2016 Book Publishing Industry Predictions: Myriad Opportunities amid a Slow Growth Environment

Welcome to my annual book publishing industry predictions.

I went overboard for 2016.  In addition to 10 prediction topics that were at the top of my mind, I also asked friends on Facebook to suggest additional questions for my crystal ball.  So in addition to my first 10 below, I take a stab at 29 additional questions. Yikes.

Predictions are fun, even when I get them wrong.  By thinking about the future we can prepare for it in all its glorious uncertainty and complexity.  By thinking about the future it helps us adapt to the many unexpected events that will hit us all in 2016.  Predictions also help us understand what might be, what can be and how we as an indie author community can directly shape the course of the future today.

You'll see I back each prediction with copious background on my thought process.  I invite you, my dear reader, to add your insights in the comments below.  What did I get right, and what did I miss?  The goal here is to spark thought and conversation.  Help me and your fellow authors, publishers and readers see the future through a sharper, more accurate lens.

Here's one thing I'm absolutely certain of:  Indie authors are the future of publishing.  The decisions indie authors make today will continue to reshape the future of publishing for better or worse.  You're in control.  Now let's have some fun.

Mark's Annual Publishing Industry Predictions

1.  Indie ebook authors will gain market share at expense of large publishers

It’s difficult to determine the percentage of the ebook market now controlled by indie authors. Only the retailers know this, and it varies dramatically from one retailer to the next. Back in early 2014 I proposed a model in which I forecasted that indie authors would capture 50% of the US ebook market by the year 2020. I blogged about it here and provided a downloadable spreadsheet so anyone could plug in their own numbers.  From a unit market share perspective today, indie authors probably control 15-20% of the ebook market with much variation across retailers and categories. Because indie ebooks are priced lower than traditionally published ebooks and print books, the dollar market share is probably in the 4-8% range. However, eyeballs matter most in the long run because readership builds author brand and reader trust, and reader purchases flow to trusted authors. Put another way, every year readers are spending more hours reading books from indie authors.  Reader eyeballs will continue to transition to indie ebooks in 2016. The growth in indie ebook market share in 2016 will be propelled by several strong macro trends that have been solidly in place for a few years now:  

• Compared to traditionally published ebook authors, the competitive landscape for ebooks is tilted to the indie author’s advantage. Indies enjoy full and often superior distribution to retail and library sales; faster time to market; greater creative control; marketing and promotion flexibility; 4-5 times higher ebook royalties; and the ability to price dramatically lower. Most indies are pricing between $2.99 and $3.99, whereas most traditional publishers are still pricing their front list books above $10.00.  Based on our Smashwords Survey, the average $3.99 ebook will get three to five times more buyers than a book priced over $10.00.  Large publishers are over-pricing, and in the process they're harming their authors' ability to build readership.
   
• Retailers are giving indie authors more seats at the merchandising table. Every major retailer now promotes indie ebooks on their home pages. iBooks has certainly been a star player here the last few years given the enormous number of Smashwords titles receiving feature promotion each month. Kobo and Barnes & Noble also stepped up efforts in 2015 to provide high profile merchandising love to indie ebook titles and I expect their efforts to increase in 2016.  We spend a lot of time every day at Smashwords helping our authors earn merchandising visibility at these stores and we'll ramp up these efforts further in 2016.
   
  
• Each year, indie authors become smarter, more sophisticated and more adept at implementing professional publishing best practices. Best practices are what separate the indie author amateurs from the indie author professionals. Bestselling indie ebooks are indistinguishable from traditionally published books (aside from indies' more reader-friendly pricing) with brilliant cover designs, great writing, professional editing, and creative marketing and promotion.
   
• Indies continue to leverage the power of free as a promotional tools for stand alone books and series starters. This incredibly powerful promotion tool remains the exclusive domain of indies (good for indies, bad for traditionally published ebook authors). 5. More traditionally published authors will continue to experiment with self-publishing. Once these authors get a taste for self publishing they typically want to direct more of their future production to the indie realm.

2.  The overall market for ebooks will shrink in dollar terms, but unit volume will increase

Many indies and traditional publishers alike reported flat or lower sales in 2015. The go-go days of exponential ebook market growth of the early days (2008-2012) are over. As I shared in my November 2014 post, Things Get More Difficult from Here – Here’s How to Succeed, a key factor in the slowdown is an emerging equilibrium for consumption of print and ebook formats. Due to the law of large numbers, ebook sales growth (or declines) will begin to more closely mirror the overall market for all books. The book market is mature and is therefore a slow or no-growth industry.  Additionally, there’s an ever-increasing glut of high-quality low-cost ebooks that will never go “out of print.” These continuing factors paint a picture for a more competitive landscape for authors in 2016 and beyond. Every author will face more competition today and tomorrow than they faced yesterday. In addition to the factors I outlined above and in the "Things get more difficult" post, the growth of Kindle Unlimited presents a new existential threat to the industry (more on this in the next item).


3.  Kindle Unlimited will gut single-copy sales and drive greater ebook commoditization

Earlier this year I blogged how Amazon’s merchandising pages encourage Kindle customers to read books for free as part of a Kindle Unlimited or Amazon Prime subscription. Most of the publishing industry remains oblivious to the long term ramifications of Amazon’s strategy here (not a surprise, because despite Amazon operating with amazing transparency and predictability, most industry watchers and media still don’t understand Amazon’s long term self publishing strategy). The issue of immediate concern is that Amazon's merchandising tactics discourage readers from purchasing single copy ebooks. Amazon is training Kindle customers to view even 99 cent ebooks as too expensive when other books can be read for what feels like free. Amazon’s success with Kindle Unlimited, which now offers over 1 million books almost exclusively supplied by indie authors is going to gut the market for single copy sales at Amazon. It'll be death by a thousand small cuts.  The pain will be felt by four publishing industry constituencies. In descending order of pain, and in order of who will feel it first, these constituencies include traditionally published authors and their publishers which I’ll consider as a single group; non-exclusive indie authors; Amazon-exclusive authors; and competing retailers.

