Wednesday, April 6, 2011

The Public Broadcasting Model for eBooks

Imagine if Radiolab (my favorite radio show) were a book. It would be a best-seller, probably the kind you might buy at Target. It would sound good on your coffee table, and you'd have a shelf full of your favorite episodes. You'd also be able to get it for free at the library. Now that radio is becoming digital, you might even be able to buy it instantly at Amazon.com, or download it to your iPad from the iBookStore.

It's expensive to create fantastic programs like Radiolab. New York Public Radio, which produces Radiolab, produces other award winning programs and operates three of America top public radio stations, all on an annual budget of  just under 48 million dollars. That works out to $130,854 per day. If you spread that expense over the 19 million potential listeners in the New Yourk Metropolitan area, it works out to 0.69 pennies per day per person.

But it doesn't even cost that much to listen to WNYC or WQXR. Most people pay even less, zero pennies, to be exact. What's more, you can listen to the shows for free on the internet. On your iPad, even. And you don't even have to go to the library.

A relatively small number of us send money to become "members" of the station. The $120 my family contributed turned into a deduction on the tax return I completed yesterday. Most people who listen don't contribute, but they're never referred to as "pirates" or "thieves".

The reason this works anyway is that radio has large fixed costs and infinitesimal marginal costs. If the listenership doubles, the costs stay exactly the same. It's not like book publishing, which spends a lot of money pumping paper through a complex supply chain.

A book can cost a lot to produce, too. An author might devote a whole year to the writing of a book. Let's be generous and say the author deserves $200,000. There's an editor, a graphic designer, maybe an illustrator who also work on the book. Add some management overhead, tax accountants, lawyers, and it's easy to get over $300,000 in fixed costs, and we haven't even started promoting, printing and shipping the book. Many books, of course are produced for much less money. Some authors don't get paid a cent.

But EBOOKS ARE NOT BOOKS. They're just bits, and typically not so many, compared to a radio show. The cost of making a copy is negligible. It needn't cost anything to distribute the ebook. eBook distribution is even cheaper than radio, because you don't have to pay for transmitter power, and you don't have to own a frequency license. It's the monetization machinery that costs money: the ecommerce systems and the DRM. If the producers of ebooks had some way of covering their fixed costs (with profit to make it worth their while), ebooks could work just like free radio. Three million people contributing a dime would do quite nicely. 30,000 contributing $10 would work, too.

A public "bookcasting" system would work somewhat differently from public radio. Audiences and patrons would be assembled around individual books and authors, which would be much more numerous than radio stations. People would be motivated to help make the books they love public by the virtuous cycle of receiving books supported by other public book patrons.

In case you haven't been paying attention, this business model is what I've begun working on as Gluejar, Inc..  The Internet presents an incredible capability for assembling audiences around a common purpose. The business will bring together people to pay for the fixed costs of producing ebooks, reward the best producers with profits, and to make these ebooks public, free to read, free to copy, to everyone, everywhere in the world, using Creative Commons Licensing.

This can work. I can see it now. The pledge drive will take up pages 40-50.
Enhanced by Zemanta

10 comments:

  1. Nice perspective, Eric. And sweetly positioned: WQXR, after all, is a great home to innovation, as the launchpad for Q2 (@Q2music on your TweetMachine), easily the most exciting development in New Music (also known as "new classical") in decades. 24/7 stream. Check it out at www.q2live.org

    ReplyDelete
  2. Eric: I really enjoy your work/words. Another podcast favorite of mine (Planet Money) had a good piece a week ago on the economics of public radio (as in radio supported by government.) Listening to the podcast, I found myself making the same leap to ebooks. You're totally right; the ebook is not a book, so the models and preconceptions which most publishers apply to it are out of synch.

    ReplyDelete
  3. Is the idea that before an author writes a book, they would set out their gluejar to catch some sponsorous flies? Or is the idea that after the book is already published they use the service to pull in funds, by embedding a link in the ebook or on their website?

    ReplyDelete
  4. The idea is that once a book is produced, the rightsholder can offer to sell distribution rights for the ebook to the public, and, correspondingly, the public can offer to buy distribution rights for the ebook from the rightsholders.

    ReplyDelete
  5. What about the possibility of authors/rightsholders using gluejar as a means of getting sponsorship to find out whether there is enough interest to make a book worth publishing, or distributing? There have been at least a few cases of authors (Sharon Lee and Steve Miller) successfully using the subscription model for works in progress when they had difficulty with traditional publishers.

    ReplyDelete
  6. Marlene- There are a number of difficulties associated with offering books that doesn't exist yet, relating to avoiding scams. Nothing insurmountable, but enough that it's unlikely we'd do it at first.

    ReplyDelete
  7. This is intriguing, but the process isn't entirely clear to me.

    If an author sells the rights to 1 member of the public for a dime, why would 2,999,999 other people also give a dime? Is the hope that enough other people will give enough dimes (essentially a tip, or a donation to the author), that the author will make money?

    You could have one author make a single dime, and another author make lots and lots of dimes, but both have assigned their rights over to the public. Is that correct? Or does the author wait to actually sell their rights until a certain number of pledges have amassed?

    For instance, if my threshold is 100 dimes, but only 20 dimes are pledged, my book is not sold to the public. Gluejar would take a cut of that final sales price? Is the author ever able to make any more than their threshold price?

    Apologies for the meandering thought process there.

    ReplyDelete
  8. Eric, I'm fascinated (though still slightly confused) with the Gluejar concept. Also intrigued by your "open book" approach to developing the business model. Hoping you'll continue to open a bit more as time goes on so that the excited buzzing you've triggered in my brain will evolve into a chant, an orchestra, a revolution. Good luck! And thanks for chasing this dream. The publishing world is ripe (if not totally ready). Time to pick the fruit. :-)

    ReplyDelete
  9. Matthew, your first model is what's known as a "tip jar". Tip jars have been available for websites for quite a while, but I'm not aware of any case where this model has been very successful. Dimes are not very efficient to collect.

    In the Gluejar model, the ebook doesn't go public/free until the rightsholder's price has been met. A very popular author might set the price at a million dollars; an author that just wants to cover digitization expenses might set the price at just a thousand dollars.

    In any case, Gluejar only collects its percentage if the price is met and the book is released into the public commons.

    To use the public radio analogy, the there's no free program at all until the pledge drive finishes.

    ReplyDelete
  10. vD, I think the benefits of being open far outweigh the advantages of stealth.

    ReplyDelete