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[Publishing svcs] Smashwords, Inc.

Jerry B. Flory

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Mark.
Some questions. Please don't think I'm trying to slap you down or anything. You may really be onto something here.
Initially, you have people purchasing a costly electronic device--a Kindle or whatever-- I don't buy that kinda stuff. Then, as an added expenditure, they're going to take their spendy new toy to your site and D/L a half or a fifth of a novel.
I think I see where you're headed with this. People want to buy that stuff, the cell phones, blackberrys all the new junk. So, you're opening a window. These people who buy this stuff aren't going to be like little kids with a Gameboy; they're not going to get bored with it and leave it in the car to melt to the dash. They're going to want more.

They'll be unsatisfied with a half or a fifth. They like to buy crappy new toys; they don't want to go buy some paper novel to finish reading what they started on their gizmo, that's practically regression! That's caveman stuff!

So how long will it take and how many more sites like yours are going to pop up and start insisting on completed works?

And when that happens, you'll inherit responsibilities, editorial, packaging. Just like those annoying menus on DVD's electronic books are going to need "covers" and electro art and all kinds of goodies.
What happens then? Are you prepared or preparing for all that?
You're headed toward what may be a media explosion by offering samples in order to start a clamoring for more.
Are you prepared to deal with us snooty, perfectionist literature types when that hits?
 

Smashwords

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Jerry, these are fun questions. I'll attempt to answer them, but let me know what I missed...

First thing to understand about ebooks is that there probably won't be any one single "ipod-like" killer device. We're actually seeing a confluence of factors contributing to the big uptake in ebooks. Ebook reading device technology, specifically the screens, have really improved over the last few years, and this technology is driving some of the most popular ereaders like the Kindle and Sony Reader. The Kindle is really interesting, especially with its wireless component because it basically extends the bookstore to anywhere. My first Kindle experience was on the beach at Waikiki. I accessed their online bookstore from the beach, sampled a few books, and then purchased one instantly. Then I decided I wanted a larger font, so one click later I had a larger font. Most people I know who have tried the Kindle have had similar "wow" moments. Another interesting thing is happening on the iPhone. If you have an Iphone, or know someone who has one, download the Stanza ereader app. The Stanza ereader app is used by over 600,000 people to consume books. It's free. Instantly, you have in the palm of your hand access to tens of thousands of free classic ebooks from Project Gutenberg and elsewhere. With a few clicks today, any Iphone users can access their personal Smashwords library on their iphone, or browse and sample most of our books, and buy them. In January, we'll have even greater integration which will essentially put our authors in front of all these potential book buyers. Stanza is a game changer, and it's just one of the game changers taking place right now. We're also seeing authors and publishers starting to drop the onerous DRM that limited ebook adoption in the late '90s. Our goal at Smashwords is to help indie authors (not all of whom are failed authors despite the common misperception of self publishing) take advantage of these new digital opportunities. There are thousands of authors out there with out of print books who have had the rights revert back to them. We want to publish them!

These new responsibilities of editorial, packaging, etc... I think the future of indie authorship is that serious indie authors will need to hire their own professional editors. We hired professional editors for our book. I'm a huge believer in the value add of good editing. In terms of packaging, not all the notions of packaging translate into the ebook realm, though some do. When you talk about commercial fiction and other straight form narrative, for example, the best ebooks are really just lightly formatted text. Complex formatting is really the enemy of ebooks, because the goal is to make your ebook easily readable on as many different devices as possible, and as many different ebook readers as possible. Most people today think ebook = PDF file. PDFs are a terrible ebook format, though I'm still in the minority in terms of saying this. Take a look at epub, the format supported by Stanza. Epub has a bright future. Other packaging: there will always be a market for digital book covers, though we've seen something interesting taking place at Smashwords. We don't require the author to have a cover. Some authors, rather than a cover, upload images they feel represent the cover. Will the traditional cover go away? I doubt it. But our notion of what is a cover may change.

Re: completed works, we insist on completed works, but we give authors the ability to designate a percentage of the book that's available as a free downloadable sample. The idea is you let the reader try a portion before they buy, you get them to invest time in your book, you hook them, and then they buy.

Electro art and goodies - there's a point where too much technology destroys a good thing. I think the future of ebooks is in simple. Yes, there will be complicated offshoots and new types of multimedia texts we can't even imagine today, but when you look at what sells at your local B&N, much of that can and will make the transition to e- over the next few years.

We welcome you "snooty, perfectionist literature types." :) We all want the same thing - we want our words to be read and appreciated. We shouldn't care if the words are read on screen or on paper.

Goodnight, and peace all.
 
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Momento Mori

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Hi, Smashwords, and thank you for taking the time to answer people's questions. I just had a couple of comments of my own that I wanted to add.

Smashwords:
No matter how you look at it, the royalty rate we pay is quite high.

An 85% royalty figure is high, but the figure itself is meaningless if people aren't selling a high enough volume of ebooks to make it worthwhile. Although Ebook sales are (I understand) increasing, they still only account for a fraction of the market. How does Smashwords intend to generate the volume of purchasers to their site that would make this a profitable venture for its authors?

Smashwords: (Bolding mine)
if a self-published author's work is truly great, and it's able to develop the word of mouth necessary to become a hit, then those solid sales won't be frowned upon by a prospective publisher - instead, those good sales will be seen as proof that there's a market for the book, or that the author has developed a sizable platform for their current and future works.

The problem for an author is in achieving that "it" and that "and" in the first place. At the risk of sounding mean, even though everyone is said to have a book in them, 90% of would-be authors shouldn't be trying to let that out. There are plenty of vanity and self-publishing outfits that are testament to the dross that comes out on the printed page and even though some blogs like PODY mouth tried to sort out the wheat from the chaff, even they found that the true gems were few and far between.

