Subscribing to the Idea
Many early software companies hired large numbers of programmers. To support a big payroll (and sometimes through just plain greed), they charged high prices for each copy of their software. Which led to piracy; which led to copy protection and even higher prices; which led to even more piracy. Software houses eventually broke that cycle by abandoning copy protection altogether. They realized, in effect, that they could make more money by selling rights to future food rather than food itself. So they hooked their audience with good, cheap products and a promise of continuous updates for a yearly fee. It worked.Unlike those early software companies, most of today's publishers don't hire authors. Instead, they encourage free-lance authors to write books, then help develop the projects and promote and sell them. Publishers provide the capital and expertise to develop titles---getting titles from supply to demand---and get money from demand to reinvest in supply. Publishers, or something like them, are necessary.
Electronic publishers, on the other hand, don't necessarily have to sell their wares the way paper publishers do today. Like selling magazine or cable subscriptions, having a large and stable number of customers each paying a small amount per day is less risky and more profitable than having a few incidental buyers of expensive single copies. The uncertainty caused by focusing on selling single copies is what's wrong with publishing as a business today. Books could be more easily distributed if they were electronic, and publishers could profit without copy protection. Subscription could make books cheaper for both publishers and readers, reduce the risks of publishing, and increase profits. It would work by shifting publishing's emphasis from betting that one particular title will be a bestseller to maintaining many readers of at least one title.
In a decade or two, publishers will be back to doing what they do today. Once the novelty of electronic books wears off and everyone is offering them, publishers will again compete mostly on the basis of their books' design, packaging, and promotion. In the meantime, however, publishers unprepared for change in the book industry are in for some fun.
The Electronic Bookstore