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Crime Writer Makes a Killing With 99 Cent E-Books 445

Posted by timothy
from the let's-all-draw-demand-curves-for-a-while dept.
Hugh Pickens writes writes "Joe Konrath has an interesting interview with independent writer John Locke who currently holds the coveted #1 spot in the Amazon Top 100 and has sold just over 350,000 downloads on Kindle of his 99 cent books since January 1st of this year, which, with a royalty rate of 35%, is an annual income well over $500k. Locke says that 99 cents is the magic number and adds that when he lowered the price of his book The List from $2.99 to 99 cents, he started selling 20 times as many copies — about 800 a day, turning his loss lead into his biggest earner. 'These days the buying public looks at a $9.95 eBook and pauses. It's not an automatic sale,' says Locke. 'And the reason it's not is because the buyer knows when an eBook is priced ten times higher than it has to be. And so the buyer pauses. And it is in this pause—this golden, sweet-scented pause—that we independent authors gain the advantage, because we offer incredible value.' Kevin Kelly predicts that within 5 years all digital books will cost 99 cents. 'I don't think publishers are ready for how low book prices will go,' writes Kelly. 'It seems insane, dangerous, life threatening, but inevitable.'"
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Crime Writer Makes a Killing With 99 Cent E-Books

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  • by Bigbutt (65939) on Wednesday March 09, 2011 @09:19AM (#35428566) Homepage Journal

    Considering the limitations of Electronic Books; can't give them to friends or family to read, can't resell them, can't return them, can have them pulled without notice, the price is way too high.

    I've purchased a few novels at the too high price since I got my iPad but so far only the ones I already have in paperback and really love to read. I have picked up a few 99 cent books at recommendation from others and generally they're an ok read.

    I've spent a lot more on gaming PDFs, especially the non-watermarked DRM'd ones (Shadowrun from the Battlecorps website).

    [John]

    • If every book was 99 cents it would hardly be a big deal. You could buy the book for friends and family and it could still end up cheaper than what you pay already.

      Seriously, 99 cents is "too high" because you can't resell or return the book? Who would need to buy a "used" copy if books were that cheap anyway? That's cheaper than most current used books already!

      And why would you need to return an eBook - it's hardly going to be defective, and if the download was in fact corrupted, they would push it out to

      • I'm fairly certain the parent meant that the current "5-20% below list price" pricing structure is too high, and was agreeing with the assertion that $.99 books would be better.
        • by tgd (2822)

          5-20% below list price would be nice. Since Apple jumped into the fray and Amazon lost its hold on the market, books have gone up a LOT. These days its not even remotely uncommon to see the e-book at 5% off the hardcover price... even when the paperback is out.

          A perfect example -- a couple months ago I was at a talk/book signing. The author's hardcover book was for sale for $10 (and he'd sign it for that) -- not an unreasonable price. Amazon's kindle price? $35. Needless to say, I neither was going to pay 3

          • Well, shit. I haven't actually been paying too close attention. I suppose the last eBook I bought was the same price as the paperback, now that I think about it. Sometimes I check out paper books from the library, download the ebooks illegally, read them electronically, and return the paper book, just so I don't feel like I'm stealing (my library doesn't have e-lending). I can't tell if that implies there's something wrong with me or the system.
    • Considering the limitations of Electronic Books; can't give them to friends or family to read

      At least on the nook, you are able to lend books to other people. There are whole forums dedicated to lending ebooks.

      And if it's a family member, you can just share a single B&N account and have full access to the library without even having to lend anything.

      can't resell them

      This! This is the single biggest problem with ebooks. I'd love to be able to re-sell some of my ebooks after I'm done with them.

      can have them pulled without notice

      Depends on the format and the delivery mechanism. If you've bought your book through Amazon with their Kindle, yeah,

      • "And if it's a family member, you can just share a single B&N account and have full access to the library without even having to lend anything." ....you forgot, "for now".
    • I agree, and seeing the AppStore platform work so well for all those apps available to you with a small click of a button and a small charge of .99cents *usually), you will see many pop one here, or there, and at the end of the month the bill ends up being like a 10$ for all these apps(or in this case ebooks).

