Caution: vulgar money talk ahead.
Feb. 18th, 2011 01:24 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
alexandraerinA comment I read about how poorly the shareware model worked (as a profit-producing business model) in the nineties and a few other questions/comments I've seen and received about the concept of undervaluing or devaluing work has got me thinking.
At the end of the day, I think modern western society has sort of lost touch with how the price (and therefore, the value) of a thing is actually determined. I've thought this before, when the topic of consumer action or collective bargaining comes up. By and large, we can't go into a store and say, "$3.99 for Coke products in select varieties? Outrageous. I won't pay a dime more than $2.50." There are places where haggling is possible, but for most such transactions the person with whom you're dealing doesn't have any ability, authority, or incentive to cut you a better deal than is advertised. Chances are the person who isn't able to haggle with you also didn't negotiate their hourly wage or benefits, either. They came with the position as part of a package deal.
That's not to say that bargaining doesn't happen. It's just done collectively and often indirectly. The store's prices and wages are based on the perceived willingness of people as a whole to accept $x as a fair price for y.
To put this another way, content... like any other product or service... is really worth what the market will bear, which is fancy talk for "what people will pay for it".
With that held firmly in mind, though, it seems the answer to the charge that I'm de-valuing my (and by extension, the questioner's and everybody else's) writing when I charge a buck for it or give it away for free is "Yes, absolutely." Other people are saying that it's reasonable to expect people to pay $10 for an e-book and I'm saying "No, that's too high. Such a thing is absolutely not worth $10."
This is not true, though. I've already paid close to $10 apiece for electronic books that I knew were worth $10 to me, that I knew I would pay $10 for a copy I could carry around weightlessly and search and annotate in a way I'd be able make sense of later.
But here's the thing: once you've moved out of the market stall where you're dealing with individual people who each have a finite and measurable supply of money and a likewise definite interest and/or need for whatever it is you're selling, the question of "value" becomes a lot more complicated than "How much is the most money I can charge for this product and still have enough customers to make ends meet?"
And if you're an individual artist, author, or artisan, the answer to even that simple question is going to shake out differently than if you are a big company with the works of many creative folks to sell.
See, an important follow-up question to "How much will the market bear?" is "Which market?" For any e-book, there's a market that will pay $10. It's just not going to be a very large one.
Now, I feel like I could make a decent amount of money marketing my ~100 page book The Gift of the Bad Guy to my established readers for something like 5 bucks. People would pay that. With an established audience to sell to (that's one market), I might sell a thousand copies. That's like $4,600-4,700 dollars, after PayPal takes its fees. I'd still clear $4,000 even if I doubled the amount of money I've spent on sprucing it up a bit. And as I type this up, part of me is going "Wow, why didn't I do that? $4,000, just like that." And I know I could have done it. A thousand of you would have bought it for sure. Maybe not all at once but over the course of a year. That's as close to a lead-pipe cinch as one gets in this industry.
But as sure as I am of that, I'm also sure that the sales would be strong at the start and then fall off. A thousand over the course of the year, but most of them would be in the first month, and most of the remainder would be in the first six months. After that, sales would trickle in. And I'm planning on doing a lot of these little e-books, and if I were to just keep returning to the same well again and again and expect my existing readers to buy it, I'd never do as well as I did with the first one. The sales for each one would undercut the sales of the others and also dip into the MU-money. My income would go up, but not by much in the long run.
Especially as some number of people would have enough faith in my work to pay $5 for the book and ultimately be disappointed when it turns out to not be what they were expecting, or not be their cup of tea. They probably wouldn't be rude about it or anything. They'd just go, "Okay, well, I thought it would be money well-spent. Now I know better for next time."
This is part of how bargaining works in the modern marketplace, too... if we have no choice but to pay a fixed price for something, we'll often pay it even if we're skeptical, but base our future spending on how well it works out for us. It's the consumer's gamble. We all make it.
The way I'm doing it now, I don't have any confidence that The Gift of the Bad Guy will make over $4,000 for me in a year. None.
What I am confident of is the following three things:
To make a long story short*, I'd be selling the book for $5 a pop if I didn't value it more, if I didn't believe it were capable of doing anything but earning a quick-and-dirty profit by reaching directly into the pockets of my most devoted readers. I believe I can still count on selling a thousand or more copies to those readers, but that we'll all get more out of the experience if each of them can pay what they want, from the pre-release low price of $0.75 to the special $5 appreciation version. Some of the people who buy the 75 cent version will pay more for later books when they're more confident that it's worth it, or they have more money themselves. Some will be happy with what they got for 75 cents and keep it up. And you know what? I'll love them for it. I'm sure I can get thousands of people who are hooked on the books at the 75 cents price than I can get people who would buy them like clockwork at $5. It will take a while to get the LitSnacks audience built up to that level, but when it happens... okay, every one thousand people who buy a book at 75 cents gives me over $600. Two thousand is over $1,200. Three thousand is over $1,800.
Perhaps you begin to see how this adds up?
I'll have been doing Tales of MU for 4 years as of this summer. If I keep this LitSnacks concept going, then in 4 years' time I don't believe there will be any question about the financial value of my work. This isn't even addressing things like print sales, or sales from digital bookstores... I'm talking only my own direct sales.
How much do I value my work? So highly that I believe I can make money hand over fist selling it for $0.75 cents a pop.
