Potter Piracy — Will Audiobook Publishers See The Opportunity?
News broke yesterday that a UK man was arrested for selling illegal copies of Harry Potter and other audiobooks. £85,000 worth of illegal copies, to put a finer point on things. In perhaps his only smart move, he plead guilty. And he still got 21 months in the pokey.
So that their is no confusion: this guy broke the law and deserves to be punished to the full extent of the law. He profited off of the work of another. Blatantly. He was not a “file sharer”. He was selling fakes on eBay. He was stupid and dishonest. Enjoy prison.
Now that I’ve gotten that out of the way, the article as posted by the BBC gets me a little out of joint right here:
It is estimated his fake audiobooks resulted in a retail loss to the publishing industry of over £1m.
I highly doubt that. Full versions of Harry Potter are going for (according to the article) £300. He was selling them for £6.49. That’s a 98% reduction in price. Quite the bargain. Enough of a bargain, perhaps, to entice people to purchase the set who would not have considered spending £300 for the legit version.
I say this not to defend his actions. I think I was pretty clear on that earlier. Nor am I suggesting the court should reduce the length of his incarceration based on a reduced value. Nope. Not at all.
But I am suggesting that had Mr. Sloper not engaged in his scam, the publishers would not be £1m the richer. And rather then speculate on how much they would have made without Mr. Sloper undermining their hard work, I think it’s a better expenditure of our time to toy with this concept: how could they sell more?
To start, we have to assume that Mr. Sloper turned a profit on his six-and-a-half pound sale. He certainly didn’t do that by selling multiple-disc copies of the book. I’ll assume he was selling a DVD version, and likely in a highly compressed .mp3 format. Creating those en masse would have cost him under a pound or two — plenty of room for profit.
How much does the publisher sell a DVD, MP3 format version of these books for? Well… they don’t. A quick search of Amazon.co.uk turns up a single entry for the complete Harry Potter set — and it’s available in CD format only, selling for £227.50 currently. That’s well over 100 CDs, as each only holds 70 minutes of audio and the books total 125 hours of listening. Yikes! Even in mass publishing, I’ve got to assume that’s costing them at least $100 with packaging. Probably more. And if it’s less, I’ll bet it’s not much less.
I’m going to further assume that the bootlegger was using a ridiculously low bit rate, enabling him to fit it on a single 4.4 GB DVD. Now that’s going to sound like crap, but to save 98%… That, and this wasn’t a “try it before you buy it” method. Not like he had to worry about returns!
But the publisher would. If they stuck with a 96 (I prefer 128) kbps bit rate1, they’d have a great sounding (better than the popular download sites) audiobook on less than 10 discs. Now that saves a TON of cash. This would allow them to sell a seriously reduced price audiobook collection. How about £50? That’s a deal for all of the books. At that price point, consumers get to make a choice: do I drop the cash for the convenient CD version 2 or do I save money to get essentially the same product, though I may have to do a bit of work to get it playing on my audio playing device?
I think Mr. Sloper proved that many customers are OK with the last one. £85,000 worth of customers, actually. And without the promotional power of a publisher, mind you. The question is this: will the publishers see the opportunity and react? Or will they stick with their misguided assumptions and continue on their current path?
And hey, if you have access to BookScan numbers, I’d be interested to know how many copies of that audioboook collection are actually selling.
1 – Apologies for the number-puking here and above. This way anyone who wants to check my math can.
2 – If you consider lugging around some 100+ CDs convenient. Not me. Fewer, please.
November 21st, 2008 at 4:54 pm
I’m torn here. As a consumer, I’d love to see prices coming down.
But look at places like Audible that have strictly digital downloads. Customers have been demanding lower prices there since there’s no physical product. True the absence of cost of goods helps, but it doesn’t entirely offset the reduction in price. Do you think the author is going to take less money? How about the publisher?
The voice talent. Now obviously, I’m biased because I am one, but I can tell you that voice talent are being paid less and less with the advent of cheaper digital audiobook downloads. I’ve heard of some places paying less than $1000 to the talent for several days worth of work.
Lower costs are great for the consumer, but they’re going to get increasingly inferior quality for the money.
November 22nd, 2008 at 9:43 am
I agree with Jeffrey. Just because audiobooks may now also be sold as digital products should not mean that the publisher’s production budget for the creative work should be any less or inequitable.
