08 Sep 2010

The Logic Behind Giving Away Book Content

Economics 20 Comments

In the last two months I have released my two new books as completely free, no-strings-attached PDF versions. Here is my new book (co-authored with Carlos Lara) on the relationship between Austrian economics, fractional reserve banking, and Nelson Nash’s “infinite banking concept,” and here is my new economics principles textbook aimed at middle- and high-school students.

A lot of people went into shock when they found out that Carlos and I were making our PDF available online. (They weren’t as shocked by the principles textbook, since the Mises Institute–the publisher–has been posting free books for a while now.) After all, weren’t Carlos and I destroying book sales?!

I have two main responses to this understandable reaction. First, part of the reason Carlos and I wrote the book, is to teach Americans how the central banking system is systematically eroding the purchasing power of the dollar, as well as contributing to the boom-bust business cycle. The best way to get this important message out, is to make it available to anyone with an internet connection.

Second, I challenge the very premise that our policy will hurt us financially. In terms of total revenues, we need to consider that Carlos and I are both public speakers, who get a decent fee for giving an after-dinner talk or other such presentation. Blasting our free book all over the Internet is a good way to promote that aspect of our business.

Regarding the student textbook, I am using it for my online Mises Academy course (which starts in a few hours!). So distributing the free PDF to homeschooling blogs etc. was a great way to advertise for the online class. (And to repeat, even if a bunch of homeschoolers got to read the book for free, without signing up for my class, that’s not a “loss” in my book. I want my lessons to get into the hands of as many students as possible.)

Even if we limit ourselves to the narrow criterion of book sales, let’s think about it like an economist. It’s true, by making the PDF available for free download, there might be some people who otherwise would have purchased the book, but now won’t do so.

But how many people is this likely to be? Each of the books is quite long; it would be a real pain to print them out. So if someone is really that interested in the whole book, he or she is probably still going to buy the physical book.

On the other hand, by giving the PDF away, there are many, many more people who “sample” it, who would otherwise have never considered buying it. It’s true, the vast majority of these people won’t end up buying, but most of them wouldn’t have bought in any event. Yet there will be some people who buy because they were pleasantly surprised by what they found in the PDF.

Now it’s true, maybe the numbers wouldn’t work out for, say, the latest Stephen King novel. But for my latest two books–which have a lot of material packed into them, and which require multiple readings to fully master–I think the second group outweighs the first. In other words, I think on net more people will end up buying the books, because we have made the PDFs available for free.

Think of an actual bookstore: To take the “don’t give it away for free” logic to its extreme, bookstores should wrap every title in plastic, so that customers can’t browse in the store. After all, if you let people browse, why would they ever buy the book?!

The logic here is the same. By making the PDF available online, it’s analogous to Barnes & Noble allowing you to browse to your heart’s content in their store. Sure, cash-strapped college students might end up reading the latest Harry Potter on successive afternoons without actually buying it, but the customer base in general will end up buying more total books because of the option of browsing.

Creative people, embrace the wave of the future. Give your content away!

Robert P. Murphy has a PhD in economics from New York University. He is teaching a 10-week online class on the Principles of Economics.

20 Responses to “The Logic Behind Giving Away Book Content”

  1. Ash says:

    What’s that? Entrepreneurs have found a way to profit with falling prices?!

    I think I just heard the sound of an entire world view collapsing.

  2. f4kingit says:

    Fair enough but why not pimp the link to Amazon for the book a bit more? Make the “conversion” from sampling to buying easier

  3. Connie says:

    I wonder if it will be a generational thing. I don’t like to read on the computer for long stretches and can’t imagine cuddling with a Kindle and a cup of tea by the fire. On the other hand, my daughter reads for hours online with no problem. BTW love the “kid’s” econ book so far — probably will eventually get the print copy.

  4. Cheryl says:

    Do those who contribute as researchers and such benefit from your speaking engagements?

    • bobmurphy says:

      I don’t know what you mean. If somebody helped me with a book the arrangement would have been explicit. I mean, I didn’t tell someone, “I’ll give you 10% of the profits” and then post the PDF.

      Maybe I’m misunderstanding your deeper point?

      • Silas Barta says:

        And maybe you’re doing so deliberately :-/

        Cheryl’s point was:

        1) Your implicit message is that the institution of copyright is somehow bad, because obviously it’s optimal to give away your stuff for free so you can become a famous personality and make money off speaking engagements.

        2) But many of the people necessary in the production of those intellectual works (“those who contribute as researchers”) can’t use this model. How do *they* do without copyright?

        By the way, I’m pretty sure that Regnery offered you such high compensation specifically because they were relying on copyright on your works.

        Please try to tackle the hard cases rather than assume them away like Polyanna.

        • ADA says:

          2) Many farmers can’t do without subsidies. How are *they* to do without subsidies?

          • Silas Barta says:

            If you’re seriously comparing growing

            a) growing worthless crops, to
            b) inventing Viagra

            then I’m not going to bother closing the inferential gap between us.

