Thursday, December 31, 2020

2021 Publishing Predictions – Pandemic Reshapes Publishing, Accelerates Consolidation

Welcome to my annual publishing predictions post, where I recap the state of the indie nation and share publishing predictions for the year ahead.

Also check out my annual Smashwords Year in Review and Preview of 2021.

The purpose of these predictions is to focus our attention on the future.

Some of my predictions will inspire you, and others might surprise or anger you.  That’s the point.  By imagining potential futures, you can work to shape the future you desire.

Although it’s easy for an individual author to feel powerless against the broader forces of this industry, the opposite is true.  Authors hold great power.  The collective actions of authors determine the direction of this industry and the exciting opportunities you’ll find within it. 

Your future success can be distilled down to four high level factors:  

  1. The foundations you laid for yourself in the past (skills, training, experience, past actions).  
  2. The actions you take today.  
  3. The future actions taken by others in the publishing industry.  
  4. Black Swan events that come out of nowhere to cause abrupt and massive shifts in direction.
My friend Jennifer Leggio sports prophetic dumpster fire halloween costume in 2019
My friend Jennifer Leggio sports a
prophetic dumpster fire costume in 2019.

You control the first two factors.  For the third factor, through your mentorship and conversations with fellow authors, publishers, retailers and service providers, you influence the direction of the industry.  You have minimal influence over the fourth category of Black Swan events, though with proper planning and diversification you can make your publishing business more resilient to unexpected shocks.

When I look back at the raging dumpster fire that was 2020, I find it impossible to separate a discussion of publishing futures from a discussion of the unfolding Black Swan event that is COVID-19. 

If COVID-19 teaches us anything, it’s that our fates are intertwined.  Whether we’re talking viruses or indie authorship, we are all neighbors.  We share the same air.  Take care of your indie author neighbors and all who support them. 

The State of the Indie Nation

COVID-19 was a Black Swan event that continues to have enormous impact on authors, readers and retailers.  It created new winners and losers, and it accelerated the progression of several entrenched trends in publishing, while pausing or redirecting other trends. 

For most indie authors, 2020 was an up year for ebook sales after several years of decline.  I find it difficult to celebrate this achievement when we consider the cost.

2020 started weak for indie authors, with most ebook retailers experiencing year over year sales declines for the first two months of the year.  This marked a continuation of a multi-year trend of lackluster ebook sales exacerbated by rampant devaluation pressures in a slow-growth industry.  I'll explore some of these pressures later in the post.

COVID-19 reversed that lackluster sales trend in March. 

As I discussed back in June for my special edition mid-year predictions post, Post-pandemic publishing for indie authors, indie ebook authors found themselves well-positioned to meet surging ebook demand from readers who were home-bound by choice, unemployment or government mandate.  Sales moderated somewhat as the year progressed and people returned to work. 

Democratization vs. Authoritarianism

In a democracy, power lies with the people.  With authoritarianism, power is consolidated under the control of a single supreme leader.  Authoritarians come to power when the people surrender their power.

I founded Smashwords 13 years ago to enable freedom of expression and author self-determination.  I wanted to democratize publishing by breaking down the barriers to publication and retail distribution.  I wanted to empower any writer anywhere to self-publish at no cost and control their own rights, production, pricing and promotion.  And I wanted to give the readers – not gatekeeping publishers – the freedom to choose what was worth reading. 

The old world of publishing was somewhat authoritarian by nature.  A small group of powerful publishers dictated which writers would become published authors, which books were distributed to retailers, and how much authors would earn for their labor.

Authoritarianism is the opposite of democratization.  

In recent years, we’ve witnessed a troubling rise in authoritarian tendencies here in the US.  The US isn’t the only country facing this challenge.

When people are hurting and losing hope, they become susceptible to nihilistic thinking.  This makes people ripe for exploitation by the siren call of authoritarian leaders. Authoritarians promise overly simplistic solutions to complex problems.  Never mind that more often than not, their tainted remedies exacerbate the very reality their supporters seek to escape. 

