Is subscription selling good for books?

Discussion
Dec 29, 2014

Mimicking Spotify in the music space and Netflix for TV shows and films, a number of subscription-based models have arrived that provide access to unlimited e-books and audiobooks for a monthly fee. Like some music artists, some authors aren’t happy, especially with Amazon entering the fray.

Kindle Unlimited, launched in July, offers access to 700,000 books for $9.99 a month. Others subscription book start-ups include Entitle, Oyster and Scribd.

When launched in July, Amazon touted the service as a cost-effective way for consumers to attain best sellers and discover new authors. Russ Grandinetti, SVP, Kindle, said in a statement at the time, "You won’t have to think twice before you try a new author or genre."

Authors are paid each time someone reads more than 10 percent of one of their books, although the amounts paid depend on individual deals struck between publishers and Amazon.

[Image: Kindle Unlimited]

Several recent reports, however, have detailed how Kindle Unlimited particularly hurts self-publishers. Traditionally, self-published authors received 70 percent of the sticker price of a book, much more than publishers pay when books are sold through Amazon. Under Kindle Limited, self-published authors receive closer to a third in most cases, according to several reports.

Self-publishers usually must sell exclusively on Amazon to be part of the program. Traditional publishers are by all accounts getting a deal closer to physical book selling rates without exclusivity.

The subscription-based model promises to encourage more reading — and, consequently, sales — while introducing new readers to self-publishing authors. Claiming their books are being used at loss leaders, some self-publishers have chosen not to sell through Kindle Unlimited at the risk their books will not be promote on amazon.com.

Holly Ward, who writes romances under the name H.M. Ward, told the New York Times that Kindle Unlimited caps off spending by the average reader to $120 a year while many voracious romance readers typically buy several titles a week.

Several avant-garde musicians, such as Radiohead’s Thom Yorke and David Byrne of The Talking Heads fame, have long been critics of the low royalty but bigger potential volume formula promised from streaming services such as Spotify and Pandora. But music streaming services earlier this year received a particular blow when best selling artist, Taylor Swift, pulled her platinum-selling album, "1989," from Spotify. She argued in a Wall Street Journal op-ed, "Valuable things should be paid for."

Are e-book subscription services a net positive or negative development for authors? What about for consumers and retailers?

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11 Comments on "Is subscription selling good for books?"


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Bob Phibbs
Guest
7 years 4 months ago

The new goal in business it seems, under the banner of “disruption,” is get someone to give their all for your sake. Whether it is Uber, Amazon, or the rest someone loses—big time. As a member of the Author’s Guild and Wiley author the idea of Amazon using someone’s published work as loss-leader is nothing new.

What is new is that the very writers Amazon has assured using their platform would be better than using traditional publishers have discovered, like traditional publishers, that ultimately Amazon does what is good for Amazon.

And while consumers rejoice at what they get from the Amazons of the world, those who actually create the product realize how tenuous their fortunes can become at the whim of a partner focused solely on growing its own fortune.

A partner who doesn’t have to show a profit and simply wants to be the last one sitting when the round of musical chairs ends.

Gajendra Ratnavel
Guest
7 years 4 months ago

It’s a little early to say this will have a negative impact on the self publishers. Holly Ward is correct in that it caps off the spending but it also introduces her romance novels to many more readers that may have not bothered to pick them up in the first place.

The self publishers should think about how to leverage this to their advantage. Perhaps offer some books on this subscription format to get exposure and keep some books off it to make the margins.

As for readers, this sounds great as long as what they want is on the list. Rogers Communications in Canada has a service for magazines that is similar to this. It’s basically an all-you-can-read buffet of a tremendous number of magazines. $15 per month for the premium subscription.

Mohamed Amer
Guest
Mohamed Amer
7 years 4 months ago

E-books are another mechanism to distribute product to consumers (readers). Streaming services and subscription models such as Kindle Unlimited do lower the threshold for consumers to explore new titles and genres so in that respect these services expand the size of the market by raising awareness. On the flip side, the price for inclusion is a lower payout for the content creators with self-publishers having minimal leverage to negotiate a favorable (or fair) split.