Here's more detail: 

1. Traditionally published authors and their publishers will suffer most in 2016 because the perceived price disparity between KU’s “Feels like free” is greatest when customers compare it against the trad publishers' high ebook and print prices. I wrote about this in Publishers Weekly.  Amazon is using the self-published ebooks in KDP Select and Kindle Unlimited to marginalize the collective bargaining power of large publishers. What do I mean by collective bargaining power? I’m referring to a large publisher’s ability to negotiate on behalf of thousands of authors. Think back to Hachette's public battle with Amazon in 2014 in which Hachette ultimately prevailed in what I labeled a pyrrhic victory (with the pyrrhic part now being realized by KU with does an end run around agency pricing).  Large publishers don’t realize it yet, but KDP-S is eventually going to hollow out their ebook businesses. Every large publisher lacks a viable indie or even pseudo-indie ebook offering for their authors that could counter this pressure (and those publishers in bed with Author Solutions and ASI’s sock puppet spawn are all swimming in the exact wrong direction and are on the wrong side of history if they want to protect their ebook businesses from Amazon).

2.  Non-exclusive indie authors – authors who aren’t in Amazon KDP-S – will feel the next greatest pain in 2016 because their $2.99 and $3.99 ebooks will feel prohibitively expensive to Kindle customers as Kindle customers modify their reading habits in favor of KU titles. As I described here in November, one bestselling Smashwords author reported having received hate mail from fans who refuse to read his $2.99 and $3.99 ebooks unless they can read them for free within their Kindle Unlimited subscription. 

3. Next, the pain will be felt by KDP-S authors.  I’m reminded of the  “First they came..” poem by Pastor Martin Niemöller.  No, Amazon are not Nazis, but the underlying lesson of Niemöller can be applied to any situation where certain segments of the public remain silent as other segments are harmed.  Eventually what goes around comes around.  There's a complicity in silence.  After Amazon comes after large publishers and non-exclusive authors, KDP Select authors are next.  Amazon's business model, which is predicated upon offering customers the greatest possible value, demands this of all products in the form of lower consumer prices.  The burden of lower prices will be borne by Amazon's authors (the suppliers).  KDP Select is powered by indie authors.  Indies enroll because it makes their books favored citizens within the Kindle ecosystem where they exchange the downsides of exclusivity for the upsides of greater merchandising visibility and sales rank advantage. Authors who refuse to enroll in KDP Select are disadvantaged in the form of fewer tools and less discoverability.  Yet despite the harm KDP-S and KU are causing fellow authors and the rest of the industry, indies continue to enroll in KDP-S to receive these privileged benefits, thereby perpetuating the inevitable cycle of destruction of single-copy sales.  With more authors moving to KDP-S, it means more readers will funnel into Kindle Unlimited as they’re presented with the opportunity to read these books for free as part of their KU or Prime subscription.  Amazon controls KU payouts, which means Amazon can decide to pay authors less at any time, or can decide to demand even greater concessions in exchange for future program benefits.  Imagine a ship at sea with not enough food to feed the passengers.  So food (in this case reader eyeballs) is rationed among a small subset of passengers (authors) who agree to make the biggest concessions (exclusivity), and the rest of the passengers are thrown overboard to fend for themselves.  With over 1 million books enrolled in KDP-S already, it’s only a matter of time before even KDP-S becomes overcrowded and Amazon decides to increase the fee-for-passage in the form of demanding even greater concessions.  And then more authors go overboard.  Amazon has a consistent track record of policy changes with KU – changes that have already lowered KU payouts for some writers and increased payouts for others.  Amazon announced in late October that payouts will decline further in some countries.  See my November blog post, Amazon Lowers Kindle Unlimited Payouts (also linked above) for more. 

4. Amazon’s retail competitors will feel greater pain in 2016 due to KU because no other retailer has a viable alternative to KU, nor the market dominance to make such a program work. The beauty of KU from Amazon’s perspective is that they have 1 million + books that can’t be purchased at other retailers, and these books feel like free to KU subscribers. This means other retailers are starved of this important inventory, and it means their remaining books which can only be purchased as a single copy will feel more and more expensive to readers. This will motivate additional customers to bleed away from Amazon’s competitors and migrate to the greater selection and lower prices of Amazon.  If even only 2% of every retailer's customer base migrates to Amazon for KU each year, it will have serious consequences for the long term viability of Amazon's competitors.  Amazon plays the long game better than anyone.  Skeptics of my prognostication might counter that KU is only a problem for self published authors.  That's mostly true for now, but if you believe as I believe that indies are the future of publishing, and that indies will continue gaining ebook market share, then you begin to see how KU is the worm that will slowly eat the publishing industry from the inside out.