  • I TOLD you. (Score:5, Insightful)

    by unity100 (970058) on Wednesday March 09, 2011 @09:21AM (#35428574) Homepage Journal
    not only i told you, but many other people told this as well :

    digital goods are easily distributable. make it something cheap that noone will hesitate to pay for, and A LOT of people will buy it - even people who think 'hey i may read/use this in future' may buy it if its 99 cents. same goes for games. a lot of people will buy games that they will never play, just to have them handy, or in their collection, or to have a more complete game arsenal. a lot of people will buy your software if its cheap, just to have it handy if they ever need it to do anything at some random point in time in future.

    there is nothing barring you from doing that. the bandwidth costs are low, they are going down and down continually. you dont have to reproduce a digital good. all you need is :

    - an easy to use website to buy from, and a short, easy checkout procedure
    - a payment provider that is easy to use. (or a reliable credit card payment method)
    - a digital download.

    its THAT simple. no really, it is THAT simple. and the example is, in the article above.
    • by vlm (69642)

      make it something cheap that noone will hesitate to pay for, and A LOT of people will buy it

      Would I steal something that "costs" $100? How about $1? Thats pretty much free. Less that two vending machine soda cans. I'm guessing the dollar store has a lot less shoplifting than "upscale" Target or Kohls.

      I think intellectually the marketing people don't understand that when I pay $10 or more I'm thinking "own a book". Even if its digital thus I do not own it. But at $1 I'm thinking thats like a delivery charge or a tax to make it magically download itself into my kindle ipad app and its the fee

    • by Kjella (173770)

      The question is whether it is just because he's one 99 cent man in a 9.99$ world or if it works just as well if the prediction comes through that all books will be 99 cents. It's highly unlikely that people on average would spend significantly more time reading books in their limited spare time and with so many other forms of education and entertainment.

      That Angry Birds makes a killing at 99 cent is good for them, but it only works because they grab such a big piece of the market. On average I don't think t

      • by drinkypoo (153816)

        That Angry Birds makes a killing at 99 cent is good for them, but it only works because they grab such a big piece of the market.

        yes, and they only grab such a big piece of the market because their app is 99 cents. I mean, seriously? Correlation vs. Causation, it's impossible to tease apart here.

    • by rhsanborn (773855)
      That may be true for this guy, in this market, at this time. And yes, many more ebooks will be sold when books are priced at 99 cents. But, the road is not all gold and riches for all writers who price their books at 99 cents. This guy is a novelty and he stands out for his low price. Think of the app store, when everything, or at least most things become 99 cents, it's much more difficult to stand out and get the critical mass needed to bring in those sales.

      The points of coming in below the pain point and
    • Re:I TOLD you. (Score:4, Insightful)

      by tgd (2822) on Wednesday March 09, 2011 @10:34AM (#35429238)

      No, its not that simple. He sold a ton of 99 cent books (20x the $2.99) because it hit a sweet spot *relative to the other books available*. He got eyeballs because his book stuck out.

      If all the books were 99 cents, he'd be lost in the noise and having to sell his book for ten cents to get that kind of bump in sales.

      Price is not the issue, exposure is.

      This is why he is a literary author, not an economist.

  • I'd imagine his name might have had a small amount of impact on his popularity.
  • Okay, maybe my math is wrong but how is (350000 * 0.99 * 0.35) > 500000?
    • by Syberz (1170343)

      It is wrong, it's 350 000 from January 1st to today, not for a 12 month period.

      So it's 350 000 in 67 days or 5224 per day, so 1 906 716 per year

      1 905 716 * 0.99 *0.35 = 660 677$

      • by asylumx (881307)

        an annual income well over $500k

        $660,677 is well over $500,000 How are they wrong?

