How do you handle unrealistic expectations about ebook prices and features?

The Kindle and the Nook provide some features that are pretty cool –

  1. A store that is open all the time.
  2. Family members can read the same book at the same time – off of just 1 book purchase. You can read a book across your devices. 
  3. You can carry lots of books in your eReader.
  4. You can search through books quickly.
  5. Kindle and Nook remember your place in a book.

They also miss out on some features of physical books –

  1. You can’t resell books. 
  2. There’s nothing physical to hold, and to take ownership of. 
  3. There are some limitations around how you can read your books i.e. you can only read them on the eReader and reading apps of the company you bought your books from. 
  4. Lending is super limited.
  5. You can’t decorate shelves with books.
  6. Lots of other things like not being able to impress people with what you’re reading.

All in all it’s not a bad trade-off. A few of the negatives of ebooks have to do with them not being physical – there isn’t really anything that can be done about that.

Things get better with eBooks

Of course, an even exchange wouldn’t work. So you start getting some advantages that are hard for physical books to match –

  1. Free public domain books.
  2. Significantly lower book prices for a subset of books.
  3. Changeable font sizes.
  4. Text to Speech.
  5. 60 second book downloads.

At that point, for reasonable customers, the argument is won. eBooks provide more value for money, and are worth the switch.

In a perfect world we’d have a smooth transition and everyone would be happy.

An imperfect world where everyone wants to have their cake and eat it too

As opposed to a perfect publishing world, where –

  1. Publishers would optimize and start making more from $5 to $10 ebooks than from $15 hardcovers.
  2. Publishers would recognize that lower prices and increased convenience would increase sales.
  3. Readers would appreciate getting $5 to $10 ebooks.
  4. Readers would realize that the disadvantages are balanced by advantages.
  5. Readers would accept that they can’t have their cake (cheaper ebooks) and also eat it (re-sell and lend books).

We live in an imperfect world.

Because we don’t have set precedents, you could take whatever prices and rules you think benefit you the most, and claim those are the appropriate ones. We all know what Publishers have been doing. However, it’s time to turn the spotlight on ourselves.

No one wants to admit that readers, or to be more precise a large portion of readers, are being just as greedy and selfish as Publishers.

Readers being greedy

There are a lot of aspects to this –

  1. Readers want all the benefits of ebooks, especially low prices, while also asking for all the benefits of physical books, especially lending and reselling. This is just economically unfeasible.
  2. Readers are assuming completely unreasonable things about book pricing. In particular, readers who think ebooks should be $1 or $2 are just as unreasonable as Publishers who think ebooks should be $15 or $20.
  3. Readers are using irrational justifications for behavior that’s questionable – it’s OK to strip DRM, it’s OK to extend library loans, it’s OK to exploit the Kindle’s family sharing feature. Basically, anything that benefits readers always has some ‘justification’.
  4. Readers aren’t being thankful for some pretty cool features – No one ever mentions how getting FREE text to speech on a lot of books is a really, really cool feature. Or that getting the equivalent of large font books for free is an amazing feature. Yet, you don’t add lending and they’re screaming bloody murder.
  5. Readers aren’t taking the long-term view. Should readers be supporting companies that are in it for the short-term? Should readers be fighting DRM when there is a subset of users who will stop paying without DRM? Should readers ask for lending and reselling rights when they are already getting incredible value for money?

Of course, you’re never allowed to point this out. These are the inconvenient truths you’re supposed to ignore because every single user is pure and always right.

Are we supposed to deny human nature?

First, consider the arguments from people who want reselling and lending for books –

We could sell and lend physical books. Why can’t we do the same for ebooks?

90% of the cost is printing. Books should be $1 and $2.

What’s going on here? Do readers honestly believe that printing and shipping accounts for 80% to 90% of the costs?

This is a subset of readers that is rationalizing things to get what they want.

If they are given what they want, two things will happen –

  1.  $1 and $2 books will become the norm and it’ll become almost impossible for authors to make a living.
  2.  These people will further rationalize, and will start demanding $0 books. This is the part that we’re ignoring.

Customers who think books should be $1 and $2 are just bad, bad customers. Note that we’re only talking about it from a business perspective – they might very well be the best thing since sliced bread from some other perspective. However, from the perspective of a company selling books, they are customers to avoid.

