No, 99% Of All Filmmakers Shouldn't Crowdfund... But An Awful Lot Should Be Testing It Out

from the don't-go-too-far dept

I'm an unabashed supporter of crowdfunding platforms like Kickstarter and IndieGoGo for certain things (in fact, many things), but I still worry that the early success of some such campaigns has people thinking that those platforms are the solution, rather than one possible solution in a sea of opportunities. Ross Pruden points us to an interesting article by Chris Dorr, in which he suggests that 99% of all filmmakers should crowdfund. Perhaps this is just hyperbole -- and the overall article is a decent one explaining some of the benefits of crowdfunding -- but I want to remind people that just because crowdfunding is a good way for some artists to make money, it doesn't mean that it's the only way to do so. We've been saying for a while that content creators should be prepared to improvise with a variety of business models. There's no one business model that works for all artists all the time. So I get worried when people suggest there's a "single" solution for everyone. Content creators shouldn't get too hung up on thinking they have to crowdfund when it might not be the right way for them to connect to their audience, even if it is a good idea for many artists.

Filed Under: crowdfunding, filmmaking

Defensive Posturing: E-Book Author Takes On The 'Old Guard' At Crime Writing Festival [UPDATED]

from the the-more-things-change,-the-more-they-wish-things-wouldn't dept

[UPDATE: Some comments (namely Steve Mosby's and David Hewson's) have pointed out that there is more to this story than simply the post by Stephen Leather I used as the basis for this one. While other accounts of this event differ slightly, the overview remains pretty much the same. However, there is a glaring omission from Leather's post that is mentioned in others. David Hewson's take on the event, as well as Mosby's, mention that Leather admitted to using sock puppets to comment in forums to drum up business for himself. This, in and of itself, would be unpleasant enough. But there appears to be evidence that Leather's sock puppetry goes beyond simple PR and into harassment of other writers, including writing one-star reviews on Amazon and setting up Twitter accounts in their names in order to, for lack of a better term, screw with them. This obviously goes far beyond shady PR tactics. 

While I believe that the points raised by Stephen Leather's post, as presented on his blog, are still valid, these other issues call Leather's character into question. I based this post solely on Leather's take which, in retrospect, was unwise. This gives the appearance that I (along with Techdirt) approve of these other actions or have simply chosen to disregard them. This is not the case. I was unaware of these aspects until they were raised in the comments, and that is no one's fault by my own.

I would encourage you to read the other postings to more fully round out this picture of Stephen Leather. Again, I feel the points he raised were valid but I do not want to give the impression of implicit approval of his other actions.]

There's something about disruption that stirs up a certain amount of animosity in those on the receiving end. It sometime seems to be almost a "fight-or-flight" response, brought on by those whose "sure thing" has become about as fiscally wise as "buying a home" or "selling the farm to buy Facebook shares."

E-book mystery writer Stephen Leather got to experience this phenomenon in person while visiting the three-day Harrogate Crime Writing Festival, with the dual purpose of rubbing elbows with other authors and adding some background for his upcoming e-book called Inspector Zhang Goes to Harrogate.

The "fun" began when Leather, at the behest of another author, appeared on a panel whose very name stacked the deck against him: "Wanted for Murder: the e-book." As pretty much the sole representative of e-publishing, Leather was outnumbered four-to-one, joining a publisher, another writer (with few e-book sales), an agent and a bookseller. Even with this huge advantage, the old guard couldn't keep itself from deploying mockery, ignorance and condescension when addressing Leather's comments.

What surprised me was how the audience seemed so set against cheap eBooks. Rather than taking my view that books are best sold at a price that readers find attractive, the general feeling of the audience seemed to be that books were already – as one man said – ‘cheap as chips’ while Norwegians had to pay £40 for one of Jo Nesbo’s books. When I explained that I had sold half a million eBooks last year, most of them for less than a quid, I was surprised to hear a few boos and hisses rather than the applause that I had expected.

