Here’s a bit from the article at Today at MSNBC:

And the price war is not the only challenge the publishing industry faces nowadays. E-books sold for the Amazon Kindle and the Sony Reader have eaten into profits of publishers and booksellers — and Grisham says the future looks bleak.

Regarding reading books electronically, he told Lauer: “If half of us are going to be doing it, then you’re going to wipe out tons of bookstores and publishers and we’re going to buy it all online.

“I’m probably going to be all right — but the aspiring writers are going to have a very hard time getting published,” he added.

I couldn’t agree more with Grisham.  While working in the wholesale book industry, I’ve heard personal testimony time and time again (and again just yesterday even) that Amazon.com is killing the brick and mortar bookstore. But guilty of it myself, I’m quick to avoid a trip to my local book chain – saving time, gas, and money, and not having to deal with unhelpful retail workers – by buying online at home instead.

Grisham’s most recent book lists for $24.00.  It’s 50% off at Amazon, making it just $11.99 to the consumer for the hardcover edition!  It should be noted that most indie bookstores buy their stock from Ingram Book Distributing and expect at least a 40 to 50% discount off the cover price, currently the same price their customers can get it for themselves online. Most chains and some indies discount new releases by at least 10 to 20%, if not more, making their profit margins even smaller, but by doing so they hope to pull in a larger customer base and rely on those customers hopefully buying at least one regular priced item from a large latte to a book light. The non-book items are where their real profit lies!

How does Amazon get away with it, you ask?  Well, it is possible that they probably receive a larger bulk discount thanks to lucrative contracts Jeff Bezos has probably worked out with distributors.  Even a 60% discount from the vendor would give Amazon a 10% margin at the current price for Grisham’s new release.  But that’s just hearsay.  Instead, it’s safer to assume that Amazon is just like the regular brick and mortar.  They can afford a loss on books as long as their customers are buying other non-book items.  And face it, you know they are!  With online shopping at its all time highest in popularity, Amazon is probably making a killing on CDs, DVDs, clothes, electronics, and more.  Although books were first to fill up Bezo’s pocketbook with millions when he got started, they are probably last on his priority list today.

And we haven’t even scratched the service of the great E-Book debate.  Currently, none of Grisham’s books are available on Kindle.  But if they list for $9.00 to $10.00 on Kindle, after his agent and publishing company and whoever else get their share of the commission, Grisham stands to make only pennies from each Ebook sale which is probably what’s got him in a tizzy.

In the quote above, Grisham mentions aspiring writers having trouble getting published in the future.  I think this is just another reason why self-publishing will continue to grow, even in E-publishing.  Recently, LLBR opened it’s review gates to include all POD companies.  We immediately got queries from authors who are only published on Smashwords and Kindle.  That’s right!  No physical print book is even available of their work!  My most recent book, Stealing Wishes, sells for just $2.99 on the Kindle.  I earn $1.05 in commission from each sale, and have no agent or editor that I have to share that with, unlike Grisham.

So, while I agree with Grisham’s argument,  unlike him, I didn’t start my writing career before E-publishing was probably even heard of.  I don’t have millions in the bank thanks to mass market paperback sales and 23 bestselling novels. Grisham published his first book in 1989, almost a decade before Amazon.com or Jeff Bezos was even heard of. Technology (for readers and writers) has changed, and I believe that as a society we have to change with it – like it or not.  If Grisham self-published just one book all by himself on the Kindle, he’d still stand to make gobs of money, although the people depending on him for a paycheck might not like it.  So, I applaud him for embracing the demise of the bookstore, but like rotary dial telephones and wholesome comedic sitcoms, I’m afraid it’s still going to become a thing of the past and disappear whether authors like Grisham bow out or not.

Proper formatting and other elements will determine if books meet the criteria to be included in a Premium Catalog which will then be distributed to these retailers. There is no cost to authors to be included in this catalog.

A list of quick facts and criteria for having your book included can be read at Smashwords.

This is an exciting opportunity for authors and a big step up in the Ebook industry for print on demand.  Thanks to Mark and Smashwords for making it happen!

With that said, it’s important to realize that E-publishing has a whole different set of rules when it comes to formatting your manuscript.  Rather than list them here for you, I’m going to point you in the direction of a formatting guide written by Mark Coker, Smashwords CEO.  It’s called, quite simply, The Smashwords Style Guide and it can be downloaded for free!  That’s right.  It’s free!  Thank you, Mr. Coker!

This style guide is not just a guide to follow when choosing to publish on Smashwords, but also rules to consider for the Kindle and other E-reading sites.  As Mark points out, e-publishing follows a whole different set of guidelines.  Guidelines that I myself have broken because of the lack of formatting options available when making your Lulu book available on Lulu as a download.

