On 99-cent e-books

Slashdot has the story of independent writer John Locke, who writes crime novels and sells them as e-books on Amazon for 99 cents. He’s sold 350,000 copies since January, which was a 20x improvement over his sales rates when he was selling them for $2.99.

Publishers hate the idea. There’s not enough perceived value in a 99-cent book. Looking at it from an author’s perspective, I don’t think it’s necessarily bad.

About 11 years ago, I was approached with a book proposal. Write a book about building a Linux PC. We didn’t talk advance, but my royalty on each copy sold was going to be 25 cents. Of course I was insulted, but I talked to some other authors, and yes, that’s what this particular publisher paid in royalties.

I said no fairly quickly. If I thought the book would sell 100,000 copies, I would have been willing to do it. At 50,000 copies I would have been hesitant, but willing. But if the book only sold 10,000 copies, that wasn’t worth six months of my life. And I thought the size of the audience was more along the lines of 10,000 than 100,000.

But that shows that writers are already used to getting pocket change per book, and making it up in volume. Publishers may be hesitant to get on board, but they may not have much choice.

Consider what happened with my book. It received a glowing review in Canada, so what happened? Well, it cost about $25 US. That’s an hour or two’s wages for the book’s audience, so some percentage of people just aren’t going to pay that. But the book sounded worth it, to some people. So they drove to the nearest book store, where there might be a copy in stock. If not, they’ve just wasted a trip, and now they’re disappointed. Some then went and ordered it off Amazon, but some just gave up and probably forgot about it.

99 cents is an impulse purchase. People will eagerly spend more than that on a caffeinated soda to get them through the afternoon. At that price, it’s worth buying even if there’s only one chapter that’s useful to you. So if my $25 trade paperback had been a 99-cent e-book, who knows how many more copies it would have sold.

And that price kills the used market. How many different people read the typical mass-market fiction book? It wouldn’t surprise me if the number was five or six, but only the first purchaser pays full retail. Divide the cover price by six, and you’re not far from that 99-cent impulse price. And there’s no printing and distribution overhead. Just editing.

So under this scenario, I think authors win. Publishers don’t lose as badly as it would appear. Consumers lose the right to re-sell their used books, but at 99 cents, they won’t complain. When they sell their used books, they sell them at a 75% loss, or more. Call it a net win. The losers are the bookstores and their landlords, who are selling to a steadily eroding audience.

Some people my age or older don’t want to read a book on anything but paper. But some people my age and younger, now that they can get an e-reader and carry a library with them everywhere, read more than they ever did before. And believe me, those people talk.

Now, the question is, if it takes me 6 months to write a book, is 99 cents the right price to charge? Perhaps some books need to be a bit higher. But to me, $9.95 for an e-book is ridiculous. There’s no reason for that pricing, with the cost of printing and most of the cost of distribution eliminated from the equation.

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6 thoughts on “On 99-cent e-books

  • March 9, 2011 at 9:54 pm

    I don’t yet have an e-book reader, but did install Amazon’s Kindle app for the desktop. It came with a couple of samples – Pride and Prejudice, Treasure Island. Though most of Chesterton is in the public domain, I bought ‘The Essential Works of G.K. Chesterton’ for ninety-nine cents, partly to see how the software works, partly for the minor convenience.

    If most books cost a dollar or two, a reader might make sense. But ten dollars for an e-book is out of the question. The product seems too ephemeral to me. Can it be backed up? What if the file gets corrupted? I can’t give my old copy to a friend, but for a dollar I can urge him to buy one and not feel too bad if he doesn’t like it. It sounds like the authors might make more money. If the publishers don’t like it, well, what are the publishers doing for their money anyway?

    • March 9, 2011 at 11:10 pm

      Exactly. By going digital, you’re giving up your rights of possession. Which means you have almost no rights. So you should gain something, and if you’re only paying 99 cents, then those rights of possession matter to you a lot less. I can’t re-sell the book, but if I re-sell a $25 book, I’m probably lucky if I get $5 for it. So do I really care if I can’t re-sell my 99c e-books for a dime?