Can you feel the hate? This doesn't sound like authors supporting other authors. This sounds like the tortured noises of a large animal backed into a corner by a previously unrecognized aggressor. I's now up against the wall, in an unfamiliar position, and unsure of what move to make next.

It gets simultaneously uglier and stupider from there:

The most surreal moment for me came when the President of the Publisher’s Association, Ursula Mackenzie, was trying to defend their policy of maintaining eBooks at a high price. Basically she was saying that books needed to maintain their value and that 20p and free eBooks needed to be stamped on.

I understand her view, but I’m a big fan of selling eBooks at lower prices providing you can get high volumes of sales. And I’m happy enough to give books away if it helps to bring in new readers.

The old argument about "devaluation" is now in play. No matter how many times it's stated, it's still nothing more than a willful misreading of the situation. Unknown (or unsigned) writers selling cheap e-books doesn't devalue your product. Innovations and the removal of barriers lower the costs associated with your product, especially in regards to the digital version. Publishers seem to think that consumers should pay physical prices for digital items. It's not a matter of "devaluing" anything. It's a matter of publishers overvaluing their goods in order to preserve the margins they're accustomed to.

When faced with this fact, publishers and certain authors start throwing out statements concerning the costs of editing and marketing books as the reason why their e-book prices are unable to square with reality. Publishers also use these same statements to explain why they're "entitled" to the largest cut of the proceeds. Leather had his own thoughts on this, but no one's interested:

Mark turned to the conversation around to the cost of books and how much went to the publisher, and asked Ursula to justify why the publisher’s took the lion’s share. She put forward the old arguments about editing and marketing and I tried to explain that with eBooks, an author with a large fan base can use fans to edit and proof-read. Everyone seemed to think that meant I thought writers could do away with editors, and of course that’s not the case. But not every writer needs a hard edit, some writers need little more than proof-reading and fact-checking and that can be done through fans. And my Jack Nightingale series is edited by a full-time editor on my agent's staff so those books need very little editing by my publisher. Yes, I know that some authors need a lot of editing. But I don't.

No one claims that Author A's strategy in the e-book game will work for Author B, but the publishers seem to think that their strategies and methods will work for all authors and that these associated costs will always exist (at increasing price points), hence the "need" for higher prices.

Leather also discussed piracy in a reasonable fashion, stating that he felt pirates "helped market his books." This was greeted by negativity ("...I thought I was about to be lynched...") and name-calling. Pointing out that DRM doesn't work and negatively affects paying customers was greeted with complete denial by the publisher's representative. When Leather questioned why a writer who sells most of their books through Amazon (not exactly known for leaving much on the negotiating table) would need an agent, agents in attendance began firing off "nasty tweets" about him.

But there's one moment in Leather's post that stands out from all the rest of the petty defensiveness of the panel, and gives an indication that some very fundamental misunderstandings of economics, consumer behavior and basic math might be what's holding back certain publishers and authors from seeing how Leather's strategy might work for them.

So I explain to Ursula – and the audience – that I can write a short story in five days and am happy to sell that at the Amazon minimum of 72p which generates me an income of 25p. At this point Ursula – who runs one of the biggest publishing houses in the UK – asked me “so you’re happy to work for 5p a day, are you?” The audience laughed and clapped, and I was frankly gob-smacked. I couldn’t understand why they hadn’t seen the fallacy in her comment. She was assuming that I spent five days writing a story and then sold one copy. She can’t possibly have believed that, could she? 

She might. Many publishers and authors might. So many of them seemed completely focused on making the largest profit they can from the fewest possible sales. It seems like a good idea, but, as has been shown here before, lowering your prices can increase both sales and your net income. Keeping your prices artificially high in hopes of earning more per sale can cost you more in the long run. Leather isn't selling one copy at 5p. He's selling thousands.

Of course I don’t work for 5p a day. My Inspector Zhang stories sell about five or six hundred copies a month. Each. So one story sells 6,000 copies a year. So over the next ten years it could sell 60,000 copies which means I’d get £15,000, which is £3,000 a day and that’s probably more than she gets paid.

