How Can a Bookstore Use Free?

by Patrick on August 4, 2009

As I mentioned yesterday, I spent the past few days in the service of the County of Los Angeles, making $15 a day sitting in overly-air-conditioned rooms and waiting to be called as a juror.  The first day of jury duty, I got a lot of reading done, and what I read was Chris Anderson’s new book Free:  The Future of a Radical Price.  Anderson, the editor-in-chief of Wired magazine, made his new media bona fides with his previous book The Long Tail, a theory of cultural consumption that remains a popular way of thinking about content in the internet age.

Free has already caused more controversy than its predecessor, and not surprisingly, with paragraphs like this one:

There may be more [journalists], not fewer, as the ability to participate in journalism extends beyond the credentialed halls of traditional media. But they may be paid far less, and for many it won’t be a full time job at all. Journalism as a profession will share the stage with journalism as an avocation. Meanwhile, others may use their skills to teach and organize amateurs to do a better job covering their own communities, becoming more editor/coach than writer. If so, leveraging the Free—paying people to get other people to write for non-monetary rewards—may not be the enemy of professional journalists. Instead, it may be their salvation.

One could see how this might rankle a professional journalist.  Indeed, Malcolm Gladwell presents an assortment of counter-examples in his review of the book on The New Yorker magazine website (presented, ironically, free of charge).  The journalism portion of Anderson’s book is, to my mind, the weakest section (and it certainly doesn’t help him to say crazy-sounding things like “there is no media” in interviews).  While some types of “journalism” can certainly fall to hobbyists or quasi-professionals, it’s hard to see how the legitimate journalists — you know, the ones who report on the war in Iraq or financial scandals — can make a living.  There may be a model out there, but I can’t find it, and Anderson never really presents one.   But that’s not what I’m going to focus on at this point.

While much of Anderson’s book consists of describing business tactics we’re all familiar with and calling them revolutionary, he does do a good job of presenting some truly unique and forward-thinking business plans.  Throughout the book, Anderson gives examples of business practicing “free,” or freemium tactics.  For instance, Irish airline Ryanair has lowered seat costs to the minimum and hopes to offer free seats in the near future by offering on-board gambling and charging for food and drinks, as well as by acting as a comprehensive travel agency and collecting referal fees from rental car agencies and hotels.

As a bookseller (and a primarily brick-and-mortar one, at that), the most intriguing example Anderson gives is that of SampleLab, a trendy boutique in Tokyo.  As Anderson says:  “At SampleLab, a boutique in Tokyo’s teen-laden Harajuku district, customers get up to five free items every time they visit — everything from candles, noodles, and face cream tot he occasional $50 videogame cartridge.  The gratis-only “sample salon” attracts 700 visitors a day.”  How do they make money?  They charge a membership fee, for one thing.  That’s right, people pay to enter SampleLab.  $13 a year to be exact.  They currently have over 47,000 members, meaning they make roughly $611,000 per year on membership fees alone.  Additionally, SampleLab charges companies a premium to have their products featured on the shelves and an additional fee for customer feedback.  In essence, SampleLab has taken their membership and sold it “upstream” to the manufacturers and producers.

Throughout the book, I found myself thinking about the book industry, and bookselling in particular.  They weren’t always happy thoughts.  A large part of Free concerns itself with digital products.  Where the marginal cost of a product — the amount it costs to produce one more copy of something — is basically zero, it stands to reason the price will trend down.  I’ve talked before about why giving away ebooks can sell more physical books, so I won’t reiterate that argument here.  Rather, read Cory Doctorow’s take on the subject.

Moving digital product is something not many of us in the indie book world have any experience with, let alone expertise.  Of course, if Anderson is right, nobody will be selling digital products, since those will be free and will be used to sell other products (physical ones) or services.  Maybe there’s room for us in this game after all.

Which brings us to the title of this post:  how can a bookstore use free?  For starters, most of us are already using it, in one way or another.  Let’s look at all the things Vroman’s currently gives away, gratis:

  • Events. With the exception of offsite events where we need to recoup the cost of hiring a sound crew or renting a space, all of our events are free as in beer.  We do this, of course, with the hope that you’ll buy a book or two at the event (Indeed, even the ticketed offsite events are free when you buy a book).  We even give things away at our free events.  This past weekend, we had a trivia night that attracted almost 70 people.  We gave away drinks and prizes, including a $50 gift card.  It was totally free to play.  (As an aside, you can see how buying your book at Costco, and then coming to our events might be construed as a touch insulting, no?  It’d be like eating the free nuts offered at a bar and bringing your own beer.)
  • Expertise. Right now, you are reading this blog for free.  We have several different email newsletter lists, each tailored to a specific interest, that you can get on for free (email me if you’d like to be added).  In these emails, you not only get news of our upcoming events, but also recommended books and products, as well as, well, tons of my incredible wit and humor.
  • The Shopping Experience. You’re welcome to come lounge about the store, browse the books and gifts, free of charge.
  • WiFi. Free as in beer.
  • Workshops. We typically offer one or two workshops per month that are free, in addition to our program of premium workshops that cost money.
  • Vroman’s bookmarks and printed newsletters. If you want to take these home, please do so.

