'Giving It Away': When Free E-books Work and When They Don't
More U.S. adults had read an e-book (15 percent) than had actually paid for an e-book this year, according to Michael Norris, senior analyst at Simba Information, based on the results of a recent Simba study called, "Trade E-book Publishing 2009."
Norris moderated a session at BookExpo called, "Giving It Away: Balancing a Sustainable Publishing Model While Discovering the Rewards of Free."
Peter Balis, director of digital content sales for John Wiley & Sons, and Brent Lewis, vice president, digital and Internet at Harlequin Enterprises, shared their experiences with free e-book efforts and their insights into the place for free e-books in a publisher's business model.
Balis, whose responsibilities span both nonfiction and trade publishing, said that this year, for the time, "thanks to mobile devices," trade titles sold more in e-book form than scientific, technical, medical and scholarly (STMS) titles—sales through "a consumer-facing retailer superseded Wiley's largest library wholesaler," he said. "That's very significant because it shows, for us, a migration from research-based [usage] to consumer [usage]. It follow our traditional best-seller list now."
Overall, Balis said, "When we explore free offerings at Wiley, we have to do so in light of our profit," he said. The company has found that "free does not cannibalize paid; free does not dilute brand; and free has some purpose," whether for marketing, public relations, or to upsell or generate traffic and/or sales/revenue on Web sites. (Wiley's online business model is a bit different than most publishers, however, as revenue from Wiley's Web sites is based on advertising, not book sales, said Balis.)
Balis discussed a few examples of the company's free e-book efforts—for Frommers.com and CliffsNotes.com. "Both are standalone, successful businesses," he said. "Any content on the site is there for these businesses' profitability."
The company, therefore, has been careful to ensure that free will not cannibalize print sales, he said. On Frommers.com, free content is "sectioned off," or served by segment, theme or destination, not by chapter or in a complete digital facsimile of print content. For example, said Balis, a search for content on accommodations or restaurants in Paris would produce a relevant chapter from a book, "but you can't read [the book] in its full form," he said.
Free content also is presented in a way that site visitors must click through multiple pages while reading, which Balis said "allows us to monetize other areas of content and create opportunities for advertising."
The lesson learned from this example, said Balis, "Is that despite offering free content in complete, but not identical form, Frommer's is the No. 1 travel site in its category and maintains its market share in travel books."
Cliffs Notes, which generally sell for $5.99 in print form, he said, are still a very successful print program for Wiley. On CliffsNotes.com, "any student can read a book in complete digital form," he notes. But, says Balls, "we find we sell the downloadable [PDF] form." In fact, 25 percent of those who view the free content convert to paid readers, paying $5.99 for a downloadable PDF. The key, suggests Balis, is the portability of the downloadable PDFs; students want something they can "take with them," he said. The bulk of orders are placed late at night when students "can't wait for the print version."
Overall, Wiley has "archived digitally the first chapter of every book, online only, non-downloadable," and a 15-page preview is offered on Wiley.com. The company also has explored (but not yet participated in) content-sharing sites such as Scribd, but said Balis, "We are cautious about our content. We want to take advantage of legitimate viral aspects, but these sites are also aiding in pirated distrubution of content."
Balis noted one example where offering content for free did not work so well. The author of "The Truth About Cheating" (M. Gary Neuman) wanted to offer his book for free on the Amazon Kindle for one week coinciding with his appearance on "The Oprah Winfrey Show."
"The book did well, but not as well as it should [have]," said Balis. "There's no question that one week [of] free download cannibalized sales." The one-week period was just too long, he noted.
Balis offered a word of caution for other publishers: Free e-books have to have some hook to a causal relationship, either by metrics and traffic increase or an upsell to future products.
Wiley is now exploring offering backlist titles for free to upsell an author's new title, as well as a "try-before-you-buy environment" for mobile.
"Be careful about how you use [free content], but don't be skittish," he said.
Lewis said that Harlequin has been doing free promotions for decades, and this year has a significant free e-book and print-book giveaway effort in conjunction with the company's 60th anniversary. The goal, he said, is "to increase awareness of our brand and the amount [and scope] of content we publish." To this end, he said, their efforts have been successful.
"I think it's really important to define the business objective of why you're giving it away free and how it's going to help your business," he said.
"The interesting thing about digital sampling," he noted, "is that a lot of people download the digital book, but don't read the whole thing; they read the first chapter and then go buy [the book]."
The key, said Lewis, is: "Make sure it's measurable—define success. What is success for you and can you track it?"