A Tale of Two Pirates

by Rich on July 9, 2011

Piracy on the internet is nothing new. With the rise in indie publishing, though, a lot of individuals and small businesses are running into what big publishers have known for a long time: Content piracy is easy and preventing it is hard.

I don’t intend to talk about the ethics or effects of piracy. Instead, I want to distinguish between two types of content theft and their different goals.

When most casual observers think of piracy, they think of people sharing files via downloads, torrents, or peer-to-peer networks. This is traditional piracy. The person sharing the content knows that sharing is illegitimate and the person downloading knows that downloading is illegitimate. There are a variety of motivations for the distributors:

  • wanting to share
  • wanting to increase their level of contribution to the system so they, in turn, can download more faster
  • using modified content as a way to distribute viruses (a form of economic motivation)

Regardless of intentions, participants on both sides know they’re in the middle of underground activity.

The other type is what I call counterfeiting. Here, the distributor takes someone’s content, repackages it, and tried to sell it through legitimate channels as his own. The Passive Voice Blog has an excellent account of one author’s struggle to get Amazon to pull an ebook where someone had taken one of her books, copied it, and sold it as his own work. The key difference from traditional piracy is that the buyers had a reasonable expectation that what they bought was legit, because Amazon was selling it. Retailer’s don’t sell stolen goods.

In counterfeiting, the seller’s motivation is clearly economic. They want to make money selling stolen goods.

The differences in apparent legitimacy lead to different prevention options. In both piracy and counterfeiting, “producers” can be subject to legal and procedural consequences (civil suits, sanctions by an ISP, etc.). It’s difficult and expensive to reach them, so for individual authors it’s impractical, but there is a mechanism. In traditional piracy, downloaders can be subject to the same sanctions.

With counterfeiting, the retailer can also be a means to enforcement. It’s not to Amazon’s advantage to be known for dealing counterfeit goods. Their interest in maintaining reputation (at least) can be used to push them into action against counterfeiters.

Retailer involvement against counterfeiters is important, since counterfeiters are highly dependent on retailers for the returns they need to make counterfeiting viable. If authors and publishers can push Amazon (and others, the problem isn’t unique to Amazon) to make counterfeiting sufficiently inconvenient, the counterfeiter’s motivation goes away. The down side is increased inconvenience to legit sellers. This is the risk management balance.

Against pirates, indies have little recourse. Major media companies and publishers don’t have an effective way to prevent it, and there’s no reason to think indies will have the resources or strategy to do any better. Counterfeiting, though, is different. Online retailers want indies’ business. Amazon, Barnes & Noble, and Smashwords (among others) have done a lot of work to court indie publishers. They want to promote indie publishing as viable and desirable because they rightly see a great business opportunity. Indies who encounter counterfeiting need to both work with retailers and keep public pressure on retailers to pull counterfeit works. Leveraging the retailers’ interest against counterfeiters will advance indies’ interest against counterfeiters.

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When startups talk with investors, one of the main questions they have to answer is “What problem are you trying to solve?”. It tells investors about the startup’s understanding of the market, the size of the opportunity they want to chase, and their ability to communicate with potential customers about how a new product or service can be helpful. In short, it gives an investor a summary of the startup’s potential.

Writers have plenty of good (and bad) reasons to go indie. Money, control, and opportunities which might not exist in traditional publishing are easy to identify.

But indie publishing is an entrepreneurial undertaking. You have to consider what’s in it for the reader. Are there benefits you can provide a reader by indie publishing that you can’t provide traditionally?

I can see three.

1) Indie lets productive writers get more books into readers hands more often.

Dean Wesley Smith and Bob Mayer love to talk about speed. They are very highly productive writers, producing several books each year. They publish under several pen names, which Dean assures his readers is more common that anyone expects. A key reason for pen names, beyond genre boundaries, is trad publishing’s expectation that authors release books annually. I’m sure there are plenty of historical reasons for this which make as much sense as the size of the space shuttle being based on the width of a horse. Any reasons tied to print runs, distribution, or shelf space no longer apply to ebooks. So either ebooks are restricted for print revenue protection or publishers have a lot of momentum and don’t feel like changing. Either way, an author who can produce multiple books per year has a harder time getting them to fans.

