Thursday, January 3, 2013

Why I Believe 99 Cent E-books Are Bad for Authors and Readers


(Note: After rereading this, I want to make one clarification. I've read lots of free e-books where the author took an old, possibly out of print, book and put it up for free as a way to hook readers. I totally get that. They've already made most of their money on it, and it's a way to say thanks and introduce themselves to new readers. Makes all the sense in the world. My comments below are really focused on why a 99 cent price point is unsustainable for new books, and why the expectation of buying all e-books at that price is bad for books and readers. Okay, carry on.) 
Yesterday I posted a Facebook status which said something like, “I’m really glad the $0.99 e-book trend seems to be fading away.” I had a lot of people agree, but I also had a lot of people question my reasoning both on and offline. They brought up some very good points. “Of course you don’t want books to sell for ninety-nine cents; you’re an author.” “I’m on a tight budget, so I like ninety-nine cent books.” “Ninety-nine cent books are a great way to see if I like an author.”
As I said, these are perfectly reasonable responses. Everyone likes cheap stuff, almost everyone is watching their money, and ninety-nine cents isn’t much to spend on a book—even if you hate it. As an author, the temptation is great to price your book low. Especially if you haven’t built up much of a following yet. It’s exciting to see your book jump up the Amazon lists—even if your book is free.
If you sense a “but” coming (was the blog title a giveaway?), you are right. I am going to argue why I believe $0.99 e-books are generally a bad thing for readers and writers alike. If you think this might offend you, feel free to stop reading now. I promise we’ll still be friends. (Actually we’ll still be friends even if you read on and completely disagree.) (Unless you get mad and egg my house.) (And even then we’ll still be friends if you say you are sorry and bring me cookies to make up for it.)


Okay, let’s start with a story that won’t apply to you if you don’t live in Utah. But stick with me and you’ll see how it does end up applying even to you.
About thirteen years ago, a guy name Richard Dutcher made a movie called God’s Army. There were two cool things about this movie. One was that it was a movie about Mormons by Mormons that didn’t rip on Mormons. Two, it was a well-made movie and a commercial success. I was living in California at the time and was thrilled to see something like this in regular theaters.
The success of God’s Army immediately spurred a lot of other LDS filmmakers into action, and a bunch of “Mormon” movies hit theaters quickly thereafter. Unfortunately, the filmmakers quickly discovered that it’s hard enough to make money on a movie with a wide audience and heavy financial backing. Your target audience for Mormon movies is primarily Mormons in a fairly small population state, so it’s tough to make money in the theaters. Most of the films that came out after God’s Army lost money.
What to do? Well a group of entrepreneurial souls realized that if you made your movies cheaply enough, you actually could turn a small profit. What followed was a whole bunch of what could at best be called Mormon B movies. I won’t name names, but if you live in Utah or follow Mormon movies. You know what I am talking about.
The scripts were fluff, the acting was mostly cheesy, and the special effects/lighting/editing were weak. But they made money. Eventually though, people got wise to these movies and quit going to them. Why spend your time on a cheesy Mormon movie when you could watch a good big budget film?
So, what does this have to do with books? Well let’s start with some numbers.   Scott Laming of BookFinder.com Journal quotes a Money Magazine article about the costs of producing a Grisham thriller with a $27.95 list price.

$3.55 - Pre-production - This amount covers editors, graphic designers, and the like
$2.83 - Printing - Ink, glue, paper, etc
$2.00 - Marketing - Book tour, NYT Book Review ad, printing and shipping galleys to journalists
$2.80 - Wholesaler - The take of the middlemen who handle distribution for publishers
$4.19 - Author Royalties - A bestseller like (John) Grisham will net about 15% in royalties, lesser known authors get less. Also the author will be paying a slice of this pie piece to his agent, publicist, etc.

