Publisher Experiments With 'Free' And Sees Book Sales Increase 20x

from the not-bad dept

We've pointed to numerous studies, at this point, that have all found that, when done right, free ebooks can greatly increase the sales of physical books (and, in some cases, even of ebooks). Here's another empirical example of that in action. Chris Anderson points us to a blog post by someone at a mid-list niche publisher, talking about how successful its experiments with "free" ebooks have been. In this case, the publisher would offer up the first book in a series as a free ebook, and found that it drove massive increases in sales:

One of our free titles was the #1 download on Amazon for the entire month of February. The subsequent sales of books 2 and 3 in the series increased by a rate of 20 to 1. For this series, digital sales are approaching 20% of the total product sales distribution and growing. With the visibility of the digital sales on Amazon, we have seen a substantial increase in print sales to the brick and mortar book chains. In this one instance, digital is driving print sales.

Basically, what this publisher realized is that with most books, obscurity is a greater threat than "piracy," and free helps deal with that:

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.

Filed Under: books, free, mid-market, obscurity, publishing

Jaron Lanier Says That Musicians Using Free To Succeed Are Lying

from the wow dept

Jaron Lanier came out with his book recently, and it's still getting a bunch of publicity, despite getting some rather basic facts wrong. But, even so, I was shocked to hear that he recently stood up at a conference and claimed that musicians who say they are using "free" music to their advantage are lying:

"Every single example of these musicians who did really well by giving stuff away... they don't exist," Lanier says. "There are a lot of people who pretend ... and it is fake."

What a bizarre statement, considering just how many real life examples we see every day of musicians successfully embracing an understanding of basic economics (which Lanier apparently lacks). I was trying to better understand how Lanier could make such an easily debunked statement with a straight face, and it's not clear at all. It appears that Lanier is the one who is pretending here. The only explanation I can find for his bizarre claim is the wiggle room he leaves for himself later in his talk:

Lanier adds that artists making a career off music in the digital age are still having success thanks to the traditional models. "Anyone who is making it now is making it off the little shreds of the old system that is still working," he says.

So, basically, he will try to turn any of the many success stories we regularly talk about into a story about how they're still using "the old system." We've seen this before, and it makes no sense. It's the last gasp argument of someone who's been proven wrong. They'll argue that because someone makes any use at all of the old infrastructure or the old system, every bit of their success is due to that. It's wrong on many different levels.

Furthermore, when Lanier talks about "the little shreds of the old system that is still working," I'm wondering what he's referring to -- given that countless studies are showing that the music business has continued to grow. So, if there's anyone "pretending" here, it seems like it's Lanier.

Filed Under: basic economics, free, jaron lanier, music

Classical Music Composers Debating The Value Of Free Too

from the free-it-up dept

scott mc laughlin alerts us to an interesting blog post from the composer Kyle Gann, discussing his feelings on posting musical scores as free PDFs online. Gann does this happily, but a publisher he was speaking with was upset that this created "unfair competition." Gann doesn't find the argument convincing in the slightest, and explains why he feels that having his scores available for free online greatly outweighs any money he might make from having them professionally published by a publisher:

For me, trying to make money off of scores is just a dubious proposition. The amount I might make seems trivial compared to the wider distribution I get from having interested musicians be able to check out my works whenever they want. There's also a certain resentment of the music publishing industry involved, since no publisher is likely to accept any music as commercially unprofitable as mine, and my understanding (from Philip Glass and many others) is that, even if a publisher takes your work, the most likely result is that they will print a few copies, keep them in boxes in warehouses as a tax write-off, tie up the copyright, and make your music more difficult to obtain even for those willing to buy it. Of all the friends whose music I write about, the few whose music is officially published are the ones whose scores I have a devil of a time trying to get. When the scores are available for perusal only, I sometimes can't get access to them at all. I'm also conditioned by my score-starved youth: so many of the scores I desperately needed to see when I was a young, studying composer couldn't be had under any circumstances. If young composers are burning with interest to see how my music works, I'm happy to satisfy them, and without giving them the hurdle of having to contact me personally. I wish Boulez, Pousseur, Glass, and co. had done the same for me. I bought a ton of scores and would have bought many more i was curious about, but many were impossible to get. I'm just not convinced that the music publishing industry, in its current form, deserves to survive.

