Wednesday, December 31, 2014

Smashwords Year in Review 2014 and Plans for 2015

Each year I provide Smashwords authors and publishers a review of our progress in the year as well as hints of our plans for the coming year.  So here goes.

2014 marked another exciting year for Smashwords as we create new ebook distribution tools and capabilities that give our authors and publishers a competitive advantage in the marketplace. 

If you’re new to Smashwords, a brief introduction to Smashwords is in order. 

I founded Smashwords in 2008 to empower writers to become professional self-publishers.  I wanted to transfer the power of publishing from publishers to authors.  Back in 2008, large publishers controlled the printing press, the knowledge of professional publishing, and the all-important access to retail distribution.  Publishers had the power to determine your fate as an author.  No more.  I wanted to make authors the captains of their own destiny.

Over the last six going on seven years, Smashwords introduced our free ebook printing press, Meatgrinder, which made it possible for any writer anywhere to publish an ebook in minutes; we opened distribution for the first time to major retailers and library partners that were previously inaccessible to self-published authors; we developed sophisticated yet easy-to-use publishing tools that help writers and small indie presses publish with pride and professionalism; we worked to actively educate our authors and publishers how to leverage best practices to publish with greater success; and we’ve been fierce (but friendly!) advocates for the rights and long term interests of the indie author community.

We exist to serve our authors and publishers, and we serve you by developing tools and relationships that help you publish faster, smarter and more effectively. Our time-saving tools help you spend more time writing and producing and less time managing multiple upload platforms.

In the years since we launched, Smashwords has grown to become the world’s largest distributor of self-published books.  To the extent we’ve been successful is entirely thanks to the continued support of the authors, publishers and retailers we serve.  You’re running a business, and we realize you work with Smashwords by choice, not by necessity.  Through continuous improvement of everything we do, we will always work to earn and deserve your continued business, trust and partnership.

So let’s take a look at our progress for the year.

Among our service milestones for the year:
  • New distribution channels - We added new distribution partners including OverDrive, the world’s largest ebook supplier serving over 20,000 public libraries, and Txtr, a European retailer.  New partners Oyster and Scribd were brought fully online.
  • Faster distributions - Working in close partnership with all our retail partners, Smashwords dramatically increased the speed and reliability of our distribution systems in 2014.  We’re now shipping multiple times daily to most of our retailers, and near-real time to iBooks, where, for example, and it’s not uncommon for authors to upload a book to Smashwords and see it appear at iBooks the same day.  Faster distributions of new titles and metadata updates give our authors more control over their publishing.
  • Faster sales reporting - We improved the speed of sales reporting.  In May, we introduced our Daily Sales tool which provides next-day and same-day sales reporting from iBooks, Barnes & Noble, OverDrive and Kobo.
  • Added EPUB 3 support - Smashwords now accepts EPUB3 files as part of our Smashwords Direct feature.  EPUB3 gives authors and publishers greater language support and text layout options, including right to left reading and vertical reading.
  • We helped more authors realize their full potential - Smashwords authors bring us their talent, and we give them tools to help realize the full potential of their talent.  Multiple Smashwords authors hit retailer bestseller lists in 2015 as well as national lists such as New York Times and USA Today, aided in part by the power of Smashwords preorders to iBooks, Barnes & Noble and Kobo, and also supported by enhanced metadata tools such as Smashwords Series Manager which improves series discoverability at retailers.
  • Diversification pays off - Our broad distribution network helped authors and publishers diversify their exposure to an industry-wide slowdown in ebook retailing.  Strong merchandising support for Smashwords authors by our wonderful colleagues at iBooks combined with sales growth from new distribution partners FlipKart, OverDrive; Oyster and Scribd helped many Smashwords authors and publishers have a great year.
  • Diversification pays off again - Authors who fully distributed their titles with Smashwords were partially insulated from the dramatic sales drops many Amazon authors reported following the introduction of Kindle Unlimited.  If you know indie authors who only upload to Amazon, invite them to diversify their distribution with Smashwords.
Among our business milestones for the year:
  • Title growth - The Smashwords catalog grew to 336,400 titles, up 60,300 titles or 22% during the year from 276,100 at the end of 2013. 
  • Word count - Smashwords helped indie authors and small independent presses publish over 2.5 billion words in 2015, up 26% to over 12 billion words!
  • Author growth - Smashwords now serves over 100,000 indie authors and small independent presses around the globe.
  • Profitability - For the fourth year in a row, Smashwords maintained profitability.  Profitability is important to our authors and publishers because it allows us to reinvest in the development of new tools and capabilities to serve our authors and publishers.  We continue to achieve this profitability by aligning our interests 100% with the interests of our authors, publishers, retailers and readers.  Unlike many competing self-publishing services organizations, we don’t employ sales people and we don’t sell services or publishing packages.  We only make money if we help our authors and publishers sell books.
  • 26 team members to serve you - We end the year with a team of 26 full-time professionals, up from 23 in 2013, 19 in 2012, 13 in 2011 and 3 in 2010.  This year we made significant investments in technology, distribution systems and finance.
  • Independence - Smashwords remains entirely self-funded without the assistance or interference of outside investors.
  • ALLi Award - The Alliance of Independent Authors (ALLi) named Smashwords its service provider of the year, in recognition for the depth and breadth of our distribution capabilities, our advocacy for authors and our relentless commitment to continuous service improvement to empower the success of indie authors worldwide.
  • INC 500 - INC Magazine named Smashwords to its INC 500 list of America’s fastest growing private companies.  They named Smashwords the #1 fastest-growing media company.  Full credit for this accomplishment goes to Smashwords authors and publishers!
  • Bowker survey - Bowker, in their annual survey of self-publishing services, named Smashwords the #1 producer of ebooks in the U.S.  View the report here (opens a PDF)
  • Forbes America's Most Promising Companies - Forbes Magazine, for the second year running, named Smashwords to its list of America’s Top 100 Most Promising Companies.
Despite our accomplishments in 2014, we’re not finished pushing the envelope.  We still feel like we've only scratched the surface of what's possible.  Our roadmap for 2015 and beyond is exciting.

Here are some hints to our direction.  In 2015, our authors and publishers can expect to see continuous improvements across every part of our business, including:
  • New distribution and merchandising tools that make your books more discoverable and desirable by readers
  • New price management tools that give our authors and publishers more granular control over pricing in multiple currencies and territories
  • New retailer additions to the Smashwords distribution network serving retailers and libraries
  • Improved, more intuitive sales reporting
  • An upgraded Meatgrinder to improve the ease and capabilities of our flagship ebook conversion tool
  • Improved search for the Smashwords retail store
  • ... and some fun surprises that will set the stage for even greater things to come.
On behalf of the entire team at Smashwords I want to thank you for your continued trust, partnership and inspiration.  We’re looking forward to serving you in 2015!

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)

Monday, December 22, 2014

Is Kindle Unlimited Devaluing Books? The Dark Side of Exclusivity

In my previous post, I examined how authors can succeed despite the challenging sales environment for ebooks.  Today, I examine how Amazon’s Kindle Unlimited could jeopardize the independence of indie authors.


