The front page of The Wall Street Journal’s Thursday March 8, 2012 edition had with the following headline: U.S. Warns Apple, Publishers; Justice Department Threatens Lawsuits, Alleging Collusion over E-Book Pricing.

I wrote about this mishigas last fall. For an overview of what it’s all about, check out “The Fox, the Hawk, and the Keepers of the Chicken Coop” and “At What Price Control?

So now that the jig is up what does all of this really mean? Here’s what I think will eventually shake out:

1. Like the music business (with the bankruptcy of EMI, now just three majors), big publishing will consolidate.

Instead of the Big Six, we’ll get down to a Core Four or even a Titanic Three. Book publishing is not a primary business for News Corporation or Viacom. Expect HarperCollins or S&S, or both, to be acquired by one of the members of the core four—Random House, Penguin, MacMillan and Hachette. My gut is that at least one sale will happen within 2 years, maybe sooner.

2. Amazon’s power will grow.

Amazon is positioned to become an even bigger colossus, all because it has direct access to consumers. Direct access requires no middleman to sell merchandise. Thus it has sliced out the most expensive element in book publishing—the preparations to sell-in and ship to retail outlets and then the warehousing necessary to process retailer returns.

When the agency model is gone (not if, when), Amazon will not only go back to aggressively discounting the competitions’ books and eBooks, it will have its own professionally vetted and edited books to sell too.

This is because after the agency model went into effect, Amazon threw down the gauntlet and started up several in-house publishing operations.  It’s important to note that many of them are genre imprints. They’re publishing the midlist long tail books that the bigs don’t want to and can’t afford to anymore. The margin Amazon makes on their own books will eventually justify the loss they’ll take deep discounting the Big Six’s books.

And no I don’t think Amazon will buy one of the Big Six…they don’t need to. Imagine combining the two cultures…what a headache.

3. Physical book retailing (bookstore selling) is in deep trouble.

No matter what anyone says, there is a price point that will convert a Luddite into reading an eBook. And Amazon will find it. Or Google… (read: “Google Sells Jonathan Safran Foer Novel for 25  Cents“)

Does anyone remember when the microwave was introduced? All it did was cook things faster… People swore they’d never get one. The stove is just fine thank you. And then the price of microwaves plummeted. Today, how many kitchens have you been in without a microwave?

If price can make people buy something they don’t really need, imagine what it can do for something they want.

4. Physical books will become beautiful again.

Craft and beauty will drive a select market of book lovers to invest in personal physical libraries…just like audiophiles today insist on record albums. Bookshelves filled with leather bound beauties will make a come back.

This is not a business that the Big Six or Amazon will have any interest in entering…

5. Amazon’s power will level off.

Amazon’s power will be challenged in the same way it has taken on the Big Six—an assault on the supply chain. It will slowly lose its position as a middleman between self selected writers and their tribe of readers.

Amazon built their business on connecting readers with books quickly and easily. No schlepping to the bookstore required. But the ultimate connection isn’t reader and book; it’s reader and writer. That’s because it’s a human interaction.

No matter what Amazon does, even with a dynamic leader like Jeff Bezos, it will always be a corporation.  Quick…name the head of publishing at Amazon… What about the head of Random House? Or Penguin? What’s the last book you read that they recommended to you?

What about your favorite writer…do you know her name? Do you have a pretty good idea about what kind of person she is just by reading her books? If she came to your door with a copy of her new book and asked if you’d like to buy it, would you? Or would you say “no thanks, I’ll get it at Amazon,” and shut the door?

While the shopping experience at Amazon is absolutely astounding, it can’t beat a personal transaction. You get things for a good price and fast, which is great, but you get no positive juju or Karma buying something at Amazon.  It’s a candy bar instant gratification kind of rush, sure, but you don’t get warm and fuzzy one clicking. At least I don’t.

The purest form of commerce is personal.  I make something you like. You buy it from me. We both benefit. We don’t need or want a corporation to pay me pennies for what I made, and then hand it to you after a proper mark up margin to satisfy Wall Street. We’d rather hand our hard earned money to a person who has worked just as hard to earn our business.

