Most authors price at $2.99…

Smashwords founder and CEO Mark Coker found that authors chose to price at $2.99 ”more frequently than any other price point. In last year’s survey, $.99 was a more common price point than $2.99. In this year’s survey, $2.99 was [chosen] about 60 percent more often.”

…but $3.99 sells the most copies.

Smashwords’ findings suggest that those $2.99 authors should price up by a dollar: “One surprising finding is that, on average, $3.99 books sold more units than $2.99 books, and more units than any other price except FREE. I didn’t expect this. Although the general pattern holds that lower priced books tend to sell more units than higher priced books, $3.99 was the rule-breaker. According to our Yield Graph, $3.99 earned authors total income that was 55% above the average compared to all price points.”

Coker also noted that “Books priced between $.99 and $1.99 continue to underperform when we look at the book’s total earnings. $1.99 performs especially poorly. It’s a black hole. I’d avoid that price point if you can.”

Coker acknowledged that if everyone starts pricing their ebooks at $3.99, the enhanced sales effect may be lost: “Today, [the] $3.99 price point appears to be an underutilized opportunity because there are fewer titles than $2.99 and readers respond favorably to $3.99. However, if thousands of authors shift their pricing to $3.99 tomorrow, would the edge diminish? I don’t know the answer to that.”

The full survey, which also includes findings on book length and title length, is here.

Photo courtesy of Shutterstock / Borys Shevchk

Apple had previously launched Breakout Books sections in Australia, New Zealand, Canada and the U.K. The section focuses primarily on genre fiction, with sections for romance, sci-fi/fantasy, and mystery/thriller.

While Apple mentions “hand-picking,” the books in the section primarily seem to be chosen based on how well they are selling. In a very long blog post about the benefits of self-publishing, Mark Coker, the founder of self-publishing company Smashwords, notes that 54 of the 64 titles in the Breakout Books section were distributed by Smashwords. He’d previously noted that Apple is now the largest retailer for Smashwords authors. (Smashwords does not distribute books to Kindle.)

To start, the three library systems using the program are Colorado’s Douglas County libraries, California-based library network Califa and Internet Archive’s free online library Open Library. In order to work with Library Direct, the libraries have to operate their own ebook lending systems. (Smashwords works separately with digital library distributors Baker & Taylor and 3M Cloud.)

On its blog, Smashwords explains how Library Direct works:

Previously, most libraries relied upon published reviews to guide their acquisition decisions. Under the Smashwords model, the curation is crowdsourced based on aggregated retail sales data drawn from across the Smashwords distribution network which includes the Apple iBookstore, Barnes & Noble, Sony, Kobo, the Diesel eBookstore and others.

Qualifying libraries can select from the top 10,000, 20,000 or any other large number of titles, and can custom-filter the titles by category and price range.

Douglas County, Califa and Open Library will each acquire “some variation” of Smashwords’ top-10,000 bestselling titles, with the three deals totaling around $100,000.

About 45,000 authors and indie publishers work with Smashwords. They can opt out of Library Direct, but they won’t know if their book has been included in the program until it shows up in their Sales and Payment report. “We don’t reveal sales rank on the site, though I suppose now might be a good time to reconsider that,” Smashwords founder and CEO Mark Coker acknowledged in the comments.

Separately, Smashwords officially launched a pricing tool that lets authors set custom pricing for libraries. (Coker told me this feature was coming at BEA.) Of 150 Smashwords authors who completed a survey, over half said they would make their books available to libraries either for free or for a price lower than retail.

Califa would “purchase about 10,000 of the company’s top titles for about $3 a title.” Some of the titles could cost less, though: Smashwords CEO Mark Coker recently told me that the company will soon allow its authors to set their own ebook prices, and said “a lot of them are going to want to offer libraries lower pricing…or will want to offer their books for free to libraries.”

Califa and Smashwords are also working on a self-publishing program for library patrons. Smashwords marketing manager Jim Azevedo explains to me how that would work:

Smashwords and Califa will collaborate to create local library publishing portals that will allow patrons to publish and distribute ebooks through Smashwords for acquisition and listing by their local library.  These ebooks will also be available for sale through the Smashwords distribution network, which includes Apple, Barnes & Noble, Sony, Kobo, Baker & Taylor’s Blio, and Diesel.  The books will also be distributed to the new Smashwords library aggregators including Baker & Taylor’s Axis360 platform and 3M’s Cloud Library platform (3M announced the Smashwords relationship earlier this month at BEA).

