Difference between a $1 book and a $15 book

Posted on May 16, 2011 by switch11

Here are some reasons why selling $15 books is better business -

  1. You can make a lot more money.
  2. You make readers feel its worth their time. If it’s $15, then it must be good and readers’ time is worth $X per hour anyways – might as well spend $15 on something that is ‘vetted’.
  3. You get readers invested – If they paid $15 they must read it, they must like it a little more than if they paid less, they must buy future books.
  4. You can provide higher quality. Spend 20% of the price on quality and you get $3 per copy sold.
  5. You set the book apart as a book for discerning readers.
  6. You can position the book as a luxury – indulge yourself; because you deserve it; you get what you pay for.
  7. Some Authors feel a high-priced book is like Viagra for their self-esteem.
  8. Scarcity. Readers feel not everyone can get it.
  9. Readers have to ‘sacrifice’ for the book and they are more open to appreciating it.

The main benefits revolve around earning more profits, having more money to put back into the business, and getting your customers much more invested in your book.

Here are some reasons why selling $1 books is better business -

  1. There is very little friction. It becomes an impulse buy for nearly everyone.
  2. You minimize regret – If the user doesn’t like your book, she has only lost $1.
  3. Your book isn’t a budget buster. No calculations required. No wondering whether the budget will be exceeded. 
  4. You can convert people who are ‘somewhat interested’.
  5. You get much better sales volume, which translates into higher sales rank and better visibility.
  6. You can convert people who don’t normally read that particular genre.
  7. You are providing more value for money so reviews are better and ratings are a bit higher.
  8. You make it easy for users and they appreciate it. On the flip side, the anticipation is gone.
  9. There are entire countries (India, China, most of Africa, some of South America) where $1 is like $4 and $10 is like $40. By going with $1 you double or triple the size of your potential market.
  10. If you have multiple $1 books, often people will impulse buy all or most of them.
  11. You increase the pleasure per dollar spent.
  12. You have a chance of making greater total profit due to much higher sales volume. You also risk the possibility that you will make very little profit despite higher sales.
  13. You increase the number of people who have access to your book. The actual number who read it may or may not increase.

The main benefits revolve around – massively increasing the size of your potential market, greatly reducing friction, providing a lot more value for money (minimizing regret, maximizing pleasure).

There are significant disadvantages – people are less likely to actually read your book, you lose ‘prestige’ and ‘exclusivity’, you lose some readers who think a low price must mean low quality, you run the risk of ending up with far less profit.

It’s not an easy decision. The one really interesting thing is that the $1 book and the $15 book set off each other – they make each other’s strengths more obvious and each other’s weaknesses more apparent.

There might even come a time when $15 books (via ‘quality’) or $1 books (via ‘value for money’) destroy the prospects of the other. For the moment, it’s a very interesting juxtaposition – Publishers pricing ebooks at $12.99 and $14.99, indie authors going with $1 and $2.99. At some point of time, things will break in one direction or perhaps two separate classes of books will be created. The risk for Publishers is that if indie books can improve quality (or if Kindle owners and Nook owners can do effective ‘curation’ via reviews) their offerings will get slaughtered.

Filed under: books | Tagged: , | 4 Comments »

The most significant event that no one is talking about

Posted on March 22, 2011 by switch11

The Book Settlement was rejected.

The most controversial Book Settlement ever proposed was rejected. Judge Chin has made a marvellous decision and he’s a hero – if it’s not clear now, it will be clear to future generations.

First, some documents and links -

  1. Judge Chin’s Statement (PDF). 
  2. Caroline McCarthy’s Article on Judge Chin rejecting the Book Settlement. 

Next, my take – which is admittedly biased by the fact that I feel every creator should have a right to decide how his work will be used, and who can profit from it.

Key Parts of Judge Chin’s Statement

These paint a very good picture of why the Settlement was rejected.

The question presented is whether the ASA is fair, adequate, and reasonable. I conclude that it is not.

… would grant Google significant rights to exploit entire books, without permission of the copyright owners.

would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission.

Seriously, Judge Chin is my hero for looking past all the ‘Let’s Save the Penguins’ rhetoric. He recognized that this was basically Publishers etc. ’stealing other people’s work’ with the added bonus that it would create a monopoly for a company that already controls Search.

Would dead authors and people who have forgotten about their work want their work to benefit readers? Or would they rather that their work makes money for corporations?

