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I've suddenly started looking at hardcover buyers with more respect. These people aren't suckers, or at least they aren't mere suckers. They are the patrons, the hardcore fans, that are keeping my favorite writers in business.

For years I felt proud of that -- as I mentioned yesterday, I used to buy hardcovers pretty indiscriminately. I'll happily pay extra for quicker access. That's why I shelled out $350 for the machine which teleports books directly into my hand. When I hear publishers talking about windowing books on my Kindle to protect their no-longer-relevant-to-me hardcovers and physical distribution systems, I get a little upset. I mentioned so on my blog.

This morning, I woke up to an inbox full of mail from people who profess to be professional communicators telling me that I "stabbed them in the back" and was a "useless parasite" and "tightwad" for expressing my desire to continue paying them thousands of dollars in return for fastest possible access. I think of myself as a patron. They clearly think of me as a sucker. Did the Medicis ever have to put up with this? Of course not: in addition to hiring artists they also had assassins on the payroll. I'm strangely tempted.

It seems like six authors have a radically different understanding of the patronage relationship than I do. In a not totally unrelated turn of events, today my To Read list got shorter by two books.

> When I hear publishers talking about windowing books on my Kindle to protect their no-longer-relevant-to-me hardcovers and physical distribution systems, I get a little upset.

It's important to note that Macmillan was only considering windowing books on the Kindle because Amazon was forcing them to sell their books at a price below what they believed was profitable. Had Amazon been more flexible in allowing publishers to set prices for the content they own, then this never would've happened.

To be clear, publishers can set any price they want on the content they own. Amazon never set (nor could it) the price at which Macmillan was selling their content. Amazon was just asking for the freedom to determine what price they could sell it to their customer at - even if it was below they price they were purchasing it at.

You don't think Amazon/WalMart/Target forced Scribner to sell "Under the Dome" for $9, do you? Hardcover releases are typically sold at a 47 percent discount, Under the Dome has a list of $35, so amazon probably paid around $18.00 for that, and turned around and sold it to their customer for $9.

That's what Amazon was trying to get the rights to do with eBooks. Macmillan didn't want Amazon discounting books to their customers.

Here's what I'm hearing from Macmillan: whine whine whine, blah blah blah, windowing. Whine whine whine, blah blah blah, price increase. Whine whine whine, blah blah blah, most books will be released simultaneously.

(When I hear that I start speculating on what books a hit-driven industry will make into the exceptions from simultaneous release. Oh, right: the ones they think I'm most likely to want to read.)

I understand on an intellectual level that Macmillan has business model problems, but their problems are not my problems. Attempting to make them my problems does not endear them to me.

Every word of your analysis and reflection is spot on regarding the importance of time-sensitive pricing, incenting authors to produce great works, and, what I believe, is my _moral_ responsibility to reward those authors/software publishers/directors/actors/content creators who give me so much pleasure. I'm happy to see there are others out there who share my worldview.

So, I think it's really important to emphasize, that Amazon wasn't suggesting non time-sensitive pricing, instead, they were requesting the ability to set the prices, EVEN IF it meant they would pay Macmillan $25 and sell a book for $9.99.

The net result would be - I get a great book, day one, cheap. MacMillan (and the author) get their cut of the $25. Amazon gets my business. (Because, once I'm at amazon.com, good chance I'll go back when buying my EOS 7D). Walmart mastered the art of selling something at a loss to get you in the door, Amazon is just following in their well understood footsteps.

The publishing industry, though, has done the analysis and realized that setting a price point of $9.99 constantly, means that readers will have a difficult time paying more than that. Which means that, eventually, Amazon.com doesn't have to sell the books at a loss, because that is the only price that books will sell at.

I don't really buy the argument - I'm going to purchase the next Peter Hamilton Void Series Book on Day 1, even if it is $50; but clearly the publishing companies do, because they desperately want to control the price that the _reader_ sees, regardless of what the publisher is being paid. Ergo, the "Agency Model". Amazon is no longer a Book Buyer/Seller for MacMillan, and will not be able to discount eBooks to get more volume.

There is a meta-game being played here, and it is for control of the Channel - to some degree, the party that controls the pricing controls the channel. If Amazon can set the pricing to a below-cost number, then they grow their (already strong) control over the channel, and make it up on all the other elements that people purchase. By turning Amazon into an Agency that has to price their books at the same price as everyone else, Macmillan has regained that control.

If you can quickly crate high quality books that people actually like you will make a lot of money as an author. To paraphrase one of the best "We don't subsidize an incompetent hore why must we subsidize incompetent authors."

