by Mark Coker
SMASHWORDS IS THE world’s largest distributor of self-published ebooks. The company has helped over 50,000 authors around the world publish and distribute over 200,000 ebooks to major retailers such as the Apple iBookstore, Barnes & Noble, Sony and Kobo.
Mark Coker, the founder of Smashwords, is also an author, entrepreneur, angel investor and advisor to technology startups.
What does 2014 hold in store for ebook authors, publishers and readers? Mark Coker shared his predictions with The Indy.
1. Big publishers lower prices – Back in 2009, one of my first posts for Huffington Post was a call for publishers to introduce $4.00 ebooks. Self-published (indie) authors heeded the call, but publishers did not. Until recently, it was rare to see a traditionally published book priced under $4.00. Why? Traditional publishers have fought tooth and nail to maintain higher ebook prices for fear that low-priced ebooks would cannibalize print sales, harm their profitability, and establish unrealistic consumer expectations of the worth of a book.
By maintaining high ebook prices, they surrendered the sub-$4.00 market for ebooks to indie authors, which indies readily exploited. The results of our 2013 ebook pricing survey illustrated the competitive advantage of low pricing. The survey found that books priced $2.99 and $3.99, on average, received about four times as many unit sales as books priced over $7.99.
For indies who could publish low-priced books that were as good or better than what New York was publishing at higher prices, they were able to out-sell and out-compete the books from the large publishers. For much of 2013, it wasn’t uncommon to see indies holding up to half of the top 10 bestseller slots at major retailers on some days. Big publishers have taken note. In 2013 big publishers began competing more aggressively on price, primarily in the form of temporary price promotions. In 2014 these price promotions will give way to a new normal of lower regular prices. Discounting is a slippery slope. Once customers are conditioned to expect big-name authors for $3.99 or less, the entire industry will be forced to go there.
2. Ebook growth slows – Here comes the hangover. After a decade of exponential growth in ebooks with publishers and indies alike partying like it was 1999, growth is slowing. We all knew this day was coming. Year over year growth of 100 percent to 300 percent a year could not continue forever. The hazard of fast-growing market is that it can mask flaws in business models.
It can cause players to misinterpret their success, and the assumptions upon which they credit their success. It can cause successful players to draw false correlations between cause and effect. Who are these players? I’m talking about authors, publishers, retailers, distributors and service providers — all of us.
It’s easy to succeed when everything’s growing. It’s when things slow down that your business model is tested. The market is slowing. A normal cyclical shakeout is coming. Rather than fear the shakeout, entrepreneurial players should embrace it. Let it spur you on to become a better, more competitive player in 2014. Players who survive shakeouts usually come out stronger the other end.
3. Competition increases dramatically – With hundreds of thousands of new books published annually, and with retailer catalogs swelling to carry millions of ebook titles, it may come across as no surprise that completion will increase in 2014. Yet in 2014, the competition faced by authors and publishers will increase by an order of magnitude, and will make some players wish it was 2013 again. The ebook publishing playing field, which until recently was significantly tilted in the indies’ favor, has now leveled a bit. Yet indies still enjoy a number of competitive advantages, including faster time to market, greater creative freedom, closer relationships with readers and thus a better understanding of reader desires, higher royalties rates and ultra-low pricing flexibility including FREE.
4. Ebook sales, measured in dollar volume, will decrease in 2014 – Yikes. I said it. The nascent ebook market is likely to experience its first annual downturn in sales as measured in dollar volume. This will be driven by price declines among major publishers and by the slowing transition from print to screens. Although readers will continue migrating from print to screens, the early adopters have adopted and the laggards will shift more slowly. Another driver of the drop is that the overall book market growth has been moribund for several years. As ebooks as a percentage of the overall book market increase, it means the growth of ebooks will become constrained by the growth and/or contraction of the overall book industry. Global sales in developing countries remain one potential bright spot that could mitigate any sales contraction.
5. Subscription ebook services will change the game – If the ebook subscription services — the most notable of which are Scribd and Oyster — can make their business models work, then they’ll drive a game-changing shift in how readers value and consume books. For ebook subscription service users, reading will become an abundant resource that feels free.
It’ll become a utility service in the same way that water and electricity are utilities. When we flip the switch to turn on a light, or when we turn the knob on the faucet to brush our teeth, we’re not thinking about how our next 60 seconds of that service will cost us one or two cents. We pay our monthly service fee, and for the most part we use the utility as much as we want.
With ebook subscription services, the reader will pay $9 or $10 a month and enjoy virtually limitless reading. Readers will be relieved of the cognitive load of having to decide if a given book is worth the purchase price. Instead, they’ll surf and sample books, as if every book is free. The reader’s attention, and the book’s ability to hold the reader’s attention, will become the new factor in determining a writer’s success. Even if these subscription services fail, they’ll change the future of publishing by giving readers a taste of friction-free reading-as-a-service. It’s a taste readers are unlikely to forget.
