Amanda Hocking, the now-famous indie writer, has an interesting post where she says, “Here’s another thing I don’t understand: The way people keep throwing my name around and saying publishers are “terrified” of me and that I really showed them.” They aren’t terrified of her, specifically, as an individual (which she notes), but they are scared of her as a symbol and what she represents: a world where you don’t need publishers as much. She just happens to be an early example of how to make it financially via ebooks. At the moment, publishers have one big advantage that no writer, no matter how skills, can replicate: distribution. If you take that advantage away, a lot of the raisons d’état of publishers goes away.

Later, she says: “And just so we’re clear – ebooks make up at best 20% of the market.” But that’s up from virtually nothing in 2006. In 2001, discs sold on shiny platters made up the vast majority of the music business. In 2011, the “music business” as it existed from the days of the first records until about ten years ago is gone. You still need a big record label if you want to be Lady Gaga, but almost no one else does. Music industry profits have never recovered. This is great for people who want to listen to music but not so good for people who want to make money from music, especially if they can’t actually make music themselves. Media executives, including publishers, know this, which is why they’re watching what happens in book-land so carefully.

“Nobody knows what makes one book a bestseller. Publishers and agents like to pretend they do, but if they did, they would only publish best sellers, and they don’t.” That’s the scariest thing of all: no one knows. This has long been a truism in lots of forms of art. William Goldman’s Adventures in the Screen Trade came in 1982, if I recall correctly, and he said almost the same thing about movies: “Nobody knows anything. Not one person in the entire motion picture field knows for a certainty what’s going to work. Every time out it’s a guess—and, if you’re lucky, an educated one.” Or, Scott Adams, if you prefer someone with even less movie experience than Goldman or me:

Evaluating whether an idea is good enough for a movie is a bit like an automobile expert saying a certain brand of car doesn’t taste good. It’s absurd. You can only hold the opinion that a particular movie concept is a good or bad idea if you don’t understand what a movie is or what an idea is.

Movies have a slight advantage in that making movies technically pretty (which requires foley artists, on-set locations, lots of actors, careful detail to light, and lots of other stuff) is still pretty expensive. A lot of people also still go to movie theaters, so that advantage hasn’t completely disappeared. With books, all you really have is the book.

There are probably lots of undiscovered bestsellers out there, which, if writers get tired of submitting to agents and all the rest, they can now relatively cheaply and easily put online and let the market sort it out. Again: if enough people succeed at this, publishers go away.

Big publishers might be dying in the way Paul Graham describes Microsoft being dead. Microsoft will continue making lots of money for the foreseeable future, but it’s no longer leading anything in tech. (Enough people misinterpreted him that he wrote the Cliff’s Notes version too.) They’re not dying in the sense that whoever owns Alfred A. Knopf is going to be gone tomorrow, or the day after. But if their relevance starts to slip, they could fail with surprising speed. Look at what happened to Blockbuster: Netflix undermined them, and within a decade of Netflix on the scene all the Blockbusters near me have “going out of business” signs on them.

Back to Hocking: “Traditional publishing and indie publishing aren’t all that different, and I don’t think people realize that.” They might not be as different as some make them out to be, but from the perspective of shareholders they’re very, very different, in that shareholders can make money off publishers in one model and they probably can’t in the same way in the other. From the perspective of the writer, she’s certainly right, as she goes on to say: writers still have to put in an enormous amount of time and effort. As I’m only too aware.

I’m not the only one saying this. Here’s what Kevin Kelly says: “I don’t think publishers are ready for how low book prices will go. It seems insane, dangerous, life threatening, but inevitable.” It’s scary because $.99 isn’t going to support cushy Manhattan offices, long lunches, interns, marketing departments, and everything else modern publishers do. It’s not going to support 5–10% growth every year, which most investors assume before they part with their money. As mentioned elsewhere, publishers can see what trend lines are like and they’ve all read The Innovator’s Dilemma, like everyone else who does anything business-related. The upshot of the book is that incumbents often recognize disruptive technologies and products and then fail to respond to them effectively anyway. Think of Microsoft and the Internet, or record labels and the Internet, or newspapers and the Internet. Yeah, I keep using “the Internet” as an example, but you can see this in other areas, like American car companies when the Japanese first entered the U.S. market. Microsoft is probably the best example, since the famous “Cornell is WIRED!” e-mail alerted them to the threat, and they responded with Internet Explorer.

Today, 17 years after that e-mail was sent, I’m typing this on an iMac, Google and Facebook are arguably the dominant Internet players, and Microsoft failed utterly to foresee the importance of search, like a lot of other people. Publishers know that they can’t really compete with $.99 – $2.99 ebooks, and that, in most genres, readers just aren’t that picky. Publishers know the sound of a market shifting underneath them because some of them have been to Harvard Business School or hired people who have been to tell them about the history of companies failing to adapt to new models and environments. That’s scary.

I pay some attention to this stuff because I’m about to take the latest plunge in the crocodile pit that is agent land. If I fail, sometime in the next two years or so I’ll probably say, “Screw it, I’m self-publishing.” Chances are, I’ll be the person who wastes a lot of money and time doing so, but that’s also true of traditional publishing. There’s still that small chance I’ll succeed. Although I’m hardly the best judge of these things, I think I would want to read my own novels, and at some point, I won’t have anything to lose by not self-publishing, if the choice is between that and letting my work sit on my hard drive. There might be other people who want to read my work too. Publishers don’t know. I don’t know. But Amazon, Barnes and Noble, and Apple will make it easier for me to find out than Alfred A. Knopf ever did.