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Mortals Enter a Digital Future | Publishing

There is no wizard to create with a wave of the hand this digital future. There are only mortals finding their way, by the slow, indirect, and uncertain means by which human beings have exploited previous paradigm shifts. To expect a practical business plan for unmediated electronic publishing to arise full blown from the existing industry would be to disregard the waywardness of human endeavor, the complexity of the emerging digital future, and the understandable, if quixotic, wish of today’s publishers to enter the digital future in approximately their present form. But to assume on the other hand that a reasonable business plan may not sooner or later emerge would be to ignore the persistence and ingenuity with which human beings have invented their world so far.

This is not to say that every powerful new technology necessarily becomes a viable business. The SST and high-speed rail travel in the United States may never overcome competition from cheaper or more convenient choices, while genetically altered and irradiated food are shunned by many consumers. No such obstacles confront the unmediated transmission of digital files whose cost per unit is minimal compared with the cost of distributing physical inventory, while the convenience of transmitting words electronically is evident to anyone who downloads e-mail attachments or receives faxes or has already bought a digital book. From the consumer’s point of view the experience of ordering a digital book selected from an on-screen catalog and printed at a nearby site will differ from buying a factory-made copy of the same book from an Internet retailer only in being nearly instantaneous, less likely to result in frustration if the physical book is out of print, and at a price that includes only a fraction of the retailer’s markup.

Because the obstacles to an unmediated digital future are not technological but institutional and emotional, the inevitable transformation will be contentious as new forms of production challenge old assumptions and practices. For example, the relatively greater value contributed by authors to digitized texts has already been noted by literary agents, who will expect authors’ future earnings from digital editions to be adjusted accordingly. But to increase the author’s share of revenues in keeping with the publisher’s minimized cost of digital production and distribution will, as digital publishing supersedes the conventional model, diminish publishers’ revenues, though not necessarily their net profits. To sustain profits, however, publishers must reduce or liquidate redundant facilities related to previous technologies, especially in the areas of marketing, sales, warehousing, and production. Book publishers, especially those dominated by their sales and marketing operations, will react defensively to such challenges to their boundaries. Meanwhile agents are coiled and waiting to strike.

Authors’ royalties traditionally represent between 10 and 15 percent of retail prices, or between 20 and 30 percent of publishers’ net revenues. Another 40 percent or so of revenue is absorbed by executive and other administrative costs and by the costs of printing, selling, and distributing physical books, costs which are irrelevant to digital publication. Therefore agents demanding 70 percent or more of digital revenues for their authors will open the bidding for new titles to upstart firms with no embedded customs or infrastructure to maintain. Under this competitive pressure traditional publishers will reduce their redundant functions in order to accommodate higher royalty payments or they will lose their authors, who, in today’s aggressive literary marketplace, are no more loyal to their publishers than their publishers are to them. Such adjustments are typical of the interregnum between a departing economic model and its successor and may help explain why today’s publishing conglomerates have approached the digital future with caution. Thanks for reading a Digital Future Blog