Indie Ebook Author Community to Earn More than Traditional Ebook Authors

In my post last week I predicted indie ebook authors would capture 50% of the US ebook market by 2020.

Today, I'm looking at the implications of this from another angle - author earnings.  Hugh Howey has recently lavished some welcome attention on this question at his AuthorEarnings.com web site (I examined the resulting uproar at Hugh Howey and the Indie Author Revolt).

One of the commonly cited advantages of indie ebook publishing is that indies earn much higher "royalty" rates than traditionally published authors.  Smashwords authors typically earn 60-80% of the list price, versus traditionally published authors who earn 12.5% to 17.5% of the list price.  The rate paid by the publisher depends on whether their publisher is selling books under the wholesale or agency models.

Let's put some numbers on the bones of these percentages.  A Smashwords-distributed author earns $2.40 on a $3.99 ebook sold through one of our retailer partners, whereas a traditionally published author would earn about 50-70 cents.  In order for the traditionally published ebook author to earn the same $2.40, their ebook would have to be priced between $13.71 and $19.20.  This explains why talented authors are feeling such strong economic incentive to go indie.  Indies can price their product lower, but still earn more per unit sold than they can earn from traditional publishers who overprice their books yet continue to offer a small royalty percentage.

The chart at the top of this page is generated off of the same estimates that created the chart at left which I first shared in last week's post.

The chart at top was created by multiplying the percentage of the market going to indie ebook authors (at left) by 60%, and the percentage going to traditional authors by 15%.



These percentages are approximations based on the spreads I mentioned above. 

You can download my spreadsheet to develop and share your own estimates.  Nothing would make me happier than for someone with better numbers to prove that my 2013 indie ebook market share estimate of 15% is too high (it would mean Smashwords authors have more upside in the future!).

I am confident, however, that the 10 winds of change I identified in the last post will lead indies to capture increased market share in the years ahead.

What's initially striking to me from the new chart at the top of the page is that 2014 could be the first year that the total dollars earned by indies at retail will equal dollars earned by traditional authors.  For 2020, the indie ebook community could earn almost four times more than the traditionally published ebook community will earn if indie ebook authors achieve the 50% market share I predict.

The next most striking thing is the slope of the curves. Note how steep the slope is for indie authors.  The linear market share growth I modeled for indies in last week's chart leads to a bigger differential in this week's chart in terms of the dollars going into indie authors' pockets vs. traditional authors' pockets. In plain English, for every retail dollar that shifts to an indie ebook, the author earns 60 cents.  For every dollar that goes to a traditionally published ebook, the author only earns 15 cents.

My charts and assumptions are not without their limitations. My numbers don't attempt to incorporate unearned advances, for example.  It's common for publishers to pay authors advances that are never earned out by book sales.  In such situations, the stated royalty percent underestimates what the author earned (it also represents a failure of the publisher to accurately estimate the commercial potential of a book).

An additional limitation of today's chart is that I'm assuming the current royalty rates stay the same. This is a dangerous assumption.  If Amazon lowers ebook rates like it lowered Audible audiobook rates the other week, Amazon would break my model and break the banks of many authors. Or, traditional publishers could heed the call of writers to increase their ebook royalty rates. Or, everyone could raise royalties.

My projections paint a picture of an indie author community poised to capture an ever-larger share of ebook profits if print continues to decline in importance.

But this does not mean that indie authorship is the road to riches. The rise of self-published ebooks will lead to a glut of high-quality books that never go out of print. These books, combined with the ebook releases of traditional publishers, will accumulate on ebook retailer shelves and lead to more high-quality ebooks competing for a limited number of reader eyeballs.  It means readers will become more discerning.  It means all authors - indie or otherwise - will face more intense competition than ever before.

Good books aren't good enough anymore.  Readers want wow books. Indies will deliver.

10 Reasons Indie Authors Will Capture 50% of the Ebook Market by 2020

There's a debate raging about the size of the self publishing market.
 
I think indie ebooks will account for 50% of ebook sales by 2020.

What do you think?

On one side of the debate, you have folks such as myself who believe all signs point toward indie ebook authors capturing an ever-greater percentage of the ebook market.

On the other side you have folks who think self publishing represents an insignificant portion of the book  market.  The naysayers think we indie optimists are delusional.

Could both sides be right?  Yes, if you look at the numbers as they stand today, and no if you look at the trends.

When you look at the trends, a new picture emerges.  Yes, I understand it can be dangerous to extrapolate trends.  Any number of events can strike to disrupt or reverse a trend.  But if you have confidence in the drivers of a trend, and you think the wind in the sails of these drivers will blow stronger not weaker, then the future becomes plain as day.

Today I'm contributing to the discussion by offering up a downloadable spreadsheet you can use to become your very own ebook pundit.  Click here to download my spreadsheet at Dropbox.

After you download the spreadsheet, open it and simply enter your estimates into the yellow cells.

You'll place your estimates in two rows:  1.  In row 11, you'll estimate the percentage of trade book sales represented by print books (as you probably know, the term "trade book" refers to consumer books typically purchased through bookstores).  2.  In row 13, you'll estimate the percentage of ebook market sales earned by indie ebook authors.

Enter your numbers for each year from 2008 to 2020.

From these two rows of estimates, the spreadsheet will calculate:

1. The percentage of trade book market sales represented by ebooks
2. The percentage of the overall trade book market represented by indie authors
3. The percentage of the overall trade book market represented by traditional publishers

And then it will draw you a pretty chart.   I encourage you to take a screen shot of your chart, post it to your blog or favorite social media site, and then explain in your post the reasoning behind your estimates and beliefs.  Do me a favor and include a link back to this blog post so others can play the pundrity game too, and please also post a link in the comments below so that others can visit your blog and benefit from your opinions and insights.

My estimates, and my pretty chart, are at the top of this post.

I'm estimating ebooks for 2013 represented 30% of the overall US trade book market, and print books accounted for 70%.  Indie authors don't have access to print distribution for brick and mortars, so I've omitted any indie credit for print in my estimates.

I'm estimating indie authors represented 15% of the ebook market.  Using these numbers, that means sales of self-published authors on the strength of ebooks alone accounted for 4.5% of the US trade book market for 2013.  If my estimate is correct, it explains why publishers have maintained their intransigence when it comes to reforming their royalty rates and other business practices for which indies are now losing patience.

It's easy for a naysayer to poo-poo this 4.5% as evidence that despite all the noise about the indie revolution, traditional publishing is still the main game in town.  Do these naysayers see the writing on the wall of where this is all leading?

There are some early signs publishers are beginning to feel the heat from self published authors, and it comes from Harlequin, the grand dame of romance publishing.  In Harlequin's management discussion portion of its 2013 earnings announcement (released March 4, 2014), the company for first time cited self publishing as a potential competitive risk:  "The proliferation of less expensive, and free, self-published works could negatively impact Harlequin’s revenues in the future." (hat tip Publishers Lunch).   View the report here (opens a PDF).

I'm sure there will be those who criticize my 2013-2020 estimates for being wildly optimistic, or crazily conservative.  Only time will tell.  My primary concerns are the general trends, the drivers of these trends, and what these trends mean for the writers we serve.


As I look to the future, I think the numbers start looking really exciting if you're in the indie author's shoes, and scary if you're a Big 5 publisher.  In my spreadsheet, I see indie authors accounting for 50% of ebook sales by the year 2020.  I think my estimates are fairly conservative.  Some people today think indie ebooks already account for 25% or more of ebook sales.  I'm modeling a steady but gradual shift from print to ebooks, and a steady but gradual increase in the indie ebook market share.

