Dynamically Priced Content

February 4th, 2010 by mispeled

Hello, friend. I feel a bit embarrassed – you’ve walked into the middle of a conversation here. No, please don’t go. It would mean a lot to me if you stayed and participated. I’m eager to hear what you think.

However, before you do that, there’s a lot of backstory that you should probably wade through. I’m not trying to give you homework or anything – all I’m suggesting is that you’ll understand this post a little better if you read this, this, and this first. If you don’t want to, that’s okay. But don’t say I didn’t warm you.

And now, without further ado, I need to reply to Levi Montgomery:

Okay, let’s narrow this back down to novels and digital fiction again, since that’s where this whole debate started before we escalated it away from the point.
I don’t know that I’ve done the best job I can to describe how digital text pricing should be levied, so I’m going to take another crack at it.

To start, let’s assemble a ballpark cost involved with being a writer. We can take as a given that to survive as a professional writer, one must have an income from that writing. This number varies depending on where you live and what other help you have, but let’s take 40,000 dollars a year as a target number. That seems like a pretty fair income for one person who gets to do what they love for a living. I don’t mean to suggest that this is what all writers should make, and I don’t want to get too caught up debating that number, but it gives us a ballpark figure to start working with the math.

Now, let’s talk workload and resources. Take a writer that writes 2,000 words a day, which is what Stephen King does (according to his writing memoir).Levi, I’ve seen your twitter reports about your daily writing – sometimes you write more, sometimes less, but I feel like 2,000 words a day is a reachable goal if writing is a full-time job. At 2,000 words a day, I’ll finish the first draft of a 100,000 word novel in 50 days. Now, that’s pretty fast, and it doesn’t allow for any rewrites, cover design, digital posting, breaks, or anything like that, so let’s double that figure and say that an industrious writer working every day can finish a novel and get it out there every 100 days. Since there are 365 days in the year, that puts a good writer’s output at about three novels a year, with some time in there for vacations and extra editing, if needed.

If I know that I can publish to the internet, in digital form, three novels a year if I’m working full time at being a writer, that gives me some data to start thinking about pricing. I know that in order to write full time I need to make 40,000 dollars a year. I have 3 novels with which to make that money. Since we’re talking about digital releases, the only costs involved for me are time. Writing, layout, design, editing, and distribution are all time costs, not resource costs.

In order to make my living, I have to sell:

at least 4 units for 10,000 USD or
at least 40 units for 1,000 USD or
at least 400 units for 100 USD or
at least 4,000 units for 10 USD or
at least 40,000 units for 1 USD

Keep in mind, this is total copies, so if I have repeat readers who might buy all 3 releases in a year, or any back releases, hitting those figures gets easier.

Now, just to give us some data, let’s pretend that the combined downloads of my current work through all online sources (that I can track) in the last year were actually sales. 2000 on scribed, 2000 via bit torrent, 100 from my site, 1200 on feedbooks. Let’s pretend that it was 5300 sales that I made in the last year.

Dividing that out, I would have needed to price my books at about 7.5 USD per unit to have made my target income for last year and support myself as a writer. Of course, my downloads weren’t actually sales. I’m using those numbers as what I have to start doing some math, not to say that I could really push that many units a year. My stuff isn’t good enough for that, and the resources I need (storefront and so on) aren’t available yet. Not to mention all the hassle of getting a bigger audience, piracy losses, and all that stuff. Those issues relate, and I know people will be upset if I just dismiss them without addressing them, but I’m going to do that, at least for now. We’re just talking here, after all. I’m trying not to get sidetracked.

So, anyway, my numbers are 7.5 USD for 5300 units so I can make my 40,000 USD and continue to write. I can afford to price them at whatever I can afford to make my living, since there is no physical production cost floor. As long as I can hit my 40,000 dollars a year, I can price them at whatever I want.

Now, say that next year is even better than this one – say that I’ve got some great content coming out and I’ve been building my name – I expect 10,000 downloads in the next year. If that’s the case, in order to maintain my target income, I only need to price my books at 4 USD per copy. Now I can offer the same thing for cheaper while still maintaining my lifestyle. Everyone wins. (It seems like there is a “devaluing” fiction conversation a lot of people are having lately that would fit in here, if I was going to try to fit it in.)

If for some reason I had a banner month, a crazy month where I got all 10,000 sales in one month at the beginning of the year, then I can now afford to price my stuff for free for the rest of the year.

