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Moderator’s note: Alan Baxter‘s RealmShift, the SF-and-fantasy novel shown here, is one of the five-star-rated titles on Smashwords, a site for self-published writers and their fans. “Samuel Harrigan is a murderer,” reads part of the plot descrption. “He used ancient blood magic to escape a deal with the Devil.”

Mark Coker, CEO and himself a self-pubbed novelist (photo), sees Smashwords as a chance to help the Baxters of this world to bypass publishing’s gatekeepers and connect directly with readers. Down in Australia, Baxter is also working through his own small press, putting out a paper editon, as Mark would encourage him to do, given the small size of the e-book market today.

Recently Mark talked with Kat Meyer as part of her  Digitizers series for TeleRead. Next, Kat will chat with Travis Alber, CEO of Book Glutton, another community-oriented site of interest to self-published writers. Meanwhile check out Paul Biba’s audio interview with Mark if you haven’t heard it already.

image Question for TeleBlog readers: Do you think that Mark’s Smashwords site could use more graphics? And should more books on it come with professionally created covers, or would that be too big a burden on writers with limited resources? Maybe bring together struggling artists with struggling writers? Or how about a professional artist at least to advise the do-it-yourself folks? In those areas and others, use our comment area to give Mark some constructive feedback about the current site’s pros and cons. One strength as I see it, beyond Mark’s willingness to experiment with author- and reader-friendly biz models, is Smashwords’ tight integration with community sites such as Facebook. I also love his opposition to DRM and advocacy of the ePub standard, which he uses, among other formats, on his site. And now, here’s Kat’s super-informative and thoughtful Q&A with Mark. I’ve rudely put this-here moderator’s note up front, because the cover issue is of such interest to me; apologies in advance to Kat!

Update, 1:21 p.m.: Mark did respond to questions Kat asked about the cover, after she did the main Q&A; and I’ve added his comments. He does say that the overwhelming majority of the books have covers, that they’ll be better featured on the current site in the future, and that the Stanza versions display them prominently. Good stuff! And I hear he hopes to help writers and artists connect. I stand by my feelings about the scarcity of graphics on the present site, but Mark obviously is doing something. Meanwhile I’m delighted to see Mark’s interview with his gifted writer Norman Savage draw a Galley Cat link! – D.R.

By Kat Meyer

Q. Is it fair to say your motivation for your first start-up, BestCalls.com, a stock-market site, bears a passing resemblance to your motivation for creating Smashwords? In both situations, you saw the system as broken, with the cards stacked against the individual.

imageA. In both cases, I was personally rebuffed by the status quo of each industry, and in each case the experience prompted me to build a business to challenge that industry. In both cases, some entrenched industry insiders told me I was crazy, that I lacked the experience to understand their business, and that I could never change the status quo. I enjoy a good challenge.

Q. How have things played out (so far) in each of these start-up ventures?

A. With BestCalls.com, we served as a catalyst for fair disclosure regulatory reform, built a small but profitable business with over 50,000 registered members, and then successfully sold the business in 2003. BestCalls is now owned and operated by the Nasdaq Stock Exchange.

With Smashwords, only time will tell if we matter to the future of book publishing. I think most in the publishing industry consider us a strange curiosity, but too small to worry about. I like it that way, for now. To many of our authors, we represent the future, and the enabler of their dreams. I receive touching emails almost daily from authors who thank me for giving them a chance to reach their audience.

I confess I’m having too much fun for this to be legal. We’re helping to digitally liberate the stories trapped inside so many authors.

Q. Do you see Smashwords enjoying the same (or even bigger) success as BestCalls.com?

A. BestCalls.com started as a cause wrapped in a website’s clothing. We were wildly successful at achieving our cause, and reasonably successful at achieving a decent outcome for our shareholders.

With Smashwords, I’ve set my sights much higher. I want to change the future of book publishing. I want to help create a future where every author can be published, where every author is given a fair chance to reach their audience, and where every author becomes the captain of their own destiny. I want to expand cross-cultural literacy and bring all the world’s indie authors together in one giant online bookstore. And in the process, I want to build Smashwords to become a large and profitable business.

