If you’re an author with an ebook, you should know about Smashwords. Smashwords calls itself an “ebook publishing and distribution platform.” It’s the distribution part that makes what the company does so valuable.

Upload your ebook to Smashwords and with one push of a button you can also put your book on:

• Kobo
• Nook
• Sony Reader
• iPad

Your book can also be made available in a Kindle format, though not directly through Amazon. Those are all five of the major e-readers on the market today. You don’t have to fuss with opening a publisher’s account at each one. Just one account with Smashwords and you’re in. Your book also becomes available for purchase through the Smashwords site itself. I’m not aware of any other company currently offering this kind of aggregated ebook distribution.

Smashwords pays 85% of your list price, minus a small credit card fee, on sales made directly through their site. On sales through most retailers (like Kobo and Apple), you earn 60% of your list price. Those are good numbers.

The one downside to Smashwords is its firm policy of taking ebooks as MS Word files only. It’s difficult to find ebook formatters who are skilled in creating a decent layout in Word, not to mention meeting some of the esoteric layout requirements that Smashwords imposes. Most ebook programmers work with ePUB files, which are essentially built using web code. (You can email Smashwords’ founder Mark Coker to be sent a short list of suppliers who can format ebooks in Word.)

Once you have your Word file in hand, though, you’ll be hard pressed to find an easier way to distribute your ebook.

E-readers have faced and overcome a number of issues in the past decade to get as far as they have:

• Technical limitations with the devices (creating the e-ink screens, getting size and weight down, engineering battery life)
• E-book format standardization (co-operation among publishers, much less tech companies, is rare)
• The perceived danger of lowering the price of books and thus their profitability
• A sense of tradition about “paper” books from publishers and readers
• A fear of piracy and bootlegging of books

The one issue that’s becoming more prominent by the day is the battle for market share among the various e-reader producers. Recent price wars have lowered e-reader technology prices by 75%. A first-generation Kindle would have set you back $450. Today, you can get a better version with more features for just $139. In order to stay competitive and maintain its price point of $149, the Kobo had to add wireless capability.

There are currently dozens of different e-readers on the market. This will change dramatically in the next year as price wars continue and the e-readers with fewer features or higher prices get muscled out. Already there have been casualties, such as the plasticLogic Que reader, which folded before it even launched. Expect to see many more e-reader brands die off.

Although the market for e-readers is growing at an astonishing rate (192% year-to-date and a record 172.4% in August over July of this year), it’s still a relatively small market worldwide with many competitors battling to add features while keeping prices low enough for the purchasing cycle to continue. There will be winners and there will be losers.

The overall war will be won by the companies that provide the best access to content AND the most flexibility to use that content. The Amazon Kindle has an early market lead and the clout to keep going. It just added a lending feature to compete with the Nook. More important, it recently launched — just in time for the Christmas buying season — a feature that allows people to give e-books as gifts, an e-reader functionality matched only by Kobo. If the Kobo can continue to grow, it has a good chance of being the number 2 e-reader, surpassing the Nook (see why here).

This year’s holiday season will be an important test. Come January, we should have a pretty good idea of how the e-reader market will shake out.

UPDATE – July 13, 2010 - Well, it’s happened already. Sony just broke the $100 e-reader barrier. Looks like there will be e-readers for everyone this holiday season! – R.S.

May 1st was a big day for the e-reader market. That’s when the Kobo, at $149, became the cheapest and most stripped down e-reader you could buy. Soon after, Borders started selling a competitive but cheaper reader, the Aluratek Libre for only $119.99. Now Barnes & Noble has a version of the Nook at $149, and Amazon Kindle promptly slashed its price to $189. Sony, not to be left out of the fun, has also dropped their prices. What’s really going on here? Is it simply competitive pricing, or something more?

Let’s look to the printer and toner pricing structure for a possible answer. Each day, printers are sold with more features, and at lower prices. The catch is the toner: It continues to be ridiculously expensive. I break out in hives when I have to buy toner cartridges for my colour printer. I even purchased a new printer once because it was cheaper than buying the toner! Don’t worry, I found the old one a new home at a recycling charity. Seems e-books are the new toner, and e-readers the new printers.

