The other obvious parallel is the newspapers jumping into the online world, making everything free based on expert predictions that advertising revenue would be profitable enough to support everything. These predictions, expert though they were, were made before Craigslist ate up all the classified ad revenue, and banner ads proved ineffective, leaving Google to scoop up most of the rest of the available ad revenue. Their speed to market has hurt them in some ways as they’ve now accustomed readers to expecting their product for free without having the sustainable business model they might have developed had they known what was going to happen.

Kent is right in that it’s important to remain aware of new technologies and developments, and to remain agile enough to move on them when warranted. David is right in that moving in a panic is rarely a good choice and that you can’t afford to try every new thing that catches your eye. I guess if you’re Google or Microsoft, you can afford to jump in everywhere and see what sticks to the wall. What’s a hundred million dollars wasted here or there, really when you’re making the profits they make (though it should be noted that neither has found much traction in all these experiments and both still rely heavily on the few products where they’ve always relied)? Speaking of this industry, perhaps a model to emulate is that of the company whose market cap passed Microsoft’s last week. Apple was not the first into the market for mp3 players, smartphones or tablet computers. In fact, they came very late to established fields for all three (though not terribly successful fields). Perhaps there is indeed value in moving slowly, understanding a market and technology before making that big gamble. Being a late mover certainly doesn’t seem to have hurt Apple.

My point is that if people make corporate bets based on different possible futures (for the industry, not just for the firm) then some will lose because their chosen future is not the one (and only one) that actually happens. For example, in this case ebooks taking over versus ebooks staying a niche product.

Technological revolutions are uncertain by nature so claims to know where the industry is going cannot be justified. In fact I try not to use the term strategic planning because one cannot plan in a revolution. It is a betting game.

What I think we’re not connecting on is that you think there’s one future and I think Michael and I believe there will be many different ones from the perspective of publishers. Some will thrive, some will not, some will maintain editorial dominance, some will find marketing dominance, and some will find a mix. Some may also find some new sort of production dominance, like Apple found with iPods.

By the way, you and Kent seem to be calling for radical action, not just the formulation of strategies. Are you under the impression that publishers are not formulating strategies at this time? I am quite sure they are.

Second I don’t know what you mean by production when you say “…publishers… have turned themselves into production and distribution companies and these services are not highly valued when it comes to ebooks…”

Publishers create the books that people buy, ebooks included. Are you claiming that this is somehow going to change? That books will no longer be produced by publishers? If so then the best strategy publishers can pursue is to get the hell out of the business and invest nothing in ebooks. Invest in diversifying away from publishing.

You folks don’t seem to understand that from one paragraph to the next you seem to be talking about entirely different futures. The one strategy a business cannot pursue is to prepare for all of them.

The better comparison is the music industry, which failed to adapt to online distribution fast enough. The sense of urgency you pick up in my writing is that I think the trade publishing industry is in a similar place to where the music industry was when the iPod hit. If trade publishers wait for all the data to come in as you suggest, it will be too late. While publishers may very well have until 2011 to digitize their front-list, digitization is not the problem that publishers should be worrying about. That is a production problem.

The problem that publishers should be worrying about is that they have turned themselves into production and distribution companies and these services are not highly valued when it comes to ebooks, much as they are not valued when it comes to music. Who cares if a recording company can get your CD in bins at music stores? When is the last time you were in a music store?

I think the writing is on the wall and don’t understand what further data is needed for publishers to begin formulating a digital strategy. And how would waiting change their strategic response in any way? Their brands still won’t resonate with consumers. Production and distribution still will not add value to online ebook distribution. Whether it takes 3 years or 5 for ebooks to become a “real” market is not important – these problems will still exist and as it will take years for publishers to implement strategies to respond to these problems, they do not have a lot of time even with the most conservative estimates.

And just to clarify, I am talking exclusively about trade book publishing. Other segments of the publishing industry – such as STM, legal, and high education – have very different challenges and operate in very different market environments.