We’re creating a digital publishing platform that can one day serve hundreds of thousands if not millions of authors around the world. And in the next couple days, we’ll introduce a solution for indie publishers as well. Our success won’t happen overnight. Our revenues are laughably small now.

Q. Is speaking up for/empowering the little guy a lucrative market across industries?

In my case, I certainly hope so! It’s one thing to get up and shout about how the world should be different. Ideas are a dime a dozen. But it’s another thing entirely to build that idea into a successful business. BestCalls was acquired because we created a profitable business of lasting value to its new owner and their customers.

A. If we can turn Smashwords into something of lasting value, then it too will have a bright future. And by lasting value, I mean we need to create a business in which all the primary stakeholders – authors, publishers, readers and book trade professionals – can come together and transact profitable business with one another.

Q. Your main focus with Smashwords seems to be enabling authors to publish with as little hassle—and as little investment—as possible. So far, how are the authors reacting?

A. Authors have reacted with effusive glee, because they realize I created Smashwords first and foremost for their benefit. Every aspect of our business is designed to help authors reach their audience.

Many of our authors were thrilled about our deal with Stanza, because it put their book in the hands of over a million iPhone and iPod Touch customers. Indie authors simply want a level playing field. As physical book shelves disappear and are replaced by digital shelves, the playing field will level even more.

By design, I’m in constant communication with our authors. On every page is an option to send us feedback. My email address is all over the site. I handle most of the customer service. It’s important to me that I’m close to our users, because I learn from them. They tell me what they like, what they don’t like, and they give us suggestions that drive our daily development.

Q. Have they asked for changes/additions to the services you are offering?

A. Every day. Lately, our authors have asked for an affiliate program, and our indie publishers have asked for a way to publish multiple authors and titles under a single publisher account. We’ll deliver both in the next two weeks.

Our authors and readers have asked for us to do a better job merchandising the books, and making the books more discoverable. We have some short term improvements planned here, and then intermediate term we’ve got more cool enhancements planned.

Our roadmap is stuffed with hundreds of planned enhancements, large and small, designed to improve the Smashwords experience for authors, publishers and readers.

Q. What is your philosophy regarding the readers who come to Smashwords looking for content? Do you feel they are as big a part of your focus as the authors? What has the reader/end-user feedback been like so far?

A. Smashwords has been reader-friendly since day one, though when we launched last May, we intentionally made the development focus for the first 12 months 80/20 author/reader, with emphasis on building out the publishing platform for authors. We realized we needed to quickly reach a critical mass of author content, so customers would have reason to visit, sample and purchase, and then be impressed enough to visit us again. So today, nearly nine months later, we’ve reached the minimal critical mass where readers have incentive to repeat visit, and authors and indie publishers have incentive to publish with us if for no other reason to reach our readers.

Obviously, without readers, there are no customers, and without customers, there is no income for either Smashwords or our authors and publishers. We designed Smashwords from the ground up to be extremely reader-friendly. All of our books are available DRM-free and multi-format, so our books are readable however the reader prefers to read. We offer personal library-building tools so customers can store and manage their books, and can also collect samples for future purchase.

Customer feedback has been positive. We’re seeing more repeat customers, so this tells me we’re on the right track. Because all our authors provide generous try-before-you-buy samples of their books, we don’t have customers complaining that the book they purchased is terrible.

Q. What tools/services do you make available to the Smashwords reader (for finding content, reviewing, etc.)?

Readers have multiple methods to discover content.

The reader community decides what’s worth reading, so these titles bubble up to the top of our different search funnels. As our readership increases, the ability for our community to efficiently identify the best works will improve.

Starting with the high level categories on the home page, we make it easy to drill down into special genres and sub genres. Readers can also free-form searches from the search box. We allow our authors to tag and categorize their work, and this greatly expands the discoverability of our content both through free-form searches and tag clouds. We make heavy use of cross-site linking, so our books are cross linked across authors, titles, publishers, subject matter and click streams.

