Friday, July 18, 2014

Is Kindle Unlimited Bad for Authors?

Amazon today unveiled Kindle Unlimited, following in the footsteps of Smashwords partners Scribd and Oyster.

When I first heard of Kindle Unlimited, I was pleased.  After learning more, however, I think indies should steer clear of it.

As long-time readers of this blog know, I was initially skeptical of the prospects for a "Netflix of ebooks," but I began to see the light as I examined the emerging business models of the subscription services.

Now, several months into our relationships with Scribd and Oyster, I'm pleased to report these two ebook subscription services are the fastest growing retail channels at Smashwords at a time when industry-wide ebook sales are looking anemic.

These services will bring more readers to ebooks and possibly even more readers to conventional ebook retailers (especially if more retailers offer subscription services too).

I think Scribd and Oyster hit the nail on the head by creating services that balance the intersecting interests of readers, authors, the subscription service itself and the publishing industry in which we all operate. 

The same cannot be said for Kindle Unlimited.  Indies would do well to avoid Kindle Unlimited for one simple reason:  it requires KDP Select exclusivity.

I've been speaking out against KDP Select ever since they launched it in 2011 when I wrote my post, Amazon Shows its Predatory Stripes with KDP Select.  Amazon partisans have accused me of being an Amazon hater for my criticism of KDP Select, but that's simply not true. I admire Amazon.  Jeff Bezos and team are freaking brilliant. They deserve massive kudos for catalyzing the rise of ebooks, and for changing the lives of indie authors.

But for all of Amazon's good deeds, it does not mean we indies should kiss their feet unconditionally. Their business methods are not beyond reproach.  We should encourage a healthy debate about Amazon's practices and how they can do better for authors and readers.  I can admire Amazon yet still oppose exclusivity.  We should also recognize when Amazon's business interests don't align with author interests.

KDP Select is a good example where the business interests of Amazon and authors diverge.

Exclusivity is great for Amazon, but it's not necessarily great for authors and readers.  Exclusivity starves competing retailers of books readers want to read, which motivates readers to move their reading to the Kindle platform. This is why Amazon has made exclusivity central to their ebook strategy. They're playing a long term game of attrition.

Most indie authors recognize the value in fostering a diverse ecosystem of multiple competing retailing options.  Yet every book enrolled in KDP Select is a vote to put Amazon's competitors out of business. You know this to be true if you believe, as I believe, that indies are the future of publishing.

Authors must weigh the benefits of KDP Select's many enticing features against the alternative benefits of broad and diversified distribution.  How do you measure what you'll lose from either decision when missed opportunities are immeasurable?  And is it the indie author's responsibility to support Amazon's competitors?  Should an indie author feel guilty for giving KDP Select a try?  I don't envy authors who must make these decisions.  Amazon forces these difficult decisions upon authors.

It can take years to build readership at a retailer.  Authors who cycle their books in and out of KDP Select will have a more difficult time building readership at Amazon's competitors. Millions of readers prefer shopping at retailers other than Amazon. These other retailers operate in multiple countries (iBooks, for example, operates in 51 countries).  These country-specific stores represent unique micro-markets of captive audiences not reachable via Amazon.

Any time an author goes exclusive, they risk alienating fans who prefer shopping at other retailers, and they miss the opportunity for serendipitous discovery by new readers at other stores.  They risk missing those times where lightning strikes and their books break out at different retailers at different times, often for reasons that can't be identified.

Authors who go exclusive at Amazon become more dependent (the opposite of independent) upon Amazon.  Just as any financial adviser will advise you to avoid placing your retirement nest egg in a single basket, indies should think twice before locking their books into these three-month, automatically-renewing KDP Select contracts.

With KDP Select, Amazon rewards authors who go exclusive and disadvantages authors who do not.  That's right, they're punishing regular KDP authors who don't go exclusive by denying them access to special sales and discovery tools like free promotional pricing, Kindle Unlimited and Kindle Owners Lending Library.  These are great tools so it's a shame Amazon doesn't make them available to all authors without restriction.

Amazon is creating a caste system within the Amazon store. Also worthy of note, as revealed by Publishers Lunch, it appears as if Amazon is paying traditionally published authors more for their participation in Kindle Unlimited than they're paying indie authors.

No other retailer creates such artificial restrictions for indie authors.  Smashwords-distributed authors, by contrast, enjoy unlimited free pricing, greater pricing control, ebook preorders, broader global distribution and all without the handcuffs of exclusivity.

It's unfortunate Amazon is restricting access to Kindle Unlimited.  It's unfortunate they're denying their customers access to the books of all indie authors who would otherwise participate if not for the exclusivity requirement.  It's unfortunate that Amazon forces indies to make such a choice.

For indie authors who feel trapped in KDP Select, today's announcement offers you a silver lining:  you now have an out.  Because Amazon automatically opted all KDP Select authors into Kindle Unlimited, they're giving KDP Select authors the ability to immediately withdraw from KDP Select without waiting for their current three-month term to expire.  The instructions, which are listed at https://kdp.amazon.com/help?topicId=AA9BSAGNO1YJH&ref_=pe_446610_120662130 , advise authors to contact their support team to leave KDP Select.

If you've got indie author friends who are in KDP Select, now might be a good time for them to cast their vote against exclusivity.  KDP Select would not exist were it not for the ongoing support of indie authors.

Sunday, July 6, 2014

2014 Smashwords Survey Reveals New Opportunities for Indie Authors

Welcome to the 2014 Smashwords Survey, our third annual survey that reveals new opportunities for indie ebook authors to sell more books.

As in prior surveys (view the 2013 Smashwords Survey here and 2012 Smashwords Survey here), we examined aggregated retail and library sales data of Smashwords books and then crunched the numbers based on various quantifiable characteristics of the book.

