The City of Lost Wages

One common theme seems to be feeling deprived of income by pirates. Celine Chatillon wrote:

Every pirated book is a royalty (about 50 cents in most cases) that I do NOT earn. I’m unemployed and in poor health with no health insurance currently… I could have used the money from THOUSANDS of my books that were e-pirated through one pirate site alone (that I know of). These books were essentially stolen from me and my publishers.

But the thing is, how many of those thousands of books actually represent lost royalties? How many people sitting in the comfort of their homes browsing pirate sites would have decided to go out and buy the book if they couldn’t have gotten it free on-line? How many of them would have even bothered to click over to Amazon and order it without having to bestir their lazy butts from their chairs? Probably not many. (They’d probably just have pirated something else instead.)

I agree that even if lost money isn’t involved, piracy is certainly illegal and usually wrong. Authors should have the right to control how their works are disseminated. But in painting each download as a lost sale that would have meant money in their pocket, a lot of anti-pirate authors are fooling themselves, as well as totally failing to connect with any pirates who might otherwise be shown the error of their ways.

After all, the pirates know for a fact that they wouldn’t have bought the book anyway, so the author is not out any money they would otherwise have gotten from them. And using themselves as an example, they doubt any other downloaders would have either. So if that author is so out of touch with reality as to think they would, why should they believe anything else the author says about being hurt by piracy?

An Industry Perspective

There are also some appeals to authority going on as writers discount the opinions of non-publishing-industry folks for their lack of understanding from within the industry. Rowena Cherry writes:

Whenever apologists for those who infringe copyright produce their arguments, sooner or later they cite a professor, doctor, or some institution of higher learning.

The trouble with these folks is that they are not experts in piracy or e-publishing. They are not qualified to opine upon e-book piracy, in my opinion. They live by a different set of rules. They enjoy an educational exemption.

(She goes on to rail against the Chafee Amendment to the DMCA, which entitles non-profits who work with the blind to create and disseminate e-books to them without paying the authors, but that’s another matter that was addressed eight years ago by writer/editor Eric Flint.)

However, there are plenty of industry folks, writers and publishers, who would disagree with the positions these authors are taking. That’s not to say they’re necessarily right (or that these authors are), but they’re certainly not the ivory-tower academics of Ms. Cherry’s comment. So, here are a few examples:

Moira Rogers

Bree, half of the urban fantasy romance writing duo “Moira Rogers”, made a thorough post to their blog explaining why, even though they strongly dislike piracy, they feel that getting bothered enough to go out of their way to fight it is a waste of time they could otherwise spend writing more books that make them money.

I believe firmly that the only solution for piracy is the iTunes solution. Make it easy, affordable, and more convenient than piracy. No, that won’t stop piracy. Nothing will stop piracy. But it’s the first step in regaining some control of the situation. Lazy people will pay, and I’m speaking as a lazy person.

For now? I ignore piracy. (Mostly: I will discuss my exceptions later.) At this point I have no proof that piracy is hurting me. My sales are not going down–but they are slowly shifting to 3rd party venues. I believe that some epublished authors are not giving the growing 3rd party market enough consideration when they look at their first month’s sales totals and scream Oh no, piracy has ended my career!

Tim O’Reilly

And here’s a post from eight years ago by tech-book publisher Tim O’Reilly, that has often been quoted and re-quoted by others since then. O’Reilly famously referred to piracy as “progressive taxation” that might cost best-selling artists a few bucks but often brings considerably more attention to artists laboring in obscurity.

I have watched my 19 year-old daughter and her friends sample countless bands on Napster and Kazaa and, enthusiastic for their music, go out to purchase CDs. My daughter now owns more CDs than I have collected in a lifetime of less exploratory listening. What’s more, she has introduced me to her favorite music, and I too have bought CDs as a result. And no, she isn’t downloading Britney Spears, but forgotten bands from the 60s, 70s, 80s, and 90s, as well as their musical forebears in other genres. This is music that is difficult to find — except online — but, once found, leads to a focused search for CDs, records, and other artifacts. eBay is doing a nice business with much of this material, even if the RIAA fails to see the opportunity.

O’Reilly puts his money where his mouth is. Like Baen, all O’Reilly e-books are sold DRM-free.