There’s always been a dramatic income inequality gap in publishing, even though few think of it in these explicit terms.  It’s time we acknowledge this as an industry.  A few authors do really well, and the vast majority live hand to mouth as they struggle to find their next reader. 

No, I’m not advocating socialism for my fellow Americans haunted by the ghosts of Fidel Castro or Hugo Chavez.  There’s nothing wrong with some books selling better than others.  Excellence should be rewarded. 

As I share in this post and many that preceded it, I’m concerned about greater forces at play working to steal power from indie authors.  These forces have been persistent, increasing, and well-documented for many years.

As I discussed in my podcast episode, The Indie Author Manifesto, ever since Gutenberg’s invention of the printing press, there have been forces that seek to control the power of the printed word. 

Although indie authors benefited this year from COVID-19 in the form of stronger ebook sales, the pandemic also altered the power structure of the publishing industry in ways that will amplify future inequalities and jeopardize author independence. 

Physical bookstores were big losers in the pandemic, while enormous power consolidated around a small number of major online platforms such as Facebook, Amazon and Google.  These dominant platforms wield their supreme power to stand between you and your audience. 

We've traded one group of authoritarian overlords for another.  These platforms are the new gatekeepers for indie authors.  

But rather than gatekeeping an author’s books based on editorial quality, author reputation, sales potential, or relevance to the reader, they gatekeep based on the author’s willingness and ability to pay for access to those readers.  The payment comes in the form of paid advertising, and in the particular case of Amazon, pressure to accept additional concessions such as reduced royalties, control, and distribution.

I’m concerned that far too many authors have been hurting for far too long, and this hurt is forcing short term thinking that undermines the long term opportunity for all authors.  

Here in the US, it’s becoming all too common to turn on the television and witness the modern day equivalent of Depression-era bread lines, with thousands of people lined up in their cars, waiting for food assistance.  My mom, who volunteers at a homeless shelter to distribute food here in the San Francisco Bay Area, tells me donations are way down while the need for assistance has skyrocketed.

Although COVID-19 is the immediate trigger for the sudden unemployment and destitution of millions of families, income inequality is more to blame.  Too many people here are living too close to the financial edge.  This holds true for authors as well.

When someone’s living hand to mouth, uncertain if they'll make their next meal or mortgage payment, they don’t have the luxury to think long term.  This further perpetuates the cycle of short term decision-making which leads to greater exploitation and lost independence.  Your decisions are your votes for the future.

So ask yourself:  Are you okay that a multi-billion dollar publishing industry continues to profit on the backs of starving artists?  

Are you okay that Jeff Bezos, the head of Amazon – the company whose business model is predicated upon nickel and diming its suppliers, devaluing your books and forcing you to trample your fellow authors when you advertise – saw his net worth rise by nearly $100 billion during the pandemic?

If you’re okay with that, carry on with business as usual.  If not okay, act accordingly if you are able.

Now on with the predictions.

