Smashwords is arguably one of the most important ebook retailers out there. It's not important for its market share. It's not important because it sells the best ereader (in fact, it doesn't advertise any ereader in particular, unlike most of the bigger ebookstores). But Smashwords has a powerful role in the game being played out in publishing today. Smashwords has proven to be a powerful locus for the burgeoning self/indie publishing movement. Before B&N had PubIt, if you wanted to get your small press ebook into their store, you used Smashwords. When Sony was not allowing anyone but larger publishers into their store, Smashwords opened the door for smaller presses. Ditto for Apple. Ditto for Kobo.
These markets are beginning to become more accessible for small companies and authors, but it was Smashwords that opened the door. And then they made it wider by creating a fairly easy method for anyone with a Word document to convert their book quickly and easily to Kindle .mobi, ePub, PDF, and a number of other formats for various readers. Format the Word doc, submit, and POOF! you've got all the formats. For some folks, formatting on their own was not an issue. For many though, this was a large hurdle to overcome. Smashwords offers this service for free.
Smashwords is also the only major ebook seller which sells for *all* major ereaders. Amazon sells books for Kindle - period. Kobo sells for the Kobo reader. B&N sells for the Nook. Sony sells for the Sony reader. These sellers have software which you can run on a PC, some phones, and some tablets to read their books, but no cross-support. Even the new Google Editions plans to launch with only epub and pdf support, despite the fact that three quarters of people are reading on Kindle devices or devices with Kindle software installed - none of which support those formats. Only Smashwords lets you pay one price for a book and purchase versions for Kindle, Nook, Sony, and pretty much every other ereading device on the planet.
Smashwords was also the first ebook seller to go 100% DRM free. This has left them unpopular with some of the major publishers - a lot of them have not yet learned the iTunes lessons yet. Lesson 1: users hate DRM. Lesson 2: every DRM ever used for media has been hacked inside a week, so it doesn't protect anything. Lesson 3: when you remove DRM from your digital products, sales go up.
Collectively, these things have made Smashwords pretty attractive to users. If you own a Nook and are buying from B&N.com, and decide next year you really want a Kindle instead, you either have to laboriously (and arguably illegally) convert all those books over to .mobi so you can read them on the new device - or you're stuck losing those books or buying them all over again. Smashwords, between the lack of DRM and the formats compatible with all major readers, makes users feel much more comfortable.
So, background done. Yes, I'm a Smashwords fan. I think they're doing great things, and I wish some of the bigger players would emulate some of what they were doing. It would be better for the industry all around if they did.
That said, Smashwords was having some problems earlier this year. Now, Smashwords has a powerful tool for the indie/small press. You can pretty quickly and easily upload not just to their site, but also to Kobo, Sony, Apple, and B&N - and then manage and track sales from all those sites via Smashwords. Smashwords takes a cut of sales, but they are giving users pretty good value for that. However, there were problems. Amazon offered indies a 70% cut of sales, but only for books priced between $2.99 and $9.99, and told publishers if they saw the book elsewhere cheaper, they would cut the price on Amazon. If the price on Amazon was cut below $2.99, you lost the 70% rate and were reduced to 35%.
And then the other retailers started slashing prices on Smashwords books, to offer sales.
So an author would put the book up on Smashwords (and through them, just about everyone else) and Amazon for $2.99 all around. Great price, good for selling books and getting word out about an author. But then B&N might cut the price to $1.99, and Amazon would then cut their own price to $1.99, and the Amazon income would drop from $2.08 per book to 70 cents per book. Since about 75% of sales overall are happening on Amazon, this was a Big Problem. People started pulling their books from the bigger distribution Smashwords offered, or pulled their books from Smashwords altogether.
So Smashwords worked very hard to fix the issue. They've just recently blogged about their success. Now, not only will indie/small press publishers (including authors self-publishing) have full control on pricing for their works on *all* of the Smashwords expanded distribution sites, but they've also raised the royalty rates they give for those sites. Sales on B&N and Sony now give B&N users 60% royalties, instead of 42.5%, and Kobo increased from 46.75% to 60% as well.
In one stroke, price control issues are history and royalties on three of the major ebook sales sites are increased dramatically.
You can read about the details at the link above. But this is pretty exciting stuff for the industry. Smashwords is available as a gateway to help authors get their books out there - get them into the places where readers can see them. They are a major enabler of the revolution in how books are being sold. It's heartening to see them taking seriously the concerns of small presses and indies out there, and making such sweeping changes should result in them continuing to be a major force in the changes sweeping publishing today.