number of would-be authors has skyrocketed. Many of them, alas, are not as talented as their mothers/significant others would have them believe, but still they submit their books for publication.

The result is that publishers are overwhelmed by submissions. Beautifully typed, spellchecked, laser-printed rubbish pours into their postrooms every working day. Somewhere among all the packages there may be some gold: but how to find it? In fact, the majority of publishers now refuse to accept unsolicited submissions at all, and will only take work from an agent.

In turn, agents are being snowed under. We are even seeing the emergence of agents who will find you an agent who will find you a publisher. It's madness.

The upshot of all this is that fewer and fewer talented writers, born writers who have laboured long and hard at the craft, the kind of people who would quickly have found a market in 1970, are shut out in the cold. Most of them give up in despair, unable even to find an agent.

The electronic distribution of books allows readers to decide for themselves what is good and what is not. Word of mouth (or, nowadays, word of mouse) is what makes a good book a successful book. If an author has a Web site, the discerning reader can tell in fifteen seconds whether the author is literate; if the Web site tempts the reader to browse, there is even a chance that a sale of some description can be made. The exact model for selling ebooks has yet to be found. It varies all the way from tightly DRM'd files (of which, if you're lucky, you can scan an extract before purchasing) to free downloads and pay-on-your-honour.

As Steve Jordan has remarked, authors write to be read. The money is usually secondary; often it's merely the means to allow the author to go on writing. The wide distribution of an author's books can only lead to their being more widely read.

When a paper book is sold, the author gets one royalty, and not a very big one at that. Afterwards the book can be resold, lent to any number of people, or put on the shelves of a public library. All of these activities deprive the author of royalties: yet he also benefits because he gains more readers and widens the audience for his next offering.

My own view is that ebooks should be freely available and that readers should pay only if they choose. Given the nature of reading itself, this shareware model is likely to have even more success than it does with computer software. I also believe that ebook displays are in their infancy. In ten years' time they will be cheap and widely available. For much of people's reading, the choice between an airport-bookstall paperback and a DRM-free ebook will be a no-brainer.

[Steven Lyle Jordan]

Sorry I don't have time to go through the whole "quote-response" thing right now, but most of your comments can be addressed this way:

First, writing is something I do for fun... it's a hobby. It's not my primary income. Therefore, I am free to experiment with things like e-books, pricing, distribution, promotion, etc, and see what sticks. I'm not making extra work for myself... in fact, the road I'm taking is a pretty easy one. I'm gaining some recognition, and a fan base, both growing, and if it keeps up, it may allow me to ramp up on my hobby and make it a strong second income.

Disclosure alert: Right now, my yearly income from e-books has been in the hundreds. The first year, I barely paid for the website I opened. This year (and I mean just from January 2008), I could have opened up 2 more, and had plenty left over. So I'm making measurable progress.

A lot of that progress is thanks to sites like MobileRead, where people not only buy my books, but they recommend them to others, who go out and buy my books. And word spreads from there. That's a grassroots promotional method, which can work if you have a good product and the right people find out about it. Grassroots tends to be slow, but if it works well, grassroots promotions can graduate to serious projects. In that respect, I'm actually doing pretty well, considering.

Trenian, although you obviously are a fan of free products that generate paying buzz, you yourself are missing an important point: If it's free for the first person, and he can just e-mail the file to people he recommends it to, why will the others pay? If your product is free for one, everyone will want it to be free, and you just gave it away. (You want to help an author: Tell others about it, but don't give away your free copy. Tell them where to buy one. If the price isn't exorbitant, they probably will.)

Now, if the e-book is connected to a printed product that you want people to buy, the e-book can be seen as a free promotional tool. But if the e-book is the product, it can't also be a promotional tool. So, until my books are aligned to be promotional items for something else, like printed books, or a partnership with a major publisher, your plan (and Cory's, and Neil's) won't work for me. Granted, if a publisher came to me and offered me a lucrative contract to print books, maybe it would at that point. But I'm not there yet.

