Wednesday, December 31, 2014

2015 Book Publishing Industry Predictions: Slow Growth Presents Challenges and Opportunities

Crystal ball - Mark Coker's 2015 book publishing predictions
Welcome to my annual publishing industry predictions for the year ahead.  This year I share 12 predictions.

Before I speculate about what 2015 holds for authors and publishers, let’s reflect for a moment about how self publishing has transformed the book publishing landscape.

Thanks to ebook self publishing, every writer in the world has democratized access to the tools and knowledge of professional publishing.  It's now possible for writers to make their books instantly accessible, discoverable and affordable to billions of readers around the world.

Most exciting of all, we're still in the early days of the ebook self publishing revolution.  I'm confident that decades from now, ebook self publishing will be viewed by historians as no less transformative than the advent of the Gutenberg printing press.

Despite the incredible opportunities available to every indie author, clouds loom on the horizon.  Recent years of exponential ebook growth have given way to a new normal of slower growth, greater competition and disruptive business models and power struggles.  These factors create new threats and opportunities for publishing industry participants.

This is why annual predictions are so useful.  To the extent any of us can predict the future (an exercise fraught with folly I might add!), predictions help stir the imagination, spark constructive debate and assist with strategic planning. 

So without further delay, I present to you my predictions for 2015.  Enjoy!

Mark Coker’s Publishing Predictions for 2015

1.  More authors will aspire to publish indie – In 2008 when I founded Smashwords, nearly all writers aspired to traditionally publish.  Self-publishing was viewed as the option of last resort – the option for failed writers.  Today the former stigma of self publishing is evaporating.  Indie authorship has become a global cultural movement, as I described when I published the Indie Author Manifesto earlier this year. The indie author movement will grow stronger in 2015.  Traditionally published authors will continue to transition to indie, led by midlist authors.  We’ll also see more hybrid authors reorient their publishing strategy back in the direction of indieville.

2.  Indie authors will capture more ebook market share – The percentage of reader dollars going to indie ebooks will increase.  The growth will be fueled by a continued increase in the number of indie-published ebooks, and by more indie authors adopting best practices to publish with greater pride and professionalism.  In March I shared some of my longer term market share projections here and here.

3.  Screen reading will increase, but at a slower rate – For readers of English language books, the early adopters of ebooks have adopted.  I think reading will continue to transition from print to digital, yet the rate of growth will slow.  One bright spot will be the continued growth in screen reading in developing countries aided by the ubiquity of smart phones.

4.  2015 will be slow growth for most authors, indie and traditional alike – I blogged about this topic last month in my post titled, Ebook Publishing Gets More Difficult From Here.  While some indies had a fabulous year in 2014 (look no further than the Smashwords bestseller list published in Publishers Weekly each month), most authors experienced a slower growth year - especially when compared against the go-go days of exponential growth from 2008 to 2012.  The causes for this slow down include a new equilibrium between print and ebook formats; immortal ebooks published by publishers and indie authors alike that will never go out of print; the continued growth of self-published titles; and myriad low-cost and free non-book alternatives competing for slices of consumers’ time such as social media, Internet video and games.

5.  Indie authors face increased competition from traditional publishers – For the first years of the ebook revolution, large publishers all but ceded the $4.99 and lower ebook market to indie authors.  Publishers tried to maintain higher prices, and indies – empowered with the ability to earn royalty rates of 60-80% list price -  offered budget-conscious consumers high-quality books at low prices.  The low prices, including the ultralow prices of FREE and .99, made it easier for readers to take a chance on unknown writers.

In the last year, large publishers, borrowing a page from the indie author playbook, have stepped up their price-cutting in the form of temporary promotions on titles from big-name authors.  In 2015 we’ll see the temporary promotions from large publishers that were so common in 2014 give way to permanent lower prices on backlist titles from big names, and faster, more aggressive discounting on recently released titles.

This means indies will face increased competition in the sub $5.00 price points.  In the past, you could identify indie titles on the bestseller lists by price alone.  This is no longer the case.  Large publishers will also make greater use of ultra-low prices.

6.  Large publishers step up usage of FREE – Inspired by the success of indie series writers who’ve had enormous success pricing series starters at permafree, large publishers will start making increased use of this unconventional price point.  Although few large publishers have made use of free as a promotional tool to date, this will begin to change in 2015.  As retailers such as iBooks run more "First in a Series Free" promotions which heretofore have been dominated by indie authors, publishers will feel the pressure to jump in.  As I write these predictions, iBooks is running a major multi-genre First in a Series Free promotion with nearly all the titles supplied by indie authors. Fifty nine Smashwords titles are featured!

7.  FREE will lose more mojo – Since 2008 I’ve encouraged authors to utilize free as a price point to turbocharge downloads, build readership and reader trust, and drive readers to priced titles.  Authors who followed this advice early on reaped the most benefit.  However, free is losing some of its gusto as the market becomes flooded with free ebooks. At Smashwords, nearly 50,000 titles are priced at free.

In our 2014 Smashwords survey we found that free books at iBooks were downloaded with 39 times more frequency than books at a price, down from a multiplier of 91 in the prior 2013 survey.  In 2015 I predict the multiplier will drop further.  Despite the anticipated drop in effectiveness, free remains one of the most powerful merchandising tools for indie authors, especially when applied to series starters. This also means that authors who utilize free today will get much more mileage from it than authors who use it a year from now (hint:  If you’re using free, make sure your free titles are upgraded with enhanced backmatter so they direct readers to your priced titles. See my blog post and video on this subject).  If you haven’t experimented with free yet, now is the time.