Most books are sold to major chains for 40 to 50% of the list price, so a $27.95 book sold to “Big Books Inc” for $14 minus the expenses above of $15.37 above would actually lose $1.37. Now we know that publishers aren’t losing money on Grisham.  Partly because he sells so many books that eventually he pays off many of the upfront costs. We also know that most authors aren’t getting $2 a book in marketing or 15% hardback royalties.
But what I want you to notice is what a small percentage of a book the actual printing and distribution is, ($5.63, even in hardback) and what a big percentage the rest of it is ($22.32).
Let’s say your publisher sells their e-book for $0.99. I’m not an Amazon expert, but I believe Amazon pays 35% on any books sold for under $2.99. So, the publisher gets about thirty-five cents per book. And let’s say, the book does amazingly well—best seller well—and sells 100,000 books. (FYI, this is NYT bestseller good.) The revenue is $35,000 on a bestselling book to pay editors, marketing, sales, art, royalties—everything except paper, glue and shipping. $35,000 honestly wouldn’t even cover the advance on a book that sold this well.
Okay, let’s change the argument. So maybe big publishers can’t sell their books for $0.99. That’s only because they are so bloated with expensive New York buildings and high salaries. (Tell that to an editor and listen to them laugh.)
Fine. Let’s take Joe Blow who is going to write and publish his own book. First of all, he writes the book. Let’s say he can write 500 words an hour, and let’s say his book is 70,000 words long. That’s 140 hours, just to complete a first draft. Can we pay him $10 an hour? I mean, you can make that in a lot of fast food places. Isn’t it a fair wage? Cool, that $1400. Now he needs an editor. The going rate for a good editor is about $2 a page. A 70,000 word book is about 280 pages, or $560. Once he gets that back, he needs to spend at least another 40 hours on editing. That’s $400. And a cheap cover is about $200.
Okay, so Joe has now invested $2560. In order to break even on his time and money spent, he needs to sell 7300+ books. Want to guess how many authors sell over 7,000 e-books?  I guarantee you, it is not very many, and even fewer of them are self-published.
So, how does a self-published author make it work? Well the first thing to go is the professional editing. If you are selling your book for what amounts to thirty-five cents, are you really going to pay someone over $500 in advance? And $200 for artwork? Heck, download a couple of free images, use a cheap software package, have some friends give you feedback, and voila, you have a book.
This is starting to sound like those B Mormon movies isn’t it? There are a few ways you can sell your book for $0.99.
1)                          Lose money. Hey, at least people are reading your book, right? Maybe all those people who downloaded your $0.99 book will buy your $9.99 book? Or maybe they’ll buy someone else’s $0.99 book instead.
2)                          Take a book that was traditionally published and which you now have the rights to and sell that. This actually works, because all the costs were covered by the publisher. Just hope that your readers don’t expect your next book to be $0.99 too, and the next, and the next.
3)                          Sell a million books. That’s $350, 000 and you’ll probably land a big book deal too. Author X says it’s perfectly possible over on his blog.
So, if you have a traditionally published book, or sell tons and tons of books, selling your title for $0.99 might be a good idea. But for most people, especially publishers who DO put all that time and money into a title, it’s a losing proposition—unless it’s a back title and they’re basically giving it away to promote the next book.
But what about for readers? Why are $0.99 e-books bad for readers?
Let’s start with money again. $0.99. That’s a good price. You throw down $0.99 for a small hamburger or a large drink at McDonald's  Why not try a book for that price? How long does it take you to read a 70,000 word book? Ten hours?  Is your time worth anything? Let’s say it’s worth as much as the guy selling you the hamburger. That’s $100 you could be earning while you read the book. If it’s a great book, awesome. Enjoy those ten hours.
But what if you could have been reading a better book? A book that was really awesome, that took you to another world, enlightened you, and maybe even taught you something? And let’s say that book cost $9.99. You basically saved $1 per hour by reading a book that wasn’t as good.
“Wait!” you scream. “Are you saying all $0.99 books are bad? Or that all $9.99 books are good?”
Nope.
But what I am saying is that your chances of having a $0.99 book be worse that a $9.99 book are very high? Why? Because every single author I know of, no matter how amazing, does a minimum of two rounds of edits on each book they write. I usually do closer to ten. And the book they end up with after all those edits is exponentially better than what they started with. The book was hammered, sawed, polished, revised, polished again, and polished again before it came out.
Most $0.99 books are not. Period. End of story. The authors might be great. But their books did not get the loving work necessary to craft a great product that you could love and reread for years. Would you hire an electrician to fix your car’s wiring for $0.99—especially with no guarantee? Would you eat a $0.99 T-Bone at the local diner? Would you expect the $0.99 cut of meat at the butcher’s to be the same quality as the $6.99 cut?
No you wouldn’t. Yes, you can find some cool stuff at the dollar store. I seriously do not want to know how they make some of it so cheaply. But I wouldn’t buy anything I cared deeply about there. I wouldn’t buy anything that I planned on investing ten or more hours on.
Now let’s clear up a couple of myths.
Myth 1—Why would I spend more than $1 on an author I don’t know? It’s too big a risk. First, how many movies do you see that cost more than $1? Are you guaranteed those will be great? No, but I’ve read reviews. Read reviews of the books you buy. But what if I don’t like the writing? Almost every e-book I’ve seen lets you download a sample. For free. Can you imagine a movie saying, “Here, watch the first fifteen minutes. If you don’t like it, just leave and pay nothing.”
Myth 2—I can’t afford to spend more money on books. Go to the library. Check out a really great book for free. You’ll be reading something good and it won’t cost you a thing. Then, when your budget isn’t so tight, you can buy some of the books from the authors you’ve come to love.
Myth 3—Why should I pay $9.99 for a book when the print version is only a couple of dollars more? Well, if the print version is close to the same price, don’t buy the e-book. Buy the print version. Sometimes you get some really great deals. Amazon had a special where I got the latest Diary of Wimpy Kid book and Killing Lincoln for $2.99 each—with free shipping. Yes, I jumped on that. Who wouldn’t?
In fact, even better go buy the print version at your local independent book store. They have awesome people, great recommendations, author events, and we really need to keep them in business.
But don’t not buy the e-book because it isn’t enough below the cost of the print book.  Remember that number up above $5 and change? That’s the sum total difference between the print book and the e-book. And as more people buy e-books, more of the production costs have to be covered by the electronic version.
A print book gives you something you can put on your shelf and share with your friends. An e-book gives you something you can load with 100 other books on your e-reader and take anywhere. Each of them has different benefits. But the bottom line is that what you are buying is the story, not the medium. I fully expect that both mediums are going to end up being a few dollars apart most of the time.
Myth Four—A book shouldn’t cost more than $0.99, and I won’t buy anything that’s more. That’s actually not a myth at all. If you feel that way, you will find plenty of books for under a buck. You’ll find as many or more that are free. And if you buy your reading material the same way you buy your generic cereal, go for it.
This really is not to be mean in any way. I know there are plenty of people for whom it’s not as much about quality as it is quantity. You would rather have ten mediocre books than one good one. You’d rather see ten okay movies than one good one. If you don’t mind buying a few clunkers, then go for it. There is a reason several authors made a ton of money selling quickly produced books for under a buck. And who knows? You may like them every bit as much as the books that are more expensive.
But just remember, quality has a price. It does in clothing. It does in houses. It does in cars. It does in hotels, piano lessons, pedicures, and yard care. If you spent much more time and produced a higher quality product that someone else, wouldn't you feel justified in charging more for product or service?
If you understand that better quality is worth a little more in everything else you buy, why should it be different in books?
And if, heaven forbid, books ever do get to the point where the only way to make a profit is to turn out a quick and crappy product, the good news is that at least the people who have been only buying cheap books for years won’t see any difference. 