The thing about commercial publishers is that to a given extent they do operate a quality threshhold and produce a polished product. Self-publishing, by definition, doesn't have that quality bar and although you may encourage your authors to edit their work properly (even having it professionally edited), if the majority of work on your site is dreck then the talented authors are going to get lost within it and if your site ends up with a reputation for publishing anything and everything, what incentive is there for authors who want to be taken seriously to use it?

(Note: I have not checked out the work available on your site and am in no way impugning the abilities of those using it but apologise for any offence I may cause with the previous observation).

Then we come to the "and" - how does an author generate word of mouth? Commercial publishers have been trying to find the answer to that and use a variety of techniques from promoting web communities to providing free copies to book groups. The simple truth though is that a book either catches the public imagination so that people talk about it and recommend it or it doesn't. If a commercial publisher's marketing department can't make a book take off with their budgets, how is a self-published author supposed to do so with little or no support and only their own finances and experience to help them?

Finally there's the fact that even if a self-published author manages to make a few thousand sales of their book, a commercial publisher is going to have to work out whether in doing so, they've managed to tap out the potential market. This can certainly be the case with more niche non-fiction work.

Smashwords:
I also know that for many authors, the achievement of mainstream publication and the joy of seeing your book in bookstores is quickly replaced by the dissatisfaction of realizing that you've lost control of the book; that for most first time authors they receive little to no marketing support; that bookstores only give your book days or a couple weeks to start flying off the shelves before they return their entire stock for a full inventory; and few authors ever see any royalties beyond their initial advance.

But the point is that for all that dissatisfaction, the author did get a cheque in advance as remuneration for their book and the publisher will have priced the royalties as against the expected performance of that book.

Authors whose books underperform against expectations are the ones who really have to worry because poor sales on a first book may mean that a second book will not be picked up, but this risk can be offset if the book has had good reviews or there is a good "feeling" about the second book at the publisher's marketing department. And even if an author does get dropped by a publisher, they still have the cash in their bank account from that first book sale and their agent will know the ways and means of getting a deal with another publisher (usually by submitting under a different name).

Smashwords:
I think most authors realize those big deals are few and far between, which is why I said if a publisher offers you a couple thousand dollars it's a personal call whether or not you take it. It's certainly not my place to say that $4,000 is a fair deal for someone, because it may or may not be fair given the quality of the work or the personal aspirations of the author.

I agree that it's a personal call for an author whether they take an offer, but I'd suggest that for many people $4k in the hand is a damn sight more worthwhile than the possibility of maybe earning a couple of hundred dollars going down the self-publishing route (which is realistically the most that self-publishing authors can hope to make after taking their expenditure into account). And of course, the irony is that even if an author makes the sales necessary via self-publishing to attract a commercial publisher's interest, they still might not make more than $4k in advance on that book anyway.

MM
 

victoriastrauss

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I find the term "indie author" interesting. One other person on this forum has used it, but before that, I'd never seen it before.

What exactly does it mean? And where did it come from? I'm curious, because all book authors (unless they are writing work-for-hire) are "indie" in the sense that they work for themselves.

- Victoria
 

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Victoria, I think the term derived out of the music industry, where we've seen many successful "indie" artists who published their own music rather than using a traditional music publishing company. These artists are essentially self-published. Some went indie because they couldn't get a record deal, and others have gone indie from the get-go by choice. And still others, who were previously successful artists with big record companies have chosen to go indie after their contracts expired.

Catalysts for the indie movement in music:

1. Some artists felt their record labels weren't representing their best interests
2. Some artists felt their royalties weren't fair
3. Some artists felt their record labels were mismanaging the new opportunities presented by digital, like imposing onerous DRM on the music for copy protection (this is a source of great debate, because not all artists are in agreement on DRM, though most seem to be migrating toward DRM-free)
4. Some artists resented the lack of control over their careers
 

veinglory

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I think that the discussion conflates self-publishing with ebook publishing. Ebook is a format. The reasons to seek an ebook publisher are roughly the same as the reasons for seeking a print book publisher. It is just that some books sell better in ebook format (e.g. novellas, erotica, niche self-help).
 
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victoriastrauss

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Okay, but the music industry really isn't comparable to the book publishing industry. For one thing, musicians don't routinely keep their copyrights. For another, because they can perform, musicians have a revenue stream and an opportunity for sales unavailable to most book authors.

Also, going "indie" in the sense of doing it all yourself is not equivalent to signing up with a self-publishing company or a micropress, which is the sense in which it appears to be used here. If you grant even limited rights to someone else, and are dependent on them for payment, you really are not "indie."

- Victoria
 

Smashwords

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MM

Hi MM, thanks for the questions.

Hi, Smashwords, and thank you for taking the time to answer people's questions. I just had a couple of comments of my own that I wanted to add.

An 85% royalty figure is high, but the figure itself is meaningless if people aren't selling a high enough volume of ebooks to make it worthwhile. Although Ebook sales are (I understand) increasing, they still only account for a fraction of the market. How does Smashwords intend to generate the volume of purchasers to their site that would make this a profitable venture for its authors?

I agree. Even a 100% royalty is meaningless without sales. Ebook sales only account for under 1%, possibly under 1/2 of 1%, of paper book sales. So for every ebook that sells, 100 to 500 print books sell. This is why we encourage our authors to publish in print as well (not that it takes any encouragement from me. Our authors realize e- is just one form of book consumption). We're taking multiple steps to achieve volume, but I have no illusions here - it's not going to happen overnight.

We have many obstacles to overcome:

1. 1/2 of 1% E. Even at the current 70-80% annualized growth according to the AAP, it'll still take several years before the E percentage reaches mainstream status.

2. In any form, e- or p-, it's tough work to sell a book! This challenge is made even more difficult because consumers are at their saturation point in terms of free and low cost media alternatives for their entertainment and information needs. Every form of traditional media out there is suffering, from television to newspapers to magazines. It's tough to hold consumer attention in this ADHD world.