8.  Many indies will quit in 2015 – Authorship is tough work.  Discouraged by weak or slumping sales, many indie authors in 2015 will either give up on publishing or will decrease their production rates.  With the rapid rise of anything – whether we’re talking tulips, dot com stocks or real estate – bubbles form when the market becomes too frothy, too optimistic, too euphoric, and too crowded.  All markets are cyclical, so this boom-to-bust pattern, while painful for many, is healthy for the long term, especially for authors who stick it out.

Indie authors will be forced to take honest stock of their dreams, motivations and commitment.  What drives you?  Is it the joy of writing, or the necessity of putting food on the table, or both?  Either reason is respectable, but if your family’s next meal is entirely dependent upon your book sales, you’re under extra pressure.

9.  Time management will separate winners from losers – Raise your hand if you have too many hours in the day.  I’d hazard to speculate that each and every one of us fails on time management to some degree each day.  We only have so many minutes in a day, and only so many heartbeats in a lifetime.  Are you optimizing your author time so you’re spending more time writing and less time on the nonessentials?

For example, if it takes you multiple hours to format your ebook, why not hire a low cost formatter for $40 or less?  I’ll give you another example, and this one’s entirely self-serving but will resonate with many Smashwords authors - using a distributor.  Smashwords is a distributor.  Our job is to help you quickly deliver your book to multiple retailers, and then help you manage and control it with minimal effort.  When an author works with Smashwords, in exchange for a small commission we earn on every sale, the author gains the time-saving benefits of a single upload, centralized metadata management, and consolidated sales reporting and tax reporting.  I think this is why the vast majority of Smashwords authors choose to fully distribute with Smashwords rather than uploading direct to retailers.  The time-saving advantages of managing your publishing with a distributor become even more pronounced once you’re managing multiple titles.  No author’s career will fail because they gave 10% list to a distributor, but many authors will fail because they’re not focusing enough time on writing.

Another example. Many authors spend too much time on marketing and social media when they should be spending more time writing.  Your best marketing is a book that sparks enthusiastic word of mouth, so focus on the book.  If you enjoy social media, that's great, but try to make it your end-of-day brain break after you've completed your daily writing quota.

10.  Amazon Will Use Kindle Unlimited to Pay Authors Less – Whether you love it or hate it, KU is already a massive disruptor in the world of ebook publishing. Many writers are claiming it caused their sales to plummet, while others say it has helped them reach new readers.  You can check out my prior analysis of KU here and here, or check out David Streitfeld's recent story on KU in the New York Times.

KU will have broader impact in 2015.  Unlike its ebook subscription competitors Oyster and Scribd which allow authors and publishers to set prices and receive retailer-level margins on qualifying reads (Smashwords authors earn 60% of their book’s list price), KU pays from a shared pool.  Author/publisher compensation is based on a book’s prorated share of readership multiplied against the size of pool.  If it sounds opaque, that's because it is. Amazon determines the size of each month’s pool and the value per qualified read after the month ends.

This wouldn’t be a problem if Amazon was a benevolent player, committed to paying their publishers 70% list.  In November Amazon paid only $1.39 per qualified read, regardless of the book’s length or price.  $1.39 works out great if your regular retail price is $.99 (a $.99 ebook sold at Amazon otherwise earns about 34 cents).  Yet if your regular ebook price is $3.99 and you’re accustomed to earning almost 70% of that or $2.80, then KU means your effective royalty rate was cut by almost half  in recent months to 35%.

Kindle Unlimited represents Amazon’s end-run around the Agency pricing model.  With Agency, Amazon is obligated to pay publishers 70% of the list price set by publishers and cannot discount books. KDP has an “Agency-lite” equivalent model in which Amazon doesn't discount except in price matching situations.  With KU, your book’s price becomes irrelevant to Amazon.  It also gives Amazon the ability to pay you less than 70% list for each qualified read.

By providing KU preferential in-store merchandising, Amazon discourages customers from purchasing individual ebooks.  Since Amazon has a critical mass of over 700,000 books in Kindle Unlimited, Amazon’s most voracious power readers already have nearly one million fewer reasons to purchase indie ebooks at full retail price.  This means that for many budget-minded readers who love indie ebooks, your $2.99 and $3.99 ebook is now too expensive when they can read it (or similar books) for free as part of their subscription.

As I mentioned in my last post, Is Kindle Unlimited Devaluing Books, most of Kindle Unlimited’s catalog is supplied by indie authors enrolled in Amazon’s KDP Select.  Without indie author support and participation in KDP Select, there’d be no Kindle Unlimited.

Will indies step up to the plate in 2015 and say no to KDP Select?  Since most indie authors sell poorly, I fear many indies will hear KU’s siren song and decide that earning $1.39 or less is better than earning nothing, and this will then perpetuate a slippery slope that will jeopardize earnings for all authors at Amazon.

11.  New VAT rules in Europe will put a damper on European ebook sales – Indie authors will suffer a drop in earnings from European ebook sales in 2015.  The cause?  New European Union VAT (Value Added Tax) rules.  On January 1, 2015, new VAT rules go into effect in the European Union.

In the past, the VAT imposed on ebooks was based on the VAT rate for the country in which the retailer was based.  To reduce the tax hit, retailers located their European headquarters in Luxembourg, where the VAT was only 3%.  At Smashwords retailers, the price set by the author was always VAT-inclusive, which meant the author and retailer’s cut was calculated after the 3% VAT was deducted.  At 3%, the rate was negligible and went unnoticed by most customers and authors.

Effective with the new EU rules that start January 1st, VAT is charged based on the customer's geographic location.  Rates across the European Union will range from 15% to 26%.  This means that effective January 1st, myriad tax rates will be applied to your ebooks sold at Smashwords retailers such as Apple iBooks, Barnes & Noble UK, Txtr, and Kobo.

