The Death of Traditional Publishers? Part 3: Death, Thy Name is “Smashwords”

Smashwords and other e-book retailers are the real threat to agency pricing and the future of the Agency 6 (Random House, Macmillan, Hachette, Simon & Schuster, Penguin, and HarperCollins). The reasons are simple: they offer quality and low prices.

Most consumers find it hard to justify paying $14.99 for a fiction e-book unless they are already extremely loyal fans of the author. Even then, many are inclined to pass, believing that at such a high price point, the publisher’s profit margin on electronically delivered products amounts to usury.

Now take a look at Smashwords, currently the most successful independent e-publisher: they sell e-books in all genre categories for prices low enough to encourage readers to try someone new. Risk $14.99? No. $3.99? Sure, why not.

But Smashwords’ real threat lies in the fact that all of their authors are available in all e-book formats including Kindle, Nook, Sony and Apple. The Agency 6 are competing face-to-face with books that are priced significantly less than theirs. As we discussed before, it isn’t the publisher who sells a book; it’s the author and the story. No one goes around saying, “I bought a great HarperCollins book yesterday.”

Traditionally-published mid-list authors now have to compete against Smashwords authors, and for readers for whom price is key in their purchasing decisions. All books sold on the internet look the same: they display a cover, offer a sample read (up to 50% of the book on Smashwords – what a great way to hook a reader!), and have similar story blurbs. The differences are price and publisher name. But publisher name has minimal power, especially when you get down to the subsidiary names with which few readers are familiar. There is no reason for readers to care; publishers aren’t the brand.

On the other hand, one advantage that the Agency 6 do retain is the level of professionalism in producing e-books – the only reason that noting the publisher does matter. Expert editors and cover design artists are unarguably better than most e-publishers. But that gap is closing rapidly.

Another advantage the Agency 6 hold is the – sadly – lowered expectations of e-book consumers. When e-books were new and still considered the ugly stepchildren of publishing, anything that might sell was tossed up on the web. Readers are much more forgiving of a $1.99 e-book than a $14.99 e-book, whose price indicates that the manuscript has been professionally vetted and edited.

Now e-books are doubling their share of the market every year. Erudite consumers switching from paper books to electronic ones expect well-edited e-books with enticing covers. And rightly so! The big gamble that the Agency 6 are making is that readers will associate quality with their houses and be willing to pay an inflated price for that quality.

(I think they are very, very wrong; I do all of my new-book purchasing on Kindle and refuse – on principle – to pay more than $9.99 for any e-book. There’s always the library.)

The bottom line is simple: combine an interesting and well-written story with a reasonable price. The reader doesn’t care if the e-book is from Smashwords or Macmillan. And the more e-book sellers do to increase the quality of their books while continuing with low prices, the more of a threat to agency pricing and the Agency 6 they become.

There is another HUGE aspect to Smashwords that I don’t think the Agency 6 publishers are taking seriously: authors can publish themselves for free. They can have a manuscript professionally edited, have a cover designed, and upload their own books; books that are well-written but make skittish Agency 6 sales departments nervous because – gasp! – they are unique.

And because these authors don’t have the overhead costs of the Agency 6, they can price their books at $2.95 and pocket $2.18 with each sale. The same book, sold as a $7.99 paperback, would net the author only $0.80 – or $0.68 after an agent’s 15% take.

Can you imagine readers having so many more choices? Or all the new authors that will be discovered? Can you see authors who are internet-savvy and promotion-competent skipping agents and traditional publishing houses altogether?

It’s already happening. Agency 6 – are you listening?

ADDENDUM: Right after posting this I opened my email and saw this: ” Introducing PubIt! by Barnes & Noble” for authors to SELF PUBLISH ON THE NOOK! Kindle already has this option, and Sony readers can download from Smashwords. It’s the trifecta!


20 Responses to “The Death of Traditional Publishers? Part 3: Death, Thy Name is “Smashwords””

  1. 1 nancy 05/20/2010 at 10:29 AM

    I do not depend or even pay much attention to covers as most would put me off the book. I would like covers of print historical novels to accurately reflect the time but seldom bother to look at covers with e-books.
    Have to investigate Smashwords.

  2. 3 Pat Brown 05/20/2010 at 12:12 PM

    I definitely think ebooks are going to seriously affect print books, but it is not going to kill traditional publishing. If it was all about money, then hardcovers would have disappeared with the advent of the paperback. I mean why pay $25-30 for a HC when you can wait a couple of months and get it for $10-15 less? But people do pay the higher price.