For this year's survey, we examined over $25 million in customer purchases  aggregated across Smashwords retailers including Apple iBooks, Barnes & Noble, the Smashwords.com store, Sony (now closed), Diesel (closed), Oyster, Scribd, Kobo, public libraries and others.

This year, we break new ground with more data, including survey questions that explore preorders and series, two categories of inquiry that weren't possible in prior years.  These latter two categories were enabled by Smashwords' introduction of ebook preorder distribution in July, 2013 and our new Smashwords Series Manager feature which allows us to capture, analyze and share the performance of series books.

The goal of the survey is to identify Viral Catalysts.  I first introduced the concept of Viral Catalyst in 2012 with the publication of my free ebook best practices book, The Secrets to Ebook Publishing Success.  A Viral Catalyst is anything that makes a book more discoverable and more enjoyable to readers.

The underlying premise of my Viral Catalyst concept is that Viral Catalysts help drive reader word of mouth because they increase reader satisfaction.  Although every author would love to learn the single secret fast track magic bullet to bestsellerdom, there is no such single secret.  Ebook bestsellers become bestsellers based on multiple Viral Catalyst factors starting with book quality but also influenced by cover design, breath of distribution, pricing, marketing, luck and myriad other factors.  In the Smashwords Survey, we seek to identify potential Viral Catalysts that are quantifiable and therefore measurable. 

The initial survey results were first revealed at the RT Booklovers convention in New Orleans on May 14, 2014.  The updated Slideshare edition of this presentation includes more data, charts and analysis than was presented in New Orleans.


Key findings in this year's survey:
The ebook sales power curve is extremely steep - This isn't a surprise, but for the first time we share some numbers along the curve (see the slides in the Series section).  A few titles sell fabulously well and most sell poorly.  An incremental increase is sales rank is usually matched by an exponential increase is sales.  Despite the steep sales curve, a lot of Smashwords authors are earning good income from their books.  Your opportunity as a Smashwords author or publisher is to do those things that give you an incremental advantage so you can climb in sales rank.
Readers prefer longer ebooks - We observed this in the prior surveys.  Longer books sell better, and when you view the data through the prism of the power curve, it becomes clear why longer books give authors such a huge sales advantage.

Pricing - The highest earning indie authors are utilizing lower average prices than the authors who earn less, but this doesn't mean that ultra-low prices such as $.99 are the path to riches.  $2.99 and $3.99 are the sweet spots for most of the bestsellers.

FREE still works great, but it's losing some mojo - Free remains one of the most powerful book marketing tools because it makes it easier for readers to take a risk on an author brand that is unknown or untrusted.  Free ebooks, according to our data derived from iBooks downloads, generated 39 times more downloads on average during our survey period than books at any price.  Yet the effectiveness of free is down dramatically compared to our 2013 (91X) and 2012 (100X) survey results.  While there is still much untapped greenfield opportunity for indies to leverage free, I expect the effectiveness of free will continue to decline as more authors learn to take advantage of it.  If you've never utilized free, now's the time to do so before your window of maximum opportunity closes further.

Preorders yield sales advantage - When we launched preorders in 2013, we knew anecdotally from our early alpha tests that preorders gave authors a sales advantage.  The 2014 Survey is the first time we're able to share aggregated results, and the results are strongly suggestive that ebooks borne as preorders sell more copies and earn the author more money than books that don't utilized preorders.  I think preorders today are where free was five years ago.  The first authors to effectively utilize preorders will gain the most advantage, just as the first authors to enter new distribution channels gain the most advantage.  Five years from now once all indies recognize that preorders are a no-brainer essential best practice, the effectiveness of preorders will decline.  Also revealed in the data is the fact that most Smashwords authors (and therefore, most indies) ARE NOT utilizing preorders yet despite our aggressive promotion of this exciting new tool.  The authors who heeded our advice, however, are reaping the rewards.

Series yield sales advantage - For the first time, we examine the performance of series books.  This new analysis is enabled by the fact that in September we launched Smashwords Series Manager which allows us to capture enhanced metadata on series.  The results are interesting!  Series books outsell standalone books.  We also look at the characteristics of series.  I'll want to do more with series in our 2015 survey.
Best-performing series have longer books - Not a surprise, but the implications are significant.  If you imagine the power curve overlaid on the series data we share, you see why authors who write full-length books in their series have an advantage over authors who break books into smaller chunks.  Also interesting, we found series books under 50,000 words are especially disadvantaged.  This is not to say that you can't become a bestseller writing shorter novellas.  Multiple Smashwords authors have had success here.  But what the data does tell me is that successful novella writers might achieve even greater success if they write full-length.  The data appears to suggest that series books under 50,000 words might create friction that makes readers incrementally less willing to buy.
FREE series starters pack a punch - This is a big deal.  I suspected this for a long time based on numerous authors' results going back to Brian S. Pratt who was one of the first Smashwords authors to prove the effectiveness of free series starters, but the aggregated numbers now confirm it.  We found strong evidence that series that have free series starters earn more money for authors than series that do not have free series starters.  For the many Smashwords authors who are reluctant to experiment with free for fear it'll devalue your books, now you've got the kick in the butt you need to give it a try.  All Smashwords retailers support free without restriction.
New (added July 7)  Non-fiction earns more at higher prices -  For the first time we added new data for non-fiction pricing.  We looked at the most common price points for indie non-fiction, the price points that earn the most downloads, and the price points that earn the non-fiction author the most money.  The results are fascinating.  It's not a surprise that non-fiction readers respond differently to price.  The surprise is how differently.  Non-fiction buyers are less price-sensitive.  After crunching the numbers it appears as if most non-fiction authors are under-pricing their works, and they should experiment with higher prices.