        • by Syberz (1170343)

          I never said that the article was wrong, I was answering the parent poster who said "maybe my math is wrong".

  • by Scutter (18425) on Wednesday March 09, 2011 @09:25AM (#35428604) Journal

    Just like the music industry, the electronic distribution of books has the publishers running scared. Writers are finally waking up to the fact that without the need to actually print books, they have no need of monolithic publishing houses whatsoever. They can self-publish with little to no overhead and keep the profits for themselves. $9.95 (or more, oftentimes) is an abso-friggin-lutely ridiculous price to charge for an e-book.

    • by john83 (923470)
      All the more so as the modern publishing industry is often rather lax in proof-reading standards, making the one lasting use for them rather less important than it might otherwise be.
    • Unfortunately for many artists, unlike authors, it's too difficult to create and sell a song on their own. They need a producer, engineer(s), backing musicians, just to name a few. Even more than that if they want to tour.
    • by Carik (205890) on Wednesday March 09, 2011 @10:03AM (#35428928)

      Writers are finally waking up to the fact that without the need to actually print books, they have no need of monolithic publishing houses whatsoever.

      Not entirely true. The publishing houses don't just provide printing and distribution, they provide editing, publicity, a route into brick-and-mortar retail locations, and often money to live off while an author is writing. Those are all important things.

      I'm not saying there's no way around them -- for instance, many authors still work a day job anyway, and there are good free-lance editors available for hire -- but they're a good "one stop" way to get them.

      • Printing and distribution? Don't need it for e-books.

        Editing? Have you SEEN the shit quality of editing in e-books? Some of it is so bad it is surely being done on purpose.

        Publicity? This one I'll give you.

        Route into brick and mortar? B&M bookstores are dying. Why pay a premium to get into a dying business model.

        Money to live on? Well if it didn't take 2+ years to go from concept to market perhaps it wouldn't be such a big deal.

        I'm still failing to see what the big deal is about publishers.

        • by Carik (205890)

          Distribution is still an issue. Yes, you put it on kindle, it's on the kindle store. But it's not at Barnes and Noble, so people with their reader can't get it. It's not on a publisher's web-site so people with non-branded readers can't get it. (Well... not without breaking the DRM, anyway, which is easy for people here, but not as easy for the most people.)

          Editing is still an issue. The fact that it's terrible right now doesn't mean it isn't necessary. My personal theory is that the big publishers ar

    • by jbssm (961115)

      I think you are making a mistake here. Now-a-days the power in the book industry it's not in the hands of the publishing houses, but in the hands of the distributors: Amazon, Barns & Noble, etc. These are the predators of the business and the ones bullying publishing houses and the writers with them.

      Art quality cannot be measured in sale numbers. If the business model becomes: write some mediocre crap about vampires full of clichés that every teenager will read and sell it at .99$ for profit, we wo

      • we would stop having writers like José Saramago, Vargas Llosa, Orwell, Huxley, Edgar Alan Poe, etc.

        Considering Poe had serious gambling debts and long struggled to make any living off his work, then essentially died in a gutter in Baltimore, I'm not sure he's the best example for you to choose. He clearly wasn't in the business to get rich.

        In principle, though I agree with you. Quality isn't measured by quantity. J. K. Rowling's or Stephanie Meyer's works might not have artistic merit commensurate with the money they're making. I think the point being made here, though, is that cutting the price has the

      • No, the superior authors will be able to charge 5.99 and even in a .99 world they'll get it.

    • by NiteShaed (315799)

      Writers are finally waking up to the fact that without the need to actually print books, they have no need of monolithic publishing houses whatsoever.

      Well, sort of. I kind of hope that it does work out that way though.