In the one-on-one human transaction, the Maker wants the appreciative Buyer to like what she made and the appreciative Buyer wants to help the Maker support herself and make more. Not fast and cheap mass market stuff, but methodical and deliberate, singular art. This is why Etsy is so popular and why Kickstarter works.

We now have the technology for appreciative readers to reward writers directly, no brick and mortar or virtual mega-store needed. Not only that, the writer and the reader can have a satisfying conversation.  What was the last satisfying conversation you’ve had with a corporation?

6. Corporate Book Publishing will become Hollywood-ized

Big publishing isn’t going away.  It will just be in the blockbuster business, like Warner Brothers Studios or the Sony Music Group.  It kind of already is. They’ll continue to publish big commercial books targeted at multiple tribes.

The Steve Jobs biography is in enough demand to make margins work for a big publisher. The demand for a long tail book like How to Invest in Derivative Tranches of Depressed Mortgages? Not so much.  But that doesn’t mean there isn’t a big enough market for the author of that investment book to make a living. It just means that the author has to find his tribe and speak directly to them. Then offer them something of value at a fair price.

Agency Model/Schmagency Model…make your work human and delightful. It matters more and more each day.

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  1. Michael Bronco on March 9, 2012 at 4:09 am

    I have to believe that the writers who do the best work will always find a place. The pressure to follow trends in enormous with the fast-paced machine that is the internet….but I met one to the world’s most celebrated model ship builders the other day and he doesn’t even own a computer. He enjoys a two year wait for his work and his customers are all over the globe. Oh, and his price point is in the tens of thousands. You’re right Shawn, he has a tribe and he focuses on them.

  2. David YB Kaufmann on March 9, 2012 at 7:10 am

    Thought-provoking. Thanks. There seems to be a consensus coalescing around your analysis. The middleman’s job was to connect writer and reader, but for many it’s become more interference than channel. I wonder how #3 and #4 will interact: Much of what I read is or will be on an e-reader (iPod Touch, in my case) or computer, but some will always be, and must be, from a physical book. I’m going to have to buy them from someone. Perhaps the retailers will specialize and ship, rather than rely on walk-in generic sales. From the writer’s perspective, two other items need discussion: who will be the curators – editors? With so much stuff out there, and Big Publishing only doing Big Blockbusters, will there be anything but word-of-mouth – or word-of-blog – to serve as post-work review and pre-work editor? Of course, it’s all word-of-mouth, personal, as you say, but in the old models writers understood the need for editors (even if they didn’t always like them). Will that still be true? And the second question is, how to find an audience, when even within a genre the marketing options bifurcate fractally.

  3. Steve Lovelace on March 9, 2012 at 7:43 am

    Is there still a strong stigma against self-publishing? I finished my novel and I have been looking for a literary agent. You know the routine. Sometimes I think about getting it printed myself and skipping the old-school process, but I don’t know if that would help or hurt my literary career. I’m in this for the long haul. What do you think?

    • Jeremy on March 9, 2012 at 8:17 am

      My two cents, the stigma is shrinking but not gone entirely. It looks like you have a good presence on your website; why not skip the paper for now and self-publish to Kindle, Smashwords, etc. to get your eBook out there?

      If it does well, the folks you’re looking for might come looking for you.

    • Shawn Coyne on March 9, 2012 at 8:37 am

      Hi Steve,

      There are probably a lot of people, including our nearest and dearest, who continue to attach a stigma to self-publishing. Can’t be avoided. These are the same kind of people who need to have an outside party legitimize their work. If I don’t get a review in the Podunk Herald, I’m worthless…that kind of thing.

      There is merit to the old school process, and it’s nice to be validated by agents and publishers. But like Steve P wrote in The War of Art, you can’t be a writer and live for that kind of stuff. Steve wrote tens of novels and scripts before he got his first check and while he financially supports himself now with his writing, he ain’t doing it for the dough.