Mark Coker’s Publishing Predictions for 2021

  1. Nesting will favor digital reading - With eight billion people around the world in need of COVID-19 vaccinations and not enough vaccine supply to go around, many consumers of books will spend more time at home than they did pre-pandemic.  The indie author community, which earns the bulk of its income via ebooks, will be a beneficiary. 
  2. Trump effect will lead to more book reading - Regardless of how you feel about Donald Trump, most people would agree that he held a sizable portion of our daily media consumption attention.  With each day, his presidency served a tantalizing new episode of must-see reality TV. The episodes got more and more riveting as he broke every imaginable norm and then some.  Last month voters cancelled his show due to poor ratings and replaced it with what promises to be a less dramatic presidential show.  This means we can now spend less time shouting into our echo chambers on social media about why he’s the worst or greatest president of all time.  What are we going to do with our extra hours of free time each week?  A portion of that time will shift to reading.  Yay for books!
  3. Consolidation in traditional publishing drives more authors to self-publishing AND vanity presses - The big four publishers are about to become the big three with Penguin Random House’s pending acquisition of Simon & Schuster.  In slow growth or overcrowded markets, consolidation yields greater efficiencies, profits and competitive advantages for the surviving entities.  The combination will give Penguin Random House about 30% of the US book market.  With fewer publishers bidding for the best books, it means fewer opportunities and lower advances for authors interested in a traditional publishing deal.  This will drive more authors to self-publishing.  For authors that don’t have the desire or the ability to put in the hard work to become a professional self-publisher, many will turn to vanity presses and subsidized presses.  These companies earn their income not by selling books to customers, but by selling services to authors.
  4. Consolidation coming to indie publishing as well - The self-publishing market is overcrowded with too many companies fighting for too few dollars.  You want to get your book to Apple Books?  Apple lists Smashwords and 20 approved aggregators and conversion houses to help you, or you can upload direct. And there are thousands of other service providers who can help you do the same.  This is unsustainable.  For the same reasons the big New York publishers are consolidating, consolidation is inevitable for self-publishing as well.  Does the world really need hundreds of ebook distributors?  The answer is no.  In fact, the plethora of all of these companies doing the same thing is confusing and counterproductive for most authors.
  5. Book discovery continues to shift from organic to inorganic - There was a time when most online book discovery was organic.  If a quality read attracted enough readers, their purchases and reviews would cause the online store’s algorithms to elevate the book’s visibility to other readers.  Today the ebook market is dominated by a single toll-taking retailer that grants preferential discoverability to authors and publishers that pay tributes in the form of paid advertising and exclusivity.  Other retailers will face pressure to do the same.  I’ve lost track of the number of times authors have asked Smashwords to create a paid advertising “opportunity” in the Smashwords Store.  Sure, we could make a lot of money doing that, but I’d have difficulty sleeping at night.  Nor would I want to disadvantage our authors who can't afford to advertise. I’d be the guy to say, “Oh, your ad spend didn’t earn back?  Here’s a refund.”
  6. Subscription consumption grows, single copy sales fall - The two dominant ebook consumption models are single-copy sales and subscription.  The three major ebook subscription services for indie authors are Kindle Unlimited, our partner Scribd, and the newer entry, Kobo Plus.  Apple doesn’t have such an offering yet, nor do I know if they plan for one, though I expect they’ll feel pressure to introduce a similar service one of these years.  Apple has a lot of experience in subscription businesses.  Over the long term, subscription will probably win, driven by the extreme value to consumers, the greater profitability to the retailer, and the proven willingness of many indie authors to accept ever-lower royalties in exchange for greater book visibility.
  7. Subscription services to drive devaluation - For indie authors, two of the three major subscription services (KU, KP) pay via a pool model in which the provider pays less than a 70% royalty from the pool to authors and publishers.  This means devaluation – readers can enjoy your book risk-free for less cost than a single copy purchase, and you earn a lower effective royalty rate for the read.  This contributes to a double devaluation of your books.  Readers become accustomed to consuming books for what feels like free, and the author is paid less per read.  Not all authors can make up the difference with higher unit consumption because there are only so many readers to go around.  And since when is a $4.99 ebook from a professional indie author too expensive?