Second, think of the removal of DRM as just a precursor to the scenario above.

If you remove DRM, you get all these $1 and $2 people saying –

We think books should be $1 and $2.

Books are $10 – that’s just wrong. We’ll set things right by getting these books for free from people who’ve bought them.

We thinks books should be re-sellable and lendable. We’ll set things right by sharing freely.

DRM is the only thing saving authors and publishers and retailers from the self-interest of customers of bad intent.

The percentage of bad customers is higher than what people assume

It’s easy to rationalize that just 5% of customers are bad – That 95% won’t misuse their power.

If DRM is removed, or other loopholes are put into the system, you can be sure that at least 25% of Kindle and Nook owners will start mis-using the system. We’re seeing it already with 10 different start-ups turning the Kindle’s lend-once feature into a sort of global exchange. Can you imagine what would happen at these sites if DRM were removed?

Let’s say 25% of people stop paying for their purchases. Add on the people who currently pirate. Add on people who do things like loan out library ebooks, strip off the DRM, and extend the loan period indefinitely.

These are all lost sales. These lost sales result in a higher burden on the 75% of customers who are actually paying for ebooks. It also means there’s a huge divide and a lot of temptation. Should the good Kindle owners pay MORE than they used to, just so they can make up for the freeloaders? Why don’t they just join the side of the freeloaders?

Amusingly, the freeloaders don’t just get free books – they get moral superiority. They get to chant about the evils of DRM, and about how they are fighting a holy war. It’s one heck of a beautiful argument to hide the stealing they are doing.

The Solution is Very Contrarian

The only solution to unrealistic expectations is to cut out bad customers. There is no place for customers of bad intent.

Removing DRM is not a solution. Competition might result in books without DRM, but that would just kill authors. The truth is that ebooks are currently offering pretty good value for money. An ebook in the $5 to $10 range is actually impressive value for money.

90% of the customers who have unrealistic expectations, who think $5 or $10 isn’t a low enough price for an ebook, are ALWAYS going to have unrealistic expectations. If you give them an inch, they will take a yard – they will end up paying you nothing.

There’s no point in making it convenient for them to take advantage of authors and customers of good intent.

You can’t change customer attitudes

Consider the lists at the top of the post.

  • Physical book advantages – reselling, lending, something physical, decorating, signalling, sturdiness, etc.
  • Electronic book advantages – family reading, portability, free public domain books, search, text to speech, lower prices, changeable font sizes, etc.

That’s a list that balances out – even without lower prices, it balances out.

So when you get someone complaining, you can tell their attitude from the nature of their complaint –

  1. This $15 physical book is $20 in ebook format – Very justified.
  2. This $15 physical book is $15 in ebook format – Justified. 
  3. This $15 physical book is $10 in ebook format, and that’s $5 too much – Unjustified.
  4. This $15 physical book is $5 in ebook format, and that’s $4 too much – Very Unjustified.

People who are complaining despite saving money with the ebook format are just customers of bad intent. Conversely, people who are content as long as ebooks are cheaper or the same price as the print format are customers of good intent.

The former (3. and 4.) will NEVER be happy. They will keep coming up with arguments because they want something that is tilted in their favor, rather than a win-win situation. They will not be happy until they get books for free, and even then they will want authors and publishers to thank them for buying those $0 books.

Those are the people who make DRM necessary.

Does DRM inconvenience customers of good intent?

Yes. However, a far bigger inconvenience would be book prices going up 25% to 50% because customers of bad intent use the absence of DRM to stop paying for books completely.

What about people who believe DRM is evil?

They’re just being unrealistic.

There’s nothing evil or good about a system meant to police an ecosystem. It is just a way to ensure that creators and customers of good intent aren’t taken advantage of.

Evil and Good are mostly terms used to fool people. When there are no rational arguments, people turn to vague concepts like good or evil.

Consider a customer of bad intent who wants to pay for books only after reading them, and thinks he should pay only for books he likes. For him, DRM is evil. Well, what about the author whose work is protected because of DRM?

Power Corrupts, and if readers take over we’ll see it first hand

If readers get ultimate power, and at the moment it looks like they will, we’ll see that readers can be even crueller than Publishers.