Although we’ve implemented the basics of book discovery, I think discovery represents one of the biggest opportunities for improvement in the months ahead.

Q. Do all books benefit from having many different “containers,” or do you think some books work better as e- or print?

A. Yes, books benefit from different containers, and different shapes of containers. Today, e-books work best with straight form narrative, because you can actually improve the reading experience by moving these books into plain text with minimal formatting. Luckily, probably two thirds of all paper books sold today can fit into this category.

For the minority of books for which readability requires complex layout or graphics, or books that require page numbers and indexes, these work less well today in e-book form because it’s a challenge (though not impossible) to deliver them multi-format and readable on all e-reading devices.

Q. Regarding Smashwords’ new affiliate partnership with WordClay, do you think Smashwords authors have a better chance with print sales b/c of their experience with the e-book publishing process?

A. Authors who were born digital may have some advantage in terms of being better positioned to leverage the myriad online book marketing opportunities. When a book is distilled to its digital text, it completely changes the online marketing opportunities for the author. And since our authors control their content, they have much more flexibility than commercially published authors to determine how the book is priced, packaged, marketed and sold.

Most digital natives recognize that ebooks are just containers for their words and stories, whereas some print natives have preconceived notions that a book is a bound collection of precisely formatted print pages, or that ebook equals PDF, and such notions are counterproductive to a good transition to digital.

Q. What are your thoughts on e-book/print book bundling?

A. I think there’s some interesting opportunity here. It’s actually something we could support today with Smashwords serving as the ebook infrastructure partner for print publishers. Using our Coupon Generator feature, publishers can issue custom coupon codes to their print customers so customers can redeem the coupon at Smashwords for either a free or discounted ebook.

Q. E-book pricing seems to be a huge focus of the overall publishing industry right now. What is your experience with e-book price points? Are Smashwords authors experimenting with pricing? What are the readers saying about pricing? Does any particular price point (or range) seem to be doing extremely well across the board? Do readers recognize the value where prices are higher, or do they expect all e-books to be priced consistently?

A. Readers expect value, and their perception of value varies by subject matter and author.

image Our best-selling book lately has been one of our most expensive at $7.97, Dan Poynter’s Self Publishing Manual Volume 2, which he published first on Smashwords. Non-fiction titles can support healthier price points because it’s easier for the reader to justify the cost. If you’re considering a book that you believe will lead you to achieve better health, happiness or professional success, then virtually any price point makes that book a smart investment.

Fiction pricing is trickier. Most of our fiction is in the $2.00 to $3.00 range, but possibly only because that’s the range most of our authors choose to price their books. At $3.00, the author knows they’ll earn $2.22 per copy, which is over five times the amount they’d earn selling the typical mass market paperback through a commercial publisher, and about the same as what they’d earn with a hard cover book priced at $25.00. I think there’s some opportunity for fiction authors and publishers to price their titles higher than $3.00, while still providing their customers incredible value. The key is to offer generous sampling so readers can try the book before they buy. Many of our author offer the first 20 to 50 percent of their book as a free, downloadable sample.

If publishers fixate only on price, they’re missing a huge opportunity to connect with readers. If we’re reaching only for the customer’s wallet, the customer will resist because they have alternatives. Instead, we need to earn their attention. If you can get a reader to invest their valuable time—and we as publishers must respect their time—to read the first half of a 200 page novel, they’ll voluntarily open their wallet to finish the book. Or, if an author has written several books, why not offer one of them for free to help build an audience for that author’s work? Or, better yet, put a price on all the books but do limited time promotions with coupons that make one of the books free. I’m seeing a lot of really interesting experimentation among Smashwords authors who use our Coupon Generator to build customer urgency to sample and purchase their books. A priced book, available for free with a limited-time coupon, has more perceived value in the mind of the customer than a book that’s always free.