Heather Teysko, Califa’s director of innovation and development, tells Library Journal, “It’s great, the whole idea of having libraries becoming community publishing partners. We always knew we wanted to have a self-publishing arm as part of this.” (Similarly, many indie bookstores are embracing self-publishing as their customers use Espresso Book Machines to print their own titles.)

Self-publishing, part I: “There are no unrealistic expectations anymore”

Self-publishing platform Smashwords announced this week that it’s making self-publishing faster: Smashwords authors who sell e-books on Kobo and Apple will see faster “shipments” to those platforms, meaning that if they update their e-book’s price the change is reflected in near-real time. “We try to listen to people with unrealistic expectations,” CEO Mark Coker told me, “because their unrealistic expectations are the leading indicator of where we need to go.” Near-instantaneous price changes would allow an author to, say, sell an e-book “at $0.99 for the next five hours only.”

Smashwords is now working with library distributors 3M and Baker & Taylor’s Axis360 so self-published authors can get their e-books into libraries. Right now, the libraries buy Smashwords books at list price (publishers like Random House, meanwhile, charge more for the e-books they make available to libraries). Soon, Smashwords will allow its authors to set special pricing for libraries, Coker told me. “A lot of them are going to want to offer libraries lower pricing,” he said, or “will want to offer their books for free to libraries.”

Smashwords will soon let authors specify the countries where their books are distributed. Right now, authors (and the agents Smashwords works with) have the rights to sell their e-books in some territories, but not others. With the changes, for instance, an author could define that his or her e-book should be distributed “globally, except for commonwealth countries.” Smashwords will also let authors specify their prices by currency — a change from now, when authors have to price in dollars and retailers convert the currency automatically.

Also, Coker said, Smashwords will start accepting EPUB files (as opposed to Word files) later this year. With EPUB 3, that means the company could “potentially take more sophisticated books or enhanced books.”

Getting rid of DRM: This is going to take forever

Macmillan’s Fritz Foy announced at the Publishers Launch BEA conference that the company’s sci-fi/fantasy imprint Tor/Forge will launch a DRM-free digital bookstore this summer, and it may include DRM-free e-books from other publishers too. Meanwhile, distributor IPG announced that it will give client publishers the option to sell e-books DRM-free, and Kobo will give authors the option to sell DRM-free through its new self-publishing platform Writing Life. Still, publishers are moving slowly and it looks as though changes are going to happen in trickles.

Penguin global digital director Molly Barton said at Pub Launch that “Penguin is interested in methods of file security that would allow greater interoperability between platforms,” but Random House president of sales, operations and digital Madeline McIntosh called the DRM discussion “a red herring in a publishers panel at the IDPF conference, Publishers Lunch reports (paywall). She noted DRM’s not the only thing that keeps readers using a particular digital bookstore’s platform: “We have to be clear about what the goal is and commercial reason [to remove DRM].”

Self-publishing, part II: It’s getting closer

“We saw that seven percent of the units sold [on Kobo] were coming from self-published authors,” Kobo EVP of content and merchandising Michael Tamblyn told me, making those authors “collectively the size of a major publishing house,” so we “wanted to get closer” to them. Thus the launch of Kobo’s new self-publishing platform Writing Life. Authors using it get a 70 percent royalty on e-books priced between $1.99 and $12.99 and a 45 percent royalty on books below $1.99 or above $12.99. By “looking at how e-books sell in general,” Tamblyn said, “we know that after $12.99 there’s a drop…and after that it’s difficult to generate significant demand.” So the royalty structure “encourages authors to stay within that space.”

Amazon took up a lot of floor space, with separate sections for Amazon Publishing and self-publishing platforms Kindle Direct Publishing and CreateSpace. At KDP, the company set up rows of chairs and, all day long, self-published authors gave presentations on why they use KDP. “I also sell on Nook [Barnes & Noble's self-publishing platform is PubIt],” I heard one author say, but Barnes & Noble doesn’t rent a public booth at BEA — which seems kinda dumb considering both Amazon and Kobo’s emphases on self-publishing at the show. Kobo, too, had the self-published authors participating in the beta launch of Writing Life speaking at its booth.

Startups: Maybe we’ll find a better way next year

The Javits Center’s vastness makes it tough for publishers and startups to randomly encounter each other, a lame “Digital Discovery Zone” is removed from the rest of the floor, and terrible or nonexistent WiFi prohibits quick demos or many interactions you need the Internet for. (Can I throw in one more complaint? There’s no WiFi in the press office and the woman who runs it yelled at me for “drinking all the water.”) The founder of one fairly well-known startup told me he was finding it tough to meet with the publishers who could get use out of his product. Despite a few panels that try to bring traditional publishers and newer companies together, BookExpo America remains, primarily, an event where publishers and authors pitch new books to librarians and booksellers. Maybe that’s what it should be, but since it’s also the largest book industry event in the United States, it’s not surprising that digital companies arrive with expectations about who they’ll meet and leave wanting more. It seems as if there should be a more efficient way to make these meetings happen — stay tuned on that.

