Amazon Acquires Lexcycle, Makers of Stanza

Big news out today for Smashwords partner Lexcycle, makers of the super-awesome Stanza e-reading app. Lexcycle announced today on their blog they've been acquired by Amazon. Congrats to Marc and Neelan at Lexcycle.

Probably of most interest to Smashwords authors and customers is the third paragraph of the statement from Marc Prud'hommeaux, founder of Lexcycle:

We are not planning any changes in the Stanza application or user experience as a result of the acquisition. Customers will still be able to browse, buy, and read ebooks from our many content partners. We look forward to offering future products and services that we hope will resonate with our passionate readers.

It'll be interesting to watch how Amazon's ownership shapes the evolution of the Stanza app.

With its support of epub, Lexcycle, via the huge popularity of Stanza, singlehandedly breathed life into the open industry format. Amazon, on the other hand, has been criticized for its refusal (to date) to embrace epub in favor of its proprietary Mobipocket format. Also at issue is DRM. Back at the Tools of Change conference in February, the scene was abuzz with criticism aimed Amazon's way for Amazon's insistence that publishers supply their ebooks in DRM-'d formats.

Is Amazon's acquisition of Lexcycle a sign of more openness to come from Amazon, or a sign of changes to come with Stanza?

The Twittersphere is all atwitterpated over the announcement.

LiveInk Experiment at Smashwords

A couple years back, while Smashwords was still incubating in my head, I attended the May, 2007 IDPF Digital Book conference in New York.

I heard a presentation from Randall Walker, the creator of a new online reading format called LiveInk. By arranging text differently on screen, Walker found he could increase reading speed and comprehension. I was so excited about the concept I wrote up a story for VentureBeat that caused quite a stir among tech geeks.

Here's an excerpt

Live Ink offers better way to read text online

Mark Coker | May 10th, 2007

Did you know our primitive brains weren’t wired very well to read this paragraph?

Scientific research conducted by Walker Reading Technologies, a small Minnesota startup that has been studying our ability to read for the last ten years, has concluded that the natural field of focus for our eyes is circular, so our eyes view the printed page as if we’re peering through a straw.

And a very bad-behaving straw at that, because not only do our eyes feed our brain the words we’re reading, they’re also uploading characters and words from the two sentences above and below the line we’re reading.

Every time we read block text, we’re forcing our brain to a wage a constant subconscious battle with itself to filter and discard the superfluous inputs. This mental tug of war slows reading speed and diminishes comprehension.

When our ancestors first invented written language about 5,000 years ago, they unfortunately didn’t have armies of neuroscientists standing by to tell them block type was the wrong way to format their papyrus rolls. But fret not. Help is on the way.

Walker Reading Technologies’ CEO and co-founder, Randall Walker MD, believes he and his team have developed a solution with a product called Live Ink that allows online publishers to improve reading speed and comprehension. Live Ink works by analyzing written language for meaning and language structure, and then applies algorithms that reformat the text into a series of short, cascading phrases. It breaks complex syntax into simpler syntax, which makes it easier for the brain to absorb the material.

.....Read the rest of the story at VentureBeat

Fast forward to today, and I'm surprised more publishers aren't using LiveInk for online reading.

With the generous assistance of Adam Gordon at LiveInk, I created a LiveInk version of my own novel, Boob Tube, to showcase on Smashwords as an experiment. He provided me a LiveInk-formatted HTML document, which I opened in Word, saved as a .doc file, then uploaded to Smashwords.

I set the price to free so folks can play with it. I think the best way to read it it is via the "Plain Text (view) (viewable as web page)" format, and then use your down arrow to scroll continuously through the text.

I see in Stanza on the iPhone, the indents aren't preserved. Maybe because my source file broke the rules of my own Smashwords Style Guide. Will continue experimenting.

You can find it here: http://www.smashwords.com/books/view/1630

What do you think of LiveInk?

The Future of Book Publishing: Risk Shifts to Author

In my last post, I wrote an allegory on why book publishing is like venture capital. Publishers, in exchange for investing their cash, talent and connections, become part owners of the author’s book project. Authors agree to share ownership in exchange for the privilege of publication and the opportunity for commercial success.

In part two of my post, I’ll explore how the risk of publishing is now shifting to the author, with dramatic consequences for the future of publishing. Just as Silicon Valley tech startups no longer need venture capitalists to launch their companies, authors no longer need publishers to publish.

First, I’ll start by stating the obvious. Publishing is a tough business. It’s difficult to predict the fickle whims of the marketplace. You never know which book will be the next breakout hit, and which will be the next bomb.

