Irish Indie Author Claire Farrell Reaches Global Market Writing Books She'd Want to Read

Irish indie author Claire Farrell eschews social media, preferring instead to spend her days writing books she'd want to read. When the recession hit hard, she made writing her full time job. Two years later, her books are selling so well she supports her large family on her writing income. As she told us in the interview below, she writes up to 5,000 words a day. She's a great example of why authors should distribute as widely as possible, keep writing and stay patient because you never know when or where your books will start resonating with readers.

[David Weir] We've noticed how well your books are selling and wanted to ask you to share some of your secrets with our readers. One thing we noticed was that Thirst, the first in your Ava Delaney series, is free. How important has that been to help your subsequent books sell?

[Claire Farrell] The Ava Delaney series didn’t sell anywhere outside of the UK Amazon store for the first few months. When I released the second book, I set the first as free, and that pretty much drew attention to it on various channels. Having a freebie was a huge kickstart into getting noticed, but that was last year, before the massive flood of freebies. My book made it into the top 100 freebie lists on Amazon and Apple (despite its truly awful average rating on Amazon at the time), which was pretty much free advertising. I knew that most people who downloaded the book would likely never read it, but I figured that some of those who were really interested in the genre would probably read it quickly. The emails started coming in that week about the series, and a lot of people would thank me for giving away my book; I was surprised because I was thanking them for taking the time to read it.

[DW] The covers to your books are beautiful and professional-looking in design; how have you achieved that?

[CF] So far, I’ve created the covers to my self-published work myself using Gimp and Photoshop and stock images. My only aim was to create something simple and recognisable. It isn’t the perfect solution, and I’m constantly on the lookout for the right artist to revamp the Ava Delaney series because they aren’t as professional as I would like.

[DW] You also maintain a blog. In what ways has blogging helped build your audience and sell books?

[CF] I’ve slowed down on blogging due to lack of time, but I don’t feel as though blogging helped build an audience. It’s more of a base for people to find me, and it’s less formal than a static website. It’s great for giving quick updates and answering random questions, but I rarely write anything truly serious or meaningful.

[DW] Can you share with us the way your books have taken off in different markets through different distribution channels?

[CF] I wasn’t paying much attention, to be honest. It sort of happened all by itself. I’ve never expected to sell more than a handful of books, but I’ve been publishing a series, and I think that’s probably the most important thing I did. I know that the majority of readers who contact me directly are those who found my books on Apple or Barnes & Noble. I know that having a freebie was massively important. I believe Apple have featured my books on the genre pages, and that probably helped, but I’m not sure how, other than one being a freebie, my books are being found anywhere else.

[DW] How important has Smashwords' Premium Catalog been to your books' success?

[CF] At first, I thought it would be useful to price match Thirst to a freebie. And it was. If I look at this as a business, availability and content are ranked right up there in importance, and I couldn’t upload directly to any of those retailers, so the Premium Catalog was a boon. But living in Europe made me fully aware of the additional benefits of having books as widely distributed as possible. At the time I began publishing, Irish people (and others) were charged an extra couple of dollars to buy a book which took a lot of impulse buys out of the equation. Smashwords alone was the perfect solution. Apple recently began selling modern ebooks in the Irish iBookstore, which was another avenue that excited me, but they also regularly feature self-published books. Their customers seem to be avid readers who enjoy low priced books and frequent releases. Barnes & Noble seem to do their own thing, but lately they’ve been chasing Amazon’s tail in terms of sales. I don’t sell much on the other channels, but I see the potential there—Kobo in particular.

[DW] What is your view of Amazon's KDP Select (exclusive) program and whether it will help or harm authors in the future?

[CF] Exclusivity can and will work very well for some writers. Especially in the early stages when the full force of interest is behind it. I can see why writers are tempted, and I know some people have blown up using Select, but I couldn’t imagine taking my books down from other channels. I have a series, so it would be a bit cheeky to take future books away from the people who have been reading all along, just because they don’t shop at a certain place. As a reader, it wouldn’t make me happy, but we all have big decisions to make.

On another level, it has taken me almost two years to sell books at the distribution channels. It happened almost overnight in the end, so you never know when luck will be in your favour. I don’t sell a massive amount of books compared to the well-known names, but I’m proof that you don’t have to. I’m thrilled about my progress so far, and I hate to think what I might have missed out on if I chose Select.

[DW] So when did you start writing?

[CF] I’ve always wanted to be a writer. Always. Before I could write, I would draw pictures and make up stories in my head about them. I let it fall by the wayside in my late teens for a number of reasons, and I regret that, but times changed. In 2010, a couple of weeks before my 27th birthday, I was pregnant with our fifth child and preparing to upload a book for the first time.

The recession had already struck bad. There had only been one Borders here, but my partner worked there contractually. The first company who employed him there had been liquidated, and people were losing their jobs everywhere. Borders was eventually shut down, and my partner was promised work by an English company, but things got so bad that they couldn’t afford to set up in Ireland again. We were pretty much screwed, and for the first time in years, there was no work out there.

We had both been born in harder times, and we had grown up through the boom. The pop was bound to happen, but we still weren’t prepared. We were surviving, but with four kids and another on the way, I needed more than surviving on benefits. I researched the heck out of anything I could do, and I began hearing about self-publishing ebooks. That kicked off the writing buzz again. I had to do something, and I finally began to see writing as a viable option. I feel like I truly started writing in the last two years, and we’re not screwed anymore.

[DW] Did you receive any special encouragement from anyone along the way?

[CF] Teachers in my primary school went out of their way to make a big deal of me writing stories. They gave me hope that I could do something that would make me happy. Obviously, my partner has been the most encouraging person. Without him, I wouldn’t have had the confidence to give it a real chance. I have five kids, including twins, under the age of eight. He wouldn’t voluntarily put up with them every morning if he didn’t believe in me. ;)

[DW] When did you realize you have a talent that resonates with readers?

[CF] I’ve never thought of it in those terms. I write what’s in my heart and head, and I hope for the best. There’s an audience for everything, and I’ve been lucky enough to find some readers who are open to the stories I share.

[DW] Did you try conventional publishing before turning to indie platforms like Smashwords?

[CF] No. It has never appealed to me. I don’t believe I have the temperament suited to it, and I don’t believe I write suitable books either. The indie scene was perfect for me. I don’t think either method is right or wrong, and I think the most success will probably be had by combining both, but neither are suitable for everyone out there. Both are hard work in different ways, and some of us are suited to one than the other.

[DW] You live in Ireland -- how important is your country in your writing, as in providing a specific sense of place?

[CF] I try not to rely on setting too much. I’m sometimes told I’m doing it wrong, but I skim descriptions when I’m reading, so I try not to dwell on them while writing. I prefer to let readers find their own world in the story. I’ve always wanted to write a world that anyone could step inside, no matter their circumstances. Because some people have asked more about the locations, I did use Pinterest to share actual pictures of places mentioned, but some readers weren’t happy about me ruining their own vision, which was actually kind of cool. In a non-descriptive sense, I believe Ireland, or at least, Dublin, is very present within the writing. I don’t live in a pretty place, and I think it translates in the writing. Also, the Irishisms. No editor will ever manage to clean my manuscript of the slang.

[DW] Do you have a sense of your audience, their demographics and where they are based?

[CF] There’s a good mix with UK and US readers taking the biggest shares—and yes, I use British English. Most are probably female, but it isn’t something I focus on.

[DW] You characterize some of your books as "romantic paranormal suspense." What key elements make a good novel of this type work?

[CF] I generally call the Ava books "urban fantasy." It’s a pretty broad term, but I can’t think of anything more appropriate. For me, the most important element in any novel is the characterisation. If people can relate to the characters, then they are likely to care to stay with them until the end. And I have to care about the characters to write about them.

[DW] Do you recommend any particular length?

[CF] I enjoy writing shorter pieces, but every audience is different. With so many people reading on smaller devices, short is great. It feels good to finish a story, especially when you don’t have much time to read. I think we’re finally getting back to a point where length isn’t necessarily a judgment on the value of a story.