Budget-minded power-readers at Amazon now have 700,000 fewer reasons to purchase indie ebooks thanks to Kindle Unlimited.  Oh, and authors earn less too.

Back in July, Amazon launched Kindle Unlimited, an ebook subscription service where for $9.99 a month, customers gain access to a catalog of over 700,000 ebooks.  Nearly all of these titles are supplied by indie authors who participate in KDP Select, Amazon’s ebook self-publishing option that requires exclusivity.

I first wrote about Kindle Unlimited here in July.  Although I'm a fan of ebook subscription services (see my two-part series analyzing the subscription business model), I concluded Kindle Unlimited was a bad deal for authors because it required exclusivity and gave Amazon free rein to control author compensation.

Five months in, let's take a fresh look at how Kindle Unlimited's unique business model is affecting authors.

For the month of November, Amazon paid $1.39 for each qualifying read.  This is half of what an indie author earns when a $3.99 ebook is purchased at Amazon, or when the same book is read at KU's ebook subscription competitors, Oyster and Scribd.

Oyster and Scribd don't require exclusivity.  Oyster and Scribd pay authors off of the retail list price set by the author (Smashwords authors earn 60% list at Oyster and Scribd like any other retailer).  Amazon, by contrast, requires exclusivity (you can't sell your book anywhere else).  They pay out of a shared pool.  The size of this shared pool is determined by Amazon the month after the book is read.  It’s like Amazon sells your book today but says, “I’ll decide what I feel like paying you in a few weeks."

Many indies have announced they're abandoning KDP Select after suffering massive sales drops since July.

Authors are in a difficult spot at Amazon.  A few KU authors have publicly reported increased sales and readership, but that appears to be the exception rather than the norm.  For most KU participants, it's unclear if the promised benefits outweigh the harm of excluding the millions of readers at other retailers.  No other retailer makes authors play Russian Roulette with their books and careers like this.

KU authors have no control over their per-copy earnings because KU pays the same for a 99 cent book as a $9.99 book.  Amazon determines the value of each read, and determines how this value is shared among participating authors.

Historically, the big fear of ebook subscription services was that they’d devalue books, much in the same way some musicians (including Taylor Swift in the news recently) are concerned Spotify devalues music.  There are two elements to the devaluation concern.  The first is that subscription services might make books feel free to consumers and make them less likely to pay fair prices for other books, and the second concern is that authors will earn less for each customer interaction at the subscription service.

Oyster and Scribd proved that authors and publishers can achieve the same or higher earnings with ebook subscriptions as they earn at retail, and without exclusivity.  The Oyster and Scribd business models are author-friendly, and were the fastest growing channels in 2014 for Smashwords authors.

Kindle Unlimited, on the other hand, strips control from the author.

When Amazon’s contract dispute with Hachette broke out earlier this year, many indies assumed the dispute had nothing to do with them.  In my blog post last May, Amazon Dispute with Hachette Foreshadows What’s Next for Indie Authors, I cautioned how the dispute with Hachette would set the stage for Amazon to put the squeeze on indie authors next.

I think most indie ebook authors would agree that low customer prices are a generally a great thing.  It's one of the reasons indie ebooks sell so well.  Indies are pricing their professional-quality books at a fraction of the price of the books from the large publishers.

Amazon’s business model is dependent upon low prices to attract customers.  It must extract price concessions from suppliers to feed budget-minded consumers.  Publishers are suppliers.  Indie authors are suppliers.  When Amazon says it has a responsibility to its customers to negotiate good deals from suppliers, I don't question that.  But how far is too far? 

Is an ebook that sells for $3.99 and earns you $2.79 too expensive for Amazon?  Last month, Amazon decided your book was worth $1.39.

Have we come to a point where ebook retailers should display a Fair Trade Certification label so consumers know if the retailer is treating their suppliers fairly?  We've got Fair Trade coffee, why not Fair Trade ebooks?

The dark side of exclusivity

Amazon's indie author squeeze started innocuously enough with their launch of KDP Select in December 2011.  With KDP Select, Amazon created a caste system in their store that gave advantages to exclusive authors (more discoverability, more merchandising tools, higher royalty rates) and harmed non-exclusive authors (less discoverability, fewer merchandising tools, lower royalty rates).

I’ve been speaking out against KDP Select exclusivity since the program first launched in December 2011.  In my first post, I cautioned that KDP Select could trap indie authors like tenant farmers tilling Amazon soil. This is happening now.

Amazon’s defenders will counter that KDP Select participation is optional and temporary, and this is true.  Authors are free to leave KDP Select after three months.  Yet this freedom is illusory.  By choosing to plant their seed exclusively at Amazon, an author must rip their seed out of other retailers' soil. They become more dependent on Amazon.

With KU, Amazon is salting the earth for authors and competing retailers.  KU devalues books, starves its competitors of the books readers want to read, exposes indies to greater risk and uncertainty, and prevents future ebook retailing options from taking root.

As Amazon’s exclusive catalog grows, and as indie authors account for an ever-greater percentage of the ebook market, ebook consumers will have fewer reasons to purchase ebooks.

Even authors who have successfully diversified their distribution outside of Amazon are affected by KU.  Why should budget-minded power-readers who loves indie ebooks purchase ebooks from iBooks or Barnes & Noble when they can access nearly a million books in KU for one low price?

Indies gave KDP Select its critical mass, which means Indies created this monster. Now indies have the power to undo this before it's too late.

~
Coming up in the next two weeks, I'll do my annual predictions post for 2015 and will also do my annual Smashwords year-in-review post.  To guarantee you don't miss any future posts, subscribe to receive posts via email at the subscription link at right. It's a private list and you can opt out at any time.

Wednesday, November 19, 2014

Ebook Publishing Gets More Difficult from Here - Here's How to Succeed

First the good news. 

For indie (self-published) authors, there’s never been a better time to publish an ebook.  Thanks to an ever-growing global market for your ebooks, your books are a couple clicks away from over one billion potential readers on smart phones, tablets and e-readers.

As a Smashwords author, you have access to tools, distribution and best practices knowledge to publish ebooks faster, smarter and less expensively than the large publishers can.  In the world of ebooks, the playing field is tilted to the indie author’s advantage.

Now the bad news. 

Everything gets more difficult from here. You face an uphill battle. With a couple exceptions – namely Scribd and Oyster – most major ebook retailers have suffered anemic or declining sales over the last 12-18 months. 

The gravy train of exponential sales growth is over.  Indies have hit a brick wall and are scrambling to make sense of it.  In recent weeks, for example, I've heard a number of indie authors report that their sales at Amazon dropped significantly since July when Amazon launched Kindle Unlimited (I might write about Kindle Unlimited in a future blog post).  Some authors are considering quitting.  It’s heartbreaking to hear this, but I’m not surprised either.  When authors hit hard times, sometimes the reasons to quit seem to outnumber the reasons to power on.  Often these voices come from friends and family who admire our authorship but question the financial sensibility of it all.

The writer's life is not an easy one, especially when you're measuring your success in dollars.  If you're relying on your earnings to put food on your family's table, a career as an indie author feels all the more precarious.

