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Netflix for Ebooks

27 April 2013

From Publishing Technology:

In just a few short years, subscription-based streaming services like Spotify and Netflix have gone from being tiny start-ups to companies that many believe hold the future of entertainment business in their hands. According to recent forecasts Netflix is on track to have over 45 million paying subscribers in the US alone by the end of 2013, while Spotify disclosed at the end of 2012 that its subscriber base now tops 6 million worldwide.

There is now a growing sense that what has worked for film, TV and music could also work for the book business. Consequently we’ve seen quite a few subscription-based start-ups appear over the past few months, vying to become the ‘Netflix’ or ‘Spotify’ for books.

. . . .

What most of them have in common is a core belief that readers will benefit from an ‘all you can eat’ model for consuming books, while publishers will be attracted to a service that delivers consistent subscription revenue. After all, it’s a payment model that has worked extremely well for journal publishers.

How such services can be structured so that they offer readers sufficient content to sign up, yet still deliver satisfactory revenue to publishers is a point that will no doubt be discussed at length in the coming year.

. . . .

2. Amazon Kindle FreeTime

This is another children-focused subscription service from Amazon itself, which launched in the US last year. An added value package for Amazon Prime subscribers the Free Time service costs from $4.99 per month (in addition to the Amazon Prime subscription) and gives the subscriber’s children infinite access to a selection of games, books and films on a Kindle Fire.

While this is an entertainment rather than books-focused service it is an interesting example of how one subscription can be used to pay for content provided in multiple formats. It also begs the question as to what other subscription services will start to diversify into books.

3. Blinkboxbooks

When UK supermarket chain Tesco acquired the ebook platform and store Mobcast in late 2012, there was feverish discussion as to what it would do with it. The retailer answered some of those questions on 4 March when it announced that Mobcast would be brought under the Blinkbox on-demand TV brand that Tesco also acquired in 2011, along with the music streaming service We7.

While there are no details as to what Blinkboxbooks will ultimately look like, the fact it’s being positioned as part of a well-known streaming services suggests that Tesco will pursue a subscription model to some extent. It will certainly be interesting to see what the new venture’s MD, Gavin Sathianathan, who joins from Facebook, has planned, and how he will translate Tesco’s might in the physical book sales market into the online space.

Link to the rest at Publishing Technology and thanks to L for the tip.

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15 Comments to “Netflix for Ebooks”

  1. One of the issues for any ebook provider is going to be distribution rights, just as it is for film and TV, which puts Tesco in a very strong position for the UK market.

    Despite the simply dreadful ebook site they have been sitting on for the past two years (long before they acquired Mobcast)it is clear there are things happening behind the scenes at Tesco as they develop their digital strategy, and that ebooks are going to play a crucial part in it.

    Rival supermarket Sainsbury has already made significant strides in developing an impressive dedicated ebook retail site and Tesco can be relied upon not to sit back and let Sainsbury gain a lead.

    Tesco may currently have one of the worst ebook sites are on the planet, and make zero contribution to most authors income, but they remain the biggest potential ebook rival to Amazon in the UK.

    Blinkboxbooks, or whatever it may be called in the future, is most definitely the one to watch.

  2. Back in the Regency, there used to be subscription libraries. (That one members-only London library that’s still around is an example.)

    • I believe that was also the way Benjamin Franklin organized the first library in Philadelphia.

  3. This is interesting. I’m not sure how I feel about it, I sort of want to wait and see.

    But regardless of how I feel about it, they are going to do it – no question. Be interesting to see if it works, and how the author is compensated.

  4. I am an author with Crimson Romance (and F+W media imprint). After many authors signed with this imprint, they launched an all-you-can-read subscription services. This is NOT good for authors.

    To make a long story very short, the company ONLY just decided-as in yesterday-how to compensate authors.

    The most authors are going to get for the service is $2.42 for titles put up in July and $0.42 for authors added to the service in December (for the calendar year ending in 2012). That averages about one penny per month per subscriber. Seems like a great idea for the company, possibly a good idea for readers, but a terrible idea for authors; especially if they don’t know about it ahead of time and the company uses a contract clause that generally refers to anthologies and giveaways to justify books’ inclusion.

  5. Amazon’s Prime borrowing system is a subscription model that comes with the member’s annual fee. That’s worked pretty well for many authors.

    • Exactly. I see Prime as a great harbinger of things to come.

      And I think the problem with these subscription services — for the reader — is the limited choice. Because of exclusivity, many of us will need the price to be quite low so we can subscribe to more than one service, or so we can buy books that aren’t available on the service we have.

      That’s not a problem for the service itself, though. That’s because there is certainly a large group of people who read the way they watch TV. If what’s available is good enough, they’ll read it, and be pleased because they got it for “free.” (That is, it’s already paid for, so why not?)

      But when I look at the video services out htere, and my behavior as a heavy consumer of video, I notice a couple of things:

      *Amazon Prime Videos were really COOL at first, but as soon as I’d burned my way through a few favorite selections…. they just didn’t have enough to keep me interested.

      *Free Hulu fares a little better, but that’s partly because they carry current shows, and their selection in general suits me better, especially their classic film. However, their fee is too high for me to subscribe, at least right now, because for that amount of money, I really can get more classic and esoteric flicks from my local video store. Or even BUY a most of what I want to see.

