As Arthur Klebanoff puts it, his 10-year-old company, Rosetta Books, "went eight years into the desert along with the rest of the e-book business, but the critical thing was, we didn't die." When Klebanoff, who also owns the Scott Meredith Literary Agency, launched Rosetta in 2001 to publish backlist e-books, the e-book market was a fraction of its size today. But now, Klebanoff said, with the e-book market exploding, the times have finally caught up to Rosetta's business model.

According to Klebanoff, the company's revenue is over $1.5 million and it currently has 300 e-books in its catalogue, with expectations to pass the 500-title mark by the end of the year.

The backlist business, which Klebanoff has been chasing for years, is finally starting to fall into place. "Yes, Open Road is a competitor and, yes, obviously the big six and some other publishers have digital units, but those units are overwhelmingly focused on frontlist."

The company is also expanding its original content, and Klebanoff expects to have more than 100 e-originals by the end of 2011. With very few traditional houses investing in e-book originals—something Klebanoff thinks could shift soon—the market for short, inexpensive content is wide open. Klebanoff has been watching the Kindle Singles program (see p. 6) and thinks the demand for content in the 99-cent to $2.99 range is significant. Citing the handful of digital self-publishing success stories, people like Amanda Hocking and John Locke, who both sold well on Amazon with e-books priced well below the reigning $12–$14 price point for traditionally published frontlist titles, Klebanoff thinks readers are hungry for good, cheap titles. "You've got this huge number of new titles available at the $12, $13, and $14 price point, because of the agency model, so $1.99 and $2.99 becomes very attractive. What we're trying to do, in selected categories, is put forward high- quality material at a very attractive price point."

The original material Klebanoff is signing is taking a number of forms. He recently struck a deal with Northstar, a leading B-to-B travel publisher, to do short city guides priced almost universally at $2.99. The Destination series—there are 32 guides available now ranging from Destination Rome to Destination Washington, D.C.—was culled from the company's database of information and condensed to 12,000-word editions that include information on what to do, along with details on hotel rankings. Klebanoff has also closed a deal to release largely unpublished, and mostly unavailable, science fiction novellas that originally appeared in the popular genre publication from the 1960s, Galaxy magazine. Klebanoff licensed the rights to the 25 titles from agents or estates; the e-books will be 15,000–20,000 words and feature a commissioned foreword. In a similar program, but in the true crime field, the e-publisher will be releasing a series of 12,000–15,000-word Singles edited by Marilyn Bardsley, of the popular online site, which is owned by Court TV.

Klebanoff also has some proof that the low-price model works. Rosetta was a participant in Amazon's recent promotion with a number of publishers, in which 600 titles were cut down in price to either $1.99 or 99 cents. Klebanoff said that with the price drop, Rosetta needed to sell three times as many copies of the titles during the two weeks of the promotion. While Klebanoff could not provide figures due to Amazon's restrictions, he said Rosetta did "hugely more business" than what was required to break even.