How to Interpret the Findings

For many of the slides, I added analysis to help you interpret the findings.  This analysis is my own interpretation.  You may view the findings differently, or see things I don't see.  Or you may strongly disagree with my interpretation.  That's okay.

Be cautious.  Most of the survey results are based on averages.  Your book is not average.  It's unique.  Therefore, your results will vary.  The findings aggregate the results of many dissimilar books, which means the findings are prone to misinterpretation and error.  The findings are also potentially skewed by factors such as genre (romance dominates, which means our data will more closely describe potential outcomes for romance or genre fiction than it will for non-fiction how-to manuals), or by the fact book sales at retailers are heavily skewed to fiction.

As I caution on Slide 25, cause and effect is not always provable.  The forces that determine a book's sales performance are often multi-dimensional, synergistic, opaque, delayed or simply not apparent.  Correlation does not always mean causation.  For example, although we show that the highest-earning books were priced at $3.99, the price alone is not the reason those books were bestsellers, and you should not necessarily jump to change all your prices to $3.99.  Although the bestselling books tend to be over 100,000 words, readers don't purchase by length alone, so don't write longer if the story doesn't demand it.

Consider our findings as possible inputs that influence the outcome.  Do not make publishing decisions solely based on the findings in this survey.  Instead, use these findings as an additional datapoint - as potential clues - that will help you make more informed decisions.  Also note the findings will raise additional questions.  As I was digging through the data for preorders, for example, I found myself wanting to dive deeper to explore such questions as, do sales decay over time, how do new releases impact the sales of existing series books, and how is the sales behavior across different genres different?  Although this survey shares more data than ever before, I found that the more questions I asked, the more I wanted to ask.  There simply wasn't time to build all the queries I wanted, or time to crunch and analyze all the numbers.

I look forward to sharing more in 2015 if not earlier.

If you found the survey results useful, won't you please share with your writer friends?

Here's how to embed the Survey PowerPoint into your blog or website:   


1.   Click to http://www.slideshare.net/Smashwords/2014-smashwords-survey-how-to-sell-more-ebooks to view the presentation at Slideshare.net

2.  Click the "Embed" link.

3.  Click the "Copy" button to copy the HTML code into your browser's memory

4.  Open you blog post and past the HTML code into your composition window.

5.  If necessary, you'll find additional instructions at http://help.slideshare.com/forums/67665-Embed-and-Share

Wednesday, June 11, 2014

Smashwords Adds Daily Sales Reporting for iBooks, Barnes & Noble, Kobo and OverDrive

Smashwords today added daily sales reporting and interactive charting for sales at iBooks, Barnes & Noble, Kobo, OverDrive and the Smashwords store.

The reports include daily and total order accumulation numbers for iBooks preorders.

The reports provide authors and publishers unprecedented insight into recent sales performance across the largest Smashwords retailers.  Authors can use the reports to gain rapid feedback on the effectiveness of marketing and promotion campaigns.

You can view your aggregated performance over the prior seven day or 30 day period, with drill-down views by retailer, title or series.  There are also one-click filters to view priced books, free books, all books and accumulated preorders (iBooks only).  Publishers and literary agents who manage multiple authors can drill down and view author-specific performance.

If you want to compare the performance of two or three series across different retailers, you can do it.  If you want to measure the impact of a blog tour, an advertisement, a price change, a new cover image, a new release in a series or a new free series starter or anything else, the results are now at your fingertips.

Each chart is also accompanied by a table that shows how the recent 7- or 30-day period compares to the prior 7- or 30-day period.

Reports are updated same-day daily every three hours for Barnes & Noble; next-day daily for iBooks and Kobo; and same-day daily every 30 minutes for the Smashwords store.

Sales data can be downloaded as a spreadsheet.

Find the new charts in your Dashboard via the Daily Sales link.  Learn more about daily charting in our Daily Reporting FAQ.

What's coming next with Daily Sales:  We'll continue to add more retailers to the daily charts as retailers make their data available to us.  Also, in the months ahead as we begin archiving more daily trending data, and we'll add options for longer analysis periods such as 60 days, 90 days and longer.

Consolidate Your Distribution with Smashwords

If you're uploading direct to any of our major retailers such as Barnes & Noble, iBooks or Kobo, consider consolidating your distribution with Smashwords.  We help you spend more time writing and less time managing multiple upload platforms.  By aggregating your sales analytics at Smashwords, we make it easier for you to spot trends, measure performance and adjust your marketing.  If you want to change a price, or update your book description or upload a new cover, you do it once at Smashwords and we get it out to all our retailer and library partners.  All Smashwords authors enjoy centralized pricing and metadata management, aggregrated sales reporting, exclusive sales and merchandising tools, access to a growing network of retail and library sales channels, and consolidated payments and year-end tax reporting.

At Smashwords, we're always working to bring you the tools, distribution and knowledge that will give your books a competitive advantage in the marketplace.

Smashwords Daily Reports joins other powerful tools at Smashwords including Smashwords Coupon Manager (custom coupon codes), Preorder Distribution (preorder listings at iBooks, B&N and Kobo), Smashwords Series Manager (enhanced series discoverability), Pricing Manager (centralized pricing control and custom library pricing), Smashwords Interviews (fun self-inteviewing tool helps readers learn the story behind the author).  More tools are coming!

Click here to learn how to publish and distribute with Smashwords.

Kudos to Case Talbot on the Smashwords engineering team for leading this exciting project.  She's also the engineer behind Smashwords Interviews, Dropbox integration and the responsive website redesign.  Thanks also to the rest of the Smashwords engineering team who assisted her, and thanks to our beta testers who provided us wonderful feedback on this feature.