3. Consumer awareness about ebooks is very low, at least here in the US (many other countries are more advanced).

4. There's great initial prejudice against ebooks when you first tell someone about them. It's only after people try them that *some* become fervent converts.

5. There's prejudice against self-published authors because some view the authors as failures and not good enough to get traditionally published.

6. There's prejudice and mistrust of self publishing companies thanks to the ongoing sins of the bad seeds that came before us, and of the ones that continue to operate.

So with Smashwords, we're working to overcome each of the above obstacles, as are our authors and many other players in the ebook industry. Again, it won't happen overnight and many of us will fail along the way. Like I think I said in an earlier post, I enjoy a challenge. For me, every time I see a new author publish their work on Smashwords, its a joyous celebration because I feel like I just helped that author get one step closer to connecting with readers.

More on how we're helping: Take a look at The Smashwords Book Marketing Guide - here's a link to the third page that highlights 14 benefits we provide our authors, all without them lifting a finger (other than the 5 minutes it takes to publish with us): http://www.smashwords.com/extreader/read/305/3/the-smashwords-book-marketing-guide

In addition to the above, we're developing tools to help authors promote and sell their books. Many of our tools leverage the unique characteristics of social media, which, in other words, are word-of-mouth tools optimized for the Internet. We've already developed several tools, all outlined in the Guide above, and we're developing others. The most recent tool we announced just a couple weeks ago is a coupon code generator, so authors can generate their own unique coupon codes they can share on social networks, their blogs, their websites and their fan lists. Many of the tools we've developed so far, and the new tools that are coming, are do-it-yourself. The author needs to make the personal investment of their time to benefit from some of these tools.

As has been pointed out here, one huge advantage of a traditionally published book is the ability to receive overnight exposure in thousands of book stores. So in the digital realm, one of our opportunities is to do the same, only differently. Our forthcoming deal with Stanza, for example, will get our books and book samples in the hands of over 600,000 iPhone and iPod Touch users. Yeah, we'll be sharing that virtual shelf space with thousands of other books, many of which are free.


The problem for an author is in achieving that "it" and that "and" in the first place. At the risk of sounding mean, even though everyone is said to have a book in them, 90% of would-be authors shouldn't be trying to let that out. There are plenty of vanity and self-publishing outfits that are testament to the dross that comes out on the printed page and even though some blogs like PODY mouth tried to sort out the wheat from the chaff, even they found that the true gems were few and far between.
I don't disagree that some self-published books don't fit certain norms for quality, but the same can be said for many traditionally published books as well. I think when agents, publishers, editors and all the rest are at their best, they provide incomparable value (I know my wife and benefited enormously from the feedback of our agent, and the feedback from the editors who rejected our book). But the publishing industry is incapable of publishing all authors, and incapable of identifying all the great future writers in our midst. Many great writers aren't recognized as great until they and their contemporaries are long dead. At Smashwords, we believe it should be up to the reader to determine what's worth reading, not the agent or the publisher. The current buzz phrase is "wisdom of the crowds." It was drives many successful social media ventures such as YouTube. The idea is that the good stuff bubbles up to the top and the bad stuff falls to the bottom and disappears.

The thing about commercial publishers is that to a given extent they do operate a quality threshhold and produce a polished product. Self-publishing, by definition, doesn't have that quality bar and although you may encourage your authors to edit their work properly (even having it professionally edited), if the majority of work on your site is dreck then the talented authors are going to get lost within it and if your site ends up with a reputation for publishing anything and everything, what incentive is there for authors who want to be taken seriously to use it?

(Note: I have not checked out the work available on your site and am in no way impugning the abilities of those using it but apologise for any offence I may cause with the previous observation).
No offense taken. :) I encourage you to check out some of our books. Some are quite good, and some will disappear almost as fast as they appeared.

Re: talented authors getting lost in the dreck, as I tell our authors all over the site in our FAQs and Guides and elsewhere, if an author simply puts their book on the site and does nothing else, they're not going to sell well. Most of our sales are author-originated, meaning the author send the customer to our store to buy. Our most successful authors are those that leverage the site as a sampling and selling platform. They've got blogs and websites and participate in the social media world and have followers, and they send their prospective readers to the site to sample and purchase. These authors send their readers direct to their Author Profile pages, or to their Book pages, so the reader doesn't need to sift through our virtual shelves to find what they want.


Then we come to the "and" - how does an author generate word of mouth? Commercial publishers have been trying to find the answer to that and use a variety of techniques from promoting web communities to providing free copies to book groups. The simple truth though is that a book either catches the public imagination so that people talk about it and recommend it or it doesn't. If a commercial publisher's marketing department can't make a book take off with their budgets, how is a self-published author supposed to do so with little or no support and only their own finances and experience to help them?
I agree, it's a huge challenge. We can't promise we'll do any better. In fact, I think I can promise we'll do worse, at least in the short run, thanks to the obstacles I mentioned above. But I'm also confident that one day we'll have our own break out hit that captures the imagination of not only readers, but authors as well. :) One of the challenges in publishing is that you can publish a true masterpiece yet noone buys it. What makes a book resonate is not always predictable beforehand.


Finally there's the fact that even if a self-published author manages to make a few thousand sales of their book, a commercial publisher is going to have to work out whether in doing so, they've managed to tap out the potential market. This can certainly be the case with more niche non-fiction work.
I don't disagree. Every situation will be different. One of the impetuses for me starting Smashwords was the realization that there are probably hundreds of thousands if not millions of unpublished manuscripts tucked away in dresser drawers and attics that never got a chance to find their audience. We hope to give every author that chance to find their audience. We're very clear all over the site that we're not promising them anything other than that chance.

But the point is that for all that dissatisfaction, the author did get a cheque in advance as remuneration for their book and the publisher will have priced the royalties as against the expected performance of that book.