Indie authors must now decide whether to raise their prices to pass the tax burden to readers, or hold the line on prices which means the author absorbs the tax hit.  Either way, the author loses.  The ebook retailers are harmed as well since the tax comes out of the purchase price before the retailer earns their 30% cut.  As one retailer told me, “we’re all hit with the same stick here.”  (Update: To help mitigate the pain, on December 31 Smashwords launched a new pricing tool that allows authors decide if they want to bear the burden of the VAT tax to keep customer prices the same, or if they want to pass the increased VAT burden on to customers in the form of higher prices.  Find it in your Smashwords Dashboard or click here.)

12.  Back to basics:  The bestselling authors in 2015 win with best practices - The formula for bestseller success isn’t rocket science.  Success is all about best practices.  For every well-executed best practice implemented by the author, the author gains an incremental advantage in the marketplace.  What are some of these best practices?  1. You must write a super-awesome “wow” book that takes the reader to an emotional, satisfying extreme (this applies to fiction and non-fiction).  2.  Your books should be professionally edited and proofed  3.  A great cover image makes your book more discoverable and more desirable to your target reader.  Great cover images make an honest and visual promise to your target reader about the experience your book offers.  4. Give your book a fair price.  5.  Release your book as a preorder.  If you’re not doing preorders, you’re missing out on one of the most powerful merchandising tools today (click here to learn how preorders work).  6.  Avoid exclusivity and distribute your book widely.  7.  Write another book, rinse and repeat.

Although the best practices aren’t secrets any more (check out my Secrets to Ebook Publishing Success for a refresher on best practices – or watch my best practices video tutorial), most authors fall short on the best practices front. Some authors fall into the trap of searching for easy silver bullet shortcuts. There is no single silver bullet.  You must do many things right and avoid pitfalls that undermine your opportunity.


That's everything!  I hope you enjoyed my 2015 predictions.   Please add your own predictions for 2015 in the comments below.  What big trends are you seeing?

For your reading pleasure, below is an archive of some of my previous predictions.  How did I do?

2014 Predictions from Smashwords Blog  (Published December 30, 2013) and Huffington Post (Published January 7, 2014)

2013 Predictions at the Smashwords blog (published Dec 21, 2012)

2011 Predictions at GalleyCat by Mark Coker (published Dec 28, 2010)

10-Year Predictions at GalleyCat By Mark Coker (published Jan 4, 2010)


Diana Persaud said...

Mr. Coker,
Insightful article. I've reached some of those conclusions myself. I never really thought about how 26% VAT (when you are earning 35% royalty) would affect profit.

Amazon has positioned themselves so that they are calling the shots. Traditional publishers are dependent on them (Hachette fiasco), and Indie authors feel even more dependent on them. This isn't necessarily true. Indie Authors, I think, have far more power and ability to distribute their works than a Traditional publisher.

How do you think VAT will affect eBook sales overall? Is the EU doing more harm than good? I read part of the VAT law and it specifically addresses the sale of digital items. It seems that digital files (eBooks) was the driving reason for this new law. It's a shame to punish readers (and authors) with a (max) 26% VAT. I hope with enough pressure, they might revisit that percentage and lower it to something more affordable for readers and authors alike. Only time will tell.

Claude Forthomme said...

Fascinating prediction, Mark, and, I believe they are spot on. The VAT situation in Europe is dire, but at least one country has moved in the right direction already and that's France - a big market where the VAT rate is 5%, the French have understood that e-books are like printed books, i.e. a cultural product that deserves support.

Regarding the other predictions, I believe you're right, the book glut will continue and probably get worse (3.8 million titles in the Kindle Store, over 4 million in Kobo...) This means that book discovery will continue to be the #1 issue facing all writers, whether traditionally published or self-published. But for the indies that don't have the marketing muscle of big publishers it will be even harder...

MikeAngelGumshoe said...

Mark, thanks for your crystal ball, much of which is derived from current trends. One that is not, however, is traditional publishers competing in the below 4.99 pricing, including free. You don't offer evidence or reasons for this prediction, so I wonder what makes you think so? Thanks
David H Fears

D.C. Charles said...

Good article. I'd be very interested in your predictions regarding the evolution of eReaders. We're about 3 years past the last mayor tech changes to eReaders - which occurred just in time for holiday buying (big surprise) - and I'm wondering when the next generation of eReaders is going to hit the marketplace. Got any info on that? It was a nightmare last time as many specs changed for covers, for example, and authors and cover designers had to scramble to revise covers whenever the author wanted to update or load a book to a new vendor site.

Mark Coker said...

@Diana, the new VAT rates are likely to cause ebook prices to increase across the board. Indie authors have one of three choices: 1. Hold prices steady and bear the burden of the tax so the reader doesn't have to. This will cause author earnings to drop by about 20% in these countries. 2. Increase prices to pass the tax burden on to customers. This will cause ebook prices to increase, which will reduce the affordability and desirability of the author's ebooks. 3. Split the difference and pass some but not all of the burden on to readers.

In each of these three options, the author/publisher is harmed, either by earning less per sale, or by increasing prices which will decrease unit sales and probably also decrease overall earnings.

The only silver lining in all of this is that for most English language authors, most of the pain will be contained to the UK since sales in other EU countries are usually much less.

One other dark side of this is that it'll harm retailers, and that's not a good thing for authors/publishers because we want ebook retailing to be a profitable pursuit for booksellers. It's in author best interests that there be more booksellers promoting books, not fewer. Since bookselling is typically a low margin business, ebook retailing becomes less profitable for retailers starting tomorrow. Lower profits means retailers can't invest as much in their business. It means slower growth. It means weaker players will have that much more difficult of a time staying in business. It means venture capitalists will be less eager to invest in the formation of new ebook retailing businesses in the EU, which probably means fewer regional and pan-regional sellers.