The full post goes into a lot more detail about the way Gann views this issue, and is a worthwhile read. Either way, it's interesting to see these same debates taking place in so many different parts of the creative industries of the world -- with people in all parts recognizing that there are benefits to free content and free access over hoarding information and setting up tollbooths for access.

Filed Under: classical, free, music

Alice In Public Domainland; Just Because Something Is Free And Open Doesn't Mean You Can't Make Money Off Of It

from the thank-you-public-domain dept

Back in December, we wrote about a submission from someone talking about the new Sherlock Holmes movie, and how it was possible because of the public domain. The truth turned out to be more complicated, but perhaps a better (and more accurate) example of the same point is the new Alice in Wonderland film. There have been a bunch of different movies based on the famous Lewis Carroll book, which has been in the public domain for quite some time.

Michael Weinberg does an excellent job highlighting how the various Alices demonstrate that those of us who support a stronger public domain aren't doing so because we think everything "must be free" or, to quote RIAA boss Mitch Bainwol's insulting falsehood, that we're "against those who actually create the intellectual property." Instead, as the various Alices show, the public domain has freed up tremendous creativity, while still allowing content creators to make plenty of money:

Each of these versions are inspired by the original Alice's Adventures in Wonderland. Each was made with commercial motives in mind, not some urge to set information free (and generally made a lot of money for their creators to boot). Each, at least according to the descriptions in the Times, is bizarre. However what is most striking is that each is bizarre in a way that was probably unanticipated by Alice's original author.

Even though they are strikingly different in almost every imaginable way, we can understand them to be related through that original story. Beyond that, they are stronger works because we understand them in the context of a shared cultural touchstone. They aren't all just freaky movies about some girl and a rabbit. They are Alice in Wonderland stories. That changes how we watch them, think about them, and talk about them.

One of the reasons that the creators of these many versions (who, again, didn't do it for free -- they made the movies to make money) felt free to be as strange as they wanted was because they did not need permission to create their version of Alice. They could take the original story, freak it up however they wanted, and create something new. Creators are better off because they had a way to link a new story to something that people understood (and probably made more money in the process). The public is better off because they can choose between a number of freaky Alice in Wonderlands, or even make their own. Even Alice is better off because she lives on as a cartoon, a little girl, a warrior princess, and whatever else people can dream up for her.

And, of course, this is the original story behind so many classic Disney films as well -- but, Disney has too often focused on then locking up the content that it copied from the public domain.

But the point raised here is an important one. No one is saying that everything must be free and open, and that content creators shouldn't make money. Obviously (to most, but not all, apparently) we've been talking about ways to better make money while also encouraging more widespread access and creativity. Getting away from strict copyright protections is not anti-content creator at all. It's very much pro-creativity. And, as we can see from all the new versions of movies about Alice in Wonderland, even Hollywood knows that the public domain doesn't mean no one makes money.

Filed Under: alice in wonderland, free, movies, profit, public domain

Free Is Not An Aberration; It's Basic Economics

from the understanding-free dept

A few folks have sent over Andrew Zolli's short opinion piece over at Newsweek, suggesting that free content can't possibly last. Normally, I wouldn't even bother with such an opinion piece, since similar ones (nearly identical ones) have been debunked a hundred times over already. But Zolli runs PopTech, which is considered one of the better conferences out there, and if he's spouting such nonsense, it deserves a response. Let's start with the basics:

Unfortunately, as we've seen since, for companies whose core product is content--like every newspaper and magazine you read, including this one--the idea that we Internet visionaries sold is a total load of crap. We persuaded executives to compete with themselves online by setting up Web sites that offered for free the same content their staffs labored so strenuously to produce and sell in their print publications. The theory was that companies were supposed to make back the money by, uh, "monetizing the attention economy," or some other similarly vaporous concept, that meant either charging customers later on, or selling advertisements, or both.

Compete with themselves, huh? First, this is hogwash. Most newspapers and magazines make the majority of their money from advertisements anyway, so putting their content out there for free is hardly taking away serious revenue. Newspaper subscription fees don't even cover the printing and delivery costs. Magazine subscriptions are just as cheap. You know all those "deals" that give you magazine subscriptions for next to nothing? That's because subscription revenue is meaningless. Ad revenue is what matters.

Second, being online doesn't mean they compete with themselves. If these magazines and newspapers didn't go online, then people would gradually come to ignore them, and favor the smarter publications that did go online, or which simply started online. Keeping yourself away from where people are is not a smart media strategy, but it seems to be the one Zolli is suggesting. So it was never "competing with themselves." It was always about understanding fundamental economics.