Authors whose books underperform against expectations are the ones who really have to worry because poor sales on a first book may mean that a second book will not be picked up, but this risk can be offset if the book has had good reviews or there is a good "feeling" about the second book at the publisher's marketing department. And even if an author does get dropped by a publisher, they still have the cash in their bank account from that first book sale and their agent will know the ways and means of getting a deal with another publisher (usually by submitting under a different name).
Agreed.


I agree that it's a personal call for an author whether they take an offer, but I'd suggest that for many people $4k in the hand is a damn sight more worthwhile than the possibility of maybe earning a couple of hundred dollars going down the self-publishing route (which is realistically the most that self-publishing authors can hope to make after taking their expenditure into account). And of course, the irony is that even if an author makes the sales necessary via self-publishing to attract a commercial publisher's interest, they still might not make more than $4k in advance on that book anyway.

MM
Right. Every author has a different threshold. Given the current average sales of most self-published authors, $4k would be tough for most authors to turn down. For me, given the thousands of hours my wife and I invested to research, write and revise our book, not to mention the $$ spent on editing and a book cover, $4k is insufficient.

Thanks for the questions.

mark
 

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Taken from your About Us page:
How is the publishing industry broken?
I call it the 80% problem... Many of the problems in the publishing industry roughly conform to this number (Some are higher, some are lower. These are my own estimates). Eighty percent of written works are never published by a publisher that can get widespread distribution in stores, and therefore these titles have limited opportunity to find their audience. Of the 200,000 or so books that go into print each year in the US, 80% receive limited or no promotion from the publishers, 80% are money losers for the publishers, 80% go out of print after the first printing, and 80% of authors never receive royalties beyond their upfront average advance of $5,000 to $10,000. There are several reasons for these failures:
I have to admit that I go cross eyed every time I see someone telling people how the publishing industry is broken. The industry is NOT broken, but we hear this from vanity and PODs in order for those business entities to garner business - i.e. authors. It's clever but inaccurate. Just because there are authors whose works don't find a good publisher doesn't imply a broken system, but rather a system that is run on fierce competition. Publishing is NOT a right. It's based on a system whereby publishers sink money into what will provide them with a hearty return on their investment, and that is based on many people buying the book. How does this imply that the industry is broken? Mark, you state that these are your estimates; may I inquire as to your foundation?

You go on to say that these "failures" are based on the expense of book productioin. Let's face it; most types of manufacturing is expensive, and we are faced with charging a retail price that is commensurate with what the public can afford. How is this a failure? It's an economic reality.
Publishers are terrible at predicting demand for a book: Despite hundreds of years of experience, the publishing industry is relatively clueless when it comes to predicting which books will sell, and which won’t. As a result, they can’t predict the proper size of their print runs, and often saddle their warehouses and bookstores with expensive unsold inventory.
Again, I must ask where you get your information. People who sink thousands into each title are hardly "clueless." We do extensive research into buyer trends and reading tastes. There isn't a single business that isn't a mistress to a fickle buying public. Frankly, I find this insulting. Everyone has bombs, and we pay dearly for it, so we work very hard and very smart in order to minimalize our losses.
Publishing is a “hit” business: Publishers lose money on most books they publish and try to make up the difference by having a few bestseller hits.
You're overgeneralizing here. Yes, the big guys can absorb losses far better than indie presses, but they would be insane not to try to recoup their losses with a blockbuster. That is what any business who sells to the public tries to do. How does this impeach the publishing industry? No one tries to lose money on their products, and I would like to know where you get this information.

You then go on about the short attention spans of bookstores and their propensity to return the books. Yes, it's aggravating as hell, but this is a matter of competition. If you have an author with a great promo plan and the books are selling, the stores will keep those books. If they aren't selling, they get returned. How is this broken? Clothing stores get rid of their nonselling items too. Are they broken as well?
Publishers don’t promote most books: Most authors (especially first time authors) receive little to no publicity support from their publishers. Authors now recognize they have to do the promotion themselves. They have to do their own PR; call bookstores to arrange signings; and personally hand sell books to local bookstores.
I'd like to know who you're including in this statement. If you're talking about POD/vanity, then you're correct. Sadly you make no distinction, and this is confusing to the undereducated author. As Victoria explained, trade publishers most certainly do support their authors, before, during, and after production. We have to because we've invested a tidy sum into its production.

I take issue with the hand selling to local bookstores. A good trade publisher has a sales team who pitches their catalogue to the genre buyers. An author can't do justice to selling their own books because they really don't know how. They're writers.

Yes, most authors schedule their own signings because it's easier to do since the publisher's publicity folks rarely know the author's schedule. How many times we scheduled signings only to have the author cancel at the last minute because something came up. On the other hand, many of us do work with an author's publicist on events and help coordinate with our distributor.

Mark, what bothers me most of all is that you don't appear to have walked fifty yards in my shoes, so everything you're saying on your About Us page is opinion and conjecture. And any author who knows little about the industry is going to believe you. If you're going to insist that the industry is broken, then you need to be able to back that up with real fact, not the same rhetoric that's been floating around every POD/vanity site for many years.

Sorry if I appear piqued at all this, but I care deeply about educating authors to the realities of the industry, not unfounded opinion.

Here are the facts: Yes, the publishing industry is going through some evolutionary pains. The large publishers have always had plenty of money that got them through the hard times. But no one has experienced these kinds of book returns and store failures, and everyone is taking a close look at their business models. It should have been done many years ago. It wasn't, so this is the industry's comeuppance.

The indie presses have seen the writing on the wall for years and most of us have taken steps to insultate ourselves as much as possible against the current state of affairs by running our companies like a true business. Your hair would fall out if you knew how the big publishers and bookstores operate. And because they have operated in this manner for so long, these tough times were inevitable.

But publishing is not broken. It's evolving, and this is good.
 
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Smashwords

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Okay, but the music industry really isn't comparable to the book publishing industry. For one thing, musicians don't routinely keep their copyrights. For another, because they can perform, musicians have a revenue stream and an opportunity for sales unavailable to most book authors.

