"Free is more complicated than you think"

Last week, Scott Adams, the Dilbert cartoonist, wrote a column (sub req'd) in the Wall Street Journal entitled "Giving Stuff Away on the Internet". It told a cautionary tale of his experiences in free distribution of his cartoons and books online (there's a good summary here). The key passage is this:

A few years ago I tried an experiment where I put the entire text of my book, "God's Debris," on the Internet for free, after sales of the hard copy and its sequel, "The Religion War" slowed. My hope was that the people who liked the free e-book would buy the sequel. According to my fan mail, people loved the free book. I know they loved it because they emailed to ask when the sequel would also be available for free. For readers of my non-Dilbert books, I inadvertently set the market value for my work at zero. Oops

Given that I'm writing a book called FREE, exploring the many ways to make money by giving things away for free, you might imagine I'd have thoughts about this. But first let's hear from someone smarter than me, Tim O'Reilly:

We find that making a book freely available can help visibility and sales of a book on a little-known topic, but for a well-known topic or author, who benefits little from the additional exposure (like Scott Adams), it can have a slight cannibalization effect on print sales. So, as a beginning science fiction author, Cory Doctorow used "free" to build his career, while Stephen King found the results of his experiments with free to be disappointing.

I plan to make as many versions as possible of FREE, well,  free, starting with the MP3 audiobook and possibly including a sponsored physical book. Is this going to backfire, given that I'm already on the well-known side of the equation?

Well, if all I wanted to do was sell books, it might (although I doubt it, given the usability benefits of the physical form of a serious book. After all, giving away a pdf version of his book on net policy and economics helped Yochai Benkler sell more hardcover books than he would have otherwise. 500+ pages is a lot to print out, to say nothing of reading on-screen).

But I don't just want to sell books. I also want to:

• Write better books. As Adams writes: "Over time, I noticed something unexpected and wonderful was happening with the blog. I had an army of volunteer editors, and they never slept. The readers were changing the course of my writing in real time. I would post my thoughts on a topic, and the masses told me what they thought of the day's offering without holding anything back....At some point I realized we were collectively writing a book, or at least the guts of one." Free content catalyzes conversations.
• Expand and promote an idea, which is not just something I believe in but will also benefit me and my magazine by association.
• Give speeches, customizing my analysis and research for specific companies and industries. The free book is simply marketing for that, which can be more lucrative than book royalties.
• And who knows what else? Free distribution will put the book, in one form or another, into the widest number of hands possible. I'm not quite sure how I'll monetize that reach, if I can at all. But the problem of making money indirectly from attention seems like a great problem to have.

Note that Scott Adam is not a critic of free--he's a free pioneer, putting his strip online at a time when others were charging for theirs, and he also reaps rich psychic rewards: "After 18 years of writing Dilbert comics, I was itching to slip the leash and just once write 'turd' without getting an email from my editor." Adams may not need more money, but we all need more freedom to do what we want to do.

Unlike simply selling what we make, free requires creative thinking about how to make money around what we make. That is, as Adams says, "complicated". Which is why I think there's a book in it.

Comments

[Terry Heaton]

The Radiohead experiment kind of tosses a bit of a monkey wrench in the "nobody will pay, if I offer it for free" argument.

[E Dewhirst]

Hi Chris,

I say make it available for free only if it is more than 80 pages. You hit the nail on the head about printing stuff out - not fun - reading on screen - not fun. Having just re-read IdeaVirus by Seth Godin, (the free download version) - and since my local bookstores could not get me a copy fast enough I can say without a doubt that people will see the value and go buy the book. I still have an order in for the book - just because I want it in my library so eight months from now I can read it again.

It is not unlike that post you had regarding the new book about bloggers - downloaded your chapter and quickly read it and went to order it - Doh! - not ready to ship. So my advice would be to make it free when you have lots of copies to sell.

That's my 2 cents.

Cheers - Eric

[Phillip]

Chris - for me the issue of free content versus paid is less about income and revenue and more about the revolution of the business model that one uses to monetise intellectual assets (IP, patents, know-how, trade secrets, copyright etc.).

It may be that the free offer becomes the loss leader to build brand-loyalty, traffic etc and less about driving a straightforward trade of goods.

And like you I also think that spreading the même – is more important than monetising everything that one creates.

My 5 cents.

Phillip

[Fergal]

No real difference to the way the music industry is going. Mainstream artists are now giving away music free (Prince for instance in the UK gave his new album away on a sunday newspaper a few weeks back before it was released) and as Terry says the raidohead honesty box experiment. All for the purpose of brand recognition and FREE marketing.

I agree with Eric though. The timing needs to be perfect. If someone wants the package they want it now. The difference in the new music model is the live event which is deemed worthy of a wait when the show hits town, but a book is a personal thing, and with so many new releases (I add about 3 new books a week to my amazon wish list but can only read one) it will be surpassed with next weeks next best thing.