Publishing is expensive, what with the rent on those New York skyscraper headquarters of the top publishers, and all the expensive tree killing, tree pulping and carbon-based fuel it takes to move around the glossy bits of paper. And then you’ve got the bookstores which somehow hoodwinked publishers into allowing bookselling to become a consignment business. Retailers order more books than they know they can sell, only to ship the unsold inventory back to the publisher for a full refund.

The challenges faced by publishers often obscure the contributions of many super-wonderful smart people in publishing who are truly committed to helping authors and their books succeed (more on the future for these folks later in the post).

In recent years, publishing, like all media business, has struggled to compete against an explosion of alternate (and often free) media product vying for their customer’s ever-shrinking mind share and wallet. If you examine the sales figures from the AAP (click here to view the PDF) from the last six years, book publishing has actually shrunk here in the U.S. if you adjust for inflation.

The Big Squeeze
With the tough business conditions, made worse by those freeloading big box consignment bookstores (who themselves are now getting their lunches eaten by Amazon), publishers have been forced to cut back on some investments. This means fewer signings of new and unproven authors; fewer signings of authors whose books are perceived to have limited “commercial” potential (even if the author is otherwise brilliant); and fewer post-publication promotional dollars to lavish on anyone but the most commercially promising authors.

Sure, a commercial publisher has an obligation to their shareholders, employees and customers to run their business for profitability. The flip side of this, however, is that authors can find themselves holding the short end of the stick.

Many commercially published authors must now assume personal responsibility for post-publication book promotion efforts that were once the sole domain of the publisher. There’s nothing wrong with this in principle, except that most authors are already poorly compensated to begin with.

I’ve read that most commercially published authors maintain day jobs to support their writing. If true, it would mean the bulk of book authorship is done on a volunteer basis.

While few of us authors would turn down a six figure advance for our book, author Walter Kern, profiled in this interesting New York Times Sunday Book Review feature, determined that even with a six figure advance on his book, it meant he had worked for less than minimum wage given the time it took to produce and publish his book.


The Tools of Liberation
As I alluded in my venture capital post, at one time it was virtually impossible to publish without a publisher. Today, the game has changed. New tools for publishing, marketing, distribution and selling are available to indie authors and indie publishers, and many of these tools are available at little to no cost.

With free do-it-yourself publishing tools like Smashwords for ebooks CreateSpace for print on demand books, anyone can become a published author in minutes (at Smashwords) or days (at CreateSpace).

Of course, just because you’re a published author doesn’t mean you’ve written a quality book. With the decision to publish shifting to the author, it’s now the author’s responsibility to invest the money and effort necessary to produce a quality work that satisfies readers.


The Future of Publishing: Risk, Reward and Power Shift to Authors
Increasingly, authors who aspire toward commercial publication will need to prove a market exists for their product before a traditional publisher will consider them. As authors assume more of the risk of publishing, they may also reap a greater share of the rewards upon commercial success.

Some authors, by choice or necessity, will publish without the benefit of professional editing, cover design, marketing, distribution and sales support. Others will opt to invest the funds necessary to purchase these important services, often supplied by experienced professionals who previously worked for the commercial book publishers.

Self-publishing will become a vast farm league for commercial publishers. Commercial publishers, including many new indie publishers, will compete against one another to identify, recruit and publish the most promising authors. Some authors who achieve commercial success on their own may choose to remain indie.

Under this new model, the power center shifts from publisher to author, and the traditional lines between the two blur. Authors become their own publishers. Commercial publishers remain publishers, but also become service providers.

It’s only a matter of time before large media companies and book publishers start partnering more closely with the self-publishing companies, because they aggregate the farm league authors. Not only do the farm league authors provide publishers a rich pool of talent, they also provide the opportunity for publishers to supply paid services to those authors willing to invest to improve the quality of their books.

Some of the more successful self publishing services are already operating under this model. They may go on to become the next big publishers if they remain independent.

Why Book Publishing is Like Venture Capital

My roots are in Silicon Valley. For most of the last three decades, Silicon Valley was the world's hotbed for startup innovation. Our advantage over the rest of the world was our unique ecosystem of talent and funding, and a culture that celebrated creative risk taking, creative destruction, knowledge sharing and yes, even failure.

In Silicon Valley, our heroes are the risk-takers, those who put their skin on the line to pursue a dream of changing the world. For much of these last 30 years, venture capital provided the dreamy entrepreneurs with the money, counsel and connections to make their dreams a reality. Earlier this decade, the Silicon Valley gravy train fell off the tracks.