    Ebooks may well outsell physical books soon, especially when the price of ebook readers drops more, but there will also be those who want a physical book in their hands.

    They’ve been predicting the death of publishing for a hundred years, just like they said movies would kill radio and TV would kill the movies and the Internet would kill everything. Yes, those industries changed and are still changing, but changing is not the same as disappearing.

    • 4 kristualla 05/20/2010 at 2:37 PM

      The shift will be to Print On Demand books, because printing-shipping-stocking-returning-destroying will no longer be viable economically when overall sale numbers drop too low. Used bookstores will thrive. But keep an eye on those under 30. They do everything on their phones – reading books included!

  3. 5 Kelly S. Bishop 05/20/2010 at 3:14 PM

    I hope to have a manuscript ready by early fall and the more I think about it, the more I’m tempted to go straight to Smashwords & Kindle.

    What kinds of things do you recommend newbie self-pubbed authors do to make themselves stand out in the crowd? What would we need to do differently than a traditionally pubbed author?


    • 6 kristualla 05/20/2010 at 5:04 PM

      Start building your promotion platform NOW. I don’t mean to sound self-serving, but you might want to get my “Primer for Beginning Authors” – there are several chapters about what we need to do and way too much to list out here (Only $2.95 on Smashwords!).

      Do you have your website done?
      Kris 🙂

  4. 7 Paisley Kirkpatrick 05/20/2010 at 4:19 PM

    Your posts are both interesting and frigtening. It’s trying to find the right way to run your career that is confusing and “are you doing the right thing” for me. Sounds like the new technology is going to drive the writing business. Thanks so much for all of this information for us to mull over, Kris. 🙂

  5. 9 Amber Scott 05/20/2010 at 4:31 PM

    Another thing I LOVE about Smashwords is I can generate coupons for free reads. As many as I want, at any discount I want. I can truly create promotional reads to build an audience through.

  6. 11 rm2h 05/20/2010 at 5:05 PM

    I am not an author but when the prices went up for ebooks I have stopped buying from the major publishers unless like this weekend I go to a bookclub and found that I had not found the book used. I can not see paying $7 to $8 for authors I have no clue what they have written. I live in a bachelor apartment which is 400 square feet with little storage. For the size of 4 harlequin series books I can store thousands of ebooks on an external hard drive. In the last 2 months I have bought 3 print books – one was on an auction site, another from Amazon and the other I do not remember from. I have a favorite folder with 12 ebook publishers who I purchase from on a regular basis but I have slowed down due to financial issues. I use a book club for ebooks to get the books I want at lower prices.

    • 12 kristualla 05/20/2010 at 5:13 PM

      Storage IS another key issue! I can walk onto an airplane with my entire library in my purse. Thousands of books is NOT an exaggeration.

      When my novels are released this fall, I will price the e-books at $2.95 because I want to build an audience. This is a slow uphill process. But readers like you make it worth it!

      Thanks for posting!

  7. 13 Kelly S. Bishop 05/20/2010 at 7:48 PM

    Yes, I have a bare bones website. I’ve started up a blog.

  8. 15 Mark Coker 05/20/2010 at 8:05 PM

    Thanks for the shout out, Kris!

  9. 17 Pauline Baird Jones 05/21/2010 at 6:32 AM

    Okay, been thinking about this topic and have come up with this.

    There are two separate issues here:

    death of PRINT BOOKS (not going to happen)

    death of traditional publishing (might)

    I agree print isn’t going to go away, but how books are printed and marketed has to change. The business model is seriously flawed. Which brings me to my conclusion. Trad publishing isn’t dying, so much as committing suicide.

    Again, their business model is seriously flawed. In the current economy, there will be no forgiveness for bad business models. My opinion, of course, but hey, I have the right to it. LOL!

    I LOVE digital books, but also buy the occasional print book. Note 90% of my book purchases are digital. What’s the response of big 6? To delay and hinder MY ability to buy books. I WANT to buy books and they won’t let me. That’t their “business” decision in the face of an exploding digital book market.

    so, yeah, suicide. IMHO.
    Pauline Baird Jones
    reader and indie author 🙂

  10. 18 Dog-Eared Pages Used Books 05/21/2010 at 9:55 AM


    I’m loving your blog. I agree indy pub is in hyperdrive and smart authors should be taking advantage of it.

  1. 1 2010 in review « KrisTualla's Author & Writing Blog Trackback on 01/04/2011 at 12:19 PM

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