      Right now I'm working on my own novel (release in another couple of months, yay!). I'm doing it myself through a POD company, and it will be both print and digital. Doing it that way allows me to keep a much higher part of the sales (which I expect to be in the tens of copies), and more imp

    • by Rayonic (462789)

      I'd say there's significant value in professional-level editing. One of the last "books" I read was self-published directly to the web, and while it was good fun and had an interesting premise, it was in dire need of editing/revision. Community input can only do so much.

      Of course, just needing editing and maybe a little promotion cuts out a huge chunk of the existing book publishing business. Not to mention retailers.

      (If anyone's curious, the novel I mentioned above is The Salvation War [stardestroyer.net]. The writer is a

  • ...how we're talking about an e-book writer today making a fair bundle, and just a few Slashdot articles earlier, we learned that the creator of Trumpet Winsock made very little money from his creation [slashdot.org] twenty years ago.
  • by shoemakc (448730) on Wednesday March 09, 2011 @09:31AM (#35428658) Homepage

    Why would anyone pay $9.95 for an Ebook when your average paperback novel costs the same (or less) at a brick + mortar store? I think the issue is that retailers still see Ebooks as an "upgrade" over a standard paperback, and prices them accordingly. While Ebooks certainly do have many advantages over a paperback, I think people realize that since printing and distribution costs of Ebooks are basicaly zero and should be reflected in a lower price.

    • i think its both greed and a catch 22. 9.95 is bout right for a book at a bookstore. so since its the same product the ebook goes for the same price.

      logic would say that the cost of distribution is lower so the ebook would be lower.(in reality printing has been pretty cheap anyway so that's not a big deal)

      so you lower the ebook to match peoples perceived value (it's the same price i could own something tangible), then people buy more ebooks, but the paperbacks suffer because the ebook is so much cheaper ("i

    • by Sockatume (732728)

      The retailers don't have a say in the matter, really. Previously, publishers would set a "wholesale" price for the book and the retailer got to keep whatever margin they wanted. Now all of the major publishers are on an "agency model" where they set the price, and the retailer has to abide by it in exchange for getting a fixed percentage off each sale. It's partly publisher greed and partly Apple's opportunism. They were willing to adopt an agency model for iBooks at a time when Amazon was holding out, and

  • The Econ101 theory of product pricing has always been "Pick the point on the demand curve where unit profit*units sold is the largest possible number(unless that number is always negative, or is never higher than fixed costs, in which case GTFO).

    The trick, of course, is locating the price that puts you on that part of the demand curve... I suspect that, for behavioral economics reasons, there are probably weird little discontinuities(ie. 99 cents is an impulse buy, while $1.21 'feels' more significant, even though you might not pick up the difference between the two if you saw those coins scattered on the side of the road...); but, given that the cost of production of a ebook is dominated by the fixed cost of writing the thing, and getting it in some semblance of acceptably typeset order, I suspect that there is a lot to be said for the "stack 'em deep, sell 'em cheap" model.

    This does not apply, of course, to low-readership specialty stuff; because you can be assured that you'll never sell more than a smallish number of copies no matter how cheap it is(as with specialist academic texts), nor does it apply to books that can command higher prices because of celebrity authorship or some sort of necessity(ie. Steven King's N+1th book, or a textbook)
    • by unity100 (970058)
      irrelevant.

      all the economic theories and their founding principles stem from 18th century. they perceive and keep the basis of that reality.

      the fact that someone sitting on its ass in a living room would be able to buy something for a dime and have it delivered instantly to its own living room with almost nonexistent cost, was never a reality at any point in time up till this decade.

      econ 101, 102, do not apply anymore. many of the people who are buying that book, actually are not even demanding tha
      • Ok, I explicitly disclaimed that theory as the "Econ101 theory"(though it is still the case that you want to hit that point on the demand curve, it's just that the rest of Econ 101 tells you fuck-all about how to find that point). I then pointed out that(much more recent) behavioral economics work about the psychological quirks of price-perception, especially at the low end and in terms of the last couple of decimal places, almost certainly introduced curious discontinuities in the demand curve, which make
      • by Sockatume (732728)

        Nobody ever bought anything "just in case" in the 18th century?

