As a follow up from yesterday's Pæans of Praise essay I thought I might write about some of Jim Baen's other devious tricks to make his readers pay more for the same old electrons.
The question of how to price intellectual property has been around since the days of the printing press if not before. The problem, in economic terms is that intellectual creations, particularly those of works of fiction, have a significant fixed cost up front in terms of authorial advance, proof-reading typsetting and printing costs and a trivial per unit cost. This is even more true inf the intellectual creation is to bedistributed electronically because most of the per unit costs of distributing traditional media are taken up by the distribution process for the physical copy. The difference in the cost of producing and delivering one eBook versus one million is perhaps a few hundred dollars of bandwidth charges but yet the two have the same fixed cost base. Thus the pricing decision is based on the classic dilemma of price elasticity and balancning the number of purchasers willing to pay a high price compared to the (presumably) larger number willing to pay a lower price and arriving at the optimum solution
In traditional book publishing the publishers attempt to capture both the high payers and the lower payers by producing hardback and paperback versions with the hardback ones being perceived to be better and being released earlier so that there are clear advantages to buying the more expensve version, despite the fact that the raw content is identical. This solution still works for high volume books (Harry Potter etc) but due to the essential death of the paperback market is not so good for midlist authors who basically get only one chance - and rarely have much choice about whether that chance should be in hardback or paperback. Up to a point there are games that can be played within each market - with better selling books perhaps being sold for a slight premium over those that sell less well.
For electronic publishing the problem of producing a premium product for those that are willing to pay more is tricky. Electrons are the same anywhere and, to be honest, the until we get a hugely improved eBook reader the vast majority of people are going to be unwilling to pay even paperback pricing for an eBook because the reading experience is generally speaking worse. However given that even when an eBook is published at the same time as a regular version there are costs involved in the eBook creation that do not apply to the paper version such as licensing a DRM and/or proprietary display format and converting the text to that format it seems that many publishers are unwilling to price the eBooks below that of the paperback price. Perhaps worse because they are paranoid about piracy they make the customers of their eBooks jump through all sorts of hoops to prove that they have the right to read the book. If you wanted an example of how not to do customer service this would rank right up there with rootkits in the list of possible case studies.
Of course there is the solitary glowing exception of Baen. Jim Baen's eBooks are produced in non-proprietary non-DRM formats which make reading them easy. At its simplest all that is required is a web browser or a word processor but various formats for PDAs and eBook readers are also supported so long as there is no demand for royalty payments. The result is that Baen's books are priced between $4 and $6 (US) with, as a rule, $4 being the price for older ones, $5 being newer ones and $6 being omnibus volumes that are generally preprints and which contain two or three books. There is also the possibility, as I noted yesterday, to get a monthly package of around 6 books (three new + three old) for $15 and of course in the grand tradition of the crack dealer your first book is frequently free courtesy of the free library, the various free CDs, initially distributed with hardcovers, or a gift webscription from a friend.
This business model seems to work well as I noted yesterday with some 1500 monthly addicts plus a number of other more occasional ones. The low price addresses the "value for money" problem that other eBook efforts fail at and, as a result, anecdotal evidence suggests that piracy is limited with the same people who freely hack other eBooks or distributed poorly OCRed versions of Harry Potter deliberately not distributing Baen titles (URLs to back up this assertion are not readily available for what I trust are obvious reasons). However what this does not address is the market of suckers who are willing to pay more for their electronic book fixes. Well Jim Baen is a publisher, and while he is undoubtedly a fine gentleman, as with all other publishers he is not happy with the concept of leaving disposable income in his customers pockets if they are willing to give it to him, and he has come up with a couple of ways to extract premium sums from those willing to pay.
The first premium sum comes from something called an eARC. ARCs (Advance Reader Copies) are the few dozen books that the publisher prints before official publication and hands out to proof-readers reviewers and the like and they typically are much prized by fans in the same way that rare postage stamps are prized by philatelists, thus there is a strong secondary market on places like eBay for them. However ARCs, by virtue of their prepublication availability, also appeal to the impatient and this is the market segment addressed by the eARC, which is a preprodcution electronic copy. eARCs are also a way to get the puchasers of paperbacks (or really impatient hardback readers) to consider paying a little bit more for the chance to read the book now as opposed to sometime later. eARCs retail for $15 when initially released and this sum gradually decreases until the book is published.
There is a question about whether this trick results in additional money being generated - it is entirely possible that regular webscription subscribers buy one eARC for a particular webscription month instead of buying the whole thing - but I suspect that on the whole what happens is that many people end up doing what I do which is buy the eARC and the two other new books that month for a total of $25 instead of $15. There are (obviously) no hard statistics for sales here because it is a comparitively new venture and anyway Baen is a private company, but given that there are now 13 volumes in the program and a number of them having appeared very recently it seems reasonable to assume that this trick is indeed generating additional cash.
The second trick - as noted at Island Passage - has to do with the Baen's Universe eMagazine. In addition to the subscription bundle and the one off price they have come up with a membership club with a variety of goodies whose overall cost is rather less than the amount paid but with the interesting wrinkle that you get the right to be Tuckerized, that is show up as character in a story published in the magazine. This is the sort of incentive that is just bound to work amongst the dedicated fans and is also the sort of thing that makes for cool presents to dedicated fans by their nearest and dearest. There are different levels of Tuckerization offered (the equivalent of being a movie extra, minor bit player etc etc) so the money capture rate is nicely optimized at what ever the sheep can afford to pay. Finally of course Tuckerization is the ultimate no-cost product, it is literally priceless because there is no way to put a price tag on it except through demand and the prices that it is being sold for as part of the Universe Club are far lower than the prices that such rights tend to go for at SF conventions and the like when they are auctioned for charity. In other words what we have is a cunning method of mass producing something that has hitherto been the domain of the truly dedicated and comparatively wealthy but which has no production costs what so ever. If you thought the luxury goods and/or perfume industry was a racket in the way that it sells coloured alcohol that costs tens of dollars for thousands of dollars then you ain't seen nothing.