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2015 Book Publishing Industry Predictions: Slow Growth Presents Challenges and Opportunities for Authors

01/05/2015 02:48 pm ET | Updated Mar 07, 2015

2015-01-02-2015crystal.pngWelcome to my annual publishing industry predictions for the year ahead. This year I share 12 predictions.

Before I speculate about what 2015 holds for authors, publishers and readers, let's reflect for a moment about how self publishing has transformed the book publishing landscape.

Thanks to ebook self publishing, every writer in the world has democratized access to the tools and knowledge of professional publishing. It's now possible for writers to make their books instantly accessible, discoverable and affordable to billions of readers around the world.

Most exciting of all, we're still in the early days of the self publishing revolution. I'm confident that decades from now, ebook self publishing will be viewed by historians as no less transformative than the advent of the Gutenberg printing press.

Despite the incredible opportunities available to every self-published author, clouds loom on the horizon. Recent years of exponential ebook growth have given way to a new normal of slower growth, greater competition and disruptive business models and power struggles. These factors create new threats and opportunities for publishing industry participants.

This is why annual predictions are so useful. To the extent any of us can predict the future (an exercise fraught with folly I might add!), predictions help stir the imagination, spark constructive debate, and help industry participants understand how the decisions they make today can help manifest the future they want tomorrow.

So without further delay, I present to you my predictions for 2015. Enjoy!

Mark Coker's Publishing Predictions for 2015

1. More authors will aspire to self-publish - In 2008 when I founded Smashwords, nearly all writers aspired to traditionally publish. Publishers controlled the printing press, the access to retail distribution and the knowledge of professional publishing. Most writers viewed self publishing as the option of last resort -- the option for failed writers. Today the former stigma of self publishing is evaporating. Self-publishing has given rise to the indie author movement, as I described when I published the Indie Author Manifesto earlier this year. The indie author movement will grow stronger in 2015. Traditionally published authors will continue to transition to indie, led by midlist authors. We'll also see more hybrid authors (authors who self-publish and traditionally publish) reorient their publishing strategy back in the direction of indieville.

2. Indie authors will capture more ebook market share - Self-published ebook authors typiclaly earn 60-80 percent of their book's list price as their royalty. This compares with 12-17 percent for traditionally published ebook authors. As the number of self published titles increases, fueled by more and more writers becoming self-published authors, and as more indie authors learn to adopt professional publishing best practices, indie authors will capture increased market share. In March I shared some of my longer term market share projections here.

3. Screen reading will increase, but at a slower rate For readers of English language books, the early adopters of ebooks have adopted. Reading will continue to transition from print to digital, yet the rate of growth will slow. One bright spot for digital books will be the continued growth in screen reading in developing countries aided by the ubiquity of smart phones.

4. 2015 will be slow growth for most authors, indie and traditional alike - I blogged about this topic in November in my post titled, Ebook Publishing Gets More Difficult From Here. While some indies had a fabulous year in 2014 (look no further than the retailer bestseller lists where self published authors are hitting the top 10 each week), most authors experienced a slower growth year - especially when compared against the go-go days of exponential growth from 2008 to 2012. The causes for this slow down include a new equilibrium between print and ebook formats; immortal ebooks published by publishers and indie authors alike that will never go out of print; the continued growth of self-published titles; and myriad low-cost and free non-book alternatives competing for reader time such as social media, Internet video and games.

5. Indie authors face increased competition from traditional publishers - For the first years of the ebook revolution, large publishers all but ceded the $4.99 and lower ebook market to indie authors. Publishers tried to maintain higher prices, while indies grew readership by offering budget-conscious consumers high-quality books at low prices. The low prices, including the ultralow prices of FREE and .99, made it easier for readers to take a chance on unknown writers.

In the last year, large publishers, borrowing a page from the indie author playbook, have stepped up their price-cutting in the form of temporary promotions on titles from big-name authors. In 2015 we'll see the temporary promotions from large publishers that were so common in 2014 give way to permanent lower prices on backlist titles from big names, and faster, more aggressive discounting on recently released titles.

This means indies will face increased competition in the sub $5.00 price points. In the past, you could identify indie titles on the bestseller lists by price alone. This is no longer the case. Large publishers will also make greater use of ultra-low prices.

6. Large publishers step up usage of FREE - Inspired by the success of indie series writers who've had enormous success permanently pricing series starters at free (a.k.a. "permafree") , large publishers will start making increased use of this unconventional price point. Although few large publishers have made use of free as a promotional tool to date, this will begin to change in 2015. As retailers such as iBooks run more "First in a Series Free" promotions which heretofore have been dominated by indie authors, publishers will feel the pressure to jump in. As I write these predictions, iBooks is running a major multi-genre First in a Series Free promotion with nearly all the titles supplied by indie authors. Fifty nine Smashwords titles are featured!