If my projections come to pass, indie authors will control over one third (35%) of the overall trade book market in seven years.  Go ahead, call me crazy or delusional.  I don't mind.

Below, I'll explain why my numbers are more achievable than the naysayers think.

10 Reasons Indie Authors Will Capture Half of the Ebook Market by 2020

1. Print will continue to decline as a book-reading format as more readers transition to screens. The transition to screens will be driven by the low prices, selection, exceptional discoverability and instant reading pleasure delivered by ebooks.
2. Brick and mortar bookstores will continue their march into the sunset with more store closures.  I'm not happy about this, but I don't see the trend reversing unless bookstores start serving wine and pot brownies in their cafes.
3. The perceived value of publishers will decline in the eyes of writers as the importance of print distribution declines.  Print distribution is an important glue that holds many writers to their traditional publishers.  When publisher stickiness decreases, writers will be tempted to explore the indie author camp.
4. Indie authors have learned to publish like professionals, which means self publishing will lead to more better books, and more diversity of better books.   The professionalism and sophistication of indie authors has increased dramatically in the six years since we launched Smashwords, and this professionalism will increase in the future as indies pioneer tomorrow's best practices.  These authors are publishing books that are quality-competitive with traditionally published books, but priced dramatically lower.  As a result, these authors have the ability to under-price, outsell and out-compete the ebooks from traditional publishers.  It means indie authors will have platform-building advantages over traditionally published authors.
5. The number of self-published ebooks will explode, and these ebooks will continue to enjoy democratized access to professional publishing and distribution tools such as Smashwords, and democratized access to global online retail distribution (every major ebook store wants to carry self-published ebooks).  Every author - even indie authors - will face increased competition from the glut of high quality works that never go out of print.
6. The most successful indie authors are mentoring the next generation of authors.  Indie authors act like a vast publishing collective of writers helping writers. 
7. The stigma once associated with self publishing is melting away at the same time the stigma of traditional publishing is on the rise.  Indie authors are in the cool kids club now.  They know they can publish with pride and professionalism, and they're developing teflon skin that deflects the once ego-bruising criticism levied by self publishing naysayers.  If you haven't been to a writers conference lately, go to one.  A few years ago, writers would leave conferences depressed in the knowledge that their dream agent only accepts one in 10,000 queries.  Today, writers attend conferences and learn to self publish like a pro.  They leave the conference upbeat in the knowledge that one way or another, they'll publish their book their way.
8. Writers are discovering the joy of self publishing. If publishers are from Mars, authors are from Venus.  They speak different languages and hold different values. The rewards of self publishing transcend the conventional and myopic commercial metric value systems of publishers.  Indie authors are enjoying total creative control, faster time to market, ownership over their publishing future, and the flexibility to innovate and evolve their immortal ebooks which will never go out of print.  Indie authors enjoy the freedom to serve their fans as they want to serve them.  Icing on the indie author's cake: Indie ebook authors earn royalty rates 4-5 times higher than they'd earn from traditional publishers.
9. Readers don't care about the publisher name on the ebook's virtual spine.  The brand they care about is the author brand. Indie authors are learning to build their own brands. 
10. The growing rift between writers and publishers will cause the next generation of writers to avoid shopping their books to publishers, and will undermine the goodwill of writers who until now have been loyal to their traditional publishers.  Writers are angry.  After centuries of living on the bottom rung of the publishing ladder, they're feeling their oats and relishing their new-found power and respect.  I wrote about this last week for Publishers Weekly in my opinion piece, Hugh Howey and the Indie Author Revolt (may require registration).

Have fun with your punditry!  I look forward to hearing all views, especially if you don't agree with me.

READ NEXT:  Read my follow-on to this post,  Indie Ebook Author Community to Earn More than Traditional Ebook Authors

Read an Ebook Week 2014 Kicks off Sunday

Read an Ebook Week kicks off this Sunday.  Smashwords is again sponsoring the event for the sixth year running.

Thousands of Smashwords authors will offer free and deep-discounted titles starting Sunday March 2 and running through Saturday March 8.

Readers, starting Sunday March 2 Pacific time, the Smashwords catalog of participating titles will appear at https://www.smashwords.com/books/category/1/newest/1


Readers and Authors:  The official Read an Ebook Week hub page is at Smashwords and offers access to banners, buttons and badges you can post on your web site, blog, Facebook and other social media outlets to celebrate your participation in this event.  This page will also feature links to promotional or free catalogs to make it easier for readers to find books.  Currently I have links to the Smashwords RAEW catalog, two great Apple iBooks catalogs (FREE series starters and featured FREE books), Barnes & Noble and Diesel.  I plan to add links to other retailers as well.

Authors:  To enroll your book(s) in the promotion, go to https://www.smashwords.com/dashboard/sitewidePromos or click the "Authors, add your books to the promotion" button on the Smashwords home page.

If you're interested to learn the story behind Read an Ebook Week, read my 2010 interview with Rita Toews at The Huffington Post .  Please note that the prior web address mentioned in the interview, www.ebookweek.com, is now controlled by a squatter and is not associated with this promotion, so please don't link to or promote the old address.  The Smashwords RAEW page at www.smashwords.com/ebookweek is a better option, and has Rita's blessing.

The official Read an Ebook Week Facebook page, operated by Ms. Toews, is at https://www.facebook.com/pages/Read-an-E-Book-Week/193882590629749  Show your support for RAEW by "Liking" it on Facebook.

Authors:  How to Get the Most out of Your Participation

Read an Ebook Week is a collaborative event driven almost entirely by indie authors and their readers.  Here's what you can do to maximize the fun:

1. Enroll all of your books.  Make it enticing for readers to add all your books to their shopping cart.
2. Promote your involvement across all your social media outlets.  Have fun!  Download your favorite official RAEW buttons, banners and badges, and like stickers, stick 'em everywhere virtual sun shines - Facebook, Twitter, your web site or blog, Tumblr, wherever you connect with your fans.  Link the images to your Smashwords author page (you'll find the link in your web browser by clicking on "Profile" at Smashwords) so it's easy for readers to add your books to their shopping cart.
3. Invite your writer friends to enroll in the promotion, and encourage them to promote their books to their fans.  Every author has the ability to draw more readers to the promotional catalog at Smashwords, and the more readers the more sales and downloads for all the participating authors.  In other words, the more authors that participate, the greater the benefits for all the participants.

Have fun!

Smashwords Authors Publish 10 Billion Words

Smashwords authors today reached an exciting milestone:  10 Billion Words Published.  The milestone was reached sometime around noon Pacific.

These words come from 87,000 writers from every corner of the globe who have gathered together to change the world of publishing one ebook at a time as manifested through their 288,000 titles at Smashwords.

These writers are revolutionaries and saviors of the written word, even if they don't view themselves as such.  They're leading the indie author movement.

It took about 50 months for us to reach 5 billion words in July, 2012.  It's taken only about 18 months more to add the second 5 Billion.

These 10 billion words represent creative expression unleashed.  And they represent a lot more.

Here are some fun stats to help you grasp the enormity of this 10-billion-word collective achievement:

• If a person could type 30 words a minute, 24 hours per day, it would take a single individual 5.6 million hours of writing, or about 630 years without a break, to type this many words
• The average book at Smashwords is 34,722 words
•  Let's assume it takes the typical writer 9 months to write a book.  The human heart beats 100,000 times per day.  Each book was created with the life force of about 27 million heartbeats.  The Smashwords catalog of 288,000 books represents about 7.8 billion heartbeats.  Wow.
• Assuming 9 months to write a book, it would take a single individual 216,000 years to write this many words. 
• Let's assume the average word in a sentence in print, including the space that follows it, is about 3/8 of an inch long (wild guess!).  These words would stretch 312 million feet, or about 60,000 miles (96,000 kilometers), or long enough to wrap the earth almost  2 1/2 times.

