The Art of Commerce sits on the corner of literature & the marketplace, asking the age old question: Who's got the right of way?  

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Episode VII: "There's a dark side to their flavor of innovation"

Published 3/25/15
In this installment, I speak with Mark Coker, the Founder of Smashwords. Topics include DRM, the indie ebook revolution, the junk and gems of self publishing, Viral Catalysts, ebooks in 2025, Amazon, how to become a fully self-employed author & more.

I’m here with Mark Coker, the Founder of Smashwords. Started in 2008, the company has been a trail-blazer in the self-publishing industry, allowing writers of all shapes and sizes to capitalize on available technology, producing (practically instant) ebooks just by uploading a Microsoft Word document. First things first. We’re currently three kilomiles away. To bridge the digital divide, would you kindly describe your current environs?

I'm in Los Gatos, California on a beautifully foggy but warm day.

Beautiful. To get us started, let's talk about something we can in common. Like 0s&1s, Smashwords doesn’t use Digital Rights Management (or DRM). What was your personal reasoning for this? Should we expect DRM implementation in the future?

DRM is toxic. It treats law-abiding customers like criminals by limiting their ability to enjoy their ebook as they wish. Imagine if you purchased a print book at the store, but the book could only be read in bed but not on the beach? DRM makes it difficult for a reader to read their book on different devices. It makes it difficult to archive and own your book. It creates unnecessary complexity and friction that makes your book less accessible to readers. It also adds expense to books, because the DRM provider takes a tax on every DRM'd book. We'll never do DRM on Smashwords books. The only instance where I see a place for DRM is for library ebook checkouts. It makes sense there.

Well worded. Changing pace: Your service allows writers to bypass the labyrinth of traditional publishing: submissions to agents and editors and negotiations—all of it. The advantages and disadvantages of the system are complex, subjective and entangled. To boil down the entire equation into an overly-simplified question, do you think the current agent-editor structure is broken?

I think the traditional publishing model is broken, but I'm not one of those self publishing advocates that calls for the demise of traditional publishing or the agents that serve it. What was needed was reform, and the indie ebook revolution has brought reform. The problem with traditional publishing is that publishers are unable, disinterested and incapable of taking a risk on every author. They simply can't say "YES" to every book. What this means historically is that only a small fraction of available works were ever published, and the vast majority of writers were destined to become "failed authors" simply because a publisher didn't see commercial merit in their work. Back in the dark ages of publishing (like five years ago), publishers controlled the means of book production and distribution. If they rejected an author, that author was doomed to failure because without access to retail stores, they couldn't reach readers. Even though print self-publishing has been an option for decades, it didn't work because these authors couldn't get in bookstores. You needed a publisher. The rise of ebooks changed all this. With ebooks and online ebook stores, now it's cost effective for every retailer to stock every ebook. Smashwords was instrumental in opening up major ebook retailers to self-published ebook authors starting in 2009, and today we're the largest supplier of these books to retailers. Democratized distribution changed everything, and retailers like Barnes & Noble, iBooks and Amazon deserve major kudos for this. So back to your original question, yes, this new indie ebook revolution enables authors to bypass publishers and agents. But looking at it another way, indie ebooks patched a huge hole in the publishing industry. Now every writer can publish. And it's a good thing we still have traditional publishers and agents, because these publishers and agents create additional opportunities for authors. The ecosystem can work now.

Agreed that "indie ebooks patched a huge hole in the publishing industry", but some say might say patching that hole has shifted the problem of publishing: not dissemination but curation. Some say there’s too much and, as such, the new issue is filtering, drawing attention, blasting through the noise. We’re almost fully in the ‘author-as-businessman’ paradigm. Is this, as you see it, a good thing or a bad thing?

