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Tuesday, August 14, 2012

What Price, Entertainment?

"What price should I set for my ebook?"

If you're a self-published author, this question persists like a bad flu. Just when you think you've put it to rest -- bam! Back it comes again, more vexing than ever.You can read the Romance Writers of America's survey showing that $6.13 is the "fairest price" for a romance ebook. You can skip to any of influential indie author Dean Wesley Smith's discussions about ebook pricing, probably starting with this one that ties prices to word counts. You could take inspiration from the many authors who have found success pricing their works at 99 cents, hoping to trade near-term profits for long-term popularity. Or you could throw up your hands in exasperation and go with your gut, saying, "I spent eight years working every night on this 250,000-word epic, and it's every bit as good as any other $11.99 best-seller on the Amazon Top 100, so pony up, people."

Today, I'm so far from being a best-selling author that the distance of my career from "here" to "made it" has to be measured in astronomical terms. But I'm as entitled to an opinion on the pricing question as the next guy. Trouble is, I don't know enough to have an opinion. That's the curse of being a journalist. I feel like I have to be surrounded with case studies, data, and a burden of evidence before I can feel confident in having an informed opinion.

If I had years of experience under my belt and a fleet of self-pubbed novels I could price this way and that, perhaps I could pass judgment on price points with some authority. But I don't. I could probably reach out and find a few, but they'd probably get so annoyed with my statistical haranguing that we'd never reach a conclusion before they sent me to blacklist banishment, that filtered layer of Hell reserved for shady pharmaceuticals, overly optimistic marital aids, and fawning journalist fanboys.

But we can't all wander around blindly. There must be some objective yardstick for gauging how to price ebooks, right? RIGHT?!

I and many others have tried comparing ebooks to movies in the past. Theaters sell $10 movie tickets by the millions, and most movies don't last anywhere near as long as a novel. Some counter-argue this point, saying that whereas a novel gets produced by a handful of people, movies require hundreds or thousands. Nobody spends $50 million to produce a novel. Think of the cost disparity. Shouldn't this translate into consumer prices?

No. That fallacy plays only into the hands of those who would spend more to make more, with nary a thought for the quality of the consumer's experience along the way.

That's the key: the quality of the consumer's experience. I don't care that it cost over $200 million to make and market the new Total Recall movie. I've paid 99 cents for ebooks produced on essentially zero budget that gave me far more entertainment for a longer time than the 135 minutes I sat yawning through Sony's botched remake. The question every consumer might ask is, "How much is this entertainment worth to me?"

More importantly, can we reach general conclusions about the value of entertainment?

The movies vs. ebooks pricing comparison can't stand on its own. It's a number in a vacuum. We need additional context so that the number becomes part of a pattern. With that in mind, I went into a Googling frenzy and emerged with some very interesting finds.

#1. Gaming

I'm not much of a gamer, but I'm surrounded by people who are. In 2011, video gaming was a roughly $16.5 billion industry just in the U.S. In comparison, 2011 movie ticket sales edged just over the $10 billion mark for all of North America. I took an informal poll of my friends, and the general rule seems to be that men in my demographic (30- to 40-somethings) buy a handful of top titles each year bolstered by several more "filler" titles -- mostly older games found in the virtual discount bin. Some games get played for days, some for only a few minutes before being tossed aside. Back of the napkin figures placed the price of gaming among my friends at about 50 cents per hour.

Not content with such informality, I went searching for harder data. One lucky find surfaced at http://howlongtobeat.com/stats.php. Among other things, the site maintains a list of how long it takes people to complete games. Here's the list of ten most-submitted titles and the average of how long users took to complete them.

1. Mass Effect 2 – 35h 56m
2. Portal 2 – 9h 00m
3. Mass Effect – 27h 00m
4. Portal – 3h 27m
5. Batman: Arkham Asylum – 15h 17m
6. Assassin’s Creed II – 25h 46m
7. Bastion – 7h 26m
8. Deus Ex: Human Revolution – 28h 03m
9. Half-Life 2 – 13h 36m
10. Dragon Age: Origins – 56h 51m

All told, this gives us an average completion time of about 22.25 hours.

Next, we need to know how much the average game costs. While top titles now frequently sell in the $60 range, one reputable source showed that the average selling price in 2011 for new titles was (converted to U.S. dollars) $40.

Do the math, and what you get is an average gaming price of $1.80 per hour. However, this ignores the rising tide of smartphone and tablet apps, such as Angry Birds, which might cost a buck and deliver dozens of hours of jaw-clenching challenge. In accounting for this, we might skew our final figure downward by...half? Maybe more? Let's figure half and call gaming a 90 cents per hour affair.

#2. Movies

It's the knee-jerk example we all reach for, but just how much does a theater experience cost? Two quick searches yield good info.

First, Hollywood Reporter claims that the average price of movie tickets now stands at $8.12, an all-time but totally not surprising high. Finding the average movie length was slightly harder, but I like the data compiled by Peter Sciretta, stating that the average length for the top 50 movies of 2008 was 110 minutes.

Divide and multiply and we see that cinema outings average $4.43 per hour -- not counting gas, concessions, and so on.

But here's the tough part about movies. In my home, we ditched our cable over two years ago (best. decision. ever.) and now watch most of our movies via Netflix or Redbox. I'd estimate that we watch five movies at home for every one in a theater. With subscription and rental costs averaged out, I'd peg the price of our home movies at about $1.50 each. Factored in with the cinema viewing, that drops us down to $1.42 per hour.