The corporations are trying to have us believe that they are doing it to save baby seals who will be clubbed to death if the corporations don’t make money from other people’s work. What nonsense - We aren’t the TV generation, and we aren’t going to fall for infantile trickery.

Judge Chin points out that there are lots of benefits of the Settlement and then points out the objections from people opposed to the Settlement. He also gives his take on each (Judge Chin’s take in italics).

  1. Adequacy of Class Notice. The Class Settlement has a ridiculously huge ‘class’ – Pretty much anyone who owns a US copyright interest in one or more books and their heirs and successors. A lot of these class holders were not given adequate notice. Judge Chin rejected this argument.
  2. Adequacy of Class Representation. Interests of some class members, such as foreign rights holders, are at odds with interests of Publishers and Google. Judge Chin agreed with this -

    I conclude that there is a substantial question as to the existence of antagonistic interests between named plaintiffs and certain members of the class.

  3. Scope of Relief. The Settlement would create a ‘forward-looking’ business arrangement. Judge Chin agreed with this objection, i.e. the Settlement doesn’t just address Google’s copyright violations, it also transfers certain rights to Google.

    As articulated by the United States, the ASA “is an attempt to use the class action mechanism to implement forward-looking business arrangements that go far beyond the dispute before the Court in this litigation.” (DOJ Statement)

    Judge Chin goes on to say that this is a matter for Congress, that the Settlement would release claims well beyond those currently being contemplated, and that interests of certain rights holders (like academic authors) have not been considered.

  4. Copyright Concerns. Violations of the Copyright Act because the Settlement pretty much runs roughshod over existing copyright laws. Judge Chin pointed out that the ‘opt-out’ nature would allow Google to exploit rights of authors who have not agreed to give up their copyright, that copyright is better suited to Congress, etc. The strongest point was that a copyright holder would have to take action to prevent losing rights – which you have to admit is pretty absurd. This is one snippet that is interesting -

    it is incongruous with the purpose of the copyright laws to place the onus on copyright owners to come forward to protect their rights when Google copied their works without first seeking their permission.

  5. Anti-Trust Concerns. Google can sell subscriptions, sell books, sell advertising in books, and make other uses. While this is non-exclusive, it does, in effect, give Google a monopoly over orphan books and perhaps even digital books. A monopoly over orphan works and the Settlement would further strengthen Google’s dominant position in search. Basically, and these are my thoughts, it would give Google an almost unlimited supply of high quality content to use – content which other search engines would not have. Judge Chin is clearly concerned about the anti-trust aspects and about the advantage this would give Google in search.
  6. Privacy Concerns. Google would collect all this information about people who read books. Judge Chin says the privacy concerns are real but not enough in themselves to reject the settlement.
  7. International Law Concerns. The Settlement would, according to some foreign authors, violate International Law. Also, it would favor rightsholders from certain nations. Judge Chin sums up his concern here succinctly -

    The fact that other nations object to the ASA, contending that it would violate international principles and treaties, is yet another reason why the matter is best left to Congress.

So Judge Chin considers 5 out of the 7 concerns to be valid.

Judge Chin’s Conclusion

Here it is -

In the end, I conclude that the ASA is not fair, adequate, and reasonable.

As the United States and other objectors have noted, many of the concerns raised in the objections would be ameliorated if the ASA were converted from an “opt-out” settlement to an “opt-in” settlement. I urge the parties to consider revising the ASA accordingly.

There couldn’t be a harder slap in the face for the looters. If you want to steal other people’s work – first, you have to get them to opt-in. It’s absolutely delicious – Google thinks everyone’s an idiot and doesn’t understand the huge difference between opt-in and opt-out – Judge Chin just smacked them right across the face.

My take on Judge Chin rejecting the Settlement

Google and Publishers were trying to build a nice little monopoly for themselves. Which would lock out any other companies interested in ebooks and would take advantage of authors. Unfortunately, for them, Authors and Rival companies didn’t fall for the ‘Saving Penguins’ nonsense and objected and opted out and destroyed any chance of Publishers+Google getting away with this monopoly creating Agreement.

Judge Chin made an amazing decision. Notice his recommendation – Change it to an ‘opt-in’ instead of an ‘opt-out’. That’s brilliant. That ensures that only authors who actually know what the settlement is, and agree voluntarily to participate, are included.