Like any radical transformation, junk and gems are created in the process. Self publishing has been criticized for leading to a tsunami of drek that that clogs virtual retail shelves making it difficult for the good books to be discovered. This is only partially true. Yes, it has enabled an unprecedented amount of horrible books to be published, yet the flip side to this is that self publishing is enabling the publication of more better books than ever before, and greater diversity than ever before. No longer is the supply of books artificially constrained by the shifting whims of publishers who can only guess what readers want to read. The power of publishing has shifted to authors. Authors now decide where, when and how their manuscript graduates to become a published book, and readers now have the freedom to decide what's worth reading. When I started Smashwords, it was very important to me that we not become curators or judged of the quality of writing. What I love someone else may hate, and I'm not presumptuous enough to believe that I'm the best judge of what readers will want to read. Readers can choose. Readers are the curators now, and some might argue they've always been the curators since they decide what they're going to read. The only difference is that in the past, publishers decided what readers could choose from. This is not to say that curators don't have a valuable role to play. Publishers as curators, retailers as curators, bloggers as curators, readers as curators. It's all great. Every book lover has an opportunity today to add value to book by curating within their expertise, and that curator's audience (be it customers, friends or family) will judge the value of that curator's recommendation on the merits of their curation. It's all good.

You also touched on discovery. How do people discover great books? In many ways, the online retailers do an excellent job of discovery. Unlike physical stores that have limited shelves and categories, and limited inventory, the online stores can sort books by hundreds or thousands of categories, making it easy for readers to drill down to their micro-interest, and then using tools like bestseller lists, highest-reviews and also-bought algorithms, it's relatively easy for readers to find great books to read.

You’ve mentioned “viral catalyst” as being key to self-publishing success, and a necessary key for an actually good book to make it out of the slush. Can you expound on what you mean by this term?

Sure. Imagine a book as an amorphous blob. Attached to that book are dozens of dials, levers and knobs that the author can twist, turn and tweak to make their book more discoverable and more enjoyable to readers. These knobs, dials and levers are what I call Viral Catalysts. Viral Catalysts increase the odds of generating reader word of mouth. For example, a professional cover image that makes a targeted emotional promise to the reader is a Viral Catalyst. A reasonable or low price that makes the book affordable to readers is a Viral Catalyst. Or a great title, great book description, great writing, great editing, proper categorization, preorders, full distribution, etc. Many authors make the mistake of searching for that single magic bullet that will catapult their book to bestsellerdom. There's no single magic bullet. There are dozens or hundreds of magic bullets, and these are the Viral Catalysts. When you get the formula just right, then your book goes viral on the wings of reader word of mouth.

And the word viral, of course, is alloyed to the digital environment—one which has changed the physical book buying environment, but not early as much as the ebook buying environment. I want to take a brief trip to the year 2025. When you walk around then, what do you see? How many of the books read will be ebooks? What will the devices look like? How will the experience fundamentally differ?

Today ebooks probably account for about 30 or 35% of the dollars spent on books here in the US. Ten years from now, that percentage will probably approach 80%. The transition from paper to screens will continue, though it'll continue at a slower more incremental pace than it has in the last six years. On the device side, I think we'll continue to see the quality of the screens will increase while prices of the screens drop. We'll see more innovation on the software side, especially in artificial intelligence with more sophisticated book recommendation algorithms that will make better individualized recommendations. Although all the retailers do relatively well here, I think they've only scratched the surface of what's possible in the area of automated and personalized recommendations. What this means is that great books you will love will be closer and more accessible than ever before. Beyond that, I don't see the nature of the book changing dramatically. Books as packaged objects of long form narrative and knowledge will be with us forever. I suppose if we look out 20 or 30 years, we'll start to see automatically generated books custom-written by machines that match our desires for our next great read. I'm not excited about that prospect, though. That's when writers start to get disintermediated by machines. You can be sure Amazon will be on the forefront of that innovation.

I actually just discussed such a possibility (on a to-be-aired The Art of Commerce) with Nick Montfort over at MIT. I take it you believe Amazon will continue to lead ebook innovation? What, do you believe, is their outlook for ebook monopoly?

