Penguin: Publishers need the e-book to survive

[GregS]

"I don't really know much about micro-cash... where can I find more info on it?"

Actually - nowhere that I have found. Micro-payment yes, plenty, but no real debate, and nothing much more than schemes and the agreement that it is a good idea.

There have been many micro-payment schemes, all involve some sort of transaction fee (the cheapest I found several years ago was 50cents per transaction). None has taken off, and I think for good reason.

Micro-cash is my own phrase, to differentiate between a transaction based system and an anonymous script exchange, where profits and costs are covered from having all real money in a single account and gaining interest from that, in order to make transactions free.

The only other method is to a have strict percentage of each transaction. I don't know how others feel, I would mind such a tax if at 5% or less, but when it climbs to 10% or more, I just don't like them having their fingers in my pocket.

A few schemes exist, which deal in real money accounts, but make no provision for seriously small amounts, or being able to convert accounts back into real money - the one my kids use is Sony's which works on deposits rather than access to credit cards (I have been burnt by this a few times).

All these seem to be closed systems, Sony accounts to buy Sony gear etc.,.

Micro-cash requires a real account to pay into, and take money from, paying for banking fees only when the user desires to put money in or out into their real world account. Some transaction schemes allowed phone cards to be used for paying in (a good cheap way of putting in small amounts - still costs though).

Linden Dollars in "Second Life" get real close to this, so someone somewhere along the line will eventually get the concept and start making it available more widely - if it is transaction fees it is micro-payment (which nothing seems work), if it fee-less for transactions at least it is micro-cash.

Sorry for the confusion.

Greg Schofield
Perth Australia

[GregS]

DaleDe thanks for the heads up - on the Hiebook, I will be looking for it for pricing and usefulness. The LCD is a bit of draw back, both in power use and reading (I say this however in ignorance). Other than that it looks good.

I dare say I will be waiting for a few readers to arrive before buying anything, unless the Heibook is very cheap ; ).

[bowerbird]

um, just so you know, jeff gomez, who's quoted above,
just went to work for penguin, so i'm not all that sure
that what he says should be taken as "their position"...

to the extent that it is, it's not ignorance on e-books,
as gomez is the author of the "print is dead" blog...
(with the corresponding "print is dead" paper-book,
which just came out, not to mention the "print is dead"
podcasts, which he is popping out on a regular basis,
soon to be followed, i'm sure, by "print is dead" cereal
and matching his-and-hers "print is dead" pajamas...)

> http://printisdeadblog.com/

did the article mention that he's a marketing guy?

-bowerbird

p.s. forget the hiebook. it's a dead-end machine...

[nekokami]

Paypal has a sort of micropayment system, in that you can deposit money with them and make payments out of it, but they still charge vendors a transaction fee, I believe.

[GregS]

I should have been clearer, it is e-ink readers I am most interested with. The fact is that LCD while good compared to many things, is not a good reading device.

nekokami Transaction fees are killers. I looked at paypal some time back, it then had hefty fees (on a micro scale that is), also at the time there was a scandal about money be siphoned off (which may or may not have been true and has been anyhow resolved - I have heard no new rumours about it since and it has a good reputation).

Transaction fees of any kind work against micro-payments. With these small amounts it is just another needless hassle, when really the idea thing is just to accumulate sales and then when there is a fair bit there to cash it.

With encryption, serial numbers, simple accounting there are literally hundreds of different ways it could be done. The real problem is that financiers tend to be very very greedy, I believe we will get something when makers of digital material (ie downloadable) find they need a better way to do business than credit cards.

I will however have another close look at paypal, who knows maybe they have already cracked it.


Greg Schofield
Perth Australia

[GregS]

paypal transaction costs to business for small amounts 2.9% + $0.30 USD ($0.00 USD-$3,000.00 USD)

Selling things for 50 cents means mostly paying paypal.

I could swallow 2.9-5% but not the 30 cents, which does not sound much is actually a killer. I'll write to them, but I am sure their answer will be is that 30 cents covers accounting costs.

The reason I favour an encrypted script system is that it cuts down on accounting, people will only bother depositing scripts when they have accumulated a fair amount, and for small frequent payments, getting $10 of change from your account might last months.

Hence it should not be a question of processing every transaction, that should remain private between customer and seller, until the seller wants to deposit their earnings and a customer needs to withdraw a "purse" of cash from their savings.

Bigger payments can be done on a transaction basis, but little ones need something much smaller to oil the cogs of digital commerce.

Anyhow it seems like a long wait until we see a ¤1% (€0.01 - 1 cent) broken into ¤1‰ (€0.001) and a ¤1µ (€0.0001), or prices like ¤5µ, ¤5.7‰ - perhaps I should address the porn industry, once they are persuaded everyone else will follow.

[nekokami]

:sigh: You're probably right about who to ask to push this issue, little though I like the idea.

It really does seem that if you put the money in an account that the holder can collect interest on, they could skip the base transaction fee. But I don't know what the real costs of accounting are-- I can barely keep track of our own expenses at home! Maybe there's an efficiency breakthrough that still needs to occur.

[Steven Lyle Jordan]

When people tend to talk about micropayment for retail products (yes, at this point it's only a concept), they are talking about carving up cash into smaller increments, say, a hundredth of a cent increments. Today this is actually done with large bulk purchases of small items, but only on paper, with amounts usually rounded up to the nearest cent for accounting purposes.

If you use a system (like PayPal) that charges a transaction fee or tax as a percentage of the sale, you can always approximate the micropayment model by figuring out what is the minimum amount you can sell a product, and lose no more than 1 cent in fees. Example: If you charge 5 cents on a product, and have a 5% fee, you'll actually lose 20% because 1 cent is the smallest amount they can take... you lose on the deal. But if you charge 20 cents, the fee you give up is exactly 1 cent. The larger the fee percent, the smaller the payment can be, to bring you down to 1 cent.