19 comments:

CTW said...

It never ceases to amaze me how smart you are. Maybe I'm just easily impressed, or maybe you truly are genius. Only those willing to spend more than .99 on one of your books will know for sure.

Cheri Chesley said...

I'm not going to say I agree with you completely, because doing so would make me hypocritical, but I do want to say I like the way you think and wish everyone thought this way. Why? Because, if they did, I think my books would sell better. :)

Seriously, though, I have lately been collecting free ebooks--and the writer in me feels guilty every time I do. I WANT to pay these people for their work, but right now if I want to read anything new it has to be free. Recently I came across one so terribly edited I had to stop reading. Another had me so enthralled I'm putting up glowing reviews everywhere the book is sold. It's a gamble, and it's the same with 99 cent books.

As a writer, the only thing I've posted free or 99 cents is my super short story because it's less than 5k words. I didn't put a ton of effort in to that one, and it gives readers a sample of my writing. I like the idea of listing a book for 99 cents briefly as part of a sale or something like that, but not something I've put over $1k into creating. Which doesn't factor in my per hour pay. But, then, I struggle over how to get the right kind of exposure and sell more copies of my $4.99, $3.99, and $2.99 ebooks.

At this point, I figure if I just keep writing I will eventually hit the market just right. But I have to write what's in me. I can't write to please the masses. If that never brings me a bestseller,then so be it.

J Scott Savage said...

Ahh, thanks Carole. Cheri, I totally get where you are coming from. I've bought plenty of books this year (can I HIGHLY recommend The False Prince among others?), but I've also downloaded some free books that looked interesting by some pretty big name authors. But all of them were books that had been previously published and sold before.

The key with putting out your own work for free or close to it, is making sure it's what you want representing you to new readers. People are almost never going to say, "Well that free book wasn't very good, but I'll buy one because that one will probably be better."

Daron D. Fraley said...

Good post. Well thought out, and right on the money (pardon the pun) as far as publishing expenses go. I can think of one place, however that the 99cent and 1.99 ebooks are warranted... even necessary: The short story and the novelette.

If I sold my 7500 word short story collection for more than that, people would feel cheated, I think. I have one collection of three stories listed for free (priced at 99cents, but reduced), and another, longer one, listed at 1.99.

My hope has been that the free one would gain readership, and the 1.99 one wouldn't make anyone mad that it's so... short.

J Scott Savage said...

Completely agree, my punny friend! (Not to be confused with my puny friends.)

The only negative thing I've seen on those is when the author doesn't make it blazing in big lights clear that it is a short story. Then you get the obligatory "this isn't a book, what a ripoff" comments.

Daron D. Fraley said...

Very true. A short story, or short anthology, or novelette, needs to be marked as such.

You know, if some of the ebook retailers weren't so incredibly draconian about their tags and keywords (cough... Amazon), it would be easier to mark them correctly.

