English: Congestion Pricing Equilibrium

English: Congestion Pricing Equilibrium (Photo credit: Wikipedia)

Things move so fast for writers who have taken publishing into their own hands. Since posting my latest “Talking Indies” column on E-Book pricing at TalkingWriting.com, I got to thinking about the need to be more creative about pricing. I knew that Smashwords had a system that allowed for that to a certain extent. But Smashwords is a bit scary when you first check it out. They have formatting requirements that sound a bit Gestapo-esque. And yet, they are known for being part of the new writer’s liberation front. Hmm…

You need to grow a pair or two if you want to be a writer in the 21st century. Right? It took a bit of effort, but I managed to jump through all the formatting hoops at Smashwords (without damaging any of my pairs) and have published my novel and both story collections on their system (all of which you can read about in my last two blog posts here and here).

What I love most about Smashwords is that you can sign books up for the “You Set the Price” option. If you read my TalkingWriting piece, you can appreciate the pricing dilemma that independent authors have. And if you’ve been following this issue at media sites like the Huffington Post or at blogs like “The Passive Voice” David Gaughran’s “Let’s Get Digital” (David Gaughran’s “Let’s Get Digital” is another awesome resource), it should have become obvious that e-book “pricing” is not the same as, say, iPod or flower pricing.

In truth, pricing for any digital product — music, software, books, video, artwork — is not subject to the laws of economics that we’ve all been taught, i.e., competitive pricing is governed by the laws of supply and demand. In the digital world, supply is theoretically infinite. That’s not true with iPods, flowers, or gasoline for that matter.

Also, pricing in the old meat world is usually dependent on costs like production inputs, distribution, warehousing, and packaging. Again, digital products don’t really have these costs (although it could be argued that production requires extensive efforts and electronic capabilities through computers, programmers, high-end software, studio time, etc.). With books in particular, the production cost is an author’s time and the cost of editing and design. While these are potentially the same as the more traditional publishing costs, there obviously aren’t paper and printing costs.

Note: I’m talking about cost here. What I think of as value is the creative input into the work of art or the product (which is also the biggest thing the consumer gets out of the product). The idea of pricing for that creative element has never been adequately addressed by economics…EVER!

My point here is that as we build this new virtual world of creative artifacts, they are being superimposed on an outmoded economic system. Some people are making out like bandits with such a system. Whether you are E.L. James or Coldplay, old pricing mechanisms may well do quite nicely. Regardless of the concept of infinite supply, demand is the lynchpin issue in all pricing systems. If you write a kinky novel about an innocent girl and a billionaire pervert that people talk about breathlessly, or you put out a Live album that is essentially a “Greatest Hits” compilation (and awesome!), you can get away with charging a lot of money for your product.

But the idea of allowing the customer to pay what they want really does seem like something that needs to be experimented with on a broad scale in the virtual bazaar.

Would such a system ever be toyed with by the likes of Apple, Amazon, or Sony? No. It wouldn’t work. When you buy something from them you’re doing business with a corporate behemoth. But doing business with independent artists is a wholly different experience. Ideally, you know when you buy my psychedelic novel, Beyond the Will of God, that you’re supporting me directly. Hopefully people who purchase music from independent artists through places like BandCamp know that too.

A “You Set the Price” option certainly eliminates the problem that a lot of DIY independent creators face. Pricing items at a very low level runs the risk of diminishing the perceived value of a product. In the book world, even pricing an e-book novel at $7.99 is ridiculously low compared to the standard of $9.99 or higher that the traditional publishing world still forces on consumers.

When you set the price, though, as a consumer, the value question is fully in your hands. You might be cynical or jaded and choose to “buy” the product for pennies. Or you might be savvy and understand the marketplace and pay something like $4-$5 for a product. Or you might be someone who really likes an author or a singer-songwriter or indie film maker. Maybe you pay $25 for an album or $100 for a video. Maybe you care about the topic the author is writing about and you are not encumbered by old world thinking. A $500 purchase of a book on how to fix our schools or how to reverse the climate change problem could be money well-spent (although probably not tax deductible).

I’m not arguing here for a wholesale change over to letting the customer decide price. Everyone’s got to eat and there’s a lot of rabid consumers out there who will jump at the chance to grab something if they can get it for almost nothing. What I want to see is the willingness of content creators and artists to take a chance and do some experimenting. If enough of us create new and innovative options for our fans and consumers, there’s no telling what effect it will have on this new economy that’s being built online.

I know one thing: I’d rather have you set the price for my awesome psychedelic novel about the power of music and the meaning of altered states of consciousness than sit it at the bargain basement Amazon floor sweeping price of 99¢. Beyond the Will of God is worth a good $19.99 a pop as far as I’m concerned. I know some of you are going to figure that out. It’s all up to you, though…right now. Which may well mean that consumers need to grow a few new pairs themselves.


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