Okay, so start by reading this short article from the Financial Times: Hachette Chief Hits Out at E-Books.
After reading the article, the quote from Mr. Nourry that is most telling is as follows.
“So, one day, they are going to come to the publishers and say: ’we are cutting the price we pay’. If that happens, after paying the authors, there will be nothing left for the publishers.”
What Mr. Nourry should really say is there is no room for publishers in the world of Amazon and the Internet.
Perhaps their current business model isn’t relevant anymore? If you are an author (or composer, painter, photographer, etc.) you used to depend on the publishers to help organize and energize your reading audience, but more realistically, get a copy of your book onto the shelves of retail book shops. With a website, Facebook page, Twitter account, etc. an author can probably do a much better job of finding and engaging her audience and perhaps with more “authentic” conversation, instead of a “buy my stuff” broken record. The problem as an author, is that running a website to sell your small collection (1 or more) of books isn’t really what you want to be doing. (Your a writer, right?)
What Amazon has done is create a system, similar to the Apple iTunes App Store for iPhone developers, where the authors can sell directly to the public. Realistically, Amazon presents the new business model for the publisher: a publisher that has infinite shelf space and doesn’t care whether you are writing the next great American novel or a “How To” book or anything, as long as you have the legal ownership of the work.
If I ran a publishing business, I would be making deals with the manufacturers of these devices to make sure that my content was on as many different devices as possible. (Amazon went so far as to create its own device instead of printing presses and binderies.) My value to the authors I represent would be the sheer negotiating power, similar to a powerful Hollywood agent that packages talent together. I would also try to represent as many authors as I possibly could and give them a simple way to get their content onto these devices as quickly as possible. In fact, I would let the authors sign up right on my website. I’d give the authors templates and tools for making their books easy to distribute electronically. I’d even let the authors set the price and define a charity to donate some of their profits to. For that, I deserve a percentage of the sales. As the iPhone App store shows, the developers are quite willing to give Apple a share to bring the audience of iPhone customers directly to the developers’ doorsteps.
Now think a step or two ahead. Where are the other “publishers” in various industries? And does your business model break when a disruptive technological force comes into your market? If so, my advice is to be the one that breaks the model not the one that gets broken.