It’s the End of the Book World as We Know It — And publishers should feel fine.

Publishers have been battling Amazon (AMZN) over the price of e-books, only to get outflanked by Wal-Mart (WMT) last week on the bread-and-butter best-sellers. In an effort to boost traffic on Wal-Mart.com, the Bentonville, Ark., retailer is offering select hardcovers that are among the most anticipated of the season for $8.99. Who saw that coming?

Not the publishing world. Book people are easily spooked. And their first line of defense is to hyperventilate. That’s what literary agent David Gernert did in the New York Times when he claimed, “[P]ublishing as we know it is over” if readers come to expect hardcover best-sellers for $9 at Wal-Mart, Amazon, and Target (TGT) (which matched the offer.) He feared the low price would turn readers off to literary books at $25: “I think we underestimate the effect to which extremely discounted best-sellers take the consumer’s attention away from emerging writers.” But instead of fretting over first novels, publishers and agents should latch on to this development as a way to restructure the economics of the industry to everyone’s benefit.

In truth, there are no barriers to success in the book business. Publishing is ruthlessly efficient. Books that excite readers take off; those that don’t disappear fast. There’s no evidence that John Grisham crowds out the great American novel. In fact, it’s quite the reverse. What the industry lacks are products that excite readers. Where publishing is brutally inefficient is the process by which it selects products and allocates resources. And those toxic assets—all the unearned advances—are paid off by the best-selling authors. Stephen King, John Grisham, and the Freakonomics guys cover the cost of failed books.

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Why Big Books Still Matter

Dan Gross, my colleague at Newsweek and Slate, pinged me the other morning after he had read the reports that Sarah Palin’s new book—suddenly announced for next month—would not be available as an e-book. Gross, a pioneer in e-book publishing long before Tina Brown, had noticed that Palin’s publisher was following Ted Kennedy’s by holding off on the e-book format. Ever alive to a budding trend, Gross figured two important instances presaged something more than a coincidence. Could I, Dan wanted to know, provide a third case, and was this preference on the part of publishers for withholding the e-book on the biggest titles an economic issue? (Gross’ column on this point can be found here.)

I replied that I did have a third example that proved the rule—Dan Brown’s The Lost Symbol—but the principle it revealed was less about the digital format and more about the role physical books play in the publishing industry.

Dan Brown’s publisher had been happy to supply the title in digital form. That allowed The Lost Symbol to sell more digital copies on the first day at Amazon than physical copies. This is because the thing of great value on the first day of sales was actually reading the book. (Merely owning it was not enough.) That’s something you can do whether you’ve read the book on paper or your Kindle.

With a big personality book, however, having read the book is far less important than owning it. These books are talismans, powerful objects that carry the aura of the person they’re associated with. That aura doesn’t attach to an e-book. You need something more substantial, at least something physical. When you buy a Kindle edition of a book, no one knows you’ve got it, no one can see you read it across an airplane aisle, and no one can admire it on your coffee table.

Source: The Big Money (Slate)