Friday, December 31, 2010

Smashwords Year in Review, Plans for 2011

Welcome to my annual Smashwords year in review where I report our progress and plans for the new year.

2010 was a breakout year for us. It was also a breakout year for our indie ebook authors and publishers.

Exactly two years ago we were publishing 140 books from 90 authors. We thought that was fantastic for our first year in business.

Last year at this time we hit 6,000 books from 2,600 authors and publishers. We were thrilled.

Today we're listing 28,800 books from over 12,000 authors and publishers. We released 3,200 new ebooks in the last 30 days alone. We're pinching ourselves now, not just because of how far we and our authors have come, but because we know we've barely scratched the surface of the possible.

Six years ago Smashwords was a jumble of simple ideas scribbled on a sketchpad. Today it's a reality.

My original idea was simple: Create a free ebook publishing platform that would allow any author, anywhere in the world, to instantly publish an ebook at no cost. Authors, I believed, should have the right to publish whatever they want, and readers should have the freedom to decide what's worth reading.

From the beginning, just about every conceivable odd was stacked against us. When we launched, ebooks accounted for about 1/2 of 1% of the overall book market; self-publishing was considered the option of last resort for failed authors who couldn't find an agent or publisher; and self-published books weren't selling. All the ingredients for a successful business, right? I thought so. I had a hunch all of this would change because it needed to change.

I believed traditional publishers were squandering the future of books. After decades of consolidation, big publishers began sucking the soul out of publishing. They began judging the merits of a book through the myopic prism of perceived commercial potential - a recipe for dumbing down publishing with more milquetoast celebrity books. Wanna buy a book from Justin Bieber, Snooki or the Kardashians?

The shift to this commercial filter meant that authors who otherwise deserved publication were denied the opportunity, therefore depriving readers of their ability to enjoy these books. If you value books, and if you believe as I believe that books are essential to the very future of mankind, then it's time to rise up and do something about it. I've always had this higher purpose in mind with Smashwords. If you look at our logo, the fist symbolizes the indie author revolution.

We're also building a business as we try to change things for the better. In my 20+ years of technology entrepreneurship, I've always been drawn to startups that have the power to effect positive social change. This was certainly the case with my last startup,, where I helped level the playing field for small stock market investors.

Smashwords, to me, is the startup of a lifetime. Every day I'm excited to be part of it. Smashwords will only ever be as great as the authors and publishers we enable. Considering the vast reservoir of creative talent we have yet to help unleash upon the world, I'm confident our best days are ahead of us.

Back to the business. What a difference a couple of years make. Today, ebooks account for nearly 10% of trade book sales. This number will probably double in 2011, and as I predicted over at GalleyCat earlier this week, I think on a unit volume basis, ebooks will account for one third or more of all book consumption come December 2011. I never imagined this would happen so fast, and it's possible I'm underestimating the growth this market will experience in the coming year.

After 31 months of advocating the indie ebook gospel, I still wake up every morning invigorated by our possibilities and potential. We attack every day with the tenacity of a newborn startup. Like I said last year, and I'll say it again, we're just getting started.

Some of the highlights of the year in addition to the numbers I shared above:

Distribution highlights:

  • Smashwords is now one of the largest distributors by title count of indie ebooks to retailers such as Apple, Barnes & Noble, Sony, and Kobo
  • I'm very pleased with the support these retailers have shown our indie authors and publishers. Retailers are starting to earn real profits from our indie ebooks. This is cause for celebration for all indie authors and publishers, because it means access to more distribution in the future.
  • In April Smashwords became one of a small handful of global aggregators serving the Apple iBookstore. On launch day of the iPad, we had over 2,000 books in the Apple iBookstore. When Apple launched the iBookstore in Australia, we had nearly 10,000 books in the store.
  • In December we successfully transitioned all of our retailers to agency pricing. This means authors and publishers set the price at retail, and earn 60% of the list price.
  • Preliminary sales reports from Apple and B&N indicate that sales tripled in the couple of days following Christmas. It will be interesting to see how these numbers moderate over the coming weeks.
Traffic to
  • In the past year, people visited Smashwords from 227 countries
  • 59.6% of visits came from the U.S.; 40.4% came from outside the U.S.
  • Top 5 countries (U.S., U.K., Canada, India, Australia) accounted for 80% of visits
  • Top 20 countries accounted for 90%
  • Top 40 countries accounted for 95%
  • Millions of people visited this year for the first time
  • receives millions of page views each month, and our traffic continues to grow each and every month.
  • Yesterday, December 30, was an all-time record for number of visits to

Business Highlights

  • Way back on October 7, 2009, when we reached 150 million words published, I set a crazy goal to reach one billion words by December 31, 2010.
  • On October 20, 2010, we reached one billion words nine weeks early.
  • Today, December 31, 2010, we've beat the goal by over a quarter billion words.
  • We redesigned our web site infrastructure this year to support faster performance and greater reliability. The site's uptime and performance is excellent now, and has been scaling very well as we achieve record traffic each month.
  • We made multiple enhancements to our Meatgrinder conversion system this year, and as a result the quality of our ebook outputs is better than ever.
  • A few months ago we reached profitability. Nothing spectacular, and not enough to pay me a salary yet because I'm reinvesting any excess cash back into the business. What this means is the business is now fully self-sustaining and we're adding staff. We're here for good. We accomplished this while also paying some of the highest royalty rates anywhere. Unlike other services that make much of their income by charging authors upfront fees for publishing packages, set-up, conversion, and other services of nebulous value, our services are free and accessible to any author. We believe our interests are aligned with our authors and publishers. The platform we created allows us to take a risk on every author. If we don't sell anything, we don't earn our commission.
What's coming in 2011:

Competitive front: Fight to survive and thrive. Despite our initial traction in the marketplace, our future is by no means guaranteed. We will continue to pursue our business plan with vigor because there's no room for complacency. We've already seen multiple upstart competitors try to launch Smashwords knockoffs. Good luck to them. They'll soon learn how tough it is to make a buck in this business. Have I mentioned I'm competitive?

