Evaluating a business and an industry

Kristine Kathryn Rusch has a good post here about holiday sales--looks like people are using their new Kindles to pick up free copies of Jane Austen and Mark Twain (which is amusing, considering how Twain wanted to treat Austen's corpse). That's good news if you want people to read good books, but as she points out, if you're expecting some huge post-Christmas spike in your own sales, you may be disappointed.

Of course, whatever you're expecting, you may be disappointed, because no one really knows how e-book buyers will behave. It's a new industry--really, really new. What people will buy, when they will buy, how they will buy, how much they will pay...all a mystery. Nobody knows. The more certain you are about specific, short-term stuff, the more likely it is you'll be wrong.

I think that's fine. Obviously if you're counting on your e-book to save you from imminent fiscal collapse, you may not agree, but in all honesty, if you're counting on any book to save you from imminent fiscal collapse, you badly need to reassess your financial strategy. (No joke: If you want to get rich quick, lottery tickets are the better risk.) Dean Wesley Smith has a great blog post on how you're likely to make money writing--slowly, that's how.

That long-term perspective not only makes sense on the level of personal finance, it's a good one to take on the industry as a whole. I know I've said this many times before, but if you're selling a product for $6 or $3 or $1, and you're able to make a decent profit off of that, then you have a huge advantage over someone who is selling a similar product for $26 or $17 or $14, especially if they are locked into those high prices because of their costs.

Does this mean that the person charging a high price is going to go under right away, or ever? Not necessarily. There are plenty of ways to fill a high-priced niche--offer luxurious books, fancy authorial brand names, and exceptional service. A more germane question is: Does the low-cost provider need the high-cost provider to go under in order to thrive? No. If Bentley has a great year, that doesn't hurt Kia one bit. What we're in now is a genuine industry revolution that is opening up whole new markets for authors. That's great--but when new territory opens up, you can't expect it all to be neatly mapped out for you.