2) Indie serves fans of less main stream genres and forms

Successful writers know their niches. If your niche is out of fashion (horror, westers, cold war spy thrillers) your readers won’t have any options on the shelves. Story size is also driven by shelf requirements. Shorter books don’t have much spine width, so they look bad on a shelf. The spine print is small and value perception is lower. Short story collections aren’t popular with publishers. Serial fiction is long out of vogue. There are readers for all of these. Indie allows writers to reach those readers whose needs are largely ignored.

3) Books are less expensive

Authors earn much higher royalties in indie, so they can charge less for books and still earn well. Readers save money, or can read more on the same budget.

A startup with a pitch that said “We can get customers more of what they want, meeting demand our competitors are too inflexible to meet, earning more while charging customers less,” would have pretty good odds. They’d certainly have an investor’s attention.

What benefits do you see for your readers in indie publishing?

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Indie is a Startup: Butt in Chair

by Rich on July 4, 2011

This is the second in a series comparing indie publishing to technology startups. I’ll follow up with more posts looking at the lessons indie publishers can learn from the tech world. They can stand alone, but you’re welcome to start at the beginning.

A few years ago, I tried to start a technology company. For someone in my business, it’s not an unusual thing to try. It’s also not unusual for these ventures to fail, as mine did.

The details of what I tried to build aren’t important here, but for convenience, I wanted to build a service which would encrypt email messages so they could be used easily and safely to send private information. My partners and I had grand plans and enough experience to know how to make it work and how to sell it.

We fell into a very common trap. We wanted to be sure we had solved the messy and unpleasant problems which, while important, weren’t the focus of our business. How would we manage users? How would we deal with reporting? How would we handle passwords? Those are all problems which can be nasty to solve, are important to running an efficient operation, and which were all our problems instead of our customers’ problems. That should have been a clue we were on the wrong path.

With all of our planning, work, and investment, we never got around to actually encrypting and sending an email message, the whole reason we we started the company.

That sounds completely ridiculous, and it is. What it’s not is uncommon. Plenty of tech startups fail for exactly that reason, which boils down to considering scale before substance. We would have had to solve those problems once we had a bunch of customers, but we’d never have customers until we had a product.

This is the classic butt-in-chair problem for writers. If I don’t finish the story, my killer platform, my billions of twitter followers, my promise of a cover blurb by Ray Bradbury, my gold-plated Facebook network don’t matter.  There’s nothing wrong with developing those things. They are important. It’s a question of investment priorities. Your product is your priority, the rest is infrastructure.

I failed to focus on the product and so I fell flat. Don’t do it that way. Get your butt in the chair. I’ll be in the one next to you.

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This is the first in a series comparing indie publishing to technology startups. I’ll follow up with more posts looking at the lessons indie publishers can learn from the tech world.

Indie publishing is awash in pricing discussions. Joe Konrath and his outstanding blog have been a primary venue for the issue. John Locke selling a million books launched another million posts. Dean Wesley Smith tackles it from (among others) a highly instructive by-the-numbers perspective. One of my favorite blogs, The Passive Voice takes it on in a couple of posts (the last also includes a shameless plug, which makes PG’s blog no less awesome).

Indie publishing is an entrepreneurial venture. It gets represented as a lot of emotional or philosophical things, but it boils down to a writer saying “I’m going to be responsible for the success of a book in the marketplace” rather than choosing to rely on a traditional publisher with all of the hard work that comes after the hard work of writing. And just like every indie author dreams of being the next Stephen King (or whichever huge success you pick as your target), every startup dreams of being the next Google (or whomever).

