The Nameless Horror

Low prices, zombie memes, and consumer research

Joe Konrath is tackling ‘zombie memes’ with Barry Eisler, which to his way of thinking are arguments in the ongoing rumble of indie-vs-trad publishing that should’ve been laid to rest long ago.

So far, so no problem - whatever floats your boat, or not - but the second, most recent of these, “Low Prices ‘Devalue’ Books”, misses the point of the claim it’s aiming to debunk quite dreadfully.

The basic premise of the argument, as it’s usually applied (and by “usually applied” I mean “at least as referenced by the entire first page of Google results for ‘price devalues books’ aside from Joe’s own if you want to double-check”), is that if readers become accustomed to $0.99 (or lower) prices for ebooks, higher prices will be seen as rip-offs, and that sales will slowly collapse for anything more than a couple of bucks (which is where the majority of trad-published fiction lies, though that’s not entirely relevant to the basic concept; the same risk applies to all). That as more and more ebooks are sold at discount rates or bottom dollar, consumer expectation will come to settle on that as the ‘normal’ value of an ebook, rather than, say, the nine or ten bucks of the modern paperback, and the expected ‘fair price’ of a book will drop, eventually, if taken to the extreme, below the point where writing is a sustainable profession. The proverbial “race to the bottom”.

Joe largely ignores this, falling back instead on his old warhorse of maximizing revenue via ‘sweet spot’ price points (drink!), publisher desires to hike prices and harm consumers (drink!), or whether a book’s “value” shouldn’t be how widely it’s read instead and nothing to do with cost (which is a reasonably sound argument on its own, but is tangential to the actual meme as it’s used).

The thing is - and regardless of whether writers should have an expectation of being able to earn a living from the craft (I’d argue it’s fair exchange for any human endeavor enjoyed by others, but it’s a debatable point) - there’s a wide and long-established body of research on the core notions of consumer behavior regarding pricing, discounting and perceived fair cost. (See Kalwani & Yim, Kwon, or something like this as an overview, and so on and so on.) The bulk of available research is pretty categorical that, in general, perceived fair value drifts downwards in response to frequent discounting or a period of price reduction - and price reduction over a category of products as a whole - and that it becomes hard to then either raise or else to maintain higher prices than the current perceived fair price while maintaining sales/income.

In short, as ebook prices slide, routine discounting by author, seller or publisher continues, and the market is packed with free or cents-only books, overall price expectations of what constitutes value for money and fair pricing will fall too. (Those sweet-spot prices? They’ll drop over time as well.)

There is support for the notion that certain brands (authors, as they’d be here) can ignore expectations through having a matching expectation of quality (or luxury); that’s equally long-established. However, that’s easier to set up in physical goods, particularly those with a broad existing price spectrum. If I want to launch my new luxury watch brand - or, hell, my line of artisan soda breads - it’s relatively easy to persuade potential customers of the extra worth of my products: I can outline the materials used, the skills and experience involved in the design and manufacture/baking, the incredible, one-of-a-kind end result they’re buying. With words, that’s tougher. Sure, a quality cover and blurb are your first step, but if someone looks at the writing inside, what sets it far enough apart from the thousands of other really good writers - indie and trad - out there? We’re wandering very much into Subjective Taste Alley here.

And, crucially, if we’re making an evidence-based argument, which is very, very hard in publishing anyway, there’s no evidence that I’m aware of showing that any given author (or their “brand”) carries enough gloss, and inspires enough rabid devotion in their fanbase, to hold a consistently high price point with no marked sales drop-off. That there are, as it were, “luxury” authors and “everyday” authors. Even in the wild world of - and this deserves air quotes - “literary” and “highbrow” writing (“Read that? It won the Booker; of course I haven’t read it, oh ho ho”), I’m not aware of any firm data around pricing (generally high, as far as I know) and sales (generally low), and whether there’s any such thing in the grim reaches where we plebs ply our trades.