Non-stop success can breed complacency and arrogance. Many in Silicon Valley thought we possessed the secret sauce to building great tech companies. Actually, we did help invent and improve the secret sauce, but like secrets that shouldn’t be kept, the recipe spread around the world and was improved upon, so that today, promising tech companies sprout in every corner of the globe without our assistance. Silicon Valley has eaten its share of humble pie lately, and that’s a good thing for the future of our industry.

For many Silicon Valley entrepreneurs, venture capital was the oxygen that breathed life into what might have otherwise remained an idea scribbled on a napkin. After all, startup creation is expensive. In exchange for the capital, the entrepreneur usually gave the VC anywhere from 20 to 60 percent of their company, and with that ownership they also gave up some control.

VCs, while usually super-intelligent people, are fallible like the rest of us. They have a recurring habit of getting caught up in the greed and feeding frenzy that occurs when a startup in a hot new category hits pay dirt with an IPO. Like drunken lemmings waving fists of cash, they compete against one another to fund similar startups in the same category. The ensuing competition sparks bidding wars that inflate the valuations of the companies and lead to a glut of cookie-cutter startups in the same category. Other entrepreneurs, spellbound by the razzle dazzle of the big dollars, rush to modify their startups to fit the same mold so they too can get funded. Inevitably, consolidation comes because the market can’t support so many clones.

Many entrepreneurs who’ve sold their souls to a VC view VCs with equal parts admiration and contempt. Key positives: VCs offer access to capital, advisors and connections that can maximize their odds of getting their company out there. Key negatives: The VCs make promises they often can’t keep (such as “spend our money quickly, we’ll be here to give you more when you need it”); their allegiance is fleeting (VCs are legend for losing interest at the first signs of hardship); and their interests aren’t necessarily aligned with those of the entrepreneur.

This last two points are the most critical. A VC’s allegiance is to their investors first and foremost, not the entrepreneur or the entrepreneur’s company. At times these interests are aligned, but more often than not they diverge.

VCs play a numbers game. They understand that out of every ten companies they fund, six or seven will be outright failures, maybe two will be “base hits” or “doubles,” and then maybe one will be a home run. The one home run, like the next Cisco, Netscape, Google or what have you, makes up for the other nine duds.

This desire to hit a home run will often cause a VC to manage their portfolio contrary to the best interests of the entrepreneur or their company. In other words, if you are one of the three most promising companies in a batch of ten, the VC may encourage (or force) you to take big risks and swing for the home run, even when a base hit or double is a smarter move. By forcing companies to take inappropriate risks, they do create the occasional home run, but they create many more failures along the way.

One of the reasons a thousand Silicon Valleys have sprouted up around the globe is that it no longer takes the same amount of funding to create a startup. The tools to build the company are essentially free now. With low cost or free open source software, and limitless free access to knowledge (Wikipedia and Google) and relationships (social networks) acting as equalizers, more and more entrepreneurs are turning their backs on the VCs. Some will utilize angels instead. Angels are service providers or fellow entrepreneurs who have experience in the same field, and who contribute much of the same value as a VC without exacting the same quantity of flesh.

Some of these entrepreneurs grow their business to profitability and then have the option, but not the necessity, to partner with a VC. Once an entrepreneur has proven the success of their business (i.e. they’ve eliminated much of the risk), they can either forego venture funding altogether, or they can bring on the VC under more favorable terms.

Fun with Words
So now, my dear reader, if you haven’t already come to your own conclusions about why publishing is like venture capital, I encourage you to perform this fun word play exercise. Enjoy!

Instructions: Copy and paste this post into a word processor, do the following search and replace ("CTRL-H" in Microsoft Word) in the following order, and then re-read your creation:

replace “entrepreneurs” with “authors”
replace “entrepreneur” with “author”
replace “tech companies” and “companies” with “authors”
replace “startups” with “books”
replace “startup” and “company” with “book”
replace “VC” with “publisher”
replace “venture capital” with “publishing”
replace “funded” with “published”
replace “an IPO” with “a bestseller”
replace “service providers” with “experienced publishing professionals”
replace “business” with “writing career”
replace “open source software” with publishing tools like Smashwords”
replace “venture funding” with “a commercial publisher”
replace “Cisco, Netscape, Google” with “Breaking Dawn, Eragon, Da Vinci Code”
replace “Silicon Valley” with “New York.”

In my next post, I’ll share what I think all the above means for the future of publishing and indie authorship.

