This long post is a primer on what’s happening / happened to publishing, and also some models for revenue going forward… The models, of course, are based on the same grey / black market economies that predict most major economic shifts — thus the title.

A friend of mine, an experienced editor at a major New York publishing company is about to go back to school – back to business school – because he doesn’t see any future for himself in book publishing. And while bookstores and print publishing are under assault, digital sales are taking off, and expected to grow 400-500% in the next few years. This rate of change is simply unsustainable for any industry, let alone one as ossified as traditional publishing.

It’s easy to look at the currently collapsed or collapsing culture industries, like music or newspapers, and draw parallels to book publishing. That narrative goes something like this: huge publishing conglomerates will cease to be able to justify the massive advances created by book auctions, they’ll fragment into independent publishing companies, small autonomous imprints, print-on-demand houses, and self-publishing websites. Authors will increasingly be responsible for building and nurturing their own fan bases and ‘brands’ by engaging in social media and lots of touring. Small labels will rise. Prices will fall. Everyone will download their books and everyone will be happy except for the bookstores and the big five. Paper books will still be sold, but mostly in Walmarts and airports – making them just as ephemeral as their digital counterparts – or as expensive, highly-designed objets d’art destined for the glass-topped coffee tables of trendy condos.

But, as attractive as this scenario is (unless you’re a major publishing house or Barnes-and-Noble executive), there’s a fundamental flaw with this line of reasoning. Margaret Atwood put it best: No one goes to a show to see an author dressed like a half-nude alien explode out of a giant egg and read their latest work. Music is performative; reading is solitary.

Or is it? Richard Nash, the former editor of Soft Skull Press, points out that we know more about reading thanks to Oprah than we like to admit. Oprah showed us that reading is, fundamentally (and like most things that humans do) a social activity. The quality or content of the book itself is secondary to the community and the conversation that exists around that book. Which is not to say you don’t need to read to take part – the experience of reading is still, fundamentally, having another person’s voice inside of your head for fifteen hours plus. But once you’ve had that voice in you for so long, you want to share it, discuss it, tell your own stories about it. Just as you can listen to music when you’re alone, you can read with others.

And yet, how do you remunerate authors if they can’t expect to go on tour and make thousands from live shows? When CD sales began to plummet, musicians were able to stay in business through a combination of singles sales and live shows. A book takes at least as long to create as a record does, but singles don’t exist, and good luck getting folks to pay for live author shows. Combine these grim realities with the fact that ebook piracy makes it so easy to download books that, in just fifteen minutes, I downloaded, for free, the complete University Press (Harvard, Cambridge, Oxford, Yale, etc…) catalogs – over 2,500 books – onto my laptop. Is the golden age of the 100,000 word narrative coming to a close?

Interestingly enough, people who have tablet PCs actually spend more time reading than those who do not. Furthermore, people with tablets read longer pieces – the internet shrunk our attention span for long-form journalism, presumably because no one liked to read on a screen. Turns out the screen wasn’t the problem – the desk was.

Movie studios and publishing houses also operate with a surprisingly marxist bent – creating a shared-risk environment for creative products: A movie studio can release ten stinkers, so long as they have a mega-blockbuster to offset all those losses. Ditto with publishing houses and bestselling books. And since these companies have extensive backlists of IP, old works also subsidize the new. But, at least with literature, we’re moving towards a more ‘democratic’ landscape exemplified by the self-publishing scene. Top-selling self-published writers can make over $200,000 / month, while others make just a few bucks.

What do we do with all these data points? The means of distribution for written works is available to anyone, not just publishers. Books are social artifacts. The music industry model will not work to pay authors. The movie industry model will not work to pay authors. People who read digitally read more, and read longer pieces (so demand is up). People won’t pay $25 / book in digital form. Everyone I know still wants to write a book…

So let’s consider porn, cyberterrorism and the Russian Mob.

‘Business is ‘just business’: a scramble for profit. Right? Well that might describe crime; it certainly doesn’t describe business. Ethics aren’t just important in business. They are the whole point of business.’ (Richard Branson, 2008). And while porn isn’t crime, it is a ‘less encumbered’ business – and, along with travel agencies, it was one of the internet’s first true victims. Also, unlike other culture industries, there’s less pretentiousness around ‘good porn’ vs. ‘bad porn’… To most of us, porn is porn. And that’s how the industry has been transformed – the studios were scared that with all the free porn on the internet, people would stop paying for porn. What they discovered, was that people who pay for porn, still pay for porn. Enthusiasts, fetishists, collectors – that same ten percent of the population or so who was paying for porn before it became free and ubiquitous. It’s just that now, people who didn’t (and still don’t) pay for porn have access to it, too.

