Search This Blog

Friday, April 13, 2012

eBooks: A Race to the Bottom?

"Planned Obsolescence" and advancing technology?
For many years I have been fascinated by what I call the "race to the bottom."

A good example of this is the current "battle" over ebook pricing.  What's in play is whether or not Apple and other "colluded" to keep prices up in order to keep profits up.

The basic book model for probably centuries was to have authors and publishers.  Publishers were responsible for manufacturing and marketing the work of authors - the thought being that an author is not into manufacturing and distributing books or doing their own marketing.  Publishers also funded the "float" between the time the work on the book started and finished - such as research and work on the authors part.

In the pre-internet world this made sense - ads for books were bought in newspapers, offered on TV or radio, and so on.  Authors would do book tours, radio interviews, and so on as part of the marketing strategy as organized by the publisher.

This is very similar to what was done for "records" and "CDs" before the intervention of Napster and iTunes.

As technology changed so did these business models.  The internet did away with the need to physically manufacture things, for example.

So all that's left in the cost of the equation is the payments to the author and the cost of marketing.  Marketing, in the digital age, is also under pressure because many purchases of ads today are internet based - so again the cost of physically "manufacturing" a magazine or poster or mailer is now out of the equation.

To me this kind of pricing pressure on the "end user" cost of a book makes sense.  As efficiencies are introduced into the system elements that are not needed come out and prices drop.

But there is a more interesting aspect to this as well.

As a child we were relatively poor so when we purchased things as a family the idea was to purchase something of the best quality your could afford.  The idea being that the item was going to have to last because you would not be able to purchase another one for some time due to the cost.

In those days it was common, for example, for a kid to have one set of "play pants" that were worn after school so as not to damage your school clothes.  These might be thread bare and well worn but mom made sure they were always as clean as they could be.  Play pants were typically "good clothes" that had passed their prime - good clothes being necessary for "going out" to school, church and family functions.

Clothes were valued on how "sturdy" they were with the idea that many kids would wear them via hand-me-downs, i.e., older cousins passed clothes on to younger cousins.  So a good shirt or pair of pants would last many years and your investment in them would be a good one.

This, to me, is the notion of a "quality purchase."

Today we have a large WalMart SuperCenter near by.  I don't buy any clothes there at all because their "combat lifetime" is usually a few washings in the washing machine.  They are generally ill-fitting, the selection, while large is useless for me because I am too "thin" around the waste.  The materials they are don't hold up at all to wear.

But one thing is true for sure - they stuff there is cheap.

The reason its cheap, as I told my son as he was growing up, is that under the WalMart is a direct tunnel through the center of the earth to China where they make all its products.

Well, not really, but instead there's and endless supply chain of containers sailing from China each day full of the cheapest possible materials US manufacturers can spec Chinese companies to make.  (Contrary to popular belief the Chinese can make good products - the US companies specing the purchases require them to make them cheaply.)

So why is this?  Is this like ebooks and music?

To some extent yes.  Chinese labor is far less expensive than in the US - so making something there is cheaper - even when you add in the $5,000 USD or so cost of shipping a container full of that material to the US.

But the other, far more serious problem, is that of "planned obsolescence."

Today people of have lost the idea of quality.  Its been replaced with "price."

Today A is better than B if it costs less for what superficially appear to be the same features.

For example, a WalMart flatscreen is generally less technically able than the same item purchased elsewhere.  My experience is that say you have flatscreen model ABC.  Normal, non-Walmart outlets sell ABC-50 but WalMart, on close inspection, sells ABC-20.  The -20 model having fewer HDMI outlets, fewer audio outlets, and all the rest (but you will only know this if you shop carefully). The holes are in the case but instead of a connector there's a plastic knock-out still in place.

Unless you know to look you won't realize you're getting less.

So what does this have to do with ebooks?

In addition to the technology cost savings on price modern ebook distribution is bending to the same price effects.  For example, I as an individual can now publish a book on Amazon, or music (which I have done - see the blog sidebar).

I no longer need an editor or producer.  The spell checker and the Microsoft Office Grammar checker fill in for free.

Unlike flatscreen TV's the author can now produce a product at home to sell directly to his/her consumer without any of the intermediate steps.

So they do.

Now whether or not this is a good idea is probably an open question.

I have read a lot of "self published" books recently.  Some are excellent, some are mediocre.

Some cost $.99 USD and some are even free.

So while I can now get a decent read for free if I am clever, what does this do to the market?

It drives the costs down.

As individual authors succeed at creating "mini best sellers" this way they are forcing out of the equation editors, editing, marketing, and so on.

Now a really good author may not need an editor.  But many times they do...

So you get a far cheaper book that's not as well written as it could be.

This pushes publishing houses on cost.  An ebook publisher-based book might cost $7.99 USD or $12.99 (compared to a hardback costing $25.99).   An Amazon author-published book might cost $2.99 or less.

By by publishers.

Amazon or Kindle or whoever puts all the books out there for free - with reviews and other details directly available on your web browser. 

The infrastructure of Amazon, for example, is already there - web servers, physical distribution, wires, lights, programmers, targeting algorithms, you name it.

The "cost" to them of adding one more CD or book, especially an ebook, is very close to zero.

The problem here is that, as a consumer, its a very hard choice to buy a book for $12.99 when I can get six or a dozen for the same price.  Sure one or two might be crap but so what?  I am getting more for my money...

Or am I?

Its hard to tell - in general I think that without question the quality of what we have today is far, far less than decades ago.

And there is constant pressure on prices to drop, i.e., a race to the bottom.

In the case of ebooks Amazon or maybe Apple will win because of their entrenched technical infrastructure.

I think, though, everyone else will lose.

Some a lot, like a publisher, and some a little, like authors and readers.

But in general the concentration of "value" for publishing will move to places like Amazon.

But Amazon is not a book publisher, it has not editors, etc.  So its product quality is poor.

And you and I are left with either reading an expensive best seller or buying a dozen best-seller wanabe's for the same price.

I think the later will win...

And soon to follow (and they are already here) are "free" books.

My guess is that the next step will be for authors to pay you to read their books.

Its all a race to the bottom.

No comments:

Post a Comment