Do the Math

Tim O'Reilly is the founder of O'Reilly Media which publishes many technical and programming manuals for all the arcane branches of system management, specific languages, operating systems, design & graphics, databases, you name it. He has been around the tech business (and the publishing business, too) for quite a while and has probably forgotten more about some of today's "new ideas" than the people who think they've invented those ideas have ever imagined. Needless to say, he's worth paying attention to when he talks about matters technical and book-related. Not least among his accomplishments, O'Reilly was involved with GNN, the first ever commercial website and the place that ran the very first banner ad.

Fortunately, he sees blogging as a useful tool for plugging his product lines and his ideas and he also has a sense of humor since his corporate blog is named Radar. The M*A*S*H reference certainly tickles my fancy.

In a recent post, O'Reilly has some pointed, intelligent and business-like things to say about one of our favorite topics, the Kindle, as well as about e-book pricing, potential markets, making a profit and other relevant issues. He observes the enthusiastic and optimistic chat about how e-books need to be priced at no more than $5 each to broaden the market and how some writers have expectations, or at least hopes, that they will get rich, or at least make lots more money, selling updates to people who buy their book for the Kindle. ("I'll sell 40,000 e-book copies of my book and 25% of those people will pay me an annual fee for the updates and maybe I'll make some money by making my e-books ad-supported as well and...")

He applies hard-won knowledge of the ways of the marketplace (Think no more than 1%, not 25% as a likely subscriber ratio and don't forget that Amazon will take 65% of each sale since you're a solo content-provider...) and brings things down to earth. I can taste the reality in what he has to say because I've had my own versions of that glorious optimism and the inevitable sober reflection when the final picture doesn't turn out to be as rosy as the hopes that propelled the initial effort.

What he says may be discouraging on one level but it isn't intended to discourage. It's intended to make people think in terms that can actually be realized. It's intended to make people actually do the math and realize that if you sell too cheaply, you aren't necessarily going to make it up on volume. (Although that's an experiment that probably should be tried in multiple variations.) It's intended to make certain that rational planning and disciplined expectations rule the day and that massive disappointment down the line is less likely because "irrational exuberance" is not the order of the day.

By the way, not only does what O'Reilly say make sense, he elicits voluminous comments and a much higher percentage of them make sense than I'm used to seeing in most other blogs. I'm planning to add his blog to my must list.

-- John