Are free ebooks a good idea or not?

Posted by Mike Shatzkin on January 24, 2010 at 7:44 am · Under Digital Book World, General Trade Publishing, Industry Events, New Models, Self-Publishing, Supply-Chain, eBooks


Kindle is certainly engendering a lot of confusion by billboarding the downloads of free ebooks as “sales.” That paradoxical scorekeeping was the lead for an article by Motoko Rich in The New York Times on Saturday that quoted a lot of people, some apparently disagreeing with each other, but none of them necessarily wrong.

There really are three separate questions to consider, which get elided in these conversations.

1. What is the impact of giving away ebooks as a promotional device, either to boost the word of mouth on the book being given away or to promote an author’s other titles?

2. What is the potential impact on the industry overall of ubiquitous giveaways of ebooks that would apparently have commercial value?

3. When ebooks are given away, how should that sale be “scored” in any measurement of the book’s popularity?

The answer to the first question appears, anecdotally but just about universally, to be that giving ebooks away boosts sales of that title and related titles. Rich’s piece sites numerous publishers attesting to that. She apparently found no publisher that is skeptical about whether giveaway promotions work or has seen the tactic fail. And that would confirm my experience: I don’t know of one.

But as we’ve noted before, this effect could change over time. We’re still in a period where ebooks are not an acceptable format to most book readers. That means the benefits of giving them away is not confined to the word-of-mouth from the recipients, it can result in a print book purchase by the very person you gave it to! As ebook reading becomes more popular, particularly if we go to a DRM-free universe, the impact of cannibalization from giveaways could grow dramatically from what it is now.

The second question is what is apparently paramount to David Young of Hachette (as quoted in the Rich piece) and is influencing the policies described at Penguin. As more and more ebooks are given away, it offers a wider array of choice to people who prefer to select from the free offerings and just never pay. For the last 15 years of his life, my father, Len Shatzkin, refused to buy anything except remainders. He shopped from several mail order catalogs and, if he was in a bookstore, shopped at the bargain tables. His position was that if publishers were going to be dumb enough to reliably give the books away six months or a year later, he’d just wait and choose his reading from among what had been marked down. With free ebook marketing the way it is today, sometimes you don’t even have to wait!

And that’s obviously what was on Young’s mind when he said the tactic was “illogical.” It is illogical if you take a long-term, industry-health view of the situation. It is totally logical if you’re trying for short-term advantage to break a new book or build a particular author, as most of the other authors and publishers were trying to say.

There was a long comment string on the HarperStudio blog about this question six or eight months ago. I said at the time that I figured that if these giveaways kept spreading, one of our more industrious web entrepreneurs would create an ebooksforfree.com site which would be a consumer directory to “free” offers at various publishers and web retailers, title by title.

It’s a classic Tragedy of the Commons. Each person giving away ebooks succeeds in their intentions to boost their sales, but everybody will pay for the overgrazing in the end.

The third question is a tricky one. It is worth noting that the App Store makes it very easy to for the consumer to decide whether to shop the free apps or the priced apps. I think Amazon is hurting themselves by not at least sorting their bestseller pages that way. And they don’t. Amazon says the Kindle bestseller listings change every hour: I just checked the Top 10 and found one 25 cent book, one book at a substantial price (higher than $9.99), and eight free. Some of the eight free were self-promoters like the lead in Rich’s story; some were public domain; some were multi-book authors from established publishers. But only one of the Top 10 was elected with votes paid for with dollars from the Kindle clientele, which is what I think most people looking at “best sellers” would be looking for.

This raises a question I don’t know the answer to and my way to do the research will be to see if somebody with knowledge posts a comment. Kindle reports to the USA Today Bestseller List. This is, as far as I know, the only reflection of ebook popularity in the public domain. It would be interesting to know if USA Today has a standard for that reporting. Of course, most of the “weight” of the USA Today list, quite properly, would be print sales so whatever Kindle reports might not move the needle much. Most sales today are still print sales. But we’re headed for a crazy world if the concept of what “sold best” is expanded to include what people were willing to take for free.

On the other hand, if you try to separate free from paid, you will still face the question of where to draw the line. If publishers sell a $20 hardcover as a $5 ebook, should those units count equally in determining bestseller status? How about a dollar? How about a penny?

