Seth Godin: A Canary in the Coal Mine for Publishers and Book Retailers

Last Updated Aug 24, 2010 2:52 PM EDT

Management guru author Seth Godin has ditched his publisher, Portfolio (a Penguin Group imprint), after a dozen books with the company. Usually when an author leaves, it's for another publisher that promises more money, better editing, or whatever it takes to snag a big name. But Godin is turning his back completely on traditional publishing, creating e-books and print-on-demand paper titles and selling directly to his fans.

Authors have long complained about publishers -- low advances, slow action, the amount of promotion they expect writers to do. But some big names are pulling the ripcords and either striking out into independent waters or making a clean break, all though e-books.

It's a huge threat to publishers, which depend both on blockbuster authors that bring in cash and negotiating leverage with resellers and backlist books that sell in small or modest amounts, year in and year out. If those people can walk away, the publishing industry is in real trouble. And the twist is that authors who develop regular contact with their audiences might be able to leave such resellers as Amazon (AMZN), Barnes & Noble (BKS), Borders (BGP), and Apple (AAPL) behind. Talk about the potential to turn an entire industry upside down.

Godin's point is that he no longer needs a traditional publisher because he can reach his audience directly through his blog. But that's just the enabling factor. The issue is that, given current technology, the interests of an author and a publisher or reseller can sharply diverge:

As the medium changes, publishers are on the defensive.... I honestly can't think of a single traditional book publisher who has led the development of a successful marketplace/marketing innovation in the last decade. The question asked by the corporate suits always seems to be, "how is this change in the marketplace going to hurt our core business?" To be succinct: I'm not sure that I serve my audience (you) by worrying about how a new approach is going to help or hurt Barnes & Noble.

My audience does things like buy five or ten copies at a time and distribute them to friends and co-workers. They (you) forward blog posts and PDFs. They join online discussion forums. None of these things are supported by the core of the current corporate publishing model.

Once there is electronic publishing and on-demand printing at a reasonable price, the author's need for the publisher drops dramatically, given that advances have come way down and authors are expected to do the majority of work to promote their books. Combine that with a direct relationship with readers, and the reseller can often go out the window as well. In the last paragraph of his post, Godin writes, "If you're among the majority reading this that has never bought one of my books in a bookstore, not much will change." The majority of his readers already buy directly from him.

Think of other authors who could easily create this sort of direct selling: J.K. Rowling, Stephen King, Stephanie Meyer, James Patterson, Danielle Steele. Others with the potential power to go direct would be top genre writers, whether in romance, business, or cooking. The economics could be overwhelmingly in the author's favor, because getting all the profit available from a title would be so much more than traditional royalty arrangements that they could sell far fewer copies and still make a lot more money.

Resellers will have better luck with midlist authors, who depend on the chance to sell to new clients. Still, even they will be able to move away from publishers. Thriller author Joe Konrath blogged last week that he sells 200 e-books a day through Amazon -- though only 100 a month through Apple.

Right now, readers are voting with their wallets. They're making the e-book market grow at an incredible rate; up 6% in just 12 months. That's over a 200% sales increase in e-books.

Publishers are publishing fewer books, dropping authors, and seem to be pushing forward with e-books with no real business plan.

Authors may eventually find that dumping publishers is their only option, if they want to make a living. As for the resellers -- if top names begin to take sales direct to increase their profit margins, they might also find their strategies shaken to the core.

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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.