One of the things I have always been fascinated with is products that get a lot of financing and support from the business end but then flop in the marketplace. From movies to computer programs to web sites I keep running into these failures and think “Didn’t they try to watch this movie or use this product? Surely if they had, they would have done something differently.” A big part of a lot of the failures is precisely the inability for the company to at some point put itself in the position of the consumer and ask, “If I were in the market for a product like this, would I really find this useful?” And, on the other hand, the times I find products that really excite me are when the people producing them are the same people who are using them.
One of the markets, for example, where I think companies are fundamentally misunderstanding consumers is in the emerging e-book efforts. I am interested in this since I have been working on a couple books over the past year that I have decided I will end up releasing as e-books. Like most authors I’d also like to get compensated for my efforts. On the other hand, I’m also an avid reader and most of the e-book offerings today do little for me since they fundamentally misunderstand how I, as a reader, use a book.
Expensive Pricing. Many E-book retailers are apparently going to try to charge prices for E-books that are close to what consumers would pay for a hardcover book at a retail outlet. This is crazy. Have publishers forgotten the lessons of the mass market paperback market? E-books will likely maximize their revenue when they are priced low enough that they compete with mass market paperbacks for price. At that point, the incentive to pirate E-books also declines.
Limited Formats/Encryption. One of the things I hate about current E-books is the move to proprietary standards in an attempt to use digital rights management schemes to make it impossible to copy the E-book. Clearly publishers are worried about people pirating E-books, but again I think that is largely a function of high costs that will disappear with realistic pricing. Moreover, this completely interferes with legitimate uses by paying consumers. If I buy an E-book, I want to have instant access to it whether I am sitting at my work computer, my home PC, working on my laptop, or browsing my Palm while waiting in line at the bank. That means not only does encryption stink, but retailers need to make their books available in as many formats as possible. If I pay for an E-book, I want to be able to download it in ASCII, PDF, HTML, Microsoft Reader format, PDB format for the Palm, and even a WAP version if need be — the rule should be “support as many formats as is feasible” and let customers download the book in any or all of these formats.
Current Licensing Schemes Stink. I know few people who like the licenses software companies force on them, and even fewer who want to license book content, largely because such license are one way streets — they give the software or content company all sorts of rights while simulatenously absolving it of all liability. Today’s licensing arrangements are not all that different from the sort of contract a schoolyard bully offers his victim before stealing his lunch money. Why not change that and make licenses a positive thing? Specifically I would like to buy (and sell) a license for a book that includes essentially a lifetime subscription. The books I am working on, for example, are nonfiction. Many nonfiction books, if they become popular, tend to get revised and go through several updated editions. It will go completely against current conventional wisdom in the publishing industry, but for my money I want a license not only for the current content but also for any future revisions. Publishers could even use this as a substitute for the price discrimination exemplified by paper vs. hardcover. Sell me the current version of the book for say $5, but offer to give me a lifetime license for $10 if you are selling a book that is likely to be revised every few years. This would be an easy way to add a lot of value to electronic books compared to the physical versions (an alternative from the software world might be to offer the first edition of the book for say $7 and then subsequent editions for an upgrade price of $3, but the costs of managing who bought what version might be too high to make this worth it).
A still outstanding issue is what the role of publishers will be in E-books. I could be wrong, but I suspect they are probably doomed in the long run since once E-books take off, the economics really shift back to the individual author. Consider, for example, if I write a non-fiction book on the above model and charge $10. Over a 5 year period I revise the book substantially a couple times and manage to convince 5,000 people to buy/license the book. Assuming my overhead for things like credit card transactions, etc., are 5 percent, I have made $47,500 — a lot more than most authors make and on a book whose sales are probably not high enough to keep a traditional publisher interested.
On top of that, if I am smart enough to write said book and persuade about 1,000 people a year to pay for it, I’m probably smart enough to realize that I can enhance the value of the book by building a larger community around it, and getting together with authors of similar books to create larger meta-communities around a cluster of books. This is taking genre book marketing to the next level — whereas in traditional publishing if I write a book on say animal rights and two other publishers recently published similar books, the market is probably too saturated for my book. On the Internet, however, assuming all three of our books are of high quality, the existence of one probably ends up increasing the market of the other two given the possibility of low prices (i.e. I do not want to buy three $29.95 hardcover books on the topics, but if I am interested in the topic, three $9.95 E-books might be an excellent value).