MONEY MONEY MONEY: Facts & Figures for Financial Payoff

New 2013 Data

Presented May 2, 2013Updated May 8, 2013 for Slideshare

Mark Coker Founder, Smashwords

Twitter: @markcoker

The purpose of this study was to identify data-driven factors that might impact the sales of an ebook. We present this as a public service to the publishing

community of authors, publishers and retailers.

This new presentation – utilizing all new data across an even broader data sample – was presented at the RT Booklovers convention in Kansas City on

May 2, 2013.

The first installment of this presentation, based on data gathered between 2011 and early 2012, was given at the Chicago RT Booklovers convention on

April 11, 2012. Click here for the original 2012 study.

For this Slideshare edition, I have enhanced the presentation with additional slides and text to capture some of the information that was conveyed

verbally. This will give Slideshare viewers better context through which to evaluate the findings.

Visit http://www.slideshare.net/smashwords/presentations to access a wide variety of other presentations from Mark Coker, including the original 2012

presentation.

Background on the Second Annual SMASHWORDS MONEY MONEY

MONEY Presentation

Smashwords is the world’s largest independent distributor of ebooks from self-published authors and small independent presses. Our company makes it fast, free and easy for any writer or publisher, anywhere in the world, to instantly publish an ebook. We distribute our ebooks to ebook retailers

including the Apple iBookstore, Barnes & Noble, Sony, Kobo, the Diesel eBook Store, Amazon (only a small subset of our titles go to Amazon), and public

libraries. We also sell books in our own ebook store at Smashwords.com. In the last five years, we’ve helped over 60,000 authors and publishers around

the world to create and distribute over 200,000 ebooks.

For this study, we analyzed the sales behavior of approximately 120,000 Smashwords books between May 1, 2012 and March 31 2013. The data drew upon over $12 million of sales aggregated across all Smashwords distribution channels, making it perhaps the industry’s most comprehensive view of how

indie ebooks behave in the marketplace. It lumps fiction and non-fiction together. The vast majority of Smashwords sales are fiction.

Please note that we’re reporting data based on averages. Every book is unique, so you book may deviate from the average.

About Smashwords and the methodology for this study

Please share this presentation with your fellow authors and publishers

A companion blog post with additional analysis of the findings can be found at

http://blog.smashwords.com/2013/05/new-smashwords-survey-helps-authors.html

When we work together to help our fellow authors and publishers succeed, the rising tide

of best practices lifts all boats.

The Smashwords Backstory

(first slide of the original presentation, provides background context for Smashwords and our source of data)

My wife Lesleyann is a former entertainment reporter for Soap Opera Weekly Magazine, and is now an entertainment blogger for Forbes.com and the Huffington Post. In 2005, we co-wrote Boob Tube, a novel that explores the wild and wacky world of daytime television.

Publishers Said “No”

• Despite representation from one of country’s best literary agencies, every major NY publisher said NO (TWICE!)

The stated reason: Previous soap-opera themed novels had performed poorly in the marketplace, so publishers were reluctant to take a chance on us.

I evaluated our options

1. The rational option Accept that we were failed authors, give up

and cry [at the time, publishers controlled the printing press and the access to retail distribution. Without a publisher, we truly were failed authors].

2. The irrational option Believe in ourselves

Get mad

Try to fix the problem

I contemplated the problem

Publishers value books based on perceived commercial potential

• I considered this a myopic measure of a book’s worth. A book’s value to humanity cannot be measured in dollars alone, let alone “perceived commercial merit.”

• Publishers can only “guess” what will sell. They really don’t know until the book reaches readers.

• They reject thousands of talented writers each year. They view the vast majority of writers as not good enough

• Publishers denying readers the rich diversity of talent locked in the minds and fingertips of writers around the globe

Publishers unable to take a risk on every author

• Millions of rejected authors were going unpublished and unread, thereby denying current and future generations the richness and diversity of writers’ talents.