Also, going "indie" in the sense of doing it all yourself is not equivalent to signing up with a self-publishing company or a micropress, which is the sense in which it appears to be used here. If you grant even limited rights to someone else, and are dependent on them for payment, you really are not "indie."

- Victoria

Victoria, labels are imperfect, and this "indie" label is no different. I think it's fair to say there are some similarities between books and music, but not all the rules of one transfer to the other. I think if you talk with any self-described indie author, they feel publishing with Smashwords, or Lulu or CreateSpace or Amazon or WordClay gives them independence and control.
 

Sheryl Nantus

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right off the top of my head after doing a quick look - I'm not enthralled with the "You set the price!" option offered... along with free.

as anyone will tell you, people will take anything for free and be willing to toss a penny or two into the pot to get something. Having your "Bestsellers" and "Highest Rated" include these two catagories are somewhat misleading.

I've seen this happen on content selling sites - the free work automatically is rated higher and "sells" more and better because it *is* free... and letting the customer choose their price is just silly. Price *does* relate to quality, in most peoples' minds and if I can get away with paying a penny, well...

I'd suggest you put these stories in a totally different catagory away from the others and perhaps establish a minimum price for your stories, based on length. Sure, you may not want to make a million dollars off your hard-fought epic but you sure don't want to have a plethora of people downloading it for a penny. Better to give it out for free and at least have your dignity intact.

imo, of course.
 

M.R.J. Le Blanc

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I do appreciate that you are here Mark, and are attempting to answer all the questions put forth. That alone puts you a few pegs higher than some other publishers seen around here. However, I still don't see the attractiveness of Smashwords, and what it offers that CreateSpace or Lulu doesn't. What does Smashwords give that others don't? Also the various elements on your site that appear to be misleading make me very uncomfortable. You list a lot of stats without sources. You make various claims and have nothing to back them up with except your own opinion. And 'indie authors' while may be an attractive label I just don't see the point of it. Just like the traditional publisher label - it's a pointless label, often used by vanities and That Publisher (you guys know who I mean). Though you are upfront that you have no quality control as it were, well that's never worked in anyone's favor.
 

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Priceless

Priceless, I'll attempt to address your questions below.

Taken from your About Us page:

I have to admit that I go cross eyed every time I see someone telling people how the publishing industry is broken. The industry is NOT broken, but we hear this from vanity and PODs in order for those business entities to garner business - i.e. authors. It's clever but inaccurate. Just because there are authors whose works don't find a good publisher doesn't imply a broken system, but rather a system that is run on fierce competition. Publishing is NOT a right.
We have a slight disagreement here. I think every author (provided they're not spewing hate speech or advocating violence against another person or group) has a right to publish. I don't think they have a right to be published by a traditional publisher such as your own, however, because I do believe that competition is good and publishers deserve the freedom to publish what they want and profit from their good work.

It's based on a system whereby publishers sink money into what will provide them with a hearty return on their investment, and that is based on many people buying the book. How does this imply that the industry is broken? Mark, you state that these are your estimates; may I inquire as to your foundation?
I think I presented plenty of reasons for why I believe the current system is broken, and that's not to say there can't be successful publishers such as your own who saw the writing on the wall earlier than the rest and who aren't broken. I'm sure I could make the claim the newspaper industry is broken, and many well informed people can make good arguments why I'm wrong.

As I make clear, the 80% rule is my own estimate based on my own interpretation of information I've been able to find. Just now, I did a google search on "percent of books that lose money for their publisher." The first result at Mediabistro quotes a publisher who says the figure is 70% and the next result says 90%. I truly don't know the exact figure, which is why I call it an estimate, though I suspect I'm close. The moment I find a good reputable figure from an industry trade group or analyst firm, I'll gladly adjust the estimate and cite the source.

You go on to say that these "failures" are based on the expense of book productioin. Let's face it; most types of manufacturing is expensive, and we are faced with charging a retail price that is commensurate with what the public can afford. How is this a failure? It's an economic reality.
I think the economic realities of the cost of paper book production and distribution mean that paper books are unaffordable to most of the literate readers in the world. Yes, I understand most publishers aren't targeting all these readers, and there's nothing wrong with that. But even here in the US, books are still expensive for people who struggle to put food on the table or pay the mortgage. The price disparity becomes even greater when you compare the cost of books to other free media. It's just the reality.

Again, I must ask where you get your information. People who sink thousands into each title are hardly "clueless." We do extensive research into buyer trends and reading tastes. There isn't a single business that isn't a mistress to a fickle buying public. Frankly, I find this insulting. Everyone has bombs, and we pay dearly for it, so we work very hard and very smart in order to minimalize our losses.
I would never accuse anyone of being clueless, and I'm sorry you find some of my opinions insulting. I personally believe the book publishing industry as we know it is facing a long and painful decline. Bookstores will close. We'll see more consolidation. It'll become more difficult for all the smart and talented people in publishing to carry out their trade. I'm not happy about it, and I don't wish the industry or anyone here any harm, I just think many of the same forces that are causing wrenching change in other media like music, television and magazine publishing will impact book publishing as well.

I'm structuring my business to survive and thrive in the world I think is coming, where customers will demand lower priced product, and authors will be forced to assume more of the responsibilities typically handled by traditional publishers. I realize my crystal ball might be wrong.

You're overgeneralizing here. Yes, the big guys can absorb losses far better than indie presses, but they would be insane not to try to recoup their losses with a blockbuster. That is what any business who sells to the public tries to do. How does this impeach the publishing industry? No one tries to lose money on their products, and I would like to know where you get this information.
Yes, it's possible I'm overgeneralizing and painting with a broad brush, because there are many smart and successful publishers out there. I'm talking about the industry as a whole.

