In light of the revelation in the New York Times* today that “more than half of the ‘best-selling’ e-books on the Kindle … are available at no charge,” one has to ask whether the publishing profitability isn’t actually being sabotaged by the profit motive itself.
After all, the business concept behind free product is always to entice the free-taker to also be a pay-buyer; Amazon isn’t offering free books for the pleasure of giving. But, with book prices already being dragged down by slimly priced digital books, is free really a wise idea?
“At a time when we are resisting the $9.99 price of e-books,” said David Young, chief executive of Hachette Book Group … “it is illogical to give books away for free.”
Research published in 2004 by Priya Raghubir in the Journal of Consumer Psychology** tends to back Young’s reasoning. Giving away something free, even when linked to a purchase, causes the perceived value of that something to plummet.
Unless you’re selling something so physically addictive that your consumers’ perception of its value is chemically fixed, giving a little taste or bonus may seem like a good tactic, but it is strategically foolish. Striving to scoop up more and more individual profit — by claiming a greater share of a struggling market — booksellers could be inadvertently scuttling everyone’s profit, including their own.
It’s like the tragedy of a commons (the “commons” here being reader dollars) that is itself shrinking through a negative feedback loop of strategically incompetent, self-devaluing business tactics.
Attention to profit requires scientifically cool reason; the emotional motive*** of professionals need to be distinct from this process to keep profit-attention free from cognitive biases. The failure to heed widely available scientific research on the folly of offering free product indicates to me that, for Amazon, profit is a simplistic motive for doing business, rather than a carefully considered instrument for continuing business.
I try to keep my economic analysis sequestered away from this literary blog, but this is one clear case in which the profit motive is demonstrably economically inferior to a profit-attentive funktionslust: professionals who are careful to stay in the black, but are nevertheless driven by a love for doing what they are good at.
* Read it while you can!
** Which research I read about in a paperback for which I paid full price, the genuine best-seller Yes! 50 Scientifically Proven Ways to Be Persuasive by Goldstein, Martin, and Cialdini. The research covered in this incredible survey highlights key issues in publishing at every turn. I would recommend it for everyone who call themselves authors, agents, or publishers.
*** Etymologically, a pleonasm, I realize.