At times like this, it’s important for all writers to take a deep breath, find their grounding, remember why they became an author in the first place, and make important decisions about their future.  It’s times like this that test an author.

Don’t fail the test.

Back in December, in my annual publishing predictions for 2014, I speculated that growth in the ebook market would stall out in 2014.  I wrote that after a decade of exponential growth in ebooks with indies partying like it was 1999, growth was slowing.

I wrote that the hazard of fast-growing markets – the hazard of the rapid rise of ebooks – is that rapid growth can mask flaws in business models.  It can cause players to misinterpret the reasons for their success, and the assumptions upon which they build and execute their publishing strategy. Who are these players?  I’m talking about authors, publishers, retailers, distributors and service providers – all of us.  It’s easy to succeed when everything’s growing like gangbusters.  It’s when things slow down that your beliefs and underlying assumptions are tested.

I urged authors to embrace the coming shakeout rather than fear it.  Let it spur you on to become a better, more competitive player in the months and years ahead.  Players who survive shakeouts usually emerge stronger out the other end.

What’s causing the slowdown?

While every individual author’s results will differ from the aggregate, I think there are several drivers shaping the current environment.

1.  There’s a glut of high-quality ebooks
There’s been a lot of hand-wringing by self-publishing naysayers who criticize the indie publishing movement for causing the release of a “tsunami of drek” (actually, they use a more profane word than “drek”) that makes it difficult for readers to find the good books.  Yes, indie publishing is enabling a tsunami of poor-quality books, but critics who fixate on drek are blinded to the bigger picture. Drek quickly becomes invisible because readers ignore or reject it.  The other, more important side of this story is that self-publishing is unleashing a tsunami of high-quality works.  When you view drek in the broader context, you realize that drek is irrelevant.  In fact, drek is yin to quality’s yang.  You must have one to have the other.  Self-publishing platforms like Smashwords have transferred editorial curation from publishers to readers, and in the process has enabled publication of a greater quantity and diversity of high-quality content then ever possible before. 

The biggest threat to every indie or traditionally-published author is the glut of high-quality low-cost works.  The quality and potency of your competition has increased dramatically thanks to self-publishing, and the competition will grow stiffer from this day forward. 

Ten years ago, publishers artificially constrained book supply by publishing a limited number of new titles each year, and by agents and publishers rejecting nearly everything that came in through the slush pile. There was an artificial scarcity of books.  The supply was further constrained by the inability of physical brick and mortar bookstores to stock every title.  Even big box stores like Barnes & Noble and Borders could only stock a small fraction of the titles published by publishers each year, and as such they were forced to return slow-selling books to make room for new releases.

This rapid loss of shelf space for the poor sellers forced many high-quality books out of print before they had a chance to connect with readers.  This then limited the supply of available books, which limited the competition for the authors whose publishers managed to keep their books in print and on store shelves.  
We’ve moved from a world of artificial scarcity to organic abundance.  Readers now enjoy a virtually unlimited selection of low-cost, high quality works, and these books will become ever-more plentiful and ever-more higher-quality in the years ahead thanks to self-publishing.
2.  The rate of growth in the supply of ebooks is outstripping the growth in demand for ebooks
A few things are happening here.  Ebooks are immortal, so they never go out of print.  Like cobwebs constructed of stainless steel, they will forever occupy the virtual shelves of ebook retailers, forever discoverable.  This is both good and bad.  It’s good your book is immortal, because it means you can look forward to harvesting an annuity stream of income for many years to come, especially for great fiction because fiction is timeless.  But it means that every year there will be more and more books for readers to choose from.  Unless the number of readers and the number of books read by readers grows faster than the number of titles released and ever-present, there will be fewer eyeballs split across more books. This means the average number of book sales for each new release will decline over time unless readership dramatically increases, or unless we see an accelerating pace of transition from print reading to screen reading.
3. The rate of transition from print books to ebooks is slowing
The early adopters for ebooks have adopted.  The exponential growth in ebook sales over the last six years was driven by a number of factors, most notably a rapid transition from print reading to ebook reading, and the success of ebook retailers such as Amazon, iBooks and Barnes & Noble.  Today, ebooks probably account for between 30 to 35% of dollar sales for the US book market, with genre ebook fiction a bit higher and romance quite a bit higher.  Since ebooks are priced lower than print, the 30-35% statistic understates the amount of reading that has moved to screens.  Most likely (especially when you include free ebooks), screen reading in the ebook format today probably accounts for around half or more of all book words read.  But the rate of transition from print to ebooks is slowing.  We’ve reached a state that might best be described as a temporary equilibrium.  I think reading will continue to transition to screens, but at a much slower rate of transition than during the last six years.  The slower rate of growth will therefore limit the number of new eyeballs available for the ever-growing supply of ebooks.

How to Succeed in the Future Competitive Landscape

The easy days are behind you, but tremendous opportunities still lie ahead.

As I mentioned at the start of this post, there's never been a better time to be an indie author.  Millions of readers are hungry to discover, purchase and read their next great book.

Here’s how to succeed in the new environment.

1.  Take the long view
You’re running a marathon, not a sprint.  Most bestsellers slogged away in obscurity for years before they broke out.  Every bestselling author you admire faced moments where it seemed more sensible to quit than to power on.  They powered on.

Work today to create the future you want 10 or 20 years from now.  Six years into the ebook revolution, you’re still early in the game.
In any market, whether fast-growing or slow-growing, the early movers have the advantage.  Although it was easier two years ago to grow readership than it is today, today it’s still dramatically easier to grow your readership than it will be two years from now.

Focus now on aggressive platform building.  Build a social media platform - using tools such as Facebook, Twitter, a blog and a private mailing list - that you control. You 'll find platform-building is the most difficult when you're first starting out.  You'll also find as you grow your platform and your following, it gets easier as your readers become your evangelists.  Social media in all its forms rewards those who add value.

Authors who attract and capture the most readers today have the greatest opportunity to convert those fans to lifelong super fans.  Super fans will buy everything you write and will evangelize your work through word of mouth, reviews and social media.


2.  Good isn’t good enough
With the glut of high-quality books, good books aren’t good enough anymore.  Cheap books aren't good enough (Smashwords publishes over 40,000 free ebooks).  The books that reach the most readers are those that bring the reader to emotionally satisfying extremes. This holds true for all genre fiction and all non-fiction.  If your readers aren’t giving you reviews averaging four or five star and using words in their reviews like, “wow,” “incredible” and “amazing,” then you’re probably not taking the reader to an emotionally satisfying extreme.  Extreme joy and pleasure is a required reading experience if you want to turn readers into fans, and turn fans into super fans.  Wow books turn readers into evangelists.  Last year I wrote a post titled, Six Tips to Bring Your Book Back from the Doldrums.  It's a self-assessment checklist that prompts you to take an honest look at your reviews, your cover image, your categorization and targeting. With some simple questions and honest answers, you'll be ready to give your books a makeover.