Consider this hypothetical scenario –

  1. Readers get DRM revoked.
  2. The 30% of customers of bad intent stop paying for books.
  3. Authors can’t sustain themselves on the 70% of remaining customers.
  4. The 70% figure keeps going down as customers of bad intent aren’t just content to steal – They also want to seem like the good guys. Which means they spend a bunch of effort trying to convince customers of good intent that stealing is the right thing to do.
  5. Some customers of good intent buy the elaborate arguments. Suddenly, authors are left with 50% of the market they had.

DRM is Evil. We remove it and make the world a better place. Except for authors – who now have only half the paying customers they used to.

This argument won’t make sense to people who assume everyone is honest like they are, and it won’t make sense to people who hate DRM for what it is, as opposed to for what it makes possible.

If DRM goes, customers with unrealistic expectations will destroy the book market

You would literally be letting readers set ebook prices.

If you do that, customers of bad intent pay zero. Customers of good intent pay less – It’s always easy to rationalize that $1 less isn’t going to make a difference. Before you know it, there is no book market because people are paying either $0 or $1 for books. Everyone is assuming that the 1 million other people getting the book must be paying a more reasonable amount like $7, and that their stealing won’t really matter in the grand scheme of things.

B&N and Amazon are shooting themselves in the foot with their lending feature. eBooks were perfect without lending and without reselling. Then one stupid decision and B&N adds the feature – then Amazon has to match it. It’s given customers of bad intent just the opening they wanted.

It’s hard to imagine any company would be stupid enough to remove DRM from books. If it does happen, we will, rather unfortunately, find out just how ruthless the unrestrained crowd of customers can be.

Kindle 3, Books, eReaders Vs Sensory Overload

As the Kindle 3 continues to sell well and Sony and B&N bring new, impressive eReaders to market the focus is on the eReader wars.

There is, however, another war that is far more interesting – The War between sources of entertainment that overwhelm users with sensory overload and sources of entertainment like books that help users focus.

The Inspiration – Two Examples of Sensory Overload

Let’s quickly look at what we mean by sensory overload –

  1. Hakiri lists a cartoon asking whether Huxley was right (with Brave New World) and Orwell was wrong (with 1984). Some of the things listed in favor of Huxley being right are scary in their accuracy –

    What Huxley feared was that there would be no reason to ban a book, for there would be no one who would want to read one.

    Huxley feared we would become a trivial culture preoccupied with some equivalent of the feelies, the orgy porgy, and the centrifugal bumblepuppy. 

  2. Gizmodo talks about carpets in Vegas casinos being hideous and loud. One of the commenters points out that creating sensory overload and triggering dopamine release are probably the motivations for having such hideous carpets –

    Casinos are ALL about sensory overload. As soon as you walk in your senses are literally assaulted by the bright flashing lights, the loud carpets, the architecture, the garish decorations, and most of all the slot machines!

    I’m pretty sure all this sensation puts one in the mood to gamble. If I remember correctly, it has to do with releasing dopamine in the brain.

When Steve Jobs says that users don’t read any more that really is what he is hoping for. It’s what pretty much every company wants.

Users that just watch TV and surf the Internet mindlessly and buy what ever is suggested and behave the way companies would like them to behave. A company would much rather have ‘consumers’ than intelligent customers. It’s about profit.

The iPad epitomizes that – iPad is a device optimized for quick sensory hits and quick dopamine releases. It’s completely unsuited to creating. It’s a consumer device tailored to make consumption easy and overpowering.

Every eReader sold fights the Sensory Overload Disease

It doesn’t matter whether it’s Kindle 3 or Nook 2 or Sony 650 or even the Skiff LostAtSea.

Here’s what happens when a user buys an eReader –

  1. She’s likely to watch less TV. She’s likely to spend less time on the Internet surfing randomly.  
  2. She’s likely to read more (a lot more) than she used to. 
  3. At the minimum she’ll be using her imagination and in the best case she’ll be reading books that make her smart.

There’s little doubt that reading books in a particular subject area makes you better informed and smarter in that area. There’s still a lot of argument about whether reading makes people smarter – anecdotal evidence suggests it does.

There’s a lot of evidence that the quality and range of a person’s vocabulary impacts the way they view the world and their experience of it.  

