Should You Consider Buying High-Priced Ebooks?

I have reviewed many ebooks since seanpoker.net is up, and there is a controversial topic I deliberately avoided to some extent so far: their price. Naturally I would say it if I felt a book was anywhere near worth its price (up to now it did not happen), but that still leaves a wide margin as far as the value per buck is concerned.

Yesterday, I received a message from “Joe Smarkz” via the contact form (thanks, Joe), and it sums up pretty well some of the concerns about this question. Here are some quotes:

“High priced ebooks are get rich quick scams by the authors. If you can sell a book for $950 to 500 people, you make $475.000.00. That is there only motivation.”

It is quite reasonable to be wary of such schemes, since they happened and still happen in many areas. You want to be careful with your money. However, to be wary is one thing, and to call someone a scammer without solid arguments is quite another one. Yes, the authors of these ebooks can make good money if they sell enough copies, but there are a lot of people in the world who legitimately make money pretty quickly (sportsmen, artists, business men), and it is particularly true in the poker world.

A scam is not defined by what amount someone can make, but by fooled “customers” who do not get the value they were promised — either they get something of ridiculously poor standard , or they get zilch. If you bought a genuine Picasso made in China, you got scammed. If you invested in some shady high-yield fund and the manager made off with the money, you got scammed. You obviously did not get the value you had all rights to expect.

However, many cases are not so clear-cut, to say the least. What about a $1,500 meal? A $10,000 bottle of wine? A $150,000 car? A $75,000,000 painting? As far as I am concerned, I would never put as much money in any of these, unless I win some major donkament that is. The meal and the wine can be absolutely delicious, the car is certainly awesome, and the painting, er, exquisite, but their prices are just out of my means. If I had one of these, I would instantly sell it to get the cash. I do not have the means — but there are some people who do, and some would be quite happy with their purchase.

Value is subjective, depending on your tastes and your interests, and it can be expressed as the part of your wealth you would devote to it ie. what you would “relinquish” in order to get that value. So there are two variables here (as a matter of fact, there are several more, like the rarity or the positional value). Back to the ebooks, a serious player who spends a big part of his time playing poker would not value poker information as a casual NL50 player who plays a couple of hours on Saturday’s afternoons would. In addition, they probably do not have the same bankroll. To the former, a $1,000 ebook could be like an expensive fine wine in the eyes of a pretty wealthy connoisseur.

Of course, there are also very overpriced wines; you cannot assume it is good because it is expensive. But you cannot say it is automatically a scam either.

Forty seven times better?

Here is another quote.

“Price is = to value. A 2+2 book is $20. When a book cost $950, you are saying it is 47.5 times more valuable than a 2+2 book. That is total crap.”

Well, technically the price is just what the author/owner is asking for his product or service. A lot of people would pay a different amount for the exact same thing. In fact, it happens all the time, and it is called price discrimination. The travel industry is the typical example: a seat can be sold for a lot of different prices according to the date of travel, the time of booking, the age of the traveler etc. Thus, when a high price is set, it targets some part of the population, ie. the part that thinks the value of the good or service is worth its price. It can be a lot of people, or very few.

So, to be very precise, when a book costs $950, it means that the author/publisher targets the players who think it is good value for that content, and that the difference between i) their valuation (factoring in everything, like their means and their eagerness to get the product/service) and ii) that of the people who thinks a book should cost $20 at most, follows a 47.5 ratio. Given the huge difference in people’s wealth and in their interests, it is hardly surprising.

Yet, there is another thing that bothers a lot of people: the difference with the price of books in the current industry. The immense majority of books cost $30 or less. This is so because publishers found out that it is the price that maximizes their revenue in the “revenue = unit price × sold copies” equation. A $50 unit price would lose too many customers for the extra $20 to make up for it. In other words, mass audience trumps about everything else in this industry.

Consequently, it is very worthwhile to sell a book for $30 so that it sells very well, even if the content in itself could be valued much higher. It could certainly be argued that Harrington’s books are worth more than $30 apiece — between one and three buy-ins in a micro-stakes game. Though, Mason Malmuth said on 2+2 that 280,000 copies of Harrington on Hold’em were sold; you can easily figure out how much income it represents.