Tuesday, June 3, 2014

Apple's New iOS 8 is Game-Changer for eBook Retailing

Yesterday Apple unveiled iOS 8, the new Apple operating system upgrade that will come out this fall.

Buried in a slide during the live demo event referenced as "iOS 8 features we didn’t have time to talk about" was an ebook retailing bombshell:  iBooks will come pre-installed on iOS 8.

The iBooks app is Apple's ebook store.  Inside that app are over 250,000 books from Smashwords authors.

This is a game-changer for ebook retailing.

iBooks will come pre-loaded on every device with iOS 8.
Image modified from original sourced from BGR.com


According to the latest public information, there are over 800 million devices (iPhone, iPod touch, iPad) running prior versions of Apple's iOS.

The new iOS will be available as a free upgrade to users of the iPhone 4s, iPhone 5, iPhone 5c, iPhone 5s, iPod touch 5th generation, iPad 2, iPad with Retina display, iPad Air, iPad mini and iPad mini with Retina display.

Prior to iOS 8, readers who wanted to shop iBooks were forced to click to the Apple App store, search for the iBooks app, sign in with their email address and password, and then install it.

The absence of a pre-installed app created unnecessary friction. It means only a fraction of Apple's customer base today has convenient access to your books (which makes the enormous success of iBooks all the more impressive).  Yesterday's news means iBooks will become ubiquitous.

It'll be like having a bookstore in nearly one billion pockets and purses.  It's not a stretch to speculate that within a couple years, the iBooks app will be ever-present on over one billion devices around the world.

Apple's brilliant move will place your books just one or two clicks from being discovered by readers.

How can you make the most of this new development?  
  1. Make sure all your books are at iBooks ASAP.  As we announced May 18, Smashwords now delivering ebooks to iBooks five times daily, seven days per week, and many of our books and preorder listings are going live in the store within hours of us delivering them.  If your books are locked in the dungeon of exclusivity elsewhere, release them today on Smashwords!  If you're not yet on Smashwords, click here to get started today.
     
  2. Promote direct hyperlinks to iBooks.  Make sure that on your blog, website and in all your social media promotions that you're providing a direct hyperlink to your books at iBooks.  With a direct hyperlink, your book page will open directly within the reader's iOS device, and with another click they can purchase it.  Use Apple's Link Maker or Widget Builder tools to find links or create attractive widgets that point directly to your book at iBooks.
     
  3. Link your series with Smashwords Series Manager.  If you write series, make sure your books are linked with Smashwords' Series Manager tool, which you'll find in your Smashwords Dashboard.  We pass this enhanced metadata on to iBooks, and they use it to make series books more discoverable.  Also referenced in fine print on the slide above is a mention of enhanced series listings in iBooks for iOS 8, which means we can expect the Series Manager metadata to become more important than ever to iBooks merchandising and reader discovery.
Congrats Smashwords authors!

Monday, May 26, 2014

Amazon's Hachette Dispute Foreshadows What's Next for Indie Authors

Amazon and Hachette Book Group are locked in an epic battle over the future of ebook publishing.

The outcome of this dispute will have permanent ramifications for publishers and indie authors alike.

On one side you have Hachette, the fourth largest trade book publisher.  Hachette earns over 1/3 of its US sales from ebooks.  Hachette wants agency terms for its books.  Hachette wants to control the list price of its books and earn 70% list from each sale.  Smashwords announced agency terms with our retail partners in 2010.

On the other side is Amazon, a fierce opponent to agency pricing.  Amazon wants the ability to discount books, and to enable greater discounting Amazon wants a larger percentage of the publisher's pie.  A story out Friday by Jeffrey Trachtenburg of the Wall Street Journal confirms Amazon is seeking to reduce the percentage paid to publishers.  Amazon is seeking to weaken or abolish the agency model.

This is also the view of Andrew Albanese of Publishers Weekly, who in his March 16 story, Will the Agency Model Survive? speculated that the future of agency hangs in the balance.  As Albanese writes in his piece, the timing of the Amazon/Hachette dispute is not coincidental.
One likely reason (for the current timing of the dispute) is that when the publishers' 2012 consent decrees in the e-book price-fixing case begin to expire this fall, so too will Amazon’s ability to discount e-books. The parties don't comment on specific negotiations (and neither Hachette or Amazon will comment directly on the current dispute or ongoing talks). But it is fair to say that Amazon officials likely see the current negotiations as their best chance to push for the end of agency pricing for e-books, and are apparently prepared to bring to bear all the pressure they can on publishers—whether on the Kindle side, or print. The question is, will the major publishers stick together to keep agency pricing for e-books?
The dispute is generating some spectacular fireworks.  It's also confirming the suspicions of Amazon's worst critics.  In an attempt to force Hachette to capitulate, Amazon is employing a shock and awe campaign of scorched earth retribution against Hachette.  According to multiple press reports, Amazon has increased Hachette's book prices to its customers then turned its automated merchandising algorithms into attack dogs that encourage customers to consider "similar items at a lower price"; Amazon is telling customers Hachette print books are out of stock; and is denying Hachette the ability to list preorders.  For a company that prides itself in customer service, these are all customer-unfriendly moves.  These actions also punish Hachette authors, who through no fault of their own will suffer reduced sales at Amazon.

For the last four years, indie ebook authors have endured similar iron-fisted policy enforcement and lost earnings with Amazon's KDP price-matching, even when Amazon knew the out-of-sync ebook prices were not the author's intention or fault.  Amazon plays business like war.  Overwhelming force pushes weak hands to surrender and comply. 

In a letter written to Amazon by the Association of Author's Representatives (AAR), a trade group representing literary agents, AAR likened Amazon's tactics to hostage-taking and extortion.

