How Indie Ebooks Will Transform The Future of Book Publishing

NYU Summer Publishing InstituteJuly 9, 2010

Mark Coker Founder, Smashwordswww.smashwords.com

My background (and biases)

The story behind Smashwords

• Co-authored Boob Tube, a novel about soap operas

• Rejected by every NYC publisher

• Decided publishing was broken.

• Acquisition decisions based on perceived commercial merit

• Print supply chain broken

• Publishers unable to take risk on every author

• Readers shut out of process

• Smashwords solution

• Create free ebook publishing and distribution platform to allow authors to bypass publishers

Indie ebooks published at Smashwords

0

10000

20000

30000

40000

50000

2008 2009 2010 2011

Authors Titles* projected, based

on 7/10 runrate

1406,000

15,000 (July)

50,000

6,700

902,700

20,000

A RECKLESSLY BRIEF HISTORY OF PUBLISHING

In the beginning…… there were no words

… and then Words were invented

… and then monastic scribes became the first mass production printing presses

… and then monks added illumination

… and then Gutenberg did moveable type

… which allowed commercial publishers to develop large mass market businesses

PUBLISHERS WERE HAPPY FOR MANY DECADES BECAUSE THEY CONTROLLED THE

MEANS OF BOOK PRODUCTION AND OF DISTRIBUTION

BUT THEN THE INTERNET HAPPENED

… and Amazon happened

• Massive bookstore in the sky

• Amazon did to big chain book retailers what the chains did to indie bookstores

• Unlimited selection +

• + Convenience

• + Low prices

• = Happy customers

• Leveled the playing field for indie authors

… and print self-publishing happened

• Free and low cost

• allowed anyone to publish

• Democratized distribution and reach

… and ebooks happened

• No paper

• Self-pubbed ebooks

• Instant publishing online

• Distribution even more democratized for indie authors

AND INDIE PROPONENTS CHEERED, “INTERNET + CHEAP & EASY PUBLISHING +

DEMOCRATIZED DISTRIBUTION= PUBLISHING BLISS FOR ALL”

AND PUBLISHERS RESPONDED, “IT’S OKAY, BECAUSE WE’RE SUPER

FABULOUS”

… and they were right. Publishers are super fabulous

• Employ smart, passionate people who love books

• Relationships with the biggest authors

• Acquire great books, which they make even greater

• Strong distribution relationships

• Strong promotional and selling ability

AND THEN PUBLISHERS ADDED, “BESIDES, SELF-PUBBED VANITY CR*P

DOESN’T SELL”

… and they were right

• For now at least

… but many publishers don’t see the gathering storm up ahead …

• READERS (CUSTOMERS!)

• Relish greater diversity of choice, lower cost

• Don’t value publishers as much as publishers value publishers

AUTHORS

• Often write for reasons different than publishers publish

• Ebooks are blowing the distribution doors wide open for indie authors

• Great authors are overlooked because of a myopic, lemming-approach to publishing

CHAPTER 2

It’s tough being a publisher

ooh,pretty!

… publishers take enormous risks

• Pay authors in advance

• Can’t predict demand, so many books flop

• Broken supply chain, huge return rates

• Must swing for the fences because it’s a hit business

… and shoulder big expenses

… bean counters come to the rescue to manage operations and cut costs

• Limit risks on unproven or midlist authors

• Acquire only authors with established platforms

• Require authors to shoulder more of the editing and marketing burden

• “Hit” mentality ironically forces publishers to chase dollars, chase bigger deals

… and self-preservation kicks in, causing publishers to act less like publishers

• Adopt customer-unfriendly policies

• Windowing and scarcity tactics

• High prices

• DRM

• Adopt author-unfriendly policies

• Take fewer chances on unproven authors

• Rights grabs, digital + print

• Tougher rights reversions

• More celebrity books

• Lower advances, lower royalties

When publishers act less like publishers, authors start questioning why they need a

publisher

Against this backdrop, publishers are ill-prepared to cope with big macro trends on

horizon

BIG TRENDS THAT WILL RESHAPE PUBLISHING

TREND: Bookselling moving to the Web

Bookselling moving to the Web

• Customer drivers:

• Price

• Convenience

• Selection

• Indie books displayed side by side with trad. books

• If brick & mortar disappears, publishers lose key value proposition: access to distribution

Percentage of book purchases made online vs B&M, P- and E-

Brick &Mortar

Web

Today?

TREND:

Ebooks to overtake print

Ebooks to overtake print?

Print books

Ebooks

Today?

Reading moving to screens

• Screen reading offers more pleasurable experience

• will get better, faster, cheaper

• Ebooks trump p-books in price, convenience, immediacy and (eventually) selection

• Paper is passé

• “paper is what you wipe with” (Zoe Winters)

Ebooks as percentage of overall trade book sales (U.S.)

Source: Compiled by Smashwords from Association of American Publishers 2003-2009, 2010 represents annualized January 2010 results reported by AAP/IDPF

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

2003 2004 2005 2006 2007 2008 2009 2010

TREND:

Publishers compete with Authors

Authors become publishers

• Tools to publish and distribute available to all

• Equal access to digital shelf space

• Authors take risks, reap 40-100% of retail price, vs. 5-12%

• More professional authors will go indie

Number of books published indie vs. traditional

Indie books

Today?

New trad. books

TREND:

Content explosion

Content explosion

• Unlimited Internet content alternatives

• Indie ebooks

• Zombie books

• Used books

• OOP resurrected via ebooks and P.O.D

• Out of copyright public domain ebooks

Content explosion

Indie books

Online alt

content

Today?

Zombiebooks

New trad. books

How Publishers can Succeed

Get to know your customer

• ADHD

• Eliminate complexity, assist discoverability

• Frugal

• Offer range of affordable content options

• Discerning

• Offer quality content

• Social

• Social media-enable books

Get closer to your customer

• Sell direct, but remember you’re an island

• Expand ebook distribution channels to reach customers

• Digital shelves everywhere

• Obscurity amid crush of alternative content choices is bigger threat to publishers than piracy

Leverage customer as extension of sales and marketing team

• Book selling has always been about W.O.M.

• Customers decide what sells

• Catalyze community

• Give customers something to talk about and share

Do for authors what they cannot (or will not) do for themselves

• Be a publisher (out-publish indies)

• Acquire, edit, polish, package, promote, distribute, sell, run backoffice

• Cross sell across customer database

• Build segmented email database of your readers

• Exclusive events

• Give authors tools to assist marketing

Eliminate friction

• Be the lubricant, not the sand

• Examine every facet of your publishing policies and ask:

• “Are we doing everything possible to make it easier for our customers to discover, sample, purchase, enjoy and talk about our books?”

• Eliminate sand

• High prices, windowing, DRM, limited distribution and scarcity

Final words

Final words

• Indie ebooks will shift power in publishing to authors and readers

• Authors will determine what’s published, and readers will determine what’s read

• Scarcity tactics will backfire

• Speed of publishing will increase

• Traditional and indie publishers face unprecedented opportunity to reach readers

• Unprecedented risk as well

Thank you for listening!

Q&A

Where to find Mark Coker:

Web: www.smashwords.com

Blog: blog.smashwords.com

HuffPo: huffingtonpost.com/mark-coker

Twitter: @markcoker

Email: first initial second initial at

smashwords dot com