Andrew Franklin: Parasites on the back of real books

There is a clear conflict of interests between representing an author's case and selling their books

The literary agent Andrew Wylie, sometimes called The Jackal, though never by authors or publishers, has announced that he has set up a company to publish e-books. Publishers in London and New York are up in arms and the grand-daddy of them all, Random House, has said it won't do business with him again. HarperCollins have condemned the move and publishers are lining up to stick the boot in. What is all the fuss about?

E-books are finally taking off as pundits have predicted they would for more than a decade. Still very small in the UK, sales are growing dramatically from an invisibly small base. Hachette UK (owners of Little Brown, Hodder Headline and Orion) says that electronic sales now account for eight per cent of their turnover. Other, more secretive, publishers cannot be far away.

It is the iPad that is changing everything here, although in the United States, Amazon's Kindle has been much more successful, so much so that last week Amazon announced that they were selling 143 e-books for every 100 hardbacks they shifted. Various self-appointed experts predict that e-books will be 25-50 per cent of the reading market within this decade. So there is everything to fight for.

Andrew Wylie is right about one thing: no one owes publishers a living. If publishers aren't serving authors and readers (including readers of e-books) they should go down with their backs to the wall. But will Wylie's operation serve authors better? Almost certainly not. They will almost certainly get higher royalties (though Wylie is giving nothing away about how generous – or mean – he is being). But this misses a golden business principle: it is more important to look at the size of the cake than worry about the thickness of the slice.

Wylie has signed a two-year exclusive deal with Amazon so his authors are cut out from Apple's iBookstore, Waterstones.com, Google and all the other burgeoning e-retailers. What publisher could satisfy any author or their agent if they said they would only sell to WH Smith? Most of Wylie's authors won't complain because they're dead. But if Evelyn Waugh, Vladimir Nabokov, Norman Mailer, John Cheever, or Jorge Luis Borges were still around they might be exceptionally articulate grumblers.

And publishers are right to be furious because e-books are not a separate market from physical books. They are wholly dependent on physical book sales. Some would say they are parasitical on them. The editorial work, design, marketing and selling are all done for physical books, and e-books sell on their back. This might change but it shows no signs of doing so yet.

Bookshops have been vocal complaining about potential customers who visit their shops, write down lists of titles and then order them from Amazon or the iBookstore rather than going out laden with shopping bags. To date there has been not a single successful "pure" e-book, published without a physical book.

E-book sales may encourage some new readers but the great majority of sales are substitutional. Most people are making the choice between e-book or physical book: it would be pretty odd to want both. So for every e-book the Wylie imprint sells, the real publisher, Penguin, Random House or Faber, will sell one fewer. But their costs will not go down because they will continue to do all the editorial, sales and marketing work for the physical books.

Is the agent-publisher the way forward? Almost certainly not. There is a clear conflict of interests between representing an author's case and selling their books. If you were buying a flat, you would take a dim view of the seller who also wanted to be your solicitor.

Publishing is changing rapidly, and will change further, but it won't be replaced by one-stop-shopping agents. Even dead authors will wake up to the problems of that.

Andrew Franklin is publisher and managing director of Profile Books