Amazon defenders (and critics too) and will say business is business, and if you want to play in the Amazon sandbox - the world's largest ebook store - you have to play by their rules.  The Amazon defenders are correct.  Amazon is under no obligation to carry Hachette's books under the terms Hachette wants. Amazon is under no obligation to play nice.

The industry can cry until it's blue in the face about how Amazon is ruthless and heavy-handed, and how other retailers are kinder and gentler. The truth of the argument doesn't change the reality.  Amazon does what it does because it can, because authors and publishers let them do it, and because it's in Amazon's nature to act this way.  Lions eat wildebeest.

For its part, Hachette is sending letters to agents and authors asking for their patience and support.  In their May 23 letter, Hachette wrote:

Please know that we are doing everything in our power to find a solution to this difficult situation, one that best serves our authors and their work, and that preserves our ability to survive and thrive as a strong and author-centric publishing company.

Amazon is playing a game of divide and conquer.  Amazon knows if they weaken or cancel their agency agreement with Hachette that the other publishers will have less leverage to hold the line on agency.  And whatever concessions Amazon gets, other retailers will want the same, further undermining the ability of publishers to control their prices or maintain their profits.

Amazon's tactics hit Hachette in two places where it hurts:
  1. Author confidence - The dispute will undermine literary agent and author confidence that Hachette can deliver books to Amazon.  This will cause some agents and authors to think twice before selling upcoming projects to Hachette.  
  2. Profitability - Amazon knows that if they if they can make Hachette the first domino to fall in their anti-agency crusade, it's more likely to force other publishers to abandon it as well.  Once agency is eliminated, ebooks will become less profitable to publishers, which then marginalizes publishers by weakening their strategic power in the marketplace.  With lower margins, publishers will have less flexibility to increase ebook royalty rates to authors at at time when their authors are clamoring for higher royalties.  This would thereby compel more authors to self-publish directly with Amazon, which benefits Amazon.  

Publishers deserve much of the blame for making their ebook margins such an appetizing target for Amazon.  Amazon's assault on their margins should come as no surprise.  In 2012, Adam Lashinsky of Fortune Magazine wrote that a favorite Jeff Bezos aphorism is "Your margin is my opportunity."  Publishers have been complaining about Amazon for years yet still supplied them the books that created Amazon. 

Publishers have been reporting healthy earnings in recent months, driven in large part by high-margin ebook sales.  Publishers pay authors only 25% of net ebook proceeds, whereas indie authors earn 85-100% of net proceeds.  In other words, publishers made themselves a target for a company whose very DNA is programmed to strip suppliers (publishers) of their margin.

From a PR perspective, Amazon can cast their move as taking from the greedy publishers to provide customers lower prices.  But in the end, they're really taking from authors.

Hachette faces a dilemma.  They face the lose/lose decision of either giving that margin to Amazon, or choosing to kiss its Amazon relationship goodbye.  It would be painful for publishers to say goodbye to Amazon.  Amazon controls approximately 1/3 of the overall trade book market in the US, and up to 50-60% of the ebook market.

In 2010, publishers presented Amazon with a unified front by simultaneously demanding agency pricing terms.  This forced Amazon to capituate and accept agency pricing.  It was a different world back then. Amazon's nascent Kindle ebook business needed the books of big publishers.  The bitter aftertaste has never left Amazon's mouth.

The publishers viewed agency as a better model.  The US DoJ viewed the united front as collusion.   

In 2014, publishers are more disposable to Amazon than they once were, thanks in part to the rise of indie authorship, and thanks also to better business diversification.  Amazon's business is no longer as dependent upon books as it once was.  They sell everything under the sun, from diapers to shoes to cloud services to groceries to media devices.

Books represent only one of hundreds of layers of icing on the cake of Amazon.  Amazon can lose money on books while still operating a profitable business.

Pure-play book retailers - Kobo and Barnes & Noble for example, must earn money from book sales.  Unlike Amazon, they don't have the financial resources to sell books at a loss forever.  Publishers must also earn money from book sales, otherwise they can't keep the lights on.

If Amazon can abolish agency pricing it will have the power to put its largest pure-play book retailing competitors out of business.  This will make the publishers even more dependent upon Amazon, which further weakens their power.

How can Hachette get out of this mess?  None of its options are good.  Amazon holds the strongest hand in this high-stakes poker match.

The boldest option is for Hachette to play the nuclear card: they can withdraw all their books from Amazon.  Hachette could direct readers to more publisher-friendly platforms and stores.  Hachette could also make a more concerted effort to develop new channels of distribution.  Curiously, neither Hachette nor any other major NY publisher has ever attempted to sell their books in the Smashwords ebook store, despite the fact that Smashwords pays up to 80% list.  Publisher insistence on DRM is one of several factors that has locked them into Amazon and locked them out of new outlets.  Most of the publishers are also refusing to work with the new ebook subscription services, or have treated libraries as second-class citizens, even though these two channels provide yet another healthy counterbalance to a single retailer's dominance.

It's uncertain if Hachette or other publishers could survive if they abandon Amazon.  Would authors and literary agents continue to support them if their books didn't reach Amazon?

The window of opportunity for such a bold move is closing quickly.  Within the next several years, ebooks as a percentage of the overall book market will increase as print declines.  Within a few years, Amazon's sales of indie-supplied ebooks will probably exceed sales of publisher-supplied books.  This means the leverage publishers hold over Amazon will diminish each year. 

The other alternative is for Hachette to capitulate to Amazon, which is akin to Hachette accepting a long term death sentence.  Amazon views publishers as unnecessary intermediaries.  Amazon works to disintermediate the intermediaries so it can control the relationship with the creators (authors) and the customers.

The other Big 5 publishers might do well to play their nuclear cards before it's too late.

