Amazon.com has a new way of paying creative writers publishing under its “kindle unlimited” label: by the page. Starting yesterday, July 1, “[u]nder the new payment method, you'll be paid for each page individual customers read of your book, the first time they read it.” This is an unusual metric, but one our very own law firm adopted at its inception, because, “pay per page” is an excellent approach to simplifying the concept of valuable consideration.
“I don’t understand. If you don’t charge by the hour, what exactly is your business model?”
I smiled. I’ve heard this question a lot. Usually from people in or familiar with “Big Law.”
“Well, we charge by the page. We charge a per page fee for each page reviewed and red-lined, and another per page fee for each page drafted and tailored to the client’s wishes. And sometimes we create special flat-rate packages for a client.”
“I don’t understand. How is that possibly a business model?”
I smiled again. It seems so obvious to me, and yet traditional law firms cannot escape a per-hour fee. And even when they offer a flat rate, they don’t seem to understand why they offer a flat rate. The answer is simple. When clients pay per page, they know what they are getting in return for their money. It’s all about making value concrete. For instance: For $95, you will get unlimited consultation, drafting, and tailoring, all revolving around one page of a contract. You pay no other fees. The client has no further concerns about where his or her $95 is going.
On the other hand, if I charge the client, let’s say, a very reasonable fee of $250 per hour, the client has no real idea what that $250 buys (assuming I have done just one hour’s work). The $250 per hour is all about the value of the dollar to the attorney, not to the client. Will some of that time be spent on twiddling thumbs? The LED light bulbs or upscale modern art in the newly furnished office? Can we blame a client for not wanting to call, email, or fax an attorney who will bill a 5 minute phone call the equivalent of a quarter of an hour or charge a copy fee of $10? On the other hand, does a client really care how long one page of drafting takes me, as long as it's well-written and delivered on time? This is our firm's "blue-ocean strategy," and clients have responded very favorably.
Amazon has cornered the market on electronic books, so it doesn’t really need a “blue ocean strategy” for its electronic book sales. But their decision to pay writers this way is reflective of the way technology is creating tectonic shifts in the relationship between corporate giants and customers. The “little guy” has a voice online. For instance, public relations executives recognize the importance of an angry tweet’s impact on the bottom line. And even when people feel powerless, the goodwill engendered by speaking up for the powerless is an excellent motivator. Recently, Taylor Swift wrote a well-branded letter to Apple, asking for the new Apple Music to pay royalties to small-time musicians. She didn't even bother to try to get the music labels to fight the good fight. The labels, more and more irrelevant by the day, missed an enormous opportunity to stand up to the most powerful company in the world, and instead left it to a pop star to get Apple to cave. And for what? Pennies per music stream. The tin ear of music labels and their inability to connect with artists and customers is hastening their demise, because artists and creative entrepreneurs can connect with audiences and customers without the help of moneyed dinosaurs, thank-you-very-much. Maybe not a complete disintermediation, but, thanks to technology and mobility, artists can interact with their audiences and customers more easily than ever. I believe this is the reason that Amazon switched to the “pay per page” approach; they want to continue to supplant the 20th century stalwarts, along with Apple and Google, and are therefore directly dealing with creative people and providing easy-to-understand value to the writers.
Likewise, it is quite possible that Big Law will crumble if it clings to an entrenched and increasingly nebulous “bill per hour” fee structure, rather than articulating simple, easy-to-understand value for clients. I have a mission statement taped to my computer: “It is my mission to be an ongoing mentor and resource to artists and entrepreneurs.” At our firm, we greatly value our own time, but, as fiduciaries, we value our clients’ time more. We proudly charge “per page,” but we also have found it fulfilling (and wise) to not charge for our time. After all, if a client is checking the clock or skipping a phone call in fear of a bigger bill, can a lawyer adequately act as an ongoing mentor and resource?