How Legacy Publishers Are Killing the Future of an E-reader Market

When the Kindle first came out, I thought it was the greatest thing ever. Actually, that’s not completely true. I was apprehensive because I was a believer in having a hard-copy of the book with me while reading it, but eventually I started to see that this could be a good thing. I went out and bought an Amazon Kindle, and shortly after that I gave up my newspaper subscription and subscribed to an online version of the newspaper (delivered over the Kindle). Then I ended up with an Ipad 2, and with the Amazon Kindle app, I have been able to read the Washington Post every morning by paying for it with that subscription.

But for books, it hasn’t been as wonderful an experience. As a matter of fact, the e-reader experience has gone from “hopeful” to “dismal” and the fault of this situation rest solely on the backs of the publishing industry itself. You see, in the very beginning, Amazon was offering books at the rate of $9.99, which was probably the perfect point for paying for a brand new book on an e-reader. The publisher wasn’t losing out because the manufacturing costs were practically nil, and their books were getting to their readers almost instantaeously. But publishers didn’t like not having complete control over their market, so they forced Amazon to allow the publishers to set the price for books. Now, an entry price is anywhere from $14.99 to $25.00 on an e-reader. As expected, owners of e-readers have practically discontinued buying books as e-books.

So, you’d get the impression that publishers won. Not really. What actually has happened is that two markets have opened up, and this was an occurrence that a smart publisher probably should have seen coming, but like the music industry before, this is an industry populated by egos who are convinced that they are infallible, and that their product is so great that it cannot be replaced or done without. Well, they were wrong.

It seems that Amazon now has two lists of bestsellers, and they are becoming completely exclusive of each other. In the old days, bookselling lists usually listed the highest selling books (physical copies) but because the legacy publishers refused to budge, Amazon has discovered that its bestsellers are actually e-books that have never been published as hard copy books. As a matter of fact, in 2011, only 3 of the top sellers actually were originally published as “normal” books. The rest were dedicated e-books only. What this means is that more and more books are being sold without ever crossing the desk of publishers at all.

Let’s unpack that. What that really means is that more and more publishers are losing out on their own marketplace because they decided they were too elite to participate in it. Instead of working with Amazon and other such e-book companies, they acted with hostility and marginalized their own market. Readers have gone out and started buying books that other readers recommend, and quite often those recommendations have no affiliations with legacy publishers whatsoever.

What this means, or could mean, is that the future for publishers is even worse than if they had participated with e-readers in the first place. Like the music industry, major publishing companies are being seen as in the way and as leeches rather than as particpants and designers of the industry. An example is the simple mathematics of a publishing contract that attempts to give a writer about 2% of the sales for a book, whereas a deal with Amazon gives the writer either 35% or 70% of the sales (depending upon which publishing deal the writer chooses for charging for books). The selling point of using an established publisher was that you got their name behind your book and their marketing team, but with most publishing contracts these days, a writer is usually left to fend for himself/herself after publication because a publisher will spend most of its resources on already established names rather than someone who is up and coming. So, essentially, you end up with a crappy contract, and you end up with a publisher that doesn’t actually do anything for you other than potentially get books into bookstores (which, in my experience, doesn’t always happen). A further example is the publishing company that handled one of my earlier books. It keeps “offering” to make my book into an e-book, and then offers me that same crappy publishing rate royalty as if it was a hard copy book. What they don’t want to reveal to me is that our contract with each other indicates that they don’t own the e-publishing rights, meaning they’re trying to get me to sign with them for e-publishing when in fact I can actually do that myself and get a 70% royalty without ever asking for their help in the first place. The dishonesty factor is the reason I’m mostly pissed at them, because they’re doing everything possible to make it seem like they’re on “my” side, even though they KNOW they can’t publish the book as an e-book without me signing over MORE of my rights that they don’t physically have right now. Again, another publisher doing everything possible to piss off a client in hopes of gaining short term gains in profit.

So, how can publishers regain the upper hand? Well, first they have to realize they lost it in the first place. If they don’t, we’re going to start to see more and more publishers go under in the next few years because they won’t have the money to keep operating. Right now, all they have is their reputations, but they’re being beaten badly by unknown writers who are making names for themselves without actual publishing companies. Once publishers become irrelevant, they’ll disappear.

But publishing companies are probably not going to go down without kicking and screaming. Realizing that they’re not going to do the smart thing, like announce that they’ll adopt the $9.99 model that Amazon first put forth (which would have probably ushered a new age in publishing), they’ll probably respond with legal action, using whatever clout they have left to hire attorneys who will submit confusing lawsuits that will bog down the system for years, further eroding their success in the industry. I wouldn’t be surprised to see a direct legal assault on both Amazon and Barnes & Noble by the publishing companies, as those are the two entities making the largest impact against them. I also wouldn’t be surprised to see it fall into some kind of patent war over technology, where some publishing company gets smart and buys up a patent that allows them to claim ownership over a certain “idea” of e-readers, even though patents were originally designed to NOT be used for that purpose. We’re seeing a lot of this kind of action on the behalf of software companies and the social networking sites, so it would not surprise me to see some enterprising legal maneuver like this.

Because they’re not going to win by going after the hearts and minds of writers and readers. They’ve already demonstrated they don’t have our interets at heart. It’s all about profit and maintaining a dinosaur of a publishing model. Therefore, expect trench warfare and years of interesting battles that lead to an industry that collapses on itself.