[DW] Can you describe your writing process, i.e., how much time you spend each day, whether you write from a pre-formed plan or rather more freestyle?

[CF] I’m not a great planner, although I’ve discovered that writing a series can be a lot easier if you prepare a vague sort of outline at the very least. My writing process is a little frantic. I go into hermit mode and write until it’s done. My partner has been able to give up his search for work in order to help me find the time. My first drafts are probably more like incredibly detailed outlines, but for me, that’s a lot easier. I write a lot because I enjoy. I love first draft writing. My current “schedule” is 5,000 words a day, but I don’t publish everything I write. The editing takes so much longer (partly because you’re relying on other people’s help) that there just isn’t enough time right now because I’m focusing so much on my series. I don’t write every single day, but while a book is out with beta readers or an editor or proofreader, I focus on writing something new.

[DW] Do you have other advice for others who might hope to replicate your lead and follow their own dreams to write and publish?

[CF] I write books I want to read.

I haven’t aspired to be one of the top sellers. I didn’t have a backlist to publish. You probably won’t notice me on Facebook or Twitter. Most people will never remember my name, and I’m not part of any indie group. I just plod along, doing my own thing—right or wrong. I didn’t even tell my family I was publishing for a long time. I’ve probably never been in the top 2000 on Amazon, or top 500 on Barnes & Noble, but I’m supporting my rather large family right now, and that’s what matters to me. I’ve no idea how many books I’ve sold, and I think too many people get stuck on the numbers and rankings, but it’s more important that readers are satisfied if you want long-term results. You don’t have to be in the top 100. Making a living from fiction isn’t an impossible dream. I’m not the greatest writer, I don’t have the best covers, and I don’t have a platform. I’m not trying to write anything profound, but I write about things I care about and wrap them up in a world a reader can hopefully get lost in.

It’s taken a long time for my books to stand on their own two feet, but I’ve been too busy writing new stories to notice. That’s probably the key. Having a freebie (before Select) helped boost the series, but releasing new content has kept readers with me. The only advice I can give anyone is to be patient and dedicated, and find your audience. Keep writing, keep working on improving your craft, and treat people with respect. Don’t be afraid to take chances. Not every book has a huge market, but that’s okay. Not everyone can take the same path, so you find your own. The only true failure is in giving up.

[DW] Thanks, Claire!


Smashwords distributes Claire Farrell to the following ebook stores:

Apple iBookstore
Barnes & Noble
Diesel eBook Store
Kobo
Sony
Smashwords


David Weir is a veteran journalist who has published three books and hundreds of articles in various publications, including The Economist, Rolling Stone, and The New York Times. He currently covers technology for 7x7.com.

Smashwords to Distribute to Blio and Public Libraries Via New Distribution Agreement with Baker & Taylor

Smashwords today announced a distribution agreement with Baker & Taylor, one of the world's largest distributors of physical and digital books.

The agreement will expand distribution for nearly 100,000 Smashwords books to new devices and markets.

There are two components of the agreement. The first is distribution into the Blio online store and e-reading app. The second part of the agreement gains Smashwords authors and publishers distribution into the library market through Baker & Taylor's Axis360 service.

If you're not familiar with Blio, it's an online store (Blio.com) and also a popular e-reading application that has been pre-loaded on over millions of computers and devices. It powers the e-reading experience for laptops, desktops and tablets produced by Dell Computer, HP, Toshiba and T-Mobile, among others. Blio is also available in the Android store.

The agreement will also bring Smashwords ebooks to public libraries that subscribe to Baker & Taylor’s new Axis360 digital media platform. Axis360, which was launched last year, has been deployed by several top public library systems in the U.S. Dozens more libraries are converting to the platform.

Like all new Smashwords distribution channels, all Premium Catalog-approved Smashwords titles will gain automatic distribution to Blio and Axis360. As standard practice, we give authors and publishers at least 48 hours to opt out new distribution outlets if they wish, though I don't recommend opting out. This agreement will give authors and publishers important, incremental exposure for their books.

Smashwords authors and publishers will earn 60% of the list price for books sold through Blio, and 45% of the list price for books sold to libraries. The libraries are authorized to check out one purchased copy at a time. The books are DRM'd so they time out after the checkout period has expired.

Read the full press release in the Smashwords Press Room.

Please join me in welcoming Baker & Taylor to the Smashwords distribution network!

Smashwords Year in Review 2011

Welcome to my annual Smashwords year in review.

2011 was another strong year for Smashwords and our authors.

We're ending the year with over 92,000 titles published, up from 28,800 at the end of last year.

In my 2010 year in review post, 75,000 was my stretch goal for this year, so we beat it by a good margin.

Smashwords today supports over 34,000 authors and small publishers around the world, up from 12,000 a year ago.

I launched Smashwords four years ago with a crazy idea to change the way books were published, marketed and sold. I believed authors should have the freedom to publish directly to their readers without the interference of publishing gatekeepers. My ideas were not unique. The great Dan Poynter has been evangelizing the virtues of self-publishing for over 30 years.

I’d like to think we’ve helped bring Dan’s vision to life. Smashwords married self-publishing with ebooks, and we did it with a free platform that enabled any writer, anywhere in the world, to easily publish an ebook using nothing more than a word processor. We took the printing press – once under the sole dominion of the publisher – and put it in the cloud for all to use.

Unlike publishing services that earn their income by selling paid services to authors, Smashwords doesn’t sell services. Smashwords earns income only if we help sell books. We earn a small commission on sales equal to 10% of the list price for distributed books, and 15% of the net for books sold at our Smashwords.com retail operation. We think our approach aligns our interests with the interests of authors. The more we help you sell your book, the better we all do.

What started as crazy dream has become a reality. We've created a business that empowers authors to reach readers with their words. Smashwords authors collectively earned millions of dollars in 2011. More importantly, we've helped tens of thousands of authors enjoy the freedom to publish and get read.

When we launched in early 2008, many writers viewed self-publishing as the option of last resort. Self-pubbed authors were often ridiculed as "vanity" authors, and much of the most vitriolic criticism came from fellow writers. We don’t hear much of that anymore. Self-publishing is finally earning the respect it deserves.

Today, self publishing is the option of first choice for many first-time authors. Previously published authors - the backbone of Big Publishing, are also wading into the indie waters. Most start with their reverted-rights works. Then they catch the indie bug and release unsold works, and then they move on to original first releases. You might think of it as a graduated progression toward enlightenment that starts with baby steps before the big leap. More will take those first steps in 2012, inspired by other successful indies, possibly inspired by you.

I think few people in the traditional publishing industry comprehend how this indie author revolution will transform their business in the next few years. Their world is about to be turned upside down.

Unfortunately, when faced with simultaneous convergence of multiple big trends (the rise of ebooks, the rise of the indie authors, the shift of bookselling from brick and mortar to online), most big publishers have taken actions counterproductive to their own self-preservation. They're trying to grab author rights they don't deserve. They're trying to the hold the line at 25% net royalties for ebooks, which works out to a paltry 12-17.5% of list. That line can't hold when authors can earn 60-80% list by self-publishing, and enjoy better distribution.

The power of publishing is shifting from large publishers to authors. It's what I’ve predicted for four years, and now the trend is plain as day for anyone who chooses to see it. What happens when authors lose faith in Big Publishing? This was the subject of my blog post earlier this year, Nietzsche and the Downfall of Big Publishing, inspired by what I thought were interesting parallels with the Arab Spring.

2011 was the year indies proved they can out-publish, out-compete, out-distribute and out-sell the large publishers. Look no further than the bestseller lists at major retailers to see how the indie insurgents are scaling the lists. A few have even landed in the NY Times ebook bestseller list. We’ll see more of this in 2012.

The Indie Movement Reaches Adolescence

Indie authors, free of the legacy business practices and expense structures of the large publishers, are beginning to feel their oats.

If the indie author movement was a person, it would just now be entering puberty. It's in that gawky awkward pimply stage of life. The participants are filled with unbridled optimism for the future, confident they're writing the new rules for the future (and they are!).