Supply and demand. If the supply is abundant, prices go down. That's not some techno-utopian "load of crap." It's what you learn if you pay attention in econ 101. If supply is effectively infinite, prices go to zero.

When I buy the dead-tree version of my local newspaper, I have no expectation that it should be free. If I pick it up and walk out of the coffee shop without paying, that's stealing. But when I walk upstairs to my office and log on to the Web site for the same paper, I feel a divine right to access the entirety of that paper--and 10 years of its archives--for free. Yet when I use another little computer invented more recently (Amazon's Kindle, say) to access that very same newspaper, I do pay. And I expect to pay. When the market floods this year with the iPad and its inevitable clones, I'll expect to pay on those as well.

You may expect to pay, but it won't be long until others recognize that it's more valuable to give away that content for free, and then those who still put up a paywall will find it quite difficult to compete.

In the long run, the first decade of the Web could come to be seen as a momentary aberration--an echo of '60s free culture when we all took the bad, digital acid.

Here, I'll let Jeff Sonderman respond to this one clearly and concisely:

The assertion is that free was clearly a mistake, an aberration, is usually not explained or backed up with any facts, it's just out there.

But any fair assessment of the facts shows that forcing payments for news is barely possible, and certainly not inevitable.

Begin with the fact that for the past two decades people largely have not paid for online news content. That's not an accident, as Zolli suggests. That's the status quo of a functioning online economic system. If someone says it's going to change, it's their burden to explain why. And so far, I don't hear any good reasons. The most common is that because the news industry is in financial trouble, consumers must bail them out by paying -- an insular, backwards view of the consumer relationship.

Along with the lack of evidence for "inevitability," there is significant evidence against it.

The spark of the whole paid-content discussion was the realization that display ads online aren't nearly as profitable as in print. The theory arose, if ads don't work we have to charge the user directly. Here's the problem: The same reason that the display ad model is failing is the reason paid content doesn't work -- there's no scarcity online. There are infinite other places to buy ads, consume content or even watch kitten videos, for free.

Filed Under: content, economics, free

Warner Music Shoots Self In Head; Says No More Free Streaming

from the you-can't-be-serious dept

A few years back, it seemed like Warner Music actually had a better handle on where the music industry was heading than its 3 major label rivals. In the last two years, however, it seems like WMG has consistently gone further and further in the opposite direction. It may have hit a new low today with the announcement that it will pull out of all free streaming music licensing offers. Yes, Warner Music just told the one thing that was effectively competing with unauthorized downloads to shove off. Brilliant.

"Free streaming services are clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed.

"The 'get all your music you want for free, and then maybe with a few bells and whistles we can move you to a premium price' strategy is not the kind of approach to business that we will be supporting in the future."

And thus, WMG will go out of business that much more quickly. That is the model that the market is moving to, and Bronfman and WMG appear to have decided to ignore what the market wants, to cover their eyes, stick fingers in their ears and go down with a ship that could easily be righted. Incredible.

Now, Warner may be a bit gun-shy after its investment in iMeem (a free online music streaming service) became a total disaster, but what Warner doesn't seem to realize is that a big part of why it failed was the ridiculous demands Warner put on iMeem in terms of how much it demanded in payment per stream. The problem is that WMG has totally unrealistic expectations of how much money should be paid per stream, and that's because the company's top execs still don't seem to handle basic economic modeling particularly well. And thus, the company will fail.

You don't compete with "free" by taking your ball and going home. You don't compete with "free" by pretending that old artificial scarcities are coming back after the wall has been broken down. You don't compete with "free" by suing customers. You don't compete with "free" by shunning those who have business models that work. You compete with free by offering a better product and a better business model. WMG is choosing to go in the other direction. Best of luck to them...

