99 Cent E-Books and the Tragedy of the Commons

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PassiveGuy
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99 Cent E-Books and the Tragedy of the Commons

Post by PassiveGuy » April 19th, 2011, 11:00 am

I found Nathan's post about the tragedy of the commons very thought-provoking. However, the thoughts it provoked did not agree with Nathan's.

Here's part of a blog response I posted:

In the present US market (and I suspect elsewhere), if you consider the number of times a book is read most of those “readings” generate no revenue for publishers, authors or bookstores. How does this happen? Somewhere authoritative (can’t locate at the moment) I read that two-thirds of all the books people read don’t cost them anything because they’re borrowed from libraries or friends.

If you had a problem giving books away free, you would never, ever sell a book to a library. In fact, you would never sell a printed book to anyone. You would license each book and limit its use to the original purchaser. Every major software company on the planet does this. To be clear, Passive Guy is not advocating this, he’s just demonstrating that Big Publishing gives away most of the “readings” it sells for free.

Absent the type of copyright license I mentioned, a printed book is inherently a delivery mechanism that encourages multiple people to read a given copy of the book. After a single read-through, the book is almost like new. Even the most cheaply-produced paperback is good for 20-25 free reads.

I don't want to insert a massive forum post here, but one of my main points is that if you look at the scope of the book market by the number of hardcopy books sold, you're missing the total number of times the books are read. With ebooks and the limitations on lending, you're getting paid for most of the times each ebook is read. You can read the rest at The Passive Voice - http://www.thepassivevoice.com/04/2011/ ... a-library/

Doug Pardee
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Re: 99 Cent E-Books and the Tragedy of the Commons

Post by Doug Pardee » April 19th, 2011, 11:48 am

PassiveGuy wrote: If you had a problem giving books away free, you would never, ever sell a book to a library. In fact, you would never sell a printed book to anyone. You would license each book and limit its use to the original purchaser.
This used to be done until 1908, when the US Supreme Court ruled in Bobbs-Merrill Co. v. Straus that the copyright owner's right to control the disposition of a book ended after the first sale (usually to a wholesaler):
The US Supreme Court wrote:To add to the right of exclusive sale the authority to control all future retail sales by a notice that such sales must be made at a fixed sum would give a right not included in the terms of the statute, and, in our view, extend its operation, by construction, beyond its meaning, when interpreted with a view to ascertaining the legislative intent in its enactment.
The Copyright Act of 1976 codified this "First Sale doctrine" into US copyright law at 17 USC 109(a):
... the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy ...
There is no equivalent law — case or statutory — relating to downloaded digital products. Furthermore, the 9th Circuit Court of Appeals has made a couple of decisions (Omega v. Costco, 2008, reviewed in 2010 by the Supreme Court with a 4:4 non-decision, and Vernor v Autodesk, 2010) that undermine the First Sale doctrine for physical copies of copyrighted material. In Omega the 9th held that copies produced outside of the US are not protected by the above-mentioned 17 USC 109(a) because they weren't "made under this title", and in Vernor the 9th held that end-user license agreements (EULAs) have precedence over the First Sale doctrine.

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Re: 99 Cent E-Books and the Tragedy of the Commons

Post by PassiveGuy » April 19th, 2011, 1:00 pm

Good points, Doug. I didn't think about Bobbs-Merril, et al., since I was in full-flight toward my idea about how many free reads are included in the sale of every printed book.

Maybe this is a good argument for never selling a printed book to anyone, period. :)

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Re: 99 Cent E-Books and the Tragedy of the Commons

Post by J. T. SHEA » April 19th, 2011, 10:51 pm

Interesting, but 'somewhere authoritative' does not sound very authoritative to me. And hardly any of my thousand or more books has ever been read by anyone other than me. And some of them not even by me yet. Or maybe ever.

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Re: 99 Cent E-Books and the Tragedy of the Commons

Post by ClaudeNougat » April 21st, 2011, 5:35 am

True, some people are very possessive about their books and even afraid of lending them out to friends (you see them type in their name and address in block letters on the first page!), but from a technical point of view, what Passive Guy says remains true: the striking difference between the two distribution mechanisms - the paper print vs. the digital - is that the former can be read many times, particularly if it belongs to a public library, while the latter belongs to the e-reader owner. Some lending mechanism exists, Amazon has put one up but for a limited period of time (15 days) and nubmer of times (only once). That may yet change, but for the moment that's the way it is.

And it has big consequences on the market. It means that the famous $0.99 price that so scares the publishing industry can be effectively used as a marketing device: it appeals to impulse buyers - thus expanding the market faster than, say a $20 hardcover: that's obvious! - but more importantly, it makes books available to a whole new audience. I'm thinking of all those teen-agers who received e-readers at Christmas from their parents. They have limited pocket money but they DO want to load up their e-readers - they are the ones buying the likes of Amanda Hocking, no doubt about it.

And hopefully they will be the readers of the future: for the first time, teen-agers don't have to go to the bookstore with Mum and Dad to buy a book and then find a title foisted upon them. They are finally free to choose for themselves! So I'm pretty optmistic about what the e-book revolution and the $0.99 price can do in expanding the future book market!

