The topic is daunting. Imagine someone coming up to Gutenberg while he was working out the kinks on his first press and asking, “So, John, where’s this printing thing going?”

I’ve spent the last few years prowling in the digital space and am more or less up to speed on what’s happening now, but the future? That’s a whole other thing.

So I’m going to talk about the e-present. For some of you it will sound like the e-future. It’s not. It’s real. It’s here. Now. In fact, much of what I describe is the past…but it’s the recent past.

Whatever I say today, by tomorrow there will be significant developments! For five hundred years ink-on-paper has defined the business of publishing. It no longer does. We are witnessing and participating in a radical transformation of publishing.

The changes taking place are having a profound impact on everybody involved. I’ll use myself as an example. I’m a pretty bookish fellow. Books have informed my life since I began reading, and I cannot remember a time when I couldn’t read. I can’t remember learning to read. I can only remember reading. And I often wonder at the fact that for my entire professional life my job has been to read. How can that be? How wonderful!

So, I’m as emotionally invested in books as anybody can be.

Here are three examples that embody my emotional attachment to books; three codex-form books that I love more than most.

(A quick definition of terms: when we think about the concept book we generally mean words printed on paper and bound in the codex form, that is, separate sheets gathered together and   bound on one side with a cover.)

First book: A Tale of a Tub by Jonathan Swift, published in 1704. This copy is from the famous fifth printing, the first incorporating Swift’s corrections. It was printed in 1710. It is a thing of beauty and a wonder to behold. Rag paper. Letter-press printing. You can feel the indentations in the paper where the lead pressed against it three hundred years ago. The etchings are radiant. No book printed today reproduces images as vibrantly. It is hand bound, probably re-bound in the eighteenth century. Gilded top edge. Three-quarter leather binding. Marbled endpapers and cover panels. This little volume weighs three-quarters of a pound. It epitomizes the golden age of bookmaking. I love it because, to my mind, it perfectly embodies the concept book. I love it because it takes me back to my time as an academic, a student, when all I did for many years was read the classics, a wonderful time-out-of-time decade. I love it because it was given to me thirty years ago by a dear friend who died young of cystic fibrosis.

I don’t love it because of the content. It is virtually incomprehensible and isn’t read by anybody but the most committed academic scholars.

Second book: What Jamie Saw by Carolyn Coman, published in 1995. This edition is from the third printing, manufactured in 1996. It’s beautifully designed, decently printed on acid-free offset stock. Perfect bound (glued) in a three-piece case with paper-covered boards and a stamped cloth spine. The headbands are decorative. It does have a flat-back spine—a piece of board to stiffen the spine that makes it feel a tad more “bookish.” It has a full-color jacket with two shiny silver stickers on it. I love this book because it was one of only three books on my first list when I founded Front Street in 1994. I love it because it was named a Newbery Honor Book in 1996 and a National Book Award finalist in 1996. I love it because it then sold enough copies to help me fend off bankruptcy and keep my fledgling publishing company going. And I love it because I subsequently married the author… not because of this book, but it didn’t hurt! Oh, and I love the content. It’s a wonderful story.

Third book: POD by Stephen Wallenfels. I’ve lost count of the number of printings of the book. Not bad for a book published in 2010. Of course, it is a print-on-demand book, which means that each book is a printing in and of itself. One hundred books equals one hundred printings. It is beautifully designed, decently printed on acid-free offset stock. Perfect bound in a one-piece case covered in faux cloth. The headbands are decorative. The manufacturing specifications are typical of contemporary trade books. I love the book because it is the first book I published under my new imprint, namelos. I love it because it has been well reviewed in all the usual places. I love it because we’ve licensed paperback rights, and foreign language rights to publishers in Australia, Germany, France, Spain, the Netherlands, Italy, and Brazil…so far. I love it because it has received considerable movie interest. I love it because it is already profitable and I have good reason to believe it will be even more profitable. And I love the content. It’s a really good story.

The reasons I “love” these three books are very different, and the only one of the three that I love because of the format is the three-hundred-year-old volume. The other two artifacts (that is, manufactured products) are, in comparison, shabby, adequate to the task of conveying the words of the authors long enough for someone to read them, and then subsequently only fit for shredding and recycling or for use as landfill, which is, in fact, where a great many of the books publishers print these days end up. In a few years, the books will fall apart. Loving these physical artifacts is akin to loving the paper cup you drank coffee out of this morning. What we really love about books is the content, which is unique and eternal, not the format, which is mass-produced and perishable. But we emotionally attach to objects.