Distribution: We love ebook retailers because they're expert at putting our ebooks in the hands of readers. Over the next 12 months we'll continue to add more retailers to the Smashwords distribution network, while working to build broader and deeper relationships with our existing retail partners. We understand that authors and publishers often have the option to go direct to retailer. Our mission is to make it more profitable for authors and retailers to work through us. We think we add a lot of value to the ebook supply chain for authors, publishers and retailers alike. If we don't add value, we don't deserve to be here.

Meatgrinder: As I mentioned above, we made a lot of enhancements to Meatgrinder. We'll continue to iterate and improve it in the months ahead, especially in the area of automated TOC detection. We'll also add more error-correction.

Premium Catalog reviews: For most of the year, we managed to maintain one week or less turnaround times on Premium Catalog reviews, though a few times we got backlogged up to two weeks. We're working on plans that should help accelerate Premium Catalog approval cycle times, so we can help you get your book in the catalog and distributed to retailers faster with less back and forth.

Surprises: We have several surprises planned for 2011. I can't tell you what they are otherwise they wouldn't be surprises.

Stretch Goal: Our goal is to hit 75,000 indie ebooks published at Smashwords by December 31, 2011. This means we need to add 47,000 books in 12 months. That works out to 130 new releases each day or one new book every 11 minutes.

Ongoing Education: While I sometimes criticize some of the practices of big publishers, I continue to have enormous respect for professional publishing and the people in publishing. Although we make it easy to self-publish an ebook (some have said "too easy"), we don't make it easy to produce a book worth reading. That responsibility lies in the hands of the author who must now step up to the plate and become a professional publisher. They must adopt proven best-practices of publishing, such as professional editing, revision and proofing prior to publication, and professional cover design. We'll do our best in the coming year to continue to help authors and publishers improve the practice of publishing so they honor their readers with books worth reading.

Smashwords Direct: Right before Christmas, we began working with a large publisher of public domain books to convert and distribute 10,000+ titles across the Smashwords distribution network (the numbers above don't reflect these direct titles). Since we don't accept PD titles at our retail site, these titles will only go to retailers. In the year ahead, we'll look for additional opportunities to help other large publishers take advantage of our expanding distribution reach. Refresh: We're noodling on multiple ideas to give the site a refresh so we can do a better job of showcasing the higher quality titles, as determined by real customer downloads, purchases and reviews. Ever since we launched in May 2008, it was important to me that every new Smashwords book receive its 15 minutes of fame on the home page as a new release. This gives every book a fair and equal chance to find its first readers, and if the book is truly wonderful, the readers can take it viral from there. The downside of this democratized feature process is that everything new hits the home page, and often the work isn't ready for prime time. It might be missing a cover image, or the author didn't properly format it to the Style Guide. Our current policy of showcasing all the latest releases - even the obviously poor ones - ultimately gives first time visitors a warped perspective of the true talent captured within the Smashwords catalog. Another issue I want to tackle is adult content. We're big supporters of free speech, but we often receive complaints from visitors and authors shocked by some of the erotica images they see on the home page - images they'd never see on the home page of another bookstore. We also have kids who hit the home page for their first visit, and such content isn't appropriate for them either. We're working on ideas in this regard that can strike a fair balance, while still allowing our professional erotica authors and publishers to get their books exposed to more customers who are searching for that content. Stay tuned as we work to strike a good compromise that benefits all parties involved.

Responsible Adult Content Publishing: There have been reports that Amazon has clamped down on incest-related titles, and some authors and publishers worry this is the start of a trend toward increased retailer censorship. At Smashwords, we've always articulated a very clear policy in our Terms of Service regarding acceptable content, and we were probably one of the first to define a clear policy against publishing erotica that includes underage characters, even if those characters are bystanders in the story. If the story is intended to titillate, kids don't belong in it. Simple. We've started encouraging our erotica authors and publishers to clearly state inside their books, if not in the book description, that all characters are 18 years of age or older. I think it's important that responsible erotica authors and publishers self-enforce these reasonable guidelines, otherwise retailers will be forced to think twice about carrying such content. Smashwords was founded with a fierce belief in free speech and no censorship, and our conviction on this issue remains true, but that doesn't mean anything goes.

For those concerned about censorship in the retail channel, I can happily report that I'm aware of fewer than a dozen titles that have been outright rejected by our retailers, and in some of those cases the content violated our Terms of Service anyway. In other cases, the authors were able to make minor modifications to cover images to satisfy retailer requirements. This works out to less than one thousandth of one percent of our titles. I think the small number reflects not only the responsibility shown by erotica authors and publishers to comply with our Terms of Service, but also the benefit of our manual vetting process at Smashwords for Premium Catalog distribution. I know our retailers appreciate we self-police. We're also thankful to Smashwords readers and customers who report potential violations to us, so we can work with the author/publisher to proactively remove or fix the content.

