According to USA Today, the percentage of people who are paying for copies of Stephen King serialized novel The Plant are slipping — only(!) 70 percent of those downloading chapters of the novel are paying the $1/chapter.
First, $1/chapter is a bit pricey, except for the fact that King has said if he makes it to the 8th chapter, all subsequent chapters will be free. Eight dollars isn’t bad for a novel, but note that it’s probably more than you’d pay for the mass paperback version of a King novel.
Second, this illustrates the importance of expecations, and the bottom line is many intellectual property rights owners have unrealistic expectations of where the profitabilty of books and music are headed. Look at the bottom line — 172,004 people paid $1 for the first installment of the novel, and 74,373 paid $1 for the second installment. Assume that for the next six installment readership falls a bit and averages 50,000 paying customers per installment. That brings gross revenues from the venture to almost $550,000. Even assuming King has insanely high overhead costs of 50% of revenue, that’s still a profit of a cool quarter of a million dollars. I don’t know what King’s book contract looks like, but most people I know who want to be authors would be very happy to make $35,000 to $40,000 a year (the bottom line is that most books don’t sell, and writers don’t make much money unless they can sell in King-like numbers).
What the Internet will do is make it able for me or someone else to make the smaller levels of income independently of large publishers. For King and others in that upper stratosphere, however, they’re incomes will almost certainly fall (though some of them might be willing to accept that in exchange for the sort of control they have by selling their own work).