Case in point. The other day I read an amazing book. Stoner by John Williams, originally published in 1965. Staggeringly beautiful writing. I read it on a Kindle. Actually, I read it on an iPad running the mobile Kindle for iPad app. When I finished it, I had a very strong impulse to order a hardcover copy. Let me quickly say that I crossed the digital divide the day I received the first Kindle e-reader from the first batch shipped, and I’m buying more books than I have in years, in digital, not print, form. But I really wanted a hardcover copy of Stoner. I was acutely aware of the contradictory impulse and attribute it to my lifelong passion for codex-form books. Rationally, I see very clearly that content matters, not form, but emotionally, I derive great pleasure and comfort from printed books. Unfortunately, the least expensive hardcover copy I could find cost over $250 and I successfully managed to repress my impulse.

The kids learning to read on screens now will be the first generation to slough off the emotional attachment to printed books. I don’t see this as a good thing. But in and of itself, it is not bad. It is what it is. It’s change. It’s different. I’m not here to deliver a eulogy or elegy for the codex-form book.

What about the e-present?

The first thing you need to understand is that publishers are not driving the change that is taking place. Until quite recently, most publishers had their heads firmly in the sand, hoping that the e-books phenomenon would go away, like pet rocks. A fad. Well, it’s not, and publishers are now doing everything they can to embrace the change. It’s hard because their business model is based on manufacturing processes, sales channels, and business practices that are rapidly changing. The driving force behind the digital revolution is hardware, machines—e-readers, tablet computers, cell phones—and it’s consumer electronics companies like Sony, Apple, and Hewlett-Packard who are making the machines. The other driving force is cloud-based computing services; that is, massive servers that store data that can be accessed via the internet. Technology companies like Google, Microsoft, and Apple dominate. A third force is Amazon, which stands alone as the largest bookstore in the world with its own proprietary hardware, the Kindle; software—the Kindle app for every imaginable mobile device; and now, cloud.

Hardware is the key to the developing digital publishing marketplace. You need a machine to read an e-book or run an app. No one really knows how many mobile devices are out there. Amazon won’t say how many Kindles they’ve sold. Apple constantly flaunts how many iPads/iPhones/iPod Touches are selling. Sony has been in the e-reader market longest, but they’re third in line behind Apple and Amazon. Barnes & Noble launched their Nook last year and claim that it is the best-selling product they’ve ever carried. The actual numbers of all these devices are not public.

According to data supplied by Forrester Research at the Digital Book Conference in NYC at the end of January 2010, “10.5 million people owned e-readers and 20 million people read e-books last year…approximately $1bn was spent last year on e-books; the firm is predicting that total will hit $1.3bn this year…They spoke to 35 executives representing 27 different companies (firms that are responsible for a total of 65% of overall publishing revenue in the US)…A little more than half— 53%—expected print book sales to fall in the next few years. And by 2014, half the executives expect e-books to be the dominant format.”

The e-reader market is expanding rapidly, spurred by the advent of tablet computers, but the growth of cell phone usage worldwide is even more important. As librarian Eli Neiburger has observed, “There are already more cell phones in the world than there are toilets.” And, increasingly, those cell phones are smartphones, which function as e-readers. Recent projections suggest that the number of smartphones and tablet computers will reach two billion in the next few years. Some of the largest growth is in remote areas without landlines (e.g., telephone or cable). These numbers are too large and too speculative to mean much to me, but I’ll tell you how the phenomenon was brought home. I work with an author who teaches on a Navajo reservation in Arizona. The closest bookstore is hundreds of miles away. Most of her students, and we’re talking some pretty underprivileged kids here, have smartphones and, thereby, functioning e-readers. That means they have instant access to the entire collection of Project Gutenberg. And kids don’t mind reading on screens. In fact, many prefer it.

If cell phones were guns, and e-books were bullets, we’d be appalled. Cell phones are more powerful than guns, and books are more powerful than bullets. We should be ecstatic. But most of the publishing industry isn’t. Why is that? The issue is distribution. Distribution is the game changer. Because of digital technology, books are available to virtually anyone, anywhere, at any time. And the incremental cost of distribution is approaching zero. Universal access at low cost matters. This is big-time change.