The first e-readers were expensive ($359 for the first Kindle), and e-books were cheap (typically about $9.99 per book). The publishers didn’t like it, but they had to live within a model where the retailer set the price. When Apple’s iPad launched this spring they forced a change that swept the industry, and now retailers have less discount wiggle room. Not surprisingly, e-books prices have shot up to the $12 range today.

The only lever left to support the rapid rise of digital book sales (and save the publishing industry) is for e-reader prices to continue to drop. Cheaper means much more accessible, and the number of people who own an e-reader will explode. Back to my printer and toner analogy, almost anyone can buy a colour printer these days, but the toner is a whole other story. We need to keep an eye on e-book pricing, and take bets on which e-readers will survive the price wars (the iRex has already filed for bankruptcy protection in the USA), and which ones will go down with last year’s colour printer models.

As Bette Davis/Margo Channing said in the movie, All About Eve, “Fasten your seatbelts. It’s going to be a bumpy night!”

In the not-so-distant future, say 10 years from now, books will be sold in three main formats: e-books, cheap print-on-demand paper books, and specialty hard cover collector editions.

1) E-Books
Digital readers are becoming cheaper every day. The Kobo is priced affordably at $149 and the magic sub-$100 price point is coming very soon. At the same time, digital readers are also getting better: better screens, better graphics, color eInk options, wireless and Bluetooth capabilities, and more memory for more books. Although the iPad may not crush the Kindle, it introduces a different kind of experience complete with audio, video, and virtually anything else you want to add. The environmental/green angle of digital books is also a great selling point. Kobo (formerly Shortcovers) was created in 2008 for a digital book market that was expected to account for 5-10% of all book sales within five years. Now the estimate is as high as 95% in 10 years. Add it up and digital is the future of books.

2) Print-On-Demand Books
Some people will still want their “beach-proof” copy of a book or something they can mark up in the margins. Technology like the Espresso Book Machine has made it cheap and easy to print single copies of a book, available in minutes from your local bookstore (yes, they will still exist), Costco, or even the public library. The difference is that these books will be produced digitally, then output to a paper format for a small group of buyers. They still make vinyl records after all, so we won’t be done with paper for a long time.

3) Specialty Hard Cover Collector Editions
Back in the old days of publishing, there were two types of books published: inexpensive paperbacks meant for mass consumption, and leather-bound hard cover books that only institutions or the wealthy could afford. The latter were as much to be collected and displayed as to be read. Well, what goes around, comes around. J.K. Rowling may have single-handedly created the rebirth of the collector concept when she packaged Tales of Beedle the Bard for Christmas 2007, complete with jewel-encrusted cover and handwritten manuscript.

Collector books will have full-colour interiors, embossed covers, and other features that will make them feel like pre-Gutenberg illuminated manuscripts. They will be gifts for people who have everything or decor for people who want to be seen as having everything. They will not be meant for reading, just visual enjoyment. Remember the special edition of The DaVinci Code with all the beautiful pictures? Like that, only more so. Prices will be upwards of $75.

So where will you be in the transition? Leading the wave with your e-reader device or lugging around printed books? As I always tell my 85-year-old mother-in-law, how do you know you don’t like it if you haven’t tried it? Just like cell phones 15 years ago (who needs one of those?!?), e-readers are here to stay.

No question, e-reading recently got a whole lot sexier. Apple’s iPad, the latest e-book reader, is sleek and shiny, and has definitely upped the ante. Not only can you read your favourite book (in colour), you can surf the web, play games, keep up with social networks, display photos, and so much more.

It’s estimated there are some 10 million downloadable book titles available and a dizzying array of readers to enjoy them on. On the first day of its launch, Apple’s iBookstore saw 250,000 downloads alone. Before the iPad, Amazon’s Kindle was the sweetheart of the industry with a whopping 90% of the market share. Sales of the iPad show it’s looking for a takeover, and many wonder if it will sink the Kindle altogether and leave all other readers in its dust.