If the big publishers capitulate and abandon agency, the other retailers, in order to remain competitive, will be forced to abandon their agency agreements with the publishers as well, otherwise Amazon would have the ability to underprice them. And then the pure-play book retailers would fall.

Are Indie Authors Next in the Crosshairs?

The dispute with Hachette foreshadows what comes next for indie ebook authors at Amazon who have grown comfortable to KDP's 70% royalty rates.

Think about my divide and conquer reference above.  Indies are already divided and conquered at Amazon, but most don't realize this.  These indies all have direct-upload relationships with Amazon.  They don't have the collective bargaining power of a large publisher to advocate on their behalf.  As the unfolding events indicate, it's questionable if even a large publisher has leverage over Amazon.

If Hachette doesn't have the power to maintain 70% earnings, how will million-copy-selling New York Times bestselling indie authors have any power when Amazon decides to put the squeeze on them?   And how about the rest of the indie community which has even less leverage over Amazon?

How long until Amazon puts on the squeeze?  The squeeze may already have started.  In February, Amazon gutted the royalty rates they pay for audiobooks, as Laura Hazard Owen reported at GigaOm in her story, Amazon-owned Audible lowers royalty rates on self-published audiobooks.  Previously, authors earned up to 90% list.  Under the new terms, authors earn from 25% to 40% list. Amazon can do this because they dominate audiobooks.

At any time, Amazon could choose to eliminate the 70% royalty option at KDP.  They could offer the same terms as their Audible division: 25% list if you're non-exclusive, and 40% list if you're exclusive. 

If Amazon tightens the screws, indies will face the same painful decision Hachette now faces.  Either swallow the bitter pill, or remove your books from Amazon. .

Most indies would probably choose to accept lower royalties at Amazon under the logic that something is better than nothing. As individuals, indies have little leverage against Amazon.

Most vulnerable to any change in policy at Amazon are the indie authors who supply approximately 500,000 ebooks to Amazon's KDP Select program.

Advice to Indie Authors: Four Steps to Improve your Independence

Is it really necessary that retailers and publishers should view one another as war-like adversaries, or as predator and prey?  I don't think so.  At Smashwords, we serve our authors by serving our retailers.  We help our retail partners efficiently receive, ingest and sell our authors' books.  By opening up new retail and library channels, we support our authors.  We think our new channels help our retailers too, because each new channel we open is a reminder that exclusivity is bad for publishing.  What leverage we do have we apply to negotiating fair and equitable agreements that are win/wins for our authors and retailers. We want our retail partners to profit from our books, because if they don't profit it's not a long-term sustainable relationship.  We believe the 70/30 agency split provides retailers a fair profit.  I've always believed that partnership and cooperation are preferable to war.

As an indie author, it's important you understand that you're the future of publishing.  Your choices matter.  Your decisions will shape not only your future but the future for all indies.  Your decisions will shape how retailers treat you.  Independence is earned - it's not something you can take for granted.  Here are four tips to preserve your independence:
  1. Choose your partners carefully.  In the Indie Author Manifesto I wrote that indie authors should seek business relationships marked by partnership, fairness, equity and mutually aligned interests.
  2. Favor retail partners that support the agency model.  Agency puts authors and publishers in control and frees retailers to compete against one another based on customer experience rather than cut-throat price wars.  The agency model enables lower customer prices because more of the money goes to the author/publisher rather than the retailer.  Indies have used agency to lower ebooks prices while publishers made the mistake of using agency to raise prices.  Agency establishes a framework by which authors and retailers can work in partnership rather than as predator and prey.
  3. Avoid exclusivity.  Exclusivity makes you dependent upon a single retailer.  Work for independence, the opposite of dependence.  Diversify your income stream by distributing everywhere.  Every retailer reaches new readers you otherwise won't reach.  Each retailer, and each store they operate in each country, represents it's own unique micro-market of readers.  It can take years to develop readership, so maintain a strong and steady course of uninterrupted full distribution.  This is similar advice I gave gave in 2011 when I cautioned authors to steer clear of Amazon's KDP Select option. 
  4. Support a vibrant ecosystem of multiple competing retailers.  On your website and in your promotions, provide direct links to your books at each retail partner.  Give your fans choice.  Choice makes your books more accessible to readers.
Good luck!

Tuesday, May 20, 2014

Smashwords and OverDrive to Bring 200,000+ Indie Ebooks to 20,000+ Public Libraries

Imagine if your indie ebook was purchasable by thousands of public libraries around the globe.  Now imagine no more.

Smashwords today announced an agreement to supply more than 200,000 titles to OverDrive, the world’s largest library ebook platform.

OverDrive powers the ebook procurement and checkout systems for 20,000 public libraries around the world, including 90% of US public libraries. 

This agreement marks a watershed moment for indie authors, libraries and library patrons around the world.

It’s also a big deal for thousands of small independent presses around the globe who now have a convenient onramp into the OverDrive network. 

Millions of library patrons will now have access to the amazing diversity and quality of the Smashwords catalog. 

At a time when many large publishers are charging libraries high prices for ebooks (front list ebooks from Big 5 publishers can cost libraries $80, and even backlist ebooks can cost libraries $20-40), Smashwords authors and publishers are stepping in to supply thousands of affordably priced, library-friendly ebooks.  Faced with the option of purchasing a single James Patterson novel for around $40.00, or ten thrillers from today’s most popular indie authors at $4.00 each, libraries now have exciting new options to build patron-pleasing ebook collections.

To help librarians streamline collection development, in the weeks ahead OverDrive and Smashwords will create curated buy-lists lists libraries can use to purchase the most popular indie authors and titles. Libraries will soon have the option, for example, to purchase the top 100 YA fantasy novels (approximate price: ~$400), or the top 1,000 most popular contemporary romances (~$4,000) or top 200 complete series across multiple categories (~$2,000), or the top 200 thrillers, mysteries, epic fantasies or memoirs.  With most of our bestsellers priced priced at or under $4.00, you can do the math to appreciate how incredibly affordable these collections will be.  We’re going to have fun slicing and dicing.

