Paul Krugman has written and given away one of the best lines ever: “In the long run, we are all the Grateful Dead.” He did so in the context of writing about whether writers and book publishers will respond to the digital revolution by doing what the Grateful Dead did: give the music away and make money on merchandise.
Interestingly, he doesn’t discuss the obvious route by which free stuff earns money: ads. My view reflected (now evolved from my views 2 years ago expressed here and here) is that ads likely don’t cut it when it comes to books. The reason is that ads are most powerful when they are seamlessly integrated with the activity you are undertaking. For instance, watching TV is seamlessly interrupted with watching ads but the activity, watching, is constant. For newspapers and magazines, scanning for interesting things is interrupted with scanning for ads. Again, the activity, scanning, is constant. Finally, search engine ads keep constant the activity, searching.
But reading is different. You are reading particular words and ads plonked on a page will be easily skipped. The only way to get ads into books is to make them look like the words — something akin to product placement. Interestingly, in writing books I have learned that companies are not only not willing to pay to place ads, if you refer to something you have to pay them. For instance, in my textbook, we wanted to use a picture of Coca Cola to refer to branding but the company wanted to charge the publisher $50 for the privilege; so we dropped it.
The big threat is to the publishing value chain. My recent experience shows that in today’s world publishers add lots of value. There is editing (something I really need), cover design and then sales and distribution — for instance, getting books into catalogues and stores is not something individual authors with no prior reputation can do. The rest of the value is at the retail end itself.
When it comes down to it, digitisation has a hierarchy of threats and it moves downstream and then up the value chain. Retail is at its biggest risk and that is why Amazon’s Kindle move is interesting: they are moving first on their own destruction. But what is more interesting is that they are leading this charge whereas surely one would have expected a hardware maker like Sony or Apple to have done the job. I fully believe that by the time Parentonomics 2: The School Day (and yes, I have already started planning it) is ready to go, e-book options will outsell others. Indeed, in the next few months I am going to launch a proper Parentonomics web site based on that bet.
My guess is that authors will make rather than lose money over the compression in the value chain. And the big authors will always make money other ways — most notably movie rights. By the way, film and TV rights are still available for Parentonomics! Any takers?
[Related: Paul Krugman back in 1996 does futurology. Very good but ‘CDs’? And Paul caring for puppies?]
I think more bands make money from their concerts than their merchandise. A lot of authors make money from speaking engagements and more importantly from consultancies. In our case we are working on a book and we hope it will pay for itself in sales of our information systems. That is, it is still advertising but the product being promoted is different.
In the case of a text book I once coauthored the main payoff was it was the clinching factor in an job as well as a useful give away on paid courses. The sales were of the order of 20,000 but the royalties of 5% (half of 10%) on the wholesale price was insignificant in comparison to the other benefits.
There are other ways to make money from your book besides the ones above. Perhaps you could team up with a supplier of some other service and offer it as a give away (fill up with petrol and get an ebook copy of parentonmics)
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“seemlessly interrupted”?
I can only guess you mean “seemingly interrupted” as only a foxy moron would mean “seamlessly interrupted”…
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