This is a not insignificant amount, in my opinion.  Maybe that’s how I feel because I’m one of the people whose expertise is available at no charge.  When I think about the time and effort that goes into what we offer for free, it’s a little terrifying.  Typically, though, it works.  Our events attract crowds; those crowds frequently buy books.  It’s a nice arrangement.  We give you content online for free because we think you’ll enjoy it, and because it keeps us near the front of your mind, making it more likely that you’ll think of us when you think of books.  And if you think of us when you think of books, we can monetize that association.

But for the sake of argument, let’s try a little thought experiment.  What if you flipped the equation:  you gave away most of books and you charged for everything else.  Could it be done?  Not as most stores are currently constructed, but I do believe there’s a way.  Here’s how I think you’d do it:

  • Find a niche. Vroman’s is very much a general interest bookstore.  We appeal to lots of different types of people.  It’s great for us, and it’s what makes our business model successful.  But a store that focused on a certain aesthetic and obsessed about it might be able to sell low-priced membership fees.  Imagine if I ran a store that specialized in graphic novels, for instance.  And what if I said that every Friday, members got a specific graphic novel, available only at my store, for free.  Every month, you got something additional for free.  Maybe you also got access to special events that everybody else has to pay for.  It’s all about creating value and loyalty.  That might be worth a $100 annual membership fee right there.  And of course, as it is with the gym, not everybody would come to the store every Friday to get their free stuff, meaning that the least active users would subsidize the most active.
  • Sell your readers to publishers. If I could prove to publishers that I had a dedicated group of customers, say 2000, I might find publishers willing to give me enough copies of a new author’s book just to get the word out.  After all, anyone dedicated enough to buy a membership to a store like mine is likely a graphic novel maven.  They probably write blogs and Facebook and tweet about graphic novels all the time.  These are exactly the type of people who you’d most want to discover your new author or artist, as they’re the ones most likely to spread the word.  Forget getting the publishers to give me stuff for free, I’m going to make them pay for the privilege.  Which brings me to point two.  Again, if I can demonstrate that I’ve got an incredible clientele of dedicated, obsessed patrons, you’re going to want me to feature your goods.  For a fee, I might give you your own bay, one that you could decorate and promote in whatever way you like.  You could decide whether you wanted to sell your goods or give some of them away or provide a mix of both free and not-free.  Would every publisher go for this?  No, but some of them would.  Many already offer a subsidy to stores willing to promote their titles in the form of co-op.
  • Become a producer. What we’ve seen over the past fifteen years is that it sucks to be an intermediary.  Digital distribution doesn’t require one, and the move towards digital products has laid bare certain inefficiencies in the current physical distribution system.  So how to correct this?  One way is to make something of your own.  Not only are you now “cutting out the middlemen,” so to speak, but you’re also gaining control over a completely unique product — something Amazon and the chain stores and even other indies can’t sell.  For access to superior and unique products, some people will be willing to pay.  Amazon knows this; why else do you think they’ve branched out into areas of traditional publishing in recent months.
  • Charge for events. For members, every event is free, but  for everybody else, it’s $5 or a book.  Additionally, a store like mine could charge first-time authors a small fee to get on my events schedule next to all the big graphic novelists of our time.  For $100 or whatever the hypothetical fee is, you would get exposure via our mailing list and in-store placement (which we’ve already established is valuable), as well as promotion leading up to your event.  Even if you don’t make back the money in direct sales, the exposure would be worth far more to you.  This is probably the point at which many of you are shaking your heads, but consider that some stores are already charging self-published authors for events.  The reason for this is pretty simple:  it costs a bookstore time and money to promote and staff an event.  In some cases, the publisher provides co-op funds as a reimbursement for these costs.  Self-published authors, not having a publisher, don’t offer that insurance.  If we only get a small turnout, or if we get a large turnout but sell few books, that event is a loss for the bookstore.  In Free, Anderson uses the example of some clubs in LA that are charging unknown bands to put on shows in the club.  The bands pay because getting your name on the marquee of a good club is worth the cost.

I think a viable business model could be made from those components (and I’m undoubtedly forgetting a few other tweaks).  I could probably give away half of the product in the store with these other fees in place.  Would I get rich?  Probably not, but who’s in bookselling to get rich?  Again, this is all contingent on building an absolutely rock solid brand, one that featured the authoritative blog on graphic novels, as well as a jaw-droppingly creative and cool slate of events and lots of unique product.  In short, your store would have to become a destination.

I’m curious to hear what everybody else’s experience with Free are?  Did you like the book?  If not, what are your problems with his argument?  And most importantly, could my crazy idea work?