Apple announced their new “this is what will revolutionize the world next” product this week – the iPad. I personally think that it’s a great product and fills a void in the marketplace. It’s the “I’m sitting on the sofa watching TV and want to read a blog but don’t feel like pulling out my laptop” market. This product is designed for people who want to be online a lot, wherever they are, and it is even better if those people want to read some e-books as well. It’s not a total Kindle-killer, but it’s the first real salvo against it, and eventually e-readers are going to look much more like the iPad than like the Kindle.
I’m excited about this future. I love the idea of bringing the internet, essentially the whole world of information, with me wherever I go. And I especially like the idea of bringing all the books that I could want with me wherever I go. Here’s the problem with the e-book market though – it’s fundamentally flawed.
The problem is in the pricing. Users have gotten used to digital media being inexpensive. What used to cost $17 (a CD) is now broken down into $.99 pieces and, even if you buy the whole album, you’re probably not spending more than $12 on it, even $5 if you catch a deal on Amazon. Because you’re not getting something physical, people don’t assign as much value to the product and will only pay so much for it.
E-book prices are hovering around $9 right now. That’s significantly less than a new hardcover, but more than a paperback. It feels overpriced, because it costs more than a physical version of the product – one that can’t be accidentally deleted unless you set it on fire. $5 is a more psychologically-comfortable price for something that is going to be essentially disposable. You won’t put this on your shelf, and chances are you will never read it again. But $5 isn’t enough to sustain the industry.
The publishing industry is expensive. Even once you take away the costs of printing, it is expensive to pay all of the people who work together to get a best-seller to the shelf. As it stands now, most books don’t earn back their advances, so that problem will be exacerbated once digital becomes dominant. And since books take so long to read, people probably won’t make up the price difference by buying extra books the way that they may with digital music. The price of e-books needs to be higher than $5, but the industry has trained us to not accept that.
You’re thinking, “but we spend $25 for a hardcover right now.” Yes, that’s true. But if you decide you don’t want to spend $25 for a hardcover you just wait for it to come out in paperback. The industry has trained us to think that the base price of the information in a book is $7, because that’s what paperbacks cost. So the hardback is more expensive in our minds because 1) it is new, and 2) it is more durable and looks nicer. With digital versions you can take advantage of 1, by raising prices for new books, but probably not to $25 because there is no shelf appeal.
So what can we do to fix this? One thought is to encourage indie-authors and try to dismantle some of the publishing industry structure. That is probably going to have to happen to some degree no matter what, because fat will need to be cut somewhere. But editors are already overwhelmed and spend less time than they used to on books. Books pretty much need to come already perfect from authors and agents. So the real benefit right not of the publishing industry is 1) to weed out the bad books and 2) to market what they publish. To keep costs low yet still make money, these two functions will need to be replicated without the high cost.
One way to do this is through a Netflix-type recommendation system for e-books combined with good reviewing. This would filter the whole universe of indie books to ones that a person is likely to enjoy and that are of publishable quality. Alternatively websites that sell e-books could market themselves based on their high standards for what they sell. They could have their own reviewers who allow only 3-4% of books they get to go onto the site. This would ensure quality, and websites could compete based on who does a better job of it. A good recommendation and review system would do the work of marketing, and even allow better marketing for books that wouldn’t get much budget under the current system.
There is one other alternative, this one doesn’t cut costs by much, but gives more value for the money spent by customers. Authors could work to form their own communities of fans who are their patrons. By interacting with fans through blogs and community events, authors could nurture a group of people who will support them personally and ensure them a living. This could be done simply through selling books, short stories, audio books, and other things, or even by charging a yearly fee to get access to creative product as it rolls out. The benefit to fans isn’t just the product, but the relationship with the author and the feeling of supporting another person’s art. Wil Wheaton is an excellent example of someone who is successfully doing this right now. The personal-feeling relationship that he has with fans through his blog and podcast allows him to sell product that a publishing house wouldn’t take on, and probably for more money than he could without that relationship.
Digital media allows us to break down many traditional barriers. It gives everyone a voice. This can be a bad thing, as the most wonderful voices can get lost in the chorus, but that doesn’t mean that we should run from it, or try to hold on to the old ways of doing things. By looking at how to get to the same result, good books for a reasonable price (for both consumers and authors), instead of trying to find a workaround to keep the old system in place, we can make sure that e-books provide a wonderful new home for authors and others in the industry. But it will be different than it has been; it needs to be, and it can even be better than before.
