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The Ins and Outs of e-Book Distribution

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by Jim Azevedo, Marketing Director, Smashwords

Jim Azevedo

In this article, IBPA discusses e-book distribution with Jim Azevedo, marketing director at the world’s largest distributor of indie e-books, Smashwords.

QUESTION: In what ways does e-book distribution differ from the distribution of print titles? To what extent, if any, does e-book distribution include a sales component analogous to the sales teams involved in print distribution?

E-books enable democratized distribution. Whereas brick-and-mortar print retailers face shelf space constraints that limit the number of titles they can carry at any point in time, e-book retailers have unlimited virtual shelf space, which means they can carry every e-book. Unlike print retailers, who constantly ship unsold or poorly selling inventory back to publishers to make room for newer books, e-book retailers will continue to list all e-books—even those that aren’t selling well.

E-books are liberated from the logistical and financial constraints of shipping tons of paper, glue, and ink around the world. It’s a lot easier to ship 10,000 files around the globe than it is to ship 10,000 physical books. What takes days, weeks, or months for physical books to be shipped, categorized, and shelved is reduced to minutes, hours, or days with e-books. The time it takes for e-book retailers to stock books on their virtual store shelves depends on the e-book retailer and number of countries in which the retailer operates dedicated e-book stores.

Another difference between print and e-book distribution is in the way print publishers divide up secondary book rights by territories, bestowing those rights to publishers who specialize in specific territories. Today indie e-book authors and publishers have easy access to global distribution. Some publishers still license e-book rights territory by territory, the same way they would for print books. Indie authors and publishers, by contrast, can enjoy worldwide distribution.

There is no sales component involved in e-book distribution that is analogous to the sales teams involved in print distribution. Global e-book retailers welcome all e-books as long as they meet the legal and formatting requirements of the retailers. No sales team is needed to convince an e-book retailer that they should carry “Book A” on their shelves because it’s bound to be a bestseller. After all, e-book retailers have unlimited shelf space.

Where there is a component with e-book distribution that could be considered analogous to print distribution is when it comes to book merchandising. E-book distributors such as Smashwords work closely with the merchandising managers at the leading e-book retailers to secure promotional features. Distributors have the advantage of viewing sales and pre-order trends across multiple channels and provide this data to merchandising managers at the retailers. Merchandising managers use this information to promote bestselling authors, support breaking authors, or to draw additional attention to highly anticipated pre-orders.

QUESTION: From an e-book distributor’s perspective, how can independent publishers best find and select e-book distribution partners with whom they’ll be well matched?

A good e-book distribution partner should provide free tools and services that simplify e-book publishing, distribution, metadata management, sales reporting and tax reporting, and should enable expanded sales channels and merchandising support.

When you work with an e-book distributor, you’ll upload your book once to the distributor, and then the distributor will transmit the book out to its retail and library sales channels. Whenever you update the book—editing the book description, uploading a new version of the book, or changing the price or book cover—you’ll do this once with your distributor, and then the distributor will transmit the updates to its multiple retail and library channels.

A good e-book distributor should offer broad access to lesser-known retailers in addition to major retailer and library platforms. For example, on the retail side, Smashwords distributes to iBooks, Barnes & Noble, Kobo, Gardners, Tolino, and others. Some of these partners power the e-book store operations of additional retailers that further extend the reach of your books.

For libraries, at Smashwords, our agreements with OverDrive, Baker & Taylor Axis 360, Gardners/Askews & Holts, and Odilo help our authors and publishers gain access into thousands of public libraries both domestically and abroad.

Next, check out the distributor’s pricing and royalty structure. Some distributors may charge fees for distribution, conversion, and other services offered, or may charge the author/publisher a fee each time a revision is uploaded and converted. These fees can add up rather quickly if your publishing house manages multiple authors and titles. Other distributors, like Smashwords, offer free services, which allow unlimited metadata updates, and earn their revenue by taking a small commission (usually 10 percent of list price) on book sales.

If the distributor doesn’t charge an up-front fee and only earns income on commission, then you can rest assured that the distributor’s interests are aligned with your own. The distributor will only earn income if they can get your books sold at retailers and libraries.

QUESTION: What should publishers know—and ask—about the services they can expect from an e-book distributor? About distribution terms? How much leeway do they have in building distribution agreements?

Most distributors are transparent about the reach of their distribution network. A distributor’s network may include other distributors, retailers, subscription services, and public libraries. Beyond the big name e-book retailers, the distributor’s expanded network can help get your books into potentially hundreds or thousands of smaller retailers around the world. While you may not sell a ton of books at the smaller retailers, a few books here and there across the aggregate number of retailers in other countries can add up.