A tip of the hat here to my sometimes colleague Brian O’Leary of Magellan Media, who hinted at what I have said at length in this piece in his brief turn in Rich’s article. Brian has done extensive research that tends to confirm what Rich’s interviews and my anecdotal information suggest: that giving away ebooks boost sales in the present marketplace. But Brian managed to bridge the enthusiasm of the giveaway marketers and the incredulity expressed by David Young with his observation that there was a risk that free reading could eventually “supplant paid reading.”

And that wouldn’t really be good for anybody.

This is absolutely the last post you will see promoting Digital Book World 2010, which is on this Tuesday and Wednesday at the New York Sheraton and which is turning out to exceed my fondest hopes when we started out planning it this summer. But we have a panel on the very subject of this post called “Ebook challenges: competing with free and getting the timing right.” Brian O’Leary is moderating, and the panelists include agent Robert Gottlieb of the Trident Group; marketing director Mindy Stockfield of Hyperion (which published Chris Anderson’s book “Free”); ebook retailer Kobo’s VP Michael Tamblyn, and Steve Ross, who has been a publisher at both Random House and HarperCollins. There’s another panel on “Ebook pricing: what should they cost and why?” which includes the head of Penguin’s ebook publishing efforts, Tim McCall.  I enjoy having The New York Times stamp the topics we selected last August as “current” 72 hours before our show begins, even if just implicitly.

If you like this blog, I know you’ll enjoy Digital Book World. I hope to see you there.


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  • brian_S1
    The driving force compelling people to read printed books is past experience using printed books in school. The human eye 'learns' to read from a page that 'reflects' light (A printed book reflects ambient light, making the page and print visible), rather a medium that is itself a light source (Computer monitor).

    The human eye matures to read from a certain medium. After this conditioning is complete, people will always prefer reading printed books rather than digital books. It's like this: If a person has a wandering eye, and the eye is not surgically corrected by about age two years, even if the eye is corrected later, the person will never have depth perception.

    If the human eye develops reading from printed books, it will never be equally comfortable reading from a digital device. Digital devices emit imperceptible flicker that people find unnerving and exhausting. In fact, most people older than age forty years cannot read text on a digital device display and printed text, with equal skill.

    My impression is that no one wants kindle. One cannot randomly page through a Kindle book. Use of printed books is a fairly complex manual skill. People become accustomed to the advantages of handling and reading printed books.

    I must conclude that the future of the printed book strictly depends upon children using printed books in school. Therefore, the survival of the printed book publishing industry relies upon the continued use of printed children's books, and printed textbooks.
  • Brian,

    Good theory. Might even be scientifically true. But it is contradicted by a
    lot of anecdotal facts. And exceptions. There are a lot of Kindles out there
    being heavily used. And here's one person who read paper books for about 50
    years before switching over to ebooks.

    Mike
  • Troy Johnson
    The strategy for many free books on Amazon is not to stay free. The current #4 book at the Kindle store is Cape Refuge by Terri Blackstock. The book was a free book a few days ago. Because it was free it moved up to #1 on the Amazon list. Then the price changed from free to $7.99. Currently the book is holding at #4 for $7.99.

    The current #1 book at the Kindle store is a free book called Two Rivers by T. Greenwood. This author also has the book available as a hardback and paperback. The exposure on the Kindle bestseller list has probably moved some copies of the paper editions. In a couple days the Two Rivers ebook may have a price on it following the trend of making the book free long enough to get on the bestseller list and then slapping a price on the ebook.
  • Troy, absolutely true that many freebies are designed to promote paid sales
    and succeed at doing that. But that doesn't change my opinion that too much
    from everybody of this will dilute sales for everybody.

    However, I learned from the very well-connected Steve Ross at Digital Book
    World that his calls around to former colleagues failed to find anybody who
    still had confidence in the ebook giveaway idea; people feel it is
    *not* boosting
    sales particularly. If that impression becomes more widespread, then the use
    of the tactic might be self-limiting and the potential damage that concerns
    me won't arise. I'd love to be wrong on that one.

    Mike
  • Ted R.
    Mike, excellent post. The plethora of interrelated issues involved with ebooks make my head spin. I admire your ability to intelligently narrow things down.

    From my befuddled mind comes one question: what would be the impact for authors and publishers to *not* offer some (limited) way for readers to sample books for free? After all, physical books -- novels, at least -- have always had free availability, i.e. libraries and lending. Isn't the estimate something like three readers per purchased book?

    Wouldn't it be long-term harmful for both publishers and authors to lock down ebooks to one person/one full purchase price as some desire?
  • Ted, sampling for free makes complete sense to me. I wish I knew Kindle's
    conversion rate on sample downloads, but I bet it is pretty good.