My New Year's Thanks to All

To the 12,000+ authors and publishers who entrusted your precious books to Smashwords over the last 2.5 years, and to those of you who stood by us despite our many inevitable growing pains, and who always believed in our commitment to do right by you, thank you for believing in us. We will continue to run our business with the highest ethical standards and transparency as we always have, and will work to earn and deserve your continued trust every day. Happy New Year!

Tuesday, December 28, 2010

2011 Predictions for Book Publishing

It's annual prognostication time when folks like me stick out their necks and try to predict the future. I invite you to join in the fun. Brush up your crystal ball and share your publishing predictions for 2011 in the comments field below.

Earlier today, Jeff Rivera over at MediaBistro interviewed me for my ten book publishing predictions for 2011.

I'll list five below, and then I encourage you to click over to Mediabistro for the full ten in his interview, Publishing Predictions for 2011 from Smashwords.

If 2010 was the year ebooks went mainstream in the U.S., 2011 will be the year indie ebook authors go mainstream. We've already seen this start to happen with some tremendous indie ebook author breakouts in 2010. I wrote about Smashwords author Brian S. Pratt a few weeks ago.

So here are five predictions for 2011:

1. Ebook sales rise, unit consumption surprises – Ebooks sales will approach 20% of trade book revenues on a monthly basis by the end of 2011 in the US, yet the bigger surprise is that ebooks will account for one third or more of unit consumption. Why? Ebooks cost less and early ebook adopters read more.

2. Agents write the next chapter of the ebook revolution – Agents, serving the economic best interests of the best-selling authors, will bring new credibility to self publishing by encouraging authors to proactively bypass publishers and work directly with ebook distribution platforms. Agents will use these publishing platforms for negotiating leverage against large publishers. The conversation will go something like this: “You’re offering my author only 15-20% list on ebooks when I can get them 60-70% list working direct with an ebook distributor like Smashwords or a retailer like Amazon?”

3. More big authors reluctant to part with digital rights – Indie ebook publishing offers compelling advantages to the author. The economics are better (see #2) and the publishing cycle times are faster (an ebook manuscript can be uploaded today and achieve worldwide distribution in minutes or days, not years). Ebooks also offer greater publishing flexibility (shorts, full length, bundles, free books), and the opportunity to reach more readers with lower cost (yet still higher-profit) books. The advantages will entice more professional authors to self-publish some or all of their future catalog, and all of their reverted-rights catalog.

4. Self Publishing goes from option of last resort to option of first resort among unpublished authors – Most unpublished authors today still aspire to achieve the perceived credibility and blessing that comes with a professional book deal. Yet the cachet of traditional publishing is fading fast. Authors with finished manuscripts will grow impatient and resentful as they wait to be discovered by big publishers otherwise preoccupied with publishing celebrity drivel from Snooki, Justin Bieber and the Kardashians. Meanwhile, the break-out success of multiple indie author stars will grab headlines in 2011, forcing many unpublished authors off the sidelines. As unpublished authors bypass the slush pile, publishers lose first dibs on tomorrow’s future stars.

5. Ebook prices to fall – It’s all about supply and demand. Demand is surging, but supply will overwhelm demand. Average ebook prices will decline, despite attempts by Agency 5 publishers to hold the line. The drop will be fueled by the oversupply of books, abundance of low-cost or free non-book content, influx of ultra-price-sensitive readers who read free first, fierce competition for readership, and digitization of reverted-rights and out-of-print books. Indie authors, since they earn 60-70% retail price, can compete at price points big publishers can’t touch.

Read all ten of my predictions in the full interview over at Mediabistro, and please share your own predictions in the comments below.

Image credit: Wikipedia

Wednesday, December 8, 2010

Smashwords Author Brian S. Pratt to Earn over $100,000 in 2011

At first glance, Brian S. Pratt of Boswell, Oklahoma doesn't fit the stereotypical profile of a best-selling author. Yet he, and others Smashwords authors like him, represent the future of publishing.

Pratt began publishing with Smashwords in early 2009. His first quarterly royalty payment was $7.82. While most authors would find that number discouraging, Pratt was encouraged. It was a start.

In the quarters since, Pratt's earnings have grown, and in recent quarters he's become a veritable breakout success. Last quarter, he earned over $18,000 from sales across the Smashwords retail distribution network. This quarter, with three weeks to go, he's on track to break $25,000. He's on track to earn over $100,000 in 2011 at Smashwords, and up to $200,000 total when he includes his projected Amazon sales. Not one to count his eggs before they're hatched, though, he's fast at work on a next series.

The road to here was anything but easy. At age 43, he's held a number of eclectic jobs, ranging from an U.S. Air Force avionics technician to a taxi driver. Until recently, as he shares in the interview below, he was living below poverty level.

He writes fast-paced, can't-put-it-down fantasy. Pratt started writing because the series authors he enjoyed reading weren't completing their series fast enough. So he started writing books he'd like to read. Unlike some ebook series writers who carve up books into short serialized chunks, Pratt's books are full-length, with most clocking in around 150,000 words.

His writing style is completely his own, and any New York editor would surely bristle at the rules Brian breaks. His most popular series, The Morcyth Saga, is written in the present tense (though he changed to past tense for subsequent series). It's no wonder that after years trying to land an agent and a publisher, he faced unanimous rejection from publishing experts.

Yet readers had other plans for Pratt, as we learn today in this interview.

