One difference between reading a book at a library and downloading it from the darknet is that the library sales are tracked by publishers and impact future contracts with that author. If a book is popular, it is purchased by many libraries, sometimes even in a special, more expensive (and presumably more durable) "library binding." In the case of very popular books, multiple copies are purchased per library. This gets noticed by publishers and authors alike. Authors (e.g. Robert Heinlein) have commented that staying in the good graces of librarians is very good strategy for authors, because it affects how well their books are known-- people who borrow their books from libraries may buy other books by the same authors later. Publishers may therefore offer the authors a larger advance for their next book if a previous book is purchased by many libraries. (And this is not even taking into account systems like the one in the UK, that track how many times a book is borrowed from a library.)
The problem this presents, by contrast, with the darknet is that unauthorized downloads are not tracked and have no effect on publisher valuation of the book. The "buzz" generated through downloads may lead to more purchases of legal copies of the book (and I think in many or even most cases it probably does), but the downloads themselves are intentionally invisible to publishers.
There's no easy solution to this -- not simple, but easy. Yes, I think publishers should put their entire inventories up for sale in digital format, sans DRM, as Baen does. I think it would generate a huge amount of revenue for publishers and authors, undermine the darknet, and lead to an explosion in the popularity of ebook reading software on common portable devices such as PDAs, iPod-like devices, and handheld game units, as well as the development of new devices optimized for ebook reading. But this action would, in fact, have a cost to publishers. Though it is relatively easy to convert digital files between formats so that a publisher's inventory could be converted, for example, to HTML or RTF fairly simply, there is still the task of setting up and monitoring the conversion, listing the books in online vendors such as Amazon, Powell's, Mobipocket, Fictionwise, etc., and monitoring sales by those vendors. There would probably be associated advertising costs and overhead in management costs as well. A large project like this would not be "free" for publishers, however much revenue it might generate for them. That means there's risk involved in taking this course, and publishers are generally risk-averse. That's why it isn't an "easy" solution, however simple it may sound.
I still wish they'd do it, though.
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