The big 5 are floundering, in a time when more books than ever are being sold, their share of the market is dwindling and they don’t know what to do, or—more likely—are too afraid to do what’s needed.
1) Independent publishers today use the very same people to do things like editing, layout and design, production, and distribution that the big 5 do, but independents only pay for the hours used, the books sold, and have little in the way of costly infrastructure to maintain.
2) The big 5 have become cautious—always a sign that a business is on the way out, since you’re either growing or dying. They’ve narrowed what they publish, dreaming—somehow—that they can predict what people will want and offering fewer and fewer real innovations. You want action and killing and sex, go to them, but don’t expect anything out of the ordinary beyond that.
3) While the content and sales are increasing, one player is rapidly trying to assert a near monopoly on book sales, and people are letting them do it. There is nothing special about Amazon. They’re middlemen with a few innovations here and there, but they are becoming more heavy handed and less customer focused as they get big. There are competitors out there: Kobo, Smashwords, Barnes & Nobel, but they don’t have Amazon’s size. We publishers could just as easily direct our works to them first. Amazon wants to dictate price and with their select program, they want to shut off the competition’s ability to offer the product.
IMO, what the big 5 and Apple and the distributors should do is to form an alliance to compete. What the big 5 still retain is the machine to get the word out on which books to read—they have a stranglehold on some of the most important reviewing organizations. They could form partnerships with hundreds or even thousands of independent publishers and in exchange for a percentage of the sales and the ability to check quality (not content or plot) , they could throw their weight behind quality books of all different sorts. The indies would still be bearing the cost of creation, editing, production and at least half of (and maybe all of) the marketing, while the big publisher verifies quality and pushes the best products through. It would gain them sales and almost pure profit, which they could focus on increasing the competition for sales outlets, even buying or leveraging sites like Wattpad for reviews and sampling of product.
Amazon is trying to dictate terms, but they create no content and offer only a few products of their own. Publishers (especially groups of competing publisher networks) have the ability to compete and to do so very effectively. At the same time, Amazon still has a great platform and can continue to compete and offer new solutions to counter-balance any shift in power. I like Amazon, too, but I like competition better.