They would start signing ten times the number of authors they currently sign. And here’s how it might work:
For every author currently receiving a traditional print/e-book deal, they would sign another handful that were offered an e-book only deal. The advances would be small, in the $1,000 to $2,000 range. The author would receive editing (hired out, not in-house, to provide flexibility and save costs) and a snazzy cover (also hired out). The contract would secure rights for the print book if sales reach a certain figure over a certain time-frame, as well as the rights to the next book, if desired.
I think this would be a boon to the big publishers. What they would get is a near-zero-cost stable of writers whose appeal would be tested on the open market. Whatever hits big gets bumped up to a print deal.
Right now they are scooping up bestselling indies but at a very steep cost. Most of us would have gladly signed with a digital imprint at a big house back when we were just getting started. $1,000 and the promise of editing/cover/prestige would have meant a lot at the time. And the publisher would get the aggregate promotional efforts of all these extra authors while tapping into the long tail of the market.
These would be manuscripts that passed editorial rigor, of course. Let’s say the outlay for each book came to $5,000 after reading/editing/design. At $3.99, that means a few thousand lifetime sales turns a profit. Surely some of these would sell in the tens of thousands, and one or two would do even better. And you’ve got the rights for just about nothing.
Baseball works similarly to this. Think of it as the farm league. If publishers weren’t so terrified to get out of the business of selling trees, I think some sort of e-only plan like this would make great financial sense. It’ll be fun to see who thinks of or implements it first!