Diana Fourall said...

I totally see where you're coming from--don't get me wrong. But I'm also a freakishly fast reader (as in 70,000 words in maybe two hours fast), so buying cheaper books isn't as big an investment for me. And some of the best books I've ever read were $0.99 e-books. It's definitely a gamble, but from my view it's a gamble that's worth it.

Heather B. Moore said...

I've downloaded some free & 99 cent books, but they usually just sit there and don't get read. Unless it's an author I know (who happens to be doing a promotion), or unless I get totally drawn into the story, I'll just skip the book and go onto the next one.

J Scott Savage said...

Yeah, that's been my experience too Heather. I wonder how many people, like Diana, are actually reading the books they download and how many are just sitting on the e-reader?

As an author, you might see a ton of downloads of a free e-book and think, "Wow, look at all the followers I'm getting." But if the free books don't translate into sales of the rest of your books, does it really mean anything?

Lauren said...

Good points. I've seen these arguments before (along with the "pirating gets you free publicity" arguments). What is amounts to is that people value what they pay for--and what they don't value, they don't want to pay for.

I get most of my books from the library, and if I like it enough to read it more than once I'll buy a copy.

Lauren

Jenny P. said...

I like to recommend Amazon Prime... not only do you get the free 2 day shipping on orders from Amazon, you also have access to the Kindle Lending Library, which gives you the opportunity to check out books for your kindle. You keep it until you finish, then return it so you can check out a new one. Not all books are available at any given time, but I've never struggled to find something of good quality, that would generally be $9.99 or more if I purchased, to check out. Most local libraries also have digital lending programs so if you really, really can't afford to pay full price, there are alternative ways to read without compromising the integrity of the industry.

And that's what frustrates me about .99 books. Of course, I acknowledge the exceptions you've noted and agree with you. But I also agree that most of the time, cheap books do nothing but cheapen literature in general. For example, I once purchased a self published .99 ebook at the recommendation of a friend. While reading, I was appalled at the number of blatant grammatical errors, even misspellings that I would scold my eleven year old for. I went and read the reviews, curious to see if others noted the errors, and was surprised to find many reviewers saying things like, "It was full of mistakes, but the story was good, so for .99, I'm willing to ignore them." What? How? Why?!!! Is that what we've become? Very frustrating, for sure.

J Scott Savage said...

I'll have to check that, Jenny. I've got Amazon Prime, but last time I checked it seemed like there were a few big name books and everything else was Indy (not that Indy is bad.) Is that not the case?

Amber Argyle, author said...

I'm an indie author now (traditional before). I pay for an editor, cover art, formatting, etc. I'm a better writer than when my first book came out with a publisher. I can't afford to price my books at 99 cents. Mine are priced at 4.99. And I'm making about 2 to 3 times as much on the indie book as the traditional book.

My newest book is up on Amazon Prime right now. So far, my sales are up.

Calvin Oats said...

When do you think you can get you're next chapter for air keep out?

Just asking

old mac donald said...

I will never, ever buy an ebook for any more than 99 cents. Period. OTH, I may buy $5 worth a week at 50 cents.

The cheaper, the more. Why? Simply put, either the hobby is worth it, or it is not. So, at 50 cent a pop, I can risk bad books, I can buy them for family, etc. At $3 a book, I am getting maybe one book worth reading for every $20 spent. Clearly, not worth the RISK.

I will continue to go to the library, until a risk free price point is reached.

J Scott Savage said...

That is absolutely your right. If the most important thing to you is getting the most books for your money, then you probably shouldn't pay anything for a book. There are plenty of free books. You can also only listen to free music, watch free movies, and find your food in dumpsters.

As I said, I'd rather pay a fair price for a great book, then a low price for a bunch of lower quality books.

Elizabeth Bolyard said...

First I would like to say I love Farworld, however, I have a problem with your logic, I can read very quickly. basically a book a day on weekdays and 3 to 4 on a weekend day (total 8 and that's working a forty hour week) so while I believe most author deserve the cover price for books I simply cannot afford $80 a month on books, so for me a 99 cent or free book is a major blessing. and i know your going to say go to the library the library only has so many book and very rarely are they the new releases that we wait sometimes years to read. Now let me ask where are we poor speed readers suppose to look for read material if don't occasionally reduce the price of your books to make them obtainable quickly and cheaply? Lastly thank you for letting me into your imagination.

J Scott Savage said...

Elizabeth,

Four books in a day? Wow! I did that once, but I think they had titles like One Fish Two Fish and The Cat in the Hat.

I do think there are lots of times when a $0.99 e-book makes sense. And you are obviously getting your money's worth.

But it's still next to impossible for most authors to earn more than minimum wage if only their $0.99 books are purchased.

BUT, if everyone read as fast as you, that might totally change! :)

Thanks for the comment.

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