For the economically-driven consumer the subscription services are a boom. Those consumers that are more conscious of “fair trade” will eschew the services as long as their pocket book can support it.

As for retailers, digitization in general with e-books and subscription services in particular creates new pressures on the perceived value that retailers offer their customers. Retailers will need to take conscious steps on how to compete in these digitized categories with differentiated value offerings targeted to specific customers.

Ed Dunn
Guest
7 years 4 months ago

If the author is a one-trick pony, Kindle Unlimited may not be the most profitable option. But for an organization that publishes non-fiction like (retail) industry whitepapers or how-to guides or history, this could be a marketing gold mine to make available certain publications on Kindle Unlimited to draw Amazon subscribers to their publishing brand, to buy the more premium published works.

Steve Montgomery
Guest
7 years 4 months ago

This is no different than any other business model that is based on generating more gross margin dollars by lowering the required/target gross margin percentage. The issue in each case is what volume lift is required to make more money. Reach it and everyone is happy. Fail to reach it and in this case the middleman, i.e., Amazon, makes more and the authors make less.

Max Goldberg
Guest
7 years 4 months ago

E-book subscriptions like Amazon’s are a win for the companies, but not for authors, just as subscription music services are a win for the service, but not recording artists. All of these services are based on content, yet they don’t pay creators enough for that content. If artists can’t make a living, they stop creating.

The economic models for subscription services are still in flux. When an artist like Taylor Swift pulls her works from Spotify, it’s time to reevaluate whether the current models are working. E-book subscriptions will experience the same growing pains as music subscriptions. We are only in the first chapter of this story.

James Tenser
Guest
7 years 4 months ago

My sympathies lie with the self-publishers on this one. Amazon evidently likes subscription-based programs, I think because they guarantee recurring revenue and upfront cash flows.

I’m not convinced this type of program will result in significantly-increased consumption (i.e., more reading hours), however. This leaves authors with the prospect of lower royalties without the offset of increased unit sales.

Debbie Hauss
Guest
7 years 4 months ago

I think it’s a good idea to develop more loyal customers. As an avid reader who reluctantly has converted to purchasing more e-books than traditional books, I would probably be motivated to purchase more items if I had a subscription. So good for consumers and retailers. For authors? They may feel like their reader base could be diluted but they need to be on board with e-books in order to continue to be successful moving forward.

Shep Hyken
Guest
7 years 4 months ago
I’m a business author with five books (plus another five that are co-authored). I don’t write for the money. I write to keep pushing my mind to come up with fresh ideas. The writing, publishing, hitting bestseller lists and more are about positioning myself as one of the experts in my field (which happens to be customer service/experience). The money is a bonus. When a lot of books are sold, my royalties add up to be substantial. It’s that simple. So if Amazon (or any other retailer) wants to pay me a sliver when they deliver a book on loan, then I’m totally happy with that. If the reader likes the book, they will most likely buy it so they can take notes and go back and reference the information as needed. Bottom line is that I’m happy giving them the “test drive.” As for the consumer, the benefit is the ability to read more books for one small monthly fee. There are many books that I have bought, read (or read part of), and… Read more »
Kai Clarke
Guest
7 years 4 months ago

Perhaps the most important concern here is how much money does a self-published author get when “publishing” compared to the e-book subscription service. Book subscription services have been around for a long time (Mark Twain sold most of his books this way), albeit in different formats. The biggest key for these is creating an immediate demand for a book, regardless of how “good” it is, or how highly “ranked” it becomes. Most self-published authors do this because of the low-cost for the demand this model creates. Otherwise they would go the traditional route and have a traditional publisher pay them….

Christopher P. Ramey
Guest
7 years 4 months ago

There are two types of writers. The first are those who make a living writing books. This group generally does not self-publish. The second is those of us who write books to act as a support/lubricant/add-on sales for our primary revenue driving businesses.

Although few like change, Amazon’s strategies accomplish the goals of most writers; increased awareness, distribution and sales.

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