Visit any writers message board and you’ll find writers plotting the future of publishing. Sure, the skeptical observer will find petty internecine squabbles reminiscent of high school, and copious uniformed opinions dripping with unfounded speculation, fear, greed, envy and aspiration. But dig deeper and you'll see something profound is happening. These newly fledged indie ebook authors (old timers are the ones with two or three years of experience) are piecing together the secrets of successful modern day publishing.

They’re sharing information, debating, arguing and leading the revolution that is upon us. We're witnessing the rise of the indie author collective, and the collective - warts and all – is giving rise to an intelligence and sophistication that will redefine publishing for the better.

The practice and professionalism of self-publishing grew by leaps and bounds in 2011 as indie authors collaborated. The best indie authors and small presses are publishing books of equal or higher quality than traditional publishers, and they're doing it faster, smarter and less expensively. Because the indies are earning 60-80% of the list price as their royalty, they're earning higher profits while producing a product that is more affordable and more accessible to more readers around the globe than ever before.

As some lucky indies strike gold (and let’s be realistic, most indies do not sell well, just as most traditionally published books don't sell well), they share their secrets in real time and inspire all authors to raise their game.

We're witnessing a publishing renaissance that will lead to more readers, more reading, greater literacy, and greater and more amazing published works than could ever have been realized under the old gatekeeping system.

As I've often stated here and elsewhere, traditional publishers are in the business of selling books, not publishing books. They acquire books they think they can sell. Nothing wrong with that, unless you’re an author whose work is not perceived as commercial, or you lack the fame of an established platform, or you’re a reader who appreciates more choice at less cost.

Writers write for reasons different than publishers publish, and it's at the nexus of these opposing motivations that the indie author revolution took root.

Today’s indie ebook author is at the right place at the right time. Print is in decline as reading moves to screens, brick and mortar fades, and book buying moves online.

The Free Printing Press Helps Shift Publishing Power to Authors

In the old world of two or three years ago, publishers controlled the printing press and access to distribution. Today, thanks to free ebook publishing and distribution tools like Smashwords, the printing press is free and available to any author, and distribution is open to all.

Retailers such as Apple, Barnes & Noble, Sony, Kobo, Diesel and Amazon deserve a lot of credit for welcoming indies to their virtual shelves. These ebook retailers are hungry to carry the books of indie authors because these books satisfy their customers (they sell). Retailers also understand that readers could care less about the name of the publisher on the book’s virtual spine.

The implications of this revolution are profound. Writers are now in charge. The writer decides when their manuscript graduates to published book. Readers decide which books are read.

Along with this power shift also comes the responsibility for authors to honor the best-practices of the best traditional publishers. Readers have little tolerance for anything less, and this is how it should be.

In this age of abundance where consumers have unlimited access to myriad high-quality sources of entertainment and knowledge - much of it accessible for free - writers need to up their game. Those who honor the reader by publishing great books will reach the most readers.

Book marketing has always been a word of mouth business. If you write a book that touches your reader’s soul, or inspires them with passion or knowledge, your readers will market your book for you.

There's never been a better time to be a writer. The opportunity to reach readers with words has never been greater.

Against this backdrop, you might understand why I’m so excited about the future I see for Smashwords authors and publishers. Our business is dedicated to helping authors stake their rightful claim to this bright future.

So let's turn the page to Smashwords...

If I were to sum up our focus in 2011 in one word, that word would be infrastructure.

Smashwords has been profitable for 15 months. We're reinvesting these profits to build a solid foundation upon which we’ll deliver continuous service enhances to our authors, publishers and retailers for many years to come.

Our development roadmap calls for over 500 minor and major service enhancements. Some are so minor you might not notice them. Others we think will knock your socks off. The Smashwords you see today barely scratches the surface of what we think is possible.

The bulk of our development effort this year focused on building a scalable technology infrastructure that can support one million or more published and distributed books (or, about 10X our current size). To enable this future, we invested heavily in infrastructure. Much of this infrastructure build-out is invisible to users, and if we do our job right it remains invisible. You don’t care how we build it, you just want what we build to work for you, whether you're an author, publisher, retailer or reader.

Notable Smashwords Milestones 2011

Before I review the plans for 2012, let’s summarize some of the notable business, technology and competitive highlights for 2011:

1. People - There are real people behind Smashwords. 12 months ago, we were barely three employees. Today we're 13. We've got a great team here in California, all of whom are dedicated to serving our authors, publishers, retailers and customers. We value every client.

2. Platform infrastructure - We completely rearchitected the underlying Smashwords platform this year to improve scalability, reliability, performance and security. As one of the Twitter founders once said, developing a fast-growing web service is akin to rebuilding a rocket ship in mid-flight. I grok that. The Smashwords platform has a lot of complex moving parts. Most of our last six months of development work has been focused on this infrastructure under the hood; the nuts, bolts, gears, glue and magic that hold our systems together. Most people never think about infrastructure except for when it fails. The proof in our pudding: Our infrastructure improvements have led to fewer website outages and faster page load times at the same time our catalog of books and traffic have exploded.

3. Distribution - We revamped our technical integrations with our retail partners so our books can flow to them faster and more accurately than ever before. Most of our retail partners also upped their games to accommodate our incredible increase in title volume. This is not to say everything is perfect. It is not. We view distribution as a never-ending work in progress, and we will continue to work in a constructive manner with all our retail partners to explore how we can improve our mutual performance.

4. Meatgrinder - We completed multiple updates to our Meatgrinder conversion engine, both in terms of scalability and also capability. On the scalability front, earlier in the year Meatgrinder was taking up to 30 hours to convert a single ebook. We tripled conversion capacity and now complete most conversions within three minutes. On the capability front, we improved Meatgrinder's ability to produce higher-quality books by adding greater styling control, automatically generated NCXes, and automatic error correction for some common formatting problems.

5. Categorization - We're in the final stages of a complete remapping of our categorization system to provide complete support for the latest BISAC categorization specifications. We're now supporting more categories than ever. Good categorization is a foundational element of what comes next in 2012.

6. Discovery - Multiple items here. Books aren’t purchasable unless they’re findable (or tripped over or stumbled upon or recommended by a friend or promoted), and that's where discovery comes in. We kicked off 2011 by adding support for long book descriptions (4,000 characters). We updated the shopping cart so it recommends up to 12 other books by the same author. In March, we launched the official Smashwords Facebook page which now gets thousands of visitors each week (thanks to the great volunteer efforts of Smashwords author John Low!) including many readers looking to discover new authors. In June, we acquired a block of 50,000 ISBNs from Bowker so we could give them away for free (ISBNs enable distribution to Apple, Sony and Kobo).

7. Reporting – We increased the frequency of our aggregated sales reporting from retail partners. We introduced a new downloadable spreadsheet that maps each quarterly payment to the sales behind that payment, and we made the data easy to query by author, retailer or title. For sales at Smashwords.com, we improved our email notifications so authors can more easily monitor more information about about their sales as they happen. Customers, too, now receive more complete purchase confirmations to help them access their books faster and easier.

8. Literary Agents – We updated our publishing platform so literary agents can now upload and manage the indie ebook efforts of their clients.

9. Globalization – On a percentage basis, most countries outside the US are just now entering the exponential growth phase. Their markets are where the US market was two, three or four years ago. Within a few years, the market for ebooks outside the US will dwarf the US market. We took a number of steps in 2011 to expand the global footprint of Smashwords ebooks. We signed an expanded distribution deal with Apple which increased our international coverage to Apple iBookstores in 32 different countries. Today, nearly half of our Apple sales come from outside the U.S (I’m surprised the media hasn’t picked up more on Apple’s impressive international success in 2011). We updated our payment and reporting systems to track VAT, which is handled differently by different retailers. Thanks to the volunteer efforts of Smashwords authors around the world, we released translated Smashwords Style Guides in German, French, Spanish, Italian (also the Smashwords Book Marketing Guide in Italian) and Dutch. A Bengali version is completed and a Danish version is in the works.