I understand some planning is needed for something like this – projections, that sort of thing, but it’s worthwhile for me to do it if I feel like I can get more work to more people. As long as I can feel somewhat comfortable with the numbers, it would be great to be able to plan a little, too.

I’m sure that if I was a Google-level engineer I could figure out some pricing system and website module that dynamically priced content on my website based on how many sales I’d made and how many I needed to make to hit my goals of remaining a professional writer. Some awesome and wonky math that priced different novels at different prices to maintain their sales rank, all while lowering or raising prices as I needed to maintain my income, yet still offering my work as close to free as possible. Even not being a Google-level engineer, I’ve taken a crack at it to see if I could figure it out.

But the real point of the thing is that I’m not trying to steal work from people. I don’t advocate that. I just advocate only taking what you need. I have a copy of your novella on my hard drive right now, Levi, a copy you gave me for free so I could review it. I wouldn’t dream of releasing that work without your consent, no matter what I think you should do with it. It’s not my place to decide what you should do with your work. I can judge you or not judge you, but my judgment is not allowed to turn into action you don’t condone.

I don’t see pirates as Robin Hoods on some moral high-ground quest. The group is too diverse to lump all together. You’ve got your competitors who do it for the name, the people who just want stuff for free, your revolution folks, and people who just can’t afford content otherwise. They don’t all go together, even through their actions are all the same. And they aren’t Robin Hood.

But I also don’t see corporations pricing their content to only take what they need, either. So, I’ll happily condemn them both. I believe in working things out from the bottom and trying to come up with numbers to support it. If corporations need to price their books at 10 bucks a pop to stay in business and pay their employees and writers an acceptable wage, then fine. But right now I don’t believe it and until I see some numbers, I’ll continue to not believe it.

But I don’t think that I have the right to take from people what they aren’t willing to give away, either. However, I see that it is a moral obligation for people to price things fairly, based on maintaining the ability to release more. That’s a personal choice, I get that, so I will happily call out the guy who has the cure for cancer and is selling it for 10,000 bucks a pop, even though his costs are only 5 bucks a pop. That guy is a jackass, and deserves to be lampooned and made a public spectacle. But beyond that, I wouldn’t steal it from him. I’d try to shame him into doing the right thing. Failing that, I’d try to get some laws changed, since laws are supposed to be there to aid the common good, even if they routinely fail short of that lofty goal.

For me, right now, that means I can release what I can for free, even though I have to spend the majority of my time at a day job. That day job severely limits the amount of time I have to produce content and release it. However, that job also provides me with an income, so I can afford to release my content for free. It’s a trade off that I’m willing to make right now. Maybe later, when I’m ready to try writing full time, I’ll have to charge. But I know that I’ll do my best to keep my prices as low as I can afford and still be professional.

I hope that makes sense.

Good Grief, Yet More Connoisseurism!

February 3rd, 2010 by mispeled

I do think that there is a place in the construction of identity for both arts and brands, but that this place is separate from the art and brands themselves, or so it seems. I’d like to pose a question to you, Jesup, and you, Angela, as well as anyone else who is following our discussion. But first, let’s get through some backstory:

Angela talks about art enjoyed innately for itself versus enjoying it after education. That’s what Bourdieu is talking about, too. He doesn’t agree with Angela, though, that the innate experience is the most important thing, or, more directly: the thing that actually happens. But let’s start there and examine it a little with some examples. I’m interested in brands and Angela is interested in Art, so let’s use an example from both. Let’s start with Art.

Angela uses the example of opera, which is a bit of a mis-categorization, since opera is a medium, not a specific piece. Inside any medium there are more approachable and less approachable works. Spider-man is more approachable comic than XKCD, for example. Mass-produced fiction (Ala Dan Brown) is a more approachable form of the novel than say, Proust. So there are degrees of approachability, but these stem from the individual work, not the medium itself. You could make the argument that one medium is more approachable than another, however.

I don’t know much about opera or music, but I think that it wouldn’t be a huge stretch of the mind to loosely lump Queen’s Bohemian Rhapsody in with Puccini’s La Boehme, since both maintain some operatic vocal conventions. Since their subject matter is similar, they make a good comparison for our discussion.

Of the two, Queen’s composition is infinitely more approachable by the masses, both since it overlaps with conventional Rock and Roll music, but also because it’s more modern (in the timeline sense, not the theory sense). New stuff is easier to approach.