Smashwords was launched six years ago.  Since then, every writer in the world has had the ability to self-publish a multi-format ebook at no cost through Smashwords and other platforms.  Imagine the creative output ebook self publishing has enabled these last few years, and imagine what's yet to come.

Imagine the number of literary classics that have been birthed over the last few years - classics that might not be recognized as such for years to come.

I'm blown away by the scale of these numbers, and I'm humbled these 87,000 authors, small presses and literary agents have chosen to partner with Smashwords to help realize their books.

Is Self Publishing Good or Bad for the Culture of Books?

There's been a lot of hand wringing lately in some circles that self publishing is enabling a deluge of low-quality books.  These people are missing the point of self publishing.  Self publishing gives writers the freedom to decide when they'll graduate to become a published author.  The gatekeepers are replaced by readers.

Gone is the myopic, suffocating filter of perceived commercial merit by which traditional publishers judge and reject books.  I've got enormous respect for the people of publishing, but their business model, and their value system for books, is off-kilter and out of date.  Prior to the rise of ebooks and the rise of indie authorship that ebooks enabled, the business of big publishing had become hazardous to books and book culture.  Why?  Because books cannot and should not be valued by sales or estimated sales alone.  These smart, well-intentioned people in publishing were forced to play a blindfolded grim reaper by guessing which books readers didn't want to read.  And then they threw the surviving spaghetti against the wall and let readers decide.

A reader can't accurately tell anyone what they really want to read until they read it, in the same same way I didn't know I wanted to listen to Nirvana's Smells Like Teen Spirit until I heard it.  The best creative works break preexisting molds and surprise us.

The Travesty of Lost Culture

What about the spaghetti that never made it to market, and that would have stuck if only given the chance?  What about the hundreds of thousands of fine traditionally published books that were forced out of print weeks after release, before they had a chance to be discovered by readers?  Many of these books will never see the light of day again.

Consider the millions of writers who've had their dreams crushed over the last couple hundred years because their books were rejected when publishers didn't recognize their value.  Virtually every literary classic today has a story of how it was almost not published.  Imagine the thousands of literary classics - classics that would have surpassed anything ever published -  that died with their authors, tossed out with the attic trash.

This tragedy no longer needs to be repeated, because the world of books is no longer constrained by a broken business model that is unable, unwilling and disinterested to take a chance on every author.

Self Publishing Energizes Book Culture, Lead to More Better Books

I founded Smashwords so I could take a chance on every author.  To reject rejection.  I wanted to give writers the freedom to publish and readers the freedom to read what they like.

Writers recognize that success cannot be measured by dollars alone.  There are spiritual and emotional pleasures to be had by self publishing that only writers can understand.

Now back to the critics who complain about the torrent of crud enabled by self publishing.

Yes, self publishing will enable more poor-quality books than ever before.  But so what?  The flip side of this coin is that self publishing will enable more better books than ever before.   You cannot grow wheat without chaff.  Yin and yang.

More better books is what matters most.  More diversity.  More choice. More freedom to publish and freedom to discover and enjoy.

Online book discovery systems are amazingly adept at burying the crud and surfacing the creme. The books that are truly horrible - books released by writers who failed to honor their reader with a quality read - quickly become invisible because readers will reject them today and in the future.  The great books - the ones that take readers to emotionally satisfying extremes - will always find readers and bubble up to visibility, if not today, then next month or next year or next decade.

Great books are more discoverable today than ever before.  The retailer discovery algorithms do an incredible job of capturing, measuring and leveraging the collective wisdom of readers as they browse, sample, purchase, read, review and talk about these books.  As capable as the book discovery algorithms are today, they'll only grow smarter in the future.

Fear not, dear booklovers, self publishing will not only improve publishing, self publishing will save publishing.

Congrats to all Smashwords authors.  You are improving the world of books one word and one indie ebook at a time.  Thanks for allowing all of us on the Smashwords team to join you in this transformative adventure.

Hit the Ebook Bestseller Lists with Preorders - A Guide to Preorder Strategy

Ebook preorders are one of the most powerful book launch tools for indies.

As I've blogged here previously, multiple Smashwords authors have hit the bestseller lists with the catalyzing assistance of ebook preorders.

But as many authors have learned, the mere act of doing a preorder does not guarantee a successful launch.  In this context, a good universal metric of success is for each new book you release to reach more readers in less time than your prior release (that's how you know you're building readership!).

Like any tool, you need to learn how to use preorders before you'll get the best results.  Several Smashwords authors have used preorders so often and with such success that they've become masters.

Preorders are a common checkbox item for nearly every title released by a traditional publisher, yet most indie authors don't take advantage of preorders.  It's a shame more authors don't use preorders, because in the battle for reader eyeballs preorders are a great equalizer.

Probably the biggest reason most authors don't take better advantage of preorders is because they either don't yet know about the tool, or don't know how to utilize it to its fullest effect.

I want to help you make preorders work for you for your next book release.

Earlier today, I published a presentation about preorder strategy on Slideshare.net titled, Hit the Ebook Bestseller Lists with Preorders: A Guide to Preorder Strategy, and have embedded it below.

Hit the Ebook Bestseller Lists with Preorders: A Guide to Preorder Strategy from Smashwords, Inc.

I hope you find it helpful.  I also hope you're share it with your friends, Tweet about it or review it on Facebook.

The presentation provides an introduction to ebook preorders, and then reveals specific recommendations for preorder timing and preorder marketing. Most of these ideas were inspired by my observations of what worked and what didn't work for your fellow Smashwords authors.

And this is where you come in.  If you've had success with Smashwords preorders, I want to hear from you.  Please blog about your success, embed my presentation in your blog post, and share the preorder tricks that worked best for you.  If you've received positive feedback from fans who appreciate the ability to place these set-and-forget preorders, mention that in your post.  Preorders aren't just for the benefit of authors, they're for readers too.  Then leave a link in the comments below and I might add the link to my list below.

One rule for submissions:  In order for me to link to your blog, you must provide some value-add, either in the form of personal experiences and lessons learned, or in the form of summarizing the presentation's key points in a well-structured blog post.  A summary of the points enriched with your own personal experience would be even better! 

Please visit the links of your fellow authors below.  They took the time to help your next book release be more successful, so please return the favor by acknowledging those who did a great job by commenting on their blogs. And if they do an especially great job, check out their books!
Indie Authors Share Preorder Tips, Tricks and Insights

Giacomo Giammatteo - How To Sell More Books: Smashwords Levels The Playing Field With Pre-orders
Anna Adams - How I Hit the iBooks Bestseller List with Smashwords Preorders 
Alicia Renee Kline - Why Preorders Should be Part of Your Marketing Strategy
Renee Benzaim  - Pre-Orders through Smashwords Can Benefit Both Readers & Writers
Stephanie Hurt  -  Smashwords Preorder – A Great Thing!
Sally Ember - Why Ebook Preorders Will Help My Next Book Land Higher on the Ebook Bestseller Lists
Gigi Galt  - Hit the Best Seller Lists With Pre-Orders
Heather Gartside - What to Expect: finding true love and perfecting preorders for my newly-born novel
Felipe Adan Lerna  - Question Mark @ the Intersections of Pre-Orders and Scribd Oyster etc
AH Pellett - Just Like Big Publishers, Indies Can Set up Preorders Too 
Tami Veldura - Introducing the Street Team

Farewell Sony Reader Store

Goodbye to our friends at the Sony Reader Store.