I wont read on screen or print, I want a cup of coffe and big leather chair or couch, or train, or coach-seat or cab etc etc....

[Paul Sweeney]

Here's a mad thought: maybe people buy books like "Dilbert" not to read them (per say), but to have them as a social signal to others (i.e. "I get it, we too around here seem to behave a bit like Dilbert's boss, but I'm not one of those guys, because I have this book!". Therefore the value in the book might be replicated online: the more someone contributes to the Dilbert Forum/ Editing cycle, the more "Dilbert knowledge" they accumulate. By looking at their "personal blog widget score" for their "Dilbertian awareness", they might be able to signal to other "hey, I am not going to be like Dilberts boss, I am a good guy to work with". By re-thinking what his "network brand is" there could be other revenue streams possible other than pure "book sales".

[k122n]

chris,
have you looked into sites like amiestreet.com? smaller/unsigned musical artists and bands upload their tracks, and price is based on demand - the tracks start out free, or close to it, and then as it's downloaded more and more, the price goes up, capped off at $.98/track (one cent below itunes pricing).

[wrs]

I wonder whether or not the give away for free/pay hardcover books might work for blogs also.

(I think about it in my blog posting linked below.)

If it applied and printed blogs made it, that'd make reading "the histories" of blogs quite a bit more comfortable.

[Paula Wellings]

A bit of a tangent but hopefully relevant...
I recently read German Border Threat: Cheap Books by Michael Kimmelman -- http://www.nytimes.com/2007/10/24/arts/24book.html?emc=eta1
-- about the impact of having books cost the same regardless of sales venue.

"Germany’s book culture is sustained by an age-old practice requiring all bookstores, including German online booksellers, to sell books at fixed prices. Save for old, used or damaged books, discounting in Germany is illegal. All books must cost the same whether they’re sold over the Internet or at Steinmetz, a shop in Offenbach that opened its doors in Goethe’s day, or at a Hugendubel or a Thalia, the two big chains."

The result of this control on pricing has been a vibrant publishing and book-selling community, where independent bookseller and publishers have survived what many did not in North America in the 1990s, the emergence of big box bookstores and online book sales.

A serious consequence of the gutting of independent bookstores and small publishers has been the loss of a meaningful venue for midlist and backlist books. I worked in a number of small bookstores in the 90s and went to many more. Within a six block radius in downtown Vancouver there was a poetry bookstore, an art and design bookstore, a women's bookstore, a critical theory bookstore, an antique bookstore, a university bookstore, and a comic shop. A few block further and there was a children's bookstore, a mystery bookstore, a gay and lesbian bookstore, and an indy fiction bookstore. There was also a few independent bookstores selling the bestsellers, cookbooks, literature and gardening type books. While amazon may carry all of these books now, it is not the same. These bookstores were essentially expertly curated collections built with love for ideas, reading, and communities of readers. A new book wasn't necessarily the best book, and midlist books were an important part of these collections.

Sadly, I don't see the re-emergence of these bookstores anytime in the future. Price competition won and small bookstores and publishers lost, and people who love independent bookstores and publishers lost too.

I am excited though about what FREE can mean to price competition and midlist and backlist books moving forward. At wowio.com we are exploring what might be possible when ebooks are given away for free with business sponsorships. Unlike small bookstores of the past we don't have to compete with the big bookstores on price and we have the opportunity to rediscover the value of the midlist book, the bestseller of yesterday, and the new and exciting ideas that don't always get a big marketing budget or paid placement.

In our sponsored bookstore we are endeavoring to grow the social aspects of our distribution to center on the role that books play in people's lives: as ideas that can bring us together, invite joy and sorrow, teach and fascinate, and help us to transcend our circumstances.

There is ungoodness in books as commodities.
I'm curious to find out how free plays out.

[Gaurav Mishra]

The Economics of Free — Free content -> Attention -> Free product -> Lock-in -> Paid bundled services -> $$$

[Tim Graham]

https://gettingreal.37signals.com/

these guys sell pdf and hardcover, but also let you read it free online.

[lophat]

The trick for the book publishing business is to apply the lessons of the music (iTunes, Radiohead), movie/TV (LOST, iTunes), and game (Puzzle Pirates, Habbo Hotel) businesses when it comes to digital distribution models. In other words, figure out how to give away basic but charge for premium content or make the whole thing ad-supported.

[Madhu]

FREE is a marketing tactic and not a business model. Like any other marketing tool used to attract - it looses effectiveness if everyone uses the me technique. While it works for few, it cannot be a mass business model. Though Google seem to prove me wrong. If Chris gives his book free - it will work as mkting idea - but I (not-yet-popular) might not get any benefit by giving away free. if everyone uses free , someone will comeout with an idea of free + additional gift (money or in kind). Imagine how many companies would be willing to pack a sample item along with Chris's book as a gift.