#3. Bowling

Why not? It's entertainment, yes?

Our local lanes are pretty representative of an average bowling alley, and the place charges $4 per game during open bowling. Let's figure that it takes an average person 15 minutes to bowl one game. If you bowl with one partner, the two of you will complete two games in an hour. Ignoring shoe rental, you're out $8 per hour.

#4. Concerts

Sad to say, but I haven't been to a concert in years. Partially, this is because we had kids, but it's also because ticket costs for the bands I like have become stratospheric. I know that artists often depend on concerts rather than album sales for their real income, but...holy cow.

I found some excellent data at Pollstar and selected bands starting with the letter V as a sample set. Average ticket prices for those bands ranged from $3.72 to $108.81, but the average was $37.50 per ticket. If we include opening acts and figure three hours per show, which is probably being generous, then we get a concert entertainment rate of $12.50 per hour.

#5. Books

Pegging entertainment value on reading is tricky. Different genres gravitate to different novel word counts. To keep things simple, I wanted one number -- one giant average for the entire literary field -- and I found it in a Huffington Post story. The magic number is 64,500. How long does it take to read a book of this length? The most-cited statistic says that the average U.S. adult reads about about 250 words per minute. Reliable studies seem few and far between, but one interesting Syracuse University paper reported rates of 231 and 189 words per minute, so I'm fine with leaving 250 as a reference point. With these averages, a normal person should be able to read a book in 258 minutes, or 4.3 hours. If this seems fast to you, adjust accordingly.

One problem, though: Most books only report their number of pages. Word counts have only started to come into vogue with ebooks, which render page counts meaningless.

While the number of words on an average page will vary based on a host of factors, we can take 350 as a fairly solid ballpark estimate. Using this, let's check out Stephen King's indescribably awesome 11/22/63, a behemoth weighing in at 880 pages, and figure that it has about 380,000 words. That works out to 25.33 hours of reading time. As of this writing, Amazon lists the hardback of 11/22/63 for $21. That's 83 cents per hour for some of the best literary entertainment I've enjoyed in decades. If we opt for the $12 paperback, that number drops to 47 cents per hour.

I wanted a top 20 title and found out that Catching Fire (book 2 from The Hunger Games trilogy) is 101,564 words, making it a 6.77-hour read. The hardback sells for $10.79, yielding $1.59 per hour. If we take the $5.99 Kindle version, we can follow the adventures of Katniss for only 88 cents per hour.

Putting It Together

I think of books, movies, and gaming as "everyday entertainment." Bowling and concerts are much less frequent activities. It seems accurate to draw a correlation between frequency and hourly entertainment cost, doesn't it? The more of a "treat" the entertainment is, the more we're willing to pay for it on an hourly basis.

Looking at everyday entertainment, if we take the paperback of 11/22/63 as a low (47 cents/hour) and movie consumption ($1.42/hour) as a high, an author can feel totally justified in pricing his or her novel at $1/hour. At 250 words/hour, I'm reading 15,000 words/hour, which means a 90,000-word novel is smack on target at $5.99.

Where this starts to break down is with shorter fiction. If we have a 30,000-word novella, that's two hours of reading for a $1.99 price point. Dean Wesley Smith would have us pricing this length at $4.99 or $5.99. I'm not saying that this is excessive. I'm only saying that such a price is skewed way out of line with the kind of hourly averages we're seeing for everyday entertainment. Believe me, as a writer, I'd love to be able to charge $3.49 for my 13,500-word historical horror novelette, "The Followers." But my sales have narrowed to a trickle even at $2.99, and that's with a bonus short story included. My slight amount of personal evidence combined with the data detailed here tells me that the market won't accept what most would call a short story for $3.49.

But by this $1/hour reckoning, all short stories should be 99 cents. In fact, you wouldn't even think of graduating to Amazon's key 70% royalty price point at $2.99 until you crossed the 45,000-word mark. I don't think that's feasible. There has to be some bend in the graph. The shorter the ebook length, the higher the entertainment value per reading hour. Again, if we take a loose range of $0.50/hour for the very longest works and $3.00/hour for the shortest, we might see results like this:

Short story (5,000 words): $0.99, 20 minutes @ $3/hr

Short story (10,000 words): $1.49, 40 minutes @ $2.25/hr

Novelette (15,000 words): $1.99, 1 hour @ $2/hr

Novella (30,000 words): $2.99, 2 hours @ $1.50/hr

Short novel (45,000 words): $3.99, 3 hours @ $1.33/hr

Novel (60,000 words): $4.99, 4 hours @ $1.25/hr

Novel (90,000 words): $5.99, 6 hours @ $1/hr

Longer novel (120,000 words): $6.99, 8 hours @ $0.87/hr

Jumbo novel (over 180,000 words): $7.99, 12 hours @ $0.67/hr

Again, I'm not saying if this scale is right or wrong. It certainly slants against writers of shorter fiction. But in comparison against other forms of everyday entertainment and the value that people seem to place on it, these numbers seem fair. We have to resist the temptation to see value in terms of the hours and expenses needed to produce fiction and weigh pricing in terms of the only metric that matters: what the market is content to pay to be entertained.

1 comment:

  1. interesting write-up. i've thought a bit before about movies VS video games and entertainment per dollar, but never brought books into the equation before