Sony today announced the imminent closure of its Sony Reader Store in the US and Canada.  The store will remain in operation until March 20, after which it will cease ebook sales.

Effective immediately, Smashwords will cease delivery of new titles to Sony.   We will continue to deliver metadata updates and takedowns, and Sony will continue to process them.

What this means for authors:  Any time any retailer closes - especially one such as Sony who pioneered the ebook market - it's a sad day.  Along with Barnes & Noble, Sony was one of the first two major retailers to embrace self-published ebooks when Sony partnered with Smashwords in 2009.  Sony's devices and ebook store predated Amazon's, so when the history books of the indie author revolution are written I hope historians give Sony the credit they deserve as a true pioneer.  My sentiments and appreciation for Sony and their awesome people aside, the impact on Smashwords authors today will be minimal.  The Sony store, as most authors know, is one of the smaller retailers in the Smashwords distribution network.  To put this in perspective, on a typical month, less than 2% of our authors' monthly sales come from Sony.

Next steps for Smashwords authors (updated):  If your books are already listed at Sony, there's nothing you need to do.  On or around March 20, your book's listing at Sony should disappear.  Your customers at Sony will have ample opportunity to backup their purchases. 

Next steps for Sony customers (updated):  Kobo, a Smashwords partner, will assume control over Sony's customers relationships, giving most Sony customers the option to migrate their Sony libraries into their Kobo library to maintain access to their books.  Note that the Sony book files will not transfer from Sony's servers to Kobo's servers.  Kobo will use the ISBNs (unique digital identifiers) of the Smashwords/Sony books to map the customer's purchase to the same book at Kobo.  Kobo has created a helpful FAQ page to assist Sony customers in the transition at http://www.kobo.com/sony   Sony has created a similar page of instructions at http://blog.sony.com/2014/02/the-future-of-reader-store/  If Smashwords books have been purchased by Sony customers, and those books aren't currently distributed and onsale at Kobo, then those books will not transfer.  Authors can mitigate this customer inconvenience by ensuring all their Smashwords Premium Catalog books are opted into Kobo.  Since Smashwords distributes to Kobo under a separate agreement, the book product listings at Sony will not transfer to Kobo.  For Sony customers, the migration to Kobo is optional.  Even if Sony customers choose not to migrate to Kobo, they can download previously purchased books from the Sony Reader Store until April 30, 2014. However, if Sony customers transfer their library to Kobo via the transfer link, they will continue to have access to their ebooks after this date, assuming those same books are available for sale at Kobo.

What led to the Sony closure?  One can only speculate, but the bottom line in my opinion is competitive pressure from all sides - from device-makers, tablet-makers and other stores, and Sony's inability to remain competitive in the fast-evolving ebook device and retailing spaces.  Although they pioneered the ebook industry, the industry grew up around them and grew faster than them.  Our sales levels at Sony over the last four years have remained relatively flat, whereas our sales at other retailers have grown by multiples.  Another contributor:  Amazon price matching.  As many Smashwords authors know, Smashwords and our retailers Apple, Barnes & Noble and Kobo have dramatically improved our ability to quickly and accurately load Smashwords titles and metadata updates.  Sony's integration systems, although they have improved over the years, by comparison have not evolved at the same rapid rate as its competitors.  Over the last few years, this led to frequent price matching from Amazon, and a lot of author frustration, which led many bestselling Smashwords authors to opt out of Sony entirely.  Price matching is a blunt force weapon that Amazon wields with impunity.  Amazon knows its price-matching practices place immense pressure on its competitors.  Here's how:  If Amazon finds a KDP book priced lower elsewhere, it price-matches to the lower price.  If you're enrolled in KDP Select, or enrolled in the 70% royalty rate, this price disparity situation puts you in direct violation of Amazon's terms of service, which leads to a threatening email from Amazon notifying the author of the violation and the consequences of such violation.  Amazon punishes the author with full knowledge that the price discrepancies are not the author's fault, and then authors feel pressured to abandon the smaller retailer rather than risk facing Amazon's future wrath.  The behavior this motivates (opting out of the smaller retailer forever) then harms the smaller retailer and makes the author more dependent upon Amazon.  Amazon has always been brilliant in this regard.  They know how to litter the stage with land mines (constructed of policies and consequences) in plain view and then wait for their competitors (be they retailers or Big 5 publishers) to step on them.  "Oh, didn't you see the big warning sign in your contract?"  But without question, it would be unfair and inaccurate to claim Amazon or indie authors killed Sony.  Amazon's price matching represented only one of many competitive pressures that set the stage for this.  Ultimately, in the cruel and unforgiving competitive world we live in, the responsibility is Sony's alone. 

What this means for the industry:  Any time we lose a retailer of any kind - whether ebook retailer or neighborhood bricks & mortar retailer - it's a sad day.  Book culture, and book sales opportunity for authors, is maximized by having as many booksellers as possible employing as many passionate booklovers as possible out there dedicating their every day to connecting books with readers.  The more retailers there are, the less dependent the author becomes on any one single retailer.  Diversification is good.  Concentrated risk is bad.  It would be a sad day if five years from now 95% of ebook sales consolidated around one or two retailers.  Such a state of affairs would strip indie authors of their independence and power.  So although the loss of Sony is inconsequential from an author sales perspective, it provides a cautionary reminder that it's in every author's best interest to foster a diverse and thriving ecosystem of multiple ebook retailers.  Ultimately, the retailers that indie authors support and promote are the ones that will survive and thrive in the future.

Farewell Sony.  I wish our friends at Sony the best and trust their dedicated team members will find new opportunities to participate in the ebook revolution they helped create.  I'm so appreciative of the amazing support they provided Smashwords authors over the last five years. 

Forbes Magazine Names Smashwords to 2014 List of America's Most Promising Companies

Forbes Magazine this week came out with their list of America's Top 100 Most Promising Companies for 2014.  Smashwords was named #69.

The editors at Forbes evaluated hundreds of companies before making the final selection.  Forbes based their selection on growth (both in sales and hiring), quality of management team and investors, margins, market size and key partnerships. 

Our most important partnership is our partnership with writers. I founded Smashwords to put the power in publishing in the hands of writers. We make it fast, free and easy for any writer, anywhere in the world, to professionally publish and distribute an ebook.

Every day I wake up thankful that over 80,000 authors and publishers around the world have chosen to partner with Smashwords for their ebook publishing and distribution.  Every day, every member of the Smashwords team is 100% focused on your success.  We serve at your pleasure, and we'll never stop working to innovate new opportunities to connect your books with readers.

As reported by Forbes, and also in my Smashwords Year in Review post, Smashwords had revenue of $20 million in 2014, up from $15 million in 2013.  100% of our revenue comes from the sale of ebooks, and over 90% of it comes from our awesome retail distribution partners Apple iBooks, Barnes & Noble, Kobo, Sony, Flipkart, Oyster, Scribd, Baker & Taylor and others.  We don't sell publishing packages or services.  The money flows from readers to retailers to Smashwords to authors.  Our business is 100% aligned with the interests of authors.  We only make our commission if we help you sell books.  Our job is to simplify your publishing, distribution and metadata management so you can spend more time writing and less time on everything else.