7. FREE will lose more mojo - Since 2008 I've encouraged authors to utilize free as a price point to turbocharge downloads, build readership and reader trust, and drive readers to priced titles. Authors who followed this advice early on reaped the most benefit. However, free is losing some of its gusto as the market becomes flooded with free ebooks.

Each year I publish a survey of ebook purchasing trends called the Smashwords Survey. In our 2014 survey we found that free books at iBooks were downloaded with 39 times more frequency than books at a price, down from a multiplier of 91 in the prior 2013 survey. In 2015 I predict the multiplier will drop further. Despite the anticipated drop in effectiveness, free remains one of the most powerful merchandising tools for indie authors, especially when applied to series starters. This also means that authors who utilize free today will get much more mileage from it than authors who use it a year from now (hint: If you're using free, make sure your free titles are upgraded with enhanced backmatter so they direct readers to your priced titles. See my blog post and video on this subject). If you're an indie author and haven't experimented with free yet, now is the time.

8. Many indies will quit in 2015 - Authorship is tough work. Discouraged by weak or slumping sales, many indie authors in 2015 will either give up on publishing or will decrease their production rates. With the rapid rise of anything -- whether we're talking tulips, dot com stocks or real estate -- bubbles form when the market becomes too frothy, too optimistic, too euphoric, and too crowded. All markets are cyclical, so this boom-to-bust pattern, while painful for many, is healthy for the long term, especially for authors who stick it out.

Indie authors will be forced to take honest stock of their dreams, motivations and commitment. What drives them? Is it the joy of writing, or the necessity of putting food on the table, or both? Either reason is respectable, but if an author's family's next meal is entirely dependent upon their book sales, they're under enormous pressure.

9. Time management will separate winners from losers - Raise your hand if you have too many hours in the day. I'd hazard to speculate that each and every one of us fails on time management to some degree each day. We only have so many minutes in a day, and only so many heartbeats in a lifetime. If you're a writer, are you optimizing your time so you're spending more time writing and less time on the nonessentials?

Here are three easy opportunities for authors to gain dozens or hundreds of additional writing hours each year: 1. Many authors spend too much time on marketing and social media when they should be spending more time writing. An author's best marketing is a book that markets itself. If an author's book isn't sparking enthusiastic word of mouth without marketing, then no amount of marketing will make it a bestseller.

Focus instead on making the book better. Please your readers and they will spread word of your book through positive reviews and recommendations. If you're preparing a book launch and you have a couple thousand dollars burning a hole in your pocket that you want to spend on marketing, spend that money on professional editing instead. 2. Many indie authors spend hours each month uploading to, managing and monitoring multiple retailer publishing platforms when they could centrally manage these retailers more efficiently by using a distributor (disclosure: my company Smashwords is a distributor for self-published authors). 3. If it takes you multiple hours to format your ebook, why not hire a low cost ebook formatter for $40 or less?

10. Amazon Will Use Kindle Unlimited to Pay Authors Less - Whether you love it or hate it, Kindle Unlimited is a massive disruptor in the world of ebook publishing. Many writers are claiming it caused their sales to plummet, while others say it has helped them reach new readers. You can check out my prior analysis of KU here and here, or check out David Streitfeld's recent story on KU in the New York Times.

KU will have broader impact in 2015. Unlike its ebook subscription competitors Oyster and Scribd which allow authors and publishers to set prices and receive retailer-level margins on qualifying reads (Smashwords distributes to each of these services - our authors earn 60% of their book's list price), KU pays from a shared pool, which means the author/publisher is compensated based on a book's prorated share of readership multiplied against the size of pool. If it sounds opaque, that's because it is. The size of this shared pool is determined by Amazon the month after the book is read. It's like Amazon sells your book today but tells the author, "I'll decide what I feel like paying you in a few weeks."

This wouldn't be a problem if Amazon was a benevolent player, committed to paying their publishers 70 percent list as is standard for most ebook sales at retailers. In November Amazon paid only $1.39 per qualified read, regardless of the book's length or price. $1.39 works out great if your regular retail price is $.99 (a $.99 ebook sold at Amazon otherwise earns about 34 cents). Yet if your regular ebook price is $3.99 and you're accustomed to earning almost 70 percent of that or $2.80, then KU means your effective royalty rate was cut by almost half in recent months to 35 percent.

Kindle Unlimited represents Amazon's end-run around the Agency pricing model. As you may recall, Agency was at the heart of Amazon's contract dispute with Hachette, a large publisher. With Agency, Amazon is obligated to pay publishers 70 percent of the list price set by publishers and cannot discount books. Amazon's KDP self-publishing platform has an "Agency-lite" equivalent model in which Amazon doesn't discount except in price matching situations. With KU, a book's price becomes irrelevant to Amazon. It also gives Amazon the ability to pay authors less than 70 percent list for each qualified read.