Eric Flint

And speaking of Baen, writer and editor Eric Flint has long been a proponent of giving things away free legitimately, and dismissive of the negative effects piracy (and other bugaboos, such as used bookstores and, gasp, libraries) is alleged to have. In fact, he’s written so much on the matter, between Prime Palaver and Salvos Against Big Brother, that it’s hard to pick out any one particular piece. But here’s part of a Salvos Against Big Brother column from 2007:

Yes, it’s irritating to authors to see their work posted up on the Internet without their permission, especially when the deed is accompanied by a virtual raspberry from a superannuated juvenile delinquent bragging about it. But the fact remains that the material damage done to authors by such activity is so minimal that it can barely be distinguished from zero— if there’s any material damage at all, which I doubt.

I am not guessing about this. The reason I initially put up my first novel for free online was because I got fed up reading the hysterical howls of some authors in online discussion groups, shrieking that their livelihood was being mortally threatened.

To prove that was nonsense, as graphically as I could, I put up one of my own novels for free. “Pirated myself,” if you’ll allow me the absurd expression. That novel, Mother of Demons, has been available online for free for almost seven years now. And . . .

It’s still in print, and still keeps selling.

Flint (along with his publisher, the late Jim Baen) followed this up by creating the Baen Free Library as an adjunct to Baen’s DRM-free low-cost Webscriptions program—and then coming up with the idea of binding CD-ROMs full of authors’ works into first-edition printings of selected hardcovers—and allowing them to be distributed for free.

One Baen fan even posts downloadable disk images and browseable directories of the CDs on his website—with permission. Many of these disks contain a majority or the entirety of the author’s other works—all available for free. Authors with giveaway CDs include Flint, David Weber, David Drake, and John Ringo. (It’s hard to imagine the Marxist Flint and the staunch conservative Ringo agreeing on anything at all, but they both see the value of giving away free e-books!) Even Lois M. Bujold, who was originally reluctant to participate in Baen’s freebies on the advice of her agent, has put (nearly) every Vorkosigan book on a free CD bound into her latest novel.

Oddly enough, Baen e-books are among the least often pirated of any mass-market books—because the pirates know they can already be had cheaply or freely by legitimate means.

Cory Doctorow

And Cory Doctorow is another author who is a proponent of giving it away for free. While some would say that Doctorow is one of those big-name writers whose reputation means he can afford to give e-books away for free, Doctorow got that reputation in the first place by…giving his books away for free. Before Down and Out in the Magic Kingdom, he was only known for being an offbeat pop-culture blogger on BoingBoing—which is well and good for people who read offbeat pop-culture blogs, but they aren’t necessarily the same people who buy books.

In an essay reprinted in his freely-given-away book Content, Doctorow writes:

There’s no empirical way to prove that giving away books sells more books–but I’ve done this with three novels and a short story collection (and I’ll be doing it with two more novels and another collection in the next year), and my books have consistently outperformed my publisher’s expectations. Comparing their sales to the numbers provided by colleagues suggests that they perform somewhat better than other books from similar writers at similar stages in their careers. But short of going back in time and re-releasing the same books under the same circumstances without the free e-book program, there’s no way to be sure.

What is certain is that every writer who’s tried giving away e-books to sell books has come away satisfied and ready to do it some more.

He also notes that SF fans are in general very affectionate toward books they like, and tend to be early adopters of new technologies.

Indeed, science fiction was the first form of widely pirated literature online, through “bookwarez” channels that contained books that had been hand-scanned, a page at a time, converted to digital text and proof-read. Even today, the mostly widely pirated literature online is SF.

Nothing could make me more sanguine about the future. As publisher Tim O’Reilly wrote in his seminal essay, Piracy is Progressive Taxation, “being well-enough known to be pirated [is] a crowning achievement.” I’d rather stake my future on a literature that people care about enough to steal than devote my life to a form that has no home in the dominant medium of the century.

Amazon.com

Over the last couple of years, major bookseller Amazon has been giving away the first books in series for free on the Kindle, and publishers, agents, and authors are often finding that they act as “gateway drugs” for readers to buy the rest of the writers’ series. (Sound familiar? Oh hey, Baen Free Library!)