My claim is that publishers had better start watching e-books and anticipating. There are logical and financial forces driving its growth that are hard to resist, and consumer expectations are shifting to support even faster growth. Things can change fast, adoption rates are fast, and the unprepared can be caught out.

I’ll continue to watch the projections. In a market that is subjective, in which projections can shape behavior and expectations, they carry a self-fulfilling force that wind power doesn’t.

The quote was indeed out of context but diagnostic none the less. I asked for the analytical basis for your projection and you gave me the Shatzkin links which reveal none. I suspect there is none.

It is a common fallacy to take rapid growth in a very small segment and project it into a massive takeover of some sort. In energy we see this with wind, which has maybe 3% market share (in generating capacity, not power sales, which are much less), and especially in solar power, which has round off market share.

US book sales are roughly $24 billion so $160 million is no market, a novelty at this point, but well worth watching, which everyone is doing already. Your claim appears to be that the publishers doing the $24 billion should drop what they are doing and rush into this minuscule market. That is a prescription for disaster.

You still don’t understand my point about multiple possibilities. I am not suggesting that everybody do the same thing, far from it. My point is that most of what they do in this nascent market, at this point, is going to fail. Anybody jumping in big time should plan on that. There will be big winners for sure, but the first question anyone thinking of jumping in should ask is how much can I afford to lose? That is your risk capital.

For most firms my recommendation is to figure out how much it will cost to make your big sellers shovel ready, in the main formats, by Christmas 2011 (if that is even possible). Then watch the numbers, the real ones, not the “projections.” How fascist is that?

First of all, you’re quoting Shatzkin out of context. He stayed away from “real numbers” only around stating how many books published each year are new books, because it’s hard to discern how many are reissues. He states clearly that he’s making an approximation for good reasons. For the 25% figure, he turns to sales figures from publishers, from the iPad, from the Kindle, and other sources. So, I think you’re being disingenuous here, plain and simple.

These devices you call “readers” can be things like iPhones (widely adopted, with book apps being very popular). People read and buy books on iPhones, on Kindles, on iPads, and on other devices. And next month, the Kindle goes on sale at Target stores nationwide. E-readers have been around even longer in Europe. There is a large installed base of readers already, and it’s growing.

You then state, in an indefensible manner, that there is “no e-book market at this point, just a bubble of speculation.” In 2009, before the iPad, ebook sales revenues topped $160,000,000 in the US alone. In the first two months of 2010, ebook sales revenues amounted to $60,000,000+ in the US alone. Please, I’d like 10% of this non-market of which you speak, and if I’m going to invest “risk capital,” I’d be happy to do it in a market that’s cheap to enter, growing at a furious pace, and logically positioned to supplant large portions of an old market rife with inefficiencies and consumer pricing disadvantages.

As to your lovely bit of logic — “there is only one future” — I’m stunned at the idea fascism in that phrase. Who determines this “one future”? You? And what if the one future is filled with different firms running off in different directions — you know, like 3M, Ford, and GE ran off in different directions from a manufacturing base. Diversification is a good thing for most businesses. Was Rolls Royce foolish for diversifying into aircraft engines? Was 3M foolish for inventing the Post-it while also creating software divisions? Was IBM foolish for creating software services? Was Apple foolish for diversifying into music? Publishing now has more options than just putting ink on paper. I think that’s a good thing, and we will see some diversification. There will be failures, but a larger failure would be to force idea lock-in because you think there is only one future that applies to all, and to which all must apply.

Analysis should begin with the sales of readers, which are expensive, then books. We are talking about a huge short term consumer capital investment, in hard times. How many billions of dollars are we talking about? In fact it is the rush to buy e-readers, not e-books, that is likely to hit book sales in the short term.

2. There is already a sense of urgency, which is bordering on panic. There is no e-book market at this point, just a bubble of speculation. The danger for most firms is that they are going to over react and spend (and lose) their risk capital, if not more.

It is true that contradictory projections lead to different firms running off in different directions. Most will lose, because there is only one future.