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.