“Giving people a sample is a great way to hook people and encourage them to buy more,” said Suzanne Murphy, group publisher of Scholastic Trade Publishing, which offered free downloads of “Suite Scarlett,” a young-adult novel by Maureen Johnson, for three weeks in the hopes of building buzz for the next book in the series, “Scarlett Fever,” out in hardcover on Feb. 1. The book went as high as No. 3 on Amazon’s Kindle best-seller list.

And Amazon benefits, too—they also lure existing fans of those writers to the Kindle e-book platform. Of course, not all publishers are fans of this practice, including some who feel it “devalues” books. (Why is it that when publishers say something “devalues” books, what they really mean is they want customers to pay more than they already are? Did nobody teach them about the price-demand curve?)

Nathan Henrion

These Amazon giveaways have been good for more writers and publishers than just those who work with the Big Six. Earlier this year I mentioned Nathan Henrion, a midlist publisher, who reported big sales of later books in its series came from Amazon listing one of his titles for free.

Much of the talk by the big 6 publishers has been stress over cannibalization of print sales, or the idea of replacement sales, by ebooks. For midlist publishers such as ourselves, I believe we fight against substitution. We capture the “browser” market. If our title is not available or visible, a customer will simply substitute for another one in the genre. Free gave us the visibility that we could not purchase.

Janis Ian

Creative artists who have embraced piracy are not confined solely to the print publishing industry, either. Folk musician Janis Ian discovered that, thanks to piracy, her recordings were finding an entirely new audience.

My site gets an average of 75,000 hits a year. Not bad for someone whose last hit record was in 1975. When the original Napster was running full-tilt, we received about 100 hits a month from people who’d downloaded “Society’s Child” or “At Seventeen” for free, then decided they wanted more information. Of those 100 people (and these are only the ones who let us know how they’d found the site), 15 bought CDs. Not huge sales, right? No record company is interested in 180 extra sales a year. But… that translates into $2,700, which is a lot of money in my book. And that doesn’t include the ones who bought the CDs in stores, or who came to my shows.

And apparently her article (please forgive pun) struck a chord with the Internet audience. Even she was startled by the immense response it brought. And though she is talking about the music industry here, her further advice could translate to just about any content industry you care to name with a little search-and-replacing of words:

Do I still believe downloading is not harming the music industry? Yes, absolutely. Do I think consumers, once the industry starts making product they want to buy, will still buy, even though they can download? Yes. Water is free, but a lot of us drink bottled water because it tastes better. You can get coffee at the office, but you’re likely to go to Starbucks or the local espresso place and bring it back to the office with you, because that coffee tastes better. When record companies start making CD’s that offer consumers a reason to buy them, as illustrated by Kevin’s email at the end of this article, consumers will buy them. The songs may be free on line, but the CD’s will taste better.

Give It Away, Give It Away Now

And it’s not only anecdotal evidence, either. At the risk of taking a quick trip to an ivory tower, a BYU study has shown a correlation between free e-books and increases in sales in a lot of cases. (Oddly enough, the only case where there wasn’t an increase in sales was for the free e-books being given away by Tor.com, who only made them available for limited times.)

I will grant that some of the above references are to giving books away for free intentionally, rather than piracy, but there really isn’t much difference in the two practices apart from intent. Either way, the book can be downloaded by anyone who cares enough to figure out how.

It probably does help sales more to give the book away for free on a site like the Baen Free Library where people can download it easily, without having to figure out how to jump through the right hoops to download it illegitimately. (And since I’ve started working phone tech support for a major computer service company, my estimate of the number of people smart enough to figure out how to download pirated e-books has gone way down.) But if letting everyone download for free doesn’t hurt, I find it hard to believe that letting just those who know how do so can hurt either.

Again, this is not to say that piracy is right. The decision of whether or not to give away a book should rest with its author. But the aforementioned authors, publishers, and musician—people who have real-world industry experience, and who make their living from their creative works, not “a professor, doctor, or some institution of higher learning” in the bunch (well, okay, except for that BYU study, but that’s just garnish)—find that it doesn’t actually hurt and in at least some cases helps. So, if piracy actually does help, the question of right or wrong may end up being irrelevant.

Weisskopf has many interesting things to say about Baen’s overall strategy, pricing, and the question of e-books “cannibalizing” printed books. The interview begins below the jump. (Links added by me.)