The issue with a downward drift in pricing as standard is not that it’s impossible to earn lots of cash with it - or to find lots of readers with it - though data from Digital Book World’s annual surveys consistently suggests that it’s very difficult to do so for many authors - as does at least some of the Author Earnings Report data when looked at by DBW’s Dana Weinberg (the regular AERs don’t touch on that in their standard analyses), but that by trying to drive sales/readership, and thus income for work done, solely by discounting, you’re ever so slowly poisoning the well. That those discount promotional prices will eventually have to be your regular prices. That your per-unit margins will be cents, not dollars, and that new writers entering the business with no pre-existing platform will find it even harder than it already is to get themselves read and supported in a way that materially encourages them to keep going, and to get better and to produce more great stuff.

Now, this is in large part due to the nature of the market: there are a huge number of books being written (not a bad thing in and of itself), greater choice for readers than ever before (equally so, problems of discovery aside), and consequently an oversupply of books in general and apparent downward price pressure because everyone knows bargains are what sells, and that means out-bargaining a hundred thousand other people. (There’s a separate argument to suggest that writers - and readers - perhaps shouldn’t, and perhaps wouldn’t, look at the broad spread of the market as a whole but look only at the supply/demand for their own work as a separate entity.) And some of what I’ve just said is, of course, speculation. It involves, as every tedious business press release says, forward-looking statements.

But that’s neither here nor there; the argument is whether or not routine low pricing causes a slow drop in perceived value. And the fundamentals of that argument - those parts based on consumer behavior - have an evidence-based background. You can argue freely whether low price expectations - and lower prices - will cause authors to flourish, to struggle, or to find some happy equilibrium in the middle, whether they’re ultimately good or bad for readers. That’s largely guesswork and philosophy and probably doesn’t have anything like a single answer. It’s far harder to argue against the notion that discounting and targeting readership through low price points will inevitably lead to the average (from which “low”, “fair” and “high” are judged) falling slowly but inexorably over time as a result of consumer perception.

That, on the majority of occasions I’ve seen it used, is what the claim is about, not some nebulous “what is a book worth to society?” waffle.

And while we’re here

There’s another “zombie meme” I wish would get an airing, related to this: “ebook sales aren’t a zero-sum game”. It’s true that just because Reader A buys Book X it doesn’t mean they won’t buy Book Y as well, and that the lower the standard price of such a thing goes, the more likely it is they’ll be able to dispose of their income that way. Even at 3-5 dollars a throw, ebooks are cheap, the expense relatively throwaway when compared to other entertainment sources. They take time to read, though, and time is far more limited.

You ride the train an hour a day getting to and from work, and you spend most of that reading, say. That’s your reading time budget, and it’s a lot tighter than your cash budget ever will be. You might be able to afford to buy a dozen novels a week without noticing it, especially at low/freebie sale prices. You’ll still only be able to read one, and then next week there’s a dozen more on the carousel. If you never get round to reading Author Z’s first book, however much you would’ve liked it if you had, well, you probably won’t pick up the next, not deliberately anyway.

Even if you’re measuring a book’s value by its being read and appreciated, not cost/author income, a glut of cheap reading material doesn’t increase reading time beyond the minority who wouldn’t otherwise read because of cost factors.

Joe links to this Mintel release from last year about UK ebook buying and reading. You can draw some extrapolations from the figures there, and they’re less cheery than you might think. 26% of people who bought an ebook in 2013-14 said they were reading more than they used to. 21% of Brits overall bought a fiction ebook in that time (63% of women, 48% of men; presumably “of those who bought an ebook of any type”, otherwise the numbers make no sense). Therefore only ~9% (rough guess, assuming they had a vaguely even gender split) of the population are reading more than they used to, while 32% haven’t bought a book in the past year, only 12% of whom because of the cost, 21% because they don’t have the time, and 34% because they don’t have the interest in reading.

While these are only the reasons respondents didn’t read at all, I think it’s probably a fair extrapolation to say that time (or perceived time) is probably therefore already more of a hard limit than money, and it’s one that’s very much finite in scope. Even the wealthiest reader - or any unoccupied reader in a world of zero-cost books - only has 16-18 waking hours to spend reading, and at some point one author will lose out to another.

Disclaimer 1: It’s very late as I write this and I’m sure I’ve drifted off-point by the end. My apologies for that.

Disclaimer 2: I have ebooks available and they’re free (here) or as near-as-I-can on Amazon and I’m therefore a vicious hypocrite. They’re old material, and I’d rather remove as many barriers to access as possible than figure out the economics of them, so I’m happy with that decision. I’m still adding to the problem, of course.