Friday, May 30, 2014

Smashed and Confused: an open letter to Smashwords CEO Mark Coker in regard to the Hachette vs. Amazon feud

I have been struggling for a while to put my thoughts on the Amazon/Hachette dispute into an article. I still believe that indie publishing and traditional publishing are on the same side, and deadlines kept me from getting my thoughts down. Lucky for me, my bestie and Green Envy Press partner Larry Kollar wrote a fantastic bit covering everything I would have said, and offering some fantastic perspective!

If you’re an author, you’ve certainly heard about the big showdown between Amazon and Hachette, one of the Big 5 publishers. Or rather, you’ve heard the breathless reports from traditional media outlets about how the Amazon colossus is attempting to strong-arm helpless publishers into accepting its terms. Mark Coker, CEO of Smashwords (a combination eBook store and distributor to other stores) weighed in with a blog post titled Amazon Hachette Dispute Foreshadows What’s Next for Indie Authors, The title provides a strong hint at Coker’s views on the matter. What follows are my own views, in the form of an open letter to Mark Coker.

Dear Mr. Coker,

Your recent blog post does not only a disservice to those authors that you claim to champion, but your own company as well. Rarely has the phrase “cutting off your nose to spite your face” been more relevant. Frankly, I’m surprised—almost shocked—that you would so blatantly side with large publishers in this dispute, especially when you admit that the same publishers shun Smashwords due to your (correct) stance on DRM. Let’s be honest here: major publishers would be happy to see Smashwords dead, right after Amazon. 
If you are getting your information about the dispute only from the likes of the Wall Street Journal and Publisher’s Weekly, you’re getting a very one-sided view that is slanted to favor Hachette. That shouldn’t be a surprise; PW is the traditional industry's mouthpiece, while the WSJ is owned by the same conglomerate that owns HarperCollins (and Fox News, but we won’t go there today). Amazon, which owns no major media outlet to tell its side of the story, has mostly taken the more typical corporate approach: keep mum until reaching an agreement. One offer Amazon has made, that has somehow escaped the notice of the world at large, is to fund 50% of an author pool “to mitigate the impact of this dispute on author royalties” if Hachette funds the other half. So to say Amazon is unconcerned with how this is affecting Hachette’s authors is blatantly untrue. To my knowledge, Hachette hasn’t exactly jumped on this offer, which I think tells us who is more concerned about authors in this dispute.

The root of the dispute is this: Hachette is attempting to reinstate the Agency Model, and Amazon does not want it. Hachette, and other major publishers, were found guilty of collusion when they forced it on Amazon a few years ago. The problem with the Agency Model is that it turns the whole system of retailing on its head. Any store, including brick-and-mortar bookstores, pays a fixed price for each unit of inventory—be it groceries, CDs, monitors, books, or rolls of carpet—and sells them at some markup (usually). Amazon has never been shy about their corporate strategy: focus on market share, and profits will follow. So Hachette might set a retail price of $14.95 on a new release; Amazon pays maybe $7.50 and sells it at whatever price they decide best fits their needs at the moment. Larger retailers can demand (and often get) discounts—that’s how Barnes and Noble killed locally-owned bookstores; they used favorable wholesale prices to undercut the indies. Would publishers demand of Walmart, or B&N’s brick-and-mortar stores, the right to set prices? If not, why is it okay to demand the same of Amazon?

Now, let’s talk about Smashwords, and why some authors might stick with Amazon. (Hint: it isn’t because they’re all starry-eyed about the Kindle ecosystem.)

I’m a member of a publishing co-op, Green Envy Press. We pool our various talents to help each other produce eBooks with at least as much polish, inside and out, as major publishers. We have varying thoughts about diversification—of our authors, I’m the one most dedicated to the proposition. Nine of my ten books, including the just-released Into the Icebound, are available at Smashwords and the stores they distribute to. I have what I think are good reasons to spread my books far and wide, although my sales figures might disagree. When I look at my income, I see $600-$900 coming in from Amazon every quarter (paid monthly by the way), and maybe $20-$30 from Smashwords. Since I use Smashwords to aggregate the rest of the world (except B&N, because I like their Nook Press tools so much), it’s safe to say that 97% of my sales come from Amazon. On a good day, I’ll sell as many books at Amazon as I have in over two years at Smashwords proper (38 books). I know that other authors have different spreads, maybe a few lopsided the other way, but I can only speak for myself. 

How much effort goes into gaining that 3% of sales, then? In my opinion: far too much. If you hadn’t started taking EPUBs, I'd have given up on you and started going direct. I write in Scrivener, and format in Sigil, so my workflow doesn’t involve a Word file. The income I get from Smashwords is not worth the time to produce a Word file just for the Meatgrinder. I’ve uncovered two problems in the EPUB autovetter (y’all were using a ratty version of Epubcheck at first, and it checks the manifest instead of the spine for the title page). Fortunately, you have excellent and responsive support staff who want to make this stuff work. But why not take it a step further? There are excellent open-source tools that can automatically convert a good EPUB to all the formats you support—like Meatgrinder, only better because those of us who don’t work from a Word file could play.

So. Why is it that, despite the far wider reach that Smashwords affords, do I typically get 30 times the sales (or more) from Amazon? It’s not for lack of trying on my part—in the beginning, I tried to give all bookstores equal time, and my non-Amazon sales have actually picked up since I gave up and just focused on Amazon links. Could it be that Amazon mentions (and sometimes headlines) my books in their massive email blasts once a month or so?

Another possibility is that online publicity sites/newsletters work from the assumption that you're in KDP Select and can schedule free days whenever you need them. Maybe Smashwords should create its own promo services, or at least encourage the established services to be more Smashwords-friendly. I would love to see more revenue coming from Smashwords.

Amazon is winning the eBook wars for a number of reasons right now, not the least of which is that it's making a lot of authors a lot of money without much up-front hassle. Between the most basic of promotions that nobody else seems to do, and the Amazon-centric review and promotion ecosystem, a cycle of dependency is spinning up. Smashwords needs to counter that, somehow, before authors have no choice but to follow the money. But backing traditional publishers in a fight against Amazon isn’t going to do that.

Author of White Pickups and Accidental Sorcerers


Cat Russell said...

Great, thoughtful article. I haven't heard this before, so you've given me a lot to think about!

A.M. Guynes/Annikka Woods said...

This is a very thoughtful article. I wasn't aware of Amazon wanting to do that 50% deal with Hachette. Personally I'm glad that the Agent Model is being phased out. It doesn't work as well in today's market. I also think that Smashwords CEO was out of line when he came in behind the big publishers.

Katherine Hajer said...

Excellent points all around. I'd add one more -- the Meatgrinder doesn't just want a Word file, it wants a Rich Text Format Word file. Even Microsoft stopped using that around 2007 -- they only support it as a legacy format now. All the native files for Office 2007 and higher are XML-based. Coincidentally (not), EPUB is also XML-based, although in a different schema of course.

So the Meatgrinder isn't just being specific, it's being specific for a format that hasn't been a default for at least seven years. I know upgrading software takes a lot of time and money, and that it's much easier to let it run along and not require any more capital expenditures, but given what the software's used for, it's getting rather silly to leave things in the state they're in.

With today's tools, assuming a cleanly-formatted MS, it takes less than half an hour to create an EPUB that will pass verification. There's really no need to impose the Meatgrinder on everyone.