Why I Believe 99 Cent E-books Are Bad for Authors and Readers

(Note: After rereading this, I want to make one clarification. I've read lots of free e-books where the author took an old, possibly out of print, book and put it up for free as a way to hook readers. I totally get that. They've already made most of their money on it, and it's a way to say thanks and introduce themselves to new readers. Makes all the sense in the world. My comments below are really focused on why a 99 cent price point is unsustainable for new books, and why the expectation of buying all e-books at that price is bad for books and readers. Okay, carry on.) 

Yesterday I posted a Facebook status which said something like, “I’m really glad the $0.99 e-book trend seems to be fading away.” I had a lot of people agree, but I also had a lot of people question my reasoning both on and offline. They brought up some very good points. “Of course you don’t want books to sell for ninety-nine cents; you’re an author.” “I’m on a tight budget, so I like ninety-nine cent books.” “Ninety-nine cent books are a great way to see if I like an author.”

As I said, these are perfectly reasonable responses. Everyone likes cheap stuff, almost everyone is watching their money, and ninety-nine cents isn’t much to spend on a book—even if you hate it. As an author, the temptation is great to price your book low. Especially if you haven’t built up much of a following yet. It’s exciting to see your book jump up the Amazon lists—even if your book is free.

If you sense a “but” coming (was the blog title a giveaway?), you are right. I am going to argue why I believe $0.99 e-books are generally a bad thing for readers and writers alike. If you think this might offend you, feel free to stop reading now. I promise we’ll still be friends. (Actually we’ll still be friends even if you read on and completely disagree.) (Unless you get mad and egg my house.) (And even then we’ll still be friends if you say you are sorry and bring me cookies to make up for it.)

Okay, let’s start with a story that won’t apply to you if you don’t live in Utah. But stick with me and you’ll see how it does end up applying even to you.

About thirteen years ago, a guy name Richard Dutcher made a movie called God’s Army. There were two cool things about this movie. One was that it was a movie about Mormons by Mormons that didn’t rip on Mormons. Two, it was a well-made movie and a commercial success. I was living in California at the time and was thrilled to see something like this in regular theaters.

The success of God’s Army immediately spurred a lot of other LDS filmmakers into action, and a bunch of “Mormon” movies hit theaters quickly thereafter. Unfortunately, the filmmakers quickly discovered that it’s hard enough to make money on a movie with a wide audience and heavy financial backing. Your target audience for Mormon movies is primarily Mormons in a fairly small population state, so it’s tough to make money in the theaters. Most of the films that came out after God’s Army lost money.

What to do? Well a group of entrepreneurial souls realized that if you made your movies cheaply enough, you actually could turn a small profit. What followed was a whole bunch of what could at best be called Mormon B movies. I won’t name names, but if you live in Utah or follow Mormon movies. You know what I am talking about.

The scripts were fluff, the acting was mostly cheesy, and the special effects/lighting/editing were weak. But they made money. Eventually though, people got wise to these movies and quit going to them. Why spend your time on a cheesy Mormon movie when you could watch a good big budget film?

So, what does this have to do with books? Well let’s start with some numbers.   Scott Laming of BookFinder.com Journal quotes a Money Magazine article about the costs of producing a Grisham thriller with a $27.95 list price.

$3.55 - Pre-production - This amount covers editors, graphic designers, and the like
$2.83 - Printing - Ink, glue, paper, etc
$2.00 - Marketing - Book tour, NYT Book Review ad, printing and shipping galleys to journalists
$2.80 - Wholesaler - The take of the middlemen who handle distribution for publishers
$4.19 - Author Royalties - A bestseller like (John) Grisham will net about 15% in royalties, lesser known authors get less. Also the author will be paying a slice of this pie piece to his agent, publicist, etc.