You then go on about the short attention spans of bookstores and their propensity to return the books. Yes, it's aggravating as hell, but this is a matter of competition. If you have an author with a great promo plan and the books are selling, the stores will keep those books. If they aren't selling, they get returned. How is this broken? Clothing stores get rid of their nonselling items too. Are they broken as well?
Bookstores are consignment sellers, and this is a great example of why I think the current system is broken. I think it's wrong that bookstores deliberately order more than they think they can sell, and then return books before the return window closes, only to reorder the books and start the clock ticking again before the next return. I think it's unfair to publishers, and I think it's an unsustainable model for publishers. I think more and more publishers will be forced to say no to consignment selling, and this will help bring about some necessary rationalization. We'll probably see fewer stores with smaller inventories with more buying shifting to online.

I'd like to know who you're including in this statement. If you're talking about POD/vanity, then you're correct. Sadly you make no distinction, and this is confusing to the undereducated author. As Victoria explained, trade publishers most certainly do support their authors, before, during, and after production. We have to because we've invested a tidy sum into its production.
I think Victoria made a great point about the distinction between pre-pub support and post-pub support. I don't disagree that many publishers do a great job on the pre-pub side.

Let's distinguish between POD, vanity and subsidy. I'm sure many here will disagree, but IMHO self-published POD is no less vanity than an author seeking to get their book published through the traditional system. If you're talking about the types of bad seed publisher that sparked the topic of my blog post yesterday at blog.smashwords.com, I make no excuses for them because they're the slime of the earth and those types of publishers are the ones that lead reputable self-publishers to be castigated and crucified for the crimes of others.

I take issue with the hand selling to local bookstores. A good trade publisher has a sales team who pitches their catalogue to the genre buyers. An author can't do justice to selling their own books because they really don't know how. They're writers.

Yes, most authors schedule their own signings because it's easier to do since the publisher's publicity folks rarely know the author's schedule. How many times we scheduled signings only to have the author cancel at the last minute because something came up. On the other hand, many of us do work with an author's publicist on events and help coordinate with our distributor.

Mark, what bothers me most of all is that you don't appear to have walked fifty yards in my shoes, so everything you're saying on your About Us page is opinion and conjecture. And any author who knows little about the industry is going to believe you. If you're going to insist that the industry is broken, then you need to be able to back that up with real fact, not the same rhetoric that's been floating around every POD/vanity site for many years.
I will consider updating our About Us page to clarify that while I think the industry as a whole is broken, there remain many good publishers who serve their authors well and whose individual businesses are not broken.

Sorry if I appear piqued at all this, but I care deeply about educating authors to the realities of the industry, not unfounded opinion.

Here are the facts: Yes, the publishing industry is going through some evolutionary pains. The large publishers have always had plenty of money that got them through the hard times. But no one has experienced these kinds of book returns and store failures, and everyone is taking a close look at their business models. It should have been done many years ago. It wasn't, so this is the industry's comeuppance.

The indie presses have seen the writing on the wall for years and most of us have taken steps to insulate ourselves as much as possible against the current state of affairs by running our companies like a true business. Your hair would fall out if you knew how the big publishers and bookstores operate. And because they have operated in this manner for so long, these tough times were inevitable.
I am in complete agreement with you.

But publishing is not broken. It's evolving, and this is good.
Like I said, I'll consider toning down the page. You and others here have made some good points and it was certainly never my intention to diminish the great work performed by many in the publishing industry. Yes, I think evolution is a good thing. It's painful but necessary for the long term future of the industry.

Thanks for the questions and comments.
 

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Like Priceless1, I get terribly worked up about people who insist that publishing is somehow broken then go on to make assertions about it which are just not true.

From Smashwords' "About" page:

Of the 200,000 or so books that go into print each year in the US, 80% receive limited or no promotion from the publishers, 80% are money losers for the publishers, 80% go out of print after the first printing, and 80% of authors never receive royalties beyond their upfront average advance of $5,000 to $10,000. There are several reasons for these failures:

1) All books which are published by reputable publishing houses are promoted--but to the booksellers who actually sell the books (and so are important people to promote to), and not by the more apparently obvious methods like book launches or signing tours, which are not terribly effective sales tools.

2) 80% of books lose money for publishers? I disagree. Very few books lose money for the publishers. They would soon go out of business if that were true. It's a much, much smaller proportion.

3) 80% of authors don't earn out their royalties? Last time I read any verified research on this it came out as 70%. But that's because the advance is calculated according to the book's expected sales. Consequently, the advance usually represents the expected earnings for the book. If a book earns out then that's great--but if it doesn't, it's not necessarily a failure (and even if a book doesn't earn out, that doesn't automatically mean the publisher has lost money on it--they're usually in profit before that level of sales is reached).

I can't remember offhand what the stats are for reprinting so I won't comment. But I do wish that Mr Smash had researched his facts a little more carefully before putting all that misinformation up onto his website.

He has posted here with great courtesy, so I do hope he's not irked by my comments. They're not meant to be hostile: but in my view his website is misleading, and that doesn't make Smashwords look good at all.
 

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Sheryl

Hi Sheryl,

We let the authors choose. Some choose free because they've decided the added exposure they might get is compensation enough, or is a good strategy for generating readership. The set your own price was inspired by Radiohead. Personally, every time someone chooses to pay nothing I consider it an insult against the author. It's the author's choice.

We recently raised the minimum price of paid books to $.99 (previously it was $.50)

I should add that I've had readers ask us to add the ability for them to "tip" an author after they read the book, as their way of showing appreciation for their hard work. This feature is on our roadmap.

I like your other ideas for restructuring the display so that free books aren't lumped in with the bestsellers of paid books. We'll continue to iterate.

Thanks,
mark


right off the top of my head after doing a quick look - I'm not enthralled with the "You set the price!" option offered... along with free.

as anyone will tell you, people will take anything for free and be willing to toss a penny or two into the pot to get something. Having your "Bestsellers" and "Highest Rated" include these two catagories are somewhat misleading.