@MikeAngel/DavidFears - Right, most of my predictions have always been grounded in trendspotting, and then further informed by the interplay of trends and by the inevitable gravitational pulls of what is, what will be and what should be. I'm considering a few things here that I think will cause trad publishers to lower prices and start playing in free: 1. It appears as if the big publishers will prevail in their attempt to maintain agency pricing terms at Amazon. Until S&S and Hachette negotiated their deals, I think the fate of Agency at Amazon was a big uncertainty for big publishers. This means publishers are probably now feeling more assured of earning 70% list at the biggest retailer, which means they have greater flexibility to offer lower list prices. 2. I watch the retailer bestseller lists. For most of the last six years, $2.99 and $3.99 bestsellers almost always meant the title was an indie title, because big pubs rarely played in those price points. This year I noticed an increasing number of low and ultra low prices in the bestseller lists from large publishers, usually for limited-time promotions. Limited-time promotions have a tendency to create a gravitational pull, especially once budget-minded readers get conditioned to big-name authors at lower prices (and note that many big-name authors are now indie authors who became big names by leveraging the magic formula of low prices and high-quality). 3. For free specifically, big publishers have largely avoided the price point heretofore. Yet in this big Apple promotion, I counted five or six freebies from large publishers. I expect they'll begin to realize that free works like magic to drive overall sales of genre series, and once they get a taste of how it works, they'll do more of it. In other words, publishers will become more sophisticated, more dynamic and more nimble in their pricing (i.e. a bit more like indies who already know these secrets).

Iza Moreau said...

I would like to know how many authors--indie or otherwise--are fleeing Amazon KDP Select after a year, or even after the required 90 days. I sampled KDP Select for less than a year with my own books. Sales at first were up, but after a few months they faded. When I removed my books from Select, my sales did not significantly decrease, especially when added to sales through other retail outlets. I suspect that the majority of indie authors will do the same (except for those authors who have huge, best-selling series, especially in romance or SF, and those authors who are simply to lazy to change). Eventually the attrition will outweigh the influx of new authors.

As far as the best-selling indie authors go, I also predict that after they have gained a significant following through KDP Select, they will want to augment this audience by exploring other retail outlets like iBooks, etc.

Mark Coker said...

@Iza, I'd like to know the answer to that as well. A lot of authors publish first at KDP-S and then never leave it. At every conference I go to, I meet authors who think KDP *requires* exclusivity, which is doesn't. This confusion probably arises out of the fact that the KDP interface is constructed to funnel authors into exclusivity. Considering they have over 700,000 books enrolled, a lot of authors are obviously making the choice to join and stick with it and therefore are missing out on the other great opportunities out there with iBooks, B&N, Scribd, Oyster, OverDrive, Kobo, the Smashwords store, etc.

Daniel Martone said...

I think the online retailers should still advertise the same prices and add the tax at the checkout, like brick and mortar stores do. What this would do is cause the buyers to take issue with their own tax rates, which would take the blame off the retailer and author.

Tom Hopp said...

That trick of using preorders to hit the bestseller list just goes to show, bestseller lists are phony. They always have been. They have been manipulated one way or another since the first day a bestseller list existed. How do I know? Just think about it. Who has a stake in making them phony? Publishers. Authors. Booksellers. Phony. I don't want to manipulate preorders because I'm just a writer, not a phony. So there.

Joyce Dade said...

Happy New Year, Mr. Coker. Great to see your Predictions List on FB just now and to oversee the content. Some of what you have written has gone way over my head. I don't know how you can articulate all this stuff all these details and knowledge. I find it amazing. I am grateful but clueless to some of what you have written here although I am grateful. Thank you, and thank you because I happen to be a graphic icon designer and art photographer and I will look for ways to offer my services at an affordable cost to writers who don't have the time or interest in designing themselves. It looks like the Halcyon days may be over for indie writers from some of what you have written or am I just mistaken in my impression? I found what you had to say about Amazon something any indie writer should get straight, myself included. Who to trust? At any rate, I thank you so much for this. Have a wonderful new year, Mr. Coker, to you and yours.

Jason D. Morrow said...

KDP Select is great at first, but then you become forgotten. It's true that the more outlets you have, the more readers you will find. I had my books in KDP select for almost a year and was making roughly $1500 a month with help from BookBub. The month I switched from KDP select and distributed through Smashwords with a BookBub promotion I started pulling in $3000 to $4000 per month including Smashwords and Amazon.

KDP is just a way to keep control. I wasn't sure about Smashwords at first, but I don't know what I'd do without the extra income from iBooks and Barnes and Noble. I know you can upload to them directly, but Smashwords makes it easy, and you can track your sales better.

Eva Markert said...

This comment is nothing but self-promotion thinly veiled by some flattery. Disgusting!l

B F Moloney said...

With so much to read the percentage of what will get read must get less over time unless more people read more. I publish through Smashwords. And I enjoy writing without a strong need to feel legitimized as a writer through big sales. It ain't going to happen. But I will always dream of improving sales, eventually, one day, before I die! I wish the best to all indie writers seeking to be read. We all have to keep on keeping on, and to do it firstly for ourselves, with readers never far behind.

Renée Paule said...

Thanks for the information Mark.

I never signed up with KDP Select and I don't like the sound of Amazon's other offerings either. I'm currently considering removing my ebooks from them altogether as this whole situation is getting more than ridiculous and unnecessarily complicated - ripping off authors and customers as happens when one company monopolises the market, or sees themselves as 'All-Powerful'. It's us who give them that power.

The VAT situation is probably going to be the final straw for many authors. Those who can't give their ebooks away for free will be forced to push up their prices, which will effect their sales.

