Indeed. As others have pointed out, new models are already emerging, they’re just not being adopted by the Big 6 dinosaurs. You identified very well what the essential economic differences are between print books in brick-and-mortar stores and ebooks sold on line: essentially zero production and distribution costs, no front-loaded revenues. That suggests changes to the current model in terms of production, marketing, payment to authors, and relationships with vendors.

For production, ebooks demand the same as print books in terms of writing, editing, and proofing, but nowhere near the same in terms of other things that go into making an attractive printed book. Fonts aren’t important (the reader can change the font anyway). Copy style isn’t important. Page layout isn’t important. Book cover is still important but not AS important as it is in print, because the book isn’t going to serve a decorative purpose; all the cover does is attract reader interest to start with. So while some of the core up-front costs to the publisher will be the same, the publisher can and should cut a lot of the other costs down or even out entirely.

For marketing, ebooks remind us who the end customer really is: the reader. Publishers are used to seeing bookstores as their markets, and that creates problems for authors when combined with return policies. Because no matter how well a book is marketed to bookstores, they don’t succeed unless readers buy them. Since ebooks don’t have to be marketed to vendors (all ebook outlets will accept any old ebook you want to toss their way as long as it’s formatted properly), the ad budget needs to go where it should have been going all along: to introduce the book to prospective readers.

For payment to authors, the change should be in the form of lower (or no) advances, but much, MUCH higher royalties. Lower advances arise because of the loss of front-loaded revenues for ebooks. When I say MUCH higher royalties, I’m thinking along the lines of about 50% of retail price. Publishers will find they have no choice but to offer this. After all, the author could epublish the book himself and get 70% royalties (or more). That means the publisher isn’t saying to the author, “This is what we’ll pay you to publish your book. If you don’t accept it, then your book won’t be published.” Instead, the publisher is saying to the author, “We will publish your book instead of you publishing it. We’ll provide you with several services, including editying, proofreading, a professional book cover, and marketing. Since you won’t have to do any of that stuff yourself, we will take a share of YOUR proceeds in payment for our services.” Note the change? The book and proceeds for it essentially belong to the AUTHOR, not the publisher. The publisher is providing the author a service and taking a share in payment for it.

As for relationships with vendors, well, the big publishers have the right idea that it should be an agency model, even though they’re pricing their ebooks absurdly high. An agency model in which the vendor sells the book for the publisher and keeps a 30% commission on any sales is exactly what Amazon offers to self-published writers. There is no reason at all not to offer the exact same deal to publishers. Probably down the road, when publishers stop trying to price ebooks so as NOT to sell and so not to compete with hardcovers, and instead see them as the core of their business, the better and more successful ones (or maybe even all publishing houses) can probably demand a smaller commission paid to the vendor than a self-published author. It’s quite predictable that 20-25% will become the standard.

We are also going to see a proliferation of smaller publishers, the serious downsizing of the Big 6 (those of them that stay in the game at all), and an increase in self-publishing. For the commenter above who deplored overpriced, poor-quality self-published books at the Kindle Store, all I can say is adapt to it. Self-publishing will allow very GOOD books to be published that would not have been publishable in the old days, but it also allows the equivalent of an entire slush pile to see daylight. It’s not hard to eliminate a bad book from consideration. Usually the paragraph of description will be as bad as the book itself. If not, all ebook vendors allow you to read a portion of the book for free. View it and do it. If it’s rough-draft crappola written by a no-talent wannabe, you’ll know it in the first paragraph or so. That’s just how it’s going to be, and it’s the price we readers pay for being the ones to decide whether a book should succeed or not, rather than some gatekeeper doing it.

Part of why this just doesn’t matter to me is that there are more books being published now than ever before. We are not going to loose access to books. Yes a lot of them are bad. But I can’t read half the really good ones on my shelf now.

Publishers have to take some responsibility. They weren’t forced to give Hillary Clinton $8 million for a book that didn’t recoup its investment. That was their own decision. Bad business decisions should not be rewarded.

What will happen, and it will be good for the consumer, is eventually DRM will die for ebooks as well. I just am not buying as much as I would if the books were DRM free. I am reading more public domain and the few publishers that are DRM free because I don’t want to spend $10 on a book that I can only read once and not give away. I give away virtually every paper book that I buy. I am not as interested in giving away the ebooks because a major reason I give paper books away is storage issues.

If ebooks become the dominant format for reading trade books then the need for traditional publishers is threatened. Authors can choose to publish directly or use Amazon’s or Sony’s services instead and reap a higher share of the retail price of their work.

This business about telling your authors that Amazon has to “request” their book before you the publisher can submit the book to Amazon in e-format is laughable. The stories we (on Amazon and other e-reader boards) have heard from authors who are clueless about the publishing process are scary. Some do not even know who holds their digital rights. If this was the way I made my living, I think I would want to know everything about it. but that’s me.

