Marvel Comics Shows How Not To Price E-Books

Digital comic pricing? It feels about like that.

Digital comics are priced in a wide variety of ways. You can read Marvel digital comics online, via your web browser, for $10 per month (or $5 per month if you buy a whole year at once). 6,000 issues are available to read, with more being added regularly. This is in contrast to their iPad application, where each digital comic costs you $1.99. Meanwhile, they have digital comics collections on DVD for $50 each, where you might get (say) 500 issues of Amazing Spider-Man. Yet they stopped authorizing these years ago.

New comic books cost $2.99 in a retail store (mostly), or you can get the digital version for less... if you care to wait. Some companies (like Archie Comics) are making digital comics available the same day as the print version, for $1 less. This is, of course, pissing off comic book retailers (those who still exist).

What a mess. Not even counting the clumsiness of Marvel's digital comics reader.

Some have argued that Marvel has to have a consistent price for their comics, regardless of the age of the comic. Why?

Comics that were created decades ago were also paid for long ago, and all costs written off. The costs now are for digitization and for the bandwidth necessary to get the comics to the reading device. Perhaps non-trivial, but thousands of comics have already been digitized. Bandwidth is cheaper all the time.

What's wrong with how Marvel is pricing their digital comics? I see no sign that they are trying to optimize their revenue by experimenting with pricing. They have a marvelous (pun, as always, intended) opportunity because of the vast size of their catalog to try dynamic pricing experiments to find the optimal revenue point. Bundle groups of comics at different price points; you've got so many comics you can easily do A/B comparisons. Gather lots of data on how many you sell, and find the optimum price point to maximize revenue. Apply to your entire comic library, and sit back to watch the profits roll in. And not incidentally, revive comics as an art form.

OK, there are issues to be resolved with newer comics, especially if you're trying to keep retail stores going. But $1.99 for each comic on an iPad? I really doubt that's the optimal price. Tablets are poised to become a huge market in the space of the next year, and comics are a perfect fit for the medium. Yet the companies with vast libraries of comics, most of them never seen by prospective audience, are pricing them way beyond the buyer's desire. Wouldn't someone be interested in the early days of the X-Men or Spider-Man? Sure, but not at $2 for 20 pages of (let's be honest) rather lame artwork and story by today's standards. How about if you could read the first 100 issues of Spider-Man for $10? You'd probably jump at the chance if you're at all interested in the character, because that's a lot of content for the money. And not a lot of money to risk. Sure, it's not the $200 Marvel could have made... but how many people are they really going to make that from? Maybe 100 people? And how many would buy that for $10? Perhaps 10,000? The math isn't hard.

This is the same idiocy that's occurring in the music industry. Record companies have vast collections of music that was all bought and paid for decades ago. Yet they're trying to charge a uniform price for it. (OK, this one is primarily Apple's fault for enforcing a 99 cent standard... but the music business has gone along, when they weren't pushing to be able to charge even more for a track.) Is that really the optimal price? How would you know for sure without extensive price testing?

Book publishers are looking at the same issue, and stupidly making the same mistake. They're trying to price e-books near the price of physical books so they don't hurt those sales. At the same time they're trying to get everyone to believe that e-books cost nearly the same to produce as physical books, which is why they should be priced the same. Maybe the office overhead is the same... but for books created decades ago, that office overhead was long ago paid for or written off. So why should the e-book from 1963 be priced the same as the latest one? Shouldn't you be trying to find the price point that brings in the most revenue? Fortunately, authors who are reclaiming their e-rights and self-pubbing are quickly figuring out the right way to maximize their own revenue.

If Marvel could be smarter, I think they'd make a whole lot more money. And comics could be a lot more popular. If the audience was big enough, prices could drop to more reasonable levels while still paying a nice amount to artists and writers. The huge back catalog of Marvel and DC is the perfect way to revive interest in comics as a medium without spending a huge amount subsidizing new comics. Will they figure it out? I'm not hopeful they will.

E-Book Pricing Excites Discussion

E-book pricing is a hot issue among authors and publishers, because prices are all over the map. New York publishers would like you to pay somewhere between $7.99 and $15.99 for an e-book, the difference being in how new it is or how much in demand it is. Joe Konrath, a midlist mystery/horror writer, prices his e-books at $2.99. Who's right?

Many discussion revolve around "value", as in the proper value of an e-book should reflect the author's time and skill level. I think the more practical way to look at it is "How much will a customer pay for it?" Some publishers (and authors) think the pricing should be related to the length of an e-book. That certainly seems reasonable; the price I pay for a short story should be less than I pay for a long novel. But what should those prices be?

