Whether you love the smell of paper books or not, digital distribution will be the primary means of accessing text-based media within your lifetime (unless you die in the next couple years; if so, my condolences). Three years ago I was in a meeting of department heads and vice presidents and all the people that make decisions on things. We were discussing the company's ebook strategy. Three years ago, Flashpaper was relatively new and xml-ebooks were in their first iteration. We were on the precipice of massive change, not that such changes were noticeable in the market.
We're now over the precipice, in case you're wondering. We're falling. Argue all you want that you prefer paper. We'll hit the bottom soon enough and paper will become the minority distribution method for published media.
Flashpaper seems like old hat now. XML is realized (not fully, as we continue to experiment with enhanced ebooks). HTML5 and CSS3 are the vanguard of the mobile revolution, where computers play second hat to smart phones and tablets. The entire publishing paradigm is shifting and those companies that deal with text-based media are trying to figure out how to handle such a rapidly changing market.
At this meeting of mine, standing at the precipice, we discussed the marketplace, the challenges of digital sales, and most importantly, the challenge of pricing. I asked what I thought was a simple enough question: Why don't we just sell content directly to the consumer?
Now at the time, ebooks represented less than 1% of total sales. MUCH less. The industry moneymaker at the time (and currently, though not for much longer) was paper books. Paper books sold in stores and online at Amazon. A book's marketing budget was much smaller than what was needed to force any one particular title to the forefront of the consumer consciousness. So much of the business depended on customers finding the books while looking for other items. (You know the "people who browsed this item also looked at X, Y, Z" suggestions on Amazon? Those are a big deal.)
The answer was as simple as the question: We can't sell directly to customers because it will upset the market. Cutting out the middleman would rock the boat for the much larger revenue generator.
In truth, the answer isn't so simple. The excuse was simple. There are too many challenges to selling directly that publishing isn't willing to tackle. How do you set up a marketplace? Which department owns it and maintains it? Will this require new staff and the costs that go along with them? How does a marketplace work? (I cannot express to you the number of meetings I had to have with directors and VPs explaining what meta-text and catalog searching is.) How do you handle international sales? How do you draw users to your market without the goods of other publishers that are offered in the collective of a place like Amazon? How do you establish industry market standards without provoking (more) anti-trust accusations? How do you sell books?
Did you catch that last one? How do you sell books? Publishers are really good at selling books to the market. Publishers are not very good at selling books to the consumer. The industry grew up in cooperation with the marketplace, not in opposition to it. Publishers do not have the staff, the institutional knowledge, or the will to bring anything but a marginal effort to bear when it comes to direct selling.
How does that affect you and me? You get the agency model of ebook selling. Ebooks cost as much as their hard-back brethren because the cost still accommodates the middle man. Rather than a 50/50 split between author and publisher, the whole thing is muddled by including a third party to act as a literary fence.
With the inclusion of self-publishing arms like CreateSpace and fourth-party catalogs like Smashwords, marketplace e-bookshelves are less accommodating than ever for browsing. There aren't enough ways to hone searches aside from direct keyword searches. If you want to see fantasy, you get sci-fi, fantasy, and horror. And a LOT of it. And a lot of that, self-published. Sure Tor might not represent 100% of the fantasy market, but when you trace so many of the imprints up to their parent corporations, you'd be surprised how many of them are owned by the same people (Penguin owns at least four different fantasy imprints. Macmillan at least three, and so on). Bundle all these titles into a top-notch database driven search engine, slap a nice marketplace on the front of it, and all of a sudden you don't need to charge $17.50 for an ebook. You can charge $10 and make more money than you ever did before.
With the rapidly changing distribution paradigm, the obligations of playing nice with the market because of print will soon be meaningless. The problem is, by the time that happens, the publishing industry will have given up any opportunity it had to establish itself as a market option for readers of its work, will have allowed Amazon to muscle its way to control the industry despite spats with Macmillan (which I still contend Amazon won despite [or because of] the application of the agency model to ebook pricing [something that will bite publishers in the ass]).
The game is being played while we fall. When we hit the bottom, the game ends, the new era of publishing begins. The question is, who will get up and walk away? If things remain as they are now, Amazon WILL be the victor. If decisive action is not taken, publishers, authors, and customers alike will lie broken and bloodied at the foot of the Cliffs of E-sanity.
But do not despair. Others have seen the chess match being played and have begun to work toward an endgame. Do you remember that huff on Black Friday/Cyber Monday when a major publisher offered 50% off direct online purchases? It undercut any sales independents might have made on the same day. While the uproar was in defense of the independents, this sale was a critical step in the outcome of the ePocalypse. Publishers need to not only attempt but succeed at selling their product directly to consumers. While there are plenty of horror scenarios of publishers maintaining their own marketplace (same pricing, same piddly author e-royalties, and no middle man?), the risk is necessary for the fruitful transition of the industry from paper to electrons. It is necessary for publishers to treat authors fairly by offering a reasonable royalty rate. It is necessary for publishers to treat customers fairly by not charging $17 for an ebook or by attempting to explain why an ebook is worth $17 when they already lost that battle (twice in fact, but that's a separate blog post). It is necessary for publishers to maintain themselves in a world of reduced revenue and growing publishing alternatives.
Joseph L. Selby is a fantasist seeking representation. From 9:30 to 5:00 he works as a media project manager for one of the big 6's education division (translation: he makes the ebooks). He blogs at http://jlselby.blogspot.com.