  8. Royalty compression accelerates - Say goodbye to 70% ebook royalties.  Yes, every major retailer will continue to offer 70% list (60-80% if you work through Smashwords), yet effective royalty rates will drop.  The drop will come in the form of hidden tolls, taxes and so-called “opportunities,” such as the opportunity to raise the visibility of your book by paying the retailer for visibility; or by discounting the book to appear in a feature or special catalog; or discounting the book so that it can appear in a subscription service that can only list lower priced books that don’t break their business model.  The net effect on your income is that you’ll be paid less for each sale.  Many forms of royalty compression have existed since the start of the indie ebook revolution in the form of delivery fees, generous no-questions-asked product returns on the backs of authors (#Audiblegate anyone?), or royalty rules that drop royalties in half if you price under $2.99 or over $9.99.  Every major retailer will face pressure by their customers to enact more royalty compression so customers can read more books for fewer dollars.  If stores resist this move, they’ll lose more customers to Amazon.  Of course, if authors refused to sell their books anywhere their effective royalty rate dropped below the highest single copy rate of 60-80%, then retailers would be forced to maintain the high royalties.  But the cat is already out of the bag.  Too many indie authors followed the siren call of KDP-Select, and too many authors have shown themselves too willing to accept more compression if it helps them skip to the front of the line in the short term.  Once you surrender your power, it’s difficult to take it back.
  9. Advertising ROI drops further - Advertising is already ineffective for many authors, yet authors still throw good money after bad hoping to be among the lucky few who can crack the formula.  Because ads on Facebook, Amazon and Google utilize an auction model where the highest paid spot earns the best visibility, economic theory would dictate that authors will continue to bid on such ads until the effective ROI of the ad reaches zero, the point at which book sales can’t cover the ad expense.  But economic theory doesn’t know indie authors.  This mad scramble to the bottom of ad ROI is exacerbated by authors’ willingness to over-invest on loss leaders (such as series starters or a debut book) in the hope that they can make up the difference later with follow-on sales. 
  10. The mad dash to the bottom of advertising ROI undermines non-advertisers - Not all indie authors spend money on advertising, yet those who don’t advertise will continue to see their visibility marginalized by those willing to pay for visibility.   As I discussed last year, at Amazon their ad program is constructed to help advertisers leech off the brands of other authors.  You can test this for yourself.  Type your pen name into the search bar at Amazon and marvel at all the paid ad spots for other authors that appear at the top of your search results and mixed within.
  11. Self-publishing to receive increased scrutiny - As society comes to grips with the collision between free speech and its ugly cousins misinformation, disinformation and fake news (I’m talking truly fake, not quality journalism erroneously labeled as fake), public pressure will build to demand more curation and accountability for the platforms that enable its publication.  Facebook and YouTube, which are two of the largest self-publishing platforms are facing such scrutiny (when you post a video to YouTube or comment on Facebook, you’re self-publishing!).   If a self-publishing platform like Smashwords – or a retailer like Amazon – allows the publication and distribution of a harmful conspiracy theory or bad medical advice, should the platform or retailer be held liable when a reader believes it as true and drinks the proverbial bleach?  It’s a challenging question we’ve had to grapple with.  Our ethos at Smashwords is free expression, but per policy we will ban authors for publishing information we deem harmful to the public.  But who are we to decide, and where should the lines be drawn?  We don’t employ medical doctors or trained epidemiologists.  I didn’t start this business to squelch voices, but I didn’t start it to help authors publish bomb-making manuals either (which we’ve never allowed).  If you want to place a long shot bet on the next Black Swan event affecting indie authors, it could very well be that a retailer is found financially liable for what it allowed in its store from a self-published author, and as a result of the costly ordeal, decides it’s not worth the risk to allow such unfettered, freewheeling access to their sales platform.
  12. Mailing list development again a top priority for indies - The most important platform-building tool is your private author newsletter.  When readers subscribe to your newsletter, you own that relationship.  You can contact the reader directly on your terms without having to rely on a toll-taking intermediary that may inhibit or even prevent your ability to notify your current and prospective fans about your new release. When we surveyed authors this year who took advantage of our new patent-pending Smashwords Presales feature, one of the top reasons cited for using the feature was mail list development (the most common reason cited was sales channel diversification).  Many of these authors are offering their subscribers the opportunity to purchase their new upcoming releases early, before the general public.  It gives your most loyal readers a strong incentive to sign up and stay subscribed.
  13. Books become more important in 2021 - In 2020, millions of readers rediscovered the joys of reading.  This trend will continue through 2021 and beyond.  The pandemic is not over.  It's difficult to emotionally process trauma when we're living it.  Even after every last soul is vaccinated and this plague is eradicated from the earth, it will take years to heal from this collective trauma.  Books have always provided readers great comfort, pleasure, escapism and understanding.  I can't think of any time in the 55 years of my lifetime when books have been more essential to the healing, recovery and progress of humanity.  As an indie author, you are the creator of this magic we call books.  Your work is important now, and will become more important in the years ahead.  It doesn't matter if you write fiction or non-fiction, romance or self-help, you will help heal the world.

