The analogy, the way Morrison has stretched it, definitely seems to fit the ebook phenomena. But the article is comparing authors to investors, or even speculators, which, at certain levels, becomes a false analogy. They're more akin to small business owners. Yes, they're investing, but... this part of the analogy only works superficially. It falls apart when you start comparing ebook self-publishing to investing in a company, or buying a house. I've self-published Kindle Shorts. I've bought a house. Let me tell you, there is a huge difference.
And you know, it's actually more like the author is comparing writers to real estate agents AND home buyers all at the same time; or investors AND businesses.
Let's take a closer look at his major points...
Stage One – DisturbanceThis comparison seems accurate enough: the invention of new technology created a disturbance in the market.
Stage Two – Expansion/Prices Start to IncreaseBuying an ebook reader is definitely more expensive than buying a book, so in a way he's correct that prices have increased. But because ebooks are cheaper (even when they're priced the same as the print edition, you save on shipping), voracious readers will find that the technology pays for itself. Voracious readers are statistically the biggest consumers of ebooks, so it begs the question: have prices actually increased, or are you just paying more upfront for greater savings in the long run? I guess it depends on what model you buy, and how often you upgrade.
Furthermore 1:
The prices of basic Kindles have dropped. A third generation "Kindle Keyboard" started with a $399 price tag. Currently you can pick one up for $139. Compare that to any commodity inflating in a bubble, like a house, and it's easy to see that on this level the analogy is false: a single model of an ebook reader does not go up in value like an investment is supposed to.
Furthermore 2:
Look into
Moore's Law, specifically how it affects the price of technology over time: it gets cheaper even as it gets more powerful.
Stage Three – Euphoria/Easy CreditLike stage one, this stage seems to reflect what's happening quite accurately. But I'm suspicious of how the author is defining "easy credit" and "speculation." Unfortunately I don't know enough about economics and investing to debate this point, but I'm fairly certain "speculating" means something other than people telling you you'll be rich if you do something. I'm pretty sure
speculating is a type of high-risk investment (for the lack of a better word) that can distort the actual value of something; not just in perception but in actual price. (See the role of
homeowner speculation in the subprime mortgage crisis.)
And isn't easy credit referring more to loans? During the rise of the real estate bubble, buyers got loans that banks never should have given them. Again, it's a type of "investment" that runs the risk of distorting real market value... by directly affecting price.
I don't know enough to conclude, but I'm really suspicious that the author might have distorted terms to make this part of the analogy seem true.
Stage Four – Over-trading/Prices Reach a PeakI'm going to number my arguments here to mirror his numbered arguments.
1. He says, "The zooming prices here refers to the zooming down of prices," but I'm fairly certain the economist he's quoting meant the zooming up of prices, which is incredibly dangerous to the investors and speculators in a market because it encourages them to take higher risks on a commodity that's not worth it; therefore, when the bubble bursts, everyone loses money. I admit, there are dangers in lowering ebook prices: traditional publishers just can't consistently compete, and in the long run it could kill their business. So I agree there is a danger here, but the author of the article is really twisting facts to validate his analogy.
He also wholly ignores the economist's point that "easy profits are made." In fact, he goes on to invalidate any correlation he might have drawn here when he talks about authors giving away their work for free, authors getting overlooked because of market saturation, and, in his second point, authors making costly investments in an ebook reader. Obviously some authors are making an easy profit (see J.A. Konrath), and I can't say for sure that lesser known self-publishers aren't making an easy profit as well, but the way this article is written, it definitely seems as if easy profits aren't being made.
2. The author is right that there is a mass behavior currently flooding the ebook market with outsiders. That's true. He makes a lot of good points here, but this one: "[The authors] may be giving their ebooks away for free but they're spending between £100-400 on single items of new technology – more than they ever actually spent on books in a year." He needs to substantiate this. How does he know what the average self-published author spends on books in a single year? Where's his proof? Look, I can easily guestimate here, based off 2003 numbers no less:
The average price of adult trade paperbacks increased slightly, about 2 cents, to $15.77; and adult trade mass market titles increased 32 cents, to $7.30.
Trade paperbacks have been slowly replacing mass-market editions, so let's be conservative and say half the time the average reader buys mass market, and half the time they buy trade; the average book price would be... $11.54? And say on average a regular reader buys twelve books a year. That's a $138 budget. The Kindle Keyboard costs $139, at the cheapest end of Morrison's price range (his range actually starts a little higher, at 100£, which is about $158; maybe that is [or was] the cost of this Kindle model over there???). I can't say for sure my assumptions are correct, but at least I'm using more data than Morrison seems to use in making his point, and at least I'm qualifying that it's an assumption instead of stating it as a fact. Yes, at the higher range of devices, these authors are probably spending way more than they would on books in a year; but at the lower range? It's questionable.
Plus, Morrison isn't even considering the other reasons a self-published author might buy an eReader or compatible tablet: they're freaking cool.