    • by pz (113803)

      The trick, of course, is locating the price that puts you on that part of the demand curve...

      Bearing in mind that, although not often mentioned, the curve is dynamic. My less-than-stellar experience with marketing folks would suggest that they generally don't understand this idea, instead throwing their arms up in the air when their assumptions are no longer valid and declaring, "OMFG THE MARKET HAS CHANGED!!" But the dynamic nature of the curve means that today's advantageous price point of USD 0.99 may

  • by lennier1 (264730)

    Simple sales psychology. Place the price below the product's usual "pain threshold" and the casual buyer's willingness to shell out money will skyrocket.
    It's the same reason commercial websites will sell more subscriptions if they lower their price from $15 to $9.99. The trick is to determine the sweet spot.

  • by 91degrees (207121) on Wednesday March 09, 2011 @09:43AM (#35428744) Journal
    I seriously doubt that the book will sell in the same numbers for the next 10 months.

    Could happen but it seems a little too optimistic.
  • Yeah, pulp fiction books need to be cheap. If I can buy a movie of a pulp fiction book for $10 then yes the book should be 99 cents.

    Plus, a Kindle book is throwaway, just a printout with DRN. If you want to charge more, you have to build something more.

  • Combine this with "Buy Real Estate with No Money Down" and the read and green stock purchasing arrows software and all poverty will be removed! All we have to do to improve this is to consider Twitter/Facebook posts to be "books" and charge 99cents for each one and we'll all be rich!
  • by rotide (1015173) on Wednesday March 09, 2011 @09:58AM (#35428860)

    I would go out and get an eReader _today_ if all books were 99 cents. At that price, I would purchase on impulse any time I finished a book. Don't like the book I just got? Get another one from another author. I could buy a few and sample until I find the set I wanna go with. Maybe a few books for different moods, etc.

    The problem with books as entertainment right now is that they are an investment. Maybe that's not necessarily a bad thing, but I don't even really read as a hobby, it's more of a time killer in the car, at work, or in bed if I can't sleep. Charging me $9.99 for a book is basically telling me not to bother unless I "know" I'm going to like it (friends/family reviews).

    But again, make eBooks 99 cents and the investment aspect is gone and people like me who just want to kill time with them will start purchasing them.

  • These days the buying public looks at a $9.95 eBook and pauses. It's not an automatic sale,' says Locke. 'And the reason it's not is because the buyer knows when an eBook is priced ten times higher than it has to be. And so the buyer pauses. And it is in this pause—this golden, sweet-scented pause—that we independent authors gain the advantage, because we offer incredible value.' Kevin Kelly predicts that within 5 years all digital books will cost 99 cents. 'I don't think publishers are ready for how low book prices will go,' writes Kelly. 'It seems insane, dangerous, life threatening, but inevitable.

    This, I think, is the key.

    Authors today can self-publish very easily. B&N offers a service to publish ebooks, as do plenty of other places. You don't need to go to a big publishing company to get your work out there.

    So all that overhead - all the editors and agents and PR folks and whatever else - is gone. Sure, you're paying something to the folks creating your ebook... But it's usually a fraction of what a big ol' publishing company would take.

    So you can price your books lower, and get a bigger ch

  • Just ask the makers of Angry Birds!
  • when he lowered the price of his book The List from $2.99 to 99 cents, he started selling 20 times as many copies

    And when 20 other people see this profit and copy him, will they still sell such high volumes, or will they go back to their old volumes at 1/3rd the price?

  • If you have e-books selling for $9.99, those who don't really want it will just skip it, and those who really want it figure they can just download it for free somewhere. At $0.99 though, those who don't really want it may still buy it on a whim, and those who really want it recognize that they'll spend more than $0.99 of their time trying to find the book for free (and you may not even be able to considering it's so cheap, people may not even think it's worth it uploading).