4.  The ebook subscription model will experience a backlash in the indie author community (but will it matter?)

The indie author community has always maintained a healthy skepticism of the ebook subscription model for fear that subscriptions could devalue books, both from the perspective of reader perceptions of what a book is worth and also in terms of author earnings. When Scribd and Oyster came on the scene with their industry-leading services, these concerns were somewhat mollified by the business models of Scribd and Oyster in which they're obligated to pay authors and publishers retailer-level rates.  This means a Smashwords author that earns 60% list on the sale of their $5.99 ebook at iBooks or Barnes & Noble will also earn 60% list if a reader reads their book at Scribd or Oyster. Due to the necessity of the subscription service maintaining profitability if they want to have a long term viable business, their business model creates a powerful check against devaluation, because if the subscription service allows aggregate readership to consume more than $9.99 worth of books per month, the service would lose money and cease to exist. Earlier this year, when romance readers began reading more books than Scribd's business model could sustain, Scribd reduced the number of romance titles available.  I expect Scribd will eventually modify their subscription terms, possibly by adding reading limits, so that they can again accommodate more romance titles. Oyster announced a couple months ago they were exiting the ebook subscription business, probably because they lacked the resources to make the model work. That leaves Scribd as the leading ebook subscription service with an author-friendly business model that won’t lead to devaluation.   Oh, then there’s Kindle Unlimited, which plays by completely different – and decidedly publisher-unfriendly - rules than Scribd and Oyster. As I’ve written many times here at the Smashwords blog, Kindle Unlimited represents Amazon’s end run around agency pricing (under agency pricing, publishers and indie authors set their own retail prices, and retailers don’t discount). With Kindle Unlimited, the book’s retail price is irrelevant to Amazon’s calculation of author earnings. Amazon sets the compensation rates for KU authors after the fact, which means Amazon determines the value of a read and determines how a read is measured. If Amazon decides to price their KU service at $3.99, as they’ve done in India, it means, as Amazon quietly informed authors in late October, those participating books by necessity will earn much much less for each read. When indies enroll in KU, they surrender pricing power and margin control.  More importantly, these indies are surrendering their independence to Amazon. This story won’t end well, because by surrendering pricing power to a retailer whose modus operandi is to continually drive supplier prices lower and lower in a religious zeal to offer consumers ever-greater value. This is great for consumers, but not so great for authors when they face declining earnings. So in 2016, more authors will come to recognize that the industry's largest ebook subscription service is at once lowering author payouts and commoditizing books. This will lead to a backlash. But the bigger question is, “will it matter?” I’m afraid to say it probably won’t matter. For four years now, I and thousands of others have been speaking out against the risks and inevitable industry harm caused by Amazon’s exclusivity strategy, but to what effect? Despite the fact that most indies hate and resent the idea of exclusivity, I talk with authors each month who feel forced to succumb to it simply because Amazon controls access to the greatest number of readers. Back in September when I blogged about the pending closure of Oyster, I shared the story of a fantastic author I met in St. Louis who despised KDP Select exclusivity yet she was all-in because she feared she couldn't pay her mortgage otherwise. Amazon knows that most authors are eager to reach more readers, and for every author who sticks to their guns and refuses to go exclusive on principle alone; there will be three more writers who will surrender to KDP Select if they believe it will help them reach more Amazon readers. My concern is that some of these authors would rather earn a penny per read than nothing at all.  That's the ultimate problem, and why I wouldn't be surprised if someday Amazon offers KU or a KU derivative that's completely free, or free to Amazon Prime subscribers.  In Amazon, we have the world's largest global seller of ebooks exerting enormous influence over which books are read and which are buried.

5.  Print will remain steady, though those sales are the sole domain for authors of traditional publishers

Print books today account for approximately 70% of the book market. The percentage varies by genre, category and country. Print showed staying power this year, as evidenced by reports from publishers and brick and mortar retailers, and aided by the adult coloring book craze. In Barnes & Noble’s latest earnings conference call, the company disclosed that they closed fewer stores than expected due to improving performance of some stores. A recent story in Slate examined how Waterstones, the large UK retailer that many recently had on death watch, is now growing again, opening new stores and turning a profit. Indie authors for the most part don’t participate in significant print sales because they lack distribution to physical stores. I think Amazon’s recent experiment opening a brick and mortar bookstore in Seattle points to even Amazon acknowledging the durability and importance of physical stores. I don’t think the prospects of print will change significantly in 2016. Print won’t go away. Traditional publishers and brick and mortar bookstores will continue to hold their own. Even if you only publish exclusively in digital (as many indies do), it’s still in your best interest that print remain a strong and viable reading format because for many readers, print is the gateway to digital. The long term fate of print books is inextricably tied to the fate of brick and mortar retail because nothing sells print like in-person browsing. What remains to be seen is what happens when the adult coloring book fad fades.

6.  Many full time indies will quit or scale back production in 2016

During the early days of the indie ebook revolution, it was relatively easy for a quality writer to earn good income self-publishing low-priced ebooks. The market was doubling and tripling each year, readers hadn't really seen 99 cent ebooks before, and everyone was happy.  As I mentioned in the “Ebook publishing gets more difficult from here” post, the exponential growth masked challenges that market's maturation has now brought to light. Many indies who quit their days jobs to pursue writing full time will find they need to return to a "real" job in 2016, especially authors for whom writing is their sole source of income and they're already feeling challenged to make the monthly rent. This means production will decline among the indie midlisters. As I’ve been telling the audiences for my ebook publishing workshops for the last seven years, if you want to make a lot of money publishing ebooks get a job at McDonalds instead. Publishing has always been a tough business. Witness the fact that most traditionally published authors must maintain day jobs. Ebook publishing is NOT the path to riches except for a very few authors. Yes, I’ve been pleased see the many Smashwords authors whose indie ebook earnings have allowed them to pay off mortgages, buy homes and save for retirement. These stories inspire me, yet we must remember these are the exceptions, not the rule. In 2015 I witnessed a growing desperation among many bestsellers, some of whom – I can imagine due to their prior successes with indie publishing - had might have changed their lifestyles or quit their day jobs. These authors are now feeling the financial and emotional pain of struggling to make ends meet. I hate to see this pain and anguish. As I’ve advised in the past, your prior success is no guarantee of future success. If you’re among the many Smashwords authors who’ve been blessed and have done well, or if you’re fortunate enough to sell well in the future, please bank that money when it comes. Pay off your debts and be conservative with your savings so you can build up your rainy day fund.

7.  Preorder usage will experience a dramatic increase

Among emerging best practices that separate the high performers from the poor performers, ebook preorders are at the top of the list. As we disclosed in the Smashwords Survey for 2015, ebooks born as preorders sell significantly more on average than books that are simply uploaded the day of release. During the 2015 Survey period which ran from April 2014 to March 2015, only 9.8% of books published at Smashwords were released as preorders, yet this small percentage accounted for fully two thirds of our top 200 bestsellers. In October, I refreshed the trailing 12 month numbers (approximately November 2014 through October 2015) and found the number born as preorders at Smashwords had increased to 13%. I think by the end of 2016 we’ll see preorder usage exceeding 20%, which would represent a more than 50% increase in usage yet is still an unacceptably low number considering that preorders enable more successful book launches. Why leave readers and money on the table? We’re doing our part to encourage greater usage with our continuing education initiatives. Our launch this year of our assetless preorder feature is a good example. With assetless preorders (read all about it here), authors can get their books listed as preorder up to 12 months in advance, even without a finished manuscript or cover. If you'd like to learn how to use ebook preorders to your advantage, visit the Smashwords Preorders page for links to my many training resources, including my article last month in Publishers Weekly, How Indie Authors Can Leverage Ebook Preorders to Crack the Bestseller Lists.  Share it with a friend!