I contemplated the solution

I believe every writer has a right to publish. It’s a matter of free speech. Not everyone agrees with me.

Just because every writer has right, doesn’t mean it’s the publisher’s responsibility to satisfy that right. What they viewed as a problem and a limitation, I viewed as an opportunity

Could technology solve the problem?

What if I could create an online publishing platform that would allow me to take a risk on every author?

• Give every writer the freedom to e-publish, without interference of a publishing gatekeeper

• Give the marketplace of readers the freedom to decide what’s worth reading

• Make the solution free and easy so it’s accessible to all writers

My Answer: Smashwords, launched in 2008

• * FREE * eBook Publishing Platform

• Free ebook printing press

• Distribution to major ebook retailers and libraries

• Free learning materials help writers become professional publishers

0

50,000

100,000

150,000

200,000

250,000

2008 2009 2010 2011 2012 2013

Ebooks published at Smashwords

1406,000

28,800

92,000

191,000

220,000 April 2013

How Smashwords Works

• UPLOAD

• Upload a Microsoft Word file or .epub

• Free conversion to 9 ebook formats (for Word .doc files)

• Ready for immediate global sale online at Smashwords store

• DISTRIBUTE

• Distribution to multiple major retailers such as the Apple iBookstore, Barnes & Noble, Sony and Kobo

• GET PAID

• Author receives 85%+ of net = 60% list from major retailers

Smashwords Distribution Network

*limited

LET’S GET STARTED WITH THE SURVEY RESULTS

Welcome to the Second Annual Smashwords RT Booklovers MONEY

MONEY MONEY survey

(first released May 2, 2013)

Last year’s study has been viewed over 75,000 times

• Access the prior study at Slideshare http://www.slideshare.net/Smashwords/how-data-driven-decisionhow-datadriven-decisions-might-help-authors-reach-more-readers

We’re in Search of Viral Catalysts

What’s a Viral Catalyst?

• A viral catalyst is anything that makes your book more available, accessible, desirable and enjoyable to readers

• Read the Secrets to Ebook Publishing Success (it’s FREE!) to learn how viral catalysts spur word-of-mouth

We decided to pose some simple questions to our data, in the hope that the answers might reveal some viral

catalysts

? ? ?

Useful (and not-so-useful) discoveries start with simple questions

? ? ?We looked at 11 months of sales data for over

120,000 titles, aggregated across the Smashwords distribution network, representing

over $12 million in global sales

Some findings are useful, some inconclusive, and some were downright silly (but fun)

Q:

Do authors who change prices frequently sell more books?

Impact of Price Changes

• Indie ebook authors have the freedom to change prices frequently, and some do so with ADHD fervor

• Do frequent price changes sell more books?

• Conclusions not clear cut

• Price changes likely a proxy for author promotion

• Our bestselling authors, on average, changed prices only once in the 11 month period, possibly an indication that frequent changes provide little benefit

• Worst selling authors changed prices less, possibly a sign of inattention to their books?

Impact of Price Changes

Vertical axis: # of price changes over 11 mo. period. Horizontal: bestselling titles, both ranges and range bands. You don’t want to be in the sales rank bands of 50,000+. They sell very little.

Q:

Which sells more books? A longer book title, or a shorter book title?

(a new question in our survey this year)

Do shorter or longer book titles impact book sales?

• We look at both character count and word count for the title

• Conclusion: yes, there appears to be some indication that shorter titles work better

• Possible reasons are unclear

• Do readers prefer shorter titles?

• Does a shorter title catch the eye more effectively?

• Are shorter titles easier for the reader to grok?

• Are some ebook retailing system unable to list full title of long titles (answer: yes)

Do Shorter Book Titles Sell Better? Let’s look at character count

Let’s look at the number of words in the title, the advantage is a little

more clear cut

Q:

Should my ebook description be short or long?

(New question for this year’s survey)

Do shorter or longer ebook descriptions impact sales?