    The one person/one purchase would ideally be one of many purchase options,
    but creating any model and enforcing it requires DRM, and DRM is
    increasingly falling out of favor. We'll see if it lasts. If there is no
    DRM, then you're going to have an unlimited number of people/one purchase
    model, and I'm not sure that will allow much commercial viability...

    Mike
  • Ted R.
    Ah, I should have written "sample authors" instead of "sample books". Amazon's samples are often too short (the stuff before the prose starts takes up too much, leaving very little of the story), though sometimes helpful and I have indeed clicked the "buy" link at the end of many to get the full book.

    What I mean is that I'm not sure whether I would have gone on to purchase novels by Kootz, Donaldson, Ludlum, Clancy, etc. (many, many etc.'s) if not for getting one or more of their books to read for free from a friend or family member. After reading King (also free), which I didn't care for, I never would have tried Koontz, for example, without the friend's urging and the free read. I had thought I didn't like the horror genre, period, not knowing that there were such different kinds. Dean Koontz has gotten a lot of my money since.

    But that's a common anecdote which doesn't add to the discussion. Just clarifying.

    DRM ... it's ironic that it only works for little-known authors. Anyone with popularity has their books out there in pirate land already.
  • Ted,

    The "sample" books DO lead to sales for those authors. That's why publishers
    will keep doing it. What I fear is the situation where lots are doing it and
    there are lots of free ebooks available all the time.

    And your final observation is why piracy has been characterized by Tim
    O'Reilly as "progressive taxation."

    Mike
  • Mike,
    Wasn't it that value moves to scarcity? Wasn't it that we have plenty of content and a lack of eyeballs? Why should anybody pay for content if it is so redundant as you have pointed in so many clever posts?
    Do you remember the Schmoon created by Al Cap in post-war America? They are not overpaid, but they are over here. They reproduce asexually, they are terribly gentle, they taste like oysters and they are eager that we feast on them. They are, though, terribly disrupting and dangerous for any established chain of values, especially, added value. Like Li'l Abner, we have adventured ourselves in the Valley of the Schmoon and we are eating them voraciously.
    Google has been --and will be for a long time-- the Great Pope of the Schmoon. Their disruptive policy has proved to be right, at least for them, and as it is new and successful, it is a model for the rest, even if Amazon is only mimicking the FreeTrap ideology. We publishers can't yet imagine --because we are already something and therefore conservative-- a similar disruptive model in order to survive as such.
    One of the most powerful ideas of yours regarding the book industry is that value moves to scarcity. Don't let it go because of Rich's excelent article in the NYTimes.
    As to authors, the idea that they should make a living "live", like rock-stars, is becoming mainstream. The thing that nobody mentions is that very few musicians can make a living in this way and that the paid music and albums are every year more and more boring and nobody in the music industry is taking any risk. Besides, who will pay to listen a conference by a mid-list author?
  • Julieta, I agree with you that value moves to scarcity. And that content is
    becoming less scarce and therefore harder to charge for. I'm not sure what
    makes you think I've abandoned that idea.

    That's one force driving the price of content down. Publishers giving away
    ebooks just pours gasoline on the fire. I'm missing it if you think there's
    a contradiction there.

    Mike
  • Quote:
    "It’s a classic Tragedy of the Commons. Each person giving away ebooks succeeds in their intentions to boost their sales, but everybody will pay for the overgrazing in the end."
    Somehow, I feel you are expecting this Tragedy of the Commons will not have place. You also imply that "free is not a business model". I'm afraid (really afraid) that free-content is an inevitable part of the business model we have to sort out.
  • I think the Tragedy WILL take place; is taking place. I don't see how it can
    be prevented. It will be one of the many causes of erosion of the value
    perception for content.

    Mike
  • Mike, we agree. Then, somehow I misread your brilliant description of the situation as a call to fight free ebooks. There's nothing we can do.
    All the best for the conference. I'm very sorry I couldn't make it to NYCity.
  • Mike, bestseller listings try to mesure too many things.

    1) They are a bad proxy for "Most read". E-books (connected or living in the cloud) will probably be able to measure which books are ("fully") read better. Some free e-books are quickly downloaded but never read.

    2) They are also a bad proxy for business success, as you pointed out, if books are subsidized. For that purpose, it would be better to sort titles by # of sales multiplied by price (somehow like in the Box Office Charts).
  • What you suggest requires that the data be collected from retailers who
    report the price they sold at. The IDPF overall ebook sales data comes from
    publishers' reports of overall sales dollars. The only by-title reporting is
    by Amazon to USA Today and USA Today counts all units for a title the same
    regardless of format or price.