Distribution is the biggest change occurring in publishing. H.B. Fenn and Company, Canada’s largest book distributor and a stalwart in the industry for thirty years, started bankruptcy proceedings in February 2011. The company “encountered significant financial challenges due to the loss of distribution lines, shrinking margins and the significant shift to e-books,” all of which dramatically reduced the company’s revenues. Then Borders filed for bankruptcy and, subsequently, has been liquidated. The REDgroup, the largest distributor in Australia and New Zealand, also filed for bankruptcy protection.

What does it all mean? Simply and crudely stated, publishers are screwed, and libraries are screwed.

I’ll start with libraries and immediately direct you to a presentation given by the previously mentioned Eli Neiburger, a very smart librarian, at a virtual summit meeting titled “ebooks: Libraries at the Tipping Point,” sponsored by the editors of Library Journal. Neiburger’s talk, “How eBooks Impact Libraries” is available on YouTube and is widely known as the “Libraries Are Screwed” talk. Neiburger makes the point that libraries are “invested in the codex,” which has become “outmoded.” Not “obsolete” but “outmoded…replaced by an increasingly convenient format that usually becomes less expensive.” This is combined with a movement away from content that is ownable and sharable. “Libraries are in the business of owning and sharing content. The faster the format becomes outmoded, the faster libraries are screwed. The brand of libraries is books: the library is the ‘book temple.’” The library brand and identity and—even the facility—is built around the codex. The codex industry is crumbling. It won’t go away, but it will get much smaller. Neiburger compares it to two other technologies, the vinyl industry and (I love this) the candle industry. They still exist, but they are much smaller. Neiburger says, “The real problem is that the value of library collections are rooted in the worth of a local copy.” You go to a library to get a book. If they have a copy, you go away happy; if not, you go away sad. In cyberspace, everywhere is local. You can get a packet of information from the other side of the world in milliseconds. When transmission effectively becomes duplication—a copy—the need to store local copies goes away. Hence, libraries are screwed.

Let me make this real for you. Right now my Kindle has about 800 books loaded on it; it will hold up to 3,500 books. I can get pretty much anything I want in under a minute. Why would I go to a library? My Kindle is a library. And so is an iPad…and so is an iPhone.

Let me quickly say that I’m not worried about librarians. Librarians have always understood that their job is to provide content. For a long time content was stored in codex-form books, so librarians became inextricably associated with them. But whatever emotional attachment librarians have to the codex format, delivering content is their job. They are in the vanguard of people who are figuring out how to accommodate the digital transformation. We may not need buildings full of books, but we’ll always need librarians to organize, track, and deliver content.

Publishers are screwed because from the very beginning of trade publishing our business model has been based on controlling the acquisition, development, manufacture, and distribution of content. Heretofore, publishers have found the content, contracted with the authors and artists to control the rights, paid for manufacturing and warehousing, contracted for sales channels (i.e., wholesalers and bookstores), and distributed the books to them. We also traditionally control the major publicity outlets. People who self-publish don’t get reviewed in The New York Times, or Publishers Weekly, or School Library Journal, or The Horn Book Magazine.

Of course, publishers do more than that. Editors identify and cultivate talent. It’s what we are trained to do. It’s what we love to do. But our job is to do that profitably, and that means we can only do it if the books we publish pay for those other functions. It takes more and more sales to hit the numbers that make it work. The financial model is complex, but it all comes down to people buying physical copies. Even when you make money on licensing a foreign edition, let’s say to Germany, for the model to work, at some point Germans need to go into bookstores and buy copies. Books sell for a certain price. That price is based on paying for all those functions and all the parties involved including, of course, the author. At one end of the whole ball of twine is an author or artist. At the other end is an individual buying a physical codex-form book.

Cast your mind back to Neiburger’s assertion: when transmission becomes duplication, the need for a physical copy goes away. That’s not all bad news because substantial costs are incurred in creating and distributing physical copies, and PPB—paper, printing, and binding—is only part of those costs. Shipping is expensive. Paper has to be manufactured and shipped to the printer (often in China). The printed and bound books are shipped to the U.S. and then trucked from whichever coast they land on to the publishers’ warehouse, and then again to the wholesalers’ warehouse, and, again, to the bookstore, and, on average, 40% of the time, back to the publishers’ warehouse as returns that didn’t sell. Those returns get sold at a fraction of cost or pulped. Warehouse space is expensive. The staff that processes this is expensive. All these costs are included in the price of a book. And consumers have become accustomed to paying the price.