At the end of the day, I think modern western society has sort of lost touch with how the price (and therefore, the value) of a thing is actually determined. I've thought this before, when the topic of consumer action or collective bargaining comes up. By and large, we can't go into a store and say, "$3.99 for Coke products in select varieties? Outrageous. I won't pay a dime more than $2.50." There are places where haggling is possible, but for most such transactions the person with whom you're dealing doesn't have any ability, authority, or incentive to cut you a better deal than is advertised. Chances are the person who isn't able to haggle with you also didn't negotiate their hourly wage or benefits, either. They came with the position as part of a package deal.
That's not to say that bargaining doesn't happen. It's just done collectively and often indirectly. The store's prices and wages are based on the perceived willingness of people as a whole to accept $x as a fair price for y.
To put this another way, content... like any other product or service... is really worth what the market will bear, which is fancy talk for "what people will pay for it".
With that held firmly in mind, though, it seems the answer to the charge that I'm de-valuing my (and by extension, the questioner's and everybody else's) writing when I charge a buck for it or give it away for free is "Yes, absolutely." Other people are saying that it's reasonable to expect people to pay $10 for an e-book and I'm saying "No, that's too high. Such a thing is absolutely not worth $10."
This is not true, though. I've already paid close to $10 apiece for electronic books that I knew were worth $10 to me, that I knew I would pay $10 for a copy I could carry around weightlessly and search and annotate in a way I'd be able make sense of later.
But here's the thing: once you've moved out of the market stall where you're dealing with individual people who each have a finite and measurable supply of money and a likewise definite interest and/or need for whatever it is you're selling, the question of "value" becomes a lot more complicated than "How much is the most money I can charge for this product and still have enough customers to make ends meet?"
And if you're an individual artist, author, or artisan, the answer to even that simple question is going to shake out differently than if you are a big company with the works of many creative folks to sell.
See, an important follow-up question to "How much will the market bear?" is "Which market?" For any e-book, there's a market that will pay $10. It's just not going to be a very large one.
Now, I feel like I could make a decent amount of money marketing my ~100 page book The Gift of the Bad Guy to my established readers for something like 5 bucks. People would pay that. With an established audience to sell to (that's one market), I might sell a thousand copies. That's like $4,600-4,700 dollars, after PayPal takes its fees. I'd still clear $4,000 even if I doubled the amount of money I've spent on sprucing it up a bit. And as I type this up, part of me is going "Wow, why didn't I do that? $4,000, just like that." And I know I could have done it. A thousand of you would have bought it for sure. Maybe not all at once but over the course of a year. That's as close to a lead-pipe cinch as one gets in this industry.
But as sure as I am of that, I'm also sure that the sales would be strong at the start and then fall off. A thousand over the course of the year, but most of them would be in the first month, and most of the remainder would be in the first six months. After that, sales would trickle in. And I'm planning on doing a lot of these little e-books, and if I were to just keep returning to the same well again and again and expect my existing readers to buy it, I'd never do as well as I did with the first one. The sales for each one would undercut the sales of the others and also dip into the MU-money. My income would go up, but not by much in the long run.
Especially as some number of people would have enough faith in my work to pay $5 for the book and ultimately be disappointed when it turns out to not be what they were expecting, or not be their cup of tea. They probably wouldn't be rude about it or anything. They'd just go, "Okay, well, I thought it would be money well-spent. Now I know better for next time."
This is part of how bargaining works in the modern marketplace, too... if we have no choice but to pay a fixed price for something, we'll often pay it even if we're skeptical, but base our future spending on how well it works out for us. It's the consumer's gamble. We all make it.
The way I'm doing it now, I don't have any confidence that The Gift of the Bad Guy will make over $4,000 for me in a year. None.
What I am confident of is the following three things:
- It will be read by more than a thousand people.
- It will be bought by more people who aren't already fans of mine.
- It will remain profitable for longer and do more to build the market for its direct follow-up and the other books I'm going to release under the same model than it would at a straight "sell it for $5 model".
To make a long story short*, I'd be selling the book for $5 a pop if I didn't value it more, if I didn't believe it were capable of doing anything but earning a quick-and-dirty profit by reaching directly into the pockets of my most devoted readers. I believe I can still count on selling a thousand or more copies to those readers, but that we'll all get more out of the experience if each of them can pay what they want, from the pre-release low price of $0.75 to the special $5 appreciation version. Some of the people who buy the 75 cent version will pay more for later books when they're more confident that it's worth it, or they have more money themselves. Some will be happy with what they got for 75 cents and keep it up. And you know what? I'll love them for it. I'm sure I can get thousands of people who are hooked on the books at the 75 cents price than I can get people who would buy them like clockwork at $5. It will take a while to get the LitSnacks audience built up to that level, but when it happens... okay, every one thousand people who buy a book at 75 cents gives me over $600. Two thousand is over $1,200. Three thousand is over $1,800.
Perhaps you begin to see how this adds up?
I'll have been doing Tales of MU for 4 years as of this summer. If I keep this LitSnacks concept going, then in 4 years' time I don't believe there will be any question about the financial value of my work. This isn't even addressing things like print sales, or sales from digital bookstores... I'm talking only my own direct sales.
How much do I value my work? So highly that I believe I can make money hand over fist selling it for $0.75 cents a pop.
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Business Models: sociology or psychology?
on 2011-02-18 03:44 pm (UTC)I ran a business myself for a while, and although it was never much money, it stayed open for a decade or so due to a similar philosophy. If I had been a better business person at the time I think it would have eventually turned the corner.
Also, this may be a good time to remind you that you wanted me to remind you to post about the steps a person should take to get a business like yours going. If you posted such on your LJ, I have missed it.
no subject
on 2011-02-18 03:48 pm (UTC)