For all practical purposes, buyers get an automatic volume discount when they purchase a book, without knowing it. They more or less think it is the normal price for a bunch of pages with some binding, the cost of distribution, plus some dollars for the time the author spent to write it. From that point of view, an electronic version of a book costing more than $100 makes no sense at all. The information in itself is very undervalued. It also shows in the fact that expensive coaching is far less criticized, as people assume they pay the coach for his time. It can be true to some extent, since the coach will adjust his rate according to his level of income, but at the end of the day it is the information that really matters to you. If a coach could give me the same information in 5min, I would still be ready to pay the same amount for it (supposing I think it’s worth it in the first place). But information is intangible, and people do not like to pay for intangible things.

One last note is that prices are never linear: a product twice better than another one is almost never costing twice as much — it generally costs more. Take the prices of computers, for instance. It is partly due to the fact that on the high end, customers are more interested in quality, whereas on the low end their main criterion is price. There is also less competition at the extremes, too. Very often, the best product in a given market costs proportionally much more than the second best. Incidentally, the latter is generally among the most popular.

“Discourage them!”

Joe’s message proceeds with some derogatory terms, and ends up with:

“You should slander high priced ebooks all the time and encourage no one to even consider buying them.”

Actually, even if I were strongly against high-priced ebooks, this would be utterly pointless. This is not a popularity contest, and even if you do not say a thing, you already vote — with your wallet. When you do not buy the book, you already say all you had to say. If you are not in the targeted audience, it does not really matter; if you are but you found the price too steep, then you impacted the sales and your job is done. Screaming and shouting just shows you are frustrated, and you need to vent it.

But why ebook authors do not choose the mass audience route?

This is one of Mason’s main objection in 2+2 discussions about ebooks, and a legitimate question. There are several answers. First, authors like to have a total free hand with their work, without someone supervising them. Second, it is also satisfactory to get 100% of the sales or close to it; no cut for middlemen. Third, it is rewarding to write advanced content for a high price (the corollary possibly being it is frustrating to write advanced poker material for $30). I believe a significant number of people would be ready to earn less so as to get their own small business.

In addition, I would say it is also a gamble the authors made: if their work sells well despite the high price, their revenue would surpass that of traditional distribution. The high-priced ebooks market is relatively new, so one never knows.

It could also be the case that the material is just not well suited for a large audience. For instance, Tom Chambers’ PLO ebook ($2,500) contains highly analytical content, that could daunt many a “recreational” player. Like someone said on 2+2, it looks more like a PhD study.

The information will become common knowledge sooner or later — why not wait?

True enough — there is no such thing as a lasting secret. However, you probably heard of Tommy Angelo’s reciprocity: if you do the same thing as everyone does, you do not get any edge — you probably just avoid being exploited.

In the same vein, some players may buy the ebooks and decide to write a (cheaper) book on their own, with a rehash of what they read. Yes, it will probably happen, but there is still something that they will miss: they are no CTS or aejones. When you buy the original information, you also buy the confidence you can have in the author. With a “plagiarist”, you will always wonder if he got it right altogether, if his own examples are good etc.

All right, but should I buy one of these ebooks, eventually?

As explained, it depends on your means and how you would value the content of the book. If you are on a relatively tight budget and you expect secret formulas that will win by themselves, you would be extremely disappointed. If you do have the bankroll (say, you could lose the same amount on the stock market and it would not hurt that much), then it is still subjective. Most of their content is much more in touch with today’s online games than their printed counterparts. I think a willingness to absorb this kind of content is required, though. It will be, like, ok I hadn’t this and that in my game so far, I’m not sure if it’s gonna work but let’s try. And it might fail first, but you will develop new skills doing so. Anyway, there sure is work involved on your part.

As a slight disclaimer, I will just add that this post reflects my opinion, which seems reasonable since it is my blog. My goal is neither to disparage anyone, nor to promote ebooks at all costs.