• We look at word count of the book description

• Most retailers support up to 4,000 characters, which equals ~ 500-600 words.

• Conclusion: inclusive

• Bestselling ebooks have descriptions, on average, ranging from 150 to 180 words.

• Indication that worst-selling titles (sales bands of #50,000-#51,000, and #100,000-#101,000) have lower word counts

• My recommendation: Rather than focusing on word count, focus on making sure that the first sentence captivates the reader’s attention and makes an honest and compelling case for why this book is worth reading for your target reader. Then make every sentence thereafter do the same. Know your target. We read to experience emotion, and this is true for fiction and non-fiction.

What’s the right word count for an ebook product description?

Q:

If ebooks are immortal, how do sales develop over time? Case studies from

Apple iBookstore

How Sales Develop: Single Retailer, Single Title

• This set of daily sales data looks at individual titles at the Apple iBookstore, which reaches 51 countries

• Key findings:

• Books develop differently over time

• Some books sell poorly at first, then breakout

• Breakouts can happen in different countries and not others

• Sales rise and fall, then rise and fall again, based on various factors (randomness, luck, author promotions, new title releases, retailer promos)

• Note that authors have control over many of these factors!

• Non-stop presence is important. Never unpublish, otherwise you miss breakouts!

• Unlike print books, which quickly go out of print, ebooks are immortal and can yield income for years

The immortal indie ebook keeps on giving

• Axis at right shows daily unit sales at iBookstore. The vertical black bar shows the sales for that particular day. This title had been out over a year (chart doesn’t show complete history). A new released by this author in November caused this title to surge anew, followed by subsequent breakouts as new readers discover this great author. As shown, still selling over 50 copies a day on average one year after publication.

The book that keeps giving

• Became immediate bestseller upon publication. Months later, still selling about 100 copies a day. This book will rise again with new releases by this author as new readers discover her talent. For this author, the annuity of ongoing sales will far surpass her great sales in the first few weeks following publication. This book, like all indie ebooks, is likely to yield income for the author and their heirs for decades to come. Think long term.

Breakout, followed by breakout, followed by strong daily sales

• Immediate wordwide bestseller. Then experienced another spike in sales with free promo of a different book and series by the same author. Not captured in the data – experiencing another spike in May 2013 with a new release.

New release sparks new breakout for older book

• Full history prior to October not shown. This book has been out nearly 18 months. Still performing well. Spiked in October 2012 concurrent with the release of a different unrelated book by this author. Still selling around 50 copies a day.

Slow boil, breakout, slow boil, breakout

• This title was selling relatively well (5-10 copies a day) then benefited from press cover in a single national daily newspaper (spike #1) then spiked again after a feature placement in an Apple email promo (spike #2). After each spike, sales settled at a higher level. Data from 2011-2012. I included this chart in last year’s presentation.

Slow boil to breakout

• This is the chart for Ruth Ann Nordin (the only author for which I obtained permission to reveal her identity) and her book, An Inconvenient Marriage. This book had already been a bestseller at a much smaller retailer, Kobo ,12 months before it suddenly broke out at Apple to become the #1 romance title in the store. The Apple spike was prompted by a new title release, and price changes including possibly a free promotion for a separate title on her list. More discussion in my free Secrets ebook. I included this chart in last year’s presentation too.

Case study: How a Cover Redesign Sparked a Breakout and Caught

Apple’s Attention

• A book’s first impression is its cover

• A great cover draws the reader in by making a promise

• A poor cover chases readers away, creates unnecessary friction

Look what happened when this great author updated the cover for this romance novel from

this to (next slide)…

… to this cover…

The cover sparked a breakout at Apple

Prior to the new cover, the book was selling 5-10 copies a day (not bad! above average for all books), and was earning rave “Wow” reviews from readers. In retrospect, the old cover wasn’t making a compelling case for readers to try the book. The new cover made the right promise to readers, and kept that promise. The cover upgrade helped propel R.L. Mathewson to the New York Times bestseller list a few weeks later.