3.  Write more, publish more and get better
The more you write and publish, the greater your chances of reaching readers.  The more you write, the more opportunity you have to perfect your craft.  What are you writing next?  Get it on preorder now.  Never stop writing.  Never stop growing.

4.  Diversify your distribution
There’s a global market for your English-language books.  Smashwords can help you distribute to iBooks, Barnes & Noble, Scribd, Oyster, Kobo and public libraries.  iBooks, for example, operates stores in 51 different countries and has become the world’s second largest seller of ebooks.  Each of these 51 countries represents its own unique micro-market.  If you’re not there with your entire list of books, then you’ll face long term disadvantage against the majority of Smashwords authors who’ve been building their fan bases for the last few years with uninterrupted global distribution. 
If you don’t have all your books available at every retailer, you’ll undermine your long term potential.
At every writers conference I attend, I’m surprised by the number of indie authors who ask, “How do I decide between Amazon and Smashwords?”  The question belies an unfortunate truth about the state of indie publishing – a scary large number of authors publishing at Amazon think Amazon requires exclusivity.  Not true!  Yes, they'll poke and prod you to go exclusive, but you can say no.  I recently wrote a short post for the IBPA (International Book Publishers Association) on this subject titled, Exclusive is Actually Optional at Amazon.  Do your indie author friends a favor and help them understand the benefits of global distribution.

5. Network with fellow indies
As I wrote in the Indie Author Manifesto, indie does not mean “alone.”  It takes a village to publish a professional-quality book.  Network with your fellow indies at writers conferences and local writers groups.  Share experiences and support one another through the good times and bad.

6. Publish multi-author box set collaborations
When authors publish and promote multi-author box sets, they can amplify their fan-building by cross-marketing to each participating author’s fan base.  Box sets work best when every author pitches in on the promotion. Check out my recent blog post on how to do multi-author box sets.  Partner with authors you love, and who you think your readers will love.  Be a great partner!

7. Leverage professional publishing tools
Over the last couple years at Smashwords, we’ve introduced a number of new tools that give our authors a competitive advantage in the marketplace, such as Smashwords Series Manager for enhanced series discovery, and preorder distribution to iBooks, Barnes and Noble and Kobo.  Yet despite the availability of these tools, they’re not universally adopted.  Even though we’ve proven and communicated that books born as preorders sell more units that other books, only a minority of Smashwords authors release their books as preorders.  Take advantage of these tools.  They give you a competitive advantage!

8. Best practices bring incremental advantage
There’s no single magic bullet that will make your writing career take off.  The secret is that you must do many things right and avoid mistakes that will undermine your career.  The many things you must do fall under the umbrella of best practices.

As I wrote in The Secrets to Ebook Publishing Success in my discussion of Viral Catalysts, it's helpful to think of your book as an amorphous blob, and attached to it are dozens of dials, levels and knobs that you can twist, turn and tweak to make your book more available, more discoverable and more desirable. What are these things you can tweak and adjust?  I'm talking about your editing, your cover, your book description, pricing, categorization, etc. Once you get the combination of settings just write, your book will start selling.
Best practices are what separate the indie author professionals from the indie author wannabees.  Be the pro!  Even if you're already a bestseller, challenge yourself to do better.  Find those things you're not doing that you should be doing better.
So here’s some good news for you.  Although the indie author community is more professional and sophisticated than it was five years ago, the fact remains that most indie authors don’t fully exploit the power of best practices.  There's plenty of low-hanging fruit on the best practices tree that they're ignoring.  This means if you fully exploit best practices, you’ll have a significant advantage over the majority of authors who do not.
Here's a quick summary of some of the most commonly underutilized best practices:  1.  Many indies release their books without professional editing and proofreading.  2.  A surprising number of authors end their book with a period and that’s it, and not with enhanced back matter and navigation that drives sales of your other books and drives the growth of your social media platforms.  3.  Although indie authors are releasing books with better quality covers than ever before, a surprising number of authors still release books with low-quality homemade covers.  4.  A lot of series writers haven’t yet experimented with free series starters, even though free series starters are proven to drive more readers into series and yield higher overall series earnings.  5.  Many series writers don't yet link their series books in Smashwords Series Manager, even though this tool increases the discoverability of series books at Smashwords and at Smashwords retailers.  6.  Even though we’ve published strong evidence three years in a row in our Smashwords Surveys (2014, 2013, 2012) that longer ebooks sell better than shorter ebooks, some authors still divide full length books into shorter books that can disappoint readers.  7.  Sloppy descriptions.  You'd be surprised at the number of book descriptions that have typographic errors, or improper casing or punctuation.  Readers pick up on this stuff.  Mistakes like this are like a slap in the face of your prospective reader.
To long time readers of the Smashwords blog, you're probably already familiar with many of the proven best practices I mentioned above.
If you want a refresher on best practices, please take some time to read my free ebook, The Secrets to Ebook Publishing Success.  Over 30 best practices are described there.  And read the Smashwords Book Marketing Guide for more than 40 free book marketing and author platform-building ideas.  And then take some time to review my prior blogs posts here, or watch my ebook publishing tutorial videos at YouTube
Indie authors pioneered many of these best practices.  I learn from you and your fellow authors, and share what I learn.

9. You’re running a business
Mark’s Unconventional (but proven effective) Rules for Business:  1.  Be a nice person. Treat partners, fellow authors and readers with kindness, respect and integrity. You'll find as you develop your career, the publishing industry will feel smaller and smaller as you get to know everyone, and as everyone gets to know you.  It takes a village to reach readers.  All these people - fellow authors, critique partners, beta readers, editors, publishers, cover designers, publicists, retailers, and distributors - have the power to open doors for you.  2.  Be honest.  Business relationships are built on trust and honesty.  The fastest way to destroy a relationship is to be dishonest.  3.  Be Ethical. Don't cheat. Do unto others as you’d want done unto you.  4.  Be Humble. Yeah, I’ve told you have superawesome potential within you.  But know that you can always be better.  Celebrate those who help you succeed.  Always know that none of us can achieve anything without the support, encouragement and love of those around us.  It takes a village.

10. Pinch your pennies (an American saying that means, "be frugal with your money")
Practice expense control.  Your sales will always be uncertain, but your expenses can be controlled.  Jealously guard your pennies.  If you can’t afford professional editing, for example, find another way to obtain it.  A couple months ago at the Rocky Mountain Fiction Writers conference, I gave a presentation on best practices.  To underscore my suggestion that writers find another way to get professional editing if they can’t afford it, I pointed out an editor friend in the audience and suggested that if authors couldn’t afford to pay for her services consider offering her something of value in exchange.  Tongue in cheek, I said, “if you’re a professional masseuse, offer massage services.” To my surprise, I learned afterward that two professional masseuses in the audience handed the editor their business cards at the end of the presentation.  You've got skills.  Get creative.  Trade editing with fellow authors.  Trade services in exchange for professional cover design.

11. Time Management
Do you have too many hours in the day?  Of course not.  Organize your time so you’re spending more time writing and imagining, and less time with the menial grunt work.  Smashwords can help on the distribution side.  Consolidate your distribution to reap the time-saving benefits of centralized publishing control and metadata management.
12. Take risks, experiment, and fail often
Success is impossible without failure.  Failure is a gift.  The challenge is to take a lot of little risks and make every failure a teachable moment.