I've seen this happen on content selling sites - the free work automatically is rated higher and "sells" more and better because it *is* free... and letting the customer choose their price is just silly. Price *does* relate to quality, in most peoples' minds and if I can get away with paying a penny, well...

I'd suggest you put these stories in a totally different catagory away from the others and perhaps establish a minimum price for your stories, based on length. Sure, you may not want to make a million dollars off your hard-fought epic but you sure don't want to have a plethora of people downloading it for a penny. Better to give it out for free and at least have your dignity intact.

imo, of course.
 

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As I make clear, the 80% rule is my own estimate based on my own interpretation of information I've been able to find. Just now, I did a google search on "percent of books that lose money for their publisher." The first result at Mediabistro quotes a publisher who says the figure is 70% and the next result says 90%. I truly don't know the exact figure, which is why I call it an estimate, though I suspect I'm close. The moment I find a good reputable figure from an industry trade group or analyst firm, I'll gladly adjust the estimate and cite the source.

When I edited for HarperCollins, the percentage of books which lost them money was nowhere near that high: I wonder if you've reversed the figures? As I remember, around 70-80% of published titles earned money. It was a few years ago, I'll admit: but I can't imagine that the levels have dropped as far as you seem to think in that time.

Bookstores are consignment sellers, and this is a great example of why I think the current system is broken. I think it's wrong that bookstores deliberately order more than they think they can sell, and then return books before the return window closes, only to reorder the books and start the clock ticking again before the next return. I think it's unfair to publishers, and I think it's an unsustainable model for publishers. I think more and more publishers will be forced to say no to consignment selling, and this will help bring about some necessary rationalization.

Clever publishers (and I think that Priceless is one of them) don't allow bookshops to order thousands of titles, only to return them a month or two later: if a bookshop orders more copies than the publisher thinks that it'll sell, that publisher will only supply part of the order.

However, the current system of SOR can and will kill off some of the independent publishers who aren't savvy enough to do this, or who overestimated their potential sales. As Emma Barnes of Snowbooks has said, greengrocers can't return lettuces if they buy too many from the wholesaler, so why should booksellers be able to return books that they over-order?

I think Victoria made a great point about the distinction between pre-pub support and post-pub support. I don't disagree that many publishers do a great job on the pre-pub side.

It might be good if you mentioned that on your website, then....

Thanks for the questions and comments.

You're welcome. And thanks for responding here so thoughtfully. It does mark you out from most of the rest, and it's much appreciated.
 

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Hi MRJ, I'm doing my best to respond, though I will have to drop off soon and tend to business.

I routinely recommend Createspace and Lulu and others. While there's some overlap with what we do, our sole focus is on the e- side, and my authors tell me they appreciate our free tools, our multi-format approach, and other secret sauce that only becomes apparent once people really interact with the system.

The last thing I want is for anyone to conclude that anything on our site is misleading, because I strive to run everything as transparently as possible. Like I posted earlier this morning, I will take another pass at our about us page to distinguish opinion from fact, and to give the good folks some of the credit they deserve.

I do appreciate that you are here Mark, and are attempting to answer all the questions put forth. That alone puts you a few pegs higher than some other publishers seen around here. However, I still don't see the attractiveness of Smashwords, and what it offers that CreateSpace or Lulu doesn't. What does Smashwords give that others don't? Also the various elements on your site that appear to be misleading make me very uncomfortable. You list a lot of stats without sources. You make various claims and have nothing to back them up with except your own opinion. And 'indie authors' while may be an attractive label I just don't see the point of it. Just like the traditional publisher label - it's a pointless label, often used by vanities and That Publisher (you guys know who I mean). Though you are upfront that you have no quality control as it were, well that's never worked in anyone's favor.
 

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I would never accuse anyone of being clueless, and I'm sorry you find some of my opinions insulting. I personally believe the book publishing industry as we know it is facing a long and painful decline. Bookstores will close. We'll see more consolidation. It'll become more difficult for all the smart and talented people in publishing to carry out their trade. I'm not happy about it, and I don't wish the industry or anyone here any harm, I just think many of the same forces that are causing wrenching change in other media like music, television and magazine publishing will impact book publishing as well.

I'm structuring my business to survive and thrive in the world I think is coming, where customers will demand lower priced product, and authors will be forced to assume more of the responsibilities typically handled by traditional publishers. I realize my crystal ball might be wrong.

This is where I think you're going to see a lot of problems. You're basing your business structure on what your opinion is of the publishing industry, and where it's going. But as of yet you've offered nothing to suggest this is even a plausible scenario. Opinions are fine, but when you start making claims about an industry (which, by the way you seem to have little experience with aside from shopping around a manuscript for a few years) with nothing to support them, you can't expect people to take you seriously at all. I really hope your business does succeed, but from the looks of things you sound terribly misinformed about the industry as a whole.
 

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I don't believe our system is broken; it's just slow. But that's necessary.
The quality control is what dictates the speed of publishing. We have to go through agents, who are trained to sort quality from slush and, if we get by them, editors.
It's our good fortune that we have people like Andrew Jameson here at AW.
There are two impossible goals I have in life: One is to wipe that hokey scowl off Donald Trump's face and the other is to get a query letter past Andrew Jameson. He's our pre-agent. He does noble work judging our queries and giving us the best possible edge in the publishing business.
If our system is broken at all, it is people like Andrew who are holding the pieces together. We're not increasing the speed, we're increasing the quality of our queries, to hopefully, increase our speed in one area: attaining representation.
As far as quality, we're all here for each other, critiquing, teaching, listening.
It's just slow. If it speeds up any it's because someone somewhere let their guard down in the quality control area and we should be concerned.
Before I signed up with Smashwords, I'd want to know that you are every bit as careful, concerned and have the ability to gatekeep your quality.
If I wanted to join a slush pile I'd join PA.
You are not, insofar as I can tell, a publisher. You are a salesman.
If you're increasing the speed in the "publishing" world then I have to say I'm very wary.
It's slow for reasons that may frustrate us, but they are damn good reasons.
 