Q:

What’s the ideal word count for ebooks?

Do Readers Prefer Shorter or Longer ebooks?

• The findings were again very conclusive: Based on sales data, e-reading consumers prefer longer books

• This finding runs counter to prevailing notion that ebook readers prefer shorter books

• Long form reading is alive and well on e-reading devices

• Word of caution: Always write your book to the length your book demands. Don’t bloat or cut your book to meet these average word count numbers. On the other hand, you can forget the notion that 120,000 words is too long for a romance novel!

Do Readers Prefer Longer Books?

• This looks at sales rank bands from #1 to #XXX.

Readers Prefer Longer Books

• When we zero in on narrower sales rank bands, the impact is clear.

Q:

What’s the average word count for the top 60 bestselling Smashwords romance

books?

A:

112,195 words = average word count of top 60 Smashwords romance

(this will come as a surprise to many. Don’t underestimate romance readers! So often in reviews, I see readers saying they wished their favorite books were longer. Listen to your readers!)

Q:

How many books sell well?

How Many Indie Ebooks Sell Well?

• Key findings:

• Sales distribution is a “power curve”

• Most books do not sell well (very important for authors to set realistic expectations, and take long term view to platform building)

• Sales distribution characterized by small minority of titles selling extremely well, thousands of moderate sellers, and then a long tail of poor sellers

• Authors should implement best practices (read the Secrets to Ebook Publishing Success for ideas!) to drive their performance to the left of the curve

• As books move to the left in sales rank, their actual sales increase at an exponential rate, especially in top 1,000

• Because ebooks are immortal, authors should continue to iterate their viral catalysts (cover, description, book content, etc.) until they get the formula just right so they spawn reader word-of-mouth can move up and to the left on the chart.

Sales Distribution Across Smashwords Network

(½ of sales are to the right of #1,000)

At first glance, it looks like most authors sell nothing. The scale is thrown off by a few amazing sellers. While it’s definitely a long tail market, many authors enjoy satisfying sales. ½ of sales by revenue was to the right of #1,000. The next slide takes a closer look at the top 500, and how the curve is shaped.

The Sales Curve for the Top 500 (normalized data)

Q:

What do words cost readers?

What do words cost?

• This question revealed some interesting results

• There’s a lot of variation

• Similar to last year’s study, there’s evidence that some authors are probably underpricing their books

• Note the two blips at the end of the chart, where two books are charging around 1 cent for 100 words, whereas most other bestsellers are selling around 300 words for penny. The authors are Bella Andre (a 41k-word book for $3.99) and Mia Dymond (a 35k-book for $2.99). This shows there are exceptions to the rules. Just because the “average” bestseller includes more words doesn’t mean there’s not an opportunity for some great books to be priced higher.

How many words can a reader buy for a penny?

Q:

What are the most common price points?

What are the most common price points for indie authors?

• Key findings:

• Indies leveraging their pricing flexibility to underprice traditional publishers

• Big competitive advantage for indies

• Indies satisfying reader desire for high-quality books at lower prices

• $2.99 is most popular price point with indies

• $.99 remains popular, but shows a big relative drop compared to our 2012 study which showed more $.99 titles than $2.99.

• Indies have virtually abandoned the $9.99 price point compared to our last study.

(Last year’s 2012 Study) How Many Books are Priced at Each Price

Point?

(2013 study) Number of indie titles in each price band

Q:

What price moves the most units?

(With the following slides, we explore the most important findings of the study, exploring pricing, earnings yield and the impact of

price on the rate of fan-building)

FREE

• FREE moves ebooks!

• 91X more downloads on average for FREE compared to priced titles

• We looked at 12 months of Smashwords download data from the Apple iBookstore

• Powerful platform builder for authors

• Gives indie authors tremendous fan-building advantage over traditionally publishing published authors

• Powerful sales catalyst for series or deep backlists

• Smashwords authors have yielded over 35 million free downloads at Apple last 12 months (rapid fan-building!)