8.  Library ebook sales will increase for Smashwords authors

Smashwords has made great progress over the last four years to open up public libraries to the ebooks from Smashwords authors and publishers. In 2016, library ebook sales will be a bright spot in an otherwise moribund ebook retailing market. While I don’t expect library ebook sales to eclipse retail sales any time soon (if ever), libraries will be an area of growth and opportunity for indie authors in the new year. In 2015 we added thousands of new libraries to the reach of the Smashwords distribution network by announcing new partnerships with Gardners in the UK (2,000+ libraries) and Odilo (2,100+ libraries). These partners join our existing library partners OverDrive (20,000+ libraries) and Baker & Taylor Axis 360 (2,500+ libraries). We’ll build our library distribution further in 2016. As indie ebooks continue to hit an ever-greater number of bestseller lists, library patrons are demanding more indie ebooks. Libraries also represent an untapped marketing opportunity for indie authors. All indies should encourage their fans to contact their local libraries and request those libraries to add their favorite indie authors’ ebooks to their collections. Libraries are generally quite responsive to patron requests.

9.  More series writers will adopt perma-free series starters

In the 2015 Smashwords Survey we found strong evidence that series with free series starters earn more than series without. As smart indie authors work to become more competitive in 2016, I think we’ll see free series starters gain recognition as an essential best practice, much in the way that preorders are gaining that recognition.

10.  Wattpad will be acquired

Okay, I’m going out on a long flimsy limb here, and I’m doing it without the benefit of inside knowledge. I’ve always been a fan of WattPad. They’re truly a self-publishing phenomena. They facilitate live publishing from writers around the world, and often from writers who aren’t yet even thinking of becoming published authors. WattPad is the training ground for the next generation of authors, and they're increasingly being used by established Smashwords authors and traditional publishers alike that want to reach WattPad’s burgeoning readership. The most likely acquirer is Amazon, and if that happens the future for large traditional publishers will be in even greater peril than it is today (I’m thinking how large publishers probably kicked themselves for not acquiring Goodreads before Amazon snapped them up). If the large publishers are smart, they’ll snap up WattPad because WattPad will give them early access to future bestsellers. But so far, the large publishers have proven themselves bewildered by the indie author movement, and oblivious to what’s driving it and how it will disrupt their businesses in the future. [Two quick tips for large publishers: 1. Self-publishing isn’t just for authors who can’t get a publishing deal. 2. An increasing number of writers aspire to indie-publish as their option of first choice, which means these authors will never enter the slush pile.]  Traditional publishers’ self-publishing clueless-to-date is illustrated by Pearson/Penguin’s acquisition of Author Solutions, and the many publishers that have since invited the ASI sock puppet foxes to enter their hen houses under the guise of powering their assisted publishing imprints). Amazon understands, and we at Smashwords agree, that the future of publishing is self-publishing. This is why Amazon, or possibly another smart retailer like Apple, are the most likely acquirers of WattPad. It’s also worth noting that WattPad has received over $60 million in venture funding. Venture investors want liquidity events – either in the form of acquisition or IPO.

Questions Answered by Special Request

And now for something completely different. As mentioned above, I invited my friends on Facebook to pose questions to my imaginary 2016 crystal ball. Below, I’ll share 29 of their questions in the form of a Q&A.

Q: Will Amazon do something more to monopolize the market? (via Susan C.)

Yes. See my analogy above about the starving passengers on the ship. KDP Select has been a tremendous business success for Amazon. Yet it’s facing overcrowding with over 1 million books which we can assume comprises around 25% of all the books listed at Amazon. Soon, it’ll be so overcrowded that any benefits of exclusivity will become diluted by the massive enrollment. Amazon will need to exact more pounds of flesh in the form of greater author concessions.

Here are some potential ideas (you’re welcome Amazon), none of which would surprise me:

1. Amazon reduces the payment per page read, which is currently hovering around ½ of one cent.

2. Amazon reduces the price of a Kindle Unlimited subscription from $9.99 per month in the US to something lower (thus giving a reason to pay authors less, as they announced in late October for the $3.99 subscription price for KU in India).

3. Amazon may demand that all KDP-S books must be published first within KDP-S. Although this is already happening, to require this KDP-first publishing would be devastating to Amazon’s competitors because most purchases of most new books occur in the first few months of release.

4. Amazon could increase the mandatory enrollment period from three months to six or 12 months, or offer new perks to do so, all in the name of allowing Amazon to invest in its service.

5. Keep an eye on Amazon’s Kindle Scout program. Kindle Scout is like WattPad in the sense that writers can publish there and gather feedback from real readers. The difference is that Kindle Scout requires exclusivity. This program allows Amazon to snap up commercially promising writers for a song (a paltry $2,000 advance) before the writer has had a chance to discover what their book would have earned them either through full distribution at Smashwords retailers, or through a traditional publishing deal. And if Amazon acquires Wattpad only to roll it into Kindle Scout, then… Big loss for the industry. 

Maybe I should start writing post-apocalyptic dystopian fiction set in the publishing industry.  On second thought, no thanks.  I'm an optimistic person, really I am!

Q: Will Amazon’s brick and mortar stores add or detract from their success in general and/or affect book sales? (via Susan C.)

Earlier this year, Amazon opened a brick and mortar concept store in Seattle. The reviews I read were generally favorable. As mentioned above, I think it speaks to the enduring importance of print books, and how print books sell best when readers can pick them up and browse. If they roll these stores out across the country or around the world, it’ll be a mixed bag. While more bookstores is always a good thing because it will expose more readers to more books, these stores will likely only feature or favor Amazon-exclusive books.  This means they’ll be islands of exclusivity (good for Amazon-exclusive and Amazon-published authors, not so helpful to authors with print books at Barnes & Noble).

