Friday, July 17, 2009

(Fre)e Books?

First, a PSA: Book Blogger Appreciation Week will be September 14 - 18 this year, so if you blog about books, you really should consider signing up. Yours truly has already done so, and I expect to be in good company. Whether you've got your own blog or not, please consider nominating your favorites for some mega sweet awards—voting is already open. (There's a "best new blog" category. Just saying.)

Now, to business.

E-books are an interesting phenomenon; as Nathan noted yesterday, the debate over e-book availability and pricing rages on, whereas Agent Kristin recently posted about the serious possibility of e-book piracy via Our Dear Leader, Google.

I believe (perhaps unfairly) that human beings are decent to a point: we're happy to pay for something if it's not a serious inconvenience and we believe we're getting our money's worth, but when we feel like we're getting the shaft, we're all for simply taking what we can get. Remember when Radiohead let us pay whatever we wanted for "In Rainbows"? Well, six out of ten of us decided we wanted to pay $0.00, and even knowing full well we could "buy" the album from Radiohead for absolutely nothing, 2.3 million of us decided we were going to "steal" it from BitTorrent instead. Things like this make me wonder whether Kurt was too optimistic about the human race.

Anyway, I have to say I agree with Nathan about the $9.99 price point for e-books (that is, I'm in favor of it) and agree that if people are denied the option of buying, say, The Forgotten Rune in e-format and are told instead that they can pay $26.00 for the hardcover, most are just going to go ahead and buy a different e-book instead (Boy Wizard and the Arduous Quest, perhaps). I don't think the current model (charging consumers hardcover price for e-books while the print hardcover is out, then reducing it to paperback price when that comes out) is sustainable, and if publishers either limit supply or make consumers feel stiffed, consumers are going to turn to piracy more and more.

Example: before the advent of the iTunes store, I did this with music. (Don't give me that look. You did it, too.) Undoubtedly, legions of us still do this, but ever since I've been given the option of paying $0.99 for a song, I've done that. It seems like a fair price to me and the iTunes store is a convenient venue. Similarly, I believe most folks will be willing to pay $9.99 for a book, and as long as it's being sold in a convenient venue (e.g. Amazon's on-line store), people will be willing to shell out.

Now, there are alternatives to the existing structure and the Amazon Model: Peter Olson, former CEO of the big house, recently wrote an essay on e-book pricing and the future of the electronic book medium. In part, he argues that books with high initial demand (especially pent-up demand, à la Dan Brown) could be priced at nearly $40.00 per book in the initial twenty-four hours, then dropped down as low as $4.00 per book once the rush has subsided. (The article also explains the price structure for printed books—among other things, that for every copy of a $10.00 printed book sold, the author makes $1.50 and the publisher and bookstore make $0.50 apiece—so I'd definitely recommend you read the whole thing.)

What do you think? Are you partial to any of the three models I've listed (existing publisher model, $9.99 model, pay-based-on-demand model), or would you prefer something entirely different?

35 comments:

  1. I agree that finding the right price point is key. Do I think it's $9.99? Uh, I don't know enough about it. But your iTunes comparison is exactly why I think the model will work for books (and movies) someday.

    (And frankly, I'm of the belief that it's silly to lament "stolen" profits, because if they didn't like it enough to pay for it, they probably wouldn't have anyway.)

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  2. I am all for the $9.99 model. I buy plenty of books for my Kindle and if I want to read something on my Kindle, and the book at the top of my list isn't available, I just move onto something else. Not offering a book on the Kindle cannot be raising the sales of hardcovers.

    Like you, I used to use venues like Napster to obtain music. When Napster was shut down and then Itunes popped up, I switched to Itunes and I love it. The price is fair, I don't feel guilty and I can pick and choose what songs I want. If I want a hard copy of a cd (which I get for my favorite artists) I go to a brick and mortar store and buy it. All other songs I buy one at a time.

    Same for the e-book movement. There will be some books that I simply want to have a hard copy of and will go to B&N or BAM and buy it.

