If You Love Books, Don't Set Them Free

I hope there will always be physical books. They’re one of the world's most enduring forms of media, and one that still works well today, even in direct sunlight. However, more and more, people are choosing to read ebooks and this trend isn't going to go away. As reading shifts from physical towards digital, there will be enormous challenges and tough times for everyone – authors, publishers, and retailers. But how tough do those times need to be?

As a series crime author, published by Hodder & Stoughton, I follow the fortunes of the book market with great interest. But my day job is running a successful app developer, working with a range of digital publishers. The games/apps business is a new market that moves extremely fast. Compared to books and music, it's the youngest, but it's evolved at a frightening rate, overtaking more established media with an explosion of innovation (and considerable collateral damage to the people and businesses that work in the space).

The good news is that the older, more established media can look at the parallels and, if they choose to, learn from the mistakes and successes of their younger counterpart. As someone with a foot in both camps, it's fascinating to watch, but I sincerely hope that the book industry won't slavishly tread on all the same landmines that the app industry has.

Let’s start with an (ironically) obvious issue: discovery. Going digital brings more choice, but almost everything is harder to find. Previously, publishers fought to get their physical products into traditional retailers where it was tough to stand out, surrounded by hundreds of competing products. But now, as the physical shop becomes an online store, each product is swamped by millions of others. These virtual shelves are never cleared; they just get longer and longer as thousands of new titles are published every week. And with no shopkeepers to curate the content on offer, and self-publishing offering a way to sidestep the publisher’s quality-threshold, much of the content is mediocre.

So if your title is swamped by a deluge of other stuff, how do you make it stand out? Surely, if it’s good enough, it will rise to the surface. Isn’t that the point of all those reviews, ratings, and charts?

Sadly, the answer is no. When I stated that the apps business was innovative, I wasn’t kidding. There’s now a whole sub-industry, dedicated to “gaming the app-stores” – artificially inflating chart positions and sales by manipulating the algorithms that drive them. And if you thought sock-puppeting was scandalous in the world of books, you should draw the curtains and hide under the bed, because in the app world there are stories of “incentivised” review campaigns that would make your pages curl.

Which leads us to the final solution: price. With no other way to differentiate themselves, many app publishers lowered their prices as a way to attract attention and grab market-share. The theory behind it was simple enough – yes, you’d make less money on each sale, but you’d sell many more titles, and end up making more money overall. It was a winning strategy...

...except when everyone did it.

Very, very quickly, the majority of apps dropped to £0.69, the lowest available Apple pricepoint at the time. It was a desperate race-to-the-bottom but, as it turned out, 69p wasn’t the bottom, and prices kept going down. Some titles – big titles, with five or even six-figure development budgets – hit zero. And once they were free, everyone else had to follow suit, or risk being left behind in the tumbleweed of the Paid Apps section.

But zero wasn’t the bottom either.

Soon, digital publishers were incentivising people to download their apps, handing out vouchers and in-game rewards to try and bribe people into playing their free titles. Propped up by investment funding, businesses are now discussing “new user acquisition costs” of $1 to $2 per person – meaning the price of a free app is actually minus $1 or minus $2.

So what about book pricing? A few years ago, £2 or £3 felt cheap for a mainstream novel, but not now when the Kindle Daily Deal offers amazing titles for just 99p. There are definite signs that ebook pricing is following the same downward trajectory as apps. Some will say that it’s just progress, that it might even be a good thing. Lower prices for everyone and more sales overall… and it’s kind of working for the apps business isn’t it?

This is where it gets dangerous. Because, unlike books, games and apps are not fixed, linear content – with a predefined beginning, middle and end. They’re built to adapt, to mould themselves to each individual user in increasingly subtle ways. Games may be “free”, but they employ a huge arsenal of psychological techniques to create a need in their audience… then sell them something that addresses that need.

"Oh, you were almost at the end of the level… do you want to buy another try?"

"Oh, it's taking ages for your virtual crops to grow… do you want to buy fertiliser?"

"Oh, your virtual kitten is sad because it’s hungry… do you want to buy it some food?"

Within this ruthlessly-optimised ecosystem, audience-behaviour is tracked and studied in real time, with apps adapting their sales approach automatically to monetise better. After all, modern games and apps are never finished; they are on-going services, constantly evolving in the pursuit of revenue.

This is why the book industry should be extremely wary of following the apps model, especially on pricepoint. Unless we want pay-walls between chapters, invasive advertising, or other consumable content to drive in-book-purchases (IBP), how will publishers and authors make enough money to cover their costs? And as we've seen in the app industry (which has spent millions of dollars training its audience not to pay for content) once you go free, you can never go back. There was a time when 69p was a small price to pay for a game, but now it's a ridiculous demand by "greedy" publishers.

So why does this situation continue? The answer is simple: because it works for the channel.

Whatever the pricepoint, some people still pay for some content. And whatever they pay, channels like Apple or Amazon will take a 30% cut, which is completely fair when you remember that many physical retailers demanded more than 50% in their day. Of course, Apple and Amazon can afford to be generous – their marketplace now covers the entire planet, and there’s a good chance they sold you the device you’re buying the content for too. Crucially, if they are taking 30% of a whole industry’s revenue, they aren’t worried about whether individual content creators and publishers are breaking even or not. But this isn’t a criticism of Apple or Amazon – they don’t set the prices, the content providers do.

Which begs the question, if so many of them are making a loss, why don’t the content providers do something about it? Why don’t they starve the machine rather than keep feeding it? In the apps business, the blunt answer is that there will always more content coming along, because there will always be new people prepared to give their content away in return for exposure. The overwhelming majority of apps make a loss, and the app-stores are gorged with games from developers who have (or will) go bust. But what about books?

Anyone with a Word document can get their novel on the Kindle store, but it’s not just self-publishing that’s bulking up the virtual shelves. Traditional print publishers all have rich back catalogues and, because digital stock doesn’t take up any space, they are naturally uploading old titles as well as new ones. An unimaginable wealth of content, constantly growing, always on sale whether anyone buys it or not… it’s hard to put the brakes on a machine with that sort of momentum behind it.

This is probably the point where I should insert a fluffy, upbeat conclusion, to dispel some of the gloom above. But rather than glibly suggesting that everything will be all right, I think it’s more reassuring to remember that everything wasn’t all right before. The “good old days” of physical products and physical distribution were beset with problems, and the rise of digital brings a host of positive opportunities, not just challenges. There’s growing talk (and investment) around the areas of content sharing and social discovery, which is very exciting.

But I do think there’s a bullet to be dodged here. Let’s just hope that the book industry reads all the way to the end, before it decides to follow other digital media too closely. Because unlike games and apps and music, books haven’t given away their pricepoint yet. And so long as they don’t train their audience to believe that digital content has no cash value, there will always be hope for non-digital content. Like physical books.