Saturday with the Bay Area Independent Publishers Assocation

I was the guest speaker today at the Bay Area Independent Publishers Association monthly meeting in San Rafael, CA. The topic was ebooks.

It was a smart crowd of publishers, many of whom have decades of experience in all matters of publishing. They asked great questions and it was fun to see such enthusiasm for the publishing opportunities presented by ebooks.

We had an interesting conversation about how books are ultimately vessels of cultural expression, and how digitally distributed books can cause cultures to collide unexpectedly when one culture's norm is another culture's freak show. I won't mention the exact Smashwords book that sparked this discussion that left some of us squirming uncomfortably, though I'm sure enterprising minds might figure it out on their own.

I brought a PowerPoint presentation, but alas, we couldn't get my ThinkPad to communicate with the projector. So there I was, holding my ThinkPad in the air so the audience could view the market data graphs.

For those who'd like to view the PowerPoint presentation in its original unadulterated form, click here to access it at Slideshare.

The Twitterization of Santos Dumont Número 8

Claudio Soares, a Brazilian author and literary blogger, has launched an intriguing multimedia online publishing experiment involving Twitter, CommentPress, videos, music and ultimately, Smashwords.

A couple years back, Soares published his novel, Santos Dumont Número 8. The story revolves around an aircraft inventor who numbers each of his inventions with "Santos-Dumont número 1" through "Santos-Dumont número 22." Mysteriously, for some superstitious reason, the inventor refuses to use the number 8.

The book follows eight main characters, seven of whom are intent upon unlocking the truth behind the mystery, and one of whom, I assume, is intent on keeping the reason a secret.

Soares has broken the novel into pieces, and is serializing it from the unique perspectives of each of the characters, each of whom has their own Twitter account. In an interesting twist, the characters will interact with their Twitter followers. This has the potential to create an immersive experience, not just for the community of readers that congregates around the book and its characters as the story unfolds, but for the author as well.

At the same time, Soares is serializing the the novel in its entirety from http://www.twiter.com/sd8. Readers can view the twitterstreams of all characters simultaneously at Crowdstatus, an online app that allows you to aggregate the Twitterstreams of multiple people.

There's a bookish twist to the novel, because it's also a book about books and readers. The narrator of the story is reading from a book. As Soares explained to me, "The main character, Abayomi, reads and it seems as if the story he reads is really happening." Soares says in writing the book, he found inspiration from by some ideas of the Argentine writer, Jorge Luis Borges, who once said words to the effect that, "the reading of a book makes us experience parallel worlds, which often, superstitiously, invade our reality."

Does Soares believe his experiment presages the future of reading? Not at all. He recognizes Twitter has numerous flaws in terms of its ability to convey a story. Twitterstreams, for example, are like ongoing conversations, and the participants pop in and out of them as if pedestrians passing in the street, so it's difficult to follow a narrative. People also tend to read Twitterstreams in reverse chronological order, which is also not terribly conducive to an immersive reading experience. And finally, for those who want to follow a story from start to beginning, Twitter doesn't make it easy to locate the start of a stream, or follow complex conversations that occur within the stream.

According to Soares, discovering the inherent limitations of these social reading tools is part of his experiment. He plans to document his experiences on his blog, and he'll publish the complete Twitterized version of the novel on Smashwords after the completion of the experiment.

The book is written in Brazilian Portuguese, though you don't need to understand the language to appreciate the experiment. For additional details on the experiment, check out this imprecise English translation of the project description, visit his blog at http://www.pontolit.com/br, view an online presentation of the project at http://prezi.com/25890/view/#104, or follow his personal Twitterstream at twitter.com/pontolit

No matter how you look at it, we've come a long way since papyrus scrolls, stone tablets and Gutenberg.

Have Ebooks Already Gone Mainstream?

Alright folks. Turn your clocks forward. If you're waiting for ebooks to go mainstream, it may have happened already.

The IDPF reported today in an email to members (see below for snippets of the email) that wholesale ebook sales for January 2009, as reported by the American Association of Publishers, jumped 173 percent over the same period one year ago to $8.8 million. If you annualize that over 12 months, as I did at left, it means wholesale ebook sales are on track to surpass $100 million in 2009.

I'll give you a minute to lift yourself up off the floor, because I'm not done yet.

As I reported here in my previous analysis in January, the numbers are even more interesting when you dig beneath the surface. The rate of growth is accelerating. We saw some signs of this in the final months of 2008, but with January, the numbers shot through the roof.