13. Dream big dreams
Be ambitious.  Aim high.  You’re smart and you’re capable.  You must believe this.  Because if you don’t try, you can’t achieve.   Salvador Dali said:  "Intelligence without ambition is a bird without wings."
14. Be delusional
At the Pikes Peak writers conference three years ago, I had a fun conversation with uber-agent Donald Maas. Don had just told a room full of writers that self-publishing was a fine option if they didn't want to sell any books.  Later that night, we crossed paths at dinner.  I told him I thought he was underestimating the impact self-published authors would have on the publishing industry.  He told me he thought I was delusional. When someone doubts me, I feel energized. To have vision - to see what doesn't yet exist - that's delusional.  Be delusional. What's your vision?  Know that every NY Times bestseller was absolutely nuts to write a book.  Most books fail, so common sense would advise getting a job at McDonalds instead. Three months ago, three years after my conversation with Mr. Maas, Inc. Magazine named Smashwords to its INC 500 list of America’s fastest-growing companies in recognition of indie authors at Smashwords who sold over $30 million worth of books at retail last year. Who’s delusional now?
15. Embrace your doubters
They know not of what they speak. They’re delusional too. They can't yet see what you see. They can't see what' s in your imagination.  Give ‘em a hug.
16. Celebrate your fellow authors’ success
Your fellow authors' success is your success, and yours theirs. When you achieve success, do everything you can to pause a moment and lift up your fellow authors to join you. A journey shared is more satisfying than a journey alone.
17. Past success is no guarantee of future success
I think about this a lot at Smashwords. The world is cyclical. You’ll have ups and downs. When you’re having a great run, enjoy it, soak it in, bank it, pay off debts and build your savings for a rainy day.  The rainy day will come. And then keep working. Never stop sprinting as fast as you can in the direction of your dreams.

18. Never Quit
Never give up. Quitting guarantees failure.  If you never quit, you’ll never fail.  Stamina and staying power beat the sprint.  Think of the story of the tortoise and the hare. Fight for your right to pursue the best career in the universe.   
19. Own Your Future
In the past, you were dependent upon publishers.  Now it’s all you.  Your success or failure is your own. You’re the writer and the publisher.  You decide how you publish.  You choose your partners.  If you succeed or fail, it’s on you.  Avoid finger pointing and celebrate those who help you succeed. 
20. Know that your writing is important
Books are important to the future of mankind. You are the creator of books.  That makes you special, and it also burdens you with a special responsibility. No one else can create what you have within you. Your writing represents the manifestation of your life, your dreams, your soul and your talent. You’re special. Others might think you’re suffering from delusions of grandiosity but so what?  What do they know?  If you don’t believe in yourself, who will? 
Find success and satisfaction in the journey of publishing.  Know that the measure of your importance and the measure of your contribution to book culture and humanity cannot be measured by your sales alone.  The moment you reach your first reader, you’ve done your part to change the world.  And that’s just the beginning.  


If you publish for the right reasons and you adopt best practices that make your books more available and more desirable to readers, your future is as bright as your imagination.

Thank you for everything you do.

Friday, November 14, 2014

The Amazon Hachette Dispute Comes to a Pyrrhic End

As the Epirot Illyrian general
Phyrrus demonstrated, winners
can be losers too. 
Image source: Wikipedia



Amazon and Hachette announced a settlement this week in their long festering contractual dispute.  I'm glad it's over.  As I discussed in a NINC interview last month, the dispute evoked a lot of unnecessary ugliness in certain quarters of the indie author community.

At the heart of the dispute was the Agency pricing model for ebooks, which meant it was a battle was over pricing and margin.  According to most press accounts, Hachette wanted the freedom to set consumer prices and earn 70% list for its ebooks, and Amazon wanted to pay Hachette lower margins so it could fund deeper discounting.  I covered the dispute back in May here at the Smashwords blog.

According to carefully worded statements this week by Amazon and Hachette - neither of which boasted of victory - Hachette will retain Agency pricing control yet conceded to certain unnamed Amazon demands that will incentivize lower pricing from Hachette.

It's not easy to pick winners and losers.  As with most wars, even winners can be losers.

Here's my attempt to examine the winners and losers of this episode, along with speculation on long term implications.

Hachette *mostly* won, but is now boxed into a position where faithful authors will expect higher net royalty rates for ebooks as well as other perceived reforms from publishers.  The Author's Guild has already hinted as much.  In a blog post this week commemorating the agreement, Authors Guild president Roxana Robinson took the opportunity to urge Hachette to raise ebook royalty rates for authors.

Amazon mostly lost, because it appears Agency wasn't dismantled or critically injured.  Amazon will likely seek revenge through other means (see below).

Agency mostly won. It dodged a bullet to the benefit of publishers and indie authors alike, and to the benefit of Amazon's retail competitors.

Amazon mostly lost on the PR front.  Amazon's heavy handed tactics confirmed the industry's worst fears about Amazon.  Word of Amazon's heavy-handedness leaked out into the mainstream media where it probably tarnished Amazon's otherwise pristine image in the minds of consumers who were paying attention.  Amazon dare not replay the same overt tactics again unless it wants to rip the scar off of the bloody putrid mess and invite people to connect dots back to the Amazon/Hachette dispute.

Amazon boxed in.  Just as Hachette is boxed in with expectations of payback from their defenders, so too is Amazon.  If Amazon puts the squeeze on indie authors and their 70% list, their supporters will cry foul ("Hey, I defended you like a loyal pit bull in your dispute with Hachette!")

Author affinity for publishers damaged.  Amazon partisans orchestrated a rage-fest against traditional publishers, further eroding the once divine reputation of traditional publishers. Amazon partisans used this dispute as an opportunity to paint all publishers with the broad brush that publishers don't care about authors, want to exploit authors, want to overcharge customers for ebooks to protect their print businesses, collude on pricing, and who knows what else, strangle puppy dogs?  All good conspiracies are grounded in a small amount of truth.  Yes, no doubt, publishers have much opportunity to bring reforms that benefit authors, though I thought the vitriol was excessive.  I also believe that indie authors are well-served by a thriving and profitable traditional publishing industry because it creates more publishing options for all authors.  When indies go too far to tear down publishing houses, they risk tearing down their own house as well.

Authors attacking authors.  Successful traditionally published authors who stood by publishers were attacked.  This, to me, was one of the most unfortunate outcomes.  When authors are attacking authors, you know the world has gone mad.  It was all the sadder that most of these attacks came from the indie author community.  Indies should be better than this.