Q. Have Smashwords’ authors shown a desire for help with the development and/or marketing of their e-books?

A. Yes. I’m a huge believer in the added value that comes from third party service providers, which is why we’ll soon create a free marketplace where book trade professionals can offer their expertise to our authors.

Q. Do you have plans to offer paid services to Smashwords authors?

No. If we made all our revenue selling pots and pans to the miners, I’d consider it a failure of our business model. I want our business be predicated upon the financial success of our authors and publishers. If we can build a successful business taking only 15 percent of the net, then it means we’ve been even more successful for our authors, publishers and readers. And someday, I’d like to drop our percentage even lower, not because I want to be the Craig Newmark of book publishing, but because to the extent we can strip costs out of book publishing, we can expand the overall selling opportunities by making books more affordable to more of the world’s literate consumers. Print books are simply too expensive for most literate people.

Q. What genres appear to be doing the best on Smashwords? Is there a trend here?

A. Since our revenues are still small, it’s difficult for me to give a statistically valid answer here. Our bestseller list bops around quite a bit, driven by the self-marketing efforts of our authors and publishers.

I receive an email each time a book sells. A couple weeks ago, a new customer made their first purchase – an erotica title. Later that same day, they came back again, and this time loaded up their cart with several more erotica titles from the same publisher. They also added ordinary commercial fiction to their cart. You might say I’m excited about the potential for erotica to help introduce millions of new consumers to the joys of ebooks.

Q. Any breakthrough success stories so far? Any bestsellers like The Shack, which was self-published?

A. No commercial successes like The Shack yet, but I stress the word yet. It’s only a matter of time.

It’s also only a matter of time before a New York Times bestselling author decides to retain digital rights for their next title and publish it with us. That, in my view, will be a transformative event, not only for Smashwords, but for the entire industry as well. I’d be willing to give the first New York Times bestselling author who steps forward 100 percent of the net for the first year, just to prove Smashwords represents a viable publishing platform for all authors, both new and established.

In my view—and I’m staking the future of Smashwords on this view—we’re entering a world where the nexus of power will shift to the author, not the publisher. This is the world we’re seeking to enable. I still think, however, the future world order will always have a place for smart and innovative publishers who put their authors first.

Q. What book/s have you read most recently (or are you currently reading), and how are you reading them?

A. My most recent book was Junk Sick: Confessions of an Uncontrolled Diabetic, by Norman Savage. It’s a Smashwords original. I first sampled it in our online HTML reader and then moved it over to my Stanza reader. I just featured the author in a Q&A interview on the Smashwords blog. A few months ago, he was on the verge of landing a book deal with Farrar, Straus & Giroux. Then the economy cratered in October and his advocates at FS&G lost their jobs.

Norman, in my view, represents the future of publishing. He’s an immensely talented, can’t-put-his-book-down type of author, and he’s just been orphaned by a publishing industry that’s struggling to keep the lights turned on. The Norman Savages of the world, who until recently were trained to aspire toward a traditional publishing deal, will soon aspire to go indie and stay indie. And the day this happens is the day Smashwords goes from a great idea to great business.

Q. Do Smashwords’ authors let you know when/what marketing efforts they are undertaking? Have you been able to correlate any sales bumps with any marketing endeavors by Smashwords authors?

Our authors usually act on their own, unless they want to bounce ideas off of me first. I’ve definitely been able to correlate sales bumps, because when a first-time customer registers for an account before they purchase a book, they tell us where they heard about Smashwords, and it’s often from author referrals from an author web page, blog post, message board post or a private fan newsletter. To help our authors get a head start on their marketing, I wrote a marketing primer called The Smashwords Book Marketing Guide.

Q. Very interesting that indie publishers are asking for ways to publish multiple titles under one account. By this do you meanso-called “traditional publishers?” Are these publishers who are already publishing multiple authors in print, and are now looking to offer ebooks as well? Not sure how to ask this, but are any “established” or otherwise well-known houses/publishers using Smashwords as their e-publishing solution?

A. Until we began live alpha testing of our publisher solution just a couple days ago, it wasn’t easy for publishers to list titles with us because the site is architected around the author, not the publisher.