Indie authors and publishers should feel comfortable and confident when entering into a distribution partnership. The following list is a suggestion of topics to address with your prospective distribution partner:

  • Ask for a list of the retail partner network. This list may also include distribution partners that your distributor may have to help extend their reach.
  • Ask about fees and hidden fees. You may be attracted by the promise of “free” and 100 percent royalties, but the distributor needs to earn money to stay in business. Some earn their living by taking a commission on each book sale, while others charge fees for distribution, e-book conversion, and other services. Carefully read through your prospective retailer’s terms of service, and ask questions.
  • Ask about royalty rates. You’ll want to know how much you’ll earn from book sales at each channel so you can account for author payments. Note that not all terms are created equal—some distributors may have negotiated terms that are better than others. For example, some distributors, like Smashwords, only distribute under agency terms, which means its authors and publishers earn higher royalties. Other distributors distribute under wholesale terms that will net significantly less for each book sold. Ask your distributor how much your book will earn at each sales channel.
  • Ask about payment schedules. Some distributors pay monthly, others pay quarterly.
  • Ask about sales tracking and reports. You’ll want to have near real-time visibility into sales so you can see how your promotional campaigns are or are not working. You’ll also want to have easy access to aggregated sales reports so you can see how each of your authors’ books have performed at each of the retailers. This is a massive time saver.
  • Ask about your control. You’ll want to have the ability to quickly and easily add/delete author names or titles, set up ghost accounts, and make unlimited metadata updates for your entire catalog. You also want the ability to opt in or out of distribution to any specific retailer. Indie authors and publishers should have complete leeway.
  • Beyond distribution, ask about additional services. These services can include preorder distribution, coupons, unlimited tech support, marketing support, educational resources, free ISBNs, retailer merchandising support, and more.
  • Many distributors offer similar services, so ask what sets your prospective partner apart from the others.

QUESTION: What should publishers do to build and maintain strong relationships with their e-book distributors? Beyond carrying out the specific terms of their agreements, can they expect anything else from their distribution partners?

When you choose a distributor, treat it as the start of a long-term relationship. Distributors want to see their publishers and authors succeed, and work very hard to help make that happen. Over time, as you build a track record at the distributor, you’ll increase the ability of the distributor to advocate on your behalf, especially when it comes to merchandising placement at retailers.

Although many retailers allow authors and publishers to upload directly to their stores without the assistance of a distributor, many authors and publishers decide it’s best to consolidate distribution with their distributor. At Smashwords, when we ask our authors and publishers why they’ve chosen to consolidate distribution with Smashwords, they commonly tell us that our tools and relationships help them save them valuable time with centralized metadata management, sales reporting, tax reporting, and updates.

To build strong relationships with your distribution partner, keep them apprised of any upcoming releases by your bestsellers. The merchandising managers at the retailers are often on the lookout for new and exciting books and authors to promote, but they can’t see everything. If you have authors on your roster who have a track record of strong sales and powerful reviews from adoring fans, let your distributor know. Distributors can have close relationships with the merchandising managers at the retailers. It’s the merchandising managers who decide who will be included in their next book promotion.

Assuming you choose a distributor with great reach, you should not have to partner with multiple distributors. In fact, it’s best to work with only one distributor, otherwise you risk double-distributing your book to the same retailers, which then causes customer confusion and damages your sales rank.

Finally, respect the distributor’s terms of service, which are designed to help keep you and your books in good standing with the retailer and library partners. Do not try to push the boundaries of what is legal or acceptable in your distributor’s terms of service. Indie publishers who neglect the terms of service or try to game the system do not do themselves or their authors any favors.

QUESTION: If e-book distribution problems arise, how should publishers address them? If a distribution partnership isn’t working out, what recourse does a publisher have?

Another big advantage of working with a distributor is that a good distributor can offer you priority support. If a retailer is listing your book incorrectly, the distributor can usually get the listing repaired quickly.

If you do discover a problem, always contact your distributor, not the retailer. Provide your distributor as much specific detail as possible. It should go without saying, but be sure to include the specific title and author name of the book in question. If possible, provide links to the book pages at the distributor and/or retailer sites.

A good distributor should not ask for or demand exclusivity. Indie e-book publishers and authors shouldn’t have to relinquish any of their rights when working with an e-book distributor. If a publisher has entered into an arrangement with a distributor from whom they want to exit, the publisher should be able to walk away at any time and collect any money owed to the publisher. At Smashwords and other reputable distributors, the author/publisher retains 100 percent of their rights and has the freedom to un-publish at any time. They also have the right to work with multiple distributors and retailers.

Two points to remember: The first is if a title you expected to sell very well is underperforming in the market, that is not a problem to bring up with your distributor. Your distributor’s value to you—the author or publisher—is to efficiently and accurately deliver your titles and metadata to its retail network. Assuming the e-book and metadata have been delivered as promised, and the retailer has properly listed the title on their virtual store shelf, a lack of sales is not a reason to raise an issue with your distributor, or worse, un-publish. Un-publishing out of frustration only guarantees zero sales for you or your authors.

The second point to remember is that you should remind your authors not to take their frustrations out online. No one enjoys reading negative rants, especially if the negativity is directed toward a professional partner. Keep in mind that human beings manage the social media channels of retailers and distributors. These professionals often have the authority to recommend authors to include in upcoming retailer promotions. If there is an author or publisher spewing negativity online about a specific retailer, you can bet that such comments will be seen by the merchandising managers at that retailer and they’ll be less likely to want to include your author in future promotions.

Jim Azevedo is the marketing director at Smashwords and a member of IBPA’s Editorial Advisory Committee.

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