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  3. The pay according to demand model sounds alot like, oh, I don't know: scalping. Because that's what it is. So I'm very against that. I don't mind a 9.99 price for a book that's out in hardcover; that's not bad. But it should probably go down to match the paperback price when the paperback actually does come out.

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  4. I don't have a Kindle or e-reader, so this may already be going on now. But I like iTunes' current model, where some albums (and songs, even) are cheaper than others, depending on popularity. It would be nice if something like 9.99 were the base price for books (like 99-cent songs) but you could get some lesser-known books cheaper, while others (like Dan Brown's books) could be a bit more expensive at first. I love the less expensive indie music I can find on iTunes. If it works for the music industry, I don't see why it couldn't work for books.

    And you're right: even after free music from Napster it's easy to love iTunes now--the ease, the organizational components all make it worth it to buy music from them.

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  5. I like the $9.99 model as well. It's affordable and easy.

    With respect to eBooks in general, not just monster blockbusters, it should bring more choice to readers. Authors complain all the time about the limitations of the current structure preventing less mainstream but quality work from having representation. The music industry model has been great for this kind of art and even the quality of mainstream offerings has gone up. iTunes is a perfect example. When consumers have a choice of buying only the songs they like artists respond by putting 10 of their best efforts on an album instead of one or two "great" songs and a bunch of filler. With eBooks this could translate to a resurgence of genres like poetry and short stories for more consumers.

    It's coming, there are some kinks to work out, but in the end it should be a good thing. In the meantime it seems silly to alienate the future market by refusing to sell them the product they want. Basic sales 101: Someone wants to buy it? Close the sale.

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  6. I wonder how many people buy hard covers compared to paperbacks. Someone must buy them, but except for the rarest of cases, I always wait for paperback (and if I really have to read it RIGHT NOW, usually go to the library). I like the $9.99 price point, but agree that it should drop when the paperback comes out (as currently seems to be the case on Amazon). So I guess I'm not inherantly opposed to the ebook price falling, more that I think $25+ is too much to pay for a book regardless of format.

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  7. The problem is that publishers (like music and movie companies before them), think that the fact that some people won't bother paying even $9.99 undercuts the model entirely. The reality, however, is that a lot of people are going to move to e-books, and they're going to get them however they can. Publishers might as well try to take advantage of the portion of people out there who are willing to pay for them. The key, in my opinion, is to keep prices low enough (at least at first) to draw these willing folks in (see, e.g., Apple's iTunes store, which stuck with the $.99 price for years in the face of tremendous pressure to increase prices).

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  8. "In part, he argues that books with high initial demand (especially pent-up demand, à la Dan Brown) could be priced at nearly $40.00 per book in the initial twenty-four hours, then dropped down as low as $4.00 per book once the rush has subsided."

    I really disagree with this. This ends up penalizing the most devoted fans of a work, and could seriously backfire. Remember when the iPhone first came out, and Apple dropped the price by $200 only 2 months after the release? Remember how PISSED people were and how Apple ended up giving out rebates and store credit?

    I was part of the Harry Potter rush, and I was TOTALLY EXCITED when Amazon screwed up and delivered my copy 12 hours early, but I simply am not interested in paying extra for the privilege of reading a book before other people. If the publishers told me the price would drop later, I'd wait. If they didn't tell me, I'd be pissed, and my ire would show when the author/publisher's next books were released.

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  9. I have not bought a book for pleasure reading since I got my Kindle and probably won't. There are enough books available on Kindle to keep me busy.

    I like the $9.99 price -- two books for the price of one hardback. I would NOT pay more for an ebook though. If I have to pay $15 or more, then I might as well buy the hardback.

    I too have skipped reading a book if it's not available on Kindle. IfI want to read it, I request that my library purchase it and get on the waiting list.

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  10. Eric --
    I asked this yesterday at Nathan's blog, and he pointed me to you: I know you said Amazon sales are calculated in BookScan recently, but does this include their ebook for Kindle sales? What about Sony's eBook Store for their Reader?