10. Smashwords Gifting - Our final big feature of the year launched on Christmas eve. We now make it easy for customers (and authors too, if they choose) to purchase ebooks as gifts. We think this is a nice complement to our popular Smashwords Coupon tool.

11. Competition - Many new ebook distribution competitors came on the scene in 2011. Back in 2008, we were the only game in town when we became the first ebook distributor to focus exclusively on self-published authors. Now you have choices. We feel honored that so many authors, small publishers and agents continue to choose Smashwords over the competition.

The ebook market remains in an exponential growth phase. 2011 will probably show ebooks at 20% of the US book market, up from 8.3% the year before and 3% the year before that. Based on preliminary post-Christmas sales results I’ve seen for Smashwords books at Apple, B&N and Sony, I think 2012 could see ebook market share in the US rise to between 40 and 50%. I expect many more competitors will come online in 2012 and 2013. I've been in technology for the last 20 years, so I'm intimately familiar with the inevitable boom and bust cycles of things touched by tech (and I have the old scars to prove it). Ebooks are in the boom phase now, but they cannot continue the torrid pace of growth. The new competitors and the noise they create will draw more authors, books and readers into the market, and will act as a growth catalyst for a couple years. When the exponential growth ends and the bust comes (and yes, it will come), some of these new competitors will disappear. Any one of us could disappear if we fail to build profitable businesses that add measurable value to those we serve.

In 2011, the most formidable competition came from Amazon, which has been on a multi-year rampage to disintermediate anyone or anything that stands between Amazon and their target customer. Three weeks ago Amazon launched KDP Select, a new opt-in service that represents their boldest broadside yet aimed at competing ebook retailers. KDP Select requires participating authors to remove their books from all retailers except for Amazon. I blogged why I think KDP Select is bad for authors (here and here). While most Smashwords authors share my view that exclusivity is a dangerously slippery slope to trod, thousands of authors enrolled titles in the Amazon program before Christmas. Of the approximate 65,000 or so books enrolled in KDP Select, nearly 6,000 books came from - and disappeared from - Smashwords as a result.

Despite the punch in the gut from Amazon, we still managed to grow our title count during the month of December (now over 92,000 titles), albeit at a lower rate of growth than we’re accustomed. Preliminary holiday sales results indicate our remaining authors enjoyed an impressive sales bump in the first few days following Christmas at Apple (up over 70%), Barnes & Noble (up over 100%) and Sony (up 30%). I don’t yet have results from Kobo and Diesel. If the record-breaking post-Christmas bump follows the same pattern as last year, sales will moderate a little in the next two weeks and then stabilize and begin growing again at a new normal that’s measurably higher than the pre-Christmas sales levels. These strong holiday sales, and the tremendous growth we’ve seen this year both in the US and internationally only solidify my conviction of the importance of authors maintaining broad and diversified distribution. Every retailer – even the smallest – works to introduce authors to new readers they wouldn’t reach otherwise. Yes, distribution is our business so my view is biased. I believe in the value of retailers and the distributors who serve them.

Someday, if the Amazon powers see fit, we’ll distribute more of our titles to them as well (we’re currently distributing about 200 titles to them). We’d much prefer to engage with Amazon as a partner rather than as adversary. We think we and our authors can help make their business more successful, just as we’ve helped our existing retailer partners grow their businesses. A good distributor helps retailers ingest and list more titles more efficiently and at less cost than operating their own self-pub platforms.

What's Coming to Smashwords in 2012?

Smashwords is an ebook distributor, so our priorities will be guided by this focus. Service enhancements will concentrate on making our books more available and more discoverable by readers.

In 2012 we’ll shift more of our attention from backend infrastructure to customer-facing user experience. The new features and service offerings will leverage the new infrastructure foundation we built in 2011.

Here’s a brief sampling of what you can expect from Smashwords in 2012:

Discovery – We’ll complete the BISAC recategorization mentioned above very soon, and from there we’ll turn our attention to our Smashwords.com retail operation and give it some much overdue love and attention on the discovery front. We’ll add more search options to the Smashwords home page, more alternative discovery paths to help readers find books they'd enjoy reading, and we’ll revamp the algorithms driving our best-seller lists so they more accurately reflect the collective intelligence and reading preferences of our customers. Once that initial stage is completed, we’ll leverage some of these new features on a couple secret projects that might surprise some folks, one of which will help our retail partners identify Smashwords books that deserve extra promotion.

More Distribution - We'll add more distribution outlets in 2012, the first of which we'll probably announce in the next two months (working on the technical integration now).

Faster Distribution – We currently ship to retailers once a week. In 2012, we’ll phase in more frequent shipments to those retailers that can support it so books appear faster and metadata changes reflect faster. This will give authors greater control over their distribution.

Faster Reporting - Some Smashwords authors have already noticed that we've increased the speed and frequency of retailer sales reporting over the last two months. We will continue to make incremental progress here for the retailers that can support it.

Faster Premium Catalog Approvals - There are two variables influencing Premium Catalog approval times. The first variable rests with the author or publisher, and that's the responsibility to upload a book that's formatted to the Smashwords Style Guide. A well-formatted book gets approved on the first review. We'll continue to improve the Smashwords Style Guide and other resources to help make it faster and easier for authors to format their books. The second variable is on our side, and that's the vetting process where we manually review each title for adherence to the Style Guide and the Smashwords Terms of Service. We've added two new recent hires to the vetting team and will add additional staff in the new year as required. The goal is to get approvals down to under three days. The faster the approval, the faster we can distribute you to retailers. In addition to throwing people at the challenge, we'll also continue to develop new automated tools to accelerate the process.

More Control - There are several planned features related to providing authors greater control over more aspects of their publishing, distribution and metadata. One such feature planned for the second half of 2012 is Smashwords Direct, which will give authors the option to upload their own pre-formatted .epub files (and other formats) if they choose. Also look for greater control over foreign currency pricing.

My thanks to you

As another fabulous year draws to a close, I want to express my sincere appreciation to every Smashwords author, publisher, reader, retailer and service provider partner (shout out to the awesome pros on my “Mark’s List” who help their fellow indies with low-cost formatting and cover design services). We created this for you.

With your trust, confidence and support, we will continue to serve you. When you utilize our distribution services, you’re directly supporting our mission to reshape book publishing for the benefit of authors and readers everywhere.

Happy New Year, and safe holidays. Peace all.

Smashwords Authors Experience Blowout Christmas at Barnes & Noble

It looks like it was a blowout Christmas for Smashwords authors at Barnes & Noble.

I'm looking at the early sales results for December 25 and December 26 for the titles Smashwords distributes to Barnes & Noble. For these first two days, sales are running about 225% (125% higher) of the daily sales average for November through mid-December (12/29 update: sales are remaining strong. 12/28 sales, three days after Christmas, were 260% of previous 30 day rate, or up 160%).

While it's too early to draw definitive conclusions, I think the numbers speak well for B&N headed into January.

FREE Smashwords books were also popular with B&N customers, racking up hundreds of thousands of downloads in two days. At the current download rate, our authors with free books will yield close to 10 million downloads in the next 30 days from B&N alone.

In the next couple days I should have sales results from the Apple iBookstore, where Smashwords authors were already enjoying a surge in sales over the last two months. Early reports of iOS activations (the operating system for the Apple iPhone and iPad) indicate Santa stuffed a lot of stockings with iPhones and iPads too.

The numbers also speak well for the importance of authors maintaining broad, uninterrupted distribution to multiple ebook retailers. Earlier this month, Amazon played the Grinch who stole Christmas when it convinced thousands of authors to remove approximately 65,000 books from Amazon's competing retailers two weeks before Christmas. Thankfully, only about 5,000 of those books came from Smashwords authors, with most Smashwords authors heeding my warnings (here at the Smashwords blog and also at the Huffington Post) and their own gut instinct that exclusivity is generally a dangerous idea. I wonder how many of these authors will feel duped? I imagine some will do well by their decision, but I suspect most will have shot themselves in the foot.

