Sunday, December 27, 2009

Smashwords Year in Review, Plans for 2010

Wow, what a fabulous year it has been for Smashwords. The two blurry charts at left show the monthly number of visitors to Smashwords since our launch in May, 2008, and the monthly number of page views.

Here are some other fun facts I can share:

As of today, Smashwords publishes 5,979 original ebooks.
We're now publishing and distributing the works of 2,700 authors and 100 small independent publishers.
The number of titles published at Smashwords has doubled in the last 90 days.

To put the numbers in further perspective, at this time last year, after eight full months of operation, we were publishing 100 authors and under 160 titles. And we thought that was great.

In the last four months, we've opened up new distribution channels for our indie authors and publishers with the world's largest ebook retailers. We're just getting started.

Salacious sidenote: Every once in a while, I'll receive an email (from my father or wife, for example) that all we publish at Smashwords is erotica. How much erotica do we really publish? See the chart at left. We publish a lot, but not as much as people might think. Only 14 percent of our content is categorized as erotica.

How do we break down across fiction and non-fiction? 74 percent of our titles are fiction, 25 percent are non-fiction, and under one percent are screenplays or plays.

We've had record traffic for each of the last 15 months.

Sales for December are already a record, handily beating November, another record. Despite the sales increases, our sales are still very low. Results don't include results from retail partners, of which B&N is the furthest along.

The average Smashwords author sells more now than they did last year, likely due to our increased traffic.

We're not profitable, yet. We could be profitable next month if, like other self-publishing services or distributors, we charged setup fees, sold packages, or charged for access to our distribution channel, but none of that is in our business model. Instead, we want our interests aligned with the authors, publishers, retailers and readers we serve. Because we only take 15-18.5% of the net, we'll grow our revenues as our authors, publishers and retail partners grow theirs.
What's next for Smashwords?

Here are the priorities I see:

Develop new distribution channels for our authors and publishers - We're building the distribution infrastructure to help authors and publishers get their ebooks out to readers. We'll continue adding new distribution partners in 2010. But first, we're going to focus on completing the technical integrations of our current retail partners. We're furthest along with Barnes & Noble, and we're moving forward with Amazon, Sony and Kobo, although we're behind schedule. This is our highest priority for the next couple months.

Improve customer service - We go out of our way to provide responsive customer service. Unlike most businesses, we make it easy for you to contact us by offering a customer support and feedback link at the top of every Smashwords page. We aim to answer support inquiries within 24 hours during normal business days, and when we can, we enjoy shaving that down to mere minutes. Going forward, as we continue to grow, we want to make Smashwords so intuitive that fewer authors, publishers and customers find it necessary to contact us with support questions. We want to help you find answers to your own questions faster than the time it takes you to email us. We want to make things so obvious there's no need to ask a question.

Improve ease of publishing - We think we provide the industry's easiest to use publishing and distribution platform, but we want to make it faster and easier.

Improve site performance - We know, we know, the Smashwords web site has been pretty slow lately. Several weeks back, we doubled the capacity of our servers, but it made absolutely no difference the next day.

Improve the quality of our ebook outputs - It's a huge challenge to take an author's single source file and convert it into nine reasonably good quality ebook formats. In order to accomplish this, we require authors and publishers to upload simpler files, and simple often means fewer features, like tables of contents that don't support internal links. In the coming year, working in partnership with our authors, publishers, technology providers and formatting partners, we plan to continue raising the quality of our ebook files so together, we can better serve our customers.

Build greater respect for indie authors and publishers - I've noticed a dramatic change among authors and industry watchers over last two years. Self-publishing, indie publishing or whatever you want to call it, is finally starting to earn the respect it deserves. We have a long way to go, however. There are still quite a few naysaying anklebiters and loud pundits who continue to diss and dismiss the the very idea of an independently published ebook. Join with me as we either help to open their eyes to the indie publishing revolution, or show them the path to the tar pits.

Bring reverted-rights books back to life at Smashwords - Several well-known authors, including some best-sellers such as Anne Frasier and Mark Sullivan, have published their reverted rights books on Smashwords. Each time a well-respected author - indie or traditionally published - publishes and distributes with Smashwords, it brings further legitimacy to the indie author movement.

Attract more authors and publishers to the Smashwords community - Every new author or publisher brings with them more readers which benefit all other Smashwords authors and publishers. I like virtuous cycles. Therefore, to best serve our current authors, publishers and readers, it's important we attract more authors, publishers and readers. This brings me to my next item...