The Huge Ramifications of the Book Settlement Rejection

Judge Chin’s rejection of the Settlement deals a heavy blow to Publishers and Google -

  1. It kills Publishers hopes of a Divide and Conquer strategy. Without something like exclusive rights to all orphan works they have no way to slow down Amazon and B&N.
  2. It significantly weakens Google’s dual hopes of a subscription based approach and of books supported by advertising. Both approaches depend heavily on having access to books other companies don’t have access to. They also depend heavily on offering orphan works as cheap throw-ins. No one ever considered the possibility that Google might just throw in these for free or very cheap to gain an advantage – that Google might have no interest at all in making rights holders any money.
  3. It means that Amazon and Apple and B&N are safe. Publishers & Google do not get a permanent monopoly on orphan works – an advantage which no other company would ever be able to match.

Publishers intended to use the Settlement as a way to empower Google and turn the eBook Wars into a three-way tussle between Amazon and Apple and Google.

Google intended to use the Settlement as a way to introduce the virus of advertising-supported Free into the world of books. Note that 96% of Google’s revenue is advertising - it’s naive to assume that Google intended to focus on generating viable revenue for authors. It just wanted YouTube Part 2.

Google was extremely interested in giving away books and orphan works for free and very cheap (as part of subscriptions). It had little interest in maintaining the value of books. Why? Because enough pennies and they add up to something that even Google finds sizeable. Of course, authors would have their work devalued – But Google doesn’t care because pennies added up across all authors’ books leads to a lot. Who cares if authors starve?

A Win for Readers and Authors

Middle-men always have big promises – we are preserving books for future generations, we are letting authors make money from books that are out of print.

The truth is that middle-men are always leeches and parasites trying to take advantage of naive readers and gullible authors. Why try for an ‘opt-out’ agreement? Why try to make money from orphan works when the rights holders can’t be found? Shouldn’t those works be given away free?

Publishers and Google were creating a huge monopoly for themselves. Judge Chin saw through all the lies and hypocrisy and suggested exactly what the Settlement should have been – Valid only for authors who agree to participate.

All the layers between Authors and Readers are being stripped away. Platforms are useful and Apple and Amazon are earning their 30% cut. However, leeches that try to forcibly take the works of others and sell them for profit have no place in the New Publishing World.

Filed under: books | Tagged: | 5 Comments »

Are we at the inflection point of maximum vulnerability for eBooks?

Posted on March 9, 2011 by switch11

In some ways the current stretch seems like the exact opposite of end 2009.

End 2009 – eReader sales were assumed to be less than a million, eBook availability was limited, eReader prices were pretty high (around $299), eBook market share was only around 3% to 4%. For all practical purposes, there was absolutely no threat from eReaders and eBooks.

Now (Early 2011) – eReader sales are supposed to be over 10 million, eBook availability has more than doubled in the last 12-16 months, eReader prices are down to $139, eBook market share is 10% or higher. There seems to be little doubt that eReaders and eBooks are here to stay.

Just as End 2009 seemed dreary and harmless to Publishers, the current period seems to be bright and shiny and full of promise for eReaders and eBooks.

However, we only have to look back to what happened in end 2009 to see how dangerous complacency can be.

The End of 2009 Inflection Point

A few things happened at the end of 2009 that dramatically changed things -

  1. B&N announced the Nook. Nook’s feature-list looked like a prioritized list of Kindle customer pain points with PDF support, library book support, and a lot more. It even came in at a lower price.
  2. Amazon matched the price and some of the features.
  3. Amazon ended up selling perhaps a million Kindles in the holiday 2009 stretch. B&N sold perhaps half a million Nooks.

That holiday season was the foundation for everything that has happened since. The shift was so huge that by early 2010 Publishers were jolted out of their complacency and introduced the Agency Model. They even partnered up with Apple to weaken eReaders.

Basically, Publishers’ complacency through most of 2009 came back to haunt them.

End 2009 became one of the most important inflection points in the rise of eBooks and eReaders.

Are we at a 2011 Publisher-created Inflection Point?

