Editor's Note: Who's Eating Your Cake?

You may have heard by now about author Stephen Covey's deal with Amazon, selling the exclusive electronic rights (via e-book publisher Rosetta Books and for a one-year period) to two of his titles, "The 7 Habits of Highly Effective People" and "Principle-Centered Leadership." You also may have heard (or been a voice among) the resounding, collective industry gasp.

The deal reportedly gives Covey 50 percent of the proceeds from the e-book's sale, compared to the 25 percent that many publishers offer, according to a Dec. 14 New York Times article. Another factor leading Covey to sign with Amazon, according to the article, was Amazon's intent to "heavily promote the e-book editions."

Covey's licensing deal brought behemoth questions to light in an industry currently venturing across completely unfamiliar terrain … at night … with what, at times, seems the equivalent of a match to guide its way.

Relationships Out the Window?
Besides some criticizing the business author's decision to prevent other retailers (including Borders, Barnes & Noble and Sony) from selling his e-books as bad business, bigger issues haunt the industry.

For starters, consumers should love this one: You can't buy the e-book at most e-tailers' sites where you can buy the print version. Nothing like further complicating an already-complicated digital landscape.

Also, obviously, Covey's longtime publisher (Simon & Schuster) was left out of the deal. Adam Rothberg, a spokesman for Simon & Schuster, told The NY Times, "Our position is that electronic editions of our backlist titles belong in the Simon & Schuster catalog, and we intend to protect our interests in those publications."

Covey's son commented that the Amazon deal did not reflect dissatisfaction with Simon & Schuster, but frankly, it's tough to see how the deal can be good for his relationship with the company.

Other author-publisher relationships are being tried by the battle over e-rights as well, and many publishers hold fast that e-rights are assumed under publishing rights.

What's that saying again … "Divided we …," something or other?

Amazon's Marketplace
People have feared an Amazon stranglehold on the market, being the largest e-booktailer (inventing words with "e" in them seems to be "in" today) and leading e-reader maker, and the Covey deal is just one more cause for concern.

In this issue's cover story, "The Future of the Industry: Whose Hands Is It In?", Innodata Isogen's Richard Rubin, author of a recent whitepaper about publishing strategies, poses, "If Amazon opens up a formal publishing arm and says, 'We are the biggest player out there,' … how can [a traditional publisher] compete with that?"

But I have to wonder why Amazon would want a publishing arm? It seems it already has its cake and is eating it, too—in fact, it may soon be eating your cake while you're not looking.

It doesn't have to invest up front in finding and developing authors and content. It doesn't have to project sales, print advance copies, store unsold inventory, or ship returns back and forth. And it seems to be able to price others' e-books however it wants and take a full share of the profits.

Moving Forward
I believe books (in any format) will always need publishers. They will need the skills offered by great editors (editing as well as market insights), as well as marketing know-how and resources. Without publishers, a marketplace flooded with every book ever written by every Joe Schmoe under the sun would be just that—flooded. Diamonds would, with few exceptions, get lost in the rough, with no one to find them, polish them up and present them to the marketplace.

Social media may help some titles, but word-of-mouth has to start somewhere; if no publishing company had gotten behind many authors (I could venture to guess that this would include Mr. Covey) in the first place, their books would never have been discovered by even a segment of the mass market.

A direct-to-Amazon approach might work for e-rights sales by name authors (though I'm curious how much Covey's sales will be impacted by not offering the e-book for sale anywhere except Amazon), but this is something publishers will likely make a priority at the negotiating table.

As you (and your authors) continue along this ominous frontier, it seems wise to make sure your actions don't negatively impact not only your relationships with longtime business partners and allies, but the rest of the industry. It is one thing to be a leader, but another to lead others into a dark cave where a lion awaits.