Do a better job of getting the word out - The blogosphere has been incredibly supportive of Smashwords this year, and as a result we're fairly well known among the digerati of tech savvy authors and publishers (though just because people have heard about us, doesn't mean they understand us). Yet Smashwords is still relatively unknown to the vast majority of the world's authors and publishers. One reason, I suspect, is that we've received essentially no press coverage from the mainstream media. Smashwords has never been covered or even mentioned by The New York Times, The Wall Street Journal, USA Today, Washington Post, Associated Press, Time Magazine or Newsweek. Why not? Simply put, we need to do a better job of getting the story out there. From my perspective, there's a massive yet quiet revolution taking place, driven by the simultaneous rise of indie publishing and the rise of ebooks. Smashwords is but one small piece of the story. We'll do our best to help the story break into the mainstream this year, for the benefit of our authors, publishers and readers.

Help publishing save itself? - When I first started Smashwords, I had this crazy idea that Smashwords could help large, established publishers survive and thrive in the coming ebook revolution. Based on continued missteps among large publishers, I'm beginning to question whether or not these publishers can be saved, or should be saved. It's sad, really, because I'm continually impressed by the smart, generous and passionate professionals I meet in publishing and I'd hate to see them working their next jobs as greeters at Walmart. But when the senior corporate executives of these publishers continue to handcuff their customers with DRM-infected ebooks; withhold ebook releases to protect hardcover sales; and continue to artificially inflate ebook prices above what customers want to pay; it makes me question whether or not publishing can right its wayward ship before it capsizes. I'm an eternal optimist, so I'm hopeful the big whigs in NY can turn course in 2010 before it's too late.

When we launched 19 months ago, a lot of people didn't know what to make of us. Because we initially focused exclusively on serving self-published authors, some doubters tried to tar us with the same brush as some of the other companies who came before us. I hope some of the initial skeptics are coming around now.

2009 was a great year for Smashwords. We launched our affiliate program, we expanded our platform to support publishers, and we opened up new retail distribution opportunities for our authors and publishers. But our work is just beginning. I'm looking ahead two, five and ten years, and I see much opportunity to better serve our authors, publishers and partners.

My warm thanks to Smashwords authors, publishers, retailers and other publishing industry friends who supported us this year and honored us with their faith and trust.

Last but not least, my sincere thanks to Bill Kendrick, our CTO. Bill is a magician, and we could not have accomplished everything in 2009 without his brilliant wizardry.

Happy new year, everyone!

Thursday, December 24, 2009

Smashwords Author V.J. Chambers Shares 2009 Sales Results

Smashwords author V.J. Chambers published an interesting post at her blog yesterday in which she revealed her earnings from her self-publishing efforts.

I always have great admiration for any author willing to share such data, because it helps inform other indie authors about the true challenges that lie ahead. It also takes guts for any author to admit how little most authors really make from their hard work.

All told, Ms. Chambers, an author of young adult thrillers, brought in revenue of $637.00 since starting her indie publishing adventure in July, 2009. Due to expenses associated with purchasing ISBNs and paying for certain print book services, her net profit for the year was $142.48.

What caught my eye was how the sales were distributed. She sells her titles as print books via CreateSpace/Amazon for about $13.00, and as ebooks in the Amazon Kindle store for $7.00, and as as multi-format ebooks on Smashwords for $5.00.

Considering that ebooks account for only about 3 percent of overall book industry sales here in the U.S., I assumed 97 percent of her sales would be of the print book, and then the remaining 3 percent would be divided between the Kindle store and the Smashwords store, and of course since Amazon gets at least 10,000 times more traffic that Smashwords each month, I assumed they'd sell quite a few more ebooks that Smashwords. I was wrong.

Here's the breakdown:

Print (Createspace/Amazon): $273.62
Kindle store: $56.54
Smashwords store: $307.32
So in other words, the books at Smashwords outsold the other two. Like many indie authors, V.J. does her own marketing and operates her own website and blog. On her website, she gives all the different formats equal promotion and lets the customer decide if they want print, Kindle or Smashwords. Smart.

I asked V.J. to share her thoughts on the results above. To ensure I was viewing her results apples to apples, I also asked if all titles were available via the multiple outlets for the same period of time. Her response (excerpted):

Yes, most of the books have been available via smashwords, kindle, and amazon/createspace for the same amount of time. Only one has been available longer on createspace/amazon/kindle than it has on smashwords.

Overall, I LOVE smashwords, for several reasons. One of course is the bigger royalty I make from smashwords than I do anywhere else. This enables me to price my books cheaper, but make more money. I think the books sell better on smashwords because I sell them for cheaper. I sell kindle books for $7 and smashwords books for $5. I do this because (even at seven bucks) I only make like $2 royalty from Amazon.