If the patterns we observed last year hold true again, we'll see a massive stepping up of the sales rates across all retailers in the first few days following Christmas, followed by a week or so of moderation, and then a new normal going forward that is significantly higher than the sales rate for the weeks and months immediately preceding Christmas.

Here are the top 20 Smashwords bestsellers at Barnes and Noble for the two day period of December 25 and 26:

Smashwords Top 20 at B&N (total dollars), December 25-26

1. Demon Dark - Penelope Fletcher
2. Fate (My Blood Approves Series #2) - Amanda Hocking
3. Wisdom (My Blood Approves Series #4) - Amanda Hocking
4. Arousing Love - M. H. Strom
5. My Blood Approves (My Blood Approves Series #1) - Amanda Hocking
6. Mud and Gold - Shayne Parkinson
7. Voodoo Kiss (Ancient Legends) - Jayde Scott
8. Shotgun Groom - Ruth Ann Nordin
9. Fires of Prophecy: The Morcyth Saga Book Two - Brian S. Pratt
10. The Witch's Ladder - Dana Donovan
11. A Job From Hell (Ancient Legends) - Jayde Scott
12. The Queen's Blade II - Sacrifice - T C Southwell
13. Immortal - Lauren Burd
14. Demon Day - Penelope Fletcher
15. Settling the Account - Shayne Parkinson
16. Doomed (Ancient Legends) - Jayde Scott
17. A Second Chance - Shayne Parkinson
18. Warrior Priest of Dmon-Li: The Morcyth Saga Book Three - Brian S. Pratt
19. The Mists of Sorrow: The Morcyth Saga Book Seven - Brian S. Pratt
20. The Queen's Blade III - Invisible Assassin - T C Southwell

Congrats authors, and a warm welcome to the millions of readers who will discover and enjoy Smashwords books this holiday season.

Apple iBookstore Expands Smashwords Ebook Distribution to 26 New Countries

Apple this week dramatically expanded the international reach of Smashwords ebooks by distributing our catalog to 26 new iBookstores across Europe and Scandinavia.

Prior to this week, over 50,000 Smashwords ebook titles were available in Apple iBookstores in the US, Canada, U.K., Germany, France and Australia.

All Smashwords authors, publishers and agents enjoy immediate access to this expanded distribution.

Below is the list of new iBookstore countries now reachable through Smashwords.

Austria
Belgium
Bulgaria
Cyprus
Czech Republic
Denmark
Estonia
Finland
Greece
Hungary
Ireland
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Norway
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
Switzerland

Go Global With Smashwords

Within the next few years, the global market for ebooks will likely eclipse the US market. Already at Smashwords, I can report that prior to this news, almost half of our iBookstore sales were coming from outside the U.S.

Although the US represents the world’s single largest ebook market today and is still growing rapidly, the US market is also the most mature. Growth rates in the US, where the ebook market has more than doubled each year for the last several years, are likely to slow thanks to the law of large numbers (you can't keep doubling forever!). I expect the US will end 2011 with ebooks accounting for 15-25% of trade book sales.

Contrast this with markets outside the US, where ebooks will account for probably between 1% and 5% of the market this year. These markets are only now beginning to enter, or will soon enter, exponential growth phases that will take them to 15-25% the next few years assuming their growth trajectories follow similar patterns seen in the US and other English speaking countries.

Indie authors will reap a two-fold benefit. They now have access to more markets, and these markets will grow faster than the U.S. in the years ahead.

The necessary ingredients for this growth include availability of affordable ebook content in concert with low-cost e-reading devices (dedicated e-readers, multi-function tablets like the iPad, smart phones, personal computers) powered by local-language ebook stores.

This is exciting news for indie ebook authors, not only for authors here in the US but also for indie authors in these new territories. Because Smashwords is an Apple-authorized global aggregator for the iBookstore, authors, publishers and literary agents around the world can use Smashwords to quickly and easily distribute local-language ebooks into their country's iBookstore, as well as to Apple iBookstores outside their country.

My thanks to our friends at Apple for introducing Smashwords books to these new markets.

If you’re not yet distributing with Smashwords, visit our How to Publish and Distribute Ebooks with Smashwords page. In addition to distributing to the 31 Apple iBookstores, we also distribute your book to the online ebook stores operated by Barnes & Noble, Sony, Kobo, the Diesel eBookstore and to major mobile app platforms such as Stanza and Aldiko.

Smashwords Partners with ScrollMotion to Deliver Indie Ebooks to Major Mobile App Marketplaces

Smashwords books are coming to an app store near you.

Today we announced an agreement with ScrollMotion that will transform over 33,000 Smashwords Premium Catalog ebooks into individual mobile apps for distribution to the largest app marketplaces for smart phones, tablets and other mobile devices.

The relationship will gain Smashwords authors and publishers free entry into the app marketplaces for Apple, Android, Windows Phone 7 and WebOS.

Our partnership with ScrollMotion expands the distribution of our books to the largest, fastest growing app marketplaces, and will enable Smashwords authors and publishers to reach new readers.

According to Gartner Group, worldwide smartphone sales will reach 468 million units in 2011, a 57.7 percent increase from 2010. Apple, Android and Windows Phone 7 above power 63 percent of all smart phones in 2011, and this will rise to 85 percent by 2015. Separately, in the all-important tablet market, which Gartner estimates will reach 69 million devices this year, Gartner predicts Apple, Android, WebOS will collectively power over 92 percent of tablets sold. Gartner estimates sales of tablets will grow to 294 million units by 2015, of which Apple, Android and WebOS are expected to command a collective 89 percent market share.

Over 47,000 books are published at Smashwords today, with over 5,000 new releases in the last 30 days. Over 34,000 of these titles have been accepted into the Smashwords Premium Catalog for distribution to major retailers.

Shipments to ScrollMotion will commence on Friday, and titles will begin appearing in the app marketplaces later this month. All Premium Catalog books are automatically opted in for ScrollMotion distribution. To modify distribution preferences, log in to your Smashwords Dashboard's Channel Manager. Like all Smashwords retail relationships, authors and publishers will earn 60 percent of the list price.

Read the official press release here.

If you're not yet working with Smashwords, learn how at our page, How to Publish and Distribute with Smashwords.

Smashwords Adds Longer Book Descriptions

You asked, we listened. Smashwords today added support for longer book descriptions.

Our previous book description supported only 400 characters. Many authors found this limiting. We now offer an optional second, longer description that supports 4,000 characters.

The longer descriptions are available immediately for all new book uploads.

For our current 30,000 + titles (yeah! we surpassed 30K the other day!), you can add the new descriptions by clicking to Dashboard: Settings.

In the next few weeks, the longer descriptions will begin appearing at Smashwords retailers such as Apple, Barnes & Noble, Sony, Kobo and Diesel.

If your book is already approved for the Smashwords Premium Catalog, your longer book description will trigger the "Resubmit this book for premium distribution" button. Click the button. This will put your description into our fast track queue for approval (see the approval requirements below). While the description sits in the queue, the previous version will continue to ship to retailers. Some of our retailers support both short descriptions and long descriptions in their feeds, so we'll provide both if available.

After you upgrade your description with the addition of the longer version, we'll automatically ship the longer version to retailers that support it.

As I write this, the feature has been live for only a few minutes and already I see Smashwords author DN Charles from Australia has become the first author to create a long description for their book, Child of the Moon.

As with the previous descriptions, there are some basic dos and don'ts we and our retailers ask you to follow.

First, the "don'ts":

• Don't assume the reader has read your short description
  
• DON'T WRITE THE DESCRIPTION IN ALL CAPS. AVOID ALL CAPS.
• Don't include email addresses or web addresses
• Don't add Smashwords coupon codes (our retailers cannot honor them)
• Don't mention limited-time pricing or other promotions
• Don't mention our retailers' competitors in the description (or in the book for that matter)
  
• Don't insert fancy glyphs or symbols, because these will turn into "?" marks at retailer sites
• Don't make promises the book or the retailer cannot keep
  

And here are some recommended "Dos":

• Do make it a complete, standalone description
• Do make a good first impression. Write snappy, articulate copy that hooks the prospective reader from word one. I'm often surprised when I see authors write an uninspiring description such as "This is my poetry. I hope you like it." J.K. Rowling or Dan Brown could get away with that, but you can't. Take advantage of your description to celebrate your book. Sell!
• Do check your description for typos and grammatical errors (common sense).