Certainly, if you are uneducated in opera, you are going to be able to appreciate the tonality of both works. However, I would argue that beyond the basic sensory experience, a person is more likely to enjoy Queen than Puccini, at least on the first listen. If one is motivated enough, Puccini might eventually overtake Queen, but only after some sort of educational period. Whether that means formal education or just an extended period of listening to La Boehme over and over, education is required nonetheless, if one is to be able to appreciate the nuances and make a distinction.

It’s like this: the first time you hear a foreign language, it all sounds like gibberish to your ear. You can’t even pick out the individual syllables. It sounds like “helloangelailikeoperadoyoulikeopera?” You can’t understand that. However, by listening to the sounds over and over, even before you know their meanings, you can begin to pick out the nuances of the speech to separate the words. Before education, whether that be formal training or just personal repetition and focus, that discernment is not possible. Works that do a better job of being approachable, like Queen, are easier to discern, and thus require less education. That’s Bourdieu’s point.

However, and let’s use the language metaphor again – there are some works that are only intelligible if one has prior knowledge that must be taught. It’s like Pig Latin. One cannot understand Pig Latin unless one already understands English. Imagine trying to listen to Pig Latin if you’re a native French speaker. You’re so far removed from the meaning, all you can do is listen to the sounds. You’ll never understand what it means without education. You might learn to appreciate the tonality of the thing, enjoy it for its sensory details, but you’ll never “get” it.

Whether art can be “gotten” is a separate thing, since there is no clear objective behind art. With art, it can be argued that “getting” it is different for everyone. Since the outcome of the thing is so subjective, it’s hard to judge the usefulness of the thing.

However, with brands (and therefore products) there is a direct objective in mind – product purchase, at the most base level. If one buys a thing, one “gets” a thing. Or, at the very least, one wants other to think one “gets” a thing. So testing this idea with brands is easier to do. That’s partly why I’m interested in them, since they are testable (and therefore, more scientific, at least with our current level of scientific understanding).

With brands, we can say whether the objective has been reached. Whether that objective was reached for the “right” reasons is part of that, but can still be removed from the quantitative analysis. So, let’s delve into an example for this, too. Let’s take two brands and compare them, just as we did for art. For the medium, let’s pick something essential, like clothing, since everyone needs clothes.

At one end you have Jordache, a clothing brand that used to have more prestige, but now produces cheap jeans and clothing for discount stores like Wal-mart. On the other hand, you’ve got high-end, prestigious brands like Praada, only sold at stores like Saks Fifth Avenue and other exclusive marketplaces.

Both of these brands sell clothes, but are aimed at entirely different demographics, if for no other reason that monetary gatekeepers keep the customers of the former from the latter.

I don’t know much about either brand, so it’s hard to go into specifics, but let’s say take an item, like blue jeans, and assume both brands sell that item. Jordache sells theirs at Wal-mart for 29.95 USD and Praada sells theirs at Saks Fifth Avenue for 499.95 USD (or some other high price).

From a utility standpoint, both brands will clothe your legs, keep rodents and children from directly nibbling your ankles, and generally keep you warm. So their utility, at least on a base level is the same. For some customers, base utility is all that matters in a pair of pants, either because they have not been educated about brand recognition, or because they want to use them for a specific purpose and that purpose only, such as, you know, wearing as pants.

To someone who is only interested in the utility of the pants, Jordache will do fine, in the same way that Queen will do fine for someone who wants to listen to something akin to opera. For those people, the extra money spent on Praada, for essentially the same product, is absurd. Only an education in the finer details of why Praada is “better” can influence someone to buy Praada over Jordache.

Before you freak out about that statement, let me first say that education is multifaceted and takes place on many mental levels. It’s doubtful that you’ll ever see a professor at a college (well, maybe in the fashion department) try to educate you about the differences.

What you will see, however, is commercials, prints ads, and different classes of people wearing different products. These things serve as an education about brands. If you see someone who you’d like to be – a famous writer, a sports star, or even your boss’ boss, wearing Praada instead of Jordache, you’re going to associate that brand with success, treat it as a marker of who you want to be, if you think that person is the type of person you’d like to be. At that point, the jeans you wear fulfill more that base utility of warming your legs. They also tell a story of success for you by associating you with a “higher” class.