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  11. Hardcover vs. paperback: If you buy the hardcover, you buy exclusivity. I'm the first to read this book. You also buy better "value" as binding and paper are more expensive. If you don't care for either, you wait until the paperback comes out, or find other solution.

    I believe that both, exclusivity and better value, are needed to justify the higher price. Of course, when a product is dated because a newer and better one is on the market, it becomes cheaper without being changed. The new product takes the place of exclusivity and better value.

    Regarding epublishing, that means to me that you can only scale prices if higher prices actually mean higher value. But why not bring out a version with additional material first for a higher price and a cheaper basic version later?

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  12. I don't own an e-reader. Cost is prohibitive. If I did, I'd look to buy more ebooks than physical books since most books only get read once. I don't buy hardcovers. Cost is prohibitive. $9.99 for an ebook still seems high to me, if the paperbook can later come out at $4.99. Why not sell ebook for $6 or $7 dollars, no price change?

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  13. I disagree with the pricing method described by Peter Olsen, because I think it'll spark that same feeling of being "cheated." Paying a higher premium to get it sooner, then having the price drop significantly in such a short period of time? I'll wait, thanks.

    Then again, I'm not an early-adopter. I always wait until tech settles before I jump in.

    Also, there's a problem with buying eBooks via Amazon and their hyper-aggressive DRM (as I've mentioned elsewhere, not applied to their mp3s). If I were to pay $9.99 for a book, I wouldn't want the ever-looming risk of it being taken away from me should there be some glitch (as was seen via Windows' escapade with aggressive DRM) or because Amazon has found the Kindle to be a poor venture for one reason or another and shuts it down. With a paper book? The book is mine. And I can loan it out to friends.

    And a point that's not often brought up about Radiohead's experiment: many people are accustomed to getting their music via BitTorrent. Navigating Radiohead's website is an extra step they don't often do, and we humans are generally creatures of habit :)

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  14. Hi Anon @ 12:13--

    At my publishing house, ebook numbers are not rolled into the general sales numbers for Amazon, though we are keeping tabs on ebook sales separately. When ebook purchasing reaches critical mass (which it hasn't yet), we want to be on top of it.

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  15. Hi again Anon--

    Sorry, I read too quickly and glossed over your real question. The answer is no; as far as I know, Amazon doesn't report their ebook sales to BookScan.

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  16. So I'm assuming the $40-$4 margin is a educated guess and really just some nice even numbers? I'm surprised there is some negative feedback to this method. What do you think a hardback price is? Perhaps I'm wrong, but my guess is it doesn't cost $20 more to make a hardback over a paperback.

    Don't want it now? Don't buy it now. Dynamic pricing is just good ol' economics. (Scalping's really just good ol' economics) It is a monopoly (the author) hiring out a firm (the p or e book publisher) to do the research for him and price his product accordingly for a share of the revenue. The friction occurs when one of these venues doesn't determine the price (aka bookstore) which I think is the problem in the first place.

    It's not an issue of e-book versus p-book, it's an issue of coordination between the parties involved.

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  17. I think $9.99 for an e-book when it first comes out is fine, but it had better drop to less than the price of a paperback when the paperback is released. My reasons for it being less are that 1. I don't get to have an actual book in my hand and turn real pages 2. There is no printing cost, and little to no distribution cost for an e-book, therefore it should not cost as much as the printed version. It would be like me charging $100 for Giclée prints of my paintings, and charging $100 for digital downloads of the same paintings. It makes no sense.

    I think $9.99 is a good starting price, and it should go down from there.

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  18. Hah! Funnily enough this article proves my fears TRUE.

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  19. As a writer, I'm more concerned with royalties than retail price. If I get $2.50 of that $9.99, I"ll be doing better than I do now.

    My only problem is piracy. Once you distribute in digital form, you are effectively pricing the book at $0.00.

    At my level, I'll take whatever the publisher dishes out; but if I were Dan Brown, why would I allow my book to be distributed electronically -at all-? That'd just lose me money.