Any perceived victory for publishers will likely prove Pyrrhic. The Hachette agreement, which was itself preceded by Simon & Schuster reaching new terms with Amazon, will likely be followed by other publishers striking similar deals now that the goal posts are planted in the ground.  To the extent Amazon feels it was forced to settle, this settlement will dredge up their bitter memories of the time publishers forced Amazon to move to Agency in 2010.  Amazon doesn't like it when others exert power over it.  Can you blame Amazon?  No one appreciates feeling powerless.  Amazon prefers its supplier frenemies divided, conquered and dependent. If it can't crush Agency, it will try to neuter the publishers who use it. It views publishers as fat middlemen to be disintermediated, their fat to be rendered away and conveyed to the bellies of customers. Although Amazon's ability to replay their heavy-handed Hachette playbook is limited, I expect they'll exact a different type of revenge in the form of discoverability and merchandising. Think of it as passive-aggressive. Amazon will redouble efforts to undermine the power of publishers by diverting more reader eyeballs to indie books in KDP Select and Kindle Unlimited, and to Amazon imprints that are exclusive to Amazon.  Amazon has every right to arrange their own shelves. Let's call it the cloak of invisibility that no author or publisher wants to wear.
Like with most battles, all combatants lost a little something in end.  Here's wishing the industry greater peace and prosperity in the future.

Thursday, September 18, 2014

iBooks Launches Worldwide Book Bundles Promotion, Features 41 Smashwords Box Sets and over 200 authors

iBooks today launched a major worldwide merchandising feature that includes 100 box sets, 41 of which are from Smashwords.

For readers looking to discover their new favorite authors, the collections offer a treasure trove of amazing authors.  $99.00 will get you hundreds of books!

The featured Smashwords box sets include the works of over 200 Smashwords authors.  View the merchandising feature at iBooks, or view on your web browser via iTunes by clicking here.

The feature showcases books in the categories of Contemporary Romance, Crime & Thrillers, Historical Romance, Paranormal, Sci-Fi & Fantasy, and Teen & Young Adult. Apple plans to promote the feature globally in the US, Australia, UK, Canada, Ireland and New Zealand.

Last month I blogged about box sets as a significant audience-building tool for indie authors. With box sets, multiple authors collaborate to produce and publish an anthology of books organized around a theme.  Each author then co-promotes the box set to their respective fan bases, which thereby amplifies the overall reach for all participating authors.

Today we see that a great box set also opens the opportunity for merchandising love, as in the case with iBooks today.  The timing of the iBooks promotion is especially great for the participating Smashwords authors. Tomorrow is when Apple will release the new iPhone 6 family of larger-screen smart phones to customers.  But more importantly, yesterday Apple released iOS8, their new mobile operating system for iPhones, iPods and iPads.  For the first time ever, the iBooks app comes preloaded on the home screen of users.  As I blogged back in June, iOS8 is a game changer, and for anyone who doubts Apple's ambition to become the #1 global seller of ebooks, well... they're not paying attention.

iOS8 will drive millions of new readers to the iBooks store, placing readers that much closer to your books.  Yesterday (Wednesday September 17), the first day iOS8 become available to users, Smashwords authors experienced an 84% increase in downloads over the prior day (amazing).  Although one day doesn't make a trend, the surge in downloads is a strong sign that the transition to iOS8 will likely bring many new readers to iBooks and to Smashwords authors.

Most of the Smashwords box sets were created expressly for this Apple promotion. A few weeks ago I invited a number of Smashwords bestsellers to serve as anchor authors to orchestrate new box sets for this promotion.  I challenged them to partner with fellow indies they'd be proud to promote to their own fan bases.  The results were extraordinary.  Over 200 authors contributed.  They created amazing titles, themes and covers.  Many are raising money for charity.  Participating authors comprise New York Times bestsellers, USA Today bestsellers and up-and-coming indies who are likely to become your new favorite authors in the years ahead.

As you might imagine, it was a lot of work for these authors to pull it off in such as short time.  Their accomplishment points to an opportunity for every Smashwords author:  Box sets represent a great opportunity for Smashwords authors to collaborate with their fellow indies to publish and co-promote a value-priced book that will put your work in the hands of more readers.

Congrats Smashwords authors, and thanks so much for your hard work in pulling this together!  And thank you iBooks for creating such an awesome promotion and selecting these titles!

Participating Smashwords Box Sets

Below is a listing of the selected box sets and their participating authors, in no particular order.  Click the link to view or purchase the iBooks page for each box set.

Faery Worlds - Six Complete Novels featuring: Jenna Johnson and Anthea Sharpe

Dangerous Lovers featuring: Becca Vincenza, H. D. Gordon, Cambria Hebert, Janelle Stalder, Jamie Magee, A.M. Hargrove

Sassy Seven: Sexy, Stylish, Scintillating Novels from Some of Today’s Top-selling Authors featuring Gemma Halliday, Serena Robar, Eileen Cook, Barbara Ferrer, Robyn Harding, Shannon McKelden, Eileen Rendahl

Natural Born Thrillers: 11 Electrifying Thriller Novels from 11 Bestselling Authors featuring Jeremy Robinson, Joseph Nassise, Steven Savile, David Wood, Kane Gilmour, J. Kent Holloway, Sean Ellis, Jon F. Merz, Casey Neumiller, David Sakmyster, Rick Chesler

Intense Anthology - Ten Bestselling Authors, Ten Powerful Alphas, Ten Passionate Novels featuring: Kahlen Aymes, Sandi Lynn, Aleatha Romig, Vi Keeland, Penelope Ward, S. E. Lund, Julie Richman, Penelope Ward, Kailin Gow, Liv Morris, J.L. Mac

From the Ballroom and Beyond, A Limited Edition Nine Book Regency Romance Box Set featuring: Rose Gordon, Ava Stone, Julie Johnstone, Catherine Gayle, Deb Marlowe, Jane Charles, Christi Caldwell, Claudia Dain, Jerrica Knight-Catania

Epic Apocalypse - Apocalyptic Horror Box Set featuring: Mark Tufo, Shawn Chesser, John O'Brien, James N. Cook, Armand Rosamilia, Heath Stallcup

Dark Roses: Eight Best-Selling Authors of Paranormal Romance featuring: Terah Edun, P.T. Michelle, Anthea Sharp, Trisha Leigh, Cameron Jace,  Lola St.Vil,  Erica Cope, Sarra Cannon

Playing for Passion: A Limited Edition Collection of Bestselling Sports Romances featuring: Carly Phillips, Toni Aleo, Chelle Bliss, V.K. Sykes,  Pamela Aares, Allie K Adams, Jami Davenport, Catherine Gayle, Mindy Klasky, Roz Lee, Dakota Madison, Bianca Sommerland

California Dreamin' Boxed Set (Four mature YA Romances set in California to Benefit "A Chance for Children") featuring: Melissa Pearl and Anna Cruise

Skirts & Swords (Female-Led Epic Fantasy Box Set for Charity) featuring: L.P. Dover, R.K.  Ryals, Melissa Wright

Love Potion No. 11 featuring: Liz Schulte, Melinda VanLone, Myndi Shafer, Olivia Hardin, L.K. Rigel, Tawdra Kandle, JoAnna Grace, L.P. Dover, Melissa Lummis, Autumn Dawn, Stephanie Nelson

When Darkness Falls - Six Paranormal Novels in One Boxed Set featuring: Shalini Boland, Sarah Dalton, Rebecca Hamilton, Laura Howard, Patti Roberts, Suzy Turner

