From Digital Book World:
What do you view as the role of traditional publishers today? And do you see that role changing at all going forward? Put another way, do you believe that the big publishers will slowly go away, or will there always be a place for them, however diminished or different it might be?
The major publishers will always have a role in delivering books to readers, even as that role dwindles. Bookstores and paper books will be around forever in some capacity, and the major publishers have great relationships here. One thing we don’t acknowledge enough in this industry is that there are more reasons for buying books than simply reading them. There’s gift-giving; decorating a home library; as a promise to our hopeful future selves (like gym equipment); for social status (young readers prefer physical books partly because they are a signal to their biblio-tribe); and to own the must-read item that no one actually reads, like Kapital and Goldfinch.
But the market share of the Big Five will continue to shrink. It has already shrunk enormously. What ground has been held has almost entirely come through acquisitions, which is why I expect we’ll get down to three major publishers eventually—much as the music industry winnowed itself from six to three major labels. Profitability has held steady and even increased in areas due to Amazon, which has reduced costly print book returns from over 30 percent to less than 5 percent. And by the digital tools Amazon has unleashed—ebooks, POD—that are more profitable and less wasteful than offset print runs.
The problem is, major publishers are going to have to eventually compete with the 70 percent earnings offered by KDP, so their margins are going to get squeezed on the royalty side. And they are going to have to compete with indies on price, which means getting squeezed on the price side. As middlemen, their role is not only going to get smaller as self-published authors bypass them—their profit margins are going to shrink as readers and authors demand better prices and pay.
There are solutions, but I don’t think any of the major publishers will adopt them. I’ve been saying for years that the smart move would be for a major publisher to get out of New York, stop competing on advance size, invest in original IP, and grow writers’ careers by sticking with them for half a dozen novels before cutting them loose. They should focus on genre works, move to shorter work lengths, and break up non-fiction into salable chapters that readers can “complete” as they might a full music album. They need to pay monthly via direct deposit. And they need to connect authors to readers a lot better than they currently do. Instead, it’s been west coast companies doing the innovating. The center of the publishing world is already along the Pacific coast with the likes of Amazon, Facebook, Google and Twitter.
Link to the rest at Digital Book World and thanks to Patrice for the tip.