Thank you Forbes and thank you Smashwords authors, publishers, retailers and readers!  To view the full list, see http://www.forbes.com/most-promising-companies/list/  

Smashwords Year in Review 2013 - Indie Authors the Stewards of Publishing's Future

Welcome to my annual Smashwords year in review.

It was another amazing year.

On behalf of all employees at Smashwords, I want to start by thanking every Smashwords author, publisher and agent that publishes and distributes with Smashwords.  We serve at your pleasure and we appreciate your trust, partnership and support.

I also want to thank the retailers and library aggregators that comprise the Smashwords distribution network.  Every day, you work tirelessly and often without adequate recognition for the amazing service you provide our authors and publishers.  You receive, ingest and merchandise our books to your customers. You introduce our authors' books to tens of millions of readers each year.  We work for our authors by working for you.  Your success is our authors' success, and we will reciprocate your support by working for your continued success. 

The Smashwords Backstory

If you're one of the 25,000 new authors who joined the Smashwords family this year, welcome.  A brief introduction is in order.

Back in 2008, I created Smashwords to give indie authors a seat at the publishing table.  Back then, a time I refer to as the Dark Ages, traditional publishers held oligopolistic control over the
printing, publishing and distribution of books. 

The control was oppressive. Writers were forced to bow subservient to the whims of big publishers.  Publishers decided which writers became published authors. Although they published many great books, over the course of decades they crushed the dreams of thousands great writers whose talent is now lost to humanity.

Publishers decided what readers could read.  Their decisions were guided by the publisher's perception of a book's anticipated commercial merit.  Their decisions were guesses.  When a book hit the bestseller lists, publishers patted themselves on the back for discovering and supporting the author.  When a book failed, the author's future publishing opportunities often failed with it.

The dirty little secret of publishing is that in the end, publishers were simply throwing what they thought was their best spaghetti against the wall.  Readers were the deciders of commercial success, not publishers.

It's not that publishers are bad.  Inside the hallowed halls of their Manhattan and London skyscrapers, publishers are made up of thousands of passionate, intelligent and ethical people who love books and have dedicated their lives to discovering, developing and publishing great books by great authors.  The problem with publishing was not a problem with the people of publishing, it was a problem with the business of publishing.

Back before the time of books as digital bits, most legacy publishing practices made sense.  They were unable to take a risk on every author.

With the advent of ebooks, self publishing platforms such as Smashwords, and democratized distribution to major retailers, a new world order is emerging.  It's a new world order where the power of publishing is shifting from the halls of publishers to the hands of writers.  It's a world where the suffocating gatekeeping mentality  - which once measured a book's worth through the myopic lens of perceived commercial merit - can now be cast away.

Books are worth more than dollars, pounds, euros and yen.  Publishers don't know what readers want to read, and they have no right to control what writers want to imagine, write or publish.  Writers deserve the freedom to publish what they want, and readers deserve the freedom to read what they want.  The new world order is beautifully democratic and fair.

This is an exciting time to be a writer, author, publisher and ebook distributor.  All of us are smack dab in the middle of turbulent cross-currents of change, innovation and opportunity. 


Indie Authors are the Stewards of Publishing's Future

If this new world ever feels scary or uncertain, that's because it is.  But despite the uncertainty, one fact will remain true forever:  Books are magical, writers are the magicians, and as long as great writers continue to write and publish, books have a permanent place in our lives.


You - the indie author - are the future of publishing.  Your publishing, distribution and marketing decisions will determine the course of the publishing industry.  You're in charge now.   Lead us well.



Now on with the Smashwords year in review.

Notable Smashwords Business Milestones for 2013

It was another great year at Smashwords, and a great year for Smashwords authors.  Here are some notable business milestones for the year.

• Title growth - Smashwords now publishes over 275,000 titles, up 45% from one year ago.
• Authors - We now support the publishing strategies of over 83,000 authors from every corner of the globe, up 42% year over year.
• Record revenue - Our authors' sales grew to $20 million, up 33% from $15 million the year before.  We're proud that 100% of our revenue in 2013 came from the sale of books to readers.  We don't sell publishing packages and we don't employ sales people.  Our income is entirely based on our commission on book sales to readers which for most sales is 10% of the retail price.
• Employee count - The Smashwords team grew to 23 people, up from 19 in 2012, 13 in 2011 and 3 in 2010.  This year we made significant investments in technology, distribution systems and author and customer service.
• Profitability - Smashwords has been profitable now for three years.  Profitability is important because it means we're here for the long haul and can reinvest in you.  We're self-funded, sustainable and will continue to grow the business on your behalf.  We've grown the business without the assistance or interference of outside venture capital.
• Bowker named Smashwords #1 ebook producer of 2012 - In Bowker's annual survey of US ebook publishers, Smashwords was named the largest producer of ebooks in 2012 based on ISBN count.  The recognition underscores Smashwords' position as the world's largest distributor of indie ebooks. 

Notable Smashwords Service Milestones for 2013

Smashwords made significant investments in 2013 to better serve the publishing and distribution needs of our authors and publishers.  At Smashwords, we think of our authors and publishers as clients, not customers.  It's a business relationship and we exist to serve you. Here are some notable milestones on the service side of our business.

• Smashwords website redesign - Earlier this month we launched a new responsive design for the Smashwords website.  The site is now more attractive and mobile-friendly than ever before.  Expect more improvements to the site and publishing platform features and interfaces in 2014!
• Preorder distribution - After months of testing, in July we introduced preorder distribution to Apple, Barnes & Noble and Kobo.  Preorders are an incredibly powerful sales and merchandising tool.  Many Smashwords authors have leveraged preorders to hit the bestseller lists.
• Smashwords Interviews - In August, we launched Smashwords Interviews, a fun tool that helps readers discover the story behind the author.  It's a self-interviewing tool.  Already, over 4,000 interviews have been posted.  They're amazing!  Complete your interview today if you haven't done so already.
• Publishers Weekly/Smashwords Bestseller List - In June, Publishers Weekly magazine started publishing our top 25 bestseller list each month.  The list is based on aggregated sales reports from Smashwords retailers and the Smashwords store.  If you're distributed by Smashwords, you've got a shot at the list!
• Expanded distribution - We expanded the Smashwords distribution network to include Flipkart (#1 bookseller in India) and two subscription ebook services, Oyster and Scribd.  We've signed additional distribution agreements which we'll announce in the months ahead.
• Series Manager - In September, we launched Smashwords Series Manager.  Series Manager collects enhanced metadata that makes it easier for readers to identify and discover books in a series.  The data also sets the stage for retailers to improve the discoverability of our series books.  Today, 38,211 books are attached to 10,419 series.  If you haven't attached your series books with Series Manager, do it now!
• Support for serials - The launch of Series Manager allowed us to modify our Terms of Service to allow serialized publications.
• YouTube tutorial series - We launched a series of YouTube ebook publishing tutorials and workshops, several of which are narrated versions of recent workshops I've presented at writers conferences.  There's also a helpful video on how to add navigation to your Smashwords ebook, and how to integrate your Smashwords Library with your Dropbox account.  Expect more tutorials in 2014. Is there a topic you'd love see us address?  Suggest it below in the comments.
• Apple tickets - In December we added a feature in the Smashwords Dashboard that reports Apple's change requests.  If Apple's QA team finds a problem with your book can prevent a listing, you'll find it there.  The feature helps authors correct issues faster so they can get books listed quicker at the world's second largest global seller of ebooks.

