The industry’s great hope was that the iPad would bring electronic books to the masses—and help make them profitable. E-books are booming. Although they account for only an estimated 3% to 5% of the market, their sales increased 177% in 2009, and it was projected that they would eventually account for between 25% and 50% of all books sold. But publishers were concerned that lower prices would decimate their profits.And therein lies the rub. I've said it before. The publishing industry did everything it could to slow the growth of electronic books: starting with delaying an e-book's release relative to the print version and continuing with pricing e-books higher than paperback books ... all in an effort to maintain the present system and their present profit margins.
But--no matter what they do--it's a losing battle.
About eight months ago, on September 22, I said the following:
Technology will out.Did the Big Six listen?
By that I mean that efforts by companies or cultures to suppress technology have almost always failed. Technology wins in the end. Trying to stop technological progress never works.
Instead of taking a hard look at everything they do and reinventing their work flows to accommodate the new e-book technology and a resulting lower price point, five of the Big Six developed the new "agency model," which permitted them to artificially set the price of e-books.
These guys have not figured it out yet. They have been running things for so long, they can't envision a world in which they do not continue to rule. Instead of examining their operations and cutting unnecessary costs, they convinced Apple to go along with a deal that allowed the publisher to control the book price.
This is a doomed strategy because it fails to take into account the most critical part of the equation: the author.
The Big Six were slow to accept the fact that they had to offer more than a 15% royalty on e-books. When they finally yielded, they continued to see this as an e-book issue rather than a larger, systemic industry issue.
These publishers failed to recognize that, once they no longer controlled the sole means of production, they lost their biggest bargaining chip with authors. They no longer ran the game.
The door to publishing is now much wider than it once was for writers.
Of course, there have always been alternatives to the Big Six for writers. They could go to the smaller publishers, the indie presses, the university presses and the self-publishing operations. But these alternate routes were seen as stepping stones to New York. When an author gained credibility (and an audience) in publishing's outer rings, s/he might finally be offered a contract by the Big Six.
The difference between then and now is that I believe the momentum is going to shift in the other direction. The big authors are going to demand more than their New York publishers are willing to offer.
And when the authors don't get what they want from their current publisher, Amazon and Google will be waiting. We'll talk about that more tomorrow.
Go here to read The New Yorker article.