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I don't have any definitive stats, but like Old Hack, I think that the idea that 80% of books published lose money defies economic logic. A company simply can't stay in business on that basis. It would also make it difficult to explain the ongoing growth in profits and revenues that so many publishers have experienced in the years leading up to this recent economic downturn.

Again, I don't know what the stats for reprints are, but I'd guess that the number of books being reprinted is actually a good deal higher now than in the past. When I published my first novel in the 1980's, publishers bought either hardcover or paperback rights--rather than both, as is common today--and if you sold hardcover rights, paperback rights were sold separately later on, if they were sold at all, which they often weren't. These days, hard/soft deals are common, and books first published in hardcover are routinely re-issued in paperback. In fact, the softcover re-issue is often the point at which a book becomes profitable.

I think it is very, very risky to make blanket statements about the publishing industry, unless you have actual citable statistics or studies to back them up. In some cases, such as the popularity of genre markets or annual sales or sales by market niche, those stats or studies do exist. But in others, such as the number of books that lose money or the percentage of manuscripts that are rejected, there really are no industry-wide studies or tracking mechanisms that would yield authoritative numbers. Ballpark estimates from publishing insiders--assuming they really are insiders--too often reflect their own experience at their particular imprint or publisher--which may be very different from someone else's experience at another imprint or publisher--and are often skewed by their own beliefs or biases.

- Victoria
 

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I don't have any definitive stats, but like Old Hack, I think that the idea that 80% of books published lose money defies economic logic.

It's a widely-disseminated faux-fact.

To quote Leonard Shatzkin on the topic, though:

''The accountants are referring to titles that failed to earn enough to cover all the arbitrary overheads that were assigned to them,'' he said. ''Those titles lose money in the same sense in which we can say that the subways 'lose money' on each person who rides them. If fewer people went through the turnstiles, would the losses go down? Now and then, when some publisher fails to see through his accountant's 'logic' and cuts his list to cut his losses, he finds that bad has become worse. Fortunately, most publishers know instinctively that these 'losses' should not be taken seriously.''

This is from a review of Shatzkin's 1983 book In Cold Type, by the way. The "8 in 10 books lose money" truism was an old one even then.

It's no more true now than it was 25 years ago.
 

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I think I presented plenty of reasons for why I believe the current system is broken..
Yes, but your experience in the publishing industry is minimal and not at all "traditional," so you're really not in a position of strength in which to make these assumptions.
As I make clear, the 80% rule is my own estimate based on my own interpretation of information I've been able to find.
Mark, you're going to find as many opinions as there are bellybuttons. Unless you're actually IN the industry, your opinions have no weight. You can't say, "In my experience..." so whatever information you site is biased to fit your agenda.
I think the economic realities of the cost of paper book production and distribution mean that paper books are unaffordable to most of the literate readers in the world.
You THINK? Based on what? We sell thousands of books every year, so you're going to have to site more profound sources.
I personally believe the book publishing industry as we know it is facing a long and painful decline. Bookstores will close. We'll see more consolidation. It'll become more difficult for all the smart and talented people in publishing to carry out their trade.
Yes, this is all true to some extent, but this doesn't mean things are broken. Broken means that something ceases to work, and this isn't the case with the publishing industry. Things are in a state of evolution, flux, reorganization, but the industry will survive just fine, and using these scare tactics does nothing for your credibility, especially when you aren't standing on solid experience.

I'm structuring my business to survive and thrive in the world I think is coming, where customers will demand lower priced product, and authors will be forced to assume more of the responsibilities typically handled by traditional publishers. I realize my crystal ball might be wrong.
In this, I have no beef provided authors understand exactly what they're getting into. But I question anyone who uses rhetoric to gain customers.

Bookstores are consignment sellers, and this is a great example of why I think the current system is broken. I think it's wrong that bookstores deliberately order more than they think they can sell, and then return books before the return window closes, only to reorder the books and start the clock ticking again before the next return. I think it's unfair to publishers, and I think it's an unsustainable model for publishers.
No, they are not consignment sellers, and you need to do more homework on how we sell books to the stores. The return policies that publishers began many many years ago has become an albatross to all of us. Sadly, that genie will probably never be stuffed back into the bottle, so the smart publishers fulfill POs based on what they believe is a realistic number. For example, if a chain wants 5,000 units of one of our titles, we'll discuss with our distributor and tell them to send 2,000. If those sell, the chains will buy more. They always do. And we cut down on our returns. That's why we're still making money when a number of my friends are having to write checks to their distributors.
I will consider updating our About Us page to clarify that while I think the industry as a whole is broken, there remain many good publishers who serve their authors well and whose individual businesses are not broken.
What I think you should do is actually know the industry from the viewpoint of a real publisher. Only then can you be in a position to pass judgment. For now, you're simply gathering opinions that support your agenda.
 

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The quality control is what dictates the speed of publishing.

That, and the marketing, IMO. Publishers send ARCs out at least three months prior to publication. At least that's what I'm seeing in my particular case.

Mark: I'll stand behind what I said before. The "limited" support a publisher gives most titles (according to your figures) runs rings around what most POD publishers can provide.
 

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The way I see it, it all boils down to this. Smashword is to eBooks what Lulu is to publishing. There is an awful lot of misinformation and no quality control whatsoever. Because I'm sorry, Mark, but not every author deserves to be published. Being published is not a reward for having finished a book. Being published is a sign of quality and being better than Joe Blow. Like it or not, it is merit based and you do have to be better than your next door neighbour.

Publishing is not like kindergarten sports. You don't get a ribbon just for participating. Maybe thats what you would like your model to be, and good for you, but that is not the real-world model of publishing and just because you don't like it, doesn't mean it's broken.