    Well, or so I assume. I'd like to hear what you think. Is there a realistic model in which Brown would make more money by simultaneously releasing a $0/9.99 version along with a $24 hardback or $8 pb? I can't think of one. Seems like he'd just lose a few million bucks, with no payoff other than making the Kindled spirits happy.

    Joel

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  20. I'm fine with the price structure of 9.99, and happy that it was pointed out that readers who prefer ebooks are going to download other ebooks instead of buying harcover.

    I guess I'm still waiting to hear that publishers have a plan, or are planning, for a better incorporation of the digital platform into their profit structures, rather than freaking out about it.

    I kind of hate myself for it, but I just can't see myself going back to real books now that I've started reading digitally. Today I passed a bookshop with a book in the window that I wanted to read and I said "I'll just download it." I hate that, but as you mention, I'm happy to pay for the download.

    I worry what poor people who can't afford expensive ereaders will read five years from now.

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  21. I read an article in the Wall Street Journal suggesting there might be a free look before purchase model whereby the first chapter or two is available for free and the reader only pays if he downloads the rest. Do you see this happening? I know it happens de facto at hardcover book stores today over a chai latte or similar.

    I also think that short stories may have a little revival due to ebooks which could increase the market for short story writers. Many of the barriers that make short stories commercially difficult are eliminated by e-books.

    And from another perspective, as television keeps getting watered down due to the implosion of their ad based model, might books become more important as they will remain of highest quality. There is not much difference in cost for an author to produce a good versus bad book as the cost is typically measured in hours and effort. Yet there is a big difference in cost between a high quality tv drama with stars and the latest iteration of "I want to get my 15 minutes of fame" that proliferates the cable dial. RC

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  22. I agree with Daniel. 9.99 is just barely acceptable to me, for an ebook, and that is when it is excusively available in hardcover. Ebooks should not cost more than their paperback brethren.

    Moreover, I would not buy a book that has wacky DRM protections on it. I don't want to be like the kindle folks that lost their copies of 1984 and Animal Farm because Amazon remotely deleted them. If I'm going to purchase a book, I expect to be able to keep it. Otherwise, piracy would be the best option for me.

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  23. Having just bought my first e-book (Jennifer Weiner's new release at $14.99) I have completely different feelings about this. I don't own a Kindle yet (using my iPhone), but what will affect me is not pricing, but whether or not I want to own the book. I guess having a virtual library is a form of ownership, but it's not the same as having hardcopies you can grab from your shelf. I really view the e-purchases as disposable. I don't feel that way about music, but you can't hold a song in your hand. I'm willing to pay a higher price for a hardback, because I feel like I'm getting more.

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  24. INTERN would like to see a subscription model for things like short stories and novels in e-book form: $20/month for a few awesome novels, or $10/month for a bunch of short stories. Erotica e-book vendors are way ahead of the game on this front. Just sayin'.

    Thanks for keeping up this insanely intelligent and interesting blog.

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  25. Great debate, and one that's been raging across the web this week in the wake of Chris Free Anderson's new book.

    As an author, I love the Radiohead model. I've also blogged (http://agnieszkasshoes.blogspot.com/) about an equivalent to the old patronage way of paying for authors. But what I will always do is give my e-books away for free and charge for the paper versions. I want my readers always to have access to my work, and I want them to have it regardless of whether they have disposable income or not. Not that I'm rich - I'm broke - which is part of why I empathise with broke readers. But I don't want people forking out nuless they really want to. So no matter how much or little success I have as an author, my books will always be free in some format. And I truly believe they have an original enough voice that I will be able to obtain and maintain the loyal fans I need to sell enough special edition paperbacks (I like the idea of ONLY selling special editions, that command a higher royalty AND give fans something extra) to keep me in beans on toast. And that's all, after all, we really need.

    On the same blog there are some interesting alternative models posted by commenters, such as the rather psychologically clever increasing cost model.

    Please help yourself to my novel if you like, at http://danholloway.wordpress.com/

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  26. Agnieszkas Shoes:

    I think the Radiohead model works (at least as well as it does) only _after_ you're Radiohead. I make my living as a novelist. I have a family and a mortgage. I need more than beans on toast: I need beans on toast and diapers and health insurance and mortgage payments.