Q: What genres/subgenres will get a boom [in 2016]? (via Emma Hart, Alta Hensley and Amy Miles)

Wow. Three people asked this question, and it’s the one question where I feel the least qualified to answer without spending a week to crunch the latest numbers.  Come on smart readers, pipe in on this one and help me!  So here goes...  I think romance and its micro-targeted subgenres will continue to dominate. Romance is about half our sales. Romance authors do micro-targeting really well, starting with the cover. The popularity of romance will be somewhat offset by the glut of high quality low cost romance titles. Beyond romance, I’ll go out on a limb and say I think the readers will want more YA post-apocalyptic fiction where the world is destroyed by the short term thinking of adults (kind of like what’s happening today) and only the kids (must have strong female and male protagonist heroes) have the fresh perspective and independence necessary to rebuild human society into a kinder-gentler-more loving-more accepting-less tribal form necessary to prevent the extinction of humanity. Books with a hopeful message that acknowledge that today’s youth have the power to fix what we adults messed up. At least that’s what I’d like to read if I had more time to read (My all-time favorite series, aside maybe from Douglas Adams’ Hitchhiker series, is John Christopher’s YA Tripod Trilogy in which young adults save the world from alien tripod lizard creatures after their parents screwed everything up by watching too much television). “What should I write” is a common question I get at writers conferences. For any author wondering what they should write in the new year, my advice is to write what you have the most passion for because that will be your best writing, and your best writing is what's most likely to find an audience. If you write what you have passion for, you’ll be writing for the right reasons and you’ll have the strength to power on despite inevitably poor sales that most writers experience when they’re first getting started (the only way to guarantee failure is to quit writing, so never quit!). Our top selling authors for 2015 were mostly romance and YA authors, but mixed in that list, one of our all-time most consistent bestsellers ever is Shayne Parkinson who writes historical fiction set in New Zealand around the time of World War 1. She's often landing in our monthly bestsellers list for Publishers Weekly.  Publishers in New Zealand told her no one outside of NZ would want to read her stories. So she self published and found a massive worldwide audience. Ignore what’s hot and what’s not, and write the story your soul is screaming at you to write.

Q: Will more authors go hybrid, and will the ones that are currently hybrid stay that way or lean more toward one route or the other (via Emma Hart)

I’ll answer this from a couple different angles. But first, for those new to the term “hybrid,” it means those authors who both self-publish and work with traditional publishers. Hybrid authors can come at it from either direction. Some start as an indie author, and then thanks to their great sales a publisher comes to them with an offer they can’t refuse (here’s a big wad of money and these are all the great things we’ll do for you, among which include print distribution to bookstores!). Others start as a traditional author and then publish some of their works as an indie. I think there are tremendous synergies between self-publishing and traditional publishing. You can use your indie ebooks to drive success of you trad books, and you can use your trad books to drive success of your indie books. I’m somewhat unusual among certain circles of the self publishing community in that although I love self-publishing and think it’s the future of authorship, I also love traditional publishers and want to see a future where traditional publishers are successful too. I see a future where all authors consider themselves indie authors because it’s their choice which publishing option they choose (I talked about this in the Indie Author Manifesto). Why do I love traditional publishers? Because the more successful traditional publishing is, the more opportunities will open up for great indie authors.  Self publishing is a lot of work, and many writers would prefer to partner with a reputable traditional publisher.  If a big New York publisher comes along and offers you a deal where they can do more for you than you can do for yourself, you’d be silly to not consider it. By the same token, as ebooks continue to gain market share, it’s going to become more and more difficult for publishers to add value. Witness the story of multi-time NYT-bestselling Jamie McGuire who was a successful indie before she had a hugely successful run with traditional publishers, and despite her love for trad publishers she ultimately decided to orient her publishing around self-publishing.  I interviewed her on the blog earlier this year in post titled, Why Jamie McGuire Returned to Self Publishing.  So there’s no one size fits all answer. If a publisher does a great job for you and makes you happy, keep with them! No shame in that.  But even if they are awesome, you'll find that side projects in indieville can support your overall success.  So here’s a prediction: I think the siren call of indie publishing will ring loudly in the ears of traditionally published authors in 2016, and many of them will transition to indieville which will make them hybrid. And many indies will also go traditional because all publishers are using the indie ebook bestseller lists to acquire the most commercially promising authors. And Emma, congrats on your publishing deals!

Q: What will happen in the world of indie short story sales? (via Tom Hopp)

Short story writers enjoyed a great run at Kindle Unlimited up until a few months ago when Amazon changed the payouts to redefine how a qualified read is measured and compensated. I think all writing has a bright future on the strength of the story alone, regardless of length. That said, for four years now we’ve seen strong evidence in the Smashwords Survey that readers prefer longer form works. I think short story writers in 2016 and beyond will do better with single-author anthologies rather than publishing individual single shorts, due to the mere fact that the ebook purchase process (find title, read description, decide to download sample, decide to buy title, purchase the title, open the title) takes time and creates friction. If I was a prolific writer of short stories, I’d make a few of my very best stories available as single-copy shorts priced at free, and then I’d create topically-organized or theme-based anthology collections of my other stories. This way, you can use free to earn the reader’s trust and loyalty, and then they can go on to purchase and enjoy your great collections.

Q: Subscription services. Where are they going?
All surviving subscription services will face a tougher road ahead as they battle against Amazon’s Kindle Unlimited.  Amazon determines author earnings per read which means Amazon has the ability to their control their expenses.  This means Amazon can lower author payouts if readers consume too much whereas Amazon’s primary competitor Scribd doesn’t have that flexibility. In Scribd’s favor, none of the books listed in Scribd’s massive catalog are offered in Kindle Unlimited.  This means some power readers may subscribe to more than one service, much in the same way many in the US are subscribed to multiple video streaming services such as Netflix, Hulu or Amazon Video because there's so much great content that's only available in these individual silos. It remains to be seen if iBooks will launch their own ebook subscription service. They have experience in subscription services following their acquisition of Beats and the launch of the Apple Music streaming service. If they do launch an ebook subscription service, it remains to be seen if they’ll follow the KU model of paying from a pool, or the Scribd model where authors and publishers are paid agency-level rates. Large publishers are resistant to pool-based models because such models represent the slippery slope to devaluation. To date, Smashwords has refused to sign distribution deals with the various pool-based subscription services for this very reason.

