FIVE TRENDS TO ROCK YOUR WORLD

Central Coast Writers’ ConferenceSeptember 17, 2011

Mark Coker Founder, Smashwords

“A message of hope for those who choose to hear it, and warning to

those who do not”

~ Lyrics from Rosetta Stoned by Tool

Books are Precious

• Long form content essential for

• deep dive knowledge immersion

• entertainment

• Books are vessels for cultural preservation

• Noah’s ark

• Promotes cross-cultural understanding

BOOKS ARE ENDANGERED

WE MUST SAVE BOOKS

WE ARE CAUGHT IN THE TURBULENT CROSS CURRENTS OF MULTIPLE FORCES

TECHNOLOGY IS COLLIDING WITH PUBLISHING

Technology Represents the Means by Which Consumer Desires are Realized

Things Touched by Technology Transformed to Something Faster, Smaller, Cheaper

Books are in Jeopardy

• In a world of faster, smaller, cheaper, print books have lost ground

• Expensive

• Unaffordable to vast majority of world’s literate population

• Unavailable, inaccessible to global market

• Archaic rights practices limit distribution

• Geographic limitations of print distribution

BIG PUBLISHERS ARE MAKING THE PROBLEM WORSE

They judge books on commercial merit

UNTIL RECENTLY, BIG PUBLISHERS HAD A MONOPOLY. THEY CONTROLLED THE

PRINTING PRESS AND DISTRIBUTION TO BOOKSTORES

IT WAS A SWEET RACKET FOR PUBLISHERS

Readers wanted books

Publishers controlled the supply

$

$

$

$$ $

$

$

$

Publishers were the deciders

• Publishers controlled:

• Who got published

• Who got distributed

• What readers could read

Publishers were the bouncers at the pearly gates

• Authors bowed subservient before the publishing gods, seeking

• blessing

• acceptance

• validation

• entry into the afterlife

• “published author” on the tomb stone

Publishers controlled Heaven

• Highway to Heaven

• The book deal

• The printing press

• The distribution

• The royalties

• The respect

• The readers

• The fame

“The world is full of kings and queens who blind your eyes and steal your

dreams”

~ Lyrics from Heaven and Hell by Black Sabbath

BUT THEN THE INTERNET HAPPENED

… THE RULES CHANGED FOREVER

Is the age of Big Publishing over?

• More difficult than ever to get an agent or book deal

• Advances declining

• Publishers want established platform

• Lose rights

• Most authors don’t earn out

• Authors expected to do most marketing

ooh,pretty!

Publishers Ill-Equiped for the New Realities

Publishers are too slow

• 12-18 month release cycles

… their expenses are too high

… they’re exposed to too much risk

• Pay author advances

• Can’t predict demand

• many books fail and don’t earn out

• Broken supply chain

• 30%+ of printed books returned to publisher unsold

• Amazon is eating publishers for lunch

• Vertically integrated from authors to readers

Publishers mitigate risk by giving bean counters increased influence

… bean counters make poor decisions in the name of risk mitigation

• Adopt author-unfriendly policies

• Acquire fewer books from unproven authors

• Pay lower advances

• Require authors to assume more editing, marketing responsibility

• Adopt customer-unfriendly policies

• Favor “commercial” & celebrity books

• Scarcity tactics to maintain higher prices

• Limit worldwide distribution

Against this backdrop, the world of publishing is changing

FIVE TRENDS TO ROCK OUR WORLD

TREND ONE:

Reading Moving to Screens

Reading moving to screens

Ebooks to overtake print

Print books

Ebooks

Today?

