Smashwords CEO on Why He as an Indie Author Supports Hachette Against Amazon

AMPLIFICATION: We should have pointed out in this post originally that Smashwords as a distributor doesn’t distribute most of its self-published ebook titles to Amazon and so would benefit from more readers buying ebooks from other retailers. We regret the omission. 

Mark Coker, the CEO of self-publishing distribution business Smashwords and an indie author himself, is rooting for Hachette in its current business dispute with Amazon.

Unlike many indie authors, Coker is rooting for Hachette to prevail against Amazon because he believes that a Hachette loss now would make it harder for big publishers to eventually switch to the old “agency” model of selling ebooks (where the publisher sets the price and takes 70% of the proceeds) and that the agency model is good for indie authors.

According to a Smashwords spokesperson, Coker believes that the agency model:

1. Has allowed indie authors to price ebooks lower to consumers, creating a favorable price comparison with traditionally published ebooks, while still earning a large royalty.

2. Has helped keep Amazon’s power in check, creating a more diverse ebook retail ecosystem, which…

3. Benefits authors (giving them more sales channels to pursue), publishers (same as authors) and readers (who get more choice when it comes to how and where they purchase ebooks).

Coker also believes that large publishers missed an opportunity on the agency model to lower book prices and give authors a higher cut, giving Amazon and other retailers less margin to pursue.

11 thoughts on “Smashwords CEO on Why He as an Indie Author Supports Hachette Against Amazon

  1. Tricia

    Thanks Mark, good summary and a global and sane view of the industry. Surely publishers can make decisions that are good for business AND good for individuals. Those things should not be mutually exclusive.

    Reply
    1. Mark Coker

      🙂 My five indie ebooks have received about 600,000 downloads but since those are mostly free downloads I suppose they don’t count toward indie authorhood or readership by your measure. Very kind of DBW to name me as a prominent indie, though. I’m flattered.

      Reply
  2. William Ash

    First, I think the dispute is about two businesses working in their interests. The tribalism that is swirling around the issue is a little confused. You need to look at business spread sheets in order to understand what is happening.

    But, from a purely economic point as an indie author, I hope the Hachette prevails. None of this is going to stop self publishing, but the current Amazon model is by starving revenues to suppliers. That also means authors. This race to the bottom of cheap goods is bad for creative people. Before you indicate authors like Huge Howey as successes, he and authors like him are outliers. Most creative people earn and sell far below those numbers. Likes don’t pay for rent or food. If we keep giving away work in the hopes of winning the lottery of fame, we are just a slave class in some dystopian society where our creative class is living of scraps in the refuse pile, while the aggregators and retailers make the money from us. If Amazon wins, it just means the value of a book will continue to decline. And as we get less and less for the same work, how are authors to survive? Already most have to subsidize their work by having another job. If we keep raising the bar to sustaining incomes by lowering prices, who is left to makes these works?

    I think authors and artists need to start thinking about their economic well being. Art has never been a road to riches, but do we need to live in poverty? Yes, I would love to do my work and give it away, but I also like to eat and have a roof over my head.

    Reply
    1. Jeremy Greenfield

      Thanks for your take, William. It’s voices like yours that get drowned out among those best-selling indie authors with bigger platforms who are eager to proclaim their successes.

      One of the greatest miracles of publishing today is that folks like you and me and Hugh Howey and Stephen King — anyone — can publish and sell a book to a wide audience. I find it even more wonderful that some of these folks are making a killing doing it. Perhaps the most wonderful thing is that droves more are paying bills here and there with their earnings.

      But to assume that the self-publishing revolution somehow doesn’t conform to earnings curves in other artistic endeavors is foolish and misleading — and the data show otherwise. Most authors — self-published and otherwise — just don’t make that much money publishing books, as we’ve shown in the DBW-Writer’s Digest Author Report and other data have verified. (No doubt, many, many of them are making more money self-publishing than they would have if they tried — and likely failed — to traditionally publish.)

      Reply
    1. Nikki

      Ditto to both of these. Especially since when Indie authors have been brought up in this dispute, one of the key notes has been how they would supposedly do better and make more money if they just went through the agency model *eye roll*. I really don’t think someone with a thriving business outside of their free Indie published titles really has a realistic idea of what it means to make a living as an Indie author. As a reader, and as a friend to many Indie authors (many whose sole businesses are writing), I hope the agency model finally gives up the ghost.