For more on this argument you can go to my blog Claude Nougat It's Political, it's Artsy! http://claudenougat.blogspot.com

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Re: 99 Cent E-Books and the Tragedy of the Commons

Post by PassiveGuy » April 21st, 2011, 6:24 pm

Claude - Good comment, but you short-changed some of the points you made in your blog. The link to the specific post is http://bit.ly/he3het

I particularly liked the point about "probably the most intelligent thing about ebooks is that famous $0.99 selling price."

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Re: 99 Cent E-Books and the Tragedy of the Commons

Post by J. T. SHEA » April 21st, 2011, 6:38 pm

But, as I and others have pointed out elsewhere in these Forums and on Nathan's blog, the best-selling e-books are as much or more expensive than mass market or even trade paperbacks. It seems readers value such e-books more than some writers do!

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Re: 99 Cent E-Books and the Tragedy of the Commons

Post by PassiveGuy » April 21st, 2011, 7:12 pm

J. T. SHEA wrote:But, as I and others have pointed out elsewhere in these Forums and on Nathan's blog, the best-selling e-books are as much or more expensive than mass market or even trade paperbacks. It seems readers value such e-books more than some writers do!
I just checked Kindle's Fiction Bestseller List:

#1 - Water for Elephants - Kindle $4.17, Paperback $4.39
#2 - The Lincoln Lawyer - Kindle $7.99, Paperback $10.51
#3 - Vegas Moon - Kindle $0.99, no paperback
#4 - The Sixth Man - Kindle $14.99, no paperback, Hardcover $14.28 (the two most recent reviews are one star and complain about the high Kindle price)
#5 - The Innocent - Kindle $0.99, no paperback
# 6 - Something Borrowed - $7.99, Paperback $8.99
# 7 - The Fifth Witness - Kindle $12.99, no paperback, Hardcover $14.28
# 8 - A Game of Thrones: A Song of Ice and Fire: Book One - Kindle $8.99, Paperback $10.36
# 9 - The Hunger Games - Kindle $5.00, Paperback $8.99
# 10 - The Paris Wife: A Novel - Kindle $12.99, no paperback, Hardcover $13.49

So only one book, The Sixth Man, had a paper version that was less expensive than the Kindle version and that one was rated at 2.5 stars. I noted the two one-star ratings. One of the best ways to get a bunch of one-star ratings is to price the paper version above the Kindle version. All the paper versions were at Amazon's price because of the free shipping, so that's a net price to the buyer's door.

I did a quick check of the top 10 Amazon bestsellers in Non-Fiction and only one had an Amazon hardcopy price lower than the Kindle price.

The only list where I found any significant number of books with higher Kindle prices was the NYT Trade Paperback bestseller lists, which always show signs of serious book cooking - See http://www.thepassivevoice.com/02/2011/ ... stsellers/

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Re: 99 Cent E-Books and the Tragedy of the Commons

Post by J. T. SHEA » April 21st, 2011, 7:46 pm

Interesting, PassiveGuy, but I never said the e-books were more expensive than a paperback OF THE SAME BOOK. In particular, I don't expect many publishers to launch a mass market paperback at the same time as the e-book.

Six of the ten e-books you list are as or more expensive than a typical mass-market paperback. Three are more expensive than a typical trade paperback. One costs more than the hardcover. Two cost 99 cents.

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Re: 99 Cent E-Books and the Tragedy of the Commons

Post by PassiveGuy » April 21st, 2011, 9:10 pm

J.T. - You are so right. My great uncle sells mass market paperbacks for 25 cents every few months in his driveway, which shows that . . . let's see . . . which shows that Amanda Hocking's readers value her ebooks more than my great uncle values his mass market paperbacks. Or something.

You don't think the publisher can and will push the price of the ebook down if and when it launches a mass market paperback of the same title? What's the "cost" of launching a mass market ebook? 30 seconds changing the price on Amazon. Someday soon, one of the Erbsenzähler in Gütersloh is going to ask Random House what the profit margin is on a mass market paperback compared to a mass market ebook and what the profit implications would be if RH just kept the employee who changes prices on Amazon, fired the rest and sublet another hundred thousand feet in Manhattan.

Publishers are circling the drain trying to support their legacy business. The price of books is getting pushed down and, unless the bean-counters move fast, the cost structure of large publishers will take them under, particularly as their top writers realize they can make much more money self-pubbing. Those low-cost mass market paperbacks, paying royalties of 6-10%, are a particular rip-off of a top writer. Even for auteurs who look way down their noses at Joe Konrath, the fact that Joe makes $2.09 for every trashy $2.99 ebook he sells and they make 60 cents (less agent's fee) for every $5.99 mass market paperback they sell, will eventually make them wonder if they're in the right business.

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Re: 99 Cent E-Books and the Tragedy of the Commons

Post by J. T. SHEA » April 22nd, 2011, 1:33 pm

PassiveGuy, what's a 'mass market e-book'?

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