Wings of Fantasy featuring: John H. Carroll, Valerie Douglas, M. R. Mathias, M. A. Nilles, Stephen L. Nowland,E.M. Sinclair

The Fates of Worlds (Science Fiction Writers Supporting Literacy) featuring: J. Daniel Sawyer, Stephen Goldin, T. Jackson King, Paul B. Spence, Anna Erishkigal, Steven J Pemberton, Rachel Cotterill

Waking Snow White: A YA Book Bundle Based on the Classic Fairy Tale featuring: Katherine Pine, Jean Haus,  K. D.  Jones, Cindy C Bennett, Laura  Briggs, K. Sean Jennkrist

Darkly Dreaming: A Five Book Fantasy Romance Anthology featuring: Elizabeth Hunter, Grace Draven, Danielle Monsch, Kristen Painter, Cate Rowan

Doorway to Destiny (A Thirteen-Book Fantasy and Science Fiction Adventure Box Set) featuring: TC Southwell and Vanessa Finaughty

Love's Sweet Surrender featuring: KF Breene, Erica Stevens, Brenda K. Davies

Tall, Dark and Paranormal: 10 Thrilling Tales of Sexy Alpha Bad Boys featuring: Opal Carew, Lori Handeland, Laura Kaye, Caridad Pineiro, Stephanie Julian, Randi Alexander, Terry Spear, Paige Tyler, Sara Humphreys, & Judi Fennell

Destiny Calling Box Set 5 Unknown Fates - Five Authors featuring: Devyn Dawson, Michele G Miller, Tressa Messenger, Brea Essex, Tia Silverthorne Bach

Otherworlds: Twelve Young Adult Fantasy Books to Benefit the Hungry featuring: Eva Pohler, Angela Corbett, Sophie Davis, Desiree DeOrto, Rebecca Ethington, Rose Garcia, Dani Hart, Allie Juliette Mousseau, Alison Pensy, Airicka Phoenix, M. Clarke, RaShelle Workman

From Dark to Light (a romance bundle containing 7 titles from 6 bestselling authors) featuring: Lilliana Anderson, Lili Saint Germain, Callie Hart, T Gephart, Natasha Preston, C.J Duggan

Touched by Love: 4 Mind-blowing Paranormal Tales featuring: Rebecca Ethington, Karen Lynch, Melissa Haag, Dean Murray

Danger and Desire: Ten Full-Length Steamy Romantic Suspense Novels featuring: Amber Lin, Pamela Clare, Katie Reus, Dianna Love, Carolyn Crane, Kaylea Cross, Norah Wilson, Dee J Adams, V.K. Sykes & Misty Evans

Perception: A New Adult Anthology featuring: Nealy Gihan, Scott C. Davis, Linda Davis, Mary Laufer Heather Hildenbrand

The Butler Didn't Do It featuring: Claudia Hall Christian, Jean Sweeney & Christopher Geoffrey McPherson

Holding Out for the Superhero featuring: Nana Malone, V. J. Chambers, June Gray, & Joni Hahn

Owned By Him featuring: Kendall Ryan, Emma Hart, Claire James

Mastered: Ten Tales of Sensual Surrender featuring: Opal Carew,  Portia Da Costa,  Madelynne Ellis, Marie Harte, T.J. Michaels, Kate Pearce, Sasha White, Emily Ryan-Davis, & Jennifer Leeland

A Fatal Four-Pack: Four Complete Mystery Novels featuring: Rae Davies, P.B. Ryan, L.L. Bartlett, & Deb Baker

What Lurks in the Dark featuring: Kody Boye, Gabrielle Faust, Rhiannon Frater, Emily Goodwin, Erin Hayes, Liz Long, M.R. Merrick, & Alexia Purdy

Legendary: 10 Otherworldly YA Romance Novels (Box Set) featuring: Kira Saito, Nikki Jefford, & S.M. Boyce

Fantasy 101 featuring: Jeffrey Poole, Lindsay Buroker, B Throwsnaill, Steve Thomas

Captured: 9 Alpha Bad-Boys Who Will Capture Your Heart featuring: Opal Carew, Sharon Page, Teresa Morgan, Mandy Rosko, Eve Langlais, S. E. Smith, Cathryn Fox, T.J. Michaels, & Pepper Winters

Girls On Fire: 10 YA Novels in a Multi-Author boxed set featuring: Elana Johnson, Amber Argyle, Angela Corbett, Christy Dorrity, Tamara Hart Heiner, Cindy M. Hogan, Laura Howard, Elana Johnson, Rachel Morgan, Lee Strauss, & Lani Woodland

Courage: A Collection of 10 Full Length Bestselling Novels featuring:  J.L. Berg, L.A. Casey, Kirsty Moseley, Erin Noelle, Tess Oliver, Kate Perry, Julie Richman, Aurora Rose Reynolds, Hilary Storm, & Pepper Winters

Three Realms (3-Book Special Edition Box Set) featuring: Michael Dadich, Ciara Ballintyne, & Dionne Lister

After Twilight featuring: Julia Crane, Sophie Davis, Lizzy Ford, Ella James, Morgan Wylie, Tara West

Three Cold Steps featuring: Sophie Davis, Airicka Phoenix, Mercy Amare
Second Chances—7 Sweet & Sexy Romances in 1 Book  featuring Diana Fraser, Tracey Alvarez, Janet Elizabeth Henderson, Joanne Hill, Kris Pearson, Shirley Wine, & Serenity Woods

Buy them all!



Wednesday, August 20, 2014

Inc. Magazine Names Smashwords to Inc. 5000 List of America's Fastest Growing Companies

Inc. Magazine today named Smashwords to its 2014 list of America's Fastest-Growing Privately-Held Companies.

Smashwords landed at #122 in a field of 5,000 companies within the Inc. 5000, and was named the #1 fastest-growing media company and the #3 fastest-growing San Jose Metro area company.

Inc. Magazine bases its ratings on three-year revenue growth.  With audited revenue of $706,000 in 2010 and $22 million in 2013, Smashwords showed 3,019% growth.

Credit for this achievement goes first and foremost to Smashwords authors and publishers.  Nearly 100,000 indie authors and small independent presses today utilize Smashwords as their ebook publishing and distribution platform.  We provide you to tools, and you publish amazing books that bring reading pleasure to millions of readers.  It's because you entrusted your books to Smashwords that we've been able to share in a small piece of your success.

The rise of Smashwords is the story of the rise of self publishing.  Self published authors now have the freedom and capability to publish with complete pride and professionalism.  The stigma that once haunted self-published authors is quickly melting away as Smashwords authors and publishers set the standard for ebook publishing best practices.  You are the pioneers who will lead book publishing to a better, more democratic future.  You are the future of publishing.

I've been singing the same tune for six and half years.  It's great to see authors embracing their new-found freedom, believing in themselves and serving readers with high-quality, low-cost ebooks.  It's great to see how the rise of indie ebooks has fulfilled the dreams and changed the lives of so many Smashwords authors.