Filed Under: business models, edgar bronfman jr., free, licensing, music, strategy, streaming music
Companies: imeem, last.fm, spotify, warner music group, we7

Yes, If You Don't Do Anything, You Shouldn't Expect People To Just Give You Money

from the wow dept

In the discussion on our recent post about CwF + RtB business models and how they work, one of our regular critics has been filling the comments with links that supposedly "disprove" this model. I find it fascinating that this person -- who claims to spend time helping musicians -- spends so much time in our comments constantly insisting that the examples that we show that work couldn't possibly work. Anyway, she pointed to the following article as some sort of "proof" that the CwF + RtB model doesn't work, because it involves a former supporter of "free" music, who was upset when money didn't come flowing in when he released his last album. But reading through the details, and I'm a bit perplexed. It looks like he did absolutely nothing described in the CwF + RtB model at all. He didn't support free music. He didn't work to connect with the fans and drive them to various reasons to buy. Instead, he just released an album the old fashioned way and got disappointed that people didn't buy it:

My experience with Lose Your Illusion was a big part of the reason my opinion about free music changed so dramatically over the course of this past year. It was the first album I'd been involved with that had a real label backing it up and covering the bills--all my previous records had been self-funded, self-released DIY projects--and as such it was the first one where the music didn't "feel" free. Somebody else's money was on the line.

When Illusion leaked via RapidShare shortly before its release date, at first it felt pretty good. Someone obviously thought the album was good enough to upload, and someone else thought it was good enough to download. Surely this would generate some positive word of mouth--when the record came out it might even sell better as a result. That never happened, though. I kept track of more than a dozen file-sharing links, eventually counting more than 1,000 downloads. I'm not sure yet how many copies have actually sold, but I do know it's fewer than that. Vinyl stock was still sitting on Flameshovel's shelves when the label packed up its offices late last year. (It's now strictly a back-catalog operation, with no new releases planned.)

Maybe people just didn't like the album enough to buy it. Maybe the important thing is that it got heard, whether they liked it or not. But seeing it posted online so many times was demoralizing. Nobody doing the posting ever contacted the band to check if the leak was intentional, and I can't imagine they were thinking about Flameshovel's tiny staff trying to steer the sinking ship. That really kneecapped my idealistic enthusiasm for file sharing.

So what did the band do to connect with fans? What reasons to buy did it offer? What unique ways did the band offer scarce value to users? How did it build up its fan base? None of that is explained in the article at all. Instead, it's just someone upset that a small number of people file sharing the album didn't translate into direct sales of that same album. That's not evidence against CwF + RtB, that's evidence for it. It's evidence against the old way of doing things.

Filed Under: business models, connect with fans, free, music, reason to buy

Lady Gaga's Use Of Free Music

from the don't-knock-it dept

While Beyonce and Taylor Swift may have outshone Lady Gaga at the Grammy's, it doesn't change the fact that Gaga has become quite a music industry sensation. But similar to what we saw with Mariah Carey, the details behind Lady Gaga's business model success shows how even today's superstars are embracing more nuanced business models that make use of free music and focus on selling unique scarcities. When it comes to free music, apparently that's been a huge part of Gaga getting attention:

In fact, much of Gaga's audience got her music for free, and legally. They have listened to free streams--by the hundreds of millions--on YouTube and the other online services that Gaga currently leads, according to research firm BigChampagne. On MySpace, Gaga has had 321.5 million plays. By contrast, singer Susan Boyle tallied only 133,000 plays, despite scoring the No. 2 selling album of 2009.

And while she has been able to sell music, she's also making a ton of money from live gigs and corporate deals, including Polaroid and Estee Lauder -- which are examples of Gaga selling the attention of her fans, as well as some tangible goods (such as makeup, similar to Mariah Carey).

Again, nothing about this is revolutionary at all. But it again shows that even today's megastars are figuring out how that just selling music isn't the only way to make money these days, and, in fact, having the music available for free can often be quite helpful in getting even more attention in ways that aid the other parts of the business model.

Filed Under: business models, economics, free, lady gaga, music

Publishers Beginning To Recognize The Value Of Free... Even As They Fight $10 eBooks

from the different-worlds dept

We've seen how various book publishers have freaked out about the growing popularity of ebooks, often with a price capped at $10 -- arguing that it's cannibalizing the higher margins found on hardcover books. And yet, at the same time, some of those very same publishers are perfectly happy to offer up free ebooks as promotional items. While some publishers are complaining that this is "devaluing" ebooks, others are recognizing that free can be quite useful in helping an author get past the obscurity barrier. We've already seen how many "top selling" Kindle books are actually free, and it's good to see publishers looking to take advantage of that, even if they haven't quite figured out that similar economic logic can apply to cheap ebooks as well. However, given the success of free ebooks, it seems likely that those publishers who are fighting against the tide will eventually come around to recognize the benefits of such things.

Filed Under: ebooks, free, marketing, publishers