Lacking a traditional outlet for his work, Pratt self published in 2005, first in print and later ebooks. Today, his ebook sales far outpace his print sales by a factor of more than 100:1.

Today, Pratt has 17 books at Smashwords, and we distribute the books to Barnes & Noble, Apple, Sony and Kobo, as well as to online mobile app catalogs of Stanza and Aldiko.

His Morcyth Saga, a seven-book fantasy adventure series, is by far his most popular collection.

Below in this exclusive interview, Brian S. Pratt recounts the long road to his overnight breakout success.

[Mark Coker] Brian, tell us about your books

[Brian S. Pratt] I have 17 books completed spread across several series. Most are full length, epic fantasy type novels, each anywhere from 120,000-190,000 words. I have a few I call my mini's that are just plain fun and get the reader into the adventure from the get-go. These range from 60,000-90,000 words.

[MC] How did you get started as a writer?

[BSP] Back in 2005, I found myself waiting for several of the main authors to get around to finishing their next novel. The biggest one that annoyed me was The Wheel of Time by Robert Jordan. Don't get me wrong, I absolutely loved the series up to around book 6; then it lost me. Action grew infrequent and far between. It got bogged down in mundane details. Jordan wasn't the only one I was impatiently waiting for. So, on March 1, 2005, I sat down at my computer and decided to write The Morcyth Saga. Figured I could do a good job and write the kind of book I wanted to read. One that had action in every chapter, you followed the main character throughout, and descriptions were down to a minimum. That is exactly what you get in The Unsuspecting Mage; Book One of The Morcyth Saga.

[MC] What training do you have as a writer?

[BSP] Training??? Not a bit. All I started with was the drive to write a story and everything else followed. I ended up writing a seven book series in Present Tense, rife with errors in grammar, spelling, and punctuation. Most of the errors have been fixed in subsequent editions. My word usage was not what one would find in the traditionally produced books, some said it was too simple. I don't know about that, but at least you don't need a dictionary at hand when you read my books. Some have liked it, others less so. My books feel different than others for that reason.

[MC] Tell us about some of the first customer reviews you received, and how you reacted?

[BSP] Reviews, yes there have been some dillies. Here's the first one-star I ever received. It was at less than a month after I first published The Unsuspecting Mage.

1.0 out of 5 stars - January 15, 2006
Present tense is an amateurish way to write.....,
.....and this book reads like it was written for a high school English class. Worst book I've read in a long time. I like lots of books, especially ones written by Robin Hobb, George Martin, and Stephen Donaldson to name but three. These books were well written. This one was not. Just wondering - how many of you are still in high school yourselves?
The last line was directed at the other reviewers who said they liked my book.

Needless to say, this devastated me and I stopped writing for a few weeks. Of course, I've had much worse ones since. But then, my books kept selling. And I always told myself that as long as my books keep selling, even if it is marginally, then it would be worth it to continue. I've come to realize that there will always be those that do not like my books, and so what? They simply are not in my target audience. And my target audience is me. I write what I would like to read. And it looks like there are many "me's" out there for I've sold lots of books. If you want to see what may be in your future, check out The Unsuspecting Mage at Amazon.

[MC] You joined Smashwords March 27, 2009 10:26pm (I checked!). Can you take us back to that moment in time, and recall what was going through your mind

[BSP] Let's see. I was a single dad living with three kids and boy, was I poor (under the poverty level). Up until then, I hadn't really thought much about eBooks. I tried Mobipocket for a while and had great sales for three months, then it died off. Sales for my paperbacks, which I had published through iUniverse had fallen off dramatically. Where I had been breaking 4 figures a quarter, I was now less than 600 per quarter and bleeding red. I typed in "self publishing" and saw a quirky little site called Smashwords. It said, Your eBook, Your way. Didn't cost a thing so what did I have to lose? First quarter sales at Smashwords were dismal, 2009-04-07 — $7.92 As it happened, April 7th is my birthday. That was cool. But I wasn't deterred. Books were selling. Sometimes, one or two a week, but they sold. I stayed with it and refused to allow all the naysayers (and there were those by the droves) to stifle my dream. Sales gradually improved and, well, here we are. Can't give up on your dream, EVER!

[MC] Your first quarter at Smashwords you earned $7.92. I've seen some new Smashwords authors jump for glee over a number like that, and others have unpublished their books and quit Smashwords in disgust. What was your reaction?

[BSP] My reaction was "I'm ahead, $7.92” By this time I had been published for a little over 3 years and had seen sales go up and down. Can't make any kind of decision based on just one quarter. Plus, I was getting the hang of how to make Smashwords work for me. You can't just publish your book, sit back and think, "Okay, the money is going to roll in now." It ain't gonna happen. The industry is stacked against anyone who is just starting out. You have to get out there and grab readers by the collar and shout, "Here I am!" They won't find you or care about you until you do.

[MC] Your sales started small but then grew steadily, and in more recent months you've broken out into the best-seller lists at some of our retailers. What was the secret?

[BSP] After receiving my second royalty check which was only $183.60, I figured I needed to get busy and get creative. So I first looked around for a good place to advertise and found Project Wonderful. They suited my needs perfectly; ads would run on websites for pennies a day. I then created a coupon code that would discount my first book for free. I then created a series of ads stating that a free copy was available, all they had to do was copy down the code and go to Smashwords for their free copy. Well, that bombed and bombed badly. Came to realize that I was asking way too much of customer. In order to get my book, they had to go to Smashwords, create an account, put in the code, then download.