There are three interesting things happening -

  1. The Big 6 Publishers are finally putting up a united front. All of them are now on The Agency Model – which becomes significant since they do have access to the majority of the literary talent.
  2. By using $15 and $13, Publishers have, in effect, bifurcated readers into ‘people who can’t wait/people who don’t mind spending more’ and ‘people who boycott higher prices’. They might not have shifted everyone to $13, but they’ve shifted enough people to be able to stick with the Agency Model for the short term.
  3. eReader and eBook companies are creating problems for each other. Apple is attacking eReader apps through its 30% tax, Publishers are forming partnerships with smaller retailers like Diesel Books and Scribd, Google is throwing its hat into the ring. Each new competitor is giving Publishers an opportunity to create one more Divide and Conquer crack. Each new competitor is confusing readers.

It’s an interesting theme – Publishers are uniting and they’re helping create divisions amongst everyone else.

Will eBooks be able to make it across the big divide?

Now, the Big 6 Publishers are all on the Agency Model. That means 60% of the ebooks sold, and perhaps a similar percentage of the best titles, will all be $13 at launch. It also means they will stay at $13 for 3 to 9 months after release.

A lot of people were buying eReaders because of cheap $9.99 books. If eBooks are almost as expensive as hardcovers the main reason to buy a Kindle or a Nook Color is gone?

Most of the advantages of the Kindle and the Nook Color aren’t obvious until you start using them. 60 second downloads doesn’t fully register until you actually get a book you want within a minute. No one’s been able to explain the benefits of eInk in language users understand – You have to read on it to get it. The list goes on.

For the rest of 2011, and perhaps for all of 2012, potential eReader owners will have to decide between -

  1. Buying an eReader and getting Indie titles for $1 and published novels for $13.
  2. Sticking with physical books and getting hardcovers for $14 and $15.

60% to 70% of the time the books people will want, will hear about, and will be waiting for – will be the $13 ebooks. Those can’t really compete effectively with $14 hardcovers.

Will indie authors be able to make up the difference? Will the FTC or some European Government strike down the Agency Model? Will published authors start leaving Publishers?

Something has to happen for eReaders and eBooks to regain their huge value for money advantage. The Agency Model has completely destroyed it.

We tend to underestimate inertia

The 10% of readers who have tasted freedom, who own eReaders, and who know all about lower prices and indie authors are not going to quit ebooks.

However, what about the 90% who don’t realize all the benefits?

Any reader who is new to ebooks needs a huge impetus to push her past her inertia. It’s only then that she makes the switch to eBooks. That impetus has mostly been provided by low-priced books. The belief/reality that you would save a lot on books was a big reason so many people jumped fearlessly into eReaders and eBooks.

If eBooks are $13 at launch, the ‘cheaper books’ motivator is gone.

eReader companies will have to find some huge benefit that replaces the value/motivation ‘books at $9.99 or less’ used to provide. It can’t be something you only understand after owning an eReader. It has to be something potential eReader owners instantly see the value of.

It’s hard to imagine what the answer could be - Perhaps a free collection of back list titles and public domain titles. Perhaps some completely new feature. Perhaps a $79 eReader. Perhaps a $10 per month all-you-can-read subscription plan.

We are at another crucial inflection point - Random House joining the Agency Model has triggered it. How eReader companies and readers react will determine whether this is the inflection point that will take eBooks to 50% or whether this is the inflection point that stalls eBooks at 20% of the market.

Filed under: books | Tagged: , | 8 Comments »

Is there an ‘ideal’ price for books? Do boycotts work? Would group buying work?

Posted on March 8, 2011 by switch11

With the Kindle and the Nook continuing to do well, and going well past the ’40,000 total eReaders sold’ prediction experts had made in 2007, we are running into a completely different issue.

What price should books be? Is the Agency Model justified? Is it winning?

There are so many differing opinions on this that it seems like a possibility sword – everyone seems to believe and see a different possibility.

  1. A few people firmly believe the Agency Model has won out. That’s hard to agree with when the #1 book in the Kindle Store is an indie book at $1.
  2. A few people feel the Agency Model is a failure. That too is questionable since the #2 book in the Kindle Store is an Agency Model book at $13.
  3. Some people seem to feel that prices between $5 and $10 are reasonable. It sounds perfect and very reasonable – except there are lots of books below $5 and lots of books above $10.
  4. Other people feel that everyone should stop complaining about prices and not buy books they think are too expensive. It’s an interesting perspective – However, protesting is a way of bringing down prices and also a way of banding together. It is unrealistic to assume people will ever stop protesting about prices they don’t like.
  5. A few people feel ebooks should be $1 or $2. That seems unsustainable but indie authors are pulling it off.

