The Disintermediation Moment

With the advent of the Barnes and Noble Nook e-reader and the growing acceptance of e-books among readers and writers, it’s safe to say that we’ve reached what I’d call the Disintermediation Moment. This is the time when industries collapse, driven by changes in consumer behavior and expectations. Technology offers new solutions, eagerly adopted by ordinary people, but resisted by middlemen and gatekeepers who want to retain their status, control and income.

The music industry had its Disintermediation Moment with the advent of Napster. Once consumers discovered the power of acquiring individual songs, rather than whole albums, the days of the $16.99 album CD were doomed. Lawyers shut down Napster but could never put the genie back in the bottle. The music business, where “thieves and pimps run free,” according to Hunter S. Thompson, was forced to cut a deal with another rebel, Steve Jobs. An industry that once condemned the idea of “ripping” songs from CDs to computers has turned to iTunes to save their sliding profits.

Newspapers were early adopters of the web, launching some of the first web sites and online services, such as the Washington Post’s Digital Ink in 1994. Early efforts made the mistaken assumption that people would pay for content – despite being surrounded by a sea of free information. For more than a decade, newspapers have tried to use the web to support a business model (money from classified ads goes for reporters, buildings, paper, trucks) that’s been undercut by Craigslist and others. It would be better if they adapted to the medium like the Huffington Post or Politico.

Back in the 1980s, movie studios tried to stop the development of the VCR, arguing that the devices enable copyright infringement. Though they lost, they continued their efforts, athwart the flow of history, as they sued DVR makers, as if they had learned nothing. Meanwhile, consumers have moved on, and watch clips and whole movies online.

And now it’s the turn of the book industry.

I’ve been reading a lot about e-books and the Nook, both as an avid reader and an author. I wrote a book, Murder in Ocean Hall, have an agent and am looking for publisher.

However, I also work on web sites for a living so the slow print publishing world seems really outdated to me. Why does it take a year for a book to go from an author to a bookstore? I could publish my book on Lulu and start selling it immediately.

Why are there so many gatekeepers involved? Why do writers get such a small (10%) royalty on their titles? Why do so many writers have to do their own marketing, despite the fact that publishers claim that’s what they’re for?

The argument seems to be that this is the way we’ve always done it. The book publishing world seems little changed, a Mad Men environment of stacks of manuscripts, Manhattan offices and boozy lunches. I would love a noontime martini but like the manual typewriters and flirtatious secretaries of Sterling Cooper, that world is long gone.

The price of e-books today is subsidized by Amazon and others. Publishers would like to charge much, much more than the standard $9.99 for e-books, arguing that they have high costs. This makes no sense – when you have perfect, unlimited digital copies of something, the price has to come down, as anyone who’s bought an album or song on iTunes knows. Consumers are saying that e-books should be comparable in price to paperbacks. That’s what its worth to them and book publishers need to adapt if they’re going to survive.

The fact that the publishing industry takes such a big chunk of the price of a book really seems like an argument against it. If so much of the cost of a title pays for execs and marketing campaigns, then why have a publishing industry at all? How is this model any different from the music, film and newspaper industries – all middlemen and gatekeepers have been rendered irrelevant by the Internet.

Without such high costs, books would be cheaper for readers and writers would make more money. My thoughts were really crystallized by this wonderful blog post by Joe Konrath. In it, he breaks down the amount of money he makes off e-books he sells through his publisher and those he sells on his own. He gets more money from titles he sells himself. And readers get more works to chose from and at a cheaper price. Konrath is meeting the demand of the market and making a better living than he would if he used a book publisher.

What value do book publishers add then? Are they not just standing in the way of more books at lower prices for more readers?