What's Coming in 2014
As I mentioned in my 2014 predictions post, indie authors will face significantly increased competition from traditional publishers in the year ahead.  2014 could be the first year where ebook sales, measured in dollars, decrease.  Despite that ominous possibility, unit sales will increase and the opportunities before authors remains greater than ever.  Our job at Smashwords is to provide you the tools and knowledge to compete, and our development roadmap is informed by this goal.

Our development roadmap for 2014 is really exciting. If writers are the magicians behind books, then the engineers at Smashwords are the magicians behind the new enhancements - large and small - that we make at Smashwords every week.  Our authors tell us what they want, I weave the ideas into initiatives and our engineers make these ideas happen.  Without tipping our hand too much, in broad strokes here's a hint of what you can expect to see in 2014:

• Distribution systems - We'll work to give you improved control over more aspects of your distribution.  We're already shipping daily, at least fives days a week to Apple, B&N and Kobo.  In 2014 we'll increase the shipment frequency further for retailers that can support it.  Faster shipments mean faster time to market and greater, faster control over pricing and metadata updates. 
• Reporting systems - We'll overhaul our reporting systems so you have faster, more intuitive access to sales data and trending information.  We improved the speed of sales reporting in 2013, and in 2014 we'll improve it even further.
• New book marketing tools - We'll introduce multiple new tools that will help authors improve the discoverability and sales of their books.
• Skunk works - There are some projects so secret I won't even give a hint.  Some of the projects are foundational in the sense that their true potential won't be apparent until after we build additional features on top of them.   Rest assured all projects we undertake will be focused on making Smashwords a more powerful publishing and distribution platform that gives our authors real advantage in the marketplace.

Thank you again for your past and future support.

We realize you have many choices for ebook publishing and distribution.  When you work with Smashwords, you are directly supporting our mission to help you reach more readers.  By distributing to major retailers through Smashwords, you further our ability to advocate on your behalf, and to continue investing in tools and services that will benefit the entire indie author community.


We appreciate the opportunity to serve you.

Happy New Year!

2014 Book Publishing Industry Predictions - Price Drops to Impact Competitive Dynamics

It’s that time of year again when I polish my crystal ball and stick my neck out with predictions for the year ahead.

Last year I went out on a limb with 21 predictions.  Looking back on them now, several were spot on, several were premature but will still play out, and some were dead wrong.  That’s the fun of the prediction game.  Even incorrect predictions, analyzed in retrospect, help shape our understanding of the present and future.

Predictions stir our imagination of what’s possible.  By imagining what’s possible, indie authors can prepare for the future, or take steps to realize the future they desire.

This year, I bring fourteen predictions for 2014.

1. Big publishers lower prices – Traditional publishers have always fought tooth and nail to hold the line on ebook prices.  By maintaining high prices, they left the sub-$5.99 market for ebooks wide open for indie authors to exploit.  For several years, indies have enjoyed this playground all to themselves.  The results of our 2013 Smashwords survey illustrated the competitive advantage indies received by pricing low.  Our 2013 survey found that books priced $2.99 and $3.99, on average, received about four times as many unit sales as books priced over $7.99.  This pricing advantage helped many indies out-sell and out-compete the traditional publishers.  It helped indies build fan bases at a rapid clip.  For indies who could write and publish low-priced books that were as good or better than what New York was publishing, placement in the bestseller lists became more achievable than ever before.  For much of 2013, it wasn’t uncommon to see indies holding up to half of the top 10 bestseller slots at major retailers on some days.  Big publishers have taken note.  In 2013 big publishers began competing more aggressively on price with temporary price promotions.  Until recently, it was rare to see a traditionally published book priced under $4.00.  In 2014 their temporary price promotions will give way to a new normal.  Discounting is a slippery slope.  Once customers are conditioned to expect big-name authors for $3.99 or less, the entire industry will be forced to go there.  The huge pricing advantage once enjoyed by indies will diminish in 2014.
2. When everyone is pricing sub $4.00, price promotions will become less effective – If readers have an unlimited supply of high-quality books from their favorite authors at under $4.00, it means factors other than price will gain importance.
3. Ebook growth slows – Here comes the hangover.  After a decade of exponential growth in ebooks with indies partying like it was 1999, growth is slowing.  We all knew this day was coming.  Year over year growth of 100% to 300% a year could not continue forever.  The hazard of fast-growing market is that it can mask flaws in business models.  It can cause players to misinterpret their success, and the assumptions upon which they credit their success.  It can cause successful players to draw false correlations between cause and effect.  Who are these players?  I’m talking about authors, publishers, retailers, distributors and service providers – all of us.  It’s easy to succeed when everything’s growing.  It’s when things slow-down that your mettle is tested.  The market is slowing.  A normal cyclical shakeout is coming.  Rather than fear the shakeout, embrace it.  Let it spur you on to become a better, more competitive player in 2014.  Players who survive shakeouts usually come out stronger the other end.
4. Competition increases dramatically – With hundreds of thousands of new books published annually, and with retailer catalogs swelling to carry millions of titles, it may come across as trite for me to predict that completion will increase in 2014 for indies.  Yet in 2014, the competition faced by indies will increase by an order of magnitude, and will make some indies wish it was 2013 again.  The ebook publishing playing field, which until recently was significantly tilted in the indies’ favor, has now leveled a bit.  Yet indies still enjoy a number of competitive advantages, including faster time to market, greater creative freedom, closer relationships with readers and thus a better understanding of reader desires, higher royalties rates and ultra-low pricing flexibility including FREE.
5. Ebook sales, measured in dollar volume, will decrease in 2014 – Yikes.  I said it.  The nascent ebook market is likely to experience its first annual downturn in sales as measured in dollar volume.  This will be driven by price declines among major publishers and by the slowing transition from print to screens.  Although readers will continue migrating from print to screens, the early adopters have adopted and the laggards will shift more slowly.  Another driver of the drop is that the overall book market growth has been moribund for several years.  As ebooks as a percentage of the overall book market increase, it means the growth of ebooks will become constrained by the growth and/or contraction of the overall book industry.  Global sales in developing countries remain one potential bright spot that could mitigate any sales contraction.
6. Ebook unit market share will increase – Ebook consumption, measured in unit sales and downloads, and measured in words read digitally, will increase in 2014.  The industry-wide sales slowdown, caused by the drop in average prices, will mask the fact that more books will be read than ever before.  This is great news for book culture, and good news for indies who despite the loss of their once-powerful price advantage, will still be positioned to profit more from low prices, or to compete at ultra-low (sub $3.00) price points than traditionally published authors.
7. A larger wave of big-name authors will defect to indieville – Multiple market forces will conspire to cause a large number of traditionally published authors to turn their backs on big publishers.  Publishers will try to hold the line on their 25% net ebook royalty structures, which means big authors will see their royalties suffer as prices drop and as the unit sales advantage of low prices decreases, and as the disadvantage of high prices increases.  At the same time, readers will continue to transition from print to ebooks, making the print distribution to physical bookstores less important, and thus weakening the grip big publishers once had on bigger-name authors.  Big authors, eager to maximize their net, will feel greater impetus to emigrate to indieville.
8. It’s all about the writing – It’s back to basics time.  In a world where readers face an unlimited quantity of high-quality low-cost works, the writers who achieve the most success will be those who take their readers to the most emotionally satisfying extremes.  Books are pleasure-delivery devices.  It doesn’t matter if you’re publishing a cookbook, romance novel, gardening how-to, memoir or political treatise.  Your job as the indie author is to write that super-fabulous book.  That involves great writing and professional-quality editing.  It also means avoiding all the mistakes that create unnecessary friction that prevent readers from discovering, desiring and enjoying the book.  To understand these points of friction, and how to avoid them, check out my discussion of Viral Catalysts in The Secrets to Ebook Publishing Success, or in my Youtube video on best practices.
9. All authors become indie authors - Back in the dark ages of publishing, you were either traditionally published or weren't published.  Writers who couldn't get a publishing deal were seen as failures, because without the access to the publisher's printing press, distribution and professional know-how, it was virtually impossible to reach readers.  Today, failure is not an option.  The next generation of writers can begin writing their book with the full confidence that one way or another, it will get published.  Traditionally published authors now realize they have desirable publishing alternatives they never had before.  Once a writer - any writer - comes to the realization that the power in the publishing industry has transfered from publishers to writers, it opens up a new world of possibilities.  Publishing no longer becomes an either/or question.  The best writers will have the option to publish independently AND traditionally, or do one or the other.  It's their choice.  Both options are worthy of consideration by all writers, and can be mutually complementary.  Even if you're a traditionally published author today, you're an indie author because you decide what happens with your next project.
10. Subscription ebook services will change the game – If the ebook subscription services – the most notable of which are Scribd and Oyster – can make their business models work, then they’ll drive a game changing shift in how readers value and consume books.  I examined the potential implications of this in my two-part blog post on this model (read part one | read part two) .  For ebook subscription service users, reading will become an abundant resource that feels free.  It’ll become a utility service in the same way that water and electricity are utilities.  When we flip the switch to turn on a light, or when we turn the knob on the faucet to brush our teeth, we’re not thinking about how our next 60 seconds of that service will cost us one or two cents.  We pay our monthly service fee, and for the most part we use the utility as much as we want.  With ebook subscription services, the reader will pay $9 or $10 a month and enjoy virtually limitless reading.  Readers will be relieved of the cognitive load of having to decide if a given book is worth the purchase price.  Instead, they’ll surf and sample books with minimal friction, as if every book is free.  The reader’s attention, and the book’s ability to hold the reader’s attention, will become the new factor in determining a writer’s success.  Even if these subscription services fail, they'll change the future of publishing by giving readers a taste of friction-free reading-as-a-service.  It's a taste readers are unlikely to forget.
11. Traditional publishers will reevaluate their approach to self-publishing – The vanity approach to self-publishing, as witnessed by Pearson/Penguin’s acquisition of Author Solutions (operates AuthorHouse, iUniverse, BookTango, Trafford, Xlibris, Palibrio, others…), has shown itself to be a boondoggle that harmed the brands of all traditional publishers.  I predicted this last year.  The Author Solutions business model is wholly dependent upon making money by selling overpriced services to unwitting authors.  Their business model is expensive at best, and unethical at worst.  It’s about selling $15,000 publishing packages to authors who will never earn the money back.  The model represents the antithesis of what the best and proudest publishers have always represented.  Great publishers invest in their authors.  The money flows from reader to retailer to publisher to author, not from author to publisher.  At the same time Author Solutions has tarnished the reputation of all traditional publishers - even those not engaged in such practices - the indie author revolution has continued in full swing.  Indies are stealing market share.  Indies have learned to publish like professionals.  Many indies no longer shop their books to agents and publishers, and instead choose to publish their books directly to readers using self-serve publishing and distribution platforms such as Smashwords, or KDP, Nook Press, and others.  Publishers are losing access to the critical deal flow that is their lifeblood.  I talked about this in my discussion of black swans in last year’s predictions.  If they lack an effective service offering for indie authors, the big publishers risk finding themselves on the wrong side of history as authors move on without them.  The stigma once associated with self-publishing is melting away as the stigma of traditional publishing grows.  How can publishers stem the bloodletting and recapture relationships with authors?  The answer will come by publishers reevaluating their attitude toward authors.  They must recognize that publishing is a service, and that they serve at the pleasure of authors.  Now that authors have choices, the publishing game can no longer be about, “What can the author do for the publisher?”  Authors no longer need to bow subservient to publishers, so business models based on this old practice and attitude will be rejected.  The new publisher mantra must be, “What can the publisher do for the author that the author cannot or will not do on their own?” 
    