The chart at left examines the quarterly sequential revenue growth over the last two years, and by sequential I mean Q2 to Q3, Q3 to Q4, etc. This provides a measure of how one quarter relates to the quarter immediately preceding it.

When you see sequential growth accelerating, something interesting is happening, especially when the growth is accelerating off of an ever-increasing base.

For Q1 2009, I took the $8.8 million for January and assumed February and March would be the same. Based on what appears to be happening, I'm probably overly conservative. Still, the number shows an estimated 57 percent sequential increase for Q1 2009 over Q4 2008. In other words, 2009 is going to be a break out year for ebooks.

Next, I analyzed what the numbers would look like if the sequential quarterly growth rate slows to 25 percent per quarter for the rest of 2009, again assuming January 2009 is representative of where 2009 is headed (of course, there's a chance January was a wild fluke, in which case all my estimates are worth the price you paid to read them). With 25 percent quarterly sequential growth, wholesale US ebook sales will be over $150 million. And unlike paper books, these aren't books that are shipped and counted as sold before they've actually been sold through to consumers. This is actually sell-through (someone correct me if I'm wrong). If you further assume, as the IDPF notes in their email below, that retail sales are about twice wholesale sales (because the retailer marks up the price paid to the publisher), retail sales could reach $300 million for 2009.

The email from the IDPF:

Dear IDPF Members,

eBook sales statistics for January 2009 have been released from the Association of American Publishers (AAP) who collects these statistics in conjunction with the IDPF.

Trade eBook sales were $8,800,000 for January, a very significant 173.6% increase over January 2008.
Just a reminder these are wholesale revenues reported from 13 participating Trade Publishers.

Please keep in mind the following:

• This data represents United States revenues only
• This data represents only trade eBook sales via wholesale channels. Retail numbers may be as much as double the above figures due to industry wholesale discounts.
• This data represents only data submitted from approx. 12 to 15 trade publishers
• This data does not include library, educational or professional electronic sales
• The numbers reflect the wholesale revenues of publishers
• The definition used for reporting electronic book sales is "All books delivered electronically over the Internet OR to hand-held reading devices"
• The IDPF and AAP began collecting data together starting in Q1 2006

You can examine the IDPF data for yourself at http://www.idpf.org/doc_library/industrystats.htm.

So what do you think, have ebooks gone mainstream? I think for authors and publishers who release in e-, ebooks have gone mainstream. Amazon reported in February that for books they sell in both e- and p-, they're deriving 10 percent of sales from e-. That's huge. It means if you offer your books in e-, readers will come. I've seen other reports of similarly large percentages from progressive publishers such as O'Reilly who are also reaping big sales increases on the e- side.

If you're an author or publisher, and your books aren't already listed on Smashwords, why not? Our 85 percent net to the author/publisher beats Amazon by a wide margin. Just sayin'.

(April Fools) J.K. Rowling Publishes Harry Potter Ebooks at Smashwords

Big news today at Smashwords, almost too good to be true.

J.K. Rowling, one of the best selling authors of all time, is well known for her previous reluctance to release the Harry Potter series in ebook form.

Today, that reluctance fell by the wayside when Ms. Rowling learned first hand how easy it is to publish a DRM-free, multi-format ebook at Smashwords.

Here's a snippet of our press release, issued April 1:

Los Gatos, Calif., April 1, 2009 -- In a move likely to send shock waves through the book publishing industry, author J.K. Rowling today published all seven Harry Potter titles as multi-format ebooks with the ebook self-publishing service Smashwords.

“Publishing with Smashwords was incredibly easy, and you don’t need to study at Hogwarts to master its magic,” said J.K. Rowling. “With a few waves of my mouse - my Harry Potter books instantly materialized online in multiple ebook formats, ready for immediate sampling and sale.”

The news came as a pleasant surprise to some industry watchers. “Until today, J.K. Rowling refused to allow her books to be published in ebook form,” said Hobson Gobnobbler, editor of the popular ebook industry blog, DigitalBookNews.com. “This is big news for Rowling fans everywhere, and it’s especially significant she’s making the ebooks available without copy protection. It means she trusts her customers to not pirate her books.”

According to Neil Blair, Rowling’s lawyer, the decision to publish with Smashwords was a simple one. “Smashwords offers an 85 percent net royalty on all ebook sales, much higher than we could negotiate with any of the commercial publishers, and infinitely higher than the nothing we’re getting from all the ebook pirating sites.”

Read the rest of the April 1 press release in the Smashwords Press Room