Most published authors suck which has a lot to do with them making no money. What publishers focus on is not high quality books but rather figuring out how to convince people to buy crap books that they will not actually read.

Amazon cut's into this in two ways, if you can read reviews before you buy you are less likely to pickup something you don't like. The other approach is by removing the limited shelf space at the book store you reduce the control large publishing houses have over the channel which allows higher quality books to compete without backing from a major publishing houses .

There may not be tons of excess profits, but there are certainly tons of efficiencies to be gained by eliminating the print/ship/warehouse model of distribution.

I simply don't accept the argument that ebooks can't be sold drastically more cheaply than paper books. To me, there's no reason for the publisher to exist at all (not that the various functions they provide don't need to be done, just that they don't need to be provided by a single large entity).

Not to mention that, as sold, Ebooks represent a drastically _worse_ value than paper books. They aren't lendable, they're often linked to a single device, and the right to read them can even be revoked remotely. Publishers are offering a worse product for nearly the same price, while simultaneously crying poor.

What most people don't realize, is that the "physical" cost of a book isn't a particularly significant portion of its cost at low volumes, and very little of its risk (You can do multiple printings should a book do better than expected)

The author here: http://www.tobiasbuckell.com/2010/01/31/why-my-books-are-no-...

Did a great job of capturing many of the costs of publishing a book - Author's Advance, editor, copy-editor, proof reader, typography, design, art, Marketing/Advertising - regardless of whether it is physical or electronic.

I've only ever been on the periphery, as a technical editor - but I can tell you, watching the birth of even _one_ book, is a painful, extensive, and incredibly expensive process involving a ton of highly qualified professionals. The actual "physical" production of the book is almost an after-thought. And, every author I know in the technical industry, has always had to have a "real job" in order to make a living.

So, no - I don't actually think there really is much difference between the cost of a physical book and an eBook for normal volumes < 10,000 copies, which is considered a good success for most authors - the fixed costs are pretty significant.

I do agree with you, though, that there are a lot of liabilities associated with DRM encumbered eBooks, that hopefully publishers will drop, and therefore _enhance_ the value of eBooks. I certainly am willing to pay more for a non-drm encumbered eBook than it's paper equivalent. With the number of Ebook readers I have (iPhone, K1, K2) - they simply are more valuabe.

What you are missing from the argument is that the reason the publishers existed was not for the ancillary services, but because of the huge capital costs of running a printing press and moving that object down the production chain to the network of distributors and retailers. If we can accept that the printed book is no longer the primary artifact, we can accept that we no longer need huge publishing houses to wrap all of the costs in.

The cost differences between producing a paper book and an eBook are striking to me. I read the linked article and it makes some imaginative leaps in assigning all costs to the eBook venture, resulting in some ridiculous numbers. If you compare the costs of physically printing the book to publishing an eBook, there is obviously a huge difference. Look at lulu.com for starters on this.

On the other hand, his argument for flexible pricing is quite sensible. The difference as we go to eBooks will be that the popular books will cost more, and the less popular books will cost less, as we get the physical production costs out of the way and the overhead is greatly reduced.

Just like recording artists and labels, authors will separate from publishers, as publishers fragment into the the physical production, editorial service providers and financial risk backing operations.

I'm actually trying to make the opposite point, which is the physical cost of a book is relatively unimportant. LuLu actually throws you way off. They quoted me $7.95 for the cost of a 300 page perfect-print edition. They are a small volume printer, <1000 copies. At Volume (2000+ copies), a perfect-print 300 Page book can cost as little as $2.50 - And there are, and always have been, a lot of printers that could that work for you. You are correct in indicating that the big publishing houses have access to scale and vertical integration in which they are probably paying around $1 for each book - but, at 2000 copies, $5000 vs $2000 doesn't matter very much when you consider all of the fixed costs associated with a book.

Where a big publisher CAN take advantage of their scale, is in spreading the risk over thousands of books. Sure, a lot of their $5K advances will yield a grand total of 75 books sold. Or, in fact, be completed but not published (Seen that happen). But, many of those books will break even, some will make a profit, and every so often, JK Rowling will show up.

Note - a private publisher is risking everything. If their 3-4 months worth of heartfelt effort turn out to sell 70 books at $10, and they get to keep all of it, well, 100% of $700 is still less than an advance of $5,000.