Many voices in the publishing industry are proclaiming that, since printing costs are only a couple of dollars out of a hardcover’s total price, selling e-books at a price point of $9.99 is "unsustainable." But Baen has been selling e-books for less than that for over ten years, even of books released in hardcover, and has become the counterexample that everybody holds up in response to other publishers’ claims about printing costs.

TW: Well, part of the “secret” there is that we don’t pay for expensive DRM (“digital rights management”) schemes. I’ve never understood why we should add to our costs with the sole outcome that it’s harder for readers to buy and read the books we want to sell. On the contrary, I want to make it as easy as possible for my readers to find, purchase and read my books. That goal influences every publishing decision I make from our marketing to what typefaces we use.

How is Baen able to sustain selling e-books at such low prices? Is it simply that Baen considers them mainly another form of promotion for the print books (as suggested here), and so does not assign the same share of manuscript production fixed costs (editing, typesetting, etc.) to e-books that other publishers do?

TW: Certainly when we started we viewed the ebooks as an experiment. In some ways mass market paperbacks are also a “form of promotion” for future hardcovers. Indeed, many pbs from the big publishers will run excerpts of the next hc from the author. The ebook just extends that idea. So yes, it’s a form of promotion. Is it also a source of income & profit? Absolutely.

Are you able to discuss the royalty rates Baen pays on e-books, in terms of percentage of "cover price"? How do they compare to print royalty figures?

TW: We pay approximately double hardcover royalties [in terms of percentage of cover price] for the ebooks.

Is it likely that inexpensive e-books will "cannibalize" print book sales—either now, or at some time in the future?

TW: I don’t think any sales “cannibalize” any other sales. Does a used book sale cannibalize a new book sale? Not at all. In general, people buy the nicest version of a book they can at the time. Can a used book sale or a library loan introduce my author, my series, my brand to a new reader, who may then be enthralled, entranced, ensorcelled into buying the next new hardcover in the series (and the eARC, and the final ebook, and maybe the pb too, so she can lend it out)—heck, yes. My goal is to make more readers for my brand. ANY sale has the potential to do that.

Specifically, I think ebooks will extend the market for books, not reduce it. But then what I am selling is good stories; I don’t care what medium I sell those stories in. If my readers tell me they want it chipped on stone, I will find some way to do that. If they want me to beam the story directly to a chip in the brain, I will do that.

Baen has pioneered a number of interesting techniques for using e-books promotionally: the free library, the webscription bundles, the pack-in CDs. Are any new promotional ideas on the horizon?

TW: We are printing codes in some hardcovers for free ebooks earlier in the same series. But for the time being, nothing radical planned. We’ll wait for the technology for flash drives to get even cheaper and flatter and who knows. Maybe we’ll be able to print drives directly into the books. You tell me! This is the sort of thing I rely on my cutting-edge techie Barflies to tell me about. Maybe your readers have suggestions for me? What would they like to see?

Some people have complained that Baen’s habit of treating e-books mainly as promotional material for selling printed books hurts the perception of e-books as having value in and of themselves, and encourages other publishers to misunderstand and perhaps misuse e-books in that way. (They might point to Tor.com’s free e-book promotion which left a number of e-book readers more disgruntled than pleased as an example of this sort of misunderstanding.) Is this a likely scenario?

TW: I can’t control what other publishers do and how they experiment! It’s not like what we do is a secret formula. Though perhaps we should call it that and sell the secret slowly over the course of a year in seminars…. We can only do what we do. But there are plenty of people over at Tor who value ebooks and want to see it done right.

In the last couple of years, since the introduction of the Kindle, we have seen the first signs that the nascent e-book market is actually starting to take off. At the moment, e-books make up a fairly small percentage of the overall book market—less than 5%. What will happen when and if e-books become a significantly larger fraction of the market? Will Baen have to revise its e-book pricing structure?

TW: When the ebook market takes off, we’ll sell more books. A lot of these questions seem to be leading to: is Baen going to raise ebook prices? We don’t have any plans to now, but I won’t rule it out for the future. Part of being small and nimble is the ability to change quickly as circumstances change. It may well be that Baen books sold through third parties will be more expensive than those we sell directly—that’s the function of paying the middleman and the price you pay to extend your reach. But we don’t dictate prices to other retailers, and we won’t to them. I’m certainly willing to try different things. If somebody finds a way to do it better, we’ll adjust.