If you had not been educated to that story, if you’d been on a desert island and a plane dropped two pairs of pants from the sky and you’d never been associated with brands or the idea of brand discernment, your reaction would be based purely on utility and sensual details. You wouldn’t know that Praada has a story of success and Jordache has a story of working class. This is a bit of a simplification, but you get the idea.

It’s education that makes people discern between brands. My original point to the whole thing was that this education that teaches you to discern makes it easier for you to discern in other areas outside your original expertise (say, moving from pants to coffee), to see that discerning as a good thing, and more importantly, as an important thing THAT MATTERS AND YOU SHOULD CARE ABOUT.

I’ve always held in my mind this precious gem, this notion that I could not bring myself to touch, that all education was good. That it was the knowledge itself that could be used for good or ill, but the knowing, the knowing was always positive. So the struggle has been how to allow that gem to crack, to sub-divide it, just a little, so that the positive view of knowledge was maintained, while still allowing the view that some knowledge, the level of discerning in things beyond a view for their simple utility, was probably negative.

I’m not sure how to do that, without cracking the whole gem. I’m afraid that if I aim my chisel wrong, the whole idea will shatter and I’m not sure if that’s in the best interest.

The only way I’ve been able to figure it so far, is by categorizing a hierarchy of important knowledge and less important knowledge. That’s nothing new – people have been doing that since the first philosophers. But that’s knowledge, not education. Since I feel like I’m talking about a specific educational process here, that doesn’t seem to solve the dilemma.

Now, Angela and Jesup have been approaching it from a different angle. Neither have approached it from the way I am, from a judgment of the process itself. Both seem more interested in the subject of the process, whether it is art or identity. But those are subjects of knowledge, not a process of knowledge acquisition and sorting, at least as I understand them. Maybe I’m wrong. I don’t know.

Now, I don’t care if we talk about art, or jeans, or coffee, or ideas. What I care about is how we learn those things and if the method that teaches us those things is tainted by the triviality of the subject matter.

The actual subject matter doesn’t matter to me, so long as it’s trivial, a pure sensory, pleasure-only-oriented pursuit. That’s what I really want to know, because if you can teach (and not sully) critical thinking by first teaching people about coffee, that’s a big win for critical thinking. But, if by beginning with coffee then people learn the lesson that they never need to move beyond silly things like coffee, instead just learn that it is okay to laterally move to things like jeans, or HDTVs or other products, then there is a big, big loss for critical thinking, because critical thinking itself is more important than those things, and, and this is the big one: it should be applied to bigger things than coffee or jeans.

So, the question I’m really asking is this: does the way we learn to discern and think critically effect our views of critical thinking in the long term? How, Jesup, does the method we use to think, and the way be come to that method affect our identity? And Angela, how does the way we learn critical thinking and the ability to discern effect our relationship with art?

That’s what I wanna know, because it seems like my thesis is that starting with coffee is a bad idea because it teaches people that lateral moves to other products are the only available outlet for the use of that idea.

What They Steal

February 2nd, 2010 by mispeled

Wow, what an exciting day! Mark at Ditchwalk posted a great entry furthering the discussion we’ve been having about piracy and copyright. With his support, I feel like the discussion is going somewhere. In this post I want to directly respond to what he wrote, so please read his post first. Once you’ve done that, let’s talk:

Both of Mark’s scenarios that don’t involve the taking of something from someone else, but still involve physical piracy (free newspaper and concert), stem from the same given: content creators have a right to decide how, why, when, and where their content is experienced, if for no other reason than they created that content.
I’m not sure I agree with that given as it stands, and I’d like to use a silly example to illustrate why. There is an anti-corporation argument that has a place in the piracy debate and I think this is also the place to bring it into our discussion. I want to use some examples to talk about where I think that argument comes from, but also what I think it means that the argument even exists in the first place. I hope that this will also help address Mark’s ideas about stealing.

We’re going to need two people for this discussion, so let’s pick polar opposites to try to tease out the implications of the thing.

First, we need someone who’s rich and can pretty much buy and sell whatever they want. Let’s use Bill Gates, since I seem to have been thinking about him lately. I don’t know why – it might have something to do with him recently joining twitter and also donating billions of dollars to charity (although those two events might be unrelated).

Second, we need someone who’s not rich. Anti-rich, even. For this, let’s use Marian, referenced in the same blog post I’m responding to. Since we were put up as mutual mouthpieces there, that seems fitting. Marian, unlike Bill Gates, cannot buy and sell whatever she wants. She’s limited by her limited income.