      Authors stand to make more. Publishers might stand to make more too. Or maybe a little less. The cynic in me says the accounting gets a lot simpler–three line items, basically–so there goes the funny money. My publisher always said I was welcome to come and examine their accounting in person any time. Except they were in Boston. Sure, I’m in St. Louis, I’ll be right over! They knew I wasn’t going to take them up on it.

      But you’re completely right. What value are the publishers adding, exactly? Editing. But I know where to find good freelance editors. Marketing, but that’s a service to the author, not the purchaser. Filtering, but there are other ways to get that too.

  • March 10, 2011 at 12:46 am

    I’m a new Kindle user, and $9.99 is stupid. I’m willing to pay up to $2.99 per book. I don’t know if Slashdot mentioned how the authors get paid, it’s pretty important.

    Amazon wants people to sell books at the $2.99 and below threshhold. At that rate, they take 30% off the top or (using Locke as an example) $0.297 per book sold. They then take another 6% of the remainder so another $0.04158, bringing the total paid to the author $0.65142 per book. Amazon makes $0.3358 per book. At 350,000 books sold since January, he’s earned about $228,000. Much better than if he was flogging ink on paper. Makes me wish I could write!

    • March 10, 2011 at 8:18 pm

      That whole topic got me thinking. Nonfiction won’t sell in that kind of volume, but I’ll bet I could do better than I did on paper. I won’t say anything more, except that I’m thinking.

  • March 11, 2011 at 11:17 am

    You’re right, nonfiction never sells in those big numbers, but scale it down to just 5% and $11,400 every three months is a life style changer! Even $1,140 every couple of months would be nice!

    The problem with Kindles is they don’t do images very well, same with two or more column layouts, like you see in magazines, newspapers and many PDFs. This makes it difficult for the nonfiction writer who specializes in technical writing. However, non-image nonfiction laid out in a single column would be fine. I’ve bought (and recycled) far too many technical books that become obsolete (how long should I hold onto my books on Quattro Pro or Lotus 123?) to purchase many more, but a digital copy for $2.99 (or less) would make it trivially easy.

    The best thing about the Kindle eBook program is how easy Amazon has made it for authors to sell eBooks through their program.

    The big publishing houses are doomed, doomed, doomed, but they’re going down fighting. Already they are starting to refuse releasing back catalogs to authors interested in selling directly to readers.

    I foresee a time where either the big houses change their ways and become an editing, marketing and design company for authors, or disappear altogether. Both will force them to move off of Manhattan. There just isn’t enough to cover the lease payments on those offices! I suspect they’ll end up going the way of the Dodo, as change doesn’t seem likely. Much more likely, is the scenario where authors will work more like a contractor. They write the books and sub-contract editing and cover design to others for a cut of the profits, and Amazon helps with marketing. It is easy to see Amazon set up a system for editing and design for self-publishing authors for either a flat fee or a percentage of the profits.

    Hope your thinking goes well!

  • March 12, 2011 at 11:42 am

    I’ve been doing some more research on the eBook thing, and I realize that I have mislead people on how it is done through Amazon. Sorry for the confusion.

    On books priced between $2.99 & $9.99, Amazon pays a 70% royalty, minus a delivery charge of $0.06. So a book selling for $9.99 earns the publisher or the self-publishing author around $6.95. Below and above that threshold and they pay a flat 35% with no delivery fee, so a book selling for $0.99 earns the author $0.35 (rounded up slightly).

    In Mr. Locke’s case, when he was selling the books for $2.99 he earned $2.04 per book. If he sold 100 books, he earned $204.00. At $0.99 cents, he’s earning only $0.35, but is selling 20x more books: 2000 x $0.35 = $700. 350,000 books sold has netted him “only” $122,508, not the almost quarter million I mentioned earlier. I’m sure he’s not complaining!

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