Is this the model for literature? People spend, on average, seven minutes watching a porno. They spend fifteen hours with a book. For most people who consume free porn, it’s fairly interchangeable – it’s only the enthusiasts who really have carefully defined tastes. The experience is solitary or perhaps shared with one other. Maybe the most popular porn sites, the ‘tube sites’ like youporn and porntube, could be a model for genre fiction – free, mostly interchangeable trade paperbacks or romance novels. Books sorted by popularity and ratings, maybe even prefaced by a quick, twenty-second video review. All these books would be free, but if you’re a real collector, if you want the good stuff – the Italo Calvino or Steven King stuff – for that you must pay a premium. Publishing companies would become even more dependent on blockbusters – but everything else would be free.

Cyberterrorism shows us the opposite approach. Not really cyberterrorism, though – that’s just what the giant copyright conglomerates like the RIAA call it – so determined to criminalize every thirteen year-old for ‘illegally’ downloading the latest Lady Gaga album, they throw around gitmo-worthy sobriquets. I guess ‘pirate’ sounds too cool. It’s incredible that organizations like the RIAA haven’t learned that such criminalization never works – whenever it’s easier to download a movie or an album that’s completely DRM-free and completely shareable then it is to buy it, that’s exactly, no matter how hard you shake your finger at them, what people will do. I wonder what the long-term effects will be of creating a society where almost every single young citizen is, openly and actively, breaking the law.

On the other hand, Netflix has shown us that at the right price point, with the right curation and recommendation technology, people will be more than happy to follow the rules. For the first time this past week, Netflix has eclipsed bit-torrent as the source of most internet traffic. What would a Netflix of reading look like? A place where books could be borrowed, for free and for a limited amount of time, by any member? It would look a lot like a library, actually. But I’ve tried the digital libraries that lend out ebooks and .mobi files – and they’re all pretty lacking. They’re disorganized and suffer from a lack of content. How long before a for-profit digital library emerges, with a great catalog of ebooks, a recommendation system, and a low-cost subscription service? The technology and legalities are already in place, so I think it’s probably months, not years before we see this occur – and it will transform publishing when it does. Will it brutalize the industry or reinforce it? Netflix gives some financial reward to independent filmmakers, but generally not nearly enough to cover even modest production costs…

But all of these ideas and trends are going to be at the mercy of the Russian Mob. The princely, unfettered, free-market capitalism that emerged when the Soviet Union collapsed and that will emerge when publishing does the same. Don’t underestimate its power – it’s made Moscow the most expensive city in the world, after all. And also one of the least egalitarian ones. Russian mob rule says that when literature changes, the new regimes will be controlled by the same people who wielded power in the old, and that public good and decent taste will be replaced by the quickest way to make a few people obscenely wealthy. This model will be fine for celebrity writers, but for the vast majority of interesting or artistic voices, it doesn’t bode well. The best thing about the glorious twentieth-century of literature is not the bestsellers of the 1990s, but all the odd and wonderful margins. The fact that James Salter and Phillip K. Dick and Thomas Pynchon can/could pay their bills by writing.

There are stigmas involved, too – ones that ask society to celebrate the novelist and shun the pre-school teacher and that are bad for novelist and teacher alike. These stigmas turn teachers into failed novelists, novelists into barristas, and celebrity autobiographies into viable business plans.

There are six billion people on this planet – and most books find an audience of a few hundred to a few thousand… and what is so bad about that? Why shouldn’t we take a writer seriously if he or she makes even a dozen people smile or laugh or think? Why shouldn’t we support his or her desire to sit, quietly, and compose? Domestic unemployment is a problem – why not try and build a system that pays more people to create? In the last decade, technology has already begun to reshape music, movies and journalism – but now that literature is about to fall, there is a very real opportunity to determine what this new culture industry looks like. Left to its own devices, it will go the way of the Russian mob (probably with a strong side of Netflix and some porn-style genre sites thrown in). Will the ‘shared-risk’ created by 20th Century publishing disappear? Will authors band together and create digital cooperatives of their own? The revolution is coming. And since it coincides with the rise of the tablet – and the dawn of the ‘post pc’ world – it will be simple, accessible and profound.