      Reply
  3. adanlerma

    “Coker also believes that large publishers missed an opportunity on the agency model to lower book prices and give authors a higher cut, giving Amazon and other retailers less margin to pursue.” –

    glad this was placed prominently at the end of the article

    hachette and others can still lower book prices and give authors a higher cut, if they wished…

    Reply
  4. Michael W. Perry

    Mark is right. It’s in the interest of writers that no retailer owns the substantial slice of the ebook market that Amazon now owns—probably around 70%. No retailer should own so much of the market that an author feels that he has no choice but to distribute through them. It is even more in the interest of authors that Amazon not be that dominant retailer.

    Remember that one of Jeff Bezos’s favorite aphorism is \Your margin is my opportunity.\ For ebooks the biggest slice of \margins\ outside Amazon is by far what is paid to the author/publisher. (Smashwords only takes about 10%.) The industry standard is for 60%-70% of the retail price going to those who created the ebook, which particularly given the often low retail prices of ebooks is quite reasonable.

    Amazon hates that. It recently told German officials that it thinks that 70% should be closer to 50%, with Amazon (of course) taking the other 50% for the cost (mere pennies) of processing a financial transaction and doing a file download.

    Personally, I think Amazon wants to grab more than half an ebook’s price for the most powerful of all arguments—it is already doing that. Outside the $2.99-9.99 price range, it currently only pays 35%, which is half what Apple pays. And inside that price range, it charges an inflated download fee that’s the equivalent of a $400 hamburger. Amazon is not a writer’s friend.

    The agency model is more important as a means than an end. In a healthy ebook market, there’d be little reason not to sell ebooks using a wholesale model. That’s precisely how my print books are sold. When I set their retail price, the discount I’ve authorized automatically sets the wholesale price. Retailers are free to set any retail price they like, but they must pay me that wholesale price.

    True, that does allow a retailer intent on establishing a monopoly to sell printed books at or below cost. Amazon was at one time doing just that very aggressively. But print book distribution has a set of costs, inventory and distribution, that makes selling below costs to destroy competitors harder than it does with ebooks. That’s why what success Amazon is achieving against local bookstores is coming only slowly. And print books don’t create device lock-in like Kindle sales do.

    Writers need to set three major goals for the ebook market:

    1. No one dominant retailer, since that puts them at the mercy of that retailer. Over time, that means no one with an over-30% marketshare.

    2. 70% royalties for direct distribution and 60% when going through distributors such as Smashwords. The cost of online sales is dropping rapidly, so that should eventually rise to 80% and 70%.

    3. Extensive control over how their ebooks is distributed. Amazon, with its obsession with control, attempts to micro-manage far too much (i.e. dictating the price for ebooks distributed with print versions). Retailers of ebooks ought to restricted by market forces from dictating to authors and publishers.

    The most important of those is that 70-and-then-80% royalty rate. Money is power. That gives authors a living wage while keeping the price of their books low. It also allows them to contract out talented people to do proofing and covers. Essentially, it allows an independent author to become the equivalent of a publisher.

    Deny authors that 70% royalty rising to 80%, as Amazon is already doing and intends to do on a still larger scale, and authors will be forced to come, cap in hand, to Amazon much like the orphans in a Dickens novel who must beg, \Please sir, could I have more gruel.\

    In short, if you don’t want to go hungry, you should be on Hachette’s side in this dispute. If Amazon can dictate terms to a giant publisher, it not only can be will dictate terms to you.

    Reply
  5. JOHN T SHEA

    Thanks to Mark Coker for his thoughtful article and to Michael W. Perry for reminding us that Amazon have been forced to show their hand more in their parallel negotiations in Germany and the UK.

    Both ‘traditional’ and ‘indy’ publishing are very dependent on shallow discount e-retailers like Amazon and Apple. And yes, 30% seems a shallow discount now, unfortunately. Only four years ago all publishers, self or otherwise, had to give Amazon a 65% discount. Amazon only cut that to 30% in anticipation of Apple’s entry to e-book retailing, and then only within certain limits, as Michael has outlined. Add in Amazon’s cutting the Audible audio book royalties and the prognosis is disquieting.

    Big publishers originally split the net with authors 50/50 or 17.5% each. When Amazon cut the discount the big publishers grabbed ALL the benefit and left ‘their’ authors with the same 17.5%. (All figures approximate and less download charges and agent’s commission, if any.)

    ‘A more diverse ebook retail ecosystem’ indeed needs to be promoted and sustained.

    Reply

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