My daylight home is in information technology, which is no stranger to entrepreneurial activity. Like writing, there are no guarantees of success, but technology ventures as an industry are about as mature as anything based around “let’s try something new and see if we can make money at it” can be. Technology ventures have a lot of lessons for indie pub.

Investors in tech startups tend to want to talk about the team and their histories (author brand), the problem the startup is trying to solve (emotional impact of your story), competition and barriers to entry (market and subject trends), customers (readers), marketing (sorry, it’s still marketing), and how much money you need. Successful entrepreneurs can answer these well, because these are the questions on which a tech business lives or dies.

Unsuccessful entrepreneurs (who can become successful after learning their lessons) often focus on underlying technology rather than solving problems (publishing mechanics rather than what to write) or the potential hugeness of the market.

That last one is how I see some advocates framing their pricing arguments. In startups, many tend to argue, “There are millions of potential customers. If we can get just 2% at a low price, we’ll be rolling in dough.” That’s true, and no one smart ever invests in them. If the way you define your market is so broad you can only be good enough to win 2% of it, you’re not making a good enough product, or your defining your market wrong. 98% of your marketing effort and expense will amount to nothing, you’ll never get enough traction to be credible, and you won’t make enough sales to be important in your market.

Looking at all of the buyers on Amazon, it’s easy for an indie to get pulled into the same trap. Amazon has 65 million customers every month. You could sell a book to 2% at $.99 and make a huge pile. A big number times a small number is still a big number, right?

It can be, but if the small number is small enough, the big number needs to be huge. More importantly, developing a product (or book) which appeals to a huge number of people is extremely hard and extremely unpredictable. Betting the farm on a rare outcome almost always means losing the farm.

The reasons tech investors pay attention to problems (story) and markets is because that’s where the money lives. Know your niche. If your dream is to write accounting software suitable for the IRS, you’re never going to sell it at Best Buy. If you want to write a photo sharing tool for grandparents, you’ll never sell it to Pixar. That’s OK.

Who is really going to read your book? It probably fits in some traditional publishing category, and that category has a number of readers. Contemporary mystery devotees are unlikely to snap up your werewolf on dragon paranormal romance, so was it really reasonable to count those people in the 2% you were going to snag from Amazon’s customer list?

Niche and reasonable expectations are one of the main reasons I think Dean’s approach is the right one. It’s based on success that midlist authors actually attain. It doesn’t rely on having the next DaVinci Code in order to pay off. By keeping prices reasonable, it also doesn’t prevent a book achieving DaVinci Code success.

Price is important with a product, but it’s mostly about not blowing it. You don’t want to leave too much on the table, but you don’t want to drive customers away, either. Misperceptions of your niche (target market) and prices you set too low or too high can do that.

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My wife and I drive similarly. Neither of us is particularly aggressive, we always use turn signals, we maintain similar speeds in comparable conditions. I tend to follow a little closer than she does, and she tends to brake a little later than I do, but there’s no real difference in how we drive. Yet when I’m driving, I know she often has a tight grip on the armrest. When she’s driving, my foot reaches for the imaginary passenger brake.

We take identical risks and the same precautions, but I feel less safe when she’s driving, and she feels less safe when I’m driving (though we’re both too nice to mention it).

Dropbox recently had a significant security failure where, for several hours, anyone could log into any account with any password. That’s a big mistake, they fixed it, they admitted it, and they moved on.

A recurring refrain in response has been “any data not under your control is insecure”. True, but so what. Regardless of the magnitude of Dropbox’s mistake, security is hard to get right. You may know what you’ve done to protect your data, but that’s no indication you know what you’re doing. My bank has been robbed more often than my house, but I don’t keep my money in the mattress (please don’t rob my house to teach me a poetic lesson).

Leaving my data out of my control means I’m victim to the mistakes Dropbox makes. Keeping it under my control means I not only miss out on a great service like Dropbox, I’m the responsible one. I need to get things right and not lose my stuff.

