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Much as blogs have bitten into the news business and YouTube has challenged television, digital self-publishing is creating a powerful new niche in books that's threatening the traditional industry.  Once derided as "vanity" titles by the publishing establishment, self-published books suddenly are able to thrive by circumventing the establishment.

"If you are an author and you want to reach a lot of readers, up until recently you were smart to sell your book to a traditional publisher, because they controlled the printing press and distribution.  That is starting to change now," says Mark Coker, founder of Silicon Valley start-up Smashwords Inc., which offers an ebook publishing and distribution service.

Fueling the shift is the growing popularity of electronic books, which few people were willing to read even three years ago.  ebook sales could reach as high as 20% to 25% of the total book market by 2012, according to Mike Shatzkin, a publishing consultant, up from an estimated 5% to 10% today.

Amazon has proven adept at using its technology to merchandise the so-called "long tail" of niche goods.  While traditional publishers rely on name-brand reviews, Amazon has millions of customers posting reviews.  Amazon offers free, instant, sample chapters to hook readers.  And it makes computer-generated recommendations based on other readers' purchases.  So, the more people that bought an author's books, the more often the site recommended the author's work.

Amazon has taken an early lead, providing service tools for authors to self publish and creating an imprint last year to publish promising authors in print and online.

This month, Amazon is upping the ante, increasing the amount it pays authors to 70% of revenue, from 35%, for ebooks priced from $2.99 to $9.99.  A self-published author whose ebook lists for $9.99 on Amazon's Kindle ebookstore will receive about $6.99 for each book sold.  The author would net $1.75 on a similar new ebook sale by most major publishers.

The new formula makes digital self-publishing more lucrative for authors.

Traditional book-industry players and tech companies are jumping on the digital self-publishing bandwagon.  Apple last week announced a digital self-publishing program for its iPad giving 70% of revenue to authors, similar to Amazon's formula.  Last month, Barnes & Noble also announced a service called PubIt!, allowing authors to post and sell e-books online.

One of the largest repositories for digitally self-published works for sale is Amazon's Digital Text Platform.  Steve Kessel, an Amazon senior vice president, says the company launched Digital Text along with its Kindle in 2007 to give writers and small publishers simple tools to add books to the Kindle store.  Today, the Kindle store accounts for about 70% of the U.S. market for ebooks.

Amazon has proven adept at using its technology to merchandise the so-called "long tail" of niche goods.  While traditional publishers rely on name-brand reviews, Amazon has millions of customers posting reviews.  Amazon offers free, instant, sample chapters to hook readers.  And it makes computer-generated recommendations based on other readers' purchases.  So, the more people that buy your book, the more often the site recommends your work.

Source: The Wall Street Journal, June 3, 2010