There’s been a lot of industry news lately, but some game changing developments that caught my eye were buried in a report under Joe Konrath’s deal with AmazonEncore. In a nutshell: Agents and bookstore are becoming publishers.

Scott Waxman, of Waxman Literary, has created Diversion Books, a separate business from his literary agency that is similar to AmazonEncore, “somewhere in between the big houses and the lonely road of self-publishing.” The company, which currently has about 20 projects signed up, offers e-book publication and distribution as well as POD, with a focus on the e-book frontlist. Waxman says Diversion Books will take on authors who cannot sell books in numbers that make financial sense for the major houses. “If you have an author with a platform who can sell books, we’re happy selling 5,000 to 10,000 copies,” he said in the report.

Bookstores are getting into the act too. Susan Novotny, owner of the Book House of Stuyvesant Plaza, Albany, N.Y., will launch Staff Picks Press, a new indie publishing house. “Independent booksellers have been making readers aware of good novels for a long time,” says Novotny in an interview. “We have over 40 reading groups connected to our stores… and my staff… recommends the books they love all day long. Now, some of those books will come directly from us.”

Agents are also advising their clients to consider other options: Ted Weinstein (Weinstein Literary Management) says he’s now having a conversation with all of his clients about the smartest way to publish their books—and going with a big house isn’t a foregone conclusion. “Authors can now be more self-possessed,” he says. “They can go with a major house, an agency, or one of the turnkey services from a major retailer, whether it’s a Lulu, Blurb, Amazon, or now B&N.”

Speaking of Barnes and Nobel. Now that the retailer is in direct competition with Amazon for self-published digital books, why not take the next step and start publishing its own titles too? Amazon is already doing it and so are other bookstores, such as Book House (mentioned early) and Poisoned Pen Press, the front runner for this idea. B&N is making a lot of bold moves, and I predict signing authors for vetted print publishing is next.

Currently, big publishers are

• buying/releasing fewer books
• expecting agents and authors to do more editing
• using outside public relations firms
• making authors primarily responsible for their own marketing
• offering smaller advances
• canceling popular series that don’t meet a quota
• pissing off digital readers by holding back ebooks and overpricing them

What are they doing right? Oh yes, they still have the advantage for distribution. But when Borders goes under, and B&N starts filling its shelves with toys and games (as it already plans to do) and with its own books (which could happen soon)—big publishers will loss a lot of their edge in distribution too.

It seems inevitable that authors will begin to gravitate to small and midsize publishers, including those run by their favorite bookstores and agents. They’ll choose publishers that print trade paper books in small POD runs while simultaneously releasing the e-book at a reasonable price. These authors will forgo advances for greater royalties on each book, a faster time to market, a little more control, a bigger piece of the e-book market, and more long-term security.

This is terrific time to be an author. The brass ring may be harder to attain, but there are more choices than ever and a lot of happy places in the middle.

What do you think? Will authors move to the middle?