Don’t hold your book party on a rowboat

OK, this one’s not digital. Author Robert Sullivan took BEA-going booksellers to the Hudson to promote his upcoming book “My American Revolution,” which is about the historical importance of New York Waterways. As the New York Times reports, “two rowboats – built at the boathouse to imitate 19th-century New York Harbor craft known as Whitehall gigs – left the pier loaded with booksellers, volunteer coxswains and local residents.” Unfortunately, one of the boats “struck a pier” and flipped, “dumping three BookExpo conventioneers, two instructors and two others into 60-degree water.” Five were able to climb onto the pier. “The other two drifted 100 yards away.” There were no fatalities.

See also

Social reading, discoverability and other unsolved problems at BEA 2012

Kobo launches e-book self-publishing platform, Writing Life

Macmillan’s Tor/Forge will launch DRM-free digital bookstore this summer

Wattpad raises $17 million to become the YouTube of writing

Photo courtesy of BEA

Amazon’s plagiarism problem came to light again last week after Fast Company reported that many of the bestselling self-published “authors” in the Kindle store were actually copycats who uploaded other writers’ e-books under different titles. Using the Kindle Direct Publishing platform, the copycats are able to hijack the sales of the original authors by simply copying and reselling their works.

Spammy and stolen e-books — either plagiarized copies of copyrighted works by other authors, or books thrown together from “private label rights” (PLR) content, which can be bought very cheaply online and quickly formatted into multiple e-books — have long been a problem in the Kindle store. We don’t have data on how many of these titles are currently for sale or how widespread the problem is.

“We’ve found that the folks spreading PLR are also more likely to be plagiarists of real book content” as well, says Mark Coker, the CEO of e-book publishing platform Smashwords (a competitor of Amazon’s self-publishing platform). In many instances, Coker says, plagiarized and PLR content banned by Smashwords still appears in the Kindle and Nook stores. He says those stores don’t vet content as thoroughly as Smashwords does.

Amazon (NSDQ: AMZN) provides an e-mail address that plagiarism victims can use to demand that an offending e-book be removed. In response to our questions on plagiarized content in the Kindle store, the company provided the following statement:

Since the launch of Kindle, we have worked steadily to build processes to detect and remove books that either violate copyright or don’t improve the customer experience. Over time, we’ve rejected or removed thousands of such offending titles, and we expect to keep improving our approach to protect the service we provide to both Kindle readers and authors/publishers.

Update: When we submitted a list of questions to Amazon via e-mail, we asked them if they use screening software to screen for unauthorized copies. Instead of responding to the individual questions, the company provided the above statement. An Amazon spokeswoman called me this morning, however, and told me that Amazon does employ screening software. However, the company would not specify the kind of software it uses; whether it is screening for PLR or plagiarized content; or any other details. Amazon does not, however, employ software to screen for unauthorized copies — which is perhaps surprising given that

Amazon would not elaborate on what software it is using or if it resembles the electronic anti-plagiarism tools are used by nearly every university and by publishers as well. This type of software works by comparing a newly submitted document against a database of existing texts and flagging submissions that contain a high degree of overlap.

Robert Creutz, an executive with anti-plagiarism service Ithenticate, says his company’s software takes between 45 seconds and a few minutes to screen a text. Creutz says clients include book publishers like John Wiley and journal publisher Reed Elsevier (NYSE: RUK).

Screening software is also used by video sites like YouTube (NSDQ: GOOG) and by document sharing site Scribd.

But while it appears that Amazon could easily employ a filter to protect its authors’ works, it may be under no legal duty to do so.

The Kindle Store as Safe Harbor

Illegal copies are hardly unique to Amazon, of course. The Kindle store is just the latest in a long line of forums, from Grokster to YouTube, through which third parties have offered works without the creators’ permission.

Most times, the websites are not legally at fault. The law protects them by granting “safe harbor” status — a shield that helps internet companies avoid liability when a third party posts copyrighted material on their sites.

Websites can lose their safe-harbor status, however, if they are found to control and directly profit from the unauthorized activities. The meaning of these terms is not entirely clear, though, and is part of a high-profile court case between YouTube and Viacom (NYSE: VIA).