Smashwords, an authorized global aggregator for Apple, makes it fast and simple to get your ebooks listed at the Apple iBookstore. Our authors are

yielding tremendous growth as Apple expands globally.

Q:

What impact does price have on unit sales?

Impact of Price on Unit Sales

• This set of data examines how price impacts unit sales

• 1.0 = normalized reference point. For example, books priced in $3.00-$3.99 price band, on average sell 4.3 times more units than books priced $10.00+

• Key findings:

• Low prices tend to sell more units (not a surprise)

• $1.99 price point dramatically underperforms (surprise)

• Is $3.99 the new $2.99? I see untapped opportunity there, where indies may be able to raise prices but not suffer unit volume decline.

How Price Impacts Units Sold

Q:

What prices earn the author the greatest amount of money?

What Price Earns the Author the Greatest Yield?

• We know low price generally yields more unit sales, but what price yields the greatest profit for the author?

• Key findings:

• $.99 to $1.99 underperforms. $1.99 a black hole.

• $2.99 to $6.99 sweet spot for max earnings

• $3.99 the new $2.99? Fewer titles to compete against at $3.99, and authors appear to pay no penalty in terms of unit sales volume (see prev. slide, “How Price Impacts Units Sold.”)

• Some authors are underpricing

What Price Yields the Greatest Author Earnings?

The Yield Graph explains why traditional publishers are headed for

trouble• As ebooks account for an ever-greater percentage of book sales,

it’s bad news for publishers, good news for indies

• Publishers can’t compete at these low prices without lowering author payouts

• If publishers try to hold prices high, they’ll squander their authors’ fan-building potential

• The Yield Graph explains why self-published ebook authors will out-perform traditionally published authors over the long term

• Lower prices move more units faster

• more unit sales = more readers = more fans = more super fans = more word-of-mouth = faster brand-building for indies

• An indie author can price at $2.99 and earn about $2.00. A traditionally published author would have to be priced over $10.00 to earn the same amount. Implication: If the economic allure of a publisher’s print distribution fades, it’ll become more challenging for publishers to attract and retain the best authors

Final Thoughts

• Data-driven publishing decisions are irrelevant without a great book

• Our study examined averages. Your results will likely vary because your book is unique!

• Numbers provide hints at reader preferences

• Dangerous to make decisions on a single metric alone

• If your story demands 200,000 words, go for it!

• Last year’s study influenced the pricing decisions of thousands of authors. If this study does the same, it may skew your results (i.e., if everyone moves to the $3.99 price point).

• Your book is immortal

• Experiment and iterate until you get your viral catalysts just right. Then iterate some more.

• Read the Secrets to Ebook Publishing Success for other viral catalysts

Free Ebook Publishing Resources

• Secrets to Ebook Publishing Success (best practices of successful authors)

• Smashwords Book Marketing Guide (how to market any book at no cost)

• Smashwords Style Guide (how to create, format and publish an ebook)

Help Spread the Word about this Survey and Indie Ebooks!

• I hope you found this presentation useful

• Please share it with your favorite friends on Facebook, Twitter, LinkedIn, message boards and with your writing group members! Link to my blog post, where you’ll find additional analysis of the survey findings -http://blog.smashwords.com/2013/05/new-smashwords-survey-helps-authors.html

• Blog about your favorite findings

• Start an online discussion and share your thoughts.

• Whether you’re a writer, a publisher or a literary agent, we’d be honored to publish and distribute your ebooks. Here’s how:

• Click here to learn how to publish and distribute with Smashwords. Reach more readers today!

Thank you!

Connect with Mark Coker:

Twitter: @markcoker

Facebook: facebook.com/markcoker

Web: www.smashwords.com

Blog: blog.smashwords.com (subscribe via email)

Huffington Post: huffingtonpost.com/mark-coker

My Smashwords page:

https://www.smashwords.com/profile/view/mc