Now that we support publisher pages, a single publisher can list all their authors, and then attached to those authors are the book pages for each title. And then everything is cross linked so the customer can search by publisher, by author, by other authors published by this publisher, etc.

Our first alpha tester is eXcessica Publishing, an indie e-publisher of erotica. They just today surpassed 100 published titles with us from 30 authors. So although we have very few publishers using us today, we think our new offering will be a great e-publishing solution for many indie publishers transitioning to e-.

We offer publishers a no-brainer alternative to Amazon as well, because we give the publisher 85% of the net and we publish multi-format and DRM-free. Although we’ll never match the traffic of Amazon, for publishers who already have a captive list of customers, and for whom the publisher has the power to point their customers to a retailer, they’re a lot better off pointing their customers to Smashwords than Amazon if for no other reasons than the greater margin and better customer reading experience.

Q. With regard to multi-format offerings, how do authors decide which formats to offer their works in? DO you advise authors about his? Do any particular formats seem more popular/sell better?

Prior to authors uploading their books, we encourage them to read our Smashwords Style Guide, which provides formatting tips and information on which formats work best for different types of books. We also summarize the suitability of each format at the time they go to upload their books.

For a properly formatted novel or any other straight form narrative work, all the output formats work great. Often, for a straight form narrative book that’s already formatted for print, the author can tweak it for good ebook conversion with minimal effort.

The biggest challenge we run into is educating authors to realize that their pretty print book will look better in ebook format if they strip away the superfluous formatting and layout.

For books with tables of contents, indexes, page numbers and copious images or charts, the author needs to be more careful, because we do less well here. These books need to be carefully reformatted, and they work less well across all the different formats. Images, for example, won’t convert into pure text.

In terms of most popular formats, it’s all over the map. Stanza has made epub popular for us, and the Kindle makes our .mobi file format popular. And of course many people read onscreen via HTML or PDF, or with RTF in their Word processor.

Q. RE: pricing and the idea of limited time “free” offers to create interest in books, do you think permanent “free” is ever a good model? Do you have authors on Smashwords (that you know of) who are using free ebooks to sell something else, or generate interest/audience for some other sector of their business? What do you personally think about the idea of “free content” and whether or not it impacts the ability of content creators to make a living?

A. Some of our authors give their e-books away for free because they view free as a quick way to build an audience they can then sell print copies to, or sell future books to. Some of our authors give books away for free because they don’t care about financial remuneration—instead, their personal reward is the satisfaction of being read. I’ve seen other authors use limited time free promotions to gather readers, build reviews, or establish their expertise in some subject matter which I assume they’ll try to monetize later via consulting or speaking gigs. There’s a lot of interesting experimentation going on now with ebook pricing, and I think the solution of what works best will really come down to the personal objectives of the author. To say one method is better than the other is to paint with too broad a brush.

My personal thought is that authors who want to sell books should look first to percentage-based sampling. At Smashwords, our sampling is really unmatched anywhere. The author can determine what percent of the book is available as a free sample, starting from page one, and then we make the sample available for immediate download in all our different formats. Like I said earlier, we need to earn the customer’s attention before we earn their wallet.

Q. Do Smashwords’ titles have option of uploading a cover? If so, how many authors upload the cover? Do you have any feelings about the use of covers in marketing an e-book? [Asked as a follow-up to the main interview.}

We make covers optional, because I don’t want the lack of a cover to prevent an author from publishing. A little over 90 percent of our authors upload book covers. I do think covers are important, though, because customers appreciate a visual representation of a virtual product. We plan to activate them on the home page very soon, per my previous comment about improving the on-site merchandising of our books.

As I mentioned, most of our authors (over 90 percent) do have covers.  Many of them look quite nice.  The only thing we haven’t done yet is activate the covers on the home page, and the search pages.  We’re waiting to work out some glitches regarding how Internet Explorer displays the covers before we activate them on the home page. On Stanza, all of the covers have been activated since that relationship started

 
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