Ebooks as a percentage of US wholesale trade market

Source: Association of American Publishers, publishers.org

0

1

2

3

4

5

6

7

8

9

2002 2004 2006 2008 2010

Ebooks replacing print faster than most realize

• On September 2, 2011, Random House announced ebooks accounted for 20% of first half 2011 revenues

• Jan-May 2011 vs Jan-May 2010

• E-Books increased by 160% while adult massmarket dropped 30% and adult hardcover dropped 23%, (Source: AAP press release, July 21, 2011)

• Amazon announced May 19 they sell 105 Kindle books for every 100 print books

• Indie ebook unit market share even higher

• Some best-selling indies selling 1,000 e- for every p-

Why ebooks are hot

• Screens offer better reading experience than paper

•Changeable font size A A A A

• Portable and compact

• Screens will get better/faster/cheaper

• Ebooks offer better purchasing experience

• Lower cost than print

• Convenient sampling and purchasing

• Huge selection

TREND TWO

Bookselling moving to the Web

Bookselling moves to the Web

• Customer drivers:

• Price

• Convenience

• Selection

• Self-published books displayed side by side with traditional books

• Big publishers lose primacy

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

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

Brick &Mortar

Web

Today?

TREND THREE

The Rise of Self-Publishing (a.k.a indie publishing)

Publishing and Distribution Tools Available to all

• Free and low cost publishing tools empower every author to become their own publisher

• Free printing press in the sky

• Distribution to all major online bookstores

0

1000020000300004000050000600007000080000

2008 2009 2010 2011

The Smashwords Example

1406,000

28,500

73,000+ (9/17/11)

Number of books published indie vs. traditional

Indie books

Today?

New trad. books

Indies Can Out-Publish Big Publishers

• Asymmetric competition

• field tilted in indie’s favor

• Smaller indie authors/publishers

• democratized distribution

• instant access to global market

• lower expenses

• closer to customers

• never go out of print

• earn more per book

Indie ebook economics favor indies

• Higher profits than traditional

• Earn 60-100% list price for indie ebooks vs. 5-17% from traditional publishiers

• Price ebooks for less yet still make more per copy than traditionally pubbed print authors

• $8 mass market paperback earns author <$.40 trad MMP

• $.99 indie ebook earns $.60 - $.70

• Lower price = reach more readers = more sales at higher profits per sale

MMP=Mass market paperback, aka “pocket book” in some countries

TREND FOUR

Content Explosion

Content explosion

• Unlimited Internet content alternatives

• Indie ebooks

• Zombie books

• Used books

• OOP resurrected via ebooks and P.O.D

• Out of copyright public domain ebooks

Content explosion

Indie books

Online alt

content

Today?

Zombiebooks

New trad. books

TREND FIVE

Ebook Prices to Decline

Ebook Prices to Decline

Today?

... driven by supply and demand

• Explosion of content

• Excess supply leads to price competition

• Yet, readers will still pay for content

• Your book is unique, a one of a kind

• Lower prices make books affordable and accessible to broader market

• More books will be sold than ever before

The Plan Forward

TO SAVE BOOKS, WE MUST CHANGE BOOKS

AND CHANGE PUBLISHING

How to Save Books

• To save books, we must harness technology to make books:

• Smaller, faster, cheaper

• More available

• More discoverable

• More accessible

• More compelling than alternative content options

The Better Book is Here

• It’s called an ebook

• Same book, only better

• Smaller, faster, cheaper

• More available

• More discoverable

• More accessible

• More functional

The Five Trends Create a Future Where Indies Can Out-Compete Big Publishers

You are the future of publishing

You are your own gatekeeper

YOU decide when you graduate from writer to PUBLISHED AUTHOR

Readers want great books

Give them great books

The Opportunity to Reach Readers Has Never Been Greater

Think Globally

In a Couple Years, the Market for Your Books Outside the US will Dwarf the US Market

Already, ~50% of Smashwords Apple iBookstore Sales are Outside the US

You Have the Tools to Reach a Worldwide Market Today

Final Thoughts

• Change brings opportunity

• Power of publishing is shifting to authors

• Readers determine your success

• Indie vs. Traditional is not an either/or question. Many authors straddle both.

• Opportunity to reach readers has never been greater

• You represent the future of publishing

• Go make us all proud

Thank you for listening!

Q&A

Connect with Mark Coker:

Web: www.smashwords.com

Blog: blog.smashwords.com

HuffPo: huffingtonpost.com/mark-coker

Twitter: @markcoker