Some people can do that. They make the effort, they develop the skills, they do the hard work Dropbox is supposed to do. Most people can’t. Not because security is magic and inscrutable, but because it’s hard and they have better ways to spend their time.

We tend to have faith in our own abilities because we know what we’ve done, we can construct stories that help us understand why our choices and actions were right. We might believe the other guy is smart, but we can’t know his decisions, can’t construct a faith-building narrative. So when he’s driving, we grip the armrest, we stomp on the imaginary passenger brake.

But it doesn’t mean we’re any less safe because someone else is driving. Competence is the key, and control is not competence.

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I see a steady stream of posts on the problems with indie/self publishing. Some are thoughtful and reasonable (e.g. The downside of the e-revolution in publishing). Some are much less so, and not worth a link. Good and bad, though, share a common trait: They identify problems faced by self publishing authors as indie problems when those same issues are faced by any publisher.

They tend to boil down to a set of completely valid issues:

  • What to publish
  • Quality control of the finished work (manuscript, formatting, cover art)
  • Poor or unprofessional marketing, promotion and distribution

They get sliced and diced lots of ways, and I’ve seen them stretched into lists twenty items long. But these three are the main categories.

Every single one of them occurs in traditional publishing. Every single one of them is challenging. And, while they may be less wrong more often than most self publishers, traditional publishers are entirely capable of screwing up each and every step.

So what’s the real difference? Too many self publishers fail to treat the publishing process as different than the writing process or as a serious and important effort.

That piece of news should not be revelatory. Saying that the problem with self publishing is that too many people  don’t work hard enough at the publishing part is the same as saying that the problem with writing is too many people don’t work hard enough at the writing part. As a reader, you still have to avoid bad books.

So what do you do? For readers, pay attention. It’s no different than any other source of information these days. When the advent of blogging allowed millions of monkeys to connect their keyboards to your browser, how long did it take for you to filter out most of the garbage and find reliable, high quality sources of information you trust and enjoy? Self publishers are the same way. Many will be bad, many will be good, some will be great.  Pay attention to recommendations, reputation, and take advantage of opportunities to sample.

For self publishing writers, read every post by Dean Wesley Smith, grit your teeth, and put the same care into publishing as you put into writing. Make a good impression, because that’s what will bring your readers back.

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The debate between indie vs. traditional publishing often sounds like a Braveheart monolog. “You may take away my extraneous commas, but you’ll never take away my freedom!” Frequently, the discussion revolves around an author’s ability to retain control of his work. Freedom and control are important, but they mean something very different for established writers like Barry Eisler or Amanda Hocking than they do for newbies and aspirants. Eisler is a traditional publishing best seller, Hocking an indie/self publishing phenomenon. Both have demonstrated an ability to write what people want to buy and read. Both have received a lot of feedback from editors, readers and reviews on what works and what doesn’t. Their experience puts them in a better position to produce a better book each time they sit down to write.

An aspirant is more like someone auditioning for American Idol. We show up with the personal conviction that we have what it takes to channel Sam Cooke or Carole King. We’re dying to get in front of the judges and make it. We want everyone to hear us sing.

But, we’ve also seen the poor schlubs whose performances are so bad they give you chest pains. The people who sing like a cat in a clothes dryer. The people who keep singing even after a judge throws them a lifeline by telling them to stop.

The people who have no idea they shouldn’t impose their voices on the public.

Now, I’m sure you’re not one of those people. I’m doubly sure I’m not one of those people. Really. I’m certain, I think.

Traditional publishers can protect unprepared aspirants from themselves through guidance and validation. Anyone in a creative field needs to deal with rejection and at least temporary failures and setbacks. Even with that in mind, no one wants their failures to be any more public than necessary. Submitting a manuscript is a fairly private way to risk rejection. Privacy is helpful for the ego, but just as importantly, it’s helpful for you brand. Fail too publicly too often, that’s what people come to expect from you.

Guidance is essential. Writers, and creatives generally, can be blind to our own shortcomings and the weaknesses in our work. Editors put the shortcomings right in your face and get you to fix them.