It doesn't get much more condescending than that. Assuming that 72p purchases will never add up to "real" money is keeping a lot of publishers and authors from making as much as they could. There's a hint of snobbishness to that line of thought: that somehow self-publishers who sell at low prices are lesser artists and should be mocked, pitied or ignored.

So be it. When the walls come crashing down around you, I'm sure the gate you've spent so much time maintaining will make all the difference in the world. And while you're admiring the distance between you and these upstart outsiders, these upstart outsiders will be more than happy to be mocked and pitied all the way to the bank.

Filed Under: business models, ebooks, mathematics, pricing, stephen leather

Sometimes The Business Model Is The Marketing

from the and-that's-not-a-bad-thing dept

When we talk about cool new business models, one thing we often hear from critics is the attempt to dismiss some of the more creative ideas as mere "gimmicks." I think that severely misses the point. For new business models to work, they need to also reach fans/customers in an effective way. And, sometimes, that means that the business model is part of the marketing campaign. In fact, I'd argue that much of Kickstarter and its success stories is based (in part) on this premise. The business model and the marketing campaign bleed into each other -- which is why it's often useful to have parts of your business model be things that will get people talking about you. It's also why we have a $100 million offer in our (soon to be relaunched!) store. While no one bought it (yet!), it was definitely the item people spoke about the most.

And, of course, none of this has to be purely digital. My friend Tom sent over this great story about Neal Gottlieb, who runs an ice cream business that has some stores and a factory -- most of which involves your everyday ice cream sales. However, he's also got some offerings for some... higher end clientele:

Q: So what's the deal with the $3,333.33 banana split you have on the Napa store's menu? Are you out of your mind?

A: I put it up not really as a joke, but for something fun for people to read while they're waiting in line.

I really hate the most expensive (dot dot dot) when most of the expense is for the serving dish, like the most expensive cocktail that comes in a crystal chalice. We serve the most expensive sundae, but the food cost is one-third of the price. It's three scoops of organic ice cream; a banana, organic of course; and is topped with three syrups made from three extremely rare dessert wines - a 1960s vintage Port, a Chateau D'Yquem and a German Trockenbeerenauslese. It also comes with a cellist who will play anything you want while you eat the sundae.

Ah, yes. Don't forget the cellist. Though, I'd argue that if his complaint about others is the price of the serving dish, there may be a valid complaint when part of the cost is the musical accompaniment. That said, this is not the most expensive item on the menu:

Q: What other expensive ice cream packages do you offer?

A: We offer a trip to Mount Kilimanjaro with a real guide and me. Once we climb the mountain, we will chip away at the glacial ice and carry it back to camp, where we will churn as much ice cream as the customer can eat. The trip includes first-class airfare, five-star accommodations, a $10,000 donation to a nonprofit African environmental charity and a souvenir T-shirt for $60,000 for one and $85,000 for two.

So far we've had no takers.

However, one person has purchased our "100 pints personally delivered." That's when I wear a green tuxedo and deliver the ice cream anywhere in the U.S. for $3,333.33.

The full article has a bunch more details and is well worth the read, so go check it out.

Now, of course, some people will (again) say that this is merely a "gimmick." And perhaps you can dismiss it as that. But I think it goes much deeper. It's showing how the business model itself can be both a part of the marketing and how you connect with fans and customers. In this day and age, part of succeeding is in standing out. Doing the same thing that everyone else does won't get you that far, so why not innovate and be creative on the business model side of things as well? I'm sure Gottlieb makes great ice cream (I've heard good things, though I haven't tried it), and so our usual critics will insist that he absolutely must only focus on that and that alone. But I think most sensible people realize that you can create a great product and do a good job marketing it while also being creative with your business models. And none of those things take away from any other part.

Anyway, should anyone decide to take us up on our $100 million offer, I plan to use some of the money to go to Mount Kilimanjaro with Mr. Gottlieb.

Filed Under: business models, ice cream, marketing