People are inherently lazy about shopping, especially in this world where everything is a click away. I pondered on the lack of success with my coupon code, then realized that if I just made the book free, they would only have to click the link in the ad, then download a free copy. Simple. (Keep it Simple-Stupid) I made it so easy for people to download my book, that downloads jumped. Subsequently, sales for books 2-7 jumped as well.

If it’s free and downloading is just a click away, people will do it. Very few can walk away from a free deal. Unknown authors are risky to readers and few wish to risk money, or time, to try a book they are not sure they will even like.

When Smashwords signed the deal with Barnes and Noble, my sales jumped 300% that quarter. Barnes and Noble have one of the best “Free eBook” sections and now people could find my book without having to see a small ad. Without Smashwords free copy of book one at Barnes and Noble, I would hardly be doing the sales I am today. That was the one act that set into motion sales the likes I never thought possible for an Indie without agent, editor, or publisher.

[MC] Prior to publishing at Smashwords, multiple agents and publishers rejected you. Tell us about your most memorable rejections.

[BSP] No one wanted me. All the rejection letters were worded very politely, but you can’t help but adding phrases to them like “You suck as a writer” or “Your book would be good to keep my table level but as for making money, it has a better chance to spontaneously combust.” When I published it through iUniverse, I opted for an editorial review ($300 at the time). They basically said the manuscript would need a serious overhaul before it would become commercially viable. And oh by the way, we do have many such services available…for a price. At the time I thought it was a complete waste of time. But now looking back with five years experience under my belt, many of their comments had merit. Although one must keep in mind, had I continued working with my first book to get it right, I’d still be working on it to this day and all subsequent ones never having seen publication. There comes a point when a writer has to say, “It’s ready. Good or bad, let’s see what happens.” What happened in this case was that there were many people out there who enjoy a good adventure and have since traveled with James through 8 books and are patiently (impatiently might be a better word) waiting for the second installment of the follow-up series, Travail of The Dark Mage.

[MC] What does it mean to you to be described as a self-published author, or an Indie author?

[BSP] The biggest worry a writer had back in 2005 was whether or not they wanted to be stigmatized as “self-published.” Once stigmatized, I was told, never again would a traditional publisher take you on. Unless you sold over 50,000 copies. But then, I thought, if I sold 50,000 copies, what would I need a publisher for?

Now, I think of it as a badge of pride. My success is mine, no one else’s. Everything that comes from my books, comes because of the hard work I, and I alone, put into it. Others have helped, but I spearheaded it and got it done. Even if today I was to get a publisher, from what I’ve heard of other author’s experiences, they still do most of their own publicity and get tied into restrictive contracts and unrealistic demands. Case in point, the movie Back to the Future. The head of the studio sent the producers a memo in which he stated that “Frogman from Mars” would be a better title. What a nightmare to have to deal with that. As a self-published author I don’t have to worry about another’s “taste” or “ideas.”

Of course, if you fail, again you have no one else to blame. But the only failure you will have, is if you quit. Try new ideas, talk to those who have succeeded, most of all don’t give up.

[MC] What's your view of the future of indie authorship, and where do you think traditional publishers fit into your plans, if at all?

[BSP] Indie authorship is here to stay and the traditional publishing houses better get used to it. They also better not discount the effectiveness of its appeal or they’re going to regret it. I think they are going to wake up one morning and wonder where all their profits have gone. The better authors will do it themselves because they are going to make more money at it. Also, as the Indie Revolution continues, more and more authors being sought by publishers will be taking hard looks at their contracts. True, if you only have a single book, traditional publishers may be the best route. I make money because I have a series, a completed series, and give the first one away free. Can’t beat free for advertising.

As of today, I no longer send query letters (what a waste of time that was) to agents. No longer submit to publishers or even enter contests. My books are not award winners. They are merely fun books. I’ve tracked winners in the past and they don’t always do well.

What would happen if I got an email from a publisher asking for publishing rights? I’d listen to what they have to say. I’d carefully scrutinize any contract for how future books would be affected and so forth. I feel the restriction and demands made by them would far outweigh any increased royalties. But I could be wrong. Never say never to anything where money is concerned.

[MC] Where does print fit into your publishing strategy going forward?

[BSP] Print goes hand in hand with eBooks. You have to have a print copy of your book. I sell maybe 2 or 3 books per 1000 eBooks. Not much, right? Keep this in mind. eBook readers tell their book reader friends about your books. If you want them to buy it, it needs to be available. My biggest hurdle with print has always been pricing. Not much you can do about that, self-publishing print books is expensive no matter where you do it. I’d suggest Lightning Source Inc. they’re the best and will put your books before the most customers.

[MC] Imagine you're mentoring a new author today. What three secrets to success would you share, and why?

[BSP] Actually, I’ve already helped over a dozen authors with getting started. I take the time to answer questions and give advice freely.

  1. First thing I advise is to be approachable. Have an email address solely for those contacting you as an author and post it everywhere. If someone sees your book, that email address had better be there too. And remove the spam filter. About a year after I published my first book, I happened to check my spam folder and found 3 emails from readers. Made me mad. Also made me wonder how many others couldn’t get hold of me due to my (censored) spam filter. There was this one author, forgot who, but I saw his profile on Amazon. It basically said that he didn’t want to be bothered with questions from readers, nor did he want to hear from other authors. And oh by the way, won’t you buy my book? –Not word for word, but that was the gist of it. Needless to say, I didn’t even look as his book and have since forgotten the guy. I’ve earned many steadfast fans simply because I responded to them in a personal and friendly manner.

