Fear of free?

Over on Dear Author, Jane posted about how different industries had responded to the notion of “free content” and adapted to monetize different revenue streams.  It’s an extremely thoughtful contribution that is part of a very interesting conversation in the digital world.

I think this discussion is fascinating because I think the book industry  has already come up with clever monetization strategies.  I don’t think they have to do all that much switching around to get something to work.

Take for instance, the phenomenon of hard cover/trade release followed by a mass market release somewhat later.  This isn’t really much more than an attempt to capitalize on different revenue streams.  There’s a higher margin on hard cover, so you release that first–and the fans, the people who cannot conceive of waiting even one week, let alone one year, to purchase rush out and buy.  But there’s a group of people who sit in the wings, shaking their heads, unwilling to pay $25 for the privilege of reading Big Name Author in hardcover.  A year later, you push out the mass market release, and you capture the revenue from people that pay $7 standing in line.  In other words, I think that the fundamental reason that different formats exist is not because some people have a preference for hard cover over mass market (although this is certainly true) or because people “value” hard covers over mass market (although some people do).  The format difference exists because publishers want to practice price discrimination.

Price discrimination is not a bad thing.  Price discrimination is why airline flights cost more if you don’t stay over a Saturday (the airline assumes that if you are not staying over on Saturday, you may be a business traveler and thus may have more money to expend on the flight).  It’s an attempt to get people who want an item enough to pay more money for it to choke up the extra bucks that they had in mind.

As a new author–at least, as a new author in genre fiction–you’re unlikely to get slotted into the hardcover market, simply because you don’t have enough fans willing to pay the premium.  So what do they do?  They use the mass market release to seed the market.  Enough of those, and maybe, 10 or 20 books down the line, they’ll start pushing you into hardcover.  Or you can see the same thing with the anthology/mass market release–they release a new author in an anthology with a few big names.  The price of buying that new author is thus reduced (the purchaser may, mentally, be willing to pay $4.99 for the short story from the Big Name Author; in her mind, she allocates the extra $2 to the authors that are new to her), with the hopes that this will bring in fans willing to pay the full price for a mass market release.

Price discrimination through different formats, and using lower prices to hook fans, is not anything new to the industry.

Now, this is all germane to the question of free.  The question that I think we have to answer as authors is not “how do we avoid free?” or “how will free change the industry?”  I think that the experiences of Napster and bittorrent, and the eventual dominance of iTunes, all point in one direction.

1. Most people like convenience.
2. Most people are happy to pay for content, at least in reasonable amounts.
3. If the most convenient way to find content in a usable format is to access a forum run by pirates, convenience will trump people’s willingness to pay.  In other words, you have to make it easy for people to pay.

That’s the brilliance of iTunes (and, in a sense, of the Kindle).  You have to make it easy for people to pay.  In fact, you have to make it darned near seamless.

But there’s a second lesson to be learned.  Pirates are not going away.  No matter how hard I try or how much effort I expend, my book is going to be up on bittorrent.

And so this brings me to part 2:  I think authors need to own free content.  The model of “owning free” in my mind is the Baen Free Library, where Baen posts books, for free.  There’s no reason for anyone to pirate the books, because they’ll always be there, in that one spot.  There’s no reason for anyone to pirate the books, because they’re available in easy-to-read formats.   I don’t have to worry about a particular torrent closing down or a pirate site moving.  I always know where the free content is.

And what is the Baen Free Library?  It is a form of price discrimination–just like releasing in hard cover and then mass market.  If you want to read the author’s book as soon as it comes out, you pay the mass market price.  If you’re not so enthusiastic, wait a year . . . and it’ll show up for free.  Just like hard cover/mass market price discrimination, this means that the rabid fans get what they want, as soon as they want it, and they pay for it.

And this strategy starves the pirates.  Why would a regular schmoe bother to figure out the complexities of bittorrent when he knows he can get the real deal eventually, free, lawfully, from a source that never changes?

For most authors, a book makes the majority of its income in the first few years of its life.  For some authors, it makes all of its income within the first few months of its life.  (In fact, Harlequin is very savvy to give away books in its lines after they’re off the shelves–the revenue stream is essentially exhausted at that point, and the more people read, the more converts they have to their lines.)  Now, I understand that a backlist is still a tremendously valuable thing.  But what about out-of-print books?  If you’re an author and you have an out-of-print book sitting on your hard drive, there are reasons you might not want to release it for free–reasons like, you want people to place a value on your output, or you want to retain control.  I understand those reasons; I’m not sure I agree with them.  Why not put them up on your website for free?

I hear of authors who are willing to pay hundreds of dollars to enter their published books in contest after contest, on the theory that at least someone will be reading the book and they might reach readers that way.  Why be afraid of paying nothing to reach five hundred?  Ask people not to make copies–promise that it’ll stay on your website.  The worst thing that can happen is that people will read your book, and will want to read more of them.  And the truth is, I am just not sure that people see “available for free on the web” as synonymous with “not of value.”  After all, Pride and Prejudice is still in print, and you can find it everywhere.

In any event, at this point, I feel as if I have done enough talking about copyright and free stuff and haven’t done much doing.  Truth is, I’m still thinking about what to do.  Keep watching, and hopefully you’ll see more action from me.