The folks at Amazon are crazy smart. But there's a dark side to their flavor of innovation. Amazon's mission is to commoditize products and subjugate the suppliers of those products. Right now, they're hell bent on disintermediating the book production and distribution supply chain. They view publishers and distributors as competitors to be cut out, and they want to own the relationship with the creator and the buyer. There's no room for anyone in the middle. But eventually the person in the middle between Amazon and the customer will be the author herself, and then Amazon will work to disintermediate and dis-empower the author, all in the name of bringing lower cost products to customers. This is why the science fiction of machine-generated books, while an innovation, would also be a dark omen for writers. If machines can automatically create music that is pleasing to the human ear by leveraging patterns known to be pleasing, then why not words?

Reminds me of the sort of end-to-end integration that made Apple into Apple. Going down the road of computer-generated prose is tempting for me, but instead I want to ask about price. I know that Smashwords puts price completely into the author's hands, and I assume this is the way it will always be. Price equilibrium, however, is bound to change. Do you think that the trend of nose-diving ebooks prices will continue? Are we ever at risk of going so low, that the new norm of profit-making in lit becomes advertising?

Ebook prices actually aren't nosediving for indie authors. We do an annual Smashwords Survey each year where we analyze price points and sales at each price point. You'll find the latest survey at Although authors are making greater use of free as a promotional tool, we're seeing good price stability in the $2.99 and $3.99 price range, and I've observed many bestselling indies actually start low and then increase prices over time. As long as writers create super-awesome books that readers want to read, readers will pay for those books whether the book is $.99 or $9.99. But price competition will always be a factor because if the reader has the choice between two books of equal quality from an unknown author, and one is priced at $3.99 and the other at $9.99, most readers will prefer the more affordable option. I don't see advertising in ebooks become a major factor. The retailers don't want their stores used as advertising platforms, and anything that interrupts the immersion of the reading experience would make the book less pleasurable to readers. But who knows, maybe someone will figure out how to do it.

I see your point. I meant nosedive in the long-run glance, in that ebooks ten years ago cost a lot more than today. It is definitely believable that $2.99 and $3.99 is the new equilibrium. Those numbers eventually work into a lot of back-of-the-envelope calculations for authors—specifically how many books they'd have to sell to become a full-time author. We're running out of time, but before I let you go, I want to hear your take on what it takes to become a fully self-employed author in the self-publishing age.

First, don't quit your day job. It's extremely difficult to make a living self publishing, so it's something most writers should transition into. It requires a long term perspective. It can take years of writing and publishing before you achieve an audience large enough to sustain you. It means the author should plan on toiling in obscurity before the breakout. The secret to success boils down to best practices. Check out my free ebook, The Secrets to Ebook Publishing Success - - where I identified about 30 best practices of our bestselling authors. If I were to boil it down into a few short bullets (next):

1. Write super awesome books that take the readers to an emotionally satisfying extreme. If the reader doesn't feel "WOW" after reading it, then your book isn't good enough. In fact, with the glut of high quality low cost books out there, good is no longer good enough. 2. The cover image must be super awesome. Romance authors are the experts here. A great cover requires the author to know the profile and desires of their target reader with pinpoint precision, and then the image must make an honest and appropriate emotional promise so that the reader instantly identifies this book as meant for them. 3. Distribute globally and avoid exclusivity. Every major retailer wants to carry self published ebooks, and there are millions of readers than can never be reached if you limit your distribution to just one retailer. 4. Publish more books. Authors who publish more than one book are much more likely to build a steady income stream. Every book you publish is an opportunity for you to improve your craft, reach more readers, earn the trust of more readers, and cross market your other books. 5. Build a platform you control. Form direct relationships with your readers with social media and private email lists. 6. Be nice. Publishing is a business, and like any business your success will be made more possible when business partners support you and open doors for you. These partners are fellow authors, editors, agents, retailers, distributors - all of us. It takes a village to be a successful author, so run your business professionally, ethically, honestly and with compassion for your fellow writers. 7. Pinch your pennies. Profit is the lifeblood of any business. You can't control sales, but you can control expenses. Be frugal, and once you start growing your business then reinvest. Never borrow money to finance your publishing adventure. Debt is an albatross that will limit an author's freedom.

Great, honest advice Mark. Thanks so much for your time and words.

My pleasure, Andrew.