By providing KU preferential in-store merchandising, Amazon discourages customers from purchasing individual ebooks. Since Amazon has a critical mass of over 700,000 books in Kindle Unlimited, Amazon's most voracious power readers already have nearly one million fewer reasons to purchase ebooks at full retail price. This means that for many budget-minded readers who love indie ebooks, a $2.99 and $3.99 ebook is expensive when they can read it (or similar books) for free as part of their monthly subscription.

Kindle Unlimited's catalog is almost entirely supplied by indie authors enrolled in Amazon's KDP Select program, which requires exclusivity. Without indie author support and participation in KDP Select, there'd be no Kindle Unlimited.

Will indies step up to the plate in 2015 and say no to KDP Select? Despite legions of indie authors now crying foul over KDP Select and Kindle Unlimited, I'm not optimistic indies will say no. Despite many warnings about the dangers of KDP Select exclusivity (include my own here at Huffington Post in 2011), indie authors have continued to enroll books in Amazon's KDP Select program. Even if 100,000 authors were to opt out of KDP Select tomorrow, KDP Select would still have the critical mass necessary to offer readers a compelling subscription offering with Kindle Unlimited, and therefore offer a large number of readers a compelling reason to never purchase another ebook again.

Since most authors sell poorly, many indies will hear the KDP Select siren song and decide that earning $1.39 or less in Kindle Unlimited is better than earning nothing. This decision will then perpetuate a slippery slope that will jeopardize earnings for all authors everywhere -- traditionally published authors included.

11. New VAT rules in Europe will put a damper on European ebook sales - Indie authors will suffer a drop in earnings from European ebook sales in 2015. The cause? New European Union VAT (Value Added Tax) rules. On January 1, 2015, new VAT rules go into effect in the European Union.

In the past, the VAT imposed on ebooks purchased by European Union readers was based on the VAT rate for the country in which the retailer was based. To reduce the tax hit, retailers located their European headquarters in Luxembourg, where the VAT was only 3 percent. At most retailers, the price set by the author was always VAT-inclusive, which meant the author and retailer's cut was calculated after the 3 percent VAT was deducted. At 3 percent, the rate was negligible and went unnoticed by most customers and authors.

Effective with the new EU rules that started January 1st, VAT is charged based on the customer's geographic location. Rates across the European Union will range from 15 percent to 26 percent. This means that effective January 1st, myriad tax rates are applied to ebooks sold at retailers such as Apple iBooks, Amazon and Barnes & Noble UK.

Indie authors must now decide whether to raise their prices to pass the tax burden to readers, or hold the line on prices which means the author absorbs the tax hit. Either way, the author loses. The ebook retailers are harmed as well since the tax comes out of the purchase price before the retailer earns their 30 percent cut. As one retailer told me, "we're all hit with the same stick here." If retailers are harmed, we could see fewer small ebook retailers in the years ahead as the market consolidates around a few large multinationals.

12. Back to basics: The bestselling authors in 2015 win with best practices - The formula for bestseller success isn't rocket science. Success is all about best practices. For every well-executed best practice implemented by the author, the author gains an incremental advantage in the marketplace. What are some of these best practices? 1. The author must write a super-awesome "wow" book that takes the reader to an emotionally satisfying extreme (this rule applies to fiction as well as non-fiction). 2. An author's book should be professionally edited and proofed 3. The book should have a great cover image. A great cover image makes the book more discoverable and more desirable to readers. Great cover images make an honest and visual promise to the target reader about the experience the book offers. 4. Price the book fairly. 5. Release the book as a preorder. Preorders are one of the most powerful merchandising tools for new book releases. They enable advance marketing of the title and special visibility advantage on the day of release. To learn more about ebook preorders, see my post, eBook Preorders Help Indie Authors Hit Bestseller Lists. 6. Avoid exclusivity and distribute your book widely to all retailers. 7. Write another book, rinse and repeat.

Although the best practices aren't secrets any more (check out my free ebook, The Secrets to Ebook Publishing Success for a refresher on best practices - or watch my best practices video tutorial), most authors fall short on the best practices front. Some authors fall into the trap of searching for easy silver bullet shortcuts. There is no single silver bullet. You must do many things right and avoid pitfalls that undermine your opportunity.

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That's everything! I hope you enjoyed my 2015 predictions. Please add your own predictions for 2015 in the comments below. What big trends are you seeing?

For your reading pleasure, below is an archive of some of my previous predictions. How did I do?

2014 Predictions at Huffington Post (Published January 7, 2014)

2013 Predictions at Huffington Post (published Dec 23, 2012)

2011 Predictions at Huffington Post (published Dec 28, 2010)