Joe Konrath has an interesting interview with independent writer John Locke who currently holds the coveted #1 spot in the Amazon Top 100 and has sold just over 350,000 downloads on Kindle of his 99 cent books since January 1st of this year, which, with a royalty rate of 35%, is an annual income well over $500k. Locke says that 99 cents is the magic number and adds that when he lowered the price of his book The List from $2.99 to 99 cents, he started selling 20 times as many copies — about 800 a day, turning his loss lead into his biggest earner.
I think that's about right. I know for iTunes, I don't mind taking a chance and dropping a buck on a tune. If I don't like it, I'm only out a buck; if I do like it, well, the pleasure of the 3 or 4 minute ditty is endless.
Writing a book takes a lot of time and effort and talent but no more so than producing a piece of music. Sure, the pleasures of a good book may last longer but that's only because it takes a longer time to consume. You'd think, then, you'd be willing to pay out more for a book than for a song but that's not how the market works. You pay what for perceived value.
In this case, Konrath has found no one's interested in taking a risk on his book for $2.99. For a dollar, they're willing to take that risk. I'd take that risk, too, if I used an e-reader. Once Konrath has his reader hooked at this price, he still has the writer's responsibility to be interesting. If he is, then he's got a customer for his next book. If not, well, he still earned a buck. In the writing world, that's not bad.