Five Rivers first signed up with Smashwords November, 2009 at the urging of Brian Rathbone. Despite having known about the service, I’d resisted jumping into the Smashwords pool because it all seemed somewhat ad hoc, geek-driven and populated by more fringe elements than credible. (I’m sure I’m going to experience a deluge of frogs because of that statement.)

However, after reading Doctorow’s take on the fallacy of digital book encryption, and Rathbone’s sales figures, I thought, sure, why not. Nothing ventured, nothing gained, as they say, and I am nothing if not pickled in entrepreneurial spirit. And I must admit the lure of having Five Rivers’ titles streaming seamlessly to Smashwords distribution channels was more than a little attractive.

Sales through Smashwords in 2009 were ridiculously small. Smashwords sales in early 2010 have been equally dismal, this despite aggressive marketing on Five Rivers’ part.

Five Rivers’ book list grew. As did our knowledge. As, it would seem, did the reach of Smashwords, with founder and CEO Mark Coker signing deals with Barnes and Noble, Sony, Kindle and Kobo, and early in 2010 Apple.

Distribution into Barnes and Noble appeared fairly quickly. Titles to Sony followed. However, much to my horror all Five Rivers’ titles, despite having Canadian ISBNs, and clear statements identifying Five Rivers as the publisher, appear on Sony’s website as being published by Smashwords. This is a false statement, encouraged by Coker through Smashwords’ publishing guidelines. And this practice further complicates the foreign business issue Smashwords has with the IRS, in that all distribution payments are subject to 30% withholding tax, because the earnings are seen as personal income, not sales of goods.

To add to the frustration of dealing with Smashwords, the agreements struck by Smashwords with Apple, Kindle and Kobo all were made without understanding the technical requirements of each channel, compounded by Smashwords’ attempt to be all things to all digital book vendors. As a result, distribution into many of the channels didn’t occur, and in some case still have not, because Smashwords attempts to take the same DOC file and make it into a silk purse for all the disparate formats.

After waiting months for Five Rivers’ titles to stream to Kindle, we pulled that distribution channel from Smashwords and went direct. We still have to pay 30% withholding tax because of Amazon’s own ridiculous setup, but better to pay it through Amazon where our books are listed as published by Five Rivers, than through Smashwords where we lose that all important identification.

Shortly after that, Ingram signed a deal with Apple to distribute digital content. That meant Five Rivers, through our affiliation with Ingram, could take advantage of the opportunity. We then cut our Apple distribution through Smashwords (which was never actually realized) and went with an established, credible company. Our titles now appear in the iBookstore, which, unfortunately, is only available to US customers.

We also pulled our distribution into Kobo through Smashwords, signed an agreement to distribute directly, and, as of this posting, have been informed by Kobo’s tech team that our titles should appear on Kobo’s site come Monday, August 9. Let’s hope Mr. Murphy declines any implied invitation to tea.

That left Five Rivers’ with Barnes and Noble and Sony distribution through Smashwords. As of today, those channels, and all distribution through Smashwords’ own site, have been terminated.

Barnes and Noble is allegedly up for sale. This indie publisher will sit back and wait to see what the giants will do. And as there were no sales whatever through Sony (does anyone actually own a Sony reader?), the way I see it there’s no loss.

Smashwords is a great idea. In my opinion, however, it fails in its realization.