20 cents or less sounds like a very small amount to charge for a book, though if you are popular enough, you could still make a lot of money. Presently it's very hard for anyone but the most popular author to sell exclusively online this way, and make enough to live on. The rest of us would only make a supplementary income at best. But it's so early in the e-book selling model, there hasn't been much experimentation to see what will work and what won't... we're all just guessing and stabbing in the dark, and hoping we find the best selling model.

Someday I might even try the method I outlined above, just to see how I fare in the market with 20 cent books. Will the word get out? Will people make impulse buys of my books at 20 cents, where $2.50 was too much? Will my sales increase overseas, where $2.50 is a much larger proportion of daily income and not as disposable as it is in the developed countries? Who knows? No one... until someone throws it at the wall, and sees if it sticks.

[Steven Lyle Jordan]

Originally Posted by JamesNunes

What it seems to me is writers will be able to benefit from the greater accessibility of their writings maybe selling directly to the reader on a website and if they're really good have the publishers do the marketing, PR and translation work. In this way the role of the publishers will shift to that of a service provider for the writer. In any scenario we'll see a downward trend in books prices as the operating costs for the whole operation diminishes.

As Barcey accurately pointed out, publishers ARE resisting the diminishment of their roles, as are the bookstores, and the traditional distribution channels. That's why the development of e-books has been so glacially slow. Their influence is weakening, but still strong. It will probably take an exclusive e-book release of incredible popularity to suddenly convert a major portion of the populace to accepting and reading e-books at once. But in the meantime, e-books will continue to erode the traditional publisher's position in the market, until they are forced to adapt to the new market.

Originally Posted by JamesNunes

Sorry for any freaky grammar, I'm not a native speaker

Actually, your grammar wasn't "freaky" at all... it's better than many native speakers!

[GregS]

Steve Jordan while I am advocating micro-cash, and while experiments in pricing are as a whole a good thing I recommend caution. The net is a thick wood where many good things are practically lost in a forest of shoddy trees.

The determinate will not be isolated actions, but a major lead taken once e-ink (good cheap and robust readers rather than just the technology) becomes an established device capable of going into the educational market - that s a little way off at the moment. Device prices at, or just below, the $100usd would be a good sign.

I don't believe that is long off perhaps 3-5 years, or one mass purchase away (ie adopted by one Educational system somewhere in the world).

The critical bit is when we see high quality text books commissioned for e-book production, textbooks of such quality that they bestow a tangible educational benefit on their readers (very different to the poor quality of many textbooks in use today in the English language).

The price that this can come in on can materially determine prices elsewhere (they will be low for the textbooks because of the amount of sales they can generate). If these substantial works came in at the 10-20cents level, then well written and popular novels would probably settle in at the $5 level, and the bulk of the rest of fictional writing, at a couple of dollars or less. Naturally public domain works may well shift down to less than 10 cents.

That structure in general uses a commodity of definite advantage (hefty, expert written Maths and Science texts), capable of arranging other prices around it - a centre of gravity.

The fact that education is dragging its feet, shows two things; one is conservative reservation, but the other is that the technology, and the content, needs to develop further.

The last part is the more important factor.

The fact is that education is the largest single market (bigger ones exist for the reader technology, but in terms of content there is an inherent similarity that exists nowhere else).

Well written textbooks of the highest quality, is the one section of digital content capable of pegging prices around itself naturally.

My feeling is, for many buyers, a new novel (not a known best seller) priced at 20 cents would at the moment look like the price of rubbish and have no real effect. A centre of value is needed first.

[GregS]

PS when I recently looked up Paypal there was also a 30cents surcharge on the vendors side of a transaction. I may have misread the site.

Greg Schofield
Perth Australia

[Steven Lyle Jordan]

Originally Posted by GregS

PS when I recently looked up Paypal there was also a 30cents surcharge on the vendors side of a transaction. I may have misread the site.

Yes, there is... so, in PayPal's case, you'd have to add enough to your charge to cover the 30 cents, plus the tax loss. Obviously, for micropayments, PayPal's model wouldn't work well (not that it's designed to work for micropayments).

[igorsk]

Google Checkout seems to be cheaper.
https://checkout.google.com/seller/fees.html

[GregS]

igorsk Thanks, I just checked out the site, similar to Paypal I am afraid.

The free transaction bit is tied up in a way I find difficult to understand.

There appears no provision for fractional amounts.

A true micro-cash system is a problem because it depends on having a very large real bank account before it starts even paying its setup and running costs, and this would take time, perhaps five or more years, if it were successful (no guarantees there either despite my enthusiasm).

That's why they all go for transaction fees.

My hope is that micro-cash gets set up by a business consortium of those already in net-commerce goods and services, on the basis it underwrites their main business, rather than becomes an immediate profit enterprise (in effect its should be run as a trust).

I am serious - the main players in the market of selling electronic medium is the porn industry. Not ebooks, or anything legit, but porn (just a fact I am afraid).

If any of that industry is reading this post - please think about it, simple anonymous micro-cash, no direct credit cards (lets admit it folks you are not trusted), no impost on spending hence per item charges that can be quite small and often repeated.

[Steven Lyle Jordan]

Originally Posted by GregS

I am serious - the main players in the market of selling electronic medium is the porn industry. Not ebooks, or anything legit, but porn (just a fact I am afraid).

Trust me... we know! The porn industry has ridden the bleeding edge of media forever, and it always will. It's a good possibility that, if anyone works out a per-single-purchase micropayment system, it'll be the porn industry.

(If they haven't already. Has anyone checked?... )