I don't think there is an easy answer. Some of the authors weighing in on the question feel the same way. Some take issue with the idea that their books should be $2.99, and argue for a higher price point. Author Dean Wesley Smith lays out a price structure that puts long novels at a higher price point of $4.99 to $5.99. One thing they all seem to agree on is that there isn't enough hard data to really answer the question of pricing.

A few things seem pretty obvious to me. New York publishers have their offices in Manhattan to pay for, an extensive staff, all sorts of expenses... while authors putting their own e-books online don't have to worry about those things. So prices those New York publishers choose for their e-books are rooted in their past, and their current situations... and should not be taken as gospel for an independent author.

Another good point is that a low price won't rescue a bad novel. The first thing an author has to do is make sure their work is good, because pricing and marketing won't transform it into a hit. Especially since, as barriers to entry lower, we're going to be seeing a lot more writing coming onto the market.

I think the most important thing about e-book (and other digital product) pricing is that you can easily experiment with pricing. There's no need to price-protect retailers, somehow notify all retail channels about the price change, make stickers to put over the price that's printed on the covers... you just change the price online. And change it back after a week and see if the sales have changed. Then see if it's made a difference after a month, or two. If you only sold 10 more copies by lowering the price $1, and you normally sell 100 copies, lowering the price doesn't help you enough. If you suddenly sold 500 more copies by lowering the price $1, then you should probably stick to the lower price point.

You can hold sales for any reason, and make the time period brief or long. The data you get will be invaluable. Especially because your data may not transfer to some other author. I would guess that Stephen King could charge more for a novel than I could because of his enormous brand value. But even King might want to have at least one book at a low price point in order to attract new readers.

The e-book market is still developing and changing, so don't look for a hard and fast answer on pricing. Look at the data; look at the deal you can land; take your best guess. Then, if you have control over pricing, experiment. See what works best for you. Don't just pick a price and never change it, because then you'll never know whether you were right or wrong.

DRACULAS Reviewed

I'm doing something a little different on my blog today; I'm reviewing an upcoming ebook, DRACULAS. Why? As part of a marketing effort by the ebook's authors they have pre-released the book to blog authors who agreed to review the book on their blog or web site. Plus, I've interviewed one of the authors about their marketing efforts for the book. One further note: I got into this by reading J.A. Konrath's blog (on the blogroll to the right); he's one of the authors under his pen-name of Jack Kilborn.

DRACULAS
By  Blake Crouch, Jack Kilborn, Jeff Strand, and F. Paul Wilson

Teaser chapters available here; full novel available here  for $2.99 on October 19th. For more information about the book see www.draculasthebook.com.

If you're looking for a leisurely voyage into a world where vampires fall in love with young women, you'd better turn right around and head back inside. Maybe you should lock the door... there are dangerous things out here. Things that run ravening through a rural hospital and tear your expectations to shreds, right before they latch on to your throat and start to drink the rich red nectar. Oh, yeah, it's like that.

DRACULAS takes off running after just a step, and never lets up. The story takes place almost entirely within and around a hospital. Vampirisim turns out to be easily communicable, and it doesn't take long for someone to turn, so the problem escalates rapidly. The authors have chosen a fast-acting plague to create a fast action novel, and the characters are quickly sketched but memorable. Even the bad guys are given the chance to develop some interesting twists and turns.

There's plenty of graphic violence, and some horrific puns, and some choice movie references by the film buffs trapped in the hospital. If you like movie references, this will, in fact, make your day. The writing is well-honed; you barely feel the needle when it slides under your skin, until the punchline finds a nerve. I found it hard to believe that four different authors worked on this, since their styles meshed so well. It did feel at times as if there was some one-upsmanship going on, as I would find some gruesome scene where I thought "Wow, that's just nasty!" and then I'd find something even nastier in the next scene. The closest analogy I can give you is the recent film Machete, where there was some amazing action scenes that I just didn't expect, but thoroughly enjoyed.

Let's be clear: There are disturbing images in this novel that will haunt you for some time to come. The clown, oh my god, the clown... I didn't know I could laugh while grimacing in horror. If you like action, and horror, and a fast-paced novel with some twisted scenes you've never before encountered, this is the place for you.

Marketing DRACULAS

I asked some questions of Blake Crouch, one of the authors of DRACULAS, about their marketing efforts for the ebook.