    The more I read about this, the more I wonder why authors would release complete books electronically _at all_. (I mean if they're trying to make a living, not just share their genius, and don't have a famous last name or a cunning marketing plan.)

    Far as I can tell, I should have my agent delete all mention of electronic rights on contracts. If I write well enough, if people want my stuff enough, it'll be available in the one format to which _everyone_ has access.

    On the other hand: libraries. What does this mean for libraries?

    Oh, and THE INTERN: the erotica business plan might be great for vendors and customers. How is that working for _writers_?

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  27. Hi, anonymous. I sincerely believe that the so-called freemium model is a highly viable model for an author. As someone who "wants in" I don't want to present readers with teh choice of paying for my work or not reading it. I believe if my work's good enough, it will find people willing to pay, but readers have to be given the chance to find out if it's good enough.

    I most certainly don't want to take a living away from existing writers. On the other hand, I do feel as though defensiveness against "free" is symptomatic of a protectionism that I'm not happy with. I'm 100% with Dawn Marie - if my writing's no good, the fact it's free won't make people keep coming back for it - and current authors have nothing to fear. If, however, it is good enough, shouldn't I be as entitled to a slice of the pie as they are? And if there are enough currently on the "outside" "better" than some on the "inside" shouldn't they be allowed to replace them? I would never begrudge any author their sales and their chance to make a living out of writing however they choose. All I ask is that they accord me the same courtesy. If either my writing or my business model is flawed, I'll soon go away.

    The comment about baked beans was, of course, a metaphor for the basic expenses of life, and a way of saying I have no desire to be rich, just to earn an honest living. Apologies if it sounded condescending - I wrote the comment shortly after reading about Yann Martel turning down an initial seven-figure advance for his Life of Pi follow-up, a story that made me, frankly, livid.

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  28. A comment on the file-sharing issue. Those who file-share music are actually more likely to buy than those who don't, because they tend to be the hardcore music fans. The model of choice is to try lots for free and then buy the ones they really like, which I have to say is a great model - new musicians realise this, and many offer their work free quite happily. I think it will become increasingly the model with books, which I think is a good thing - it will happen more so in literary fiction and some other genres than in mass markes, because that's where the tech-savvy, hardcore book fans are, just like in music. Earlier this year The Boxer Rebellion had an iTunes number 1 (560,000 downloads in a week) without a label or a physical product because they had put the music out there for free and the fans had picked up on its quality. I can't imagine why an author would think a bottom-up meritocratic model like that is anything other than great. The problem with the current industry is that it thinks top down - which is why it is in crisis. As writers, we SHOULD be driven above all else by our readers (yes, more than ourselves - in any other business you put the customer first!).

    The question isn't, though, what should or shouldn't be the case, it's how writers, given the changing landscape, will adapt. And sticking to the old ways just won't work. Readers won't stand for it.

    Very best
    Dan
    http://www.freeeday.wordpress.com
    http://yearzerowriters.wordpress.com

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  29. Well, six out of ten of us decided we wanted to pay $0.00, and even knowing full well we could "buy" the album from Radiohead for absolutely nothing, 2.3 million of us decided we were going to "steal" it from BitTorrent instead.

    There's huge issues which are still largely unaddressed regarding usability. People were already using BitTorrent and as the track was free anyway, they may as well get it via the system they are used to. Often I've seen perfectly good content become a nightmare to deal with because of badly thought-out DRM or even just forms to fill in that people don't feel like filling in.

    I have seen instances where users were happy to pay for content but then when that content wasn't delivered efficiently, they opted out and took the illegal version. Money was not the primary issue. Often, DRM or perceived rights to keep the content are.

    There's a lot of discussion about the Kindle and losing the content you have purchased. In that case, you should get a pirated version to make sure no one can take it away from you. And if you are doing that, well, why bother paying in the first place. People feel a lot better about opting out of the legal transaction when they feel they are simply protecting themselves.