The longer descriptions are consistent with our ongoing effort at Smashwords to help our authors, publishers and retail partners improve the visibility and discoverability of Smashwords books. These improvements also improve discoverability of your books at Smashwords.com and in search engines.

In the last few weeks, we've begun distributing author bios and other enhanced metadata to some of our retail partners. At Barnes & Noble, for example, we're now shipping author bios and double BISACs (BISAC codes are industry-standard category identifiers that help retailers place the book on the proper virtual shelf). More to come as we continue evolve our enhanced retailer metadata feeds.

Smashwords Year in Review, Plans for 2011

Welcome to my annual Smashwords year in review where I report our progress and plans for the new year.

2010 was a breakout year for us. It was also a breakout year for our indie ebook authors and publishers.

Exactly two years ago we were publishing 140 books from 90 authors. We thought that was fantastic for our first year in business.

Last year at this time we hit 6,000 books from 2,600 authors and publishers. We were thrilled.

Today we're listing 28,800 books from over 12,000 authors and publishers. We released 3,200 new ebooks in the last 30 days alone. We're pinching ourselves now, not just because of how far we and our authors have come, but because we know we've barely scratched the surface of the possible.

Six years ago Smashwords was a jumble of simple ideas scribbled on a sketchpad. Today it's a reality.

My original idea was simple: Create a free ebook publishing platform that would allow any author, anywhere in the world, to instantly publish an ebook at no cost. Authors, I believed, should have the right to publish whatever they want, and readers should have the freedom to decide what's worth reading.

From the beginning, just about every conceivable odd was stacked against us. When we launched, ebooks accounted for about 1/2 of 1% of the overall book market; self-publishing was considered the option of last resort for failed authors who couldn't find an agent or publisher; and self-published books weren't selling. All the ingredients for a successful business, right? I thought so. I had a hunch all of this would change because it needed to change.

I believed traditional publishers were squandering the future of books. After decades of consolidation, big publishers began sucking the soul out of publishing. They began judging the merits of a book through the myopic prism of perceived commercial potential - a recipe for dumbing down publishing with more milquetoast celebrity books. Wanna buy a book from Justin Bieber, Snooki or the Kardashians?

The shift to this commercial filter meant that authors who otherwise deserved publication were denied the opportunity, therefore depriving readers of their ability to enjoy these books. If you value books, and if you believe as I believe that books are essential to the very future of mankind, then it's time to rise up and do something about it. I've always had this higher purpose in mind with Smashwords. If you look at our logo, the fist symbolizes the indie author revolution.

We're also building a business as we try to change things for the better. In my 20+ years of technology entrepreneurship, I've always been drawn to startups that have the power to effect positive social change. This was certainly the case with my last startup, Bestcalls.com, where I helped level the playing field for small stock market investors.

Smashwords, to me, is the startup of a lifetime. Every day I'm excited to be part of it. Smashwords will only ever be as great as the authors and publishers we enable. Considering the vast reservoir of creative talent we have yet to help unleash upon the world, I'm confident our best days are ahead of us.

Back to the business. What a difference a couple of years make. Today, ebooks account for nearly 10% of trade book sales. This number will probably double in 2011, and as I predicted over at GalleyCat earlier this week, I think on a unit volume basis, ebooks will account for one third or more of all book consumption come December 2011. I never imagined this would happen so fast, and it's possible I'm underestimating the growth this market will experience in the coming year.

After 31 months of advocating the indie ebook gospel, I still wake up every morning invigorated by our possibilities and potential. We attack every day with the tenacity of a newborn startup. Like I said last year, and I'll say it again, we're just getting started.

Some of the highlights of the year in addition to the numbers I shared above:

Distribution highlights:

• Smashwords is now one of the largest distributors by title count of indie ebooks to retailers such as Apple, Barnes & Noble, Sony, and Kobo
• I'm very pleased with the support these retailers have shown our indie authors and publishers. Retailers are starting to earn real profits from our indie ebooks. This is cause for celebration for all indie authors and publishers, because it means access to more distribution in the future.
  
• In April Smashwords became one of a small handful of global aggregators serving the Apple iBookstore. On launch day of the iPad, we had over 2,000 books in the Apple iBookstore. When Apple launched the iBookstore in Australia, we had nearly 10,000 books in the store.
• In December we successfully transitioned all of our retailers to agency pricing. This means authors and publishers set the price at retail, and earn 60% of the list price.
• Preliminary sales reports from Apple and B&N indicate that sales tripled in the couple of days following Christmas. It will be interesting to see how these numbers moderate over the coming weeks.
  

Traffic to Smashwords.com:

• In the past year, people visited Smashwords from 227 countries
• 59.6% of visits came from the U.S.; 40.4% came from outside the U.S.
  
• Top 5 countries (U.S., U.K., Canada, India, Australia) accounted for 80% of visits
  
• Top 20 countries accounted for 90%
• Top 40 countries accounted for 95%
• Millions of people visited Smashwords.com this year for the first time
  
• Smashwords.com receives millions of page views each month, and our traffic continues to grow each and every month.
• Yesterday, December 30, was an all-time record for number of visits to Smashwords.com
  

Business Highlights

• Way back on October 7, 2009, when we reached 150 million words published, I set a crazy goal to reach one billion words by December 31, 2010.
• On October 20, 2010, we reached one billion words nine weeks early.
• Today, December 31, 2010, we've beat the goal by over a quarter billion words.
• We redesigned our web site infrastructure this year to support faster performance and greater reliability. The site's uptime and performance is excellent now, and has been scaling very well as we achieve record traffic each month.
  
• We made multiple enhancements to our Meatgrinder conversion system this year, and as a result the quality of our ebook outputs is better than ever.
  
• A few months ago we reached profitability. Nothing spectacular, and not enough to pay me a salary yet because I'm reinvesting any excess cash back into the business. What this means is the business is now fully self-sustaining and we're adding staff. We're here for good. We accomplished this while also paying some of the highest royalty rates anywhere. Unlike other services that make much of their income by charging authors upfront fees for publishing packages, set-up, conversion, and other services of nebulous value, our services are free and accessible to any author. We believe our interests are aligned with our authors and publishers. The platform we created allows us to take a risk on every author. If we don't sell anything, we don't earn our commission.

What's coming in 2011:

Competitive front: Fight to survive and thrive. Despite our initial traction in the marketplace, our future is by no means guaranteed. We will continue to pursue our business plan with vigor because there's no room for complacency. We've already seen multiple upstart competitors try to launch Smashwords knockoffs. Good luck to them. They'll soon learn how tough it is to make a buck in this business. Have I mentioned I'm competitive?

Distribution: We love ebook retailers because they're expert at putting our ebooks in the hands of readers. Over the next 12 months we'll continue to add more retailers to the Smashwords distribution network, while working to build broader and deeper relationships with our existing retail partners. We understand that authors and publishers often have the option to go direct to retailer. Our mission is to make it more profitable for authors and retailers to work through us. We think we add a lot of value to the ebook supply chain for authors, publishers and retailers alike. If we don't add value, we don't deserve to be here.

Meatgrinder: As I mentioned above, we made a lot of enhancements to Meatgrinder. We'll continue to iterate and improve it in the months ahead, especially in the area of automated TOC detection. We'll also add more error-correction.

Premium Catalog reviews: For most of the year, we managed to maintain one week or less turnaround times on Premium Catalog reviews, though a few times we got backlogged up to two weeks. We're working on plans that should help accelerate Premium Catalog approval cycle times, so we can help you get your book in the catalog and distributed to retailers faster with less back and forth.