Um...but your question was how do I account for the results. So...A) Smashwords books are more affordable. B) My audience clearly has no problem reading books on a computer screen, so they're willing to buy an inexpensive e-book before they'll buy a trade paperback. C) E-books trump print books in instant gratification. D) Smashwords trumps Kindle since it offers multiple ebooks formats.
I think V.J.'s results are fascinating for a number of reasons:

  1. Lower cost books can actually help authors/publishers sell more books - Large NY publishers are fighting tooth and nail to protect higher prices for their ebooks, fearful they can't profitably run their businesses with lower cost ebooks. Many publishers are upset Amazon is helping to establish $9.99 as a price expectation among its customers for ebooks. V.J.'s experience provides one datapoint supporting my belief that publishers should consider offering some of their titles as lower cost ebooks, under $9.99. I blogged about this at Huffington Post a couple months back with my column, "Why We Need $4.00 Books."
  2. Publishers can make more money with lower cost ebooks - Since Smashwords pays authors 85 percent of the net for sales at, authors can price for less but still make more profit per copy sold. I've been talking about the virtuous economic dynamics behind low cost/high margin ebooks since we launched Smashwords 18 months ago, so I'm gratified to see the numbers play out in the real world.
  3. It pays to offer customers choice - Any publisher, large and small, can follow V.J.'s lead by offering customers a choice of formats, prices and retailers. When customers have a choice of low cost ebooks vs. more expensive print books, the 3 percent ebook marketshare data above doesn't hold water. In the real world, if a publisher gives the consumer the choice, ebook sales represent a much higher percentage of sales than you'd expect. This actually confirms Amazon's own reported sales results: For books available in both print and Kindle format at Amazon, Amazon reports 48% of those sales go to the Kindle version. Amazing.
  4. Ebooks can be more profitable than print books - If it weren't for her ebook sales at Amazon and Smashwords, V.J. would have lost money for the year. Print publishing can be more complicated, and more expensive, than ebook publishing.
  5. Authors/publishers have the power to direct customers to favored retailers - As an indie author, V.J. is directly engaged with her readership, and as you can see in her web site's store, she offers links to where her customers can find her books.
  6. Self-published books need never go out of print - At first glance, $637 in royalties may not seem like much, but annualized over a year they're closer to $1,200, and if you consider these books will never go out of print, it's quite possible she'll continue earning the same or greater income for many years to come, even if she never publishes another book. Yet she will write and publish more books, so it's more likely she'll see her earnings rise in the years ahead as she builds her readership.
I think all publishers, large and small, have a lot to learn from the indie author pioneers. The more I learn about publishing trends, the more I believe that the future of publishing truly lies in the hands of authors like V.J.

To learn more about V.J. Chambers (and buy her books!), check out her author profile on Smashwords, or visit her personal website or blog.

Are you an indie author or publisher? Feel free to share your own results below, even if you don't publish or distribute through Smashwords.

Sunday, December 13, 2009

Developing an Ebook Strategy - Free IBPA Conference Call Monday 1pm Eastern

The Independent Book Publisher's Association has invited me to be the guest on a free 90-minute conference call Monday at 1pm Eastern titled, "How to Develop and Implement an Ebook Strategy."

We'll be giving away a free Sony Reader Pocket Edition to one lucky listener, courtesy of our good friends at Sony Electronics and the Reader Store from Sony.

The conference call will follow a Q&A format, moderated by Florrie Binford Kichler, president of the IBPA.

If you're new to ebooks (and who isn't??), I invite you to attend. We'll cover a lot of ground, including almost everything you need to know to produce, publish, distribute and market your ebooks. No, this is not a Smashwords advertorial, so even if you don't work with Smashwords you're welcome to attend and join the conversation with your questions.

Topics we'll address include:
* What’s the latest market data on ebooks?
* What’s driving the growth of ebooks?
* Overview of ebook reading devices
* How do ebooks fit within an overall publishing strategy?
* Which books work best as ebooks?
* Tips on ebook formatting
* Deciphering the alphabet soup of ebook formats
* How is the ebook supply chain evolving?
* What's DRM, and do customers really know or care?
* How do I price my ebooks?
* How do I market my ebooks?
Florrie has prepared dozens of questions to ask me, and we'll also take live questions from listeners on the conference call and from folks on Twitter who use the hashtag #IBPA.

This call is a follow-up to an online seminar I presented back in July for the IBPA's Publishing University Online series. Over 120 people paid up to $69 each to attend that class. There were so many great questions we couldn't get to them all. After some pondering, we decided to do a free conference call, open it up to everyone (even if you're not an IBPA member!), and make it 100 percent Q&A for 90 minutes!

Post-Call Update:
Great call. Thanks everyone for attending. Access the conference call replay at 712.432.1085 (free, but your long distance rate, if any, applies) with passcode 405513.

Monday, December 7, 2009

The Importance of Protecting Your Dreams

As any writer will appreciate, writing can be a grueling, solitary and thankless endeavor.

While most people fantasize about writing a book, few posses the determination to actually complete one.

There are many voices telling the author to never put pen to paper.