Our lists will measure title popularity by aggregating sales data from across the Smashwords distribution network.  Indie authors: If you needed yet another reason to fully distribute all your titles to all retailers via the Smashwords distribution network, now you have it.  Stand up and have your sales counted because we want to help libraries purchase the greatest diversity of high-quality ebooks across multiple genres and categories.

Here are a couple additional stats to help you appreciate the massive scale of the OverDrive network:
  1. Library patrons borrowed more than 102 million digital titles across the OverDrive network in 2013, up 44% over 2012. 
  2. OverDrive delivered over 1.8 billion cover image impressions to library patrons in 2013, up almost 70% from 2012.  This gives authors incredible exposure and branding to readers searching for their next read.
Per our agreement with OverDrive, libraries will lend purchased ebooks under the one copy/one user model, meaning each copy they purchase can be checked to only one reader at a time.  This is the same licensing arrangement we use for books we distribute via Baker & Taylor's Axis 360 service which we launched two years ago.  Once a patron’s borrowing time expires, the book is ready to be checked out by another patron. 

Library patrons at OverDrive are able to recommend titles to their library from the Smashwords catalog, which will help libraries round out their collections.

Alternately, if a library ebook is already checked out, patrons will be presented with the option to purchase the ebook through a link on participating libraries’ websites through OverDrive’s “Buy It Now” feature. In this sense, the OverDrive library network becomes an ebook retailer for popular books.  The library also earns a commission in the process.

Libraries are engines of book discovery.  Libraries buy ebooks.  Library patrons buy ebooks.  According to a Pew research study in 2012, 41% of library cardholders who read ebooks purchased their most recently read ebook.  Indie authors who distribute to libraries will not only sell books to libraries, but they’ll also sell more books at retail as their readership grows.

Smashwords distributes many of the world’s bestselling indie authors, including numerous New York Times and USA Today bestsellers. Among the many bestselling Smashwords authors available to OverDrive libraries are Amy Miles, Brian S. Pratt, Chanda Hahn (Chanda is a former librarian!  Read her story here), Colleen Hoover, GJ Walker-Smith, Jamie McGuire, JD Nixon, Kirsty Moseley, Kristen Ashley, Lauren Blakely, Melody Grace, Natasha Preston, Quinn Loftis, R.L. Mathewson, Randolph Lalonde, Shayne Parkinson and T.C. Southwell.

The full Smashwords Premium Catalog of non-erotica titles is eligible for the distribution to OverDrive.

Smashwords authors and publishers can set custom library prices through the Smashwords Dashboard’s Pricing Manager feature.  Many Smashwords authors, in a show of support for public libraries, setting lower-than-retail prices for libraries. 

Smashwords authors will earn 45% of the library list price they set.

OverDrive does not support prices under $1.99 due to per-checkout transaction fees OverDrive must pay to their DRM vendor.  Therefore Smashwords books priced under $1.99 – including FREE titles – will be priced at $1.99 at OverDrive.  Even at $1.99, this low price represents a tremendous value for libraries that are accustomed to paying 20-40 times more for a single title.

OverDrive has already completed ingestion of the first 100,000 Smashwords ebooks.  Books will become purchasable by Overdrive libraries as early as this Friday or next week.

All non-erotica Premium Catalog books are automatically opted in to OverDrive distribution.  If any Smashwords authors or publishers wish to opt out of OverDrive distribution (not recommended!), they should do so via their Dashboard's Channel Manager feature before Thursday end of day to prevent titles from appearing for sale at OverDrive.  Of course, authors and publishers have the freedom to opt out at any time.  Later today I’ll send an email to all Smashwords authors and publishers notifying them about this exciting new distribution opportunity.

I anticipate OverDrive will complete loading the remaining 100,000+ titles to over the next 4-8 weeks.

Smashwords Authors, Here’s What you Can Do to Support Your Local Libraries
  1. Distribute your full list of titles to OverDrive
  2. Let your fans know that your books will soon be purchasable by 20,000 libraries around the world (remember, erotica is not distributed to OverDrive). Encourage your fans to contact their local library and ask them to order your books!
  3. In the next few weeks, make a point to visit your local library and introduce yourself.  Let them know you’re a local author, and your books will soon be available on OverDrive (please keep in mind that it'll still be several weeks before OverDrive completes the ingestion of our massive catalog so it's possible not all of your titles are immediately available).
  4. Offer to hold a book reading event at your library.  Or better yet, partner with other local Smashwords authors to collaborate on a multi-author reading event.  If your author friends are not yet distributing via Smashwords, show them how.  Here's a link to my videos on YouTube that will help them learn to publish like a pro at Smashwords - http://youtube.com/user/Smashwords
  5. Offer to present a free workshop at your library on how to professionally self-publish an ebook.  Be sure to promote your workshop to local media and event calendar listings.  Help mentor the next generation of library-friendly authors and have fun in the process!  You’re welcome to take my Powerpoint presentations and customize them for your own purposes.  Here’s a link to the two presentations I gave at the Los Gatos High School, in partnership with the Los Gatos Library, educating the students about ebook publishing for their amazing Windows to the Teenage Soul project (a great example of how libraries can partner with local schools to promote a culture of authorship).  The project has received nationwide press attention (see the story that came out yesterday in School Library Journal or see my write-up here at the Smashwords blog). 
  6. Many libraries face constant budget pressures.  The work they do is important!  Partner with your fellow authors to support your local library.  If you're a member of a writing or critique group, support your library as a group.  Offer to hold book launch parties at the library once they have a copy of your ebook in their OverDrive collection.  Ask your local librarian what you and your fellow indies can do to support their good work.  Maybe a library fund raiser?  Contact your local city's mayor and state political representatives and tell them how vitally important your local library is to your community.