That’s it for my 2021 predictions.  Feel free to contribute your own predictions in the comments below. 

I wish you, your family and our indie community the best of health, happiness and prosperity in the year ahead.  

Here are links to my prediction from prior years:

Summary of Prior Publishing Prediction Posts by Mark Coker

2020 Publishing Predictions (Published December 31, 2019)
2019 Publishing Predictions
(Published December 31, 2018)
2018 Publishing Predictions (Published December 31, 2017)
2017 Publishing Predictions (Published December 31, 2016)
2016 Publishing Predictions (Published December 31, 2015)
2015 Publishing Predictions (Published December 31, 2014)
2014 Publishing Predictions (Published December 30, 2013)
and Huffington Post (Published January 7, 2014)
2013 Publishing Predictions (Published Dec 21, 2012)
2011 Predictions at GalleyCat (Published Dec 28, 2010)
10-Year Predictions at GalleyCat (Published Jan 4, 2010)

Smashwords 2020 Year in Review and 2021 Preview

Welcome to my 2020 Smashwords year in review and 2021 preview.  Can you believe we’ve been in business for 13 years?  We couldn’t have done this without your partnership and support.  Thank you!

Don't miss my annual companion post, 2021 Publishing Predictions – Pandemic Reshapes Publishing, Accelerates Consolidation

I feel a little uncomfortable talking about our accomplishments at a time when a pandemic is raging and so many are hurting.  So, I’ll keep things briefer than normal.

As I mentioned in my predictions post today, 2020 was a good year to be an indie ebook author.  Most Smashwords authors experienced a strong uptick in sales starting in March of 2020 due to millions of people spending more time at home because of government-mandated lockdowns, unemployment and personal choice.  

The growth moderated somewhat as people returned to work, but for most authors it will still be an up year despite a weak start in January and February.

What have we been up to at Smashwords in 2020?  Here are some highlights, as well as some broad stroke hints of where we’re focused for 2021.

Smashwords 2020 Milestones:

Books published – We now publish 556,800 books; up 5.7% from 526,800 books at the end of last year.

Words published – We now publish 19.7 billion words; up exactly one billion words, or 5.3% from 18.7 billion a year ago.

Authors served – We’re now serving 154,100 authors and publishers; up 5.3% from 146,400 a year ago.

Smashwords Highlights for 2020

Smashwords Presales - Our patent-pending Smashwords Presales feature, which we launched in December 2019, is getting good traction from early adopters.  I’m pleased by how sales are trending and I’m looking forward to introducing more authors and publishers to this exciting tool in 2021.

A key motivation behind Smashwords Presales is to help indie authors gain greater control over their publishing future.  Early adopters are discovering the power of ebook presales to thrill their readers, diversify their sales channels, build greater reader loyalty, and grow their private mailing lists.  Unlike preorders, which require readers to wait until a book’s public release date before they can enjoy the book, presales give your most loyal readers exclusive early access to your new releases in the form of public and private presales.  Readers love early access!  

As I discussed last year, Smashwords filed a patent with the US Patent & Trademark Office in 2019 describing our presales invention. The full scope of the invention is yet to be revealed in the current iteration of our Smashwords Presales offering.  We continue to work through the approval process with our patent examiner.  It’s been a fun and exciting process, though it’s too soon to know if the patent will be granted.  Patent or not, we’ll continue to build out this innovative technology for the benefit of indie authors.  In 2020 we also filed what’s known as a PCT, the first step in securing international protection for the invention.