What are the three most important marketing efforts for Draculas?

First, the grass roots pre-publication review campaign we initiated. We’ve had 260 people confirm advance reviews.  If 70% - 80% come through, we will consider this a rousing success.

Additionally, we are placing targeting advertising on KindleBoards and KindleNation.

Finally, we’re all sending out newsletters on the release date to our fan bases.

Are you able to track the effectiveness of different marketing efforts? If so, how?

We’ll only be able to directly track the review prong of the campaign. Of course, where DRACULAS debuts in the Kindle Store, and how long it stays there will be the ultimate test.

Do you expect Draculas to perform as well as other ebooks from any of the four authors? Better? Worse? Why?

Hard to say. We are pushing harder from a marketing and publicity standpoint than we ever have. We think the title, the premise, and the execution could make this a hot book, coupled with the strategic near-Halloween release date. Potential drawbacks…will people be enthused for a 4-way collaboration, and will the violence in this book be a drawback for some?

How much time, between all of you, do you expect to put in on marketing Draculas?

We have invested about two weeks toward marketing and promotion.

I'll be interested to see how their promotional efforts pay off for them. I suspect it will have been well worth the two weeks of effort in terms of additional sales. Combining the existing fan bases should prove very useful not only for this novel, but for cross-promoting other novels. Authors who can seek out their author friends and cross-promote are probably going to get some good results for not a lot of effort.

Of course, it all starts with having a good product. An interesting aspect here is that because it's an ebook, they were able to put in a lot of extra material: An interview with the authors, short stories, excerpts from novels, bibliographies and biographies, and an extensive look into the creative process via hundreds of emails the authors exchanged. All of this adds to the value, and at $2.99 it brings me back to the casual book-buying days of my youth.

Among other things for marketers to note about this: They have a well-designed cover; they've established a web site just for the book; it's being published on multiple platforms; and they've gotten some additional promotion through this effort to get pre-release copies into the hands of bloggers like me.

I think it will be a happy Halloween for the authors of DRACULAS.

UPDATE: The marketing is a success... read about it in this post.

More on E-Book Pricing

The New York Times has talked to some unnamed book publishers, who must have been getting the impression that customers don't exactly believe that e-books should cost $15. This article lists the logic of these unnamed publishers in pricing e-books at that level. Fundamentally, they point to their overhead that needs to be paid for, production costs of e-books being the same as for regular books, and how, well, even if they do make a bit more on e-books it's because they need to keep the poor bookstore chains alive, so they price e-books high to keep from selling too many of them which would reduce the sale of paper books and send bookstores into oblivion.

There are so many things wrong with this logic it's hard to figure out where to start. Let's look at one unspoken assumption first: Their logic assumes that each e-book sold means one less physical book sold. If you only ever addressed your marketing to people who already buy your books, I still don't think this would be entirely true. There have been no studies on this subject that I'm aware of. Mike Stackpole address the issue in this essay on his blog.

The fundamental logic of e-books is that you have eliminated many expenses: printing, warehousing, shipping, returns, lost sales from being out of stock, and the extra margins given to distributors and retailers. All you're left with are transaction costs (getting less all the time, and generally around 3%), the overall cost of your operations (which can, as Mike points out, be conducted nearly anywhere, and most of anywhere is cheaper than New York City), your production costs (graphics, art, typesetting), and the cost of paying the author. Oh, yes, and of course any marketing costs you may have, such as web sites, PR, book tours, advertising... and all of those costs you should be spending in proportion to what you think you're going to sell of the book.

This all means that with an e-book, you can experiment much more with pricing to find if lower pricing actually generates more total profit for you. If your fixed costs for the book are less than $1, then the important thing is not whether you charge $2 or $20 for the e-book... the important thing is the total revenue you take in and the net profit you're left with. Usually the author costs are variable, being a royalty based on the selling price. If you as publisher or author get $10,000, do you really care if it was from the sale of 1000 books that earned you $10 apiece, or 10,000 books that earned you $1 apiece?

The only part you should really care about is whether you could have generated a bigger pile of cash by pricing the e-book differently, or by spending more or less on marketing (and how you chose to market). This is the sort of thing each publisher should learn through experimentation. Trying to set prices with your gut, and then spending time preaching to the customers about how you know what's best for them and the world, is a recipe for failure. You'd think the example of the music industry should have been sufficiently instructive... but it appears the publishing business is planning on similar head-in-the-sand mistakes. Small publishers should avoid this.