May 11, 2011
Every year, my friend Ben DuPont and his colleagues gather fifty or sixty interesting people in a room for what they call the Non-Obvious Dinner. Participants eat for free, but there’s a catch: everyone has to bring along — and be prepared to defend — a prediction of something significant that they expect to happen within the next ten years. And that prediction can’t be something we can all see coming from miles away.
As a serial entrepreneur — and most recently as president of Yet2.com, a marketplace for trading industrial patents — Ben has a big stake in the future. But, then again, who doesn’t?
More to the point, Ben is one of those guys who not only tries to predict the future — he sets out to shape it.
I think of Ben’s Non-Obvious Dinner when I think of e-books. There are plenty of predictions for what will happen in book publishing’s future: fewer bookstores…greater market share for e-books…more interactivity…e-books as advertising platform, etc. I’ve made a few of these predictions myself, but all are pretty obvious to the thoughtful observer.
Yet, though much continues to be written about the impact of e-books, there remain a few aspects of this medium that I think have escaped much notice — or, at least, much chatter. Here are my…
Four Non-Obvious Aspects of the E-book Revolution
1. Dynamic Pricing
There has been a vast amount of handwringing — and justifiably so — about the great race to the bottom that seems to be affecting e-books. (I’ll likely discuss the pricing of Primacy in another post.) E-books started out mostly priced like trade paperbacks but quickly fell below the price of most mass-market paperbacks, and we now see them trending south of five dollars in many cases, sometimes as low as ninety-nine cents. To make matters worse, many of these e-books are competing directly with comparable hardcovers.
These pricing trends didn’t come out of nowhere. For years now the false mantra that “information wants to be free” has had the upper hand against “you get what you pay for.” Exacerbating this insanity: since the Internet arose, writers hungering for attention have completely given away most blog product (and other forms of written expression) in hopes they can monetize their efforts somewhere further up the food chain. But this great giveaway has resulted in little but lower price expectations for much written work that people used to be willing to pay for.
This craven yearning for attention at the cost of any possible livelihood provides a staggering lesson in futility. It’s the opposite of greed-driven crony capitalism but worse than socialism. It’s more akin to the desperation of a worn-out ten-dollar whore who soon learns that no price is low enough.
(I’m not pointing fingers, by the way, unless I’m looking in the mirror. After all, you haven’t paid to read this post, have you?)
But the mechanism that enables one to price an e-book under a buck has a silver lining. It means you can price an e-book however you want whenever you want. It empowers you, in other words, to price to what the market will bear on an hourly basis if you wish, to maximize revenue in the context of factors besides price.
The airlines, of course, have been doing this for a long time, based upon the scarcity of seats on a given flight. Computer maker Dell has done this on a real-time basis depending upon the availability of component parts in their suppliers’ warehouses.
Unlike airline seats and computer parts, the supply of an incremental e-book is infinite. But demand is quite elastic. With paper books, the price is affixed to the book and if an expected publicity hit doesn’t come along — well, the price is still the price until the book gets remaindered.
In e-book land, however, say as an unknown author that you remainder-price on Monday because few people are buying, but then Oprah suddenly invites you onto her show that Wednesday. There you are, Wednesday morning, waiting in the green room, and you’ve magically repriced your book higher in anticipation of making a killing.
That’s dynamic pricing — a way to stoke demand and maximize profitability in the same week.
2. Supply Elasticity
Publicity, by its very nature, is a hit and miss affair. Sometimes you get a big placement and nothing happens. Other times a small placement goes three times around the world before the printer can get his pants on.
The problem with this serendipity in the past has been that a big publicity hit might come along when there were very few books in the distribution channel (i.e. In bookstores and other retailers or in their warehouses). If the book goes out of stock, retail customers can place orders and wait for the reprint, but it’s a well known fact that some people don’t desire to wait. In that case, with printed books, some of the sales follow-through on the publicity opportunity is lost.
With e-books, on the other hand, there is total elasticity of supply. A customer sees the publicity hit and need one book: she gets it now. A million people see the publicity hit and wish to buy the book: they all get it now. Pure follow-through. One hundred percent opportunity capture.
3. More Buying But Less Read-Through
If you have an e-book reader you may have observed two phenomena. First, because you can buy the book without leaving your house and have it minutes later, you tend to purchase more books.
But, second, as a corollary, because you have hundreds of books in your hand at the same time, you are greatly tempted to abandon boring books sooner than you would have in the past, because the promise of another book lies just two clicks away.
So people will abandon books they’re reading sooner because it’s so easy to do so. But they’ll be purchasing more books, too, and for the very same reason.
Bottom line: more books bought, less reading completed.
4. Story Remains King
We’ve been told that the Internet and action movies and video games and TiVo are leading to shorter attention spans. I don’t know if this is true in the arc of history. If you were the farthest guy from the fire when the poet was narrating The Iliad or Beowulf, and an arrow or a wild animal or a dragon could pick you off at a moment’s notice, what kind of attention span did you have then? Isn’t that why those stories are models of structure and economy?
Maybe we’re coming back to the place where stories used to be, when the only claim that writers had on readers’ attention at any moment was the claim they earned sentence by sentence, paragraph by paragraph (or stanza by stanza).
In this way, we may find, the e-book returns story to its well-earned throne.
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