Here’s a quote from a piece on e-publishing, titled (provocatively) Why Ebooks Must Fail:
And therein lies the dilemma… how does the publishing industry fund the creation, editing, design, production, marketing, e-warehousing, and sales of ebooks, if the income isn’t there? How do ebooks cover the huge advances needed to buy books if we cannot generate the cash, especially at their extremely low, discounted prices, cover the advances that an entire industry has come to require? The answer is that ebooks, alone, cannot.
Given the assumptions, I can’t really disagree. But the assumptions aren’t a given.
If ebook revenue is X, but publishing costs are greater than X, then no, I can’t pay for my publishing costs with ebook revenue.
But what if I say my publishing costs are pretty much nothing? What if, in fact, I say that the entire publishing industry — the bricks-and-mortar part, the people-on-staff part, the layers-of-management part, the advances part — is unnecessary for independent authors in the digital age?
Suddenly the math looks a lot different. Ebook revenue is X (and yes, that may be a very small number). But because of the internet my costs are going to be very small as well. So all I need to do is make sure that my costs are less than X and I’m in business. As is any other author who can meet that test.
That’s the new math.
I don’t expect people entrenched in the publishing industry to suddenly switch to an entirely new paradigm. And I don’t think change is going to happen overnight. The technology’s not there yet, there’s always some inertia when changing old habits, and there will always be star authors who need a large corporation to manage and exploit their worldwide rights.
But this idea that e-publishing and e-books (or ebooks if you prefer) needs to fit into the existing business model is completely wrong. Electronic transfer of content is not simply a new means of delivery, it is a new model of doing business, and every business predicated on the old model is going to have to change.
Fiddling with the spreadsheet or slashing staff in order to make a quarterly profit is not going to cut it. It’s not just a recalibration of price that needs to be made, it’s a complete top-to-bottom reassessment of costs throughout the publishing supply chain. Because in a relatively short amount of time, a great deal of the publishing supply chain is going to be reduced to a single click.
— Mark Barrett