    Publishers need to broaden their author services menu by creating an inclusive business model that allows them to take a risk on every author, to be able to say “Yes” to every author when the prior attitude was to say “No.”  Authors want a spectrum of options, from self-serve to full-serve, and they shouldn't have to shell out cash to their publisher for any option.   Publishers must abandon the culture of “No,” because authors no longer have the patience or tolerance to hear “No.”  Authors have choices, and they’ve gained a taste for the joys of self-publishing.  What’s this new model, where the publisher can say yes to every author, yet still earn a profit?  The answer: they need to build or acquire their own self-serve publishing platform. A self-serve platform would allow them to take a risk on every author, and to form a relationship with every author.  By operating a free publishing platform, the publishers would have the ability to serve the diverse needs of all authors.  DIY authors would select the self-serve option.  Authors with proven commercial potential who don't want to hassle with the responsibilities of being one's own publisher might opt for a path somewhere along the spectrum between DIY and full-serve (what has been heretofore been known as traditional publishing), assuming both the author and publisher desire that.  The compensation models and level of publisher investment could vary based on the level of publisher service.  Such a full-spectrum approach to publishing, where authors pay nothing, is 100% aligned with the author’s interests, and 100% aligned with the best practices of the best publishers.  A good self-serve platform doesn't employ sales people.  It doesn't take money from authors.  And that’s how it should be.  So the question is, can publishers introduce their own free self-serve platforms to broaden their services offerings?  Time is running out.
12. Platform is king – Platform is your ability to reach readers.  Authors who can build, maintain and leverage their platforms will have a significant competitive advantage over those who cannot.  Think of your platform as a multi-layered infrastructure that allows you to reach both new and existing fans.  Elements of this infrastructure include your followings on Twitter, Facebook and the RSS feed of your blog.  It includes the breadth of your distribution (more retailers is better than fewer), your uninterrupted presence at each retailer for every book, and the reviews at those retailers.  It includes the number of authors who have “favorited” you at Smashwords, or who have added your books to their booklists at Goodreads.  It includes subscribers to your private mailing list.  It includes your celebrity, and your ability to leverage social media or traditional media or the love of your fans to get your message out.  There are two primary factors that drive sales of any product or brand.  The first is awareness.  If the consumer is not aware of your product or brand, then they cannot purchase it.  You need to put your product in front of a consumer and gain their attention before they can consider it.  The second is desire.  Once a consumer is aware of your product or brand, they must desire it.  As I talk about in my Secrets book, the author is the brand.  Your job as the author is to build awareness of your brand, and to build, earn and deserve positive desire for your brand.  Awareness plus desire create demand for your product.  This is why platform will become more important than ever in 2014.  Your platform helps you get the message out to existing fans who already know and desire your brand, and helps you reach new fans who will attach their wagons to your horse.  The larger your platform is, the easier it is to grow your platform further, because platforms grow organically.
13. Multi-author collaborations will become more common – In 2013, I observed a marked increase in the number of multi-author collaborations.  I’ve been encouraging multi-author collaborations for a few years in the Smashwords Book Marketing Guide, but 2013 was the year the practice really took hold.  Authors are collaborating with fellow authors in their same genre or category on box set compilations of existing and original content.  These collaborations are often competitively priced and offer readers the opportunity to discover multiple new authors in a single book.  The collaborations also enable multiple authors to amplify each other’s marketing efforts by leveraging each other’s platforms.
14. Production takes on increased importance in 2014 – One of the most important secrets to ebook publishing success is to write more books.  As a writer, your writing is your unique creation.  It’s your product.  Authors who write great books (and produce more of them), are the authors who build sales and platform the fastest, because each new book represents an opportunity to please existing fans and hook new ones.  Organize your time to spend more time writing and less time on everything else.

