Knowing your market is half the battle
2013 has been an interesting year, particularly if you enjoy watching price wars between the major ebook sellers. Some ebook markets even decided to take the plunge to price titles as low as 20p in the UK, just to spite Amazon. If ebook prices are going to continue to drop, then that begs a very important question – how are authors and publishers ever going to make money if their book sells for less than a pack of mints?
At the beginning of the year, Sony and Amazon duked it out over ebooks that saw many titles in both of their top selling lists sell for around 20p – even The Life of Pi sold a quarter of a million copies within a month this way. Many of these sales will never even be opened, but hey – why not buy it at such a low price? One upside to this is that publishers can boost their marketshare this way – some of the cheaply priced titles of Pan Macmillan caused their marketshare of ebooks to nearly double that of their print books. Ultimately plots like this by Sony would cause Amazon to lose out on millions of dollars (or pounds, since most of this took place in UK) in order to price match with their competitors. FutureBook posted an article about the whole situation here.
So in a world where material (and this is not necessarily restricted to books, either) is routinely distributed for free, figuring out how to make a profit can be a tricky thing. People tend to fixate on digital as a major threat to profit, but in reality, it could offer you a lot more options than setting up a CD stand on the street. Nicholas Lovell wrote this article in August, telling us that we need to figure out an audience for our ebooks, and that we shouldn’t necessarily set a strict monetary price on how highly customers might value your product.
Crowdsourcing is a great way of making money – we’ve discussed this before. But ‘The Dish‘ website, which focuses on American politics, has used this principle to make themselves a lot of unanticipated profit. Although most of the Dish’s content is available for free, subscriptions are still available to support journalist Andrew Sullivan’s work. Options for subscribing on the website include $19.99 per year, $1.99 per month for the more casual readers or – ‘More If You Really Love Us’, which is a box left blank for users to decide how much to donate. To date, Sullivan has generated more than $100,000 in extra revenue, because super fans value his efforts so highly. Heck, even Amanda Palmer made $1m on Kickstarter by offering to paint nude fans for $10,000 a pop. It’s all about how much people are willing to pay.
So that’s probably one of the best ways to do it. Find an audience, figure out what they value, and let those people (who love what you do) spend money on the things that they value – namely your work. This might sound really obvious, and perhaps the most basic business model in the world, but it actually encourages one-on-one relationships between businesses and consumers, which is becoming increasingly important.
Publishers and authors could use these tales to realise that today, they are no longer purely selling themselves to bookstores or whatever link comes next in the publisher-to-consumer chain. They’re also selling directly to consumers in some cases – which I think will become the norm in years to come. If you take this path and decide to sell directly, whether you are a big publisher or a self-published author, figuring out which consumer belongs in which market and advertising to them accordingly could make a huge difference in sales – especially if you let the diehard fans determine how much they market a product themselves. Don’t be mistaken – the majority of consumers would without hesitation use your product for free. However, I predict that the super fans are the buyers of the future, so watch out for them.