Librarians, Here’s How You Can Support the Indie Author Community

1.  If you’re on OverDrive, check out our books!  Talk with your OverDrive rep.  We'll be building recommended buy-lists in the coming weeks, so let us know your wishlists for categories and list sizes (or leave suggestions below).

2.  Promote indie authorship in your community.  This is your chance to support the next generation of library-friendly authors.  Libraries have always done a fantastic job promoting literacy and a culture of books.  Now's your chance to promote a culture of authorship. Hold ebook publishing workshops.  Read my story at the Huffington Post about how the Los Gatos Public Library held a series of educational workshops for library patrons, aspiring authors and library staff.  Download my Ebook Publishing in the Classroom presentation which I gave as part of Los Gatos High School's Windows to the Teenage Soul project (mentioned above) in partnership with Los Gatos Public Library (and feel free modify these presentations for your patron-training purposes).  Download the presentation I gave last month at the Texas Library Association's annual conference titled, Launch Community Publishing Initiatives with Self-Published Ebooks

3.  Partner with Smashwords to launch your very own co-branded publishing portal.  It’s free.  Click the "support" link at the Smashwords Website to request our fact sheet with instructions. You'll simply provide us two marketing images.  We’ll place one on the Smashwords signup page and the other on the Smashwords Publish page.  We’ll provide you a custom hyperlink to the Smashwords sign-up page that you’ll place on your website.  Every time the author uploads a new title to Smashwords, they’ll be reminded of their association with your library.  Our ebook publishing services are FREE to you and your patrons.  We handle everything via our self-serve platform.  We don’t employ sales people and we don’t sell anything.  We earn 100% of our income on sales commissions which run only 10% of book’s list price for retail and library sales.  Our entire business is oriented around empowering writers with free ebook publishing services, best practices knowledge, and an ever-growing global distribution network of retail outlets and libraries.  Click here to learn why Smashwords is the world’s #1 ebook publishing and distribution platform!

The news of our agreement is getting picked up everywhere.  Here's an alpha-sorted sampling of some of the stories that have appeared in the last few hours (please share on Facebook, Twitter and everywhere!):

Crains Cleveland Business by Scott Suttell - OverDrive in partnership with Smashwords to  add self-published ebooks to public libraries

GalleyCat/MediaBistro by Dianna Dilworth - Smashwords Books Are Coming to a Library Near You

GigaOm by Laura Hazard Owen - Self-published ebook site Smashwords expands to more libraries in deal with Overdrive

GoodEreader by Mercy Pilkington - Smashwords, OverDrive Bring Indie Titles to Libraries

Infodocket by Gary Price - OverDrive and Smashwords Announce Distribution Deal 

Publishers Weekly by Calvin Reid - Smashwords, OverDrive Ink Distribution Deal
Teleread by Susan Lulgjaraj - Smashwords partners with OverDrive
The Digital Reader by Nate  Hoffelder - Self-published eBooks Coming to a Library Near You
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Official joint press release by OverDrive/Smashwords - Smashwords and OverDrive in Worldwide Ebook Distribution Agreement


Special Thanks

My thanks to OverDrive founder Steve Potash (uber library ebook pioneer!) and the entire team at Overdrive for their hard work that made this relationship possible. 




Special thanks to Henry Bankhead of the Los Gatos Public Library.  He has served as an incredible mentor to me over the last few years to help me understand the ebook needs of public libraries.  Recently, in honor of his work encouraging libraries to work in partnership with local indie authors, Henry was named a 2014 Mover and Shaker by Library Journal Magazine.  Thanks for supporting indie authors Henry!

Monday, May 19, 2014

Smashwords to Distribute 250,000+ eBooks to txtr

Smashwords today announced a distribution agreement with txtr, an ebook retailing and e-reading platform based in Berlin.

txtr operates ebook stores on the web at txtr.com and through e-reading apps for iOS, Android, the Mac and Windows 8. txtr also powers the ebook store for UK-based retailer Foyles and powers the stores of two Eastern European mobile network operators. 

txtr is currently developing txtr-powered ebook stores for US-based mass merchant retailers though the details of these relationships have not been announced yet. Once txtr is ready to announce these or other exciting developments, I’ll share with Smashwords authors.

Over 250,000 Smashwords titles – which come from many of the world’s bestselling indie authors – will bring txtr’s ebook catalog to over 1.7 million titles.  Smashwords titles join titles from most of the major New York publishers.

The addition of txtr marks an ongoing global expansion of the Smashwords retail distribution network.  Smashwords authors can upload one book to Smashwords and have it distributed within hours or days to a growing number of retail and library sales outlets.

txtr will retail Smashwords books at the price set by Smashwords authors and publishers (no discounting), or at the local currency equivalent. Smashwords will pay authors 60% list after the deduction of VAT taxes, if any (similar to how we pay for iBooks sales).  In the months ahead, Smashwords will also supply preorders to txtr because their platform supports preorders.

Smashwords titles will begin appearing for sale at txtr on or shortly after this Friday. Smashwords authors are automatically opted in to txtr as with all new Smashwords channels, but may opt out anytime from the Smashwords Dashboard's Channel Manager in the next three days to prevent their titles from going on sale (we do not recommend opting out!).  As with all new retail and library partners, we send test shipments in advance of each partner's launch and we always provide an opt-out window of at least 48 hours. You'll see these test shipments in your Channel Manager. 

I’ll send out an email notification on Tuesday to all Smashwords authors covering the txtr agreement and additional important news yet to come (stay tuned!).