[Dave]

Just by the by, I read God's Debris, and it really sucked quite badly. Had it not, I would have bought a hard copy and also one of the sequel.

Conversely Seibel's "Practical Common LISP" is available freely online and so good that I was delighted to buy the £40 (currently about $80) hardback copy. And I'm an author with the same publishers, so I could easily have got a review copy if all I wanted was the convenience of paper.

If all your works are freely available online, yes, you may lose some sales. If only some of them are, it's probably a pretty good way to advertise.

I'm looking forward to reading FREE for free. And if I like it I'll be happy to re-read it for $$$ as well.

[Allison]

It makes sense to use *free* when you are in a new market space, relatively unknown, and trying to establish a beachhead. In that instance you need reach and exposure because you are unknown. The Dilbert author, however, already had his beachhead well established, so declining sales are more likely to be indicative of people being bored with his stuff, and therefore not likely to keep buying his work. He's reached his saturation point. In that instance, free doesn't help at all.

[Mary]

Show me a magazine that gives away Ads for "Free" and then maybe I'll write for them for "Free."

Otherwise, this is an inane analogy to the real world of making a living at writing.

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[Victor Cheng]

The question, should you give away parts of your book for free is respectfully the wrong question (or perhaps a good question, but at the wrong time).

The more appropriate question is to look out how a free or not free book would fit into your entire portfolio of offerings. I know authors who sell less than 10,000 copies of a book, but make $10 million a year. Obviously the bulk of their money does NOT come from book royalties, but related (and substantially more expensive) services related to the book.

Every business should have a series of offerings (e.g., products, services) than range from free to very expensive -- a price point for everyone if you would.

Whether a particular book should be free very much depends on:

1) What problem are you trying to solve with the book (build a brand, build an audience, build an email list, generate leads, maximize sales of just that one product)?

2) It also depends on what other ways you plan to make money.

So what I tell my clients is the right way to structure the "first sale" depends entirely on what you intend for the second and third sale. If you don't at least know what you plan for the second sale, you'd better figure it out before you put a lot of effort into it.

So in short, it's not a decision about whether the book should be free or not, it's a decision about what you want your entire ladder of products and services to look like.

That being said, here are a few rules of thumbs for authors and business owners:

1) If your second and third sale is for high ticket products and services (tens of thousands to a million or more), having something free as a low risk way to get a prospect interested in learning more about you is a good way to go.

So for a digitally delivered product, free = low risk. For physically free product, you might say the product is free but they pay shipping and handling.

2) If you're successful at getting leads, readers, subscribers but your cost to market to them is high (say you have expensive direct mail packages you send out, you have a sales force, etc...) and getting a more serious, higher quality prospect is more important than shear numbers, you want to charge something for your first sale as a way to filter out the freebie seekers.

I do a lot of work in direct response marketing and numerous studies have shown the more the person pays for the first sale the more they will end up spending with you for all future sales combined. So a $20 book buyer is financially more valuable than a free book reader -- even if it's the same person in many cases.

The reason for this is the $20 is a psychological investment on the part of the buyer. They will treat the words they read more seriously because they paid for it.

3) Focus on the single most important problem you're trying to solve (e.g., pick the metric you most want to influence # readers, # buyers, # email opt-in email address collected, # consulting clients obtained) and THEN see if making parts of the book free helps you in that regard.

So to make a long story short, the right question to ask first is what you want your entire ladder of products and services to look like (and what price points will each be at) and THEN decide whether or not it makes sense to make the book free.

On a side note, the economics of the book business for authors is pretty lousy. With only a few execption it's hard to make big bucks from actual book sales. However, books are a fantastic way to build a brand, a following, establish credibility, popularize an idea... and these in turn can lead to sales of other things where the real money is made.

It helps to know the end game you have in mind before making your opening move.

[Leela Cosgrove]

Free is fine ... but you have to set up a VALUE for free.

Whenever I have made a book available for 'free' - I have always had it for sale also. Normally, I'll give people a coupon code so when they click through for the book they SEE that it was worth $whatever and that they are being given the privilege of getting it for free.

Never ever ever devalue yourself or your work.

[Firma]

Free is fine ... but you have to set up a VALUE for free.

[NobodobodoN]

Did you intentionally mispell Scott Adam[s] the final time, to see if your army of sleepless editors would catch it?

[kabin]

thanks...
Kabin
Konteyner

[Deals Hunt]

it will work as marking idea - but I might not get any benefit by giving away free.

[matériel informatique]

The Radiohead experiment has garnered a lot of attention and the notion that they have established a "market value of zero" may soon be tested. They indicated that they will release a traditional CD of In Rainbows in early 2008. Will they charge for the download at that point or eliminate it? Will dispensing with the free download be a condition of their distribution agreement? Or maybe they will backtrack and dispense with the CD instead. The model continues to be fluid and subject to experimentation. Free: Subject to complications.