Almost all of the time, energy, risk(!) and money associated with creating a book come before the actual physical creation. I'd be prepared to say that for a 5000 book run, (which is considered a success, for most authors), approximately 90% of the cost is associated with the creation of the book, advertising, marketing of the book, and only 10% in the manufacturing of it.

Now, where we can reduce costs is in the marketing/advertising - with eBooks, you don't really need shelf space. And Social Networks/intelligence engines can do a better job of getting me the book I'm interested in anyways.

But, to create a great book, requires a team of professionals. And those people have to eat....

[edit: And, to steal a point from retric above, "What publishers focus on is not high quality books but rather figuring out how to convince people to buy crap books that they will not actually read." - That's true, the other strength of the Publisher is controlling the channel, aka the bookshelf in the past. But, given that there is no "bookshelf" to control anymore, hopefully great content will rise to the top, and that is yet _another_ inefficiency that we will be able to eliminate ]

with eBooks, you don't really need shelf space.

I predict that the extent to which this turns out to be false will surprise us all.

Shelf space at a bookstore is the primary advertising medium for books. Most people don't consult the New York Review of Books. Most people see very few book advertisements. Even those of us who do most of their book buying online still wander through bookstores and libraries. Physical objects have a powerful draw. I buy almost all of my computer equipment online, and yet I still find myself wandering through the Apple Store, just to experience the physical presence of computers and computer users.

Dedicated physical bookstores are going to get even harder to keep open. They might get smaller. They might continue to diversify until they're basically cafes with books lining the walls, or small performance spaces where authors gather to hold readings, or something. But I suspect that, somehow, the biggest and most successful publishers will continue producing copies of physical books and putting them on shelf displays in places where readers are likely to gather, just to get those books in front of people's eyes at the exact moment when those people are in a book-browsing mood.

Then they'll sell electronic copies. Right there in the store. Barnes and Noble apparently agrees with me: They're plugging the Nook front and center in their brick-and-mortar stores.

Or, maybe I'm wrong. It will be interesting to see how it plays out.

PS: To anticipate every reader's first objection to my wacky hypothesis: This didn't save the music stores because music is inherently unbrowseable in a store. Music stores used to have little listening stations with headphones, but did anyone ever actually use those things? They never had what I wanted to hear. The iTunes store blows that experience away, to say nothing of Pandora or YouTube or a filesharing network.

Actually, I think you missed my point. I was talking about the historical reasons that publishers came into existence. At that point in time, it was (and still is) a huge expense to run a printing press and book bindery. Then, they took control over the distribution channel. These are huge costs- Lulu doesn't get your book into B&N. I was speaking to a future where bookstores are as rare as record stores as one where those costs are not significant.

It is just a historical accident that the people that control the printing presses control the rest of the process. It used to cost quite a bit. With on demand printing, there is little need for their services.

I understand that your premise is as follows:

"In the 1800s, or early 1900s, there was massive capital required to print a book. As a result, the books that people bought, came from those who had capitalized the printing presses. Now a days, the publishers are historically tied to those large printing presses, which really are less relevant with inexpensive on-demand printing. "

But this overlooks that you don't need to _own_ a printing press to have your book printed/bound.

Every town I've ever been in has had several printing companies that would do all types of printing jobs for you. Including your book and binding, if you were so interested and actually had a need for 5,000 of them.

LuLu, btw, is the _counter example_ to this. They are hugely expensive, but convenient for very small print runs.

Yes, large book publishers can print a 300 page book for $1, whereas it will cost you $2.50 to do so at your local printshop, but the real risk is the fact that you probably spent 4 months of your life writing a book, and paying people several thousand dollars to edit/proof/provide art, all for a book that may sell 70 copies @ $15.

I think we do agree, that (one) real value of publishing companies has been their ability to control the channel (book stores). I think we differ on their importance in developing books (Copy Editors, Editors, Proof Readers, Designers, Artists). I don't think you've commented on the publishers ability to spread risk over thousands of authors (and also pick the good ones!)

Now, authors still need book shelf space _today_, as ebooks do not yet dominate. This is why a famous and well known author, with their own brand, would stick with a publisher when they already have a brand. They need the channel. I like your quotation "Lulu doesn't get our book into B&N." :-)

But, Peter Hamiliton or JK Rowling are in the drivers seat. Unless they've been tied down with contracts that prevent them from going elsewhere, I would think that, right about now, they would start to realize they can go their own. They don't _need_ a publisher. They can personally hire their own editor, copy editor, proof reader, design, and artist, and self publish. Why more famous authors don't pull a Stephen Covey is beyond me.