  2. Get a website. They’re pretty cheap and are absolutely invaluable. Your readers need a place they can go to learn more about the books, and about you.

  3. Listen to your heart, not reviewers. If you can’t stand criticism, find something else to do. Also, when you get your book first published, friends and family always like to post reviews. Well, there are certain things you need to explain to these reviewers before they post.

    One line reviews are worthless. Saying, “This is greatest book I’ve ever read!!!” is a waste of time. It means nothing to no one.

    Tell potential customers about the book. Why is it great? Why did you love it? Why should they spend time and money to read it? Give an example from the book. If you use an example, it gives your review more weight for it lends credence that you actually read the book.

    Don’t talk about just the good. Pick something negative and write about that too. A balanced review is more helpful, and more believable than one that just gushes praise. No matter the book, there has to be something that bugged them. If the book is self-published, there will be something to criticize. I received an email from one reader that said he read a review in which a previous customer complained that my book read like a D&D game transcript. The reader, a gamer by the way, checked it out on that basis alone and ended up buying the entire series. So never assume that a negative review will be negative to all readers.

  4. Here’s the biggie. Write. Seems simple doesn’t it? You’d be surprised how often we come up with excuses why we can’t write. If you’re a writer, then you better be writing. Finished a book? When’s the next one going to be published? Don’t stand still and see if the first one sells well before starting the second. Do you believe in what you are doing? Then for heaven’s sake, write. Set a goal. In the beginning, my goal was 20,000 words a week, or an equivalent time editing. I met that and in fact wrote Shepherd’s Quest, a 130,000 word book in 5 weeks. I was on roll.

  5. Don’t go to your family with your manuscript and ask, “How is it?” If you want an honest answer, go to and join. You’ll find out fast just how good/bad your manuscript is. Friends and family are biased and will have a hard time seeing your work for what it truly is. If you ask for an opinion from someone who knows you, the person answering you knows that they’ll have to deal with you afterward so will say “it’s great” or give some other affirmative response. They don’t want to crush your spirit. I watched this one show once where a guy wore this t-shirt that said, “My mom thinks I’m cool.” Enough said.

  6. I have posted lots of useful info for self-published authors, or those thinking of going that route on my website. If you’re interested, check out my site, Brian Pratt Books. It’s a year old, but most of the info should still be fairly current. It will definitely give you some things to think about.

  7. We’re all in this together. Email me should you have questions or anything.

[MC] Every author must compete against hundreds of thousands of other books. What's the secret to breaking out?

[BSP] Write, keep writing, and when your fingers are sore, write some more. The more books you have out, available through the most channels, the better your exposure. Never cancel a channel unless you know another will fill the void. Best channels right now are Smashwords and Kindle. Neither costs you anything but time. From the first sale, you’re making a profit. If you give up, it’s over. Until then, anything can happen. I’m a prime example of that.

Find ways to get your book in front of people. Don’t expect glowing reviews to sell your book. After all, if readers don’t find your book in the first place, no amount of “good” reviews will help.

[MC] Now that you've achieved success as a writer, how might your writing change, if at all?

[BSP] I now understand why some authors take a long time in getting out the next book. The more books you have, the more time ends up being devoted to previous titles and other things (this Q&A is a prime example). Editing has always been a sore point with [my] readers, or rather, the lack of it. My books have never seen a professional editor and could use a touch of polishing. I’ll be looking into that with the new year.

[MC] Now that you're able to devote full time to your writing, what's your typical day like. What's your process?

[BSP] I spend far too much time on the internet checking sales, answering emails (I love that part) and seeing what’s going on in the world of publishing. Smashwords is usually the first page I visit in the hopes that sales have posted. Most days, I’m disappointed. There have been times when I thought, “What the heck is going on? Where are my sales?” But you know, they all come in before the quarter payout, and I’ve never had a problem with getting my money from Smashwords. [Note from MC: We hear you Brian! Faster reporting is one of our top priorities for 2011]

After that, I try to get some editing done on my newer works, then an hour or so of computer gaming. I write some, check emails again, and so forth. The longer a series goes, the more complex it becomes. You need to take into account all that has gone before, keep your characters consistent, and make it all seem flawless.

[MC] What's coming next?

[BSP] Finish Travail of The Dark Mage. I’m on book 2 and figure the series will be around 5 books. Never know for sure until I’m done. The initial plan for The Morcyth Saga was 10 books. Can you imagine what would have happened if I had contracted for 10 books with a publisher and instead came through with 7? Love being an Indie.

I do have ideas for another 2 series after Travail, as well as off-shoots like The Improbable Adventures of Scar and Potbelly, a series of short adventure books based on the duo from the series. One thing I do know for sure. I will not release another series unless I have it already completed. I hate making readers wait.

[MC] Thanks for sharing, Brian!

To sample or purchase the ebooks of Brian S. Pratt, visit his Smashwords author page

Wednesday, December 1, 2010

Smashwords Puts Authors and Publishers in Control of Pricing

Our authors and publishers spoke (and some wrote, screamed, begged and politely asked), and we listened.

Effective today, all Smashwords retailers are pricing Smashwords books at the price set by the author or publisher. No more discounting.

It also means we have significantly increased the royalties we pay our authors and publishers.

