In the short term (1 to 3 years), the subdivision should first target executives, professionals, and technicians. They have the money and the motivation to support expensive early experiments. This phase will not generate much capital since the experiments and the learning process will be expensive.
During this first phase publishers should start trying to put their authors under long-term contract, just as Hollywood studios kept their actors in the thirties to fifties. Failing that, publishers must attract and maintain a stable source of new product--which means more emphasis on new product acquisition. Only with constant title turnover will they keep their readership.
Publishers should also renegotiate their author contracts to allow for electronic distribution. Putnam and Berkley have already adapted their contracts to keep electronic display rights [13]. Through ignorance of the market and the technology Random House sold the electronic display rights for its dictionary and other references for a mere $10,000 plus 10 percent of the royalties [54]. Random House expected to make $40,000 (this was the lower cap in the contract). They made over a million dollars.