First there are the logical, sensible voices in your head that remind you your masterpiece is unlikely to ever get published by a big publisher, and even if you were lucky enough to earn that badge of honor, you're unlikely to ever earn enough to make the tax man care (see this anonymous post this morning that links to a 2003 story in, written by an anonymous 'Jane Austen Doe' titled, "Confessions of a Semi-Successful Author" that reveals the ugly truth about writer compensation).

If the common sense voices in your head aren't enough to discourage you, you must also contend with the soul sucking voices of naysayers. They're the snarky or even well-intentioned unbelievers who kindly remind you: you're nuts to dream of writing a book, others already do it better than you, and hey, why don't you get a real job instead?

The prompt for my post today came indirectly from a question I was asked for a Q&A interview I did at

Debbie Jenkins of AuthorShock asked me to name the single most important thing I wished I knew before I started out in business. To answer the question, I thought back to 20 years ago when I first cut my teeth working for my dad's software startup, and it reminded me of one of my all-time favorite lyrics:

"They say that life's a carousel, spinning fast you've got to ride it well. The world is full of kings and queens, who blind your eyes and steal your dreams..."
-Black Sabbath, Heaven and Hell
My short answer was that the entrepreneur (writers are entrepreneurs too!) must protect their dreams. No, I'm not talking about people stealing your ideas. Ideas are a dime a dozen. It's the execution that matters.

Don't let people stop you from dreaming your dreams, and don't let the skeptics derail you from executing on your dreams. Often, those naysayers are criticizing you because they're scared, or they can't see what you see.

Noone will understand your vision until you get out there and show them.

If all writers were fully equipped with a full contingent of common sense genes, most books would never get written and the world would be a poorer place for it.

What's my dream? To build an ebook publishing and distribution platform that helps any author, anywhere in the world, realize their dream of publishing. You can read the full interview at Authorshock.

What's your dream?

P.S. Don't forget to enter the free Editor Unleashed/Smashwords "Why I Write" essay contest. Win $500. Top 50 will be published in an anthology at Smashwords.

Tuesday, December 1, 2009

Should Publishers Abolish DRM and Trust Customers Instead?

My new column at Huffington Post suggests publishers should abolish DRM and trust their customers to do the right thing.

Most ebook customers don't know what DRM is. Many authors and small publishers don't understand it either. Yet if you're a reader, author or publisher, it's probably a good idea to roll up your sleeves and think about how DRM might impact you in the future.

All Smashwords books are published DRM-free. This means we don't apply copy-protection schemes that would prevent, for example, a customer from reading their ebook on any of the multiple ebook reading devices they may own today or in the future (e-readers, computer, cell phone, etc.).

Some of our retail partners apply DRM to our books in their own stores, and we're fine with this. It's up to the customer to decide if they care about DRM or not.

At Smashwords, we're strongly anti-piracy, though unlike publishers who infect their books with DRM, we instead work with our authors and publishers to help them educate customers to do the right thing. We think most customers are honest and honorable, and they understand the value of supporting the author or publisher who created the book for their enjoyment.

In the Smashwords Style Guide, we encourage our authors and publishers to add the following license statement to their books, which acts as a gentle reminder:

This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each person you share it with. If you’re reading this book and did not purchase it, or it was not purchased for your use only, then you should return to and purchase your own copy. Thank you for respecting the hard work of this author.

The license statement also acts as a trojan horse. Should the book fall into the hands of readers who didn't pay for it, the license statement provides the honest reader a chance to make good on their obligation to support the author or publisher.

Obscurity is a bigger risk to authors than piracy. And while I'd never say piracy is a good thing, I've seen some folks argue it can actually provide indirect benefits to the creator. The idea isn't as outlandish as you might think. Imagine if somehow my novel was pirated, and fell into the hands of one million readers. What if the gentle reminder above prompted one percent of them to purchase the book? That's 10,000 paid customers.

In the column at HuffPo, I have a real world example of how one forward-looking software company (and folks, ebooks are software!) leveraged piracy in their early years - even encouraged it - and now they sell billions of dollars in software per year. There are many lessons to be learned by authors and publishers willing to experiment.

The column at HuffPo is actually a re-write of a previous column that first appeared here on the Smashwords blog. In that column, I tried to rationalize what I viewed as dichotomous thinking on the part of mainstream publishers. They sell books in print, and those books are shared, resold, resold again, again and again, and at each step the publisher receives nothing. If that book was an ebook, the publisher would call it piracy.

The same previous column was also republished over at Teleread. One commenter there called it, "marvelously imperfect," which is the highest praise I've ever received on a blog post. To me, the best blog posts provoke thought and serve as conversation-starters, not the last word.

What do you think is the last word (or the next word) on the DRM debate? Comment here, or click here to join the discussion at HuffPo.