Yes, it works for some to use the "donation" method, but for every one like them, there is someone who closes their shop because they didn't get enough to sustain their work. And it's not always quality that dictates success or failure with donations... much of it is just dumb luck. So you can pick either method, and see which works for you. I picked the "pay" system, and it's working for me. If I can get onto a "patronage" or "subsidization" system later, depending on how my popularity goes, I'll be even better off. And based on my popularity rise, I've got a fair shot at it down the line <AllFingersCrossed>.

So, overall, my methods are working, slowly but surely, and they're not over-taxing me, making me enemies, or breaking any laws. As it's based on a concept of honesty and good conscience, it suits me as a way to do business (I'm not a cutthroat kind of guy). I'm not saying here that anyone else's methods are bad or immoral... just that my methods are good, and they're getting the job done, so I'm comfortable with it. And as things progress, I can imagine me changing my business model to suit... or, if they begin to digress, change my model, or get out of the business. Either way, I will have learned something, made some money, and I feel good about the fact that I managed to entertain some people without ripping them off. So I sleep well at night.

[Trenien]

Originally Posted by Steve Jordan

Trenien, although you obviously are a fan of free products that generate paying buzz, you yourself are missing an important point: If it's free for the first person, and he can just e-mail the file to people he recommends it to, why will the others pay? If your product is free for one, everyone will want it to be free, and you just gave it away. (You want to help an author: Tell others about it, but don't give away your free copy. Tell them where to buy one. If the price isn't exorbitant, they probably will.)

You misunderstood my point. It's not about being a fan of that method, it's just that I feel it's the only one that really gives an author a shot at earning a living through writing in the digital age that's just begun. Be it legal or from darknet, there's more and more content available for free.
As people get more and more savvy with computers and the associated devices, you'll need to offer something more than just the ebook file to compete with (in your case) it's illegal version off of darknet. In the case of pbook, that's easy, the premium you get from paying is having your own hardcopy.
It gets trickier in your case where the ebook is the only product. Sure, you get a nice secondary income, but I'm a bit doubtful about it graduating from there (I may be wrong, good for you if that's the case).

As for the case of giving out a copy of an ebook. Sure, it may mean one lost sale, but it also my mean that second guy will go over to your site (if properly written down in the ebook) and buy a few others, whereas the same person receiving an advice to read your book may never get around to do it.

[Steven Lyle Jordan]

The thing about the "free" argument that doesn't work for me (as it doesn't work for a lot of people), is that it always breaks down to things people could do... not what they will do. In other words, they could tell their friends, who may decide to pay for a book, and maybe the right freeloader will contact the right publisher for you, etc, etc.

And while I wait out these maybes, I don't get any compensation for my work... just a lot of comments on the web that go, "Whoo-Hoo! Steve is great for giving his stuff away for free! I hope he becomes a big success!" Mm-hmm.

Well, there may be a lot of free content out there, but no one is making a living off of it. They're making a living off of selling something, even if it's not the actual book, but something that the book lures you to, like a subscription site, or a product page, or a printed version of the book you just read.

That's why I see the patronage or subsidizing model to be a good one: It allows you to give the e-books away, but you still get compensated, even given all the "coulds" and "maybes." And again, it's a method that's worked for TV and radio for a few years now, so I'd call it a proven model.

And it allows an e-book to exist as a product on its own, not simply as a shill's hook to get you to a detergent site.

[Greg Anos]

That's the nice thing about the digital age. You can charge or not charge for digital product, DRM or or not DRM it, even choose to make it available or not (legally), and the customer can pay or not pay for the same. That, tovarich, is freedom.

Will the free model win? Certainly, over time, but there will always be pocket of non-free in the mix. This is a wrenching readjustment for everyone used to the old model. The one thing I can guarantee is, there's no going back. The world is not going to destroy digital technology.