Most books are sold to major chains for 40 to 50% of the list price, so a $27.95 book sold to “Big Books Inc” for $14 minus the expenses above of $15.37 above would actually lose $1.37. Now we know that publishers aren’t losing money on Grisham.  Partly because he sells so many books that eventually he pays off many of the upfront costs. We also know that most authors aren’t getting $2 a book in marketing or 15% hardback royalties.

But what I want you to notice is what a small percentage of a book the actual printing and distribution is, ($5.63, even in hardback) and what a big percentage the rest of it is ($22.32).

Let’s say your publisher sells their e-book for $0.99. I’m not an Amazon expert, but I believe Amazon pays 35% on any books sold for under $2.99. So, the publisher gets about thirty-five cents per book. And let’s say, the book does amazingly well—best seller well—and sells 100,000 books. (FYI, this is NYT bestseller good.) The revenue is $35,000 on a bestselling book to pay editors, marketing, sales, art, royalties—everything except paper, glue and shipping. $35,000 honestly wouldn’t even cover the advance on a book that sold this well.

Okay, let’s change the argument. So maybe big publishers can’t sell their books for $0.99. That’s only because they are so bloated with expensive New York buildings and high salaries. (Tell that to an editor and listen to them laugh.)

Fine. Let’s take Joe Blow who is going to write and publish his own book. First of all, he writes the book. Let’s say he can write 500 words an hour, and let’s say his book is 70,000 words long. That’s 140 hours, just to complete a first draft. Can we pay him $10 an hour? I mean, you can make that in a lot of fast food places. Isn’t it a fair wage? Cool, that $1400. Now he needs an editor. The going rate for a good editor is about $2 a page. A 70,000 word book is about 280 pages, or $560. Once he gets that back, he needs to spend at least another 40 hours on editing. That’s $400. And a cheap cover is about $200.

Okay, so Joe has now invested $2560. In order to break even on his time and money spent, he needs to sell 7300+ books. Want to guess how many authors sell over 7,000 e-books?  I guarantee you, it is not very many, and even fewer of them are self-published.

So, how does a self-published author make it work? Well the first thing to go is the professional editing. If you are selling your book for what amounts to thirty-five cents, are you really going to pay someone over $500 in advance? And $200 for artwork? Heck, download a couple of free images, use a cheap software package, have some friends give you feedback, and voila, you have a book.

This is starting to sound like those B Mormon movies isn’t it? There are a few ways you can sell your book for $0.99.

1)                          Lose money. Hey, at least people are reading your book, right? Maybe all those people who downloaded your $0.99 book will buy your $9.99 book? Or maybe they’ll buy someone else’s $0.99 book instead.

2)                          Take a book that was traditionally published and which you now have the rights to and sell that. This actually works, because all the costs were covered by the publisher. Just hope that your readers don’t expect your next book to be $0.99 too, and the next, and the next.

3)                          Sell a million books. That’s $350, 000 and you’ll probably land a big book deal too. Author X says it’s perfectly possible over on his blog.

So, if you have a traditionally published book, or sell tons and tons of books, selling your title for $0.99 might be a good idea. But for most people, especially publishers who DO put all that time and money into a title, it’s a losing proposition—unless it’s a back title and they’re basically giving it away to promote the next book.

But what about for readers? Why are $0.99 e-books bad for readers?

Let’s start with money again. $0.99. That’s a good price. You throw down $0.99 for a small hamburger or a large drink at McDonald's  Why not try a book for that price? How long does it take you to read a 70,000 word book? Ten hours?  Is your time worth anything? Let’s say it’s worth as much as the guy selling you the hamburger. That’s $100 you could be earning while you read the book. If it’s a great book, awesome. Enjoy those ten hours.

But what if you could have been reading a better book? A book that was really awesome, that took you to another world, enlightened you, and maybe even taught you something? And let’s say that book cost $9.99. You basically saved $1 per hour by reading a book that wasn’t as good.

“Wait!” you scream. “Are you saying all $0.99 books are bad? Or that all $9.99 books are good?”

