Henry Blodget Aims to "Save the Book Publishing Industry"

It's been fun watching this one play out over the last couple of days.  Former securities analyst and blogger Henry Blodget wrote this post on how to save the book publishing industry.

For the record, although I don't think we need to be "saved", Blodget makes some excellent points but glosses over one critical fact: eBook devices remain prohibitively expensive for the masses, at least for now.  While it's easy to pick apart Blodget's P&L, and you'll see several follow-up comments do just that, there's no doubt that widespread adoption of e-readers would enable some very interesting scenarios.

I tried to take things in that direction with this post over the weekend, for example.  But until we can come up with a cellphone model where the bulk of the device's cost is buried somewhere else in the transaction I don't think we'll get to the adoption level that's required to make Blodget's model work.

Then there's the question of "cheapening the brand" or "under-pricing the intellectual property."  After all, if publishers have been able to sell a print book for $25 in the past, why should they "give it away for $5?"  The answer, of course, is that they'll more than "make it up in volume", which is mostly true...again, as long as the device base exists.

So it's a bit of a chicken-and-egg problem.  Publishers are wary until there's an enormous device base and the base probably won't get huge until the device/e-book prices drop.  Amazon is trying to help supply the data though: The Kindle bestseller list is full of sub-$10 products and you can bet Amazon is collecting data to show publishers how $10 and $5 are important pricing thresholds in the e-book world.