But that doesn’t mean that you can’t polish that manuscript when you DIY for the Kindle, Smashwords, or whereever else you make your book available for downloading.  Afterall, that’s why they call it SELF-publishing!  So, just when you thought you’d conquered all there is to know about putting your best trade book forward… now you’ve got a whole new set of rules to learn and follow for the next generation in reading.  The E-Generation!

Read an E-Book Week

Wanna broaden your options though? Check out Smashwords!  It’s a new online bookstore specializing in Ebooks and offering readers 9 different formats to download their books.  The good news is that it’s free to authors and will pay you up to 85% in royalties for each sale. To learn more, we recently interviewed Smashwords CEO Mark Coker:

1. Tell us a little about Smashwords. What is it? When and how did it get started? And how does it help authors?

Smashwords is a free digital publishing platform and online bookstore for self-published authors and their readers. Authors upload their finished manuscripts as a Microsoft Word .doc file and then we instantly convert it into nine DRM-free ebook formats, ready for immediate sale online. The author sets the price, retains all rights to the book, and receives up to 85 percent of the net sales proceeds.

I came up with the idea for Smashwords a few years ago after own unsuccessful, multi-year attempt to find a publisher for Boob Tube, a novel my wife and I co-wrote. The book explores the dark side of Hollywood celebrity from the viewpoint of characters on a fictional daytime television soap opera. Even though we were represented by one of the top New York City literary agencies, our agent was unable to sell the book. Publishers told us they didn’t believe the market was large enough for the book – they questioned whether soap opera fans read books.

It struck me as wrong that a publisher could serve as the ultimate arbiter and censor of what was worthy and what was not, and effectively deny an author a chance to connect with their audience. I thought about the hundreds of thousands and millions of authors around the world who probably have rejected manuscripts tucked away in dresser drawers and attics, and I pondered the travesty of these authors’ works never seeing the light of day.

So I came up with the idea for Smashwords, a new online publisher that gives independent authors the freedom to publish, promote and sell their books online. My goal is to unleash a torrent of creative talent upon the world that heretofore was dammed up behind an archaic publishing industry.

Smashwords puts the authors in control of what’s published, and puts the readers in control to determine what’s worth reading.

We launched the service in May, 2008 and have been growing steadily since then.

2. Tell us about Read an E-Book Week.

RAEW is an international week-long celebration of ebooks. The event is designed to help educate readers, educators, literacy advocates and media about the joys of reading ebooks. The non-profit event is organized by Rita Toews, a Canadian author and ebook advocate. During the week-long event, participating authors and publishers will make some of their ebooks available for free, or at deep discounts.

3. Tell us about Wordclay and your partnership. If authors publish with Smashwords, do they have to publish with Wordclay as well?

Wordclay is the do-it-yourself print on demand publishing service arm of Author Solutions, one of the largest self-publishing service providers. Although we’re huge advocates for ebooks, we also recognize that ebook sales today represent less than one percent of the overall market for book sales. This means if authors want to serve their readers, they need to publish in both print and ebook formats. Through our relationship with Wordclay, authors can publish in print with Wordclay and then promote their print book alongside their ebook on Smashwords. Our authors are under no obligation to publish with Wordclay. They’re welcome to use any print publishing service they desire.

4. How many publications do you currently have on Smashwords? What types of genres?

We currently publish about 750 books from 360 authors. I should note that I’m using the “book” label loosely, because some of these ebooks are short stories or even single poems, and some are 200,000 + word novels. Most are full length novels. Virtually every genre is represented. Fiction is most popular, though we have a lot of non-fiction and poetry as well

5. What are readers downloading the most?

In the fiction category, romance, sci-fi, fantasy, historical fiction, paranormal, action/adventure and erotica are all popular. In non-fiction, self-help, spiritual/self discovery, religion and personal memoirs are popular. Given that we still publish a relatively small number of authors and titles, it’s too early to draw definitive conclusions of what sells best. Our best-seller lists shift constantly, usually driven by authors who are doing the most innovative self-marketing.

6. What other services do you offer authors?

When an author publishes with us, we put them in complete control of their publishing, promotion and sales, and we provide a range of free tools to help support their effort. I wrote a free ebook, The Smashwords Guide to Book Marketing, that provides authors a good overview of what we do for them, and what they can do for themselves.

What we do for them: We offer distribution on Stanza (the most popular e-reading app on the iPhone and iPod Touch – downloaded by over 1.3 million people), author pages with bios, headshots and lists of works; the industry’s broadest range of sampling options (authors determine what percentage of the book is available as a free sample); embedded YouTube videos for video book trailers and virtual author events; reviews from readers; ebook downloads in multiple ebook formats; a coupon code generator for custom promotions; and more tools in the works. For example, in the weeks ahead, we’ll launch an affiliate program that gives third party websites, blogs and online bookstores incentive to promote our authors’ books.