Angry Birds vs The Girl with the Dragon Tattoo

Let’s assume two people start with a blank slate –

  1. Person 1 downloads the #1 App for the iPhone and gets the following added to his worldview – pigs bad, birds good, eggs precious, pigs steal eggs, birds vengeful, throw birds at pigs, win back eggs.
  2. Person 2 downloads The Girl with the Dragon Tattoo and gets the following added to her world view – Haven’t read the book so let’s assume it’s the way a person in another country views the world. Basically, something that has a lot more depth and realism and meaning than Birds turning into a combination of Chuck Norris, Rambo, and the Expendables and saving the world (or in this case eggs).

Which person is better off – The person who spent 10-20 hours reading the Millenium Trilogy or someone who spent 20 hours throwing birds at pigs?


Let’s extrapolate and ask ourselves which kid is better off –

  1. One who goes to school and studies from books for 4-5 hours a day.  
  2. One who goes to a special App School and plays iPhone games and watches MTV for 4-5 hours a day.

Well, most kids are already in category two – there’s way more TV time and video game time than there is study time and reading time. We’re already drowning in an information overload nightmare that’s beginning to resemble exactly what Huxley was afraid of.

TV, Games, Most Internet Sites are making people dumber

There really isn’t any way to argue that they are making people smarter. If we can agree that TV and games aren’t making people smarter we’ve already established something significant.

You could win the argument that TV and Games are making people dumber  just through opportunity cost – People could be doing something else, something that makes them smarter, and since they’re not they’re relatively dumber.

However, it goes a lot further than that.

The person making the TV show or coding a game or building an interesting new site is fighting starvation and failure. He has to get our attention and our money any way he can and the easiest way to do that is to trigger dopamine release and use psychological tricks and get us addicted.

The more we get enticed into all this subterfuge the dumber we become. If someone quits his job so he can play World of Warcraft for a year how do you categorize that? If a 14-year-old kid is playing 5 hours of Farmville a day instead of playing softball and going out to play with friends what’s that doing to her social intelligence and people skills?

There is a tangible cost – all those hours spent on TV and Video Games can’t be rationalized away as harmless entertainment.

eReaders and Books are a counter to that

The Kindle 3 manages to stick to its focus on reading and continues to ‘disappear in the background’.

It’s letting the reader construct her/his own world and create a self-driven journey. The money’s up-front so there are no hidden costs and it’s a 1 on 1 with some of the smartest people in the world. People who are trying to share their knowledge and their wisdom and leave behind a legacy.

So it’s the exact opposite of TV and games and most Internet sites –

  1. Books get their money up-front so they don’t have to sell user information or play psychological tricks. 
  2. Authors are focused on legacy and passing on knowledge and ideas. They aren’t focused on the quick money aspect (well, most aren’t).  
  3. Most TV shows and Internet sites have morphed – since companies that advertise and companies that buy user information provide the profits they’ve tailored themselves to serve these companies well. Their real customers aren’t you and me – we are the product being sold.

It’s also important to note that Authors have a vested interest in keeping readers smart- If readers become dumb they’ll stop buying and reading books.

Why Sensory Overload is a brilliant strategy to fleece people

The Vegas Casino strategy (garish carpets, no clocks, glittery things everywhere) is very effective. The more you unsettle a person, the more emotional they become, the higher the rush they feel – the greater the chance they’ll indulge in risky, irresponsible behavior.

It’s the same with MTV and Facebook – The more quick dopamine hits they provide users with the more addicted users become. That’s basically what the news feed on Facebook is – it’s a bit of an addiction as you never know when a good item will pop up (OMG! They broke up!). It’s almost exactly like a slot machine since it provides erratic, unpredictable rewards of varying magnitude.

You start with a person with a blank slate –

  1. You start showing him MTV and warp his world of reality. He notices things in the real world are never as exciting as things in The Real World and begins to watch MTV more.
  2. You get him on to Facebook and Farmville and instead of a job that is tough and real life friends he has to be a good friend to he gets guaranteed satisfaction (virtual crops that can be harvested every 4 hours – so much more satisfying than a yearly bonus) and loads and loads of pretend friends.
  3. Throw in a few more things like porn and video games and you’ve turned a normal human being into Pavlov’s dog.

You start off with a human being and you end up with Pavlov’s dog who’ll spend even money he doesn’t yet have the minute he’s given the right signal.