Q: Will this author win the Nobel Prize this year? Or a million dollar contract? ‘Cause that would be awesome (via Kymberlie Calkins Ingalls)

I think the million dollar contract is a tiny tad more likely than the Nobel Prize.  Aim high and try for both!

Q: World peace: Possibility or writing device? (via Linton Robinson)
Total world peace is probably an impossibility in 2016 given the human race’s proclivities toward tribalism, religious sectarianism, greed, blood lust and struggles over limited resources. Yet as we’ve seen in recent months, the worst in people can bring out the best in people. You can’t help but feel optimistic when the vast majority of peace-loving people stand up for peace and love. As a writing device, let’s hope more writers of fiction and non-fiction alike continue to inspire readers around the globe to celebrate our cultural differences and sprint in the direction of peace.

Q: It’s difficult to get noticed. Is there any hope for us small time authors to actually make a name for ourselves in this industry? (via Crissi Langwell)

Yes, there’s definitely a chance. New Smashwords authors are breaking out into the bestseller lists every month. However, the sad truth of the matter is that most authors will sell poorly. 2016 will be more challenging than ever for all writers. Yet despite the challenges, there’s still never been a better time for writers to publish. A mere 10 years ago the publishing industry was mired in the dark ages when most writers had little chance of getting published.  It was a time when a small number of gatekeepers acted as the bouncers as the pearly gates of authordom, denying writers the freedom to publish and deciding what readers could read. Still, most of their chosen books were flops. Today, thanks to the democratization of ebook distribution where every author can get their ebook carried at all the major ebook stores, and thanks to free professional publishing tools like Smashwords, more writers than ever have a chance at discovery. Yet due to the glut of high-quality low-cost immortal ebooks, it’s increasingly difficult for writers to find their readers. And the competition will only grow more intense in 2016. The good news is that the secret to reaching readers isn’t such a secret – it’s all about best practices. It’s also worth noting that the vast majority of authors fall short on best practices (witness the low adoption of ebook preorders, even though preorders are proven to sell more books, or witness the large number of self published authors who design amateur-looking cover images despite the dearth of low-cost professionals who for $200 or less can make their cover look amazing). With so many authors falling short on best practices, it means that those who do implement best practices well have a significant advantage. The authors who do the best job of implementing best practices will get discovered. One common trait among the bestsellers is that their constantly working to improve every aspect of their publishing, especially the quality of their writing and covers. The most important best practice is to write a book that takes the reader to an emotionally satisfying extreme. Good isn’t good enough anymore. A super-fabulous book with horrible marketing and a horrible cover can still become a bestseller, but a mediocre book with fabulous marketing and an awesome cover is unlikely to become a bestseller.  Great books spark word of mouth.   If a book doesn’t make a reader go WOW, if it doesn’t touch the reader’s soul, it won’t turn readers into superfan evangelists and it won’t spawn passionate word of mouth. I identify 15 other best practices in my How to Publish Ebooks presentation. Or, check out my free ebook, The Secrets to Ebook Publishing Success. Each well-implemented best practice will yield you a small incremental advantage in the marketplace. Those incremental advantages can add up. Smart authors know that there’s no single magic bullet to bestsellerdom. It’ll all about implementing dozens of best practices, and then constantly iterating and improving each one until the point where your book can turn one reader into another reader. An important factor in success is honest self-assessment. I’ll often hear from authors who claim they’ve implemented all the best practices yet they’re still failing to sell well, but when I examine their covers they’re obviously homemade, or they’ve fallen short on any number of other factors. A few years ago I wrote a blog post with a short self-assessment checklist. Read it here.

Here are a couple of the top tips for every author:  

1. What’s your average review rating across all the retailers? If you’re averaging 4.5 to 5 stars out of 5, you’re doing great. If you’re averaging less than four stars, it’s probably time for a major revision because you’re not taking readers to that point of passion where they become evangelists for your book. If you haven’t earned a critical mass of reviews, price your book to free for a few months to get more reviews so you can learn what readers really think.

2. Look at your cover. Is it micro-targeted to that subset of readers who will find more joy in the book than anyone else? Did you hire a professional designer so your cover looks as good or better than the bestsellers in your genre or category? Take a serious look at the covers of the top 20 bestsellers in your category at Amazon or iBooks and honestly ask yourself if your cover belongs alongside them. Professional cover design is not expensive, yet so many authors fail to take advantage of what’s probably their lowest cost yet highest-impact investment.

3.   Look at your distribution. Are you opted in to all the sales channels at Smashwords?  Even some bestsellers at Smashwords are leaving sales on the table by not opting in to some of our smaller and midsize channels.

Q: Any idea what’s going to happen in the romance market? KU appears to have gutted sales there (via Jessica Scott)

Romance will continue to be a strong market in 2016, but KU will sap a lot of the single-copy sales for romance authors at Amazon for the reasons I outlined above. Romance readers tend to be power readers, so the value proposition of unlimited reading in KU is quite appealing to them which makes the transition of these power readers to KU all the more painful for romance authors. I think the most successful romance writers in the future will be those that maintain full uninterrupted distribution across all sales channels so they can build diversified global readership, and who build platforms they control (especially private mailing lists) so they can reach their most loyal readership which will be more immune to the temptation of only reading KU books. If authors dabble in KU by cycling books in and out, they should understand that they’re training readers to wait until the book lands in KU.

Q: Will brick and mortar stores continue to decline, or will they fight back? (via Pauline Christou)

Brick and mortar stores will continue to face challenges in 2016, but there are signs they’re fighting back and holding their own. Small independent bookshops have led the way by hosting local book events, author talks and seminars that can’t be easily reproduced online, and even the larger stores are following this tact. I think the next opportunity for physical bookstores is to embrace their local indie community by carrying more POD books of local authors and hosting more indie author events.