You could take absolutely any possible outcome of the eBook Pricing Wars and piece together enough evidence to make that particular outcome seem the one and only true outcome. Take the Top 100 Bestsellers list for example -

  • 4 $1 books in the Top 10. That’s proof ebook prices are going to zero.
  • 3 books above $10 in the Top 10. That’s proof the Agency Model has worked.
  • 25 indie books in the Top 100. That must mean indie authors are taking over.
  • 10 Publisher published books over $10, and another 13 between $3 and $10, in the Top 40. Publishers must be growing stronger than ever.

Which is it? What’s going on with ebook prices? Who’s winning?

At the moment no one knows.

The Ideal Price for eBooks might not exist

People assume there is a rational price for ebooks – one which makes sense to all involved parties. That once we arrive at this price, ebook prices will stabilize.

There is no such ‘magic price’.

Prices for ebooks can never stabilize because we have some very emotional factors and some very unexpected things coming into play -

  1. Readers’ inability to wait for prices to drop. Why are $15 books still selling? Because some readers just can’t wait a few months.
  2. Readers’ refusal to pay more than what paper books cost. Lots of readers absolutely refuse to pay more for an ebook than what the paperback costs. This makes it very difficult to settle on any price that lies between the paperback price and the hardcover price.
  3. Publishers’ need to prop up their physical book business. Publishers’ attachment to their existing book business, and the fact that it’s 9 times bigger than ebooks, means that for the next few years ebooks will continue to pay for the sins of physical book publishing.
  4. Publishers are trying to maximize profits. That means they are constantly trying to tweak prices. If we arrive at a stable price, Publishers will soon try to get 10% more. Of course, it cuts both ways – as soon as a stable price is arrived at, readers will ask for 10% less.
  5. Readers have rationalized away any possible floor for ebook prices. We have begun to feel that there’s no reason ebooks couldn’t keep going lower and lower.
  6. Authors are competing ruthlessly against each other. You arrive at a balanced, sustainable price on Monday, and on Tuesday some author is going to try to get an advantage by going 10% cheaper.
  7. For new Authors it’s all upside. They have nothing to lose. Whether they sell a book for $10 or for $1, it doesn’t make much of a difference since their sales are so low.

There is no ideal price for ebooks. You could argue that the ideal price for Publishers is $100 per book, for readers is $0 per book, and for indie authors its any price that gets readers to read their books. However, all of these are competing against and coexisting with each other.

Boycotts do work – but not quite in the way people expect them to

The $9.99 boycott did some interesting things – it led to the rise of indie authors, it made Random House very successful in ebooks, it helped spread eReaders, it showed the power of readers.

There are some things it didn’t do -

  1. It didn’t get Publishers to lower prices to $10. This is because a segment of readers aren’t willing to wait months or even weeks for the books they want. Nothing wrong with that. It just means that Agency Model Publishers were weakened but not killed when it came to ebook sales.
  2. The actual impact of the $9.99 boycott is partially hidden. This is because ‘new releases’ always sell more in the first few weeks. So new releases at $13 still make it to the Top 10 and the Top 100. We don’t get to see all the $13 books that miss out because of the higher price – We do get to see the $13 books that make it to the Top 100 despite the higher price.
  3. It didn’t get Publishers to kill the Agency Model. This is because 90% of their sales are still physical books. Their aim with the Agency Model is mostly to slow down and kill eBooks and eReaders. If they don’t manage to do that, and so far they haven’t, they will pretend that all along their aim was to preserve prices.

We can look at the 20% of books in the Top 100 that are at $1, and the 40% that are below $5, and call the $9.99 boycott a victory. We can look at the 25% of books in the Top 100 that are over $10 and call the $9.99 boycott a failure. It’s whatever you want it to be.

One thing we do know, is that prices are lower than they were two years ago. 

Group Buying is certainly worth trying

What if we set up a site where 10 million Kindle and Nook owners got together and said -

  1. Mr. King, set your next book at $5, and 1 million of us will sign up for a preorder.
  2. Harper Collins, release Book X from your backlist and 200,000 of us will sign up for a $3 preorder.
  3. Bundle the Harry Potter Series at $40, and 2 million of us will pledge the money up-front.