  5. Anon73 says:

    Perhaps I’m being a bit cynical, but I have friends who haven’t paid for books/music for at least a couple years. I don’t know if that example holds more generally but it dissuaded me from going into music or publishing. Would you advise a first-time writer who doesn’t have lucrative public speaking engagements to publish for free?

    • Ricardo Cruz says:

      Bob did say his numbers would likely only apply to him.

      In your case though, being a virgin writer, I’d say that, if no publisher offers you a great deal, I would go with the free PDF option (and would sell paper copies through lulu.com). There was a band a few years ago that gained notoriety, and got their single into #1 by offering their music for free through iTunes.

      Notice that books and music tend to be winner takes all markets. Naturally, only the top spots sell really well, because people’s time being limited, they want the best in whatever field they are looking, be that fiction, technical textbooks, or rock music. Successful musicians, like Prince, complain a lot about the contracts they signed when they were starting and that took years to lapse, but the reason why publishers had so many profits with them, it’s because for every successful singer there are lots and lots of failed ones. (Those contracts can be seen as form of redistribution from the rich singers to the dime-less ones that are just starting.)

      Btw, David Friedman, the economist, has lots of interesting posts on his blog about publishing. He has had his dose of experience in publishing novels, and textbooks. And some of them he negotiated a free Internet edition, for others he didn’t. He also published them through different companies. So, the guy has a lot of knowledge to back up his stuff. I’d do a search over his blog, if I were a nascent writer.

    • Ricardo Cruz says:

      Anyhow, just to point out, I do think there would be (and there are already) free riding problems if copyright wasn’t enforced, which means less movies, music, books, etc (less than the “efficient” amount that is).

      What I did read on anti-copyright, I find their views incoherent. First, it annoys me to death that, many times, they make no clear distinction moving between copyright and patents, even when their arguments apply only to one of their systems. Then, I think they self-defeat many times. For instance, with arguments such as saying that trade secrets would be enough. But the all point behind patents is that the enforcement costs between parties, to (maladroitly) prevent leaking, may lead to underproduction since many deals are not made.

      Kinsella’s natural rights approach to copyright I find even less convincing. If someone sells you a book that is clearly a 3rd party copy, and there is even a “unauthorized copies are not allowed”, then you are clearly collaborating in a breach of contract and can be prosecuted. Even in music, I find it very unlikely that people don’t know when they are helping their supplier to skim the publisher.

      Anyhow, I haven’t yet got much deep into Boldrin’s book, which Cowen recommends and it’s possible it changes my mind (especially on patents, I expect).

    • bobmurphy says:

      Yes, absolutely. I got my “break” with LRC, where I wrote dozens (more than a hundred?) of articles for free. It’s not so much that Regnery gave me a book contract because they were fans of my LRC work, but:

      (a) The practice helped my writing, both in quality and in me being able to crank stuff out,

      (b) Tom Woods was instrumental in introducing me to the Regnery people, and he knew me through the Mises Institute,


      (c) When I wrote my first PIG book, a lot of the material was just repackaging of things I had first written about on LRC.

      So yeah, I definitely would say start writing stuff and posting it wherever, to get your name out there and to practice. If you were trying to be a stand-up comic, I would recommend you go to every “Amateur’s Night” you could find to work on your material, if you couldn’t get paying gigs yet.

  6. Matt J. says:

    It would have taken me decades (if I didn’t lose interest) to accumulate the sort of knowledge I have been able to in several months thanks Mises’ free content. I’m glad that it works out financially and I can definitely see the potential economic benefit of making the content available. Jeffrey Tucker’s lectures on this subject are very compelling, especially about how great books that are bound by copyright tend to fall out of print and fade into obscurity (I listened to him give those lectures for free from Mises University on iTunes) which benefits nobody.

    It would be interesting to see in the coming years how inventions like the iPad (and Mises’ active role in creating a Stanza catalog of free books for iPad) will affect the dynamic of choosing between buying a physical book or printing it out, but that is only one aspect of the benefits that free books can give to their authors.

  7. senyoreconomist says:

    Just out of curiosity, when will the actual book be coming out? It looks really nice, but I don’t like reading on a computer, I prefer reading from a book. And While I am at it, and this is addressed to all Free Advice readers, how many of the visitors to Free Advice like to read on a computer and how many prefer to read from a book? Which do you prefer, Bob? Thanks.

    • bobmurphy says:

      They haven’t given me a firm promise, but I hope by the end of the month the physical book will be available for purchase.

  8. Brian S says:


    With your obvious Karaoke skills, I’m waiting for the sing-along version to hit iTunes.

  9. jennifer says:

    I am huge fan of Nelson Nash and I have my own private banking system. Thank you so much for making Nelson’s 25 year old dream come true. I have a hard copy of your book and I am sharing it and this ebook with others from my blog. I love not only being part of the solution but also helping others see the light and structuring private banking systems for them as well. Thank you for this book.

    • Silas Barta says:

      And thank *you*, Jennifer, for investing all your savings in dollar-denominated fixed-income securities (which is what whole life plans put their money in), which are issued by large corporations and governments. That’s definitely part of the solution.

      (Have you “wowed” yourself yet by realizing you can borrow your own money without a credit check?)