The book industry believes we are about to enjoy an "ebook Christmas". One thing is for sure: it will not be a print-book Christmas. Gloom about the economy, plus a general perception that publishers are offering us more of the same, only worse (uninteresting "celebrities", chefs reheating the usual ingrethents), have depressed the market. But, in compensation to a certain extent, there is a new vogue for ebooks. In the US, ebooks are accounting for 20 per cent of leading publishers' revenues, and rising; in the UK, the figure is about i o per cent and rising. These figures will leap in the new year as people who unwrapped e-readers on 25 December play with their new gadgets. Amazon is pushing its Kindle reader and WHSmith is selling the Kobo, which is attached to a Canada-based retailer. Ebooks for the iPad and other tablets are also gaining in popularity.

These developments give publishers a modest satisfaction, offset by a great deal of fear. The focus ofthat fear at present is Amazon. The internet giant is by far the most aggressive book retailer they have ever dealt with, and, thanks to its dominance of ebook sales through the Kindle, it is also becoming the most powerful retailer that publishers have ever dealt with. Amazon uses its power largely to depress prices. Should we, as readers, be delighted that books, already widely discounted, are getting cheaper still as the digital revolution spreads? Or is the enthusiasm of giant retailers for pricecutting a mixed blessing at best, as it has been with food?

For my new Kobo e-reader, kindly sent to me by a PR firm, I have bought A D Miller's Booker-shortlisted novel, Snowdrops, for £4.31 and Robert Harris's thriller The Fear Index for £5.49. In print, Miller's novel is available in paperback at a recommended retail price (RRP) of £7.99. The Fear Index is a hardback with an RRP of £18.99. S° I have saved more than £17 on two books. I've also downloaded free ebook editions of D avid Copperfield ana MansfieldPark.

Buying ebooks affects the way you look at print books. Browsing in the Piccadilly branch of Water stone 's the other day, I was chastened to find myself seeing the books at this vast, five -floor shop as pricey items, of the kind one might buy if one wanted to indulge oneself, or if one were looking for gifts.

I am shocked at myself, because I have always been dismayed when people say - as they so often do - that books are expensive. They are not expensive, I have insisted, by comparison with cinema or theatre tickets. A new paperback is cheaper than around of drinks. People's attitudes, not book prices, needed to change, I thought.

I have also tried many times to explain why so many books appear first in expensive hardback editions, which only a minority of even committed book buyers want to pay for. It is hard to get publicity for paperbacks , I say; if you produce 10,000 paperback copies of a literary first novel, you may not sell any more copies than you would have done if you had produced 1,500 hardbacks, and you'll earn a good deal less. Moreover, books by established authors - P D James, say, or Ian McEwan or Claire TomaHn - sell in huge quantities in hardback, and no publisher will happily forgo this income.

Ebooks are destroying this economic model. Julian B arnés, whose novel The Sense of an Ending won the most recent Man Booker Prize, is one of those established authors who can sell a lot of hardbacks. Indeed, as I write, he is the fourth -bestselling author at independentbookshops, which are mostly selling his novel at the RRP of £12.99. But in tne weeks following the Booker, Amazon decided that the correct price for The Sense of an Ending in ebook was £3.59 (the price has since gone up to £4.79).

Some publishers have attempted to hold the line by introducing "agency pricing", through which they set the retail prices and give retailers a cut of the revenue. Amazon hates taking anyone else's orders about what it should charge, and is suspected of having had some influence on the decision by the European Commission to investigate the agency model.

The evidence is that ebook buyers are with Amazon on this issue, and believe that digital editions should be cheap. Amazon's customers have blitzed the site with one-star reviews of books, by Ken Follett and others, that they consider to be too expensive, and its Kindle bestseller list at present shows titles priced at less than £1 occupying seven of the top ten slots. Will 99P become the optimum price for an ebook? If so, who is going to make any money out of publishing or writing books for such a market?

It turns out that a few people are doing very well out of selling cheap ebooks. In the US, Amanda Hocking and John Locke, two genre authors who self-published their novels, have each sold more than one million ebooks through the Kindle store. Some publishers have used ebooks to turn the conventional publishing model on its head: instead of going to market first with expensive hardbacks, they have found substantial audiences by promoting authors with cheap ebooks. Myriad Editions, a small publisher based in Brighton, has sold 70,000 copies in print and ebook of Into the Darkest Corner, a crime novel by the newcomer Elizabeth Haynes; the novel has 445 customer reviews on Amazon and was the site's editors' pick as the best book of 2011.

These successes lead one to wonder if the complainers were right all along, and books really were too expensive. Surveys suggest that owners of ereading devices are buying books in greater numbers than they did previously. At the Kindle store, Amazon and self-publishers are able to adjust their pricing until they reach a sweet spot at which readers will buy, even if the authors are unfamiliar. As ebooks take a greater share of the market, book sales overall may increase.

This will be a happy development, except as it affects shops sellingprint books, and publishers and authors' cash flows. In place of the social experience of browsing in bookshops, we will have the social media experience of sharing our tastes through Facebook and Twitter. As for the financial implications - on the Me and My Big Mouth blog, the novelist Ian Hocking (no relation to Amanda, above) has confided his sales figures and revenues from self-publishing ebooks with Amazon. Two of them have sold more than 8,000 copies. This is a figure that many conventionally published novelists would envy. But Hocking's profit to date is only just over £300 (his revenue is just over £2,000).

Had Hocking chosen a conventional publisher, he might well have sold fewer copies, but he would have earned more, thanks to the publisher's advance. It is not only the likes of Julian Assange, Jeffrey Eugenides (£500,000 each) and Pippa Middleton (£400,000, for a book about parties) who get unrecoverable sums of money upfront from publishers. Most authors, right down to those whose sales are in four figures, depend on such handouts. But it is hard to see how, in the new world of cheap books, downloaded one by one rather than bought in bulk by stockholding booksellers, publishers will be able to afford them.

An industry that paid unrecoverable advances for books, and then published them in formats that the public thought too expensive, had its eccentricities. Still, it served readers and literary culture pretty well. Most writing careers have depended on the subsidies that publishers have been able to provide. In the digital world, authors, whether they self-publish or not, will have to sell to survive.

Author affiliation:

Nicholas Clee is a joint editor ofBookBrunch, a book industry newsletter