No publisher or author in their right mind would refuse. At some level, this ‘power of the group’ is what’s really needed – readers have to get every single reader of ebooks on the same team. It’s pointless to discuss Kindle vs Nook when owners of both devices are looking for the same thing – a much better range of ebooks at much better prices.

The only way for eReader owners to make their 10% share of the market more impactful is to get better organized. This applies to the boycotts too – more important than whether $3 over $10 is stealing or not, is whether eReader owners can band together or not. There are a variety of benefits that will accrue if eReader owners work together – more range, better editing, better graphics and covers, lower prices, earlier availability.

If, on the other hand, eReader owners start arguing with each other, over things like which devices they use or what they think the ideal price for ebooks should be, then it’ll slow down the rise of eReaders and readers.

Filed under: books | Tagged: , | 15 Comments »

The Kindle, libraries, subscription plans, and the big transition

Posted on March 6, 2011 by switch11

Thanks to Joe Siegler and Roger Knights for writing in about a very interesting post by Mark Cuban on How Amazon will/should/could probably do a Netflix for ebooks. Thanks to Kitty for a link to The 26 loans limit on ebook lending by libraries.

These two posts are linked by the fact that they cover opportunities to take advantage of the big transition in Publishing.

Transition = Opportunity for everyone to get a larger share of the pie

The reason there’s so much discussion and hand-wringing about ebooks is that we’re in a time of major transition. Everyone thinks they can get a better deal than they had before. Everyone thinks they can get a bigger share of the pie while doing less.

  1. For readers and indie authors, it’s freedom and a revolution.
  2. For readers, it’s an opportunity to get cheaper books and to get more of the type of books they want to read.
  3. For indie authors, it’s a shot at getting read, and at making money. 
  4. For Publishers, it’s a disaster and alien and scary. It’s also an opportunity to cut out lots of costs without lowering prices. It’s a shot at eliminating the used books market and limiting losses due to libraries and lending.
  5. For Published authors, it’s a chance to get a larger share of the profits. At the same time, they don’t want to go from little competition to infinite competition.
  6. For Libraries and Bookstores, it is, unfortunately, a challenge to their very existence. There’s little to no upside.
  7. For new Publishers and for platforms, it’s an opportunity to get a 10% to 30% cut on all of book sales. For them it’s all upside.

For everyone involved, it’s an opportunity to tilt things more in their favor. It’s also a threat as they have to make sure they don’t get destroyed by the changes the transition brings about.

Those last two sentences are the critical one here. And the only ones that matter.

There’s no point in discussing the symptoms and the side-effects of this transition/upheaval. There’s even less point in pretending that any of the interested parties is sacrificing themselves and not acting in self-interest.

Everyone is trying to do two things -

  1. Tilt things in their favor.
  2. Minimize possible damage.

Let’s start by discussing how we readers want to get more than we used to. Or to be precise – a lot more than we used to.

Readers are being just as unreasonable as everyone else

Here are a few things readers want -

  1. Prices between $3 and $10. Roughly half of what they were paying.
  2. The same features as physical books i.e. lending and reselling.
  3. Ability to share between various eReaders on one account, and read on other devices.
  4. All the best things about ebooks i.e. search, remembering your place in a book, etc.
  5. All the physical book benefits – the ones mentioned above, page numbers, etc.

It should be painfully obvious that readers aren’t sacrificing at all. We are getting a lot more than we were getting earlier, and yet we want even more.

On top of getting a lot more value for money, we also want the following – the power to decide the winners, more of the books we want, convenience, ease of use, time savings.

Will readers get everything they want?

Firstly, if it isn’t clear yet to everyone involved, in a truly free market readers will have total control and will squeeze authors and platforms to breaking point. It won’t be intentional - It’ll be a direct result of the fact that authors want to be read a lot more than readers want to read.

This is a fundamental fact that no one can do anything about. It just matters a lot more to authors to be read than it does to readers to read. For an author, readers’ time and validation are more valuable than any money they give. The freer the market, and the closer it reflects reality, the higher the chance that authors will be paying readers to read their books.

Yes, there will be bestselling authors whose work readers pay for. However, those will be more than balanced out by newer authors and less well-known authors paying readers to give their book a shot.

Strengthening this will be a belief that every author has – I just need to get 1,000 people to read my book. Then word of mouth, and their reviews, will make me a bestseller.