Smashwords Store achieves fourth consecutive year of sales growth - Although our primary business is ebook distribution to major retailers and library platforms, we also operate our own ebook store.  Our store pays up to 80% list on ebooks, among the highest of any retailer.  With the exception of this pandemic year, most major ebook retailers have seen flat to declining ebook sales the last few years, but our little store has managed to buck the trend, turning in its fourth consecutive year of sales growth.  Some of our authors now sell more in the Smashwords Store than they sell at Barnes & Noble or Kobo.  Your mileage may vary month to month, but a key factor in your performance is to make sure your readers know that your book is available at Smashwords in addition to our other great retail partners.  Many Smashwords authors utilize our store as their personal sales platform.  They leverage our exclusive sales, marketing, and platform-building tools such as Smashwords Coupons, the new Smashwords Presales feature, Smashwords Interviews, and our popular Smashwords Alerts feature that notifies fans of new releases.  Thank you Smashwords authors and customers!

New curated merchandising at Smashwords Store - Everyone’s familiar with our annual sales such as Read an Ebook Week, the Smashwords Summer/Winter Sale and the Smashwords End of Year Sale (now running until January 1st).  These promotions are open to all Smashwords authors and publishers.  For a long time, we’ve wanted to add additional themed merchandising features to showcase and promote a broader diversity of authors, book categories and themes at the top of our store.  We have an ambitious promotions calendar planned for 2021.  Almost every week in 2021 you’ll see new curated features.  There’s a good chance we’ll publish an editorial calendar down the line so that authors can nominate books for consideration.  We’ll also look to showcase highly anticipated exclusive presale releases.  Our selection criteria focuses on an author’s track record of pleasing readers, as measured by their sales and downloads across the Smashwords distribution network.  By showcasing more categories and themes, we’ll create new opportunities for more authors and a lot of excitement for readers.

Smashwords introduces two factor authentication - To help authors and publishers protect access to their Smashwords accounts and payment settings, Smashwords introduced a two factor authentication (aka 2FA) solution.  2FA increases the security of your Smashwords account by preventing other persons from accessing your account, even if they've stolen your password.  You'll find the feature under the new "Account Security" section on your Account page.  Here's a direct link you can use to activate 2FA in your account - 2FA setup for Smashwords authors.

Author Education Day - With writers conferences cancelled around the globe, Smashwords produced our first ever online education conference called Smashwords Author Day.  Hundreds of authors attended, the feedback was excellent, and we’re encouraged to do another one in 2021.  Click here to view the full recorded sessions presented by Smashwords Marketing Director, Jim Azevedo.

Smashwords launches special Authors Give Back sale - For the period of March 20th through May 31st, we launched the one-time Authors Give Back sale, designed to help readers affected by pandemic lockdowns and subsequent job losses to access discounted ebooks.  The sale was well-received by customers and authors alike.

Smashwords goes virtual - For the first 12 years of our business, Smashwords maintained a physical office in Los Gatos, California.  Over the years most of our employees, including yours truly, transitioned to working from home offices.  When we decided to eliminate our underutilized office in February, we had no idea how propitious our timing would be.  The physical lockdowns that were disruptive to other office-bound businesses didn’t affect our operations.  It’s encouraging to see many large corporations, initially forced to allow employees to work from home during the pandemic, now plan to make greater use of teleworking in the future.  It offers team members more hours in the day for work-life balance.

Plans for 2021

One of the worst planning investments anyone could have made in 2020 was the purchase of a 2020 day planner or calendar.  COVID-19 and its spawn will continue to disrupt the global order in 2021, but we’re prepared to carry on with the business of helping authors publish, distribute and market ebooks.

Among new features, keep an eye out for a new book uploading experience in 2021.  We had hoped to complete this project in 2020 but alas did not.

We’ll continue to evolve our tools, processes and technology to make your publishing and distribution faster, easier and more rewarding. 

Thank you, Smashwords authors, publishers, customers, retailers, and libraries for your continued trust, support and partnership.  It’s our sincere honor to work with you.

We hope you and your family enjoy a safe and prosperous New Year!