Between last year's disastrous alliance with the Sobol Awards, its strange love of American Idol-style contests and the brand new fight about its boilerplate contract changes, Simon & Schuster has been having a rough go of late with regards to its reputation. But Motoko Rich's newest report that S&S is partnering with MediaPredict to select a book proposal based on bets placed by traders in the new market goes a step further and confirms the following: the publishing house execs must really have a high-quality crack pipe being passed around the office.

On the face of it, the idea sounds, if not plausible, at least interesting: Media Predict is soliciting book proposals from agents and the public, and posting pages of them on the site. Traders, who are given $5,000 in fantasy cash, can buy shares based on their guess about whether a particular book proposal is likely to get a deal, or whether S&S imprint Touchstone Books will select it as a finalist in a contest called Project Publish. If either happens within a four-month period, the value of the shares go to $100 apiece; if not, the share price falls to zero. "Being able to predict the performance of something is key," said Brent Stinski, founder of Media Predict. A prediction market, he said, "is a very powerful tool." And Touchstone publisher Mark Gompertz is excited about the possibilities of a project that in his words, could do for book publishing what focus groups do for soap and soda and what screening audiences do for movies.

But I can't help but agree, at least in part, with Wharton School prof Justin Wolfers' concerns about the contest. "If they say we find it really persuasive that everyone bet on book A, they're just looking at a book that everyone bet that everyone else bet that everyone else thinks is the best book. So you don't end up with the wisdom of crowds, but the infinite reflection of crowds looking at crowds." And taking the sum total of S&S's recent moves, by going directly to the reader for guidance and counseling, it's like they're cutting out the editor, agent and author in the process - growing pains which may not really work in the end.