Plus plus, he's not taking into account that this type of expense, as well as any other "investment" the author might make, IS TAX DEDUCTIBLE against any profit; so when their refund comes, have these authors really spent more than they would spend on books in a year?
But the real issue here is... how does Morrison's point align at all with the subtopic? This isn't about how much an author spends on books in a year, so what's he trying to say?
Stage Five – Market Reversal/Insider Profit TakingHe makes good points here, this one especially: "The crisis that's looming is that while the price of ebooks is pushed to almost zero by the rush of frantic amateur self-publishing activity, the established publishing businesses will be forced into life-saving cost-cutting." While his conclusion stands to reason, he's not really supporting his assertion. Again, where's his data to prove that bargain-basement self-publishing is destroying traditional publishing? Maybe it is, but you can't expect readers to believe a claim like this without any sort of support. We have to ask, do self-published ebooks outsell traditionally published ebooks? The long tail would suggest that
collectively they do. But that spending is also spread out over a much wider audience than the pool of voracious readers. So is this outselling really the demise of traditional publishing? Or are there other larger factors at play? I honestly don't know. And Morrison certainly isn't answering that question here.
Stage Six – Financial CrisisOf Amanda Hawking, Morrison writes:
The self-epublished author has left the glass-ceiling world of 79c ebook sales (to embrace the old mainstream model, believing that it is the only system that can elevate her to a higher profile and bring her into an arena where her books can by "synergised" with tie-in products such as films, TV serials, even toys) and the door of opportunity closes behind her as she exits, leaving hundreds of thousands of self-epublishing authors without a model to aspire to.
Yeah, maybe if Amanda Hawking were
the only successful self-publisher of ebooks. Morrison is totally overlooking the exceptions to his rule. Like J.A. Konrath, or Barry Eisler, who turned down half a million dollars from a traditional publisher because he believed he could make more as a self-publisher. Morrison's previous point that these models of success are generally unattainable definitely seems to be true, but here he's making a sweeping generalization just to prove his argument. Just because big-shots like Amanda Hawking sign up for the big leagues doesn't mean there won't be any more models for self-publishers to aspire to.
The rest of his argument here, I just can't comment on. I don't know enough about how these behaviors are going to affect the market, and I'm not sure what people's attitudes will be if they become disillusioned. But I will say that if the ebook "bubble" bursts as Morrison envisions, it's not necessarily a bad thing for traditional publishers. He's assuming total meltdown of the entire industry while overlooking the alternative.
Stage seven – Revulsion/Lender of Last ResortHere, Morrison argues that self-publishers will become "disillusioned with their ereaders, which are now out of date anyway. And so they return to the mainstream publishers to look for culture."
Firstly, cell phones have been around for a long time, and as long as the technology evolves, people will be interested in the newest model. So far, ebook readers have continued to evolve right along with other technology. So again Morrison is jumping to a rather huge assumption totally at odds with trends established beyond the book industry. He's also assuming mainstream publishers won't be offering ebooks in his literary dystopia. Basically he's saying that if the general public can't earn money self-publishing ebooks, they won't want anything to do with ebooks at all. He's gone well beyond any defensible argument at this point.
Morrison goes on to say:
Unfortunately, as a result of the ebook market implosion it is impossible for publishers to push their prices back up to pre-bubble levels (from 99p to £12.99), and so their infrastructure continues to decline. And since they have decided to look for new talent in self-epublishing, they are trapped in the very same bubble that everyone else is trying to get out of.
We need proof that mainstream publishers have significantly lowered the price of their ebooks, because Morrison seems to think they've dropped all the way down to 99p. Based on anecdotal evidence, I don't believe that's entirely true. Go search the Kindle Store for your favorite traditionally published authors: you'll probably see a few cheaply priced titles, but you'll probably see more prices equal to a mass-market paperback; you'll also see a few priced more like a trade paperback, or even as high as a hardback.
To further invalidate his argument in the quote above, Morrison seems to be saying that because publishers changed the source of their talent, they're essentially stuck looking in the same place from here on out, even when that talent dries up. As if it's that static. As if there aren't tons of super-talented, hungry authors out there just waiting for a big break,
who still work even if they're not getting paid yet. Again, Morrison's argument at this point is indefensible.
I can't really comment on the rest of this subtopic, when it comes to last resort lending and subsidizing. But I can comment on his conclusion:
Of course, none of this might come to pass. Perhaps self-epublishing wont take off, and perhaps people will continue to pay more than 99p for ebooks and paper books. And perhaps hundreds of thousands of new writers will actually taste success. But this, again, is mere speculation.
Based on his previous arguments, self-epublishing has
already taken off, and it would seem by his description that we're currently in a mix of stage five and six. And you know what?
People are still paying more than 99p for ebooks and paper books.
Overall, Morrison brings up some solid points, but I think there are enough major holes in his argument that the analogy of a bubble-driven apocalypse is faulty, and his conclusion overlooks other viable possibilities: namely that if the self-publishing ebook craze does collapse, traditional publishers could actually thrive in its absence.