    (Related content: Twenty Sided » Blog Archive » Re-Kindle the DRM debate )

    Content providers who want to avoid their content being pirated should invest time and effort into looking at what they can do to keep access simple.

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  30. Agnieszkas Shoes:

    Thanks for the v. interesting response. I don't think the conflict is between writers on the 'inside' and the 'outside'. I think the conflict is between a system that allows writers to make a (meager!) living vs. one that does not. (Or at least makes it much more difficult.)

    I DO want to present readers with the choice of paying for my work or not reading it. That's the same choice that we face when we want to eat a meal at a fine restaurant, say. Or if we go to the doctor, or the auto mechanic or therapist. That's almost the definition of a 'professional.'

    I see no reason to believe that people, if they must choose between getting something for free and getting precisely the same thing for a fee, will choose to pay the fee. (At least not in sufficiently large numbers to keep me and you both from needing day jobs!)

    That reminds me of nothing so much as those 'optional' regulations that gov't (in the pocket of a particular industry) sometimes imposes. Let the industry decide if they wanna follow any particular regulation! Surely they'll do the right thing!

    I completely agree with this: "I believe if my work's good enough, it will find people willing to pay, but readers have to be given the chance to find out if it's good enough."

    Absolutely. And giving away half a book makes a lot of sense to me. (As do reviews, word of mouth, etc.) What I don't agree with is -this-: "I believe if my work's good enough, it will find people who choose to send me completely optional charitable donations."

    I also don't think writers should beg, to be so desperate. We're professionals. I don't take a pair of sneakers home from the store and wear them for a week before deciding if I wanna pay. I think novels deserve at least that much respect.

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  31. I like the $9.99 e-book model, but books are much more expensive in Australia where I'm from. You won't even get a paperback that cheap, so it seems like a pretty good price to me.

    I also don't mind the idea of having a premium price for people for the first 24 hours and then dropping the price. While most people may not be willing to pay the higher price, some would be. The others could just wait the 24 hours.

    I do agree that people would need to know in advance that the price was going to drop, or they would be pissed to find that they've paid $40 for something that, had they waited, they could have gotten for $9.99. They need to know that they have a choice.

    I also think you'd need to market it carefully. Instead of saying, 'The price will be $40 for the first 24 hours of release', you need to say, 'The price will be $9.99 on release. Those willing to pay for a pre-release copy can get it 24 hours in advance for $40." The people not willing to pay the $40 still feel like they're getting the book on its release date, and those who do cough up feel like they're getting something exclusive.

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  32. I think selling something in electronic format is immoral and offensive. Let's get away from selling (Or, in Amazon's case, leasing) ebooks and find new ways for authors to make a living that doesn't involve charging money for something in infinite supply.

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  33. Hi Anon 8.22 (if that makes sense). I have absolutely no problem with authors who don't want to give away their work for free. My only beef (and it's not really a beef, just something I don't quite get) is with authors who tell me I shouldn't give my work away. Like I say, if I'm wrong, I'll soon land face down and go away.

    People often think I must be rich. The answer is I'm broke, and I'm looking for creative ways, as an author, to make money, so I can do what I love for more than an hour a day. I genuinely believe giving my work away is it. And if I'm told not to, I'm afraid I can't see a word for that other than protectionism.

    Jon, check out the Free-e-day site www.freeeday.wordpress.com I will follow your blog with interest later in the year - I am always trying to refine business models for making money out of writing, from merch to special editions, to live performance to standard freemium. Books will be free whether people like it or not. We need to learn to figure out what to do next rather than trying to hold backthe inevitable. Musicians have managed without diluting the quality of what's out there -I find it extraordinary to think that we writers can't do the same.

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  34. I'm totally for the $9.99 model. My publisher, one of the biggies, is offering the Kindle version of my book at the generous price of $17.95, marked down from $21.95. I've begged and pleaded with them to lower the price to realistic, affordable, and rational levels. Dead silence. Suicidal silence, if you ask me. I go out an promote the book, raise interest and then folks see the price. (The $21.95 is damaging enough, but extending it to the e-book, well, that just about does it.)

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