According to Grandinetti, publishers are asking the wrong questions. “The real competition here is not, in our view, between the hardcover book and the e-book,” he says. “TV, movies, Web browsing, video games are all competing for people’s valuable time. And if the book doesn’t compete we think that over time the industry will suffer. Look at the price points of digital goods in other media. I read a newspaper this morning online, and it didn’t cost me anything. Look at the price of rental movies. Look at the price of music. In a lot of respects, teaching a customer to pay ten dollars for a digital book is a great accomplishment.”

In Grandinetti’s view, book publishers—like executives in other media—are making the same mistake the railroad companies made more than a century ago: thinking they were in the train business rather than the transportation business. To thrive, he believes, publishers have to reimagine the book as multimedia entertainment. David Rosenthal, the publisher of Simon & Schuster, says that his company is racing “to embed audio and video and other value-added features in e-books. It could be an author discussing his book, or a clip from a movie that touches on the book’s topic.” The other major publishers are working on similar projects, experimenting with music, video from news clips, and animation. Publishers hope that consumers will be willing to pay more for the added features. The iPad, Rosenthal says, “has opened up the possibility that we are no longer dealing with a static book. You have tremendous possibilities.”

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