The coupon generator is especially exciting. In the last few weeks, I’ve seen several Smashwords authors use coupons as a tool to build excitement for their books in message forums, online social networks, websites and personal blogs.

7. What are the different formats an E-book can be downloaded in from Smashwords? Who sets the list price? How much royalty does the author earn from each sale?

The author sets the price and retains 85% of the net sales proceeds. Net = (sales price – PayPal fee) * 85. After we launch the affiliate program, the net to author will drop a little, for affiliate sales only, so that affiliates can earn a cut.

We currently convert the books into nine DRM-free ebook formats, readable on any e-reading device. These formats include .EPUB, .LRF, .PDF, .TXT (two forms), .RTF, online HTML, online Javascript, and .MOBI. Novels, and other straight form narrative works best on Smashwords. Books that contain overly complex formatting and page layout, or that contain lots of images, are more challenging for us to work with (obviously, you can’t convert and image into a .TXT file). We wrote The Smashwords Style Guide to help authors simplify their formatting and prepare their books for digital publishing.

8. What are some of the advantages of E-publishing for readers and for authors?

For readers, the advantage is having a broad selection of quality, low cost and free books that are easily sampled prior to purchase, and easy to read on a wide variety of devices. Readers have a chance to discover new voices in fiction and non-fiction.

For authors, and e-publishing tool such as Smashwords means authors can now publish a new book in seconds as opposed to years, and they can make their books available at low cost to readers around the world.

Dan Poynter, the godfather of self-publishing and a vocal advocate for authors, recently published his new Self Publishing Manual Volume 2 on Smashwords, and he published it on Smashwords first. I did a Q&A interview with Dan on the Smashwords blog in which he had some choice words about the traditional book publishing industry, and the future of ebooks. He said the large New York publishers haven’t appreciably changed their business practices since 1947, and he predicted brick-and-mortar store sales would continue to decrease and authors will see smaller advances from the traditional publishers. In contrast, he said ebook sales are rising and with new tools such as Smashwords he could publish at the speed of light.

Another advantage of ebook publishing is that authors can price their books low but earn a much larger per-book royalty than they would if they were publishing in print. The author of a mass market paperback, for example, makes about 5 percent royalty on a $6.95 paperback from a commercial publisher, or about $.35. The same book published on Smashwords would earn the author $5.48, or about 15 times more. The author could price the same book on Smashwords for only $3.00 and make $2.22 per copy, still six times more than they would with a traditionally published mass market paperback. As everyone knows, when you lower the cost of a product, you expand the potential audience for that product. It’s a virtuous cycle, and it’s a win win for authors and their readers.

9. How quickly do you think the E-book trend will grow over the next few years? What factors will determine its success?

I think within five years ebooks will account for 10 percent of all book sales, and I think my estimate is conservative. Some industry watchers predict we’ll hit that number in the next two years. Amazon just announced earlier this month that of the books they sell in both ebook form and print form, ebook sales already account for 10% of revenues. This is huge. It means the faster authors and publishers get their books in ebook form, the faster this market will grow because readers are hungry for ebooks.

Book selling has always been about word of mouth. If readers love your book, they talk it up to their friends and the book starts selling. In the online realm, word of mouth can go viral in a matter of seconds, whereas in the past such virality was more constrained. Today, if someone on Twitter with 25,000 followers tweets that they love such and such book over at Smashwords, within minutes thousands of people can learn about a new book.

At Smashwords, we have a distribution deal with Lexcycle, the makers of the Stanza ebook reading app. Within seconds of publishing a novel on Smashwords, our authors and their books appear instantly within the Smashwords store in the native online catalog of Stanza. Before today, indie authors didn’t have such great publicity, promotion and selling opportunities. Physical bookstore shelves are being replaced by digital shelves.

10. Any advice for indie authors considering E-publishing?

The best advice I can offer is that indie authors need to jump in now with both feet. We’re at the early stage with ebooks today that bloggers were just 10 years ago. Authors who start experimenting with digital publishing today are the authors who will be most successful in the next few years as ebooks go mainstream.

I would also advise authors to remain realistic about sales opportunities. As we caution all over the Smashwords web site, authors should not expect to sell a lot of ebooks, at least in the short term. This is because the ebook market is still in its infancy, and in the case of Smashwords, we’re still at an embryonic stage in our development compared to the plans we have for the future. The authors who sell the most books on Smashwords are those who are deliberate about their own online marketing. They’re on Twitter, Facebook, they maintain fan email mailing lists and newsletters, they blog and they have web sites.