eBooks get social, pose further threat to traditional publishers
When most industry observers examine the impact of social media on traditional media industries, the focus inevitability turns to easily digitized media such as newspapers, magazines, radio, television and music.
Q. [Jennifer] To start, I want to make sure everyone understands exactly what Smashwords is.
A. [Mark] We help authors publish, sample and sell multi-format, DRM-free eBooks. The books are readable on e-reading devices like the Amazon Kindle, Sony Reader, iPhone, PCs, or even printable to plain paper. Authors simply upload their finished manuscript as a Microsoft Word file and set the price and sampling privileges.
Q. Who owns the content, and how do you compensate the authors?
A. We put the author in complete control over their published works. Our publishing agreement is non-exclusive. We give them 85 percent of the net sales proceeds of their books.
Q. If you publish any book, how do you filter the good from the bad?
A. As a community publishing platform, our authors can publish anything but readers decide what’s worth reading. Readers vote with their dollars and eyeballs, and the best and most popular works bubble up to the top of our listings.
Q. What benefits if any does social publishing provide over the traditional publishing model?
A. The traditional model for print publishing is broken. The system is clogged with expensive intermediaries - literary agents, editors, publishers, printers, distributors and bookstores - that stand between the author and their prospective reader. The cost problem is further exacerbated because publishers have no way to predict demand, so they often print twice as many books as they can sell. The high costs mean that published book authors seldom earn more than their advance, and most publishers lose money on the vast majority of the titles they publish. Many authors see self-publishing as a more viable method.
Next: Indie authorship's impact on traditional publishers -->
Q. What does the trend toward indie authorship mean for traditional print publishers?
A. It means traditional publishers will have to change their business practices. It’s only a matter of time before authors go from aspiring to be traditionally published to aspiring to be self published. When this happens, traditional publishers that don’t adapt to the new realities could be in a world of hurt.
Q. What new business practices will traditional publishers adopt?
A. Books have always been a hit business. Publishers lose money on 80 percent of their titles and make up the difference with their best sellers. They can’t predict what will sell, so they throw their print runs against the wall and wait to see what sticks. In the future, I think publishers will morph their strategies to incorporate a combination of best-guess print runs combined with greater use of Print on Demand (POD) and eBooks. They’ll begin signing authors under eBook and POD-only contracts, kind of farm league approach, and then move their best sellers into larger print runs and more traditional distribution and promotion. They’ll also keep a close eye on self-published authors and try to buy up the ones with promise. The challenge for publishers, however, is that new social publishing tools such as Smashwords will eventually help indie authors achieve similar success on their own.
Q. How do socially published eBooks solve the cost problem?
A. Socially published eBooks cost virtually nothing to produce other than the hard work of the author. When you remove the middlemen and the high cost of print production, authors can price their books at half the cost of a traditional paperback yet still earn a royalty three to five times greater. Lower prices expand the market for the book, eventually leading to a virtuous cycle of greater affordability, greater demand, and greater profits for the author.
Q. How does Smashwords make use of social media?
A. Books have always been a word of mouth business, so we leverage social media to enable easy sharing of book samples across email, social networks, and social bookmarking sites. We rely on book buyers to help curate our books, so the better books rise to the top and the lower quality ones drop to the bottom. We make heavy use of intrasite hyperlinks to help book lovers tap into the collective knowledge and tastes of others, and of course we offer community-contributed book reviews.
Q. There was a ton of hype about eBooks in the late ‘90s but eBooks flopped. What happened?
A. eBook adoption was stymied by a number of factors, the most important of which were DRM and mispricing. Publishers crippled books with onerous DRM to prevent piracy and they priced eBooks the same as paper books so as to not cannibalize print sales. Customers don’t appreciate being ripped off.
Q. What is the state of eBooks today?
A. Here in the United States, eBooks represent the fastest growing segment of the book publishing industry, with annual sales growth (see stats here and here) averaging 50 percent since 2002 whereas traditional print sales are stagnant or declining. Despite the growth, eBook sales still represent under one percent of overall industry book sales.
Q, What’s driving the growth?
A. Publishers are beginning to drop DRM, we’re seeing more reasonable eBook pricing. Ereading devices such as the Amazon Kindle and smart phones are making it possible for book lovers to hold virtually limitless libraries in the palm of their hand. Screen technologies have also improved.
Next: Amazon Kindle: iPod of eBooks? -->
Q. Is the Kindle the iPod of books?
A. I don’t think we’re going to have a single killer “iPod-like” device for eBooks. The Kindle is a great leap forward, as is the new Sony Reader, the Plastic Logic reader, and other readers based on E-Ink technology. Even with the plethora of new eBook reading devices, there’s a good chance that smart phones such as the Apple iPhone will surpass the Kindle as an ereading platform. There won’t necessarily be a single winner. Many book lovers will consume their books across multiple devices. You might start a book on the iPhone and complete it on your computer or Kindle.
Q. If under one percent of book sales are eBooks, how long until eBooks go mainstream?
A. If you asked me this a week ago, I would have told you five years, because most people still don’t know what an eBook is. However, just last Friday, Oprah Winfrey, the most influential book promoter of our generation, introduced her viewers to the joys of eBooks with a strong endorsement of the Amazon Kindle. So maybe shave a year or two off my estimate.
Q. In the music industry, we’ve seen a big movement toward indie artists who leverage the Internet to democratize the production, marketing and selling of music. What’s happening in the book business?
A. The book business runs a few years behind the music business, but we’ve already seen an explosion of indie authorship thanks to print on demand publishers such as Lulu.com and Wordclay. In the future, I think we’ll begin to see more authors turn their backs on traditional publishers and go indie from the get-go. After all, most authors already realize that the bulk of book promotion falls on their shoulders anyway.
Mark Coker is founder of Smashwords, Inc., a Web site offering self-published eBooks from independent authors. Visit Smashwords or read Mark's blog.