Surprises: We have several surprises planned for 2011. I can't tell you what they are otherwise they wouldn't be surprises.

Stretch Goal: Our goal is to hit 75,000 indie ebooks published at Smashwords by December 31, 2011. This means we need to add 47,000 books in 12 months. That works out to 130 new releases each day or one new book every 11 minutes.

Ongoing Education: While I sometimes criticize some of the practices of big publishers, I continue to have enormous respect for professional publishing and the people in publishing. Although we make it easy to self-publish an ebook (some have said "too easy"), we don't make it easy to produce a book worth reading. That responsibility lies in the hands of the author who must now step up to the plate and become a professional publisher. They must adopt proven best-practices of publishing, such as professional editing, revision and proofing prior to publication, and professional cover design. We'll do our best in the coming year to continue to help authors and publishers improve the practice of publishing so they honor their readers with books worth reading.

Smashwords Direct: Right before Christmas, we began working with a large publisher of public domain books to convert and distribute 10,000+ titles across the Smashwords distribution network (the numbers above don't reflect these direct titles). Since we don't accept PD titles at our Smashwords.com retail site, these titles will only go to retailers. In the year ahead, we'll look for additional opportunities to help other large publishers take advantage of our expanding distribution reach.

Smashwords.com Refresh: We're noodling on multiple ideas to give the site a refresh so we can do a better job of showcasing the higher quality titles, as determined by real customer downloads, purchases and reviews. Ever since we launched in May 2008, it was important to me that every new Smashwords book receive its 15 minutes of fame on the home page as a new release. This gives every book a fair and equal chance to find its first readers, and if the book is truly wonderful, the readers can take it viral from there. The downside of this democratized feature process is that everything new hits the home page, and often the work isn't ready for prime time. It might be missing a cover image, or the author didn't properly format it to the Style Guide. Our current policy of showcasing all the latest releases - even the obviously poor ones - ultimately gives first time visitors a warped perspective of the true talent captured within the Smashwords catalog. Another issue I want to tackle is adult content. We're big supporters of free speech, but we often receive complaints from visitors and authors shocked by some of the erotica images they see on the home page - images they'd never see on the home page of another bookstore. We also have kids who hit the home page for their first visit, and such content isn't appropriate for them either. We're working on ideas in this regard that can strike a fair balance, while still allowing our professional erotica authors and publishers to get their books exposed to more customers who are searching for that content. Stay tuned as we work to strike a good compromise that benefits all parties involved.

Responsible Adult Content Publishing: There have been reports that Amazon has clamped down on incest-related titles, and some authors and publishers worry this is the start of a trend toward increased retailer censorship. At Smashwords, we've always articulated a very clear policy in our Terms of Service regarding acceptable content, and we were probably one of the first to define a clear policy against publishing erotica that includes underage characters, even if those characters are bystanders in the story. If the story is intended to titillate, kids don't belong in it. Simple. We've started encouraging our erotica authors and publishers to clearly state inside their books, if not in the book description, that all characters are 18 years of age or older. I think it's important that responsible erotica authors and publishers self-enforce these reasonable guidelines, otherwise retailers will be forced to think twice about carrying such content. Smashwords was founded with a fierce belief in free speech and no censorship, and our conviction on this issue remains true, but that doesn't mean anything goes.

For those concerned about censorship in the retail channel, I can happily report that I'm aware of fewer than a dozen titles that have been outright rejected by our retailers, and in some of those cases the content violated our Terms of Service anyway. In other cases, the authors were able to make minor modifications to cover images to satisfy retailer requirements. This works out to less than one thousandth of one percent of our titles. I think the small number reflects not only the responsibility shown by erotica authors and publishers to comply with our Terms of Service, but also the benefit of our manual vetting process at Smashwords for Premium Catalog distribution. I know our retailers appreciate we self-police. We're also thankful to Smashwords readers and customers who report potential violations to us, so we can work with the author/publisher to proactively remove or fix the content.

My New Year's Thanks to All

To the 12,000+ authors and publishers who entrusted your precious books to Smashwords over the last 2.5 years, and to those of you who stood by us despite our many inevitable growing pains, and who always believed in our commitment to do right by you, thank you for believing in us. We will continue to run our business with the highest ethical standards and transparency as we always have, and will work to earn and deserve your continued trust every day. Happy New Year!

Smashwords Puts Authors and Publishers in Control of Pricing

Our authors and publishers spoke (and some wrote, screamed, begged and politely asked), and we listened.

Effective today, all Smashwords retailers are pricing Smashwords books at the price set by the author or publisher. No more discounting.

It also means we have significantly increased the royalties we pay our authors and publishers.

To summarize how we got here, and what it means to Smashwords authors, publishers and readers, let's take a stroll down memory lane to review how books have traditionally been priced, distributed and sold.

For most of the last several decades, the book industry worked under a wholesale pricing model. A publisher would ship their books to a distributor or wholesaler, who would then sell the books to brick and mortar bookstores. In advance, the publishers and their supply chain partners would work out a discount schedule in which the retailer would purchase the book for some percentage off of the suggested retail price.

For example, a retail bookstore might purchase books from the wholesaler/distributor for 50% off of list price, which means the retailer would pay $15 for each $30 list price book they sell. The retailer could then set the price. Most retailers, taking advantage of their close proximity to the customer and their understanding of consumer behavior, had the ability to discount the book to such a price that they could achieve their objective.

For example, if a retailer's objective was to maximize the per-copy profit, they might sell the book at list price (when I was Brazil in October, I learned some airport bookstores sell print books for more than the list price). If the retailer wanted to maximize their overall profits, they might sell the book at a discount and make up the difference in increased volume. If a retailer wanted to attract buyers into their store, they might even sell the book at below cost.

To the author and the publisher, the discounting didn't make a difference, because the author and publisher were paid a fixed percentage of the suggested list price. Retailers liked this pricing model because it gave them the flexibility and freedom to use price to help serve their customers and serve their bottom line. Everyone was happy.

Then ebooks came on the scene, and the pricing of ebooks followed the same general wholesale model, only rather than shipping physical copies of a dead-tree book to a warehouse or distributor, the publishers or their distributors would ship a single digital copy of the book to the retailer, and the retailer would make digital copies each time they sold one.

Retailers, responding to customers who expected to pay less for ebooks than print books, started aggressively discounting. Many publishers dreaded such discounting for fear it would devalue books, or would cannibalize print book sales. Then Amazon, in an effort to serve their customers, started selling many best-seller ebooks for under $9.99 - for less than what Amazon had to pay the publisher for the book.

An ebook price war broke out, and other ebook retailers tried to match Amazon's price.

Now remember, in the print world, publishers didn't care too much if a retailer discounted the book, since the publisher is paid based on a predetermined discount off of list. Publishers also understood that if the retailers couldn't sell through their inventory of books, those books would be returned to the publisher for a full refund. So the discounting double-benefited the publishers.

You might think the publishers would have been happy that Amazon and other retailers were pricing books at below cost. The low costs drove up demand, helped accelerate the growth of the ebook market, and helped the publishers sell more books.

But no, the big New York publishers were not pleased. They feared that Amazon and other retailers, by pricing their books under $10.00, were devaluing books and setting an inappropriate customer expectation that ebooks should be priced at $9.99 or less. Publishers feared Amazon was exerting too much control over prices, and further feared that some day Amazon would come back to publishers and demand greater discounts, thereby permanently lowering the publisher's list prices and profits.

When Apple came on the scene in April 2010 with a new pricing model known as "agency," one in which the publisher set the price and Apple, acting as a sales agent, would not discount, five of the big six New York publishers jumped for glee. Finally, they thought, Apple would be their savior - their counterbalance - to Amazon's increasing influence in the ebook business. Publishers also appreciated that Apple would pay them 70% of the list price, as opposed to the traditional 50% or less that they earned under the conventional wholesale pricing model.