So even though I sell more paperbacks than ebooks, which I put down to my genre rather than the quality of my work, I'll probably start distributing my ebooks through Smashwords only.

Claudy Conn said...

As always, I find your comments 'right on'.
So earnings will be tough, but, although money is necessity, writing is more so.
Just going to hang in there till things improve. KDP Select is a pain, but a fact of life.

Mike Matheson said...

@Mark Coker You said KDP DOESN"T require exclusivity. I must be one of the ones who drank the Kool-Aid because I was under that impression. Can you elaborate

awillis511 said...

Thank u so much for your insightful predictions. I have had marginal success with KDP & I am not comfotable with the exclusivity. I was lured into the option by the promise of free marketing - an area in which I struggle. However, with slumping sales & concerns over iffy practices, I am definitely leaning toward pulling out of KDP Select. Do you know if there is or heard about any blowback indie authors might have encountered as a result? Please share if you have, and thanks again for your honest accounting of indie publishing.

Mike Matheson said...

@Mark Coker You said KDP DOESN"T require exclusivity. I must be one of the ones who drank the Kool-Aid because I was under that impression. Can you elaborate

Diana Persaud said...


Publishing through KDP (Amazon's publishing program) does NOT require exclusivity. Enrolling in KDP SELECT DOES require exclusivity for 90 days. I don't know why anyone would enroll in KDP select. (I did for 90 days until I discovered that it wasn't necessary to offer your book free.) If you want your book free, simply price it free through your other distributors. Once customers notify Amazon via price check, they will drop the price to match your other sites. If you want to change the price from "Free" to another price, you have to email them through your author portal. They are USUALLY good about fixing the price within 24 hours.

Diana Persaud said...


Why do you say KDP select is NECESSARY? It isn't. It's 100% a choice. Could you elaborate on what you mean?

Mike Matheson said...

Thanks @Diana Persaud for your helpful insights

Owen Jones said...

Hi Mark Coker,

You put your head above the parapet, so hat's off to you. You also seem to know what you're talking about, and I thank you for sharing your opinions with me.
I have two points:
1] I thought KDP was exclusive, as I have been 'finally warned' by Amazon twice for having books available in some back end sites in Spain and Mexico.
Now I only put my sub $2 novellas on there.
2] I am European. We are used to paying tax, believe me, so I don't think tha t the new tax laws will alter readers' habits at all. Why should they? Readers read, smokers smoke, drinkers drink.
Don't worry about it so much.

All the best,

Maria said...

Happy New Year, Mark and everyone at Smashwords! Thanks for being a great partner.

Maria Schneider

Michael Parker said...

As more writers choose to write short stories for publishing on Amazon´s KU, so the book world will split into two: the advent of the modern 'Penny Dreadfuls', and those books that have at least a 100,000 word content. The eBook system is swamped with writers who would probably never had found a traditional publisher but can now swarm all over the eBook industry.

Diana Persaud said...

@Michael Parker
Interesting that you lump books into either/or category: if it's short, it must be awful and if it's long it must be great. I don't think most readers judge a book's worthiness based on length.

The great thing about having self published authors is now it's more of a "Free market." Books that are well written will be purchased and those authors will make money. Those that have no value (as determined by readers) will not be sold.

Not all writers expect to be as rich or JK Rowling or EL James. Nor do they want fame. Some of us write because we love it and making money is an added (and appreciated) bonus.

In ANY field, you will have top earners (sports, entertainment, business). A "fair market" (as much as it can be fair) is good for readers and authors, not for Traditional Publishers.

Diana Persaud said...

Not sure how effective this will be, but there is an online petition with regards to VAT.

David Rose said...

Regarding FREE (your predictions 6 and 7) and Kindle Unlimited:
I'm seeing an awful lot of readers of free books out there. I'm seeing an increasing willingness on the part of readers to sign up with KU, or Scribd, or subscription services in general, as they realise what a good bargain that generally is for the reader. No, of course that's not the whole picture and it's never going to be.
I'm thinking that Indies should be making use of this, particularly to get more exposure - *without* signing up with KU.

I'm thinking it would be great if Indie publishing in the form of someone like Smashwords could offer a similar service. *Not* sponsored the way Amazon does it, but on a simple pro rata basis. I would suggest basing payment on the reader's consumption.
Reader 'Voracious' signs up for $10 a month, gets unlimited reading. Reads 8 books that month. Smashwords keeps say $1 for admin; $9 gets paid to the 8 authors, divided pro rata with the price of each book. If 4 books are $1 and 4 books are $5, the total retail value read is $24 and the subscription unit for that reader is $9/$24 = $0.375 the the $1 authors would get $0.37 each while $5 authors would get $1.87 each, rounded down.
Reader 'Slow' signs up for $10 a month, and reads only two books, priced at $2 and $5. The $2 book would earn the author $2.57 and the $5 book would garner $6.2 or thereabouts.

This might not earn authors the price they want, but they would be getting exposure which at present they are losing to KU. With the added disadvantage that KU is trying to corner the market, and - clearly - will dictate terms once Amazon has done that.

Nirmala said...

@David Rose: Your idea is an interesting one, but there is a potential for abuse. Since the reader never pays for any book they read, what would stop an author from pricing all of their books (including short stories) at $9.99 or even $14.99? Instead of a race to the bottom in ebook pricing, there could be a race to the top, especially since the reader might be tricked into thinking a book for $9.99 was somehow better than a book for $2.99. And again, for the reader, both books would be free after they pay their monthly subscription, so the only effect of the higher price would be a bigger payout for the author.

If subscription services do come to dominate the ebook market, then it would probably be fairer to have author payments based on the length of the book instead of an easily manipulated retail price which has no relevance in a subscription model.