So publisher make your decision. Either get on the bandwagon or let the public know you are not interested in making your authors’ works available in e-format. One large Pub House has an enormous e-book division. Cudos to them! The others, goodness gracious, if they can get a new release out within a month or two of a release date, we celebrate. Mostly they cannot get it done. (Statements such as they do not want e-books to cut into the sales of their DTB so they delay the digital or e-book release? Give me a break) So the author loses again. Sales are down. We e-readers turn to those self-published books that authors are loading onto Amazon in droves and finding some great reads. Sorry Pub you missed the boat again.

Many of us find that we are indeed spending more money on books than we had allocated or spent in the past. I know I am in fact spending in excess of $100 a month on books to read for pleasure. And I am not the only one. There are a lot of people who spend more and of course there are people who spend less.

And don’t spam the cost of a kindle or sony e-reader. Look at the prices for the larger iPods. You can spend the $300 for an iPod and download the kindle app and voila…… reading on your iPod. Who would have thought?

So lastly publishers need to get on the bandwagon and authors, you need to educate yourself about who has the digital rights to your books. And then you need to do something about it. Just think with e-book technology, no longer will someone look your book up ready to purchase only to find out it is no longer in print…………………… in e-format, all they will have to do is click a button.

Except they haven’t. Bad hardware for reading (with high costs, DRM
which makes it reek,) high costs for media, and (ironically)
competition from hard copy publishers all make ebooks look like a
horrible investment.

I enjoy that you point out about the growing efficiency in the
publishing industry, and I think this is a key factor whenever we
think about “the future of publishing.” For the past ten years while
the geeks have been talking about the promise of ebooks, publishers
*have* been able to make their hard copy business more
effective. That’s awesome. I don’t think that it’s sane to say “we’ve
come this far and now we’re going to change horses” to ebooks, but
rather it’s probably likely that increasingly our hard copy books will
be produced locally and on demand. Go to Barnes and Nobel, browse the
shelves, write a title down, go to the counter, order a late, and
before it’s cold you have your *brand new* book. It’s not ebooks, but
it takes advantage of much of the same technology. In hard copy books
become the “ebook” readers we never expected.

Lastly, I’m convinced that even 3 USD is too expensive for an
ebook. I’m pretty convinced that subscription models or sub 1
dollar/unit are going to be ebooks that finally succeed. This of
course means that the publishing industry is going to have to move
away from accounting sales and royalties/per copy based on “units
sold” and to some other metric…

In this world, publishers do a couple of things: first they provide
readers with curated lists and suggestions, and publishers more than
ever provide reputation and authenticity to the books that they
publish. Readers should be able to know and trust the editors and the
editorial tastes of particular publishing houses/editors
names. Secondly, publishers provide authors with services. Editing,
copy editing, cover art, layout, etc. These are still incredibly
relevant in the digital age, but it’s possible that these businesses
will start looking more like adhoc service providers, or writer’s
trade groups rather than “book publishers.”

In any case, it’s an exciting time to be alive.

Increasingly though, new authors are going to expect the large publishers to be able to offer and market their books through a variety of channels. It’s one thing to be told by a small, niche publisher that they a have limited scope but a brand-name publisher has to be able to offer a ‘full service’ (including print, ebooks, social marketing etc) if it’s going to be of value to the best-selling authors it relies on, otherwise big publishers risk being disintermediated completely by the handful of powerful authors they rely on the most. (In the same way that Madonna is now signed to a concert promotor rather than a record company)
I’m so tired of the term ‘added value’ but that is what it is going to come down to. What value will publishers be adding to the process 5 years from now? If your key differentiator is that you pay a big advance and can get books into a bookstore, you’re going to have a very tough time appealling to the next generation of authors – and readers.

I currently look at my groaning bookshelves and ponder whether to buy that new tranche of books on a favourite subject and begin building more shelf-space or should I wait until the price of external terabyte hard drives fall and download the digital versions?

Should I begin work on my magnum opus now so that its completed in time to take advantage of the growing tensions between eBook and print publishers?
If the print publishers refuse my manuscript I still have the eBook publishers as a fallback and digital self-publishing as a backstop.
As a newbie author I would not expect instant wealth and fame but would seek to reach the widest possible audience to establish my credentials.

Digital versions of my reference collection allow me to more efficiently research and cross-corelate data, potentially improving the quality of my writing.

Printed books will still, of course, feature on my bookshelves but probably mostly those with a sentimental value.
Somehow the feel and sight of certain printed books (e.g. religious books) lends a legitimacy to the emotions we experience when preparing to read them that is absent from digital or A4 copies.

I predict that the eBook, as an evolving new species of publishing medium seeking niches in which to prosper, pitted against an inert and bewildered print industry, will indeed prosper and might possibly, as an act of mercy, consume the print industry.