Hillel Parness, a copyright attorney at Robins, Kaplan, Miller & Ciresi, said that courts have found that a website has no duty to act unless it knows about a specific infringement. This means that Amazon is likely not responsible for the plagiarism unless an author can show the company knew a particular title was plagiarized. But Parness adds,

“If authors decide to challenge Amazon, they may choose to focus on the revenue Amazon enjoys on the sale of every e-book. Or perhaps they will question the fairness of placing the burden on authors to monitor Amazon’s e-book marketplace for books that infringe their own. Indeed, one may question if self-published authors even have the practical ability to do so.”

Amazon also stands out because it is a retailer making a direct commission from the unauthorized copies — unlike other safe harbor situations in which a site makes money indirectly via advertising.

In deciding if a site is shielded, courts will also look at its response to copyright complaints. Some plagiarized authors have reported Amazon was slow to take action — a situation that could place it on shaky ground.

Overall, Amazon’s response to the plagiarism problem reflects its status as a relative newcomer to the publishing game. This will no doubt change as the company continues to expand its presence from retailer to content creator.

Self-published authors have signed up by the thousands: Today the library contains 46,662 titles. But many are wary about getting on board.

To those who are signing up for KDP Select, the benefits seem obvious: Increased visibility and publicity for their titles and the option to make their book free for five days out of every 90-day period (many self-published authors have seen higher paid sales after making their books free for a limited time, and Amazon hasn’t previously allowed it). Also, as David Gaughran of Let’s Get Digital notes, “Rentals positively affect your sales ranking in the same manner that a normal sale does.”

Here are some of the concerns self-published authors have about joining KDP Select:

Exclusivity is required. Self-published authors who want to include their e-books in the Kindle Owners’ Lending Library have to make those titles exclusive to Amazon in digital format. The exclusivity period starts at 90 days and automatically renews for additional 90-day periods unless authors opt out before renewal. For self-published authors who are already selling the bulk of their e-books through Amazon, exclusivity isn’t much of a problem. Those who sell their e-books through other vendors like Barnes & Noble (NYSE: BKS) and Smashwords have to make a more difficult decision.

Mark Coker, the CEO of Smashwords, writes, “The new Amazon KDP Select program strikes me as a startling example of a predatory business practice. Amazon has the opportunity to leverage their dominance as the world’s largest ebook retailer (and world’s largest payer to indie authors) to attain monopolistic advantage by effectively denying its competing retailers (Apple (NSDQ: AAPL), B&N, Kobo, Sony (NYSE: SNE), etc) access to the books from indie authors.”

There are severe consequences for authors who don’t adhere to the exclusivity agreement. From Amazon’s KDP Select Terms and Conditions:

If you don’t comply with these KDP Select terms and conditions, we will not owe you Royalties for that Digital Book earned through the Kindle Owners’ Lending Library Program, and we may offset any of those Royalties that were previously paid against future Royalties, or require you to remit them to us. We may also withhold your Royalty payments on all your Digital Books for a period of up to 90 days while we investigate. This doesn’t limit other remedies we have, such as prohibiting your future participation in KDP Select or KDP generally.

It’s unclear how much money authors will make or how large the fund will be each month. The fund is $500,000 for December. Authors are paid based on their book’s “share of the total number of borrows of all participating KDP books in the Kindle Owners’ Lending Library.” In its FAQ, Amazon says it “expect[s] the total KDP Kindle Owners’ Lending Library fund will be at least $6 million for all of 2012,” and “The size of the fund is determined to make participation in KDP Select a compelling option for authors and publishers. We will review the size of the fund each month to consider adjustments.” But as Gaughran writes,

I think that agreeing to Amazon’s model of a fixed pot is a dangerous precedent, and I would much prefer if a per-download fee was negotiated – that could then be revised upwards or downwards by mutual agreement in the future.

Right now, authors get to set the price of their work. We put a dollar value on it whether we self-publish and sell through Amazon, or whether we license it to publishers and accept payment in return.

By accepting the compensation system Amazon is proposing, we are agreeing to fight for a limited pot of cash – no matter how many authors are scrambling for it. Amazon say they will raise it if the scheme is popular, but it’s all at their discretion. We have no say. They have all the power under this new model.

Gaughran thinks Amazon is open to discussing the program with self-published authors, and that it may make changes based on their suggestions: “If enough self-publishers don’t enroll (or opt out after enrolling), I’m sure Amazon will reach out to the community to see how they can make the program more attractive to us.”

Concerns/benefits that I am missing? Let me know in the comments.