    Mike
  • sunbookr
    Free is a good idea to promote a product. Is an author a product? Certainly not. But his/her eBook - yes. Give away for free Milton's, Hugo's or Flaubert's is a great thing for our society. And there is no royalties issue since at least a century. eBook has no cost or so little that Amazon can 'sell' them without problem.
    Now take the marketing view: new eBook readers will be caught. And most certainly will get afterward an eBook with royalties.

    However, it is necessary not to give Amazon too much power. We must diversify our eBook stores. There is plenty of great ones.
  • todshuttleworth
    These are fascinating times; invigorating. Is it possible that free is a limited tool today to encourage the new reading medium, e-books, but ultimately like iPhone apps you have to pay for the really good stuff? (i.e. The gaming experience my kids have had on my iPhone.) My hunch is that the model is changing, but at the end of the day the best content creators will still be rewarded for the value they create. People will still pay for that, although they may pay less. Marginal quality content creators will have less opportunity than they do today for capturing the consumer's dollar.
  • The problem, Tod, is that almost everybody who tries it finds that giving
    away content promotes sales of that or related content. That means a lot of
    free content is out there competing with paid. And not all the free will be
    inferior to all the paid. I lean toward optimism in general, but it is hard
    for me to see how this situation is good for anybody trying to sell content,
    whether it is good content or not.

    Mike
  • Mike,

    its really easy. Treat your customers properly (i.e. no DRM or ripoff prices), make it EASY for them to buy, make it clear that a large chunk of the money goes to the creator (i.e. the author). If you do all that then people who discover the first book free will buy the rest.

  • Skreemr is a good example of the tragedy of the commons and the compound effect of giving away little bits for free. It's a music search engine that indexes blogs that list one or two artist mp3 per post. Blog by blog, the giveaways are meaningless. But aggregated they become a non-trivial warehouse of contemporary music. And Skreemr only points to the files rather than hosting them, so they're not running a non-compliant service.

    It's fairly easy to see that with the right taxonomy, an ebook version of Skreemr will rise up and create the same compound effect.
  • Mark, this is an very valuable piece of info; thanks for it. Yes, it reads
    like a plan to turn book business marketing into major disruption. And it
    also seems inevitable

    Mike
  • Jake Mosberg
    Great post. This is an interesting, somewhat relevant article/interview: http://www.themillions.com/2010/01/confessions-of-a-book-pirate.html

    Also, will there be transcripts available for talks at Digital Book World?
  • I agree with you Mike that free is not a sustainable long term proposition. Like much of the activity in the entire eBook market at present, there is a scramble for position and free is a useful tool to establish short term gains.
    As publishers find their vertical niches in the marketplace, it almost broadens their options rather than just restricting them to specific genres etc. I think some kind of subscription model may work well where as well as access to the titles they want, customers are given free samples of new authors/works. Previews are also an established method of generating interest in new authors without giving content away entirely free. Readers will pay for what they want and in many ways it is the role of the Publisher (now and certainly in the future) to introduce them to new authors in their genre.
    Its all about building meaningful relationships with your customers which will last long beyond the eBook goldrush.
  • Gareth, you're absolutely right that having a true vertical audience
    broadens the number of ways you can get paid. That is being demonstrated now
    by O'Reilly most dramatically, but by others (Hay House, for exma
    Mike
    --------------------
    Mike Shatzkin
    http://idealog.com/blog
    mike@idealog.com, 212-758-5670
    Founder & CEO
    The Idea Logical Company, Inc., http://idealog.com
    Co-founder: Filedby, Inc. http://filedby.com
    Conference Chair: Digital Book World http://digitalbookworld.com
  • Gareth, you're absolutely right that having a true vertical audience
    broadens the number of ways you can get paid. That is being demonstrated now
    by O'Reilly most dramatically, but by others (Hay House, for example) who
    own eyeballs as well.

    Mike
  • Gareth, you're absolutely right that having a true vertical audience
    broadens the number of ways you can get paid. That is being demonstrated now
    by O'Reilly most dramatically, but by others (Hay House, for example) who
    own eyeballs as well.

    Mike
  • Steve
    " '.... a risk that free reading could eventually “supplant paid reading.'

    And that wouldn’t really be good for anybody."

    Except us consumers :)
  • It *might* be good for consumers. But if it means that good writers turn to
    construction jobs, waiting tables, or working on Wall Street because they
    can't make a living as writers, then maybe it won't be. You know the old
    expression: you get what you pay for.