      So my advice is this. Be a pro no matter what. If you choose to go old school, then accept the fact that you will have little control over your work once it has been acquired by a publisher. Hey they paid for it. It’s theirs now. If you decide to self publish, then be a pro here too.

      What that means is you should find an editor who can identify the strengths and weaknesses in your work. Do your best to fix the weaknesses and amplify the strengths. Then when you’ve pulled out your last hair and you know you have to let that puppy go, find a top flight copyeditor and pay to have your book punctuated properly. (you can find great copyeditors online, editors too). Then find a book designer to create an overarching interior and exterior “look” for your book so that your potential readers will only have to take one glance at it to know what kind of book it is. You want to make it look UNIQUELY FAMILIAR. That’s a lot harder to do than it sounds.

      While you are doing all of the above, start blogging…not about the weather (unless your book is about weather) rather about something closely associated with your work. That way you’ll slowly begin to attract tribe members who care about the same things that you do. It will take you at least three years of blogging (dedicated blogging not once a month) to see results. Try not to pay attention to “likes” “Tweets” or negative “comments.” They don’t matter. What matters is getting in the habit of writing on deadline and doing it whether you want to or not.

      Once you have a professionally produced book (look at the big sixes books to get a sense of how these things look re: layouts, copyright pages etc.) you don’t have to print physical copies. You can use a Print on Demand company (like Amazon’s Createspace) to get the book produced with no money down. At the same time, you should publish the book in Kindle, Nook, Ibook etc. platforms so that if someone reads your blog, they can find your book quickly and easily.

      Repeat the above process for the rest of your life and do it for the work and not for third party validation and you may be able to support yourself with your writing. If the only thing worse than writing for you is not writing, the above path with keep you sane. And you’ll learn things you never imagined while also having some seriously depressing set backs. This kind of process is what gives our lives meaning. Digging deep, not quitting, and fighting to stay in the arena of our choice.

      All the best,

  4. Basilis on March 9, 2012 at 7:48 am

    An other great article.

  5. Jeremy on March 9, 2012 at 8:05 am

    Or would you say “no thanks, I’ll get it at Amazon,” and shut the door?

    Hilarious and revelatory. This post and Steven’s “Why I Don’t Speak” tell me that even though we’re advancing with writing/reading/social technology, we’re getting back to the roots of storytelling.

    Me and you, sharing a tale because we found each other. This is exciting.

  6. Joe on March 9, 2012 at 2:17 pm

    I love point number 4: Books will become beautiful again. I don’t know what combination of things makes it so but I’m a hardcopy die-hard (I even returned a kindle I got as a gift so I could get ‘hard’ books with the refund.. for a few reasons but I digress..) I just think its great to have physical copies of ideas, history, stories, art, and whatever else. On the British ‘auto’ show Top Gear in one of the episodes, one of the hosts discussed how when automobiles came into their own, as it were, it largely relegated horses to hobby and specialty positions. Perhaps ‘hard’ books are in the beginning of their ‘hobby/specialty’ days…

  7. Sonja on March 10, 2012 at 8:09 pm

    Fantastic post, Shawn! I learned so much, the good, bad and ugly of publishing a book in this climate. thank you.

  8. Mary Tod on March 11, 2012 at 6:11 am

    Hi … Could not agree with you more. Connecting readers and writers is the way to go. I wrote a blog about this on Monday, complete with diagram (I love diagrams). One thesis I have is that publishers can exploit niches to create competitive advantage. Here’s the link on One Writer’s Voice

  9. S. J. Crown on March 11, 2012 at 7:07 am

    A bit off topic, but this article demonstrates clearly why Obamacare’s individual mandate to purchase health insurance is outrageous. Forcing us to buy our health care from an insurance company is like forcing us to buy our books from a corporate publisher. Like the publishers, the health insurance companies are middlemen who provide little or no service themselves, but somehow have acquired the power to tell both parties (health care provider and patient)how and at what price to carry out their transaction. And if you think there’s collusion among publishers. . .

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