Q: Will the other retailers grow in a way that that will help us counter Amazon/KU? (via Karen Weinberg Drogin)

When I look at the universe of booksellers from a high level, I see see retailers in two camps – the ancillary players and the pure players. The ancillary players are companies like Amazon, iBooks and Google for whom books are an add-on – an ancillary service that makes their platforms more valuable for consumers. These companies’ businesses are so diversified that they don’t need to earn a profit selling books to keep the lights on. For Amazon, book readers can be sold a wide range of physical and digital goods. For Google, a company that profits by streaming targeted ads in front of eyeballs, readers can be advertised to, and readers' use of the Android operating system on smart phones enriches the Android ecosystem which also benefits Google. For iBooks, books cause readers to spend more hours connected to their iPhones and iPads which helps make these devices more indispensable and more valuable. And then I look at the pure plays like Barnes & Noble and Kobo, or ebook subscription services like Scribd, for which their businesses are almost entirely dependent upon their ability to sell books at a profit. Amazon is the fly in the ointment. Their business model is entirely dependent upon them commoditizing everything they sell, all in the interest of lowering consumer prices. With KU, they have the ability to lower the effective prices of books as low as they want because they have a stranglehold on the world’s largest online community of book buyers. With KU, the agency pricing system where authors and publishers set the prices and books aren’t discounted is neutered. Since agency pricing benefits indie authors too, it means all books outside the KU service – especially for power readers – are more expensive. As I’ve written previously, I think there are three primary drivers of consumer behavior – price, selection and convenience. Thanks to KU, Amazon dominates on price.  And because of the 1 million + titles in KDP Select, Amazon has the best selection of exclusive and non-exclusive books. Other retailers only have non-exclusive books. This means many readers around the world will continue to migrate to Amazon. It also means that across these three consumer drivers, Amazon’s competitors have the most opportunity to add value on the convenience side, such as improving automated book recommendations, or making their stores better at discovery and reader recommendations, or for the physical stores, hosting community-building events that are best experienced in the flesh. But that’s tough because Amazon is no slouch on the convenience side either.

But all it not lost. Pew Research came out with a study in 2015 that indicated that readers are migrating away from single-purpose e-reading devices. This could be Amazon’s Achilles heel, because so far they’ve failed to make a huge dent in smart phones and tablets. It means that iBooks with its more than one billion iOS device users, and other stores with strong apps will be able to leverage this trend as a counterbalance to Amazon. Another weakness of Amazon is that they lack an international footprint of brick and mortar stores. This is a strength of stores like Barnes & Noble in the US, Waterstones and WH Smith in the UK, and other physical booksellers such as Thalia in Germany or Livraria Cultura in Brazil, all of which carry (or will soon carry) Smashwords titles in their online stores. Yet another vulnerability of Amazon is that the large New York publishers which still control most bestselling books are not big fans of Amazon’s business practices. If publishers figure out a way to build alternative sales channels that limit their dependence upon Amazon, it’ll help the entire publishing industry build and support counterbalances.

I’m not betting against Amazon, but I’m doing my best to support a thriving ecosystem of multiple sales outlets. The more successful booksellers are out there, the more books will be sold and the more players will be competing for the good graces of the indie community. That, my friends, it the secret to bright future for all authors. It would be a sad day if all 95% of all bookselling consolidated around one or two players. That’s the day authors become tenant farmers with no power.

Q: Will Barnes & Noble survive or go out of business in 2016? (via Sarah Ettrich and AC Adams)

They’ll definitely survive in 2016 and for many years to come.

Q: Will B&N drop all ebooks and/or implode and go under? (Julie York)

B&N is in the business of selling books which means the ebook business is core to their future. They won’t implode or go under this year, but like every ebook retailer struggling in this flat environment, they’ll need to think out of the box to find new ways to connect readers with books. To B&N’s credit, their divestiture of the college business (Yuzu, now also a Smashwords partner!), their decision to get out of the hardware manufacturing business, and their buyout of Microsoft’s stake in the company will give them more bandwidth to refocus on books. Their brick and mortar footprint and massive customer base give them a huge strategic advantage when it comes to reaching readers.  B&N might be one of the unsung success stories of 2015.  Here's hoping!  They've certainly been a great partner for Smashwords authors, and they continue to sell a lot of our books.  They were the first retailer back in 2009 to carry our books when we decided to become a distributor.

Q: Will Amazon relax the exclusivity requirements for Kindle Unlmited in 2016? (via Sarah Ettrich)

I think it’s unlikely they’ll loosen their exclusivity requirements for KU because then it would lose its exclusivity. Already, the program has become so full of titles that its losing some of its air of exclusivity. Refer to my example above about how there’s not enough food (reader eyeballs) to sustain all the authors. Exclusivity is a way for Amazon to extract concessions from a minority of authors who can then enjoy the spoils and bounty of more eyeballs concentrated on a smaller group of authors.  I think Amazon will figure out a way to tighten the screws AND attract more authors.

Q: Will Google Play introduce a subscription model in 2016? (via Sarah Ettrich)

I’m going to guess no for 2016, even though Google acquired Oyster.  I've met with the good folks at Google.  They're smart people and genuine book lovers, and they want to do well in the market but I think their corporate overlords have stymied them from achieving their full potential.  This is my impression, not what they told me.

Q: Will Google Play put their significant weight toward becoming a big force in eBooks, and counterbalance to Amazon? (via Aaron Compton and Julie York)

See the answer above.  I wish the answer was yes, because next to Apple, Google is among the small cohort with the financial resources to invest hundreds of millions of dollars to build a massive counterbalance without putting their business in jeopardy.  At Google, one billion dollars is practically a rounding error.

Q: Will Disney call me? (via John Dony)

Maybe they’ll call you now that they know you’re awaiting their call.


Q: Will Kindle Worlds go international and multi-lingual

I don’t have an opinion here. If you have an opinion, comment below!

Q: “Digital refund policies… will [Amazon’s policies] be reworked to prevent [their liberal return policies from ] being used as an ebook library?” (Marianne Morea)

No, I think policies will stay the same. Authors are simply suppliers to Amazon, and at Amazon customers come first.