    As long as it's reasonably priced

  • The long tail (Score:5, Insightful)

    by bradley13 (1118935) on Wednesday March 09, 2011 @10:50AM (#35429542) Homepage

    Another thing that publishers are totally screwing up: the long tail. Ebooks give them the opportunity to get some last sales out of older books.

    As an example: my kids are reading an old series that contains 20-odd books. These books are no longer in print, but you can easily find them in a used bookstore for about 50 cents each. The original cover prices were $3.00 to $3.50. I thought - hey, we have an ebook reader (Sony), let's see if the publisher has them, and we'll just get the ebooks. I would have happily paid $0.99 per ebook - twice the cost at the used bookstore, but hey, they do have to reformat the things.

    Sure enough, the publisher has all of the books on offer as ebooks. Price: $9.99 each, and no extra charge for the DRM.

    Is that insane or what? Charging 20 times the price I would have to pay for the physical book (and three times the original cover price). Meanwhile, their DRM is not compatible with our ebook reader. Yes, I could strip the DRM off, but I shouldn't have to.

    Faced with such utter stupidity on the part of the publisher, most people will make the obvious choice: it takes only a few minutes to find a torrent containing all of the books - free and without DRM. The pointy-haired managers at the publisher will, of course, draw the wrong conclusion. They will say "piracy costs us sales." In fact, their idiotic pricing and DRM policies cost them sales.

  • by H0p313ss (811249) on Wednesday March 09, 2011 @11:12AM (#35429906)

    And it is in this pause—this golden, sweet-scented pause—that we independent authors gain the advantage

    Heck, I'd buy his books just for that sentence.

  • by rlseaman (1420667) on Wednesday March 09, 2011 @11:38AM (#35430400)

    Publishing physical books and e-books are two different things. The market niches are complementary. If a company like Borders goes bankrupt it's because they've failed to comprehend the complete mix of markets they compete in, not because one part of the business cannibalized another.

    There are reasons to be skeptical that paper books will become extinct any time soon. The great strengths of e-books are also their weaknesses - in particular the book is only as permanent as the battery in the e-book reader, and the reader is a fragile device. A fat paperback can even be ripped in half down the spine to improve portability without harming the reading "experience". Textbooks? Artbooks? Etc.

    The success of the physical book business is only loosely tied to the satisfaction of the readers. It is much more tightly connected to the profitability of the publishing workflow. As soon as Amazon, etc., solved the mail order scalability problem - an issue related to physical books, not e-books - physical book stores quaked. Really, the readers are more product than customer here - their loyalty traded back and forth between vendors vying for their business.

    The next step in dismantling the publishing industry is the printing workflow itself. Send a PDF to lulu.com and you can immediately order a very nice paperback with a single copy price of $5.77 (depending on page count, etc.) Chop a couple of bucks off of that for an order of a few hundred.

  • by Plekto (1018050) on Wednesday March 09, 2011 @12:10PM (#35430974)

    If you calculate in the payment that Amazon makes to the author, the break-point is actually $1.99. Books under $1.99 get 35% and books $1.99 and over get 70% profit to their authors. He should have read the terms and done the math a bit more carefully as he'd have made twice the money, even with half the sales.

    350,000 X .99 X 0.35 = 121,275
    175,000 X 1.99 X 0.70 = 243,775

    If you are selling it for 99 cents, you're actually throwing away profit, because under $2 is the actual magic price-point where people impulse by almost anything these days. You'd probably see closer to 200,000 sales or more at that price, since due to inflation, most people would still buy something for $1.99 on a whim just as readily as they would for 99 cents.

    The price floor won't be 99 cents, it'll be $1.99, or until Amazon changes its payment schedule.

    • by jo_ham (604554)

      Perhaps, but his income depends on readers - if he sells twice as many, even if he doesn't make quite as much raw profit per sale, he'll have more eyes on his books and likely attract more repeat readers. For a little less profit in the sort term, he could be ensuring his future earnings.

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