Supply and Demand – eBooks

One of the first lessons you learn in any business school is that of supply and demand.

One of the first lessons you learn in any business school is that of supply and demand.

A steady supply with increasing demand will lead to higher prices. A growing supply with steady demand will lead to lower prices.

It’s also an issue that frequently plagues the digital world. In a traditional brick-and-mortar sense, supply is a physical property – you can’t physically produce more than your manufacturing process allows. With digital wares, the incremental cost of producing an extra widget, or two, or two million is essentially zero.

As demand grows, supply can expand infinitely to meet it – or be limited artificially in a way to make the price go back up.

Online Publishing

The publishing world has gotten in trouble recently for attempting to artificially push up prices. Several publishers banded together and agreed behind closed doors to fix their prices at a certain point.

They saw – as did the legal system – all ebooks and digital publications as being equal. As if a book by Stephen King and a book by Frog the Homeless Guy on the Corner were interchangeable goods – lowering the price of one would automatically make it a more attractive product than the other.

The point of the case against publishers was to prevent them from leveraging a monopoly of content to raise prices and, essentially, defraud the customer. It was argued from the position of free market economics – that these publishers need to keep their prices “competitive” with the rest of the market.

Unfortunately, the rest of the market is Amazon – the behemoth that controls a whopping 65% of the eBook market.

Kindle Unlimited

Kindle Unlimited is a new service that allows readers to subscribe to an unlimited number of eBooks for $9.99 per month. For heavy readers, it means you’re spending far less to get a hold of the content you want to consume.

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For writers, it likely spells the end of the ability to feed your family based on writing books.

I don’t fault Amazon for creating or releasing this service; it was an inevitable act on the part of the market. Readers are reading less, and are less and less willing to pay large sums for the books they do read. Publishers already tried to up the game through price fixing and, justifiably, failed.

Unfortunately, a the downward momentum of book prices is incredibly detrimental to the writers who produce content:

Driving the prices lower isn’t likely to expand the market of readers, since book prices don’t seem to be the deciding factor on whether someone reads a book (time is). But those lower prices directly shrink the incomes of authors, who lack any other means of translating their sales into additional revenue.[ref]Amazon Isn’t Killing Writing, The Market Is[/ref]

Instead, it forces professional writers – those who publish books as their primary source of income – to either look to other avenues for their salary or sacrifice on quality to increase their publication volume. It also encourages, for better or worse, novice authors to publish more frequently and continue flooding the market with, frankly, crap.

YouTube is often cited as a clear analogy to this same struggle between old and new media, albeit video rather than writing. Yes, there are a handful of high-quality channels on YouTube putting out serious content (and making significant revenue as a result). The vast majority of YouTube content, however, is utterly worthless and fails to compete with even the most novice mainstream media production of a decade ago.

Does Kindle Unlimited mean the end of the book? No, but it’s evidence that the market is already drafting an obituary.