John Chapman said...

The new EU VAT rates will have an impact but probably not much at the low end of the price scale where a $0.99 e-book will go from 77p to 90p in the UK. In Ireland the price should go up to the Euro equivalent of 92p but since Ireland is served by they will still see and pay a price of 90p and the author will lose 2p in royalties to cover the extra 3% VAT. That represents a decrease of 10% on Irish sales.

What makes the new VAT hard to swallow is the fact that paper books are 0% VAT in the UK. E-books have been described as a 'service' and therefore subject to the VAT charge of 20%. Yet both formats require and author, an editor, a formatter and a sales outlet. E-books do not require the felling of trees, transport of timber to the pulp mill, pulping and paper making process, disposal of environmentally damaging pulp waste. E-books don't require paper to be transported to the printer, the printing process, the book storage and distribution to retailers. E-books don't require the reader travel to obtain the book (or have it surface mailed to them). When surplus books are printed they don't need transport back from the retailer to the printer and subsequent pulping. Neither do they require the removal of toxic ink from the pulp before it can be re-used.
In all 95% of the carbon cost of a book can be saved by using the e-book rather than the paper book format. This paper book 'non-service' is expensive, environmentally damaging and makes a mockery of the UK intention to reduce carbon emissions.

Ruth Ann Nordin said...

I definitely see traditional publishers lowering prices on ebooks and doing free promotions, especially in romance. I think this will be done more and more in the future. I also think this will effect the way indies price books.

I believe some authors will leave, especially those who thought self-publishing was an easy way to make money. Some might be forced to slow their writing down in favor of a job that brings in more money. There will continue to be those who make a living and give it their all, of course.

I think hybrid is going to be more popular, both for indie and traditionally published authors.

I'm waiting for Amazon to say in order to get 70% at $2.99, a book must be in Select. All non-Select books will be at 35% or maybe 50% (if they feel generous). (I expect this to be on new books being published, not on ones already on the site.) The day won't surprise me if it happens.

I wouldn't be surprised if all retailers started offering subscription services.

Mike Matheson said...

@Ruth Ann Nordin Re Amazon royalties. I just pulled out of KDP Select and For me royalty is 35% in USA 70% in most of the rest of the world.

Peter Hogenkamp said...

Mark, enjoyed the article, but I wanted to expand upon something you touched on: The biggest hurdle facing self-published books is discoverability, because there are too many books being written, too many poorly written books that is. (If the 4 million books on Amazon were all well-written, growth would be exponential.) While it is true that there are many great self-published books available, it is also true that are far more which are poorly-written, unedited, and populated by flat, stereotypical characters. This is the dilemna for the self-publishing industry: Can quality standards be imposed, or are quality standards antithetical to the industry? I look forward to hearing your thoughts.

Diana Persaud said...

@Nirmala, I think your prediction is spot on. Amazon is positioning themselves so that they will call all the shots. However, some authors will feel they have no choice but to stay with them. Amazon is creating a market for other companies like Smashwords. If Amazon doesn't want you, other companies will be happy to have your books. As more "famous" authors leave KU, I hope that Indie authors will stop and think about what is best for themselves and for other authors in the long run.

@Peter, there are objective and subjective ways to measure a book's worth. Excellent grammar is more objective. The content however is purely subjective. Have you checked the ratings on 50 Shades? It's a popular book and the author is very rich, but there are a lot of people who hate it and question why it was allowed to be published in the first place. I think readers should be allowed to judge the books in a "free" market made free by self published authors.

The only hindrance is being discovered when you are a "nobody." Indie authors will have to find creative ways to get noticed. In all of my research, I have found the best way for an "unknown" to get noticed is through word of mouth. So self published authors need to start out small and count on their GREAT book to sell itself.

Ed said...

part 1 The overall problem that everyone is facing is visibility. If your ebook is not quickly visible then it won’t be picked up. Case in point. You release a new ebook and you see some nice sales then they plummet as soon as your ebook is not on the front page anymore.
So what does that tell you? simply that what is visible attracts people.
Right now smashwords is a huge repository of information and you are trying to fight your way to the top to be visible.
How worse is it going to be for an start up indie author to get known when there will be a million books available on smashwords for people to buy or download for free? It will be like one guy going up against an army of other people with the same goal which is to reach a public. People will get discouraged and abandon, not because they are bad writers but because they simply don’t have a fighting chance.
By its design itself smashwords will sink itself as it will just become some sort of data dump in the future and no one will be able to make heads or tails of it and will jump at whatever is on front page because it will be the easiest route for the readers to get something to read.
Smashwords needs to find a way to help promote its reader on site. The only way i can see this happening is to have some sort of publicity put in place so that people can buy a fighting chance to have their books showcased for others to see and not being buried as the 10000 book in the fantasy section.

Ed said...

part 2 If you go to a physical library you will see posters and ads all over the place to help promote specific books and unless smashwords starts doing that it will just become a data dump like i said earlier.
Also free should be removed entirely form the site as too many freeloaders are using this to get their fix. Free chapters or a free percentage of the book should be the norm instead of giving it for free. Otherwise down the road the new authors will just post everything they have for free to gain readership and make no money at all because of the freeloaders. I know what i am talking about. As soon as i put my stuff for free i get some people downloading my books. As soon as i put a price i get no downloads. Even if i put my price at a more than reasonable 99 cents i get nothing, that is because smashwords encourages freeloaders to abuse the site because of its very own design. Free should go and chapters samples should be instated. If you want your books to be free you could use the coupon system to give them out as free promotions to an interested crowd.
Also smashwords should seperate itself from the erotica genre. It should have its own website for the adult content which would give the other content a chance to stand out amongst the crowd. Sex will always win over anything to matter what and its hurting the other genres that have all of this mixed together on the same site to make it look like it is bigger. Smashwords should seriously consider to do a clean up and do what it is right. Put the same eggs in the same basket so that people who like specific genres are served properly and that the authors have a better chance to perform on a site that caters to their writing genre without interference of another. I have nothing against erotica but i hate to see my book getting passed over on the front page just because an erotica book was listed below. It is human nature to gravitate towards sex which removes a lot of fighting chances for the other authors chances.
Smashwords needs to become more proactive towards its authors and avoid the trap of becoming a data dump. It should reward authors who are trying to make a break thru.
example: paid publicity. authors could buy banners on the site to promote their work.
authors output incentive. authors receive a showcase in the front page for putting out his or her 10 book, 15 book, etc...
Try to instated a mandatory review system so that people do get reviews and not hundreds of downloads without a peep from anynone.
and so on and so forth.