Certainly, there are other places to get that kind of help. Critiques, beta readers, hired expertise. What a traditional publisher has that none of those has is a willingness to say “I believe in this, and I’m willing to take a financial risk on it being successful.” Anybody can deliver the first half of that, but the second half is important. Ultimately, most writers seeking publication also want commercial success. A willingness to take financial risk on a work is an excellent in-kind predictor.

Validation and guidance are by no means the only value traditional publishing can provide, and, as I said, they’re not unique to traditional publishing. But especially for the aspirant, I think those services are essential to get from somewhere. A unique advantage of traditional publishers vs. indie/self publishing is that it’s very hard to ignore their guidance. Publishers are gatekeepers. They can always not publish. Your critique group is great. If you’re lucky, they’re experienced, and their advice is sound. But you have to be willing to listen if they tell you that you sound like this guy:

I’m by no means telling you which way is right. I don’t know which path I want for myself. But I think the shift under way in publishing is going to demand a lot more maturity and self awareness from writers, particularly newer ones.

I’d love to hear what you have to say. Is it too easy to believe you’re Carrie Underwood when you’re really a dork with a power mullet and a voice like an asthmatic bulldog?

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I grew up watching This Old House with my dad. We’d watch Norm Abram (way back before he was a Master Carpenter) make an old wreck of a home look beautiful. One of the constants of the show was that the homes were always a frenzy of activity. Dozens of people were always framing, plumbing, roofing and finishing. The tools were amazing – I still remember seeing Norm’s laser-guided mitre saw for the first time. Houses were rebuilt to spectacular size and style, and an endless parade of specialists put their stamp on individual aspects of the home. A big, multi-team crew took a home with a lot of potential and turned it into something great.

Roy UnderhillAfter years of following This Old House, we stumbled across The Woodwright’s Shop (on a lower rent public television station). If you’ve never seen it, you need to go watch a few episodes now. Roy Underhill blew my mind. We had found the complete opposite of This Old House. Gone were the specialists, fancy tools, commercial plugs and ostentatious facades. Roy Underhill took tools that would have been old in 1750 and turned out some of the most beautiful woodwork I had ever seen. He’d cut down his own trees. He powered his lathe with his foot. Sometimes, during the show, he would make the tool he needed then turn around and use it – all in a single shot.

He did sometimes bring in experts. I remember the guy he brought in who built a violin with a pocket knife and a hand saw. But he wasn’t there to build a violin for Roy, he was there to teach Roy how to do it.

He didn’t use any tricks. He didn’t use anything your grandfather (or his neighbor) didn’t have in his garage.

But he did something Bob Vila and Norm Abram (whom I still think is fantastic) never did. He made himself personally responsible for the entire process start to finish. Nobody else could take the blame if the table turned out crooked or the door didn’t close correctly. A mistake was never due to a problem with a tool, because the tools were never expected to be smart enough to control themselves.

It was all Roy, his sweat, and the practice in his hands.

The difference between the two shows and the two approaches is exactly the difference between traditional publishing and indie publishing. Both showcased a ton of skill. Both could produce beautiful results. Both had a great market for what they built. And either would fully respect the quality of the other’s work. The difference was never about quality.

The difference was about reliance on experts vs. development of expertise.

Experts vs. expertise are both completely reasonable approaches. It’s not even about picking Norm’s way or Roy’s way. It’s about understanding the implications of a Norm approach or a Roy approach at each stage of your work.

Where do you want to do the hard work to develop expertise? Make no mistake, Roy always sweated more than Norm. Where do you want to allow yourself to specialize, and what are you willing to trade for that? How much are you willing to trust someone else’s expertise? Roy couldn’t build a brick wall as well or as fast as they did on This Old House.

So, are you a Norm or a Roy?

