Kindle, iPad, MacMillan, and the Death of a Business Model
As an author who has several books available in book stores and on Amazon, the value that publishers bring is distribution. If I could somehow get my books sold through the same channels as they are now (Amazon is do-able, the brick and mortars is not so easy, the educational and trade channels are probably impossible), I’d do it in a second. Like many authors, I’m making something like $2 on a $40 cover price title for each copy sold. A lot of the difference covers the publisher’s physical production and distribution cost. A whole lot of the difference covers books on which the publisher never even sold enough to cover the cost of the author’s advance (not a problem with my titles 
). The fact that the publishers are selling Amazon the right to a Kindle version at the same discount price that they’re selling the physical book seems odd. The publishers are making significantly more profit on that deal than on that for physical books.
However, piracy and digital distribution is certainly a concern. My own books, niche though they are, are frequently found on book-sharing sites in pristine .PDF format, which was probably sourced from the Chinese plant where they actually manufacture the books.
The real trick here is the advance model of paying writers. I personally opt for a higher royalty structure in lieu of advances, but many many do not. As long as publishers pay advances to hungry authors, they’re going to be taking a bath on a large percentage of their investment, and that’s going to limit the absolute lower limit of cost on book production, even with digital distribution. And honestly, you can get good condition used copies of almost any book you like for a fraction of this cost. All you have to be willing to do is wait a couple of weeks after release, and you can hit Amazon Marketplace to pick up physical books for $3.95 and less. Something’s going on here, but I think it has more to do with absolute bottoms on cost, and a real confusion as to how to price this stuff with no real precedent, than it is a clear defense of their old model.