So here’s the scenario:

Say that I’ve just finished writing the next great American novel. It’s the best thing since sliced bread, full of the bees-knees, wisdom, humor, and great ideas. Not only is it gonna be a best seller, a strong member of the Oprah book club, and adored by the mainstream and counter-culture alike, it’s also full of life-changing ideas that everyone on the face of the planet, young and old, should read. Say that’s what the book is, just for example.

Now say that, before it’s released, word gets around that all the hype about the book is true, that it really is better than Shakespeare, the Bible, and Twilight (for the mass market appeal) rolled into one and my publishing company and I decide to set the price of the novel at 10 billion dollars a copy, because we think, for some reason, that we can get Bill Gates to pay that price.

Lo, the novel is realized. My publishing company and I sell three copies to the three richest people in the world. We retire in luxury and never work again. Bill Gates gets to read the book, being one of the three who bought it, but poor Marian never does, because she cannot afford the price of entry.

This is an extraordinarily silly example, but a necessary one, because it demonstrates some talking points:

People should only have a right to distribute content if their profits from said content are reasonable. What right, beyond the creation itself do I have to price my novel at such an exorbitant price? I created the content, but if the book is so good that it might improve lives, what right do I have to price it so only a few lives can be improved?

That’s the point about sticking it to corporations and where it originates. Just because I create something, do I have the right to completely control access to that thing? Maybe, but only to a point. After that point, the social contract says that the work should be freely available, or at the very least, as widely available as possible.
That’s what this is really about. Did Bill Gates really have the right to make 40 billion dollars because he started a software company that provided the right thing at the right time? Does he have the right to become the wealthiest person on the planet because he won big on a social roulette game?

I don’t think so. That’s too much. Letting someone profit that much from the creation of a single thing is absurd, whether it’s a company or a novel. Now, novels aren’t as absurdly profitable as the amount of money Bill Gates has, but you get the slippery-slope gist of the thing.

Now, Marian’s point was this: if the content isn’t priced affordably, she knows how to get it for free.

I think she’s right. It’s easy to get it for free. And digitalization of work brings that into a whole new perspective. Because although piracy might be described as the theft of a sale, the hard fact is that after the content is created, an additional digital copy costs the company nothing. NOTHING.

So how in the hell can they justify pricing a book at ten dollars? It’s an unreasonable profit margin for their investment.

If a publishing company spends 150,000 dollars to pay the author, the editor, the layout person, and the web guy who throws it up on the digital store – they only have to sell 15,000 copies at 10 bucks a pop to recoup that investment. Now, for a novel that they are willing to spend 150 grand on, they are easily going to sell 15,000 copies. It’s more likely that they are going to sell 100,000 copies or more, since they are banking on it being a best seller (otherwise, they would have paid 15,000 or less for the advance, layout, and editing fees). 100,000 copies at 10 bucks a pop gets them 1 million gross and 850,000 net. That’s an absurd margin.

This is simplistic, but basically how it works nonetheless. Now, if they price the book at one dollar, not only are they going to sell way more than 100,000 books, they also put it in reach of a bunch more people. They probably aren’t going to make the same margins, since they’d have to sell a million books at one dollar to make the same as selling 100,000 books at 10 bucks, but it’s possible.

And if they do sell a million books, it’s time to lower the price. Thus spake the social contract and the social contract mote it so.

(Beyond that, there is also the issue of the payment of the writer versus the payment of the publisher, but that’s another whole big thing that probably needs its own post.)

So, my belief is this: content creators have a right to distribute their content as they wish, as long as they price that content so the most people can have access to it (which means as cheap as possible) and still maintain a comfortable lifestyle that lets them continue to create that content. If you want to charge me ten bucks for a copy of a digital book, you don’t get to have a private jet. I’m sorry. No. That’s not feasible or socially responsible. Instead, people in my generation will steal your book. So it goes.

In the above scenario, I would be an asshole for writing something that could help people and then pricing it so only a select few could afford it. That’s capitalism, you say. Fine, I say, well capitalism is an asshole, too.

Information, content, entertainment, whatever you want to call it, should be priced so that the highest number of people can access it and the people who made it can live and continue to create it. When that happens, then content creators have a right to control their content. Until that level of social responsibility is inherent in the system – content creators shouldn’t have a right to do what they want with their content.

That’s the “right” of creation – bringing good to people, and as many people, as possible. If you don’t do that, you have no right to create.