But if the iPad is being used specifically as a reader, word on the street is that the Kindle, or other single-purpose reader, may be a better option. There’s the matter of eInk, the technology that makes the Kindle screen delightfully easy to read in any light. Take an iPad to the beach on a sunny day and good luck reading the screen. Then there’s the battery. The Kindle has enough juice for up to two weeks of reading. The iPad? Ten hours.

If the iPad hype and sales have shown us anything, it’s that e-books are teetering on the edge of becoming mainstream, and consumers want digital content and are willing to shell out for it. From that perspective, the iPad could become the tipping point for the e-book market, and publishers and authors need to focus on the implications and opportunities that will bring.

March 8 -14 is Read an E-Book Week. In keeping with the spirit of the event, I thought I’d try to summarize what an author should know about Kindle, the e-reader from Amazon.

I’m going to assume that you’ve heard about the Kindle but you don’t really know too much about it. My aim with this post is to provide enough information for you to evaluate the market and figure out if it’s worth pursuing. So let’s get started.

What Is the Kindle?

• The Kindle is a dedicated e-book reading device, meaning it reads e-books, along with some newspapers and magazines, but not much else. Version 2 of the Kindle was released in February of this year.
• It uses E ink technology for the display. E ink is very different from a computer screen or the screen on, say, an iPhone. It is not backlit and so the experience of reading on a Kindle is very much like that of reading off paper. There’s no eye strain and it can be comfortably used for long periods of reading.
• The Kindle is relatively small and lightweight. It weighs just 10.2 ounces and has a 6″ screen on the diagonal. It’s very convenient for carrying, and many users appreciate its portability over heavy books.
• The Kindle 2 can hold about 1,500 books at a time.
• The device currently sells for $359 USD.

There are many video reviews online that will give you a more detailed look at the Kindle and its features. Here are a few good videos I have found:

• Kindle 2 first impressions from Michael Hyatt, CEO of Thomas Nelson Publishers
  
• CNET Kindle 2 review
• Kindle 2 user feedback video from Amazon

Who Uses a Kindle?

• Amazon will not release any sales data about the Kindle devices so no one really knows how many they have sold or who is buying them. Guesses from industry watchers range from 300,000 units sold to as high as 500,000.
• Contrary to what you might intuitively guess — that the biggest users are kids of the ‘Net generation — anecdotal evidence points to users 40 years of age and up as the primary market. This older audience appreciates the resizable type, the light weight and portability, and the convenience of instant access to content. Typically, they also have more money and are able to afford the $359 ticket price.
• Oprah Winfrey endorsed the Kindle on her show in October 2008, raising the device’s profile with the public in a big way. Demi Moore twitters about how much she loves her Kindle.
• Right now, the Kindle is only available in the United States. There is some speculation that version 3 will be available in other countries, but Amazon has yet to confirm that this is true.

What About the Content?

• There are about 245,000 book titles currently available in the Kindle format, including 102 of 111 current New York Times bestsellers.
• Amazon reports that Kindle books have been selling briskly, now accounting for about 10% of sales for titles where both print and Kindle editions are available.
• Kindle books are proprietary files. The files are wrapped in DRM (Digital Rights Management) technology, meaning they are encrypted. They can only be read on a Kindle or on the Kindle app for the iPhone. There is a great deal of debate and criticism in the publishing industry over Amazon’s choice to encrypt its files. Many publishers are pushing to standardize e-books around an open file format called ePub. (More on that in a later post.)
• The typical price for a Kindle book is about $9.95. Amazon keeps a 65% commission on each sale. This is higher than the 55% commission they keep on print book sales.

What’s the Upshot?
While Amazon has taken its share of criticism over the Kindle for a variety of reasons — some of it well deserved — it can’t be denied that the device is helping bring e-books to the mainstream and creating new opportunities for book sales.

If you are an author with an existing print book, or one in production, publishing a companion Kindle version is pretty easy and inexpensive. For a small additional investment, you can make your book available to an audience that craves new content and wants it quickly. This audience is relatively small right now but will continue to grow over time. It’s almost certainly a good investment to make.