View some of my previous predictions:
2013 Predictions at the Smashwords blog (published Dec 21, 2012)
2011 Predictions at GalleyCat by Mark Coker (published Dec 28, 2010)
10-Year Predictions at GalleyCat By Mark Coker (published Jan 4, 2010)

Did my crystal ball miss anything?  Please add your own predictions below.
            

Smashwords Signs Distribution Agreement with Scribd

Smashwords today announced a distribution agreement with Scribd, which operates one of the world’s largest publishing platforms and online reading communities.  Scribd receives over 80 million monthly readers to their platform according to their website.

There are two distribution components to the Smashwords agreement with Scribd.  1.  Smashwords will supply books to Scribd’s new ebook subscription service, where for $8.99 per month subscribers can enjoy unlimited reading.  2.  Smashwords ebooks will also be available for individual sale to Scribd customers under our standard retailer terms.

Ever since Scribd launched in 2007, I’ve admired their publishing platform, their social reading technology and their commitment to content creators.  Scribd has built a massive audience of millions of readers, and these readers are now accessible to the 70,000+ authors and publishers that distribute with Smashwords.

Scribd’s roots are in community publishing. They’ve been a pioneer in user generated content, and in making it possible for content creators to share their works with the world.  Their platform makes it easy for people around the world to upload documents, presentations and books, and they’ve always done a great job of making the content discoverable, readable and sharable.

Back in October, I wrote a two-part blog post in which I named Scribd as one of the leading examples of the new breed of ebook subscription services that aim to do for ebooks what Netflix did for filmed entertainment and what Spotify did for streamed music.

Over the last year, they’ve developed a compelling subscription ebook service.  For a low monthly subscription of only $8.99, readers can enjoy a massive catalog of ebooks, and a frictionless reading environment where book price is not a deciding factor.  Readers can enjoy unlimited reading on-demand.

Visit the Scribd home page and it’s immediately apparent they’re positioning their entire business around ebooks.  They're working to convert their 80 milllion monthly visitors to subscribers for your benefit.

Scribd is going to provide an incredible level of support to Smashwords authors, and I trust every Smashwords author will want to be involved and support their efforts.

Scribd reaches a global audience, serving readers in over 100 countries.

The terms we negotiated with Scribd are author friendly, generous, and closely aligned with our standard retail distribution terms.  But as you’ll see, they’ve thrown in some compelling twists as well. 

For Scribd’s retail store, the terms are identical to our standard retail agreements.  Smashwords authors and publishers will set the price, there will be no discounting, and authors will earn 60% of the list price on all sales.  The first 10% of the book, from the cover image forward, will be the free preview sample, similar to most retailers.

For Scribd’s subscription ebook service, authors will earn 60% of the list price on all qualifying reads, and here they’ve added a cool twist.  With subscription services, the author or publisher earns credit for a full read when the reader reaches a certain trigger point, measured by the percentage of the book that is read.  The first 10% of the book is a free sample, similar to a retailer.  Excluding the sample, once the reader reads an additional 20% of the book, a full sale is triggered and the Smashwords author earns 60% of the list price, up to a maximum of about $12.50 per read.  In practice, what this means for most fiction writers is that after the reader reads more than the first 30% of your book, it triggers a full sale.  For some non-fiction writers, where your book’s content is more likely to be read non-sequentially, it means if the reader starts their reading deeper in the book at Chapter 10, a sale could be triggered after reading only 20% of the book (As an aside, this underscores the importance of authors building fully functional navigation into their ebooks so that all their book's content is easily discoverable.  To learn how to upgrade your ebook's navigation, check out my recent blog post and video, How to Add Navigation to a Smashwords Ebook).

Unlike any other subscription service or retailer, Scribd has sweetened the pot by added a secondary sales trigger for the author by providing credit for partial reads.  If the subscriber reads 5% more than the first free 10% but less than the additional 20% necessary to generate a full sale, this triggers a credit for partial read.  For every ten partial reads, which Scribd calls a “browse,” the author earns credit for a full sale.  Since most people read fiction from page one forward, this means if 10 people read just over the first 15% of your book but less than 30%, it’ll generate a full sale.  For non-fiction, where readers are more likely to read non-sequentially, they can read 5% of the middle of the book and trigger a browse credit.

December 21 Update on Piracy Prevention:  By distributing your book to Scribd via Smashwords, you'll also help prevent and remove unauthorized versions of your work at Scribd.  To protect the intellectual property of authors and publishers, Scribd has developed and is continuing to enhance a Copyright Management System (CMS) that takes a digital fingerprint of all authorized uploads from Smashwords, and will use the Smashwords version as the authorized version of record.  So not only will the Scribd CMS help protect Smashwords authors against unauthorized uploads in the future, it will also trigger retroactive and automated takedowns of unauthorized versions.  If you ever discover an unauthorized version of your work at Scribd, visit the the Scribd DMCA takedown page and provide them a direct hyperlink to the offender's upload.

Smashwords and Scribd have begun integrating our respective distribution systems and conducting test shipments.  If all goes as well as we expect, Smashwords books will start appearing during the month of January.

To qualify for Scribd distribution via Smashwords, the book must be Premium Catalog approved.

In addition to the sales opportunity represented by their subscription service and ebook store, Scribd has outlined some exciting plans to take their support of Smashwords authors and publishers to the next level. 

Here's a hint of some of what you’ll see from Scribd in the months ahead: 

• As part of this relationship, they plan create ongoing merchandising features dedicated to indie authors, showcasing and celebrating the amazing talent of the indie author community.  Smashwords will share our bestseller lists with Scribd, drawing upon our knowledge of your sales through the Smashwords distribution network (yet another reason to maintain full distribution with Smashwords!).
• For a limited time, they’re planning to offer Smashwords authors who distribute to Scribd via Smashwords a free one-year subscription to the service so you can try it out.  Multiplied by 70,000 Smashwords authors, this is a $100 per author bonus, and an overall potential commitment valued at over $7 million.  Cool beans!  To qualify, make sure your books are opted in to Scribd by January 1.  The Scribd distribution channel will appear in your Smashwords Dashboard's Channel Manager later today.
• They’re planning to develop author profile pages that Smashwords authors can access and manage.
• They’re planning to create analytic tools in which they aim to give authors unprecedented data about how readers are engaging with their books.  I’ll share more about that in the months ahead as their plans unfold.   

Please join me in welcoming Scribd as the latest member of the Smashwords distribution network.  I’m looking forward to working with Scribd to grow our authors’ audience and sales in the months and years ahead.  I'll send out an author/publisher alert about the deal later today.

Check out the Scribd blog which quotes Smashwords author Quinn Loftis.

“I’m thrilled to learn about the partnership between Smashwords and Scribd,” said Quinn Loftis, a USA Today bestselling Smashwords author of nine young adult paranormal romance titles, including the seven-book Grey Wolves series. “I look forward to distributing all my titles to Scribd via Smashwords because I appreciate the opportunity to reach more readers.  My fans will appreciate the incredible value represented by Scribd’s subscription service.”

View Scribd's press release here:  http://www.scribd.com/doc/192561226/Scribd-Partners-with-Smashwords