Ewan Morrison has previously argued his case that books are dead, referring to the ability of a writer to make a living writing in the new publishing world. That's not a bad article, by the way; you should probably bookmark that for later. In this new article he discusses self-publishing (specifically electronic self-publishing) in the context of a 'bubble':
All of this ebook talk is becoming a business in itself. Money is being made out of thin air in this strange new speculative meta-practice: there are seminars, conferences and courses springing up everywhere, even at the Society of Authors (a writers' union which, until recently, was largely against epublication). Television and radio programmes are being made about self-epublishing [...].
But all of this gives me an alarming sense of deja vu. There's another name for what happens when people start to make money out of speculation and hype: it's called a bubble. Like the dotcom bubble, the commercial real estate bubble, the subprime mortgage bubble, the credit bubble and the derivative trading bubble before it, the DIY epublishing bubble is inflating around us.
Ewan goes through a set of indicators of a bubble, and ties these back to the self-publishing industry, and all the services growing up around it. Below I've listed Ewan's seven stages of an economic bubble, which he adapted from Hyman Minsky, and I've exerpted a small piece from each of Ewan's analyses.
Before I shoot you into this long-ish list though, I'd like to address one of the points Ewan makes, regarding the 'race to the bottom' in pricing. I don't really see this, and previous articles I've posted here (eg. this one) indicate that there is a kind of 'quality' expectation associated with higher e-book pricing, one that an author can and should take advantage. Whether this effect sufficiently buffers the 'race to the bottom' argument I couldn't say.
Anyway, have a look at some overview paragraphs for each stage:
Stage 1 - Disturbance
Over the last decade, Amazon has undercut the big global publishing houses through a radical new structural approach to storage and distribution and grown so quickly that it forced them to renegotiate their pricing policies.
Stage 2 - Expansion/Prices Start to Increase
On first inspection, epublishing doesn't appear to fit the model here, as it's clear that the prices of ebooks are falling drastically [but...read the article for deeper analysis.]
Stage 3 - Euphoria/Easy Credit
The whole point of self-epublishing is that the market "brings in people who would not normally be there". Like the promise that we can all have an affordable home with a cheap mortgage, we are being told constantly by digital businesses and the media that we can all be writers and even be successful as writers.
Stage 4 - Over-trading/Prices Reach a Peak
Since epublishing started, the race to undercut competitors has accelerated at unforeseen speed. Blogs now give advice to start-up writers, telling them to give their work away for free to gain audience share and get reviews, and only then attempt to raise their prices.
Stage 5 - Market Reversal/Insider Profit Taking
The model of ebook success that's held up for everyone to copy is based on half-truths. Even those who are seen as ebook stars are actually transitional figures straddling the digital self-publishing and the mainstream camps.
Stage 6 - Financial Crisis
Already the stars of self-epublishing are leaving the system that launched them. Hocking signed a deal with Macmillan that gave her a $500,000 advance on four separate books in a series
Stage 7 - Revulsion/Lender of Last Resort
After a long year of trying to sell self-epublished books, attempting to self-promote on all available networking sites, and realising that they have been in competition with hundreds of thousands of newcomers just like them, the vast majority of the newly self-epublished authors discover that they have sold less than 100 books each.
It's a pretty compelling (and by extension depressing) read. My tiny excerpts don't do his analysis justice though, and may even misrepresent his more detailed arguments, so do please check the original out if it sounds of interest to you: http://www.guardian.co.uk/books/2012/jan/30/self-e-publishing-bubble-ewan-morrison