Q: What’s happening with China and India with ebooks over the coming years? (Des Greene)

We had high hopes for Flipkart in India, but sadly they missed their opportunity.  That leaves Amazon, and with the $3.99-priced Kindle Unlimited in India to dominate.  This will have a chilling effect on the ability for future Indian retailers to attract the biggest books.  I'm eagerly awaiting the day iBooks enters both India and China with a bookstore.  Kobo is in India but they're not much of a factor there yet.

Q: Will iBooks try to take on the Zon by releasing a multi-platform app? (Julie York)

I’d love to see iBooks do this but I don’t think it will happen. Android phones, for example, would benefit from an iBooks app. iBooks would also do well to create a web-accessible customer experience so readers can browse and buy from any browser or device. People with personal computers can buy music with iTunes, so why not be able to buy books with iBooks?

Q: How much will the standard agent/publisher cut shrink in the face of the superior economics of self publishing? (Elise Ackerman)

I don’t think agents will reduce their cuts. The agents I know work hard for their 15%, and the most progressive agents are extremely supportive of their clients' self-publishing efforts, and some agencies even provide ebook publishing assistance as a service to their clients. Smashwords works as the ebook distributor for many such agents. Publishers, on the other hand, will feel increased pressure to address paltry ebook royalties – something that has become a major grievance for authors who are increasingly reluctant to give up their rights in exchange for only 25% of the net. It’s likely some publishers start increasing that percentage to 50% (and if they don’t, there are digital-only specialty publishers that will do it for 50% net, and of course Smashwords is here to provide 85% net!).

Q: What percent of new authors will decline a standard agent/publishing deal and go it alone? (Elise Ackerman)

Oh boy, I won’t even hazard a guess on the percentage here. I don’t know. But there is a broader macro trend at play where more and more authors are aspiring to indie publish as the stigma of self-publishing disappears, and many of these authors are self-publishing without ever bothering to shop their books to agents and publishers. There’s also what we should call the Jamie McGuire trend (I don’t know if it’s a trend yet but let's hope it becomes one!) where indie authors who tried trad publishing are migrating back to indie publishing because indie publishing suits the author’s economic and personal interests better (Here's a link again to  my interview with Jamie). I will predict that whatever that percentage of authors was in 2015 that rejected publishing offers, the percentage will increase in 2016 unless publishers enact reforms. Author want higher royalty rates, lower ebook pricing (indie authors offer much more competitive pricing, enabling greater readership building and sales), and some authors would like to see publishers abandon DRM. As you can imagine, from the publisher’s perspective it’s doubly difficult for them to wrestle with the concept of lowering ebook prices while increasing author payouts. Can it be done? Yes. Would it reduce publisher profits? Probably.

Q: Will new promotion-oriented businesses emerge to help new authors, and what will these look like? (Elise Ackerman)

Hundreds of services have sprung up to serve the burgeoning business of self publishing, and promotion-oriented services are certainly well-represented. The challenge with marketing and promotion is that it’s every expensive, and since most self-published books won’t sell well it creates a situation where many authors that pay for publicity services or advertising will never earn back their expenses. I think the most successful publicity services out there will be those that connect authors with knowledge that helps them market more efficiently for the long term, and provide services that get their books read by the right readers. I think our friends at Red Coat PR do a great job here.  In book advertising, BookBub is the gold standard with their curated advertising model (they only accept advertisements from authors with proven track records), and many authors get great results.  I hear Facebook advertising is working for some authors. If readers have promotion-oriented recommendations based on their personal experiences, please comment in the comments below and share what works!

Q: Will Smashwords introduce a POD offering in 2016? (Cynthia Seasons Christaskis)

Extremely unlikely.  I would be surprised.

Q: Predict when indies will be allowed into brick and mortars (Gwen Steel)

I think you'll see all brick and more retailers make greater efforts this year to accommodate indie authors.   This is purely based on the fact that indie ebook authors at hitting the national bestseller lists every week, so it's only natural that more of these books find their way to stores.

Q: How long will the coloring book craze continue, what effect will it have on the overall book market, and how can indie ebook authors participate? (Selina French and Jacquie Biggar)

I think the craze will peak in 2016 and then diminish, but I also think these books are here for good because they open up a new opportunity for innovative publishers, artists and book designers to take things to the next level.  It's good for indie authors because anything that brings more consumers into bookstores is good.  I think there's certainly an opportunity for indies to help drive the innovation on the POD side of things, and then if you can prove the commercial market for your book it'll open up more distribution opportunities.   I don't see any opportunity on the reflowable ebook side of things but who knows, technology has a habit of breaking rules all the time. 

Q: Is there a place where I can see all your past predictions altogether? (Cheri Lasota)

Yes! Right here:

2015 Predictions from the Smashwords Blog  (Published December 31, 2014)

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)

The Road Ahead

I hope you enjoyed my epic-length predictions.  Please share your thoughts, feedback and epiphanies below.  Thanks to the authors credited above for augmenting this post with their questions (and sorry to those of you whose questions I didn't answer - there were too many!). 

Things change in this industry every day.  If you're like me, you probably find it bewildering at times.  But take heart.  Some things never change.  The most important thing that will never change is that books are magical containers for delivering stories and knowledge.  You create magic.

The industry will change - players will go out of business and others will rise and fall and rise again - but books will always remain.  Authors will always remain.  You are the captain of your personal adventure in publishing, and the course you chart is rife with opportunity.

The global book publishing is a $100 billion market. Despite anemic growth, and even if the market shrinks, there’s still incredible opportunity for every new, future and veteran author alike to reach thousands if not millions of readers.  Best practices will separate those who reach a lot of readers from those who reach few.

Luck plays a factor as well, but only for those who implement best practices first.  Best practices prepare you to capture lightning in a bottle when luck strikes.  Luck strikes all the time.  It's word of mouth.  It's a blog post or a tweet or a Facebook mention or a review that recommends your book.

The books you have in you are important. Your books are important to the future of book culture and humanity.  Don't let anyone or anything discourage you from putting your book out into the world.

If you're new to self-publishing, or you're looking for a few fresh ideas to take things to the next level, check out the Powerpoint deck I uploaded here to blog titled, How to Publish Ebooks - An Ebook Publishing Intensive.