After all, it still takes a voice talent the same amount of time and effort to prepare and record an audiobook for a publisher who is charging higher fees for a physical product as it does for an audiobook publisher selling digital downloads to customers at a minimal cost.
In the case of an online seller of audiobooks (downloadable after purchase), the seller should be making their sales in volume to see a return on their investment in a voice talent and audio production, not cheaping out on production elements (voice talent’s experience, quality of audio, etc.) before going to market, thus creating an inferior product that is harder to sell.
With quality audio and a properly compensated professional voice talent, the seller should have no problem promoting the work and selling it like hot cakes to those interested, generating a stream of passive income for the seller.
Such is the beauty of digital downloads.
Best wishes,
Stephanie Ciccarelli
Co-founder of Voices.com
November 22nd, 2008 at 10:12 am
And I think I’d agree with both of you. There’s no need to skimp on production. There’s no need to pay voice talent less. And there’s no reason for the production company or the publisher to make LESS money.
No, my post was about exploring ways the publisher could move more product with a lower-price point. Is this all that different than making a hard-cover and a paper-back available? I have to think that the cost of goods sold AND the volume sold impact the price point of both. One is a LOT cheaper.
Would the same theory work in the world of audiobooks?
November 23rd, 2008 at 1:00 pm
Hi Evo,
Thanks for following up and sharing more of your thoughts with us.
I would think that a physical CD set with all of the trimmings sold in stores should cost quite a bit more than downloadable content.
When you offer a physical product, there are CD duplication costs (the CDs, jewel case, cardboard box, etc), artwork usage costs, printing costs, distributing costs, handling costs and so on. Conversely, there is very little overhead where digital downloads are concerned, however, the product still has value and shouldn’t be sold for peanuts.
At Audible, you can download complete audiobooks for about $10 – $20 an audiobook (some more, some less at price points like $7.49) which is a very good deal considering that some audiobook sets in the stores can cost upwards of $40 or $50 (perhaps more).
Should audiobooks be priced lower at Audible? I would say no. A seller wants to recoup a sensible if not pleasing profit and still have money leftover to pay royalties for each downloaded audiobook.
In a way, the digital download is like the soft cover and the CD set as described above is likened to the hard cover, which of course, is always quite a bit more expensive.
I hope this has helped a bit
Best wishes,
Stephanie
November 28th, 2008 at 2:34 am
I personally doubt they really lost anything at all, quite the opposite – to pay £300 you would really have to be a dedicated fan and want the “collectors” edition, probably to display, this is not something you will buy on a whim – unlike a £6.75 which you would. It is actually more likely to me that they may have gained a sale or 2 from this as people will have become very keen on it and wanted to get the high quality “collectors” version to do it properly (and probably display) and actually own something they liked so much – or at least some may have bought the books to put on a bookshelf to pretend they had actually read them.
It is accepted by Autodesk a CAD software company that a very large part of thier success was down to the fact that in the eighties their AutoCad Software was widely pirated and people learned to like it and know it – so it became adopted as the industry standard…
But that aside, yes there is a lesson to be learned here by these people – for example why not give away half of the first book free with a newspaper on CD, or all of the first book free on here. Get people interested enough to buy the rest.
November 28th, 2008 at 7:08 am
Hi Evo,
Thanks for posting this. I think it is vital for everyone who believes in a bright future for a legitimate market in digital products to take a stand whenever the ‘suits’ attempt to hoodwink us all with fatuous estimates of revenue lost to piracy.
At best you could say that the opportunity cost of this incident was £85,000. That is how much Mr Sloper’s dodgy clients forked out, and there is no evidence they would be prepared to pay more. When you also consider that he offered each pirate-client a much lower unit-cost compared to the legitimate product, it is likely the “lost revenue” … approached £0!!!
I think you are quite right to take pains that this in no way means you condones piracy. But to ignore the silly math of the copyright owners (or their enforcers more likely) is to simply perpetuate their lazy approach to new markets.
I would rather see copyright owners get creative – include compelling ‘bonus features’ – take a longer view, and simply right-price in order to optimise their market, rather than just fall back on the law and faulty economics to shore up their businesses.
100% of 0 is still 0. And everyone you annoy in the process is a potential lost sale.