So the five big New York Publishers - now known as the Agency Five or A5 - put a gun to the heads of all the major ebook retailers, and basically told them, "you need to either switch us to the agency model April 1 or we're going to stop allowing you to sell our books." As you might imagine, the retailers were not pleased. First, no one appreciates threats, especially from suppliers who are supposed to be your partners. And second, if you take away a retailer's ability to control the price, you make it difficult for retailers to do what they do best, which is to use price as a tool to sell more product and make customers happy.

Amid this awkward shift to agency for the A5, the A5 also gave second shrift to the smaller independent ebook retailers, even though a thriving ecosystem of indie ebook retailers would assist the A5's master plan of creating a counterbalance to Amazon. Due to logistical problems, contractual holdups, tax collection requirements and prioritization, the small indie ebook retailers were not allowed to switch immediately to agency, which meant that the indie retailers lost access to most of the best-selling books in April. I'm told more than one indie retailer went out of business after the virtual rug was pulled out from underneath them when they could no longer sell these books.

The move to agency also created conflict within the supply chain, and it created challenges for Smashwords authors too. Prior to the advent of agency, three our original retailers - Barnes & Noble, Sony and Kobo - were under the traditional wholesale retailer model. Previously, most Smashwords authors and publishers didn't care that their books were discounted, because the discounting only helped sell more ebooks, which benefited authors, publishers and readers.

But then around July, Amazon increased their royalty rates for direct publishers to match the Apple 70%. For the authors who chose to work directly with Amazon, they had to agree that their books would not be sold elsewhere for less, and if Amazon discovered the book priced elsewhere for less, they had the right to discount the author's book to price-match the competition.

This is when the proverbial fertilizer hit the fan for some Smashwords authors who publish direct with Amazon via DTP and then use Smashwords for all the non-Amazon retailers. I recall receiving one especially frantic email from a Smashwords author on disability retirement who was faced with the prospect of seeing his Amazon sales slashed due to discounting at our retailers. This author, like some other panicked authors who had been selling at Amazon for a long time, decided to remove their books from Smashwords retailers. This, to me, was an especially disconcerting trend, because these authors were hurting themselves by removing their books from important retailers like B&N, Sony and Kobo. Some of these authors even removed their books from our Apple channel, or unpublished their books at Smashwords altogether, even though Smashwords and Apple have never discounted. When someone yells "FIRE," it's tough to think straight. Matters weren't helped when some authors, clearly talented on the imagination front but lacking hard details, jumped to erroneous conclusions in online message boards, which further fueled more panicked responses.

When an author pulls a book from retail, it destroys their sales rank, they lose all their reviews, and they deny themselves the opportunity to reach new readers. In other words, no author in their right mind should ever remove a book from retail.

On the other hand, it's difficult to maintain your right mind when your friends are panicking too, and you're suffering real measurable harm when an auto-pricing robot cuts the price of your book at the largest retailer - a retailer said to control 70% or more of the ebook market. Remember, Amazon had every right to do these price corrections - and the authors agreed to this when they signed the Amazon contract - though it did create a situation where some authors felt forced to take actions to preserve their sales at Amazon. Some of these authors eventually waded back in, or tried to compensate for the expected discounting by raising prices at Smashwords, or raising prices across the board.

The obvious solution to me, given the impossibility of managing two incompatible pricing models, was to give our authors and publishers complete control over the price of their books. We've always done this for sales at Smashwords.com, our small retail operation, but I knew it would be a bigger challenge to move our retailers to the agency model, or something agency-like. Needless to say, none of our retailers were too keen to do this when I first started requesting this in June. I can't blame them for their hesitation, because the agency model creates all kinds of complexity and expense for the retailer to administer. I imagine many were still smarting from the insult of being forced to do it in the first place by the A5.

Today, however, I'm pleased to report that Kobo, Barnes & Noble and Sony have transitioned all Smashwords books to the new model. I'm also pleased to report that unlike the tactics used by the Agency 5, we did not put a gun to the head of our retailers. No shots fired, no threats made. In the end, I think each retail partner decided on their own that what is best for Smashwords authors and publishers is also what's best for them and their customers in the long term.

Possibly I have a different view of our retailers than the view from the large publishers. I see our retailers as true partners. Our mission at Smashwords is to help our authors and publishers connect with readers. One of ways we accomplish this is by supporting our retail partners because they more than anyone know how to connect readers with books.

Every once in a while I'll see people suggest authors should only sell their ebooks direct on their own websites, as if all intermediaries between the author and the reader are to be excised. Those folks are smoking opium. Smart authors put their books at retailers who can put their books in front of customers.

So effective immediately, all our retailers are on the same page. Like with our other agency retailers Apple and Diesel, we now pay our authors and publishers 60% of the author/publisher-determined list price for books sold at Kobo, Barnes & Noble and Sony. Simple.

Well, mostly simple. Here are some additional fine print details of interest to Smashwords authors and publishers:

This change means that for sales at B&N and Sony, we have significantly increased our royalty rates. Previously, we paid 42.5% of your suggested list price. The new 60% represents a 42% increase (42.5*1.42=60). At Kobo, we've increased our rate from 46.75% list to 60% list for most sales, a 28% increase. At Kobo, the new royalty rate applies for books priced between $.99 and $12.99, and only for dollar-denominated sales. We can no longer ship books to B&N that carry the price "Reader Sets the Price," so if you're one of the very few authors with this price setting, and you want distribution to B&N, then please change your price asap to $.99 or higher. All three have the freedom to price match if the same book is sold elsewhere for less. Make sure your prices at Smashwords are the same as elsewhere. Click to your Smashwords Dashboard's Channel Manager for summarized details.

With this change comes new responsibility for authors and publishers to price their books at a level customers want to pay. Here, I think indie authors and small publishers do a much better job than the big publishers. Already, the average book at Smashwords is priced under $5.00. At $5.00, a Smashwords author earns $3.00 profit for every book sold at retail. Large publishers can't compete against that (a traditional mass market paperback sold for $8.00 earns the author about 40 cents), which is one of the reasons I firmly believe the future of publishing lies in the hands of indie authors and small publishers, and in the years ahead we'll see more and more big-name authors go indie. They can earn more money per sale while serving their readers with a lower cost product. It's a win-win for the author and reader.

If you'd like to learn more about the agency model, Mike Shatzkin did a good post on it a few days ago at his Idealogical blog in which he concluded agency pricing represents the most significant event in 2010 for the publishing industry. Click here to access it.

If you'd like to learn about the transition to agency from the perspective of an indie ebook retailer, Kelley Allen over at Diesel has been posting a fascinating blow by blow as the events unfolded from April through today. She thinks the agency model will eventually be good for indie retailers and customers in the long term, though the path to here was fraught with much pain. Some links from the Diesel blog:

April: Most of the posts on this page deal with agency. Start at the bottom first for a chronological blow by blow: http://blog.diesel-ebooks.com/?m=201004

May:
Jilted (this caused quite a stir): http://blog.diesel-ebooks.com/?p=124

Day 43, Landing Harper Collins: http://blog.diesel-ebooks.com/?p=137

Day 45 days, they got Penguin: http://blog.diesel-ebooks.com/?p=130

June:
Mobi announces that they are no long selling Agency
http://blog.diesel-ebooks.com/?p=161
http://blog.diesel-ebooks.com/?p=179

July:
Diesel inteviewed by Kat Meyer of O'Reilly about Agency
http://blog.diesel-ebooks.com/?p=201

September:
Day 153: Hachette back up http://blog.diesel-ebooks.com/?p=368

October:
S&S back up http://blog.diesel-ebooks.com/?p=520

Nov:
Kelley Allen's recap of her latest thoughts on agency
http://blog.diesel-ebooks.com/?p=704

My sincere thanks to Smashwords authors, publishers and especially our retail partners for their support in helping us navigate these exciting times.

If you're not yet using Smashwords as your ebook publishing and distribution platform, please join the over 10,000 indie authors and publishers who now collectively publish and distribute over 25,000 books at Smashwords. To learn more, visit How to Publish and Distribute Ebooks with Smashwords. Or, view the Introduction to Smashwords post on the Smashwords Blog.