To summarize how we got here, and what it means to Smashwords authors, publishers and readers, let's take a stroll down memory lane to review how books have traditionally been priced, distributed and sold.

For most of the last several decades, the book industry worked under a wholesale pricing model. A publisher would ship their books to a distributor or wholesaler, who would then sell the books to brick and mortar bookstores. In advance, the publishers and their supply chain partners would work out a discount schedule in which the retailer would purchase the book for some percentage off of the suggested retail price.

For example, a retail bookstore might purchase books from the wholesaler/distributor for 50% off of list price, which means the retailer would pay $15 for each $30 list price book they sell. The retailer could then set the price. Most retailers, taking advantage of their close proximity to the customer and their understanding of consumer behavior, had the ability to discount the book to such a price that they could achieve their objective.

For example, if a retailer's objective was to maximize the per-copy profit, they might sell the book at list price (when I was Brazil in October, I learned some airport bookstores sell print books for more than the list price). If the retailer wanted to maximize their overall profits, they might sell the book at a discount and make up the difference in increased volume. If a retailer wanted to attract buyers into their store, they might even sell the book at below cost.

To the author and the publisher, the discounting didn't make a difference, because the author and publisher were paid a fixed percentage of the suggested list price. Retailers liked this pricing model because it gave them the flexibility and freedom to use price to help serve their customers and serve their bottom line. Everyone was happy.

Then ebooks came on the scene, and the pricing of ebooks followed the same general wholesale model, only rather than shipping physical copies of a dead-tree book to a warehouse or distributor, the publishers or their distributors would ship a single digital copy of the book to the retailer, and the retailer would make digital copies each time they sold one.

Retailers, responding to customers who expected to pay less for ebooks than print books, started aggressively discounting. Many publishers dreaded such discounting for fear it would devalue books, or would cannibalize print book sales. Then Amazon, in an effort to serve their customers, started selling many best-seller ebooks for under $9.99 - for less than what Amazon had to pay the publisher for the book.

An ebook price war broke out, and other ebook retailers tried to match Amazon's price.

Now remember, in the print world, publishers didn't care too much if a retailer discounted the book, since the publisher is paid based on a predetermined discount off of list. Publishers also understood that if the retailers couldn't sell through their inventory of books, those books would be returned to the publisher for a full refund. So the discounting double-benefited the publishers.

You might think the publishers would have been happy that Amazon and other retailers were pricing books at below cost. The low costs drove up demand, helped accelerate the growth of the ebook market, and helped the publishers sell more books.

But no, the big New York publishers were not pleased. They feared that Amazon and other retailers, by pricing their books under $10.00, were devaluing books and setting an inappropriate customer expectation that ebooks should be priced at $9.99 or less. Publishers feared Amazon was exerting too much control over prices, and further feared that some day Amazon would come back to publishers and demand greater discounts, thereby permanently lowering the publisher's list prices and profits.

When Apple came on the scene in April 2010 with a new pricing model known as "agency," one in which the publisher set the price and Apple, acting as a sales agent, would not discount, five of the big six New York publishers jumped for glee. Finally, they thought, Apple would be their savior - their counterbalance - to Amazon's increasing influence in the ebook business. Publishers also appreciated that Apple would pay them 70% of the list price, as opposed to the traditional 50% or less that they earned under the conventional wholesale pricing model.

So the five big New York Publishers - now known as the Agency Five or A5 - put a gun to the heads of all the major ebook retailers, and basically told them, "you need to either switch us to the agency model April 1 or we're going to stop allowing you to sell our books." As you might imagine, the retailers were not pleased. First, no one appreciates threats, especially from suppliers who are supposed to be your partners. And second, if you take away a retailer's ability to control the price, you make it difficult for retailers to do what they do best, which is to use price as a tool to sell more product and make customers happy.

Amid this awkward shift to agency for the A5, the A5 also gave second shrift to the smaller independent ebook retailers, even though a thriving ecosystem of indie ebook retailers would assist the A5's master plan of creating a counterbalance to Amazon. Due to logistical problems, contractual holdups, tax collection requirements and prioritization, the small indie ebook retailers were not allowed to switch immediately to agency, which meant that the indie retailers lost access to most of the best-selling books in April. I'm told more than one indie retailer went out of business after the virtual rug was pulled out from underneath them when they could no longer sell these books.

The move to agency also created conflict within the supply chain, and it created challenges for Smashwords authors too. Prior to the advent of agency, three our original retailers - Barnes & Noble, Sony and Kobo - were under the traditional wholesale retailer model. Previously, most Smashwords authors and publishers didn't care that their books were discounted, because the discounting only helped sell more ebooks, which benefited authors, publishers and readers.

But then around July, Amazon increased their royalty rates for direct publishers to match the Apple 70%. For the authors who chose to work directly with Amazon, they had to agree that their books would not be sold elsewhere for less, and if Amazon discovered the book priced elsewhere for less, they had the right to discount the author's book to price-match the competition.

This is when the proverbial fertilizer hit the fan for some Smashwords authors who publish direct with Amazon via DTP and then use Smashwords for all the non-Amazon retailers. I recall receiving one especially frantic email from a Smashwords author on disability retirement who was faced with the prospect of seeing his Amazon sales slashed due to discounting at our retailers. This author, like some other panicked authors who had been selling at Amazon for a long time, decided to remove their books from Smashwords retailers. This, to me, was an especially disconcerting trend, because these authors were hurting themselves by removing their books from important retailers like B&N, Sony and Kobo. Some of these authors even removed their books from our Apple channel, or unpublished their books at Smashwords altogether, even though Smashwords and Apple have never discounted. When someone yells "FIRE," it's tough to think straight. Matters weren't helped when some authors, clearly talented on the imagination front but lacking hard details, jumped to erroneous conclusions in online message boards, which further fueled more panicked responses.