Nope.

But what I am saying is that your chances of having a $0.99 book be worse that a $9.99 book are very high? Why? Because every single author I know of, no matter how amazing, does a minimum of two rounds of edits on each book they write. I usually do closer to ten. And the book they end up with after all those edits is exponentially better than what they started with. The book was hammered, sawed, polished, revised, polished again, and polished again before it came out.

Most $0.99 books are not. Period. End of story. The authors might be great. But their books did not get the loving work necessary to craft a great product that you could love and reread for years. Would you hire an electrician to fix your car’s wiring for $0.99—especially with no guarantee? Would you eat a $0.99 T-Bone at the local diner? Would you expect the $0.99 cut of meat at the butcher’s to be the same quality as the $6.99 cut?

No you wouldn’t. Yes, you can find some cool stuff at the dollar store. I seriously do not want to know how they make some of it so cheaply. But I wouldn’t buy anything I cared deeply about there. I wouldn’t buy anything that I planned on investing ten or more hours on.

Now let’s clear up a couple of myths.

Myth 1—Why would I spend more than $1 on an author I don’t know? It’s too big a risk. First, how many movies do you see that cost more than $1? Are you guaranteed those will be great? No, but I’ve read reviews. Read reviews of the books you buy. But what if I don’t like the writing? Almost every e-book I’ve seen lets you download a sample. For free. Can you imagine a movie saying, “Here, watch the first fifteen minutes. If you don’t like it, just leave and pay nothing.”

Myth 2—I can’t afford to spend more money on books. Go to the library. Check out a really great book for free. You’ll be reading something good and it won’t cost you a thing. Then, when your budget isn’t so tight, you can buy some of the books from the authors you’ve come to love.

Myth 3—Why should I pay $9.99 for a book when the print version is only a couple of dollars more? Well, if the print version is close to the same price, don’t buy the e-book. Buy the print version. Sometimes you get some really great deals. Amazon had a special where I got the latest Diary of Wimpy Kid book and Killing Lincoln for $2.99 each—with free shipping. Yes, I jumped on that. Who wouldn’t?

In fact, even better go buy the print version at your local independent book store. They have awesome people, great recommendations, author events, and we really need to keep them in business.

But don’t not buy the e-book because it isn’t enough below the cost of the print book.  Remember that number up above $5 and change? That’s the sum total difference between the print book and the e-book. And as more people buy e-books, more of the production costs have to be covered by the electronic version.

A print book gives you something you can put on your shelf and share with your friends. An e-book gives you something you can load with 100 other books on your e-reader and take anywhere. Each of them has different benefits. But the bottom line is that what you are buying is the story, not the medium. I fully expect that both mediums are going to end up being a few dollars apart most of the time.

Myth Four—A book shouldn’t cost more than $0.99, and I won’t buy anything that’s more. That’s actually not a myth at all. If you feel that way, you will find plenty of books for under a buck. You’ll find as many or more that are free. And if you buy your reading material the same way you buy your generic cereal, go for it.

This really is not to be mean in any way. I know there are plenty of people for whom it’s not as much about quality as it is quantity. You would rather have ten mediocre books than one good one. You’d rather see ten okay movies than one good one. If you don’t mind buying a few clunkers, then go for it. There is a reason several authors made a ton of money selling quickly produced books for under a buck. And who knows? You may like them every bit as much as the books that are more expensive.

But just remember, quality has a price. It does in clothing. It does in houses. It does in cars. It does in hotels, piano lessons, pedicures, and yard care. If you spent much more time and produced a higher quality product that someone else, wouldn't you feel justified in charging more for product or service?

If you understand that better quality is worth a little more in everything else you buy, why should it be different in books?

And if, heaven forbid, books ever do get to the point where the only way to make a profit is to turn out a quick and crappy product, the good news is that at least the people who have been only buying cheap books for years won’t see any difference.