People involved in each of these dopamine rush generating businesses will claim that what they do is perfectly legitimate – that it’s about free choice and about letting people destroy themselves if they want to. They even go as far as to claim they do tons of good – MTV is educational, Facebook is a social utility, and video games are a mix of art and entertainment.

We have to look at the end-result. If it’s really hurting users in the long run how is it educational or art?

The beauty is that we can keep arguing and pretending there are no negative consequences until 20-30 years in the future when there’s irrefutable proof. By then we’ll probably be living in a world where 90% of people are dumb and have food fed into them via pipes while they simply watch Jersey Shore 2040 and play Angry Birds: The Return of King Pig.

The Real War isn’t amongst eReaders

The Real War is between –

  • Companies that want to domesticate us all and turn us into sheep they can shear at regular intervals. And …
  • All of us and a handful of companies that are still resisting the consumer culture.

In The Time Machine H. G. Wells’s Time Traveler finds a world populated by childlike Eloi who are simply cattle – provided food by the Morlocks and then eaten by them.

Well, 2010 is not very different. The Eloi are now us – fed on a diet of TV and games and unreality and trapped with sensory overload. The Morlocks are the companies that are unethical enough or can delude themselves enough to justify a world where humans are nothing more than consumers.

Every book we read weakens the spell of sensory overload.

Every Kindle 3, every Nook 2, every Sony Reader is a triumph because people read more and they free themselves from TV and mindless sites and video games and all the other psychological traps set up for us.

We will look back upon the eReader Wars as not wars that were won by a particular eReader but wars that were won either by the Morlocks or by the Time Traveler and the Eloi.

eReaders, reading, advertising, and addictiveness

The Kindle and the Nook and the Sony Reader and ebooks aren’t just helping destroy Publishing. They are collaborating with the good parts of the Internet and helping to destroy advertising and manipulation.

There are a lot of other good things that help. However, a large part stems from reading books for yourself and gathering knowledge from the Internet yourself and developing the faculty to reason independently.

Let’s look at each of the elements.

Advertising is on the Decline – Smarter People means the End of Advertising

Conde Nast just realized that it can no longer depend on advertising dollars –

 Conde Nast’s CEO, Charles Townsend, stated, “We have been so overly dependent on advertising as the turbine that runs this place, and that is a very, very, risky model as we emerge from the recession.”

What he really wants to say is –

People are no longer stupid and won’t just buy whatever they see in advertisements.

That means advertisements no longer make us as much money because companies don’t get the same returns on their investment.

The New York Times has a very good article covering Conde Nast’s move away from advertising. There’s the predictable disbelief that Conde Nast can get over a dependence on advertising –

other questions remain about the company’s future, namely whether it can wean itself from advertising dollars as much as it would like.

Its transition to a more consumer-focused business model will be difficult for a company that now earns about 70 percent of its net profit from advertising.

Predictably, advertisers think Conde Nast is risking everything. Read this post at AdAgeIt sounds exactly like Publishers trying to convince authors they should keep handing over 75% of their revenue. The blogger thinks Conde Nast is making two wrong assumptions –

Assumption No. 1: Consumers are loyal enough to your brand to overcome their desire to consume free, or highly subsidized, content.

Assumption No. 2: Advertising prices are going to continue to free-fall.

Really? If Conde Nast doesn’t have brand loyalty then what’s the point. They aren’t your customers if they don’t have brand loyalty. It’s also impressive that’s he’s freely admitting advertising prices are in free-fall. Yes, that’s what happens when Facebook gets 500 million people to generate content for free.

Basically, advertising is in decline because people are getting smarter, they finally have the option to ignore ads, and are getting trained to ignore advertising. There’s an excellent post by Frederic Filloux about the end of advertising.

What’s going to replace advertising?

Well, there are two possibilities. The first is to find something more manipulative and compelling than advertising.

Newer and More Addictive Things are Rising Up to Enslave us

Paul Graham writes about ‘The Acceleration of Addictiveness’ and how more and more addictive things are rising up –

Checkers and solitaire have been replaced by World of Warcraft and FarmVille. TV has become much more engaging, and even so it can’t compete with Facebook.

The world is more addictive than it was 40 years ago.

Perhaps the most compelling part of his post is this –

More things we like will mean more things we have to be careful about. Most people won’t, unfortunately.

Which means that as the world becomes more addictive, the two senses in which one can live a normal life will be driven ever further apart.