When an author pulls a book from retail, it destroys their sales rank, they lose all their reviews, and they deny themselves the opportunity to reach new readers. In other words, no author in their right mind should ever remove a book from retail.

On the other hand, it's difficult to maintain your right mind when your friends are panicking too, and you're suffering real measurable harm when an auto-pricing robot cuts the price of your book at the largest retailer - a retailer said to control 70% or more of the ebook market. Remember, Amazon had every right to do these price corrections - and the authors agreed to this when they signed the Amazon contract - though it did create a situation where some authors felt forced to take actions to preserve their sales at Amazon. Some of these authors eventually waded back in, or tried to compensate for the expected discounting by raising prices at Smashwords, or raising prices across the board.

The obvious solution to me, given the impossibility of managing two incompatible pricing models, was to give our authors and publishers complete control over the price of their books. We've always done this for sales at, our small retail operation, but I knew it would be a bigger challenge to move our retailers to the agency model, or something agency-like. Needless to say, none of our retailers were too keen to do this when I first started requesting this in June. I can't blame them for their hesitation, because the agency model creates all kinds of complexity and expense for the retailer to administer. I imagine many were still smarting from the insult of being forced to do it in the first place by the A5.

Today, however, I'm pleased to report that Kobo, Barnes & Noble and Sony have transitioned all Smashwords books to the new model. I'm also pleased to report that unlike the tactics used by the Agency 5, we did not put a gun to the head of our retailers. No shots fired, no threats made. In the end, I think each retail partner decided on their own that what is best for Smashwords authors and publishers is also what's best for them and their customers in the long term.

Possibly I have a different view of our retailers than the view from the large publishers. I see our retailers as true partners. Our mission at Smashwords is to help our authors and publishers connect with readers. One of ways we accomplish this is by supporting our retail partners because they more than anyone know how to connect readers with books.

Every once in a while I'll see people suggest authors should only sell their ebooks direct on their own websites, as if all intermediaries between the author and the reader are to be excised. Those folks are smoking opium. Smart authors put their books at retailers who can put their books in front of customers.

So effective immediately, all our retailers are on the same page. Like with our other agency retailers Apple and Diesel, we now pay our authors and publishers 60% of the author/publisher-determined list price for books sold at Kobo, Barnes & Noble and Sony. Simple.

Well, mostly simple. Here are some additional fine print details of interest to Smashwords authors and publishers:
This change means that for sales at B&N and Sony, we have significantly increased our royalty rates. Previously, we paid 42.5% of your suggested list price. The new 60% represents a 42% increase (42.5*1.42=60). At Kobo, we've increased our rate from 46.75% list to 60% list for most sales, a 28% increase. At Kobo, the new royalty rate applies for books priced between $.99 and $12.99, and only for dollar-denominated sales. We can no longer ship books to B&N that carry the price "Reader Sets the Price," so if you're one of the very few authors with this price setting, and you want distribution to B&N, then please change your price asap to $.99 or higher. All three have the freedom to price match if the same book is sold elsewhere for less. Make sure your prices at Smashwords are the same as elsewhere. Click to your Smashwords Dashboard's Channel Manager for summarized details.
With this change comes new responsibility for authors and publishers to price their books at a level customers want to pay. Here, I think indie authors and small publishers do a much better job than the big publishers. Already, the average book at Smashwords is priced under $5.00. At $5.00, a Smashwords author earns $3.00 profit for every book sold at retail. Large publishers can't compete against that (a traditional mass market paperback sold for $8.00 earns the author about 40 cents), which is one of the reasons I firmly believe the future of publishing lies in the hands of indie authors and small publishers, and in the years ahead we'll see more and more big-name authors go indie. They can earn more money per sale while serving their readers with a lower cost product. It's a win-win for the author and reader.

If you'd like to learn more about the agency model, Mike Shatzkin did a good post on it a few days ago at his Idealogical blog in which he concluded agency pricing represents the most significant event in 2010 for the publishing industry. Click here to access it.

If you'd like to learn about the transition to agency from the perspective of an indie ebook retailer, Kelley Allen over at Diesel has been posting a fascinating blow by blow as the events unfolded from April through today. She thinks the agency model will eventually be good for indie retailers and customers in the long term, though the path to here was fraught with much pain. Some links from the Diesel blog:

April: Most of the posts on this page deal with agency. Start at the bottom first for a chronological blow by blow:

Jilted (this caused quite a stir):

Day 43, Landing Harper Collins:

Day 45 days, they got Penguin:

Mobi announces that they are no long selling Agency

Diesel inteviewed by Kat Meyer of O'Reilly about Agency

Day 153: Hachette back up

S&S back up

Kelley Allen's recap of her latest thoughts on agency

My sincere thanks to Smashwords authors, publishers and especially our retail partners for their support in helping us navigate these exciting times.

If you're not yet using Smashwords as your ebook publishing and distribution platform, please join the over 10,000 indie authors and publishers who now collectively publish and distribute over 25,000 books at Smashwords. To learn more, visit How to Publish and Distribute Ebooks with Smashwords. Or, view the Introduction to Smashwords post on the Smashwords Blog.