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. And now we get to 2012, and ebooks are likely to hit 40% of total publishing sales by the end of this year, and are on the way to 60% within five years (per Tim Hely Hutchinson, CEO of Hachette UK). In five years, we've gone from <1% to >40%. That's disruption for you!
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This is what I am talking about. The market is changing. Arguing that the Publishers and authors are screwed because e-books make less money is foolish because the market is shifting from paperbooks to ebooks. The Publishers can complain about it all they want but unless they change how they make their money, they are screwed. Figure out how to make ebooks work. Reduce the advances, increase the royalties. The cost of producing and distributing ebooks is smaller. That should translate into additional profit even at a lower price if they shift how they pay for books in advance.
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By foolishly insisting on DRM, and then selling to Amazon on a wholesale basis, the publishers handed Amazon a monopoly on their customers—and thereby empowered a predatory monopsony.
If the major publishers switch to selling ebooks without DRM, then they can enable customers to buy books from a variety of outlets and move away from the walled garden of the Kindle store. They see DRM as a defense against piracy, but piracy is a much less immediate threat than a gigantic multinational with revenue of $48 Billion in 2011 (more than the entire global publishing industry) that has expressed its intention to "disrupt" them, and whose chief executive said recently "even well-meaning gatekeepers slow innovation" (where "innovation" is code-speak for "opportunities for me to turn a profit").
And so they will deep-six their existing commitment to DRM and use the terms of the DoJ-imposed settlement to wiggle out of the most-favoured-nation terms imposed by Amazon, in order to sell their wares as widely as possible.
If they don't, they're doomed. And all of us who like to read (or write) fiction get to live in the Amazon company town.
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Yup.