I, too, still judge a book by its cover. It's not the ONLY thing I judge by, but an indie book with a crappy cover is a big turn-off for me, and conversely, a really nice cover will make me want to see what the book is about.
Some readers will display the book cover as the sleep image. My reader doesn't do this automatically, but I take great pains (ok, little tedious pains) to make it happen myself. I find my reader to be so much more "book-like" when it's displaying the cover image when I "close" the book. Of course it would be nicer in color, but ironically the color readers such as Kindle Fire can't display anything when sleeping, of course!
I do agree with the article that book cover design needs to change in the age of buying books online (your first experience with the cover is going to be a thumbnail, whether you are shopping for ebooks for pbooks online). Could you still make a great, iconic cover? I think so. Are we going to lose richness in the design? Definitely. Like the change from LPs to CDs, where the size of the art changed.
AND: I love Chip Kidd!!!
eP
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