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Don’t think of publishers as gatekeepers

by Rich on March 19, 2011

Lately, I’ve immersed myself in the buzz around independent publishing, ebooks and the desire for some authors to shift away from big publishing. On the indie side, authors are breaking free from “the man”, going their own way, and some are doing very well. On the traditional publishing side, authors, agents and editors point out that with indie publishing, there’s no garbage filter, that publishers don’t just find authors and stories, they improve them, and that a huge amount of work goes into making a manuscript something worth printing (or downloading).

Both sides are right, as far as they take the discussion, but they’re both failing to put the difference between indie and self publishing in the right context. There’s a lot of talk of gatekeepers, quality control, marketing and distribution, dead trees and large vs. small royalties. All are fair points.

Nobody talks about risk management.

That’s the characteristic which unites all of the issues and differences. I’ll admit to being a bit biased here, since I do risk management for a living, but I think it gives me a different perspective than most people coming to the issue from the (aspiring) author’s side of the discussion.

Risk management, at its most basic, is finding the right balance between potential loss and potential reward. The most important thing to remember is that when evaluating risk, there’s no universal right answer to what an acceptable risk is. Potential returns or losses are often imprecise (what’s the personal value of being a published author? A best selling author?). In cases where they are precise – such as money gained or lost – the importance of that result varies depending on your goals. Seeing your name on a book may be more important that the possibility of losing money in the process. The perspective and priorities of each person or group making a decision influences risk evaluations.

Traditional publishers take an author’s manuscript and lead the author thorough revision cycles, multiple editing phases, produce cover art, market, distribute, and so on. All of those steps are time consuming and expensive. They don’t spend that time and money for fun – they spend it to make the book more likely to sell. Please note I didn’t say to make the book better or more successful. Those may be true, but they’re not important here. Publishing, especially traditional publishing, is a business and the goal is to earn money. Adding expensive effort to a book means they have to sell more to recover that investment. They wouldn’t do it if they didn’t believe the return was worth the investment, i.e. the risk of net loss was lower with the investment than without it.

From an author’s perspective, the situation is different. Authors have a host of motivations which may include return on investment, but include many intangibles, too. I’m going to over-simplify and put them into three categories:

I Want To Make Money With My Books: Authors going the traditional publishing route are highly insulated from financial risk. They need to do the work of writing, and there are certainly no financial guarantees in that work. But the work of writing happens in all scenarios, so it doesn’t change the risk assessment.

Authors bear no direct cost from the traditional publishing process (“Money flows from publishers to authors, never the other way”, is the standard shorthand to identify publishing scams). So, traditional publishers reduce an author’s financial risk.

I Want To See My Name In Print: Here, the revenue goals of traditional publishers increase the risk of an author failing to meet this goal. The world has a lot more manuscripts than it has good manuscripts, and a publisher is much less likely to be financially successful with a bad one. This goal is most of what gives rise to authors’ perception of publishers as gatekeepers. With respect to this goal, that perspective is well founded.

I Want Lots Of People To Read My Books: Quality control/ improvement efforts from traditional publishers and marketing and distribution capabilities insulate authors from financial and outright failure risks here. When all independent publishing was through a vanity press, authors would be left with no money and a garage full of thousands of books they had no practical way to sell.

Leaving aside the question of the final product’s quality for now, the risk difference in indie publishing is clear.

An author’s risk of failing in the “see my name in print” goal moves to zero.

The likelihood of and author losing money was already zero in traditional publishing. It can be low for indies as well, but the likelihood of actually making money is probably lower as well. There are no advances paid in indie publishing and the great majority of indie published books sell many fewer copies than the great majority of traditionally published books.

I freely admit that this is a very contentious area, though. Dean Wesley Smith and Kristin Kathryn Rusch are must-reads on this topic. They do the actual math. They don’t go so far (correctly) as to tell you that indie publishing will be successful, but they do show you exactly what you have to do to make the finances work. They also highlight financial opportunities that simply don’t exist in traditional publishing for all but the most successful authors. I also suggest following Joanna Penn, who pulls together the best indie publishing articles on a daily basis.

