Newspapers, magazines, book publishers, television networks and movie studios need only examine the bumpy evolution of the music industry brought on by the iPod to see what’s potentially on the horizon for them.

Eight and a half years after the iPod’s introduction, the way people listen to music has significantly changed: Digital music revenues are expected to surpass those from CD sales.

It’s too early to know whether the iPad will incite such drastic change for the content it displays, but one thing is certain: The days of counting on big profits from hardcover books, print subscriptions, ratings-based ad revenues and opening-weekend box office are over.

While content remains highly valued, its consumption is becoming increasingly...

One of the biggest pricing dramas of 2009 is taking place as we speak -- the war between Wal-Mart and Amazon on top-selling hardcover books.

Wal-Mart launched the war last week by offering 10 highly anticipated titles (by well-known authors including John Grisham, Stephen King, Dean Koonz and Sarah Palin) for $10. After a few back-and-forth volleys, Wal-Mart is now selling the titles for $8.99 (free shipping) and Amazon has a $9 price (free shipping only if total purchases are $25 or more).

At these prices, both retailers are losing money on each sale. The traditional wholesale price of books is set at 50% of list price (regardless of what price retailers ultimately decide to charge). Thus, with a list price of $35 for King's new novel "Under the Dome," Amazon and Wal-Mart are losing in the neighborhood of $8.50 per book sold.

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In last week's New York Times, Motoko Rich and Brad Stone wrote that “no topic is more hotly debated at the moment than the timing, pricing and ultimate impact of e-books on the financial health of publishers and retailers.”

The primary debate centers on how low-priced ($9.99) digital books affect demand for more expensive ($25+) hardcover books. Since digital books are more profitable to publishers, my response is “who cares?”

The norm in the publishing industry is to set a wholesale price equal to 50% of the hardcover list price. A $25 list price yields a $12.50 wholesale price. Interestingly, publishers also sell e-books to retailers at the same 50% (of hardcover retail) price. Thus, when Amazon sells a popular e-book for $9.99, it is usually losing money on each sale.

E-books are more profitable than their hardcover counterparts for...