      *Services like Netflix seemed like the classic movie junkie’s dream…. except that their collection isn’t much better than mine already is. Certainly not nearly as good as my local video store.

      *Netflix streaming services? The selection is AWFUL.

      Subscription services are likely to be great for “the long tail” of backlists and classics and indie titles…. but I’m looking for one of two things to happen before that really takes off: either the prices will come down so people can afford to subscribe to more than one service, or a few of the services are going to have to corner the market so they can offer everything a reader could want.

      Amazon has a good shot at doing this with books. Publishers (if they were smart enough) have a good shot at realizing their line could be like a magazine and doing it cheaper. I would expect book packagers to do that, actually. If they could only recognize that, unlike with cable and hardbacks, there’s a huge “pulp” audience out there if you’ll just hit their price points.

  6. Freetime sounds like a great service to help promote reading for kids.

    Only problem, because it’s Zon, is that it will probably destroy all important literature and book culture. Forever. ;)

  7. I love the IDEA of this. As a heavy reader prone to binges, how lovely it would be to have a subscription that allows me unlimited access. Especially given that I don’t collect books anymore. There might be one or two very special titles in a year that I need to OWN. And I’m building a nice digital library of non-fiction and reference material. But otherwise, I don’t really need to own ebooks. I don’t mind paying for them, I just don’t have a need to keep them.

    Genre specific subscriptions could be nice money-makers for authors and subscription service. Especially in romance. For readers it would be akin to having the world’s biggest TBR pile at their fingertips.

    As for payment, why not pay a flat fee to authors? A buck or two per download adds up. A higher payout for exclusives.

  8. “As for payment, why not pay a flat fee to authors? A buck or two per download adds up. A higher payout for exclusives.”

    There’s a lot of risk to Amazon in that scheme. The payments to authors could easily exceed the subscription revenue. However, they could protect themselves by giving each book in the subscription package a prorate payment based on the total subscription revenue and individual book download..

    • I think that’s how KDP Select works. There’s a fixed “pot” that everyone’s royalties come out of. The more borrows, the lower the royalty on each individual borrow…but the “pot” has been growing steadily over the last couple of years. When I first signed up, it was about $600,000. Today it stands at $1,000,000.

  9. A buck or two, yes. Crimson/F+W’s model of a penny – not so much.

  10. The problem is that these are not actually executed like Netflix. With Netflix, you can’t download movies and keep them on your drive forever. You can’t share those movies with friends, family, the mailman, etc. an unlimited number of times.

    But many of these book services (like FW’s Crimson Romance service mentioned above) have no protections to keep people from abusing the system – they can download as many titles as they’d like, then share with as many people as they’d like, all the while the author gets mere pennies.

    I’m all for exploring new distribution models in digital media, but there has to be a better way to execute than this. It’s bad for the publishing business and even worse for the writers.

  11. Another Anon Crimson Author

    This might work for giants like Amazon that can accumulate a million dollar pot to pay authors from, but for smaller publishers this will mean very low royalties for authors.

    My publisher Crimson Romance, an Adams Media imprint, started a subscription service last year. The problem is that they didn’t include any language in their contracts with authors for how royalties would be paid. Many authors signed contracts with CR before the subscription service was announced and were given no option to opt out of it. Not only that, but there is no reference to subscription service specifically in any CR contract.

    When questioned CR sited 2 vague paragraphs that they say permits CR to “price, and promote, market and sell” books as it sees fit and to combine my book “with any other material in any publication or product.”

    Basically they’re treating the subscription service as an anthology that includes every book in their catalog. Not only that the subscription service is unlimited, meaning a reader could pay $12.99 for one month and download EVERY SINGLE CRIMSON ROMANCE TITLE. Once a reader downloads every single CR title there is no software preventing a reader from sharing all of the nearly 300 title with their friends. There isn’t any software that causes the books to drop off of readers’ devices after a set amount of time either.
    This causes 2 problems.
    1. Once a reader downloads nearly 300 books, why would they pay $12.99 for an additional month of service?

    2. Because the service is designed to have a very low rate of return subscribers, the pool of money the authors would be paid from is severely diminished.

    CR recently decided on a plan to pay authors whose books were in the service in 2012 on a prorated basis based on the length of time a book was in the service and the number of subscribers who bought subscriptions.
    Individual books will be compensated as follows according to publication dates-
    June & July $2.42
    August $2.02
    September $1.67
    October $1.25
    November $0.83
    December $0.42

    So if my book was published in December I would receive $0.42 in total royalties no matter how many times my book was downloaded from the service. That’s it. 42 cents. And as CR continues to publish 20 new books a month my pro rata share will shrink and shrink and shrink.

    CR continues to write contracts that do not spell out the terms and royalties of the subscription service.

    CR has not announced a plan for how royalties will be paid in 2013.

    Can somebody please tell me again how this is fair compensation for authors and why any author would knowingly and willingly agree to be included in such a service?

    • In general, you’re not supposed to target a service to sell to people who would steal your books, or to people who would read books stolen by other people. So I don’t think the thieves will really take much away from revenue.

      OTOH, I think it’s perfectly possible for the average romance reader to burn her way through 100-300 books a month. So a subscription model isn’t going to last too long in your genre!

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