But consumers aren’t comfortable paying the same price for e-books. You can discuss the merits of the pricing argument all day, but whatever price is put on a book comes up against its perceived value, and people aren’t willing to pay as much for an e-book as for a print book. Ironically, e-books are substantially more profitable than print books because the incremental costs of duplication and distribution approximate zero, but publishers have legacy infrastructures—warehouses and staff—that need to be paid for, and as e-book sales cannibalize print book sales, publishers’ cash flow diminishes and their business model crumbles. Publishers are screwed, but they’ve got some time to dodge the bullet.

I’m not worried about publishers. I love this business because the people I’ve met in my forty years in it are the smartest, most curious, most engaging people imaginable. We will figure this out. It won’t be pretty, and for those of us who work in the industry, it likely will be traumatic. These are interesting times.

So publishers are screwed. Libraries are screwed. What about authors and illustrators?

Actually, those folks are golden. They are headed into the sunlit uplands. They are living the dream. They have the best of both worlds.

Here are the big technological developments that have turned the world into a writer’s oyster. I’m borrowing from another very smart man named Martyn Daniels, whose blog is called “Brave New World.” A while ago he gazed back over the first decade of the twenty-first century, reflecting on the ten big changes in technology that have enabled publishing to go digital. Here are five of the ten.

Apple’s iPhone revealed the potential of the smartphone, a mobile reading platform that has been accepted and adopted by readers. I would add, especially young readers.

Amazon’s Kindle defined the dedicated reading device, providing a single platform accessible across multiple devices and secure, instant access to the world’s largest catalog of titles.

“YouTube did for film what iTunes did for music.” That’s a direct quote from Daniels. YouTube has made us all video makers, and that makes us all “starmakers.”

Facebook makes us all publicists. Publishers always aspire to getting word-of-mouth going for their titles. Social networks are technologically enabled word-of-mouth.

Lightning Source is the leader in print-on-demand technology and enables anybody to manufacture print books one at a time for a viable price.

Daniels named proprietary brands because they are recognizable. More important is the generic functions they represent. A universal mobile reading platform/format, virtual distribution, viral video marketing, social networking for publicity, and print-on-demand manufacturing.

There has never been a more exciting or vibrant time in publishing. Microniche publishers are springing up by the bucketload. Before “publishing” got tied to a business model, it meant “to make public,” and now virtually anybody can do that.

We’ve all grown up with a notion about what it means to be published. It involves editors in New York reading a manuscript and offering to publish it, advances that don’t need to be paid back, publication dates, advance reading copies, reviews in trade journals, publication parties, book signings, and, if you’re lucky, awards and honors and big royalty checks. That still exists, but it is harder and harder to achieve.

Those things are nice, but they don’t define a writer, they don’t touch the essence of what a writer is. They are trappings. They are just like the paper and print and binding of a codex book. Form, not content. They are also increasingly outmoded. They’ll always be there, but at a much smaller level, available to fewer and fewer writers and illustrators. So if they can’t acquire them, should people stop writing or drawing? Should they abandon the effort to communicate their vision to readers? Or should they look for another way to get there?

What writers and artists do hasn’t changed. They create art with words and pictures. The tools don’t matter: charcoal on the wall of a cave, pixels on a screen. The format or platform doesn’t matter. If it’s done well, the reader or viewer will quickly lose any awareness of the medium as they immerse themselves in the content. And if you can get your work into the hands of readers, then the trappings don’t matter.

Most big publishers won’t touch a book that they project will sell fewer than 10,000 copies. There’s nothing wrong with a book that sells 5,000 copies, but it won’t pay for the functions the publisher provides, let alone the dividends the shareholders demand. What if a first book, or better yet, a second book is a 5,000-copy sale? Do you think it shouldn’t be published because it doesn’t hit the metric imposed by a corporate profit and loss statement? I don’t.

Should writers not try to find a traditional publisher? Of course not. But technology has provided some options.

So, folks, it is, indeed, a brave new world. The future? Well, strap yourself down. We are in for a ride and it may get bumpy! But it is my strong conviction that for authors and illustrators these are the best of times. Opportunities are accessible and endless. The old order is changing, making way for the new. When the new world was discovered, most people stayed put, enjoying the security and comfort of their established order. But a lot of people got on boats and ventured out of their comfort zone. For those of you whose comfort zone isn’t all that comfortable, be adventurers. You’ve got nothing to lose and everything to gain.

Article adapted from the author's speech on February 19, 2011, at the Austin SCBWI.