    Mike
  • Steve
    Mike,

    Good writers have *always*turned to "...construction jobs, waiting tables..." although perhaps not working on Wall Street - surely a fate worse than. (Google longshoreman Eric Hoffer).

    I think the professional writer who makes a living from their work is more an exception among writers than otherwise.

    Non-commercial content is arguably superior in quality to commercialized schlock because it is written from the heart, not for financial gain. But if I'm wrong about that, a market for paid would re-establish itself because the quality would be superior.

    -Steve

    P.S. Free has been a major element of software business models for almost 30 years now. I haven't noticed the death of the commercial software megacorp in consequence.
  • david nussbaum
    Mike, as usual, you bring much clarity, and add a leadership view to a very important industry topic.

    From where I sit, I fail to see how "free" is a good, long time business model.

    "The content wants to be free" crowd has lead the way to the near destruction of newspapers and magazines. eBooks should have a price point that is lower than printed books. However, if something has value, it should not be given away.

    Publishers should have confidence in their product, their marketing, and their audience and not devalue their products in an effort to drive "sales."

    It is all so reminiscent of the days when during the first internet bubble, no one cared about revenues, just "hits." And then no one cared about profits, just revenue. None of that worked out well for those content players.
  • Everything free and only free is clearly a dead business model. However the concept of the first hit is free and then once you're hooked the rest you pay for is one that goes back to prehistory and one that (in the form of the storyteller's bowl) has proven success in the field of books.

    One could note Baen with its free library and its habit of posting the first 25% of all its books online as an example of how well that works.

    To go back to the "Storyteller's Bowl" crowdsourcing of fiction is becoming ever more common and does have the potential to make a decent return. Two examples - Lee & Miller wrote the first drafts of their recently published (by er Baen) novels Fledgling and Saltation a chapter at a time visible for all to see on the Internet. As I understand it, they raised somewhere north of $20,000 doing so - I think it may have been over 30k but am niot sure. That's not too different from the typical midlist authorial advance.

    Similarly Dave Freer is crowdsourcing a book to raise money to bring his pets with him to Australia. That book has raised over $10,000 - the site reports $10,637.28 at present - and I would not be at all surprised if the final total is over $15,000.

    This book is free - you can read it at http://savethedragons.nu/ without paying a penny - but I happen to know that many people have contributed amounts ranging from $5 to $250 (I know because I'm the webmaster). Have all the visitors contributed? certainly not but enough have to raise $10,000.
  • The tin cup model will be tried by many and will work for a few.

    And the offering of samples is a good idea. Amazon handles it very well with
    the Kindle. Everything has a free sample available and they nudge you toward
    a one-click conversion to purchase the title when the sample ends...

    Mike
  • Guest
  • I don't know if we can lay the industry's downward spiral turning into a
    free fall entirely at the feet of "free content", but it sure as hell
    doesn't help.

    Mike
  • michaelcader
    1. Re USA Today, they simply tabulate. Amazon reports the titles that actually sold the most (so no free titles); USAT counts those the same way the count print sales. Similarly, the USAT list is completely format agnostic (hc, paper and mass all on the same list). Kindle bestsellers tend to be frontlist fiction and as best we could tell from early comparisons, the addition of Kindle data didn't have a big impact on the USAT list. (It might have more on lists that break out hc fiction separately.)

    2. Also note that, while I would agree that most free ebook promotions appear to stimulate print sales, success has not been universal. As you know, publishers won't speak publicly about their failures--and even when they do, that's not what they call them. From an objective standpoint, the highest-profile book giveaway of 2009 did not work (and certainly did not fulfill the author's expectations). Of course we don't have the data to indicate whether the giveaways (and/or the extent and duration of the giveaways) actually degraded print sales, or if the book just was not as resonant with a paying audience and would have performed the same (or even worse) without the attention of the giveaways.
  • Thanks for the hard data about how the USA Today list works, Michael. Over
    time, the Kindle exposure will be more and more important to that list if
    all units count equally.

    On your second point: I didn't mean to suggest that all ebook giveaways
    trigger bestsellers. I guess there are really two kinds of experiences:
    books on which it is clear that the giveaways kick-started something and
    books on which you can't see any discernible effect. I'd actually hope a
    publisher *would* speak up if they did a giveaway and saw sales went down!
    It might slow the unfolding Tragedy of the Commons, which I fear cannot be
    stopped.

    Mike
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