Friday, December 25, 2009

Does Paul Graham Read Hacker News?

This post is an excerpt from the much longer post "Blogs Are Godless Communist Bullshit." I'm posting it seperately so that I'll be able to refer to its ebook research with distinct links. The "Godless Communist" blog post is a little too big for that purpose.

Paul Graham recently wrote:

Publishers of all types, from news to music, are unhappy that consumers won't pay for content anymore. At least, that's how they see it.

In fact consumers never really were paying for content, and publishers weren't really selling it either. If the content was what they were selling, why has the price of books or music or movies always depended mostly on the format?


The emphasis is mine.

I emphasize those sentences because of a recurring theme discussed on Hacker News: downloadable ebooks. One interesting thing about downloadable ebooks is that price has nothing to do with format. Another interesting thing about downloadable ebooks is that people have been discussing the hell out of them on Hacker News, Paul Graham's news site.

I believe the discussion first came up with regards to an ebook on parrots - parrot care, parrot feeding, making your parrot happy, and training your parrot to talk - which pulls in $700,000 a year for a guy in India who doesn't even own a parrot and hired somebody else to write the book. Since that first post, the theme keeps popping up again.


Polly want some Benjamins

Of course part of the interest is in the simplicity of the business model. Consider JavaScript Performance Rocks! and Getting Real. If you've done well on the Web, there's probably an ebook worth writing in the story of that. You build a web page, you write a book, you add a shopping cart, you're done. But the ebook discussion on Hacker News mostly centers around the money, and there's a lot of money.

People pay astounding amounts for ebooks and other similar downloadable information products. Gamblers will pay $97 for a 20-page ebook on somebody's allegedly foolproof gambling system (although they shouldn't). Video courses run to four and five figures - all for the ability to watch a small number of online videos. There is absolutely no connection between price and format in that field.

Which begs the question, does Paul Graham read Hacker News?

He asks, why has the price of books or music or movies always depended mostly on the format? - but it just ain't so.

He goes on:

There have always been people in the business of selling information, but that has historically been a distinct business from publishing. And the business of selling information to consumers has always been a marginal one. When I was a kid there were people who used to sell newsletters containing stock tips, printed on colored paper that made them hard for the copiers of the day to reproduce. That is a different world, both culturally and economically, from the one publishers currently inhabit.

People will pay for information they think they can make money from. That's why they paid for those stock tip newsletters, and why companies pay now for Bloomberg terminals and Economist Intelligence Unit reports. But will people pay for information otherwise? History offers little encouragement.


Again: does anybody believe that they will make money by training their parrot to talk? The sheer number of compelling counter-examples to Graham's argument boggles the mind. The information product marketplace Clickbank.com reports its current client earnings at well over $1.4 billion. Fuck history; Clickbank offers all the encouragement anybody could need. No matter how insecure you might feel, $1.4B will help you get over it.



To get an idea how big the blind spot is here, understand: there isn't just a market for ebooks. There's a market for ebook businesses. People set up these businesses, turn a profit, and then sell them on sites like Flippa.com. Then they write ebooks about it.

Here's search results on Flippa.com for web sites about Mafia Wars (the Facebook game). The listing includes a web site which sells an ebook about winning Mafia Wars. This web site was netting $7,000 per month when it sold for $50,000.

Guess how much effort it takes to maintain?

The ad for the site's sale answers that question:

I can honestly say I spend less than an hour a week on this site.

The site has been hosted on Hostmonster, along with all my other domains, which costs me $4.95 a month. Bandwidth for the site is about 50 GB/month. The two videos are hosted on Amazon Web Services. The cost for video hosting was $47 in August and $79 so far in September.


And Paul Graham seriously believes that "history offers little encouragement" for the existence of content markets? The history of September 2009 kills his argument! How far into history was this guy looking? People have been successfully marketing information since at least 1928, when Napoleon Hill launched the Law of Success home study course with Andrew Carnegie. That's 81 years of historical encouragement.

Law of Success was about making money - fair enough. But people pay for lots of information that they can't make money from - everything from parrot care to psoriasis cures. I myself bought an ebook on making gold in World of Warcraft and learned a trick that made me Warcraft rich almost instantly. The ebook cost me less than an expansion pack and added a lot more fun to the game.


Some links in this blog post are affiliate links, which pay small sales commissions. Polly want some Benjamins.

I guess that technically qualifies as buying information which can make me money, although it's a stretch, but consider another niche: people who want to get back together with their ex. So many ebooks exist on this topic that review sites exist which compare them all. And it's not hard to see why. Some relationship problems are difficult to solve.



Does this seem like an easy problem to solve? It sure looks like a doozy to me. Faced with trouble like this, you might well resort to an ebook. You might need more than one. (And in fact, if you're looking to decide which one you need, there's a profitable business model in just assisting that decision-making process.)

A note for Warcraft fans: I would love to give you an affiliate link to sell the awesome ebook that got me my ducats. The original "Godless Communist" blog post saw over 15,000 visitors, and a good ad for a Warcraft product might have made me a bunch of cash. But I have no idea which ebook it was. I bought it in like 2005; I don't have that computer any more. I've googled the hell out of this thing and I can't find it anywhere. I do however plan to start playing Warcraft again and review a ton of these ebooks to find out which the best ones are, and if you want to know about that when it happens, just click here to let me know.