At some level, it’s best for authors if there is some artificial barrier. With ebooks available the only barrier left is a real one, i.e. quality of books. However, there needs to be some artificial barrier to add on top of that. Indie authors will eventually figure out a way to deliver high quality at low cost. At that point, everything will break down.

If some company doesn’t figure out a really solid artificial barrier that prevents every author from giving out their potential masterpieces for free – Well, everything will go to zero. Except perhaps books from an exceedingly small group of ‘bestselling authors’.

Switching over to Libraries

There are two competing things here -

  1. Libraries and the crucial role they play - Equality, education, reading, and so much more.
  2. The fact that libraries are the least well-positioned for the current transition.

Should people be upset that Harper Collins wants a limit of 26 ebook loans? Not really.

On the one hand, Harper Collins gets to eliminate the used book market and gets to limit user lending to one or zero loans per book sold. On the other hand, Harper Collins will probably end up earning less on ebooks as prices go down.

The library ebook loan concept is stuck in the middle.

If Publishers get a chance to eliminate that, they will. Perhaps in the long term it hurts word of mouth – However, Publishers don’t know where they’ll be in 10 years. They aren’t concerned about the long term.

It just seems strange that the used book market is gone, lending is close to zero, ebook prices are lower than hardcovers, and in the midst of all of that libraries just keep functioning as infinite loan machines.

Publishers’ job is to eliminate library lending. Not to reduce it, but to eliminate it. It’s the role of libraries and readers to prevent that. It’s that simple. It’s a transition and things could go either way. To pretend that Publishers will care about the greater good or the long-term implications is being naive.

Subscription Plans

Subscription plans are beautiful because they make both parties happy.

  1. Readers feel they can read as many books as they want. They can read any book they want.
  2. Publishers and platforms feel they get a guaranteed amount of money per reader, they get it every month, and they get more money than they would if they sold books individually.

That’s the key thing here – both parties feel they get a better deal. It’s one of the few possibilities, out of all the ones being explored, that results in a win-win situation.

Well, perhaps it isn’t really a win-win but it sure feels that way.

Mark Cuban brings up ebook subscriptions in a very practical way, i.e. by talking about how Publishers could turn their back lists into a source of solid revenue.

Netflix in its brilliance helped content owners monetize their libraries. Their re-runs . All those shows and movies that were gathering dust earning bupkis.

Who else has huge libraries of content that is gathering dust and earning bupkis ? Publishers. Book publishers to be specific.

Who is going to be the first to go to those publishers and offer the biggest publishers 10, 20, 30, 50 million dollars for multiyear rights to freely distribute their books online to E-Readers ?

He suggests that if Amazon offered a subscription plan, where Readers could access any book that was more than 1 year old (and not in the top 20 sales lists) for free, it might get millions of readers to bite.

It probably would.

Mark Cuban also thinks it won’t be long before someone offers a subscription plan -

Bottom line is that it won’t be long before a Netflix or Prime for E-Books happens and takes hold. Someone is bound to do it. The publishing industry needs the money far worse than the movie industry did. Their monetization of their libraries is horrid.

Yes, there are three very simple reasons why ebook subscriptions are bound to happen -

  1. It is perhaps the only big strategic move left. It’s the only way anyone can catch up with Amazon. It’s the only way Amazon can get a further advantage over competitors in an Agency Model era.
  2. It’s very easy to get both Publishers and readers to bite. Publishers get to monetize their backlists, and readers get unlimited books – every book ever published before 2009 sounds amazing. For both parties it seems to be a real deal.
  3. It is perhaps the only sustainable plan left.

The chances are slim that it will be done properly – because Publishers may very well feel killing off ebooks is a worthier goal than making money from their back lists, and because Publishers might not be able to get over their ‘stuck in the 1980s’ attitude.

However, ebook subscriptions will happen and will play a big part in the Book Wars.

Coming back to the Transition

It’s worth keeping in mind, when people cry out about the unfairness of it all and about the death of sacred things, that everyone is just trying to use the transition to get a better deal for themselves.

We have a bunch of very intelligent people on each side, and they’re all trying to outwit each other. Since it’s people in the world of books everyone is able to articulate their arguments very well, and use words to great effect.

The beauty of the arguments doesn’t change the fact that we are all driven by self-interest.

There are still a few win-win solutions possible, and subscriptions are one of the best. Hopefully, someone pulls it off and saves us from the race to zero.

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