This milestone also wouldn't have been possible without the hard work of my team at Smashwords.  From vetting to service to finance and engineering and marketing, every Smashwords team member comes to work with the single-minded purpose to serve writers.  We're here to provide you a competitive advantage in the marketplace. We exist for you.

We realize that every Smashwords author works with us by choice.  We're thankful you choose to do business with us. We strive to reciprocate by giving you full access to our ever-growing and ever-improving suite of tools that connect you with readers.  We offer these tools without cost and without exclusivity. 

When you choose to fully distribute with Smashwords, you're directly supporting our ability to invest in the development of new tools, new distribution and new capabilities to help you reach more readers.  As long as you work with us, we're here to work with you.

The Smashwords business has been profitable for over three years, and we've managed to maintain this profitability while reinvesting in the business to give you competitive advantage. This is a low margin business, which means we must make difficult decisions every day to prioritize our resources.  It means we cannot and should not try to be all things to all people.  We're focused on the logistics of connecting ebooks with readers.  When prioritizing resources, we ask, "what will give our authors the greatest aggregate benefit?"

How We Got Here

I'm often asked how we got here, wherever here is.  I suppose here today is the milestone we're celebrating.  Smashwords is an Inc. 500 company.

As most Smashwords authors know, I was inspired to start Smashwords after my wife and I wrote a novel together.  Despite representation from a top tier literary agency, publishers were unwilling to take a chance on it.  The experience led me to realize that publishers held too much power, because they alone decided which writers graduated to become published authors.  They decided which manuscripts became books, and they decided what readers could read.  My vision for Smashwords was to turn everything upside down and give all the power to writers and readers.  Give writers the freedom to publish what they want, and give readers the freedom to read what they want.

Although only in my wildest dreams did I dream Smashwords would reach such a milestone, I never expected it.  In fact, I knew the odds were stacked against us.  I thought the business would most likely fail.  In the darkest days early on - those days when on a good day we were earning only $1.00 a day in commission - the thing that kept me going was my belief that the world needed a Smashwords.  I had faith that if I could give all writers a chance, and few of them would break out and change everything for all writers.

We've traveled a lot of ground in six and half years.  We've overcome numerous roadblocks, experienced our fair share of growing pains, made our fair share of mistakes and took a lot of bullets.  We've also received a lot of love, and that sustains us more than anything.  We've had the good fortune to work with amazing authors and amazing retailer business partners.

The business has been entirely self-funded without the assistance or interference of venture capitalists or outside investors.  This has given us the freedom to build a business around some very simple if not unconventional principles which guide how we manage the business.  I'll share them now for the first time.

Smashwords Business Principles 


  1. Every writer is special, and holds the potential to contribute something worthwhile to the culture of books.
     
  2. Every writer should have the freedom to publish at no cost. 
     
  3. The worth of a writer's book cannot be measured by sales alone.
     
  4. The money should flow from reader to author.  We only earn commission if we help authors sell books.  We believe this aligns every fiber of our business - every motivation, every decision and every action - with the best interests of our authors and publishers.
     
  5. We serve our authors and publishers by working to enable a diverse and vibrant global ecosystem of multiple ebook retailing channels.
     
  6. We believe it's in every author's best long term interest that we promote broad and diversified distribution.
     
  7. We believe in the value of a great distributor. We believe distributors will become more important in the future, not less so.  A good distributor provides efficient digital logistics for the benefit of authors, publishers, retailers and readers alike.
     
  8. We constantly strive to become a better distributor.
     
  9. We believe that authors who leverage the full benefits of a distributor will be more successful over the long term than those who do not.  Distributors help authors spend more time writing and less time on distribution.  It's about time management.  Time is every writer's most precious asset.
     
  10. We believe past success is no guarantee of future success.  Success must be earned.  The moment we stop innovating and adding value to the publishing and distribution experience of our authors and readers, we lose our right to exist.
     
  11. Innovation is messy. We promise we will blaze new trails and take prudent risks.
     
  12. We will always strive to work in the best interest of our writers. 
     
  13. We will make mistakes and we will learn from our mistakes.
     
  14. We will help and encourage our retailer partners to improve their businesses for the benefit of our authors, publishers and their readers.  We also appreciate when our retail partners do the same of us.
     
  15. Our development will be guided by our authors, publishers and retailers.
     
  16. If we add more value than we earn in commissions, we have a future that is without limit, because the talent, creativity and capability of our authors is without limit.
     
  17. Our authors and publishers are not our customers.  They are our partners, our clients.  We do not sell them anything, we service them. We will not accept money from them. We will not employ salespeople and we will not sell publishing packages.
     
  18. We believe the future of publishing is bright because books are important to the future of mankind. As long as writers have a chance to publish, readers will want to read.
     
  19. We are in a relationship with you, the author, publisher, reader and retailer.  We will be honest in all our dealings with you.  The ebook business is entirely dependent upon trust.  When trust is deserved and reciprocated, great things can happen.
     
  20. We will never forget that we serve at the pleasure of our authors, publishers and retailers.

Where to From Here

Smashwords and the indie community we serve are in the same boat. We've built a great business, but I don't expect the torrid growth to continue.  As I predicted in my 2014 projections, the ebook market has slowed and sales are likely to be lower this year than last.

Prior to starting Smashwords in 2008, I spent almost 20 years doing PR  and strategic communications consulting for venture-backed Silicon Valley tech companies. Working in tech, you come to expect cyclical swings of boom and bust followed by boom again.  The survivors of the shakeouts emerge stronger and more vibrant than ever.  A shakeout is coming, not just for the ebook industry but for authors as well.  Things will get tougher from here.

Ebooks never go out of print. There's a glut of high-quality reading material out there.  The growth of in the number of ebooks published and forever immortal on digital shelves will probably outpace the growth in reader eyeballs, and therefore the capacity of readers to consume this content.  In other words, every one of us will face more competition in the future.  The average book in the future will sell fewer copies, not more.  The easy days are behind all of us.

Yet more books will be read than ever before.  The opportunity is there for all of us.

I thrive on challenge.  The new business realities don't change how we run the business.  It's an environment where author production (the number of titles published each year) and author quality will be the key determinants of success.  If you're an author, it's about time management.  How will you increase your production, quality, discoverability and desirability?  How will you increase your capacity to serve your readers?

For Smashwords, it's about innovation.  We will continue focusing on innovation.  We'll build new tools and capabilities that give our authors an advantage in the marketplace.  It's not only a business strategy, it's a Darwinian necessity.  Every one of us, whether we're a retailer, a distributor, a publisher or an author, must add value to the reader's experience otherwise we fail to live our dream.  The spoils will go to those who innovate, adopt and pioneer best practices, and who persevere through the darkest days.  If you're an author - even a New York Times bestselling author - you've had those dark days where you wondered if you had the will to carry on.

Think back to our early days at Smashwords when were were taking in only $1.00 a day yet losing thousands of dollars a month.  We kept going because we had this crazy idea that the world needed a Smashwords.  Well, your readers need you.  Serve them.  Your best work is ahead of you if you persevere.  I hope you invite Smashwords to join you for the ride!