One sense of “normal” is statistically normal: what everyone else does. The other is the sense we mean when we talk about the normal operating range of a piece of machinery: what works best.

Extrapolate his post and you see the emergence of two broad groups of people –

  1. A group of people who give in to increasingly addictive and enticing things. They play Farmville and watch TV all the time or are addicted to drugs and prescription drugs or play video games all the time. They’re basically in a Matrix like world completely detached from reality.
  2. A group of people who live in reality – even though it doesn’t offer the tantalizing escape from pain non-reality offers.

If we’re lucky the ratio will be 80:20. It’s far more likely to be 90:10. This sounds crazy until you consider that we are close to a point where robots take over all the menial tasks and leave us free to play Farmville and entertain ourselves with iPhone Apps all day long.

When you look at a social game like Farmville with artificial rewards that still manage to trigger the right chemicals or look at video games that offer virtual satisfaction and success for close to zero effort you have to seriously ask yourself – What percentage of people will stick with the real world where you have to work really hard to succeed?

Fortunately, there’s a counterbalance to increasingly manipulative and compelling addictions and enticements.

The Internet, Reading Books, and the spread of Knowledge are making people smarter

Advertising doesn’t work on the Internet. The only company that makes a ton of money is Google and it provides the starting point and it provides shortcuts. Notice that it only sends users where users ALREADY intended to go. That’s why it only does text ads and does its best to make its shortcuts look as different from ads as possible.

You could come up with lots of reasons why Advertising isn’t working. My assumption would be that people quickly realize who’s helping them and who’s manipulating them – this is helped by the free spread of knowledge. They then avoid or ignore the manipulative elements.

At its most fundamental advertising is influence. In fact, you could argue (and evolutionary psychologists do) that all communication is influence.

You need two things to be in place to influence people – An unhappiness i.e. a need that they feel is unfulfilled, an influential message that makes people feel that the product being advertised will fulfill their need.

With smart people you can’t really get either. Consider fashion –

A young, impressionable girl sees a fashion magazine and feels unpretty and links ‘being pretty’ with what is portrayed i.e. buying make-up and clothes and being ridiculously thin.

However, if that young girl has been taught or has learnt that beauty has nothing to do with the dictates of the fashion world then no amount of fashion magazines can convince her she’s unpretty.

Where would she learn this? Not from TV. Not from the magazines.

It would have to be from sources that seek to educate. Which would mean the good parts of the Internet and Books and Libraries and Parents and Teachers.

The role of eReaders in the rise of smartness

The good parts of the Internet and books have the wisdom of the ages. The bad parts of the Internet and TV have the manipulation of the ages.

With eReaders you’re finally taking books into the 21st century and getting more people to read. Instead of getting manipulated by tobacco and beer companies you get to learn from the best writers the world has ever known.

That’s influence too – they wanted to pass on their knowledge and paint a portrait of their time and achieve immortality. However, it’s a win-win sort of influence because it makes you smarter and more knowledgeable.

It’s just a choice – Lots of people will still prefer to farm on Farmville. However, it’s critical to ensure people get to choose freely and fairly. The combination of a lack of evolution in books and the gatekeeping of Publishers was locking out more and more people from books. Instead of choosing between reading and wasting time users had to choose between ‘putting in a lot of effort and money to be able to read books’ and ‘zero effort to waste time’.

With eReaders and ebooks and lower prices and convenience that’s changing.

People will argue that if young kids want to destroy their intelligence and sense of reality with countless hours of TV and video games and porn and social games that’s their privilege. Yes, perhaps it is. However, we should at least give them the choice between very compelling good options and very compelling bad options. Currently, nearly all the compelling options are bad.

Take any parent – What would they rather have their kids do?

We’re seeing attempts to kill off the Internet with the rise of numerous walled gardens and competing Internets (Facebook). We’re also seeing attempts to kill off eReaders (is it a surprise it’s mostly the Press who are dependent on advertising?).

However, we’re beyond the inflection point. Every person who’s buying an eReader is exchanging a world of manipulation for a world where they decide what direction they take. It doesn’t matter whether it’s Amazon or Barnes & Noble or a bunch of aliens from Mars who’re making the eReaders – As long as they are dedicated ebook reading devices they will play a crucial part in destroying advertising and fighting the newer more manipulative diseases we keep coming up with.