The more smashwords try to help the authors the more money everyone will make. Right now smashwords is basically a business host for books and the authors are left to market their books which is an insane amount of work and could bring you on the verge of giving up because there is too much competition and getting known is a major undertaking which can take years to get done. Smashwords should help authors with its klout to help them establish themselves and then everyone will be a winner.

In short smashwords has to stop being a data dump and help its authors some more with some innovative tools.

nuff said.

Danny Culpepper said...

Thank you for the insightful words. This year's predictions have me feeling pretty good in that I'm not dependent on my royalties to put food on the table so I will eat the VAT increase and give my readers a break. Alas, I'm able to do this because I have a full-time job and can only write as a hobby. For those authors whose livelihood depends on substantial monthly book sales, I hope they can find a happy medium that will allow them to survive. Happy writing to all!

Ed said...

You can use KDP to publish on the amazon sites but you don't have the perk of KDP select... if you want to call that perks anyways...

I use KDP to publish my book so that they go on all the amazon sites around the world.

Mark Coker said...

@Tom Based on my observation of the bestseller lists, and my ability to correlate sales rank with the actual underlying sales, the lists are actually quite accurate in their ability to show what readers are buying. They're weighted toward unit sales over the most recent 12-24 hours. Some retailers exclude adult material from their lists (erotica), so yes, I suppose that's a form of artifice. iBooks, B&N and Kobo allow accumulated preorders to credit all at once the day the book goes onsale. Some might view that as a form of artifice, but it has good redeeming qualities as well by making these lists more accessible to lesser known authors, and it does no disservice to readers because if a book is able to accumulate several thousand orders during its preorder period, that's pretty dang special it it probably deserves extra attention by readers. :)

@Joyce, I think the best days are still ahead for indie authors. But my point is that for indies to fully exploit these opportunities, they're going to have to work harder because one of the most powerful tools in the indie author's bag of tricks was the ability to price low. This gave indies a huge advantage over the last few years. It's still an advantage now and into the future, but the advantage will diminish (much in the same way FREE books will still help increase readership, but not in the same dramatic fashion as years prior). Of all my predictions, #12 is the most important. It's really back to basics time. It's all about the book, and the book's ability to transport the reader to a "wow" experience. And then to the extent the author can execute on the full constellation of best practices, they'll increase the chances that their book's brilliance becomes accessible to readers.

@BF, good approach.

@Renée I'd encourage you to continue distributing through Amazon's regular KDP program, just avoid KDP Select which requires exclusivity. The goal is to maximize the availability of your books so it's convenient for readers to find your books at their favorite reader. For millions of readers, that favorite retailer might be Barnes & Noble, iBooks, or Amazon. Let the readers decide.

@Mike, I see others already answered, but I'll add that your prior misconception is actually quite common. I meet writers all the time who think that Amazon requires exclusivity. Amazon makes it an opt-in option, but they also go out of their way to encourage you at every click to enroll your books, and once enrolled they auto-renew and do a good job of reminding you of your exclusive obligation. It's fair to say Amazon benefits from this confusion more than the author.

@Owen, thanks for the sharing the European POV. The VAT will increase book prices, so that will probably impact consumption to some degree. In the past, most authors ate the 3% VAT without passing it on to customers. Now many indies will decide to increase prices so if past experience and general economic theory of price elasticity holds true, the increased prices should reduce unit sales. Of course this is only theory. In practice, the reader is performing complex calculus in their mind to determine the desirability of a book, and in that calculus price is but one factor, and usually not the only factor.

Mark Coker said...

@awillis511, Amazon gives merchandising advantage to authors that enroll in KDP Select. To the extent this advantage is effective (every author's experience will vary from month to month and book to book), then you can probably expect to experience a sales decline at Amazon if you pull out of Select. However, what you'll gain is the ability to diversify your retailer exposure because you can distribute your books to the other approximate 35% of the ebook market represented by the retailers in the Smashwords distribution network of Apple iBooks (the world's #2 seller of ebooks), Barnes & Noble (still very big in the US market), Kobo (strong in Canada and sells globally), the Smashwords store (small store, international), Scribd, Oyster, OverDrive (libraries) and others. I think it's advantageous to take a long term view. You should expect that it might take months or years to develop readership at these other retailers. What you'll find, however, is that as you build readership, building more readership becomes easier. It's a general rule of platform building. The early days are the most difficult, but if you stick at it and work hard, the rewards are more likely to come. You'll also find that your books might sell better at some retailers than others, and it will fluctuate often for reasons that cannot be explained (there's a lot of randomness). Ruth Ann Nordin on this thread is a good example. She broke out at Kobo a year before she broke out at iBooks. I talk about her in my free ebook, The Secrets to Ebook Publishing Success.

