A leading light in the publishing industry has predicted that, "Ebooks, if successful, will sink the trade publishing industry." Evan Schnittman suggests the success of the electronic book would be the nail in the coffin of a fundamentally flawed industry.
Schnittman is the chap in charge of digital partnerships and licensing at Oxford University Press, so there's a decent chance he knows what he's talking about. The first post at his new personal blog is Why Ebooks Must Fail, a snappy title that should perhaps read, 'Why Ebooks Will Show How the Publishing Industry's Business Model Has Failed, and So Publishers Won't Jump On Ebooks.'
In the post, Schnittman outlines the current business model of the publishing industry. Pay an author over-the-odds in advance, print the book, punt it to retailers on sale-or-return and collect the cash, then pray you don't get too many copies back -- and do it all again. This relies on the publisher making short-term cash by shifting large numbers of books up-front to retailers.
There's an obvious flaw to this: it relies on a constant flow of short-term cash to finance the next book. Schnittman likens this to a Ponzi scheme, and we all know how well they turned out. Ebooks can't be distributed in the same way, as there's no inventory involved, so publishers won't get their cash upfront.
One myth Schnittman punctures is that ebooks are free to produce, being intangible products. You still have to pay the author, and they still have to be designed, stored -- albeit electronically -- and marketed. If ebooks do take off there'll be a skills gap in the industry as the shift to digital occurs.
More importantly, ebooks are presently underpriced, which is unsustainable. And crucially, there'll be a cash gap as cash drip-feeds in from each ebook sold to consumers, rather than when pre-sold to retailers. As such, big publishers won't be keen for ebooks to take off, won't invest in them, and will continue to keep them as the poor relation of the book world. In another blog post, Schnittman suggests that the answer is giving away a free digital copy with every book sold. Now that's some straight thinking, Evan. Mail some of that common sense to the record industry when you get a chance, will you? Much obliged.
As with the record industry, we see this as an opportunity for smaller, nimbler publishers and distributors. It also suggests that self-publishing, already at an unprecedented level with print-on-demand sites such as Lulu and Authors Online, could be another avenue for ebooks. Ebooks have yet to reach critical mass, but with readers such as the and it may only be a matter of time. We await developments in this page-turner with interest.