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Publishers and authors who've figured out what I'm willing to buy are getting money from me that wasn't on the table at all ten years ago. *That's* what the agency publishers are missing--they're under the assumption that they know who "the book-buying public" is, and what they want & will put up with, instead of realizing that new media = new audience; they could have a flood of customers who've never cared about paper books.
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Well, they know that the book buying public will pay agency prices for premium talent. They were right about that.
You should also understand that it takes a LOT of money to do the R&D and to build out the infrastructure for the new money and that investment money comes out of current sales. When people talk about new media, you get the impression that its all unicorns and rainbows that don't have to be paid for because the Internet changed everything. However, servers and programmers and bandwidth and developers all have to be paid for. Shatzkin says it this way:
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The old publishing sales-and-distribution ecosystem is disappearing but the new one is not built out yet. Publishers are, to greater and lesser degrees, converting to digital workflows, developing their metadata chops, collecting names, building vertical communities by genre and topic, collecting and analyzing ebook pricing data, building new models to work with authors and even self-publishers, and they’re still signing the books they want with royalty rates for ebooks of 25% of revenue.
These efforts have been financed by the margins being earned on sales of print and sales of digital that publishers were able to acquire because of their power to distribute print. In Esposito’s words, this cash provides “venture capital for the new all-digital businesses that all publishers are contemplating”. These annual step-increments of digital growth and brick store decline have so far been tolerable to most of the big players we’ve known for decades. (Borders was an exception, but we know Borders was not done in by digital change alone.)
The pace of the digital switchover is quickening. That will reduce the cash available to invest in building a new ecosystem at the same time the urgency of coming up with new answers is rising. It’s enough to make a sober executive, even at a very large, successful, smart, and innovative company, admit to serious concern for the industry’s future.
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