@Peter. Yes, the never-ending challenge of discoverability. Self publishing will enable more great books to be published than ever before, but also more horrible books. It's the yin and yang of self publishing. I think the retailers do a great job in their discovery algorithms to filter out the books to which readers aren't responding. In many ways, even though there are millions of books at the ebook retailers, books are more discoverable now than they've ever been, especially when compared to the old discovery limitations of brick and mortar stores. Online ebook stores have more virtual shelves, which makes it easier for readers to drill down to their micro-category of interest, and then once there they can search for books based on what's selling, what's new and what's getting the best reviews. The curation job is now in the hands of readers. The system isn't perfect, but I do think it's much more fair than imposing gatekeepers into the system. That's not to say that gatekeepers don't have an opportunity to play an important role, however. For example, a blogger who specializes in reviewing a certain category of books can become a trusted expert for their audience, and to the extent that blogger surfaces the very best books in that category, readers will respond to them by trusting their recommendations and rewarding the recommended books with their readership. So gatekeeping such as this will always be alive and well because such expert curation is appreciated by many readers. It's just not a job we'd ever want to take on at Smashwords. I view such expert curation as a value-add layer than be performed by specialists. Our specialty at Smashwords is managing the digital logistics of ebook distribution.

Mark Coker said...

@Ed. I appreciate your perspective and certainly appreciate the challenge of how an author can make their book stand out from the other 330,000 books at Smashwords. It's important to remember that our primary role at Smashwords is distribution to other retailers. It's a bit unusual that as a distributor we operate our own retail store (a vestige of the early days in 2008 before we became a distributor). To put things in perspective, about 95% of our authors sales come from sales at the retailers we distribute to, so only about 5% of sales on average are from the SW store. At the SW store you're only (*only*) competing against 330,000 titles, whereas at a major retailer you're competiting again millions. I think there's a lot more we can do to provide discovery tools for authors in our store, and we may do these things, but when it comes down to it our primary focus is helping our authors be more successful on the distribution side of things because that's where their greatest sales potential is. I don't see the day we ever allow authors to pay us for advertising placement. We don't take money from authors. We're much more inclined to leverage more organic systems where our discovery algoritms are based on reader interactions (sales, downloads, reviews), stuff you might call the meat and potatoes of retail discovery. Thanks.

Renée Paule said...

Thank you Mark,

I'll bear your comments in mind.

Happy New Year


Ruth Ann Nordin said...

@Mike Matheson

Do you live outside the USA? I'm not in Select, and I get 70% on books in USA as long as they're $2.99-$9.99. I don't know how things work for authors in other countries. I get 70% in some countries (like the UK and Germany), but most of them is 35%, regardless of price. If I was in Select, my $2.99 books would be 70% in all countries.

George Phillies said...

Some readers may find of interest the following link on the VAT situation.

Others may wish they had not had this clarification.

Unknown said...

The glut of throwaway drivel out there in the millions in the market have made the potential of the best book a small chance of distribution. The traditional publishing industry has gone on a dark grim consciousness in their books. Formulaic and tripe. Walked through Barnes and Noble the other day looking for anything inspirational, anything uplifting, anything having an underlying truth or premise greater than the material wallowing of the current society, no luck. Bought another history book.

joleenenaylor said...

@Peter - Once you introduce gate keepers you've stepped over the threshold and are headed right down the hallway to the same traditional publishing gate keepers we already have. Who gets to choose what is a "bad book" vs a "good book"? do you start with typos? grammar? then what's next? story content? pacing? marketability? And soon all these indie distributors are the same as the big 5 publishers and we start over with new distributors who have no gatekeepers. I think it will eventually go that route, though, at least with Amazon, but that's another discussion all together.

Great post mark :)

Discover-ability is a problem, and I'm not sure how to fix it. At the moment we, as authors, tend to post on social media so that it's akin to a knife salesman going to the park and selling knives from a picnic table. Sure, he'll make some sales, but the people at the park aren't *looking* for knives, so his success rate will be less. Where as if he could find a place where a lot of people who were all looking for knives were gathered his sales percentage would be much higher. But where is that place? A knife store? Sure, only there are 500,000 other knives there and only the top selling ones are displayed right on the shelves; the buyers have to go search in the back rooms for the others, so he's less likely to sell there. So he goes to a store with fewer knives to sell - some small imprint - only because the store is small and the selection small, now the customers aren't there so he's back at the park shouting at people enjoying their picnics, trying to get them to visit the store. In the end I think the best discoverablitiy is, sadly, those email lists people subscribe to. The ones that usually cost $$ to get your book listed on. The people getting it int heir inbox/checking the listing site are looking for books, so it's not random passers by, and there are only so many listed per day, so the volume you're competing with is much lower. However, you still run the risk of "this email list says they have 2,000 subscribers but only about 100 of them are real people and/or open their emails to see my book listed" add to that that they are really only effective if your book is on sale or free (because a sale or a limited time free causes people to act now while they can grab the deal up as opposed to knowing they have tie to do it) so unless you have a backlist you still haven't gained much. Sooooo what's the answer? Write a bunch of really good books with good covers and good descriptions and then try offering one (or more) on sale/free and get them listed on some of those email lists. At least that's what I'm working on, anyway ;) I know my best sales have occurred after getting a book (usually the first in my series which was $.99 and is now free) listed on one of those. You get more downloads with free than with a sale priced book but I'm not sure it translates out later. A lot of the free downloaders never read the book because they're just free hoarders (i do this too, so I'm not pointing fingers!) But I don't have enough data yet to support the theory (it's only been free for a month and it may take longer than that for people to read it and move on to buying the rest), so we'll see.

Joshua Kimball said...

This is such a great post. I have been racking my brain trying to get direction for when I finish my book. There is so much information out there and going the traditional agent and publisher route seems like a nightmare.