Long-term there’s no future in printed books. They’ll be like vinyl: pricey and for collectors only. 95% of people will read digitally. Everybody in publishing knows this but most are in denial about it because moving to becoming a digital company means laying off like 40% of our staffs. And the barriers to entry fall, too. We simply don’t want to think about it.

This anonymous email sent to Sarah Lacey, formerly of TechCrunch and more recently founder of PandoDaily, is full of interesting insights into the publishing industry's Amazon problem. It looks to me like it boils down to the fact that publishers spent so much time and money fighting the shift to e-books that Amazon has emerged, whether naturally or unnaturally (read: through deliberately anti-competitive tendencies or practices...), at the top of the game. We know they're making about $134 per Kindle Fire purchased. VentureBeat's Ben Popper cited reports that Amazon loses about $2 per Kindle Fire sold, but they may make an estimated $136 per Kindle Fire user. That strategy, of using the hardware as a loss leader and the content as the revenue source, is a very good one for the modern content industry in general.

Aggressive changes in strategy may allow some traditional publishers to make up for lost time, but those changes would probably require loss leaders, probably in the form of e-book prices meant to undercut Amazon, and sold in formats compatible with all e-readers. A market-wide shift to electronic publishing may mean job losses, as well, or at least a shift in what kind of workforce modern publishing will require. Jobs lost at publishing companies may be indirectly replaced by additional employment needs at services like web hosts, web designers, systems administrators, etc.

I don't want to see anyone lose their jobs, especially when things may be looking up, but the change in desired skills I wrote about last month is happening either way. Some types of employees are simply becoming more desireable in a modern business environment, and that change is driven in large part by the increasing ubiquity of internet access and lower barriers to entry. It's possible that the traditional publishing industry is far behind the curve on this shift, and due to catch up.

History tells us the traditional publishers are not probably not keen on the kind of bet-the-company strategy loss leader plans sometimes require, but it does look a lot better than simply surrendering to Amazon without a fight.

And that's exactly what publishers appear to be doing with their current strategy, or lack thereof.

[PS: I'm taking a course in antitrust law this semester, so expect more posts about monopoly and related topics.]

[PPS: If you haven't spent time at PandoDaily yet, do so now. It's a great new addition to the tech/start-up space.]