The risk of failure at “having lots of people read my book” is higher in indie publishing. Exceptions like Amanda Hocking are both wonderful and important, but even she acknowledges that she’s a very unusual case. Traditionally published books sell more copies than indie published books. Individual titles may differ, but on the whole, this is true.

Evaluating this risk is more complicated, though, as it’s weighed against the “see my name in print” goal. Most authors want both, but you can’t be widely read until you’re published. In the traditional world, most authors won’t be published. The importance of these two goals varies among all authors, but I think it’s safe to say that being published is a prerequisite to being widely read. So, I’ll give the risk reduction edge to traditional publishing. By the time you’re published, you’re more likely to be widely read with a traditional publisher than as an indie.

Following the traditional publishing route, then, increases an author’s risk of failing to get published at all, but reduces financial risk and risk of not being read.

Expense and being widely read are clearly connected, as product quality can be improved through editing, art work, etc. Sales are improved through marketing. So the more important it is to an author to be widely read, the more a traditional publisher insulates the author from financial loss, as an indie author has to pay for those services.

Most often the traditional vs. indie discussion is in terms of quality, income, freedom. Those are the right issues. Without putting it in terms of risk management and the differences between an author’s risks and a traditional publisher’s, it’s much harder to see where the benefits and pitfalls of the different approaches lie.

It’s also harder to understand the fundamental implication of indie books: The author is the publisher, so the author has all of the risks. That’s not necessarily bad, but you ignore it at your peril.

In my next post on this subject, I’ll dig deeper into publisher vs. author goals, talk about how technology is changing roles, and what that does to the risk analysis.



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Smurfs Running Up Your Credit Card Bills

by Rich on March 16, 2011

Apple is already starting to see issues managing authorization in their payment systems as in my last post. In this case, it wasn’t malware related, but it was still a function of trying to find the right balance between user convenience and payment authorization. When you make a purchase through iTunes, your password is cached for fifteen minutes. In this case, parents were buying on iTunes then handing their phones over to kids who would go on to make huge purchases of Smurfberries in Smurf Village. It does sound irresistible.

What’s happening is that Apple is changing the model for online payments. Most everyone – and certainly everyone with an iPhone – is familiar with online payments. Payments are tied to specific sites, accounts or services. I log into Barnes and Noble and buy a book. I log into New Egg and buy a hard drive. I use the same credit card for all of those purchases, but they’re tied to different accounts and different sessions. New Egg doesn’t know anything about my BN cart or my BN purchase. PayPal is marginally closer, as it’s an online account usable across multiple sites rather than just a credit card number stored in multiple profiles, but PayPal still authenticates you at each payment event.

Apple has made a fortune off of easy payments. Removing barriers to the impulse of buying a song or an app is a huge part of their billions in music and app revenue. But as an abundance of Smurfberries shows, a little user inconvenience can be a user benefit. Inadequate authorization is poisonous to user trust. By prioritizing convenience over rigor, Apple has damaged the trust of active buyers, not only leading to a reduction in errant Smurfberries, but probably reducing the prior purchases which led to the Smurfberries. Getting burned by unwanted charges kills the appetite for impuse buys.

Amazon’s one-click purchase is the closest comparison, as it allows for a strict impulse purchase. No extra checks, passwords or confirmations. But Amazon purchases are confined to the Amazon website. Apple has extended its impulse buy across the entire app ecosystem. In that fifteen minute window, any app was eligible.

To its credit, Apple has changed all that. iOS 4.3 now has separate timers for App Store and in-app purchases. That’s the right position to take, and it’s good for users. But minimal barriers to impulse purchase has been incredibly lucrative for Apple. Doing anything to increase the barrier to a sale will reduce their revenue.

It’s a tacit admission that they had a serious problem. I don’t know if it’s one they saw coming or not, but they should be prepared for more. Apple is great at optimizing for user experience. Optimizing for security is a very different matter. They need to do more of that to succeed in the payment business.

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