Recently, Baen "rescued" two e-book series, Sharon Lee & Steve Miller’s Liaden stories and P.C. Hodgell’s Chronicles of the Kencyrath, after their prior publishers Meisha Merlin (for print) and Embiid (for e-books) went under. What led to the decision to take these books on? Was Lee & Miller’s successful "Storyteller’s Bowl" experiment with Fledgling and Saltation a factor?

TW: We had an editor who was a big Liaden fan, and a freelance editor who had recommended Hodgell to me, so I was aware of those authors in a general way. Also, there was a lot of call for the books from our on-line forum, Baen’s Bar. The Barflies thought the Liaden series would make a good fit for our line. I take that sort of input very seriously. And before they ceased operating we’d been in negotiations with Meisha Merlin to distribute their ebooks, so we were already prepared to take on the Hodgell and Lee and Miller anyway. Hodgell was getting ready to write a new book in the Kencyrath series right about then. It seemed like all the forces of the universe were conspiring to give us the opportunity.

Regarding the success of the “story bowl” early publication of Fledgling andSaltation: yes, it was another proof of principle. We knew the authors had their own strong on-line community, there was already support and good word-of-mouth report on the books, and that wasn’t going to hurt our efforts, but supplement them. The obvious follow-on question is “why not do it again?” And the answer is that it takes a lot of effort on the authors’ part to make that model work, and these authors would rather spend that time writing the next book. Most authors do—but not all. You’ll see this model of publishing more, I think, in the future. BUT—it’s very hard to build an audience if you don’t have the reach of a mass market publisher. Not impossible, but hard. It takes a particular kind of personality to enjoy doing that in addition to enjoying writing fiction that a mass market will want to read—and have the professional skills to do both well.

These series were first reprinted as e-book-only omnibus titles before being re-issued as print omnibuses (although it seems the existing Liaden books were reprinted through Ace rather than Baen) with new sequels commissioned. Were the e-book sales of those titles a factor in the decision to commission new books?

TW: Heck yes! It was invaluable marketing research. And we made money for the authors and ourselves doing it. Win all around.

Toni concluded:

TW: I’m not saying that what we do will work for everyone else. They want to try it, that’s their lookout, and the beauty of a free market. But some contributing factors: because we are an independent publishing house (distributed by publishing giant Simon & Schuster), our overhead costs are probably lower than the big guys. Another factor is that our business model is that of the midlist publisher. Yes, we have several New York Times bestsellers a year. But we don’t expect those books to finance all the rest. All our books are expected to pull their weight, and we rely a great deal on our backlist, the long chain of earlier books in series and so on, to act as a profit center. Put another way, we are betting smaller, so our potential losses are smaller, but the upside is smaller, too. But it is a sustainable way of betting. At least so far!

I refer people to Eric Flint’s “Prime Palaver” at the Baen Free Library for an exhaustive discussion of the issues. In a nutshell, the problem of the midlist author or publisher is not piracy, but lack of exposure. If you like alternate history but don’t know about the 1632 series you can’t buy the books from Baen. So I want to spread the word by any means possible, I want to reach as many readers as possible. So we post extensive partial samples of books, we post partial samples of series (i.e. entire novels) at the Baen Free Library, we distribute CDs with tons of free books in selected hardcovers a couple times a year, we send out review copies to reviewers and booksellers. I hand out free books at conventions.

I have faith in my product: if you read it, you will like it and want more. And if you find you don’t like what I do, I’ve still not alienated a reader who’s been forced to pay for something they don’t like. Plenty of people who like Mercedes Lackey won’t go for Tom Kratman and I publish them both (which means, btw, that I do enjoy them both). This way the reader is more likely to try something new from Baen again—and if I don’t get you with one author or title, maybe I’ll get you on the next one.

The other side of the coin is that Jim Baen didn’t believe our readers are thieves and neither do I. I believe they will buy the book when they have the money. And I don’t believe our readers are ignorant. The understand TANSTAAFL. Our readers understand that we can’t continue to find great books and the authors continue to write them if we don’t get paid. So we don’t treat our readers badly by trying to micromanage the use of the ebooks, and we have been amply rewarded for that trust.

Thanks to Toni Weisskopf for participating in this interview!