From Digital Book World:
Launching an all-you-can-eat access model for ebooks is tough as nails. After all the economics for ebook subscription services are pretty sobering.
New York City start-up Oyster launched its take on the “all-you-can-eat” ebook business model this week. It’s team of eight engineers has put together a slick iPhone app with $3 million in funding from some top technology investors and they have spent a year worth of time trying to figure out the best user experience.
Oyster has also secured some decent content. Most of the big-five are missing, but so what — they have some well-known titles from Harper Collins and other leading publishers.
They got two things right:
– They focused more on back-list rather than recent best-sellers which makes the economics much more appealing for publishers
– They chose a price point low enough at $9.99 per month to be taken seriously by consumers (though many have pointed out that this is higher than the $8.99 Netflix charges)
. . . .
Oyster is of course getting compared to Spotify (music) and Netflix (movies), but the interesting aspect is that these two companies are very, very different role models for Oyster and the book publishing industry in general.
Spotify offers you unlimited access to almost any music single or album you might possibly want. There are some gaps and hold-outs and some singles arrive with a few weeks delay, but overall it is a pretty complete catalog.
Pulling the same stunt in ebook is going to be near impossible. Record labels have embraced Spotify because it makes money from consumers in their teens and tweens who would otherwise take to pirated content. In other words the music industry is financially better off.
In publishing the consumers likely to take up a “Spotify for ebooks” are much older and predominantly female and they spend more than $9.99 a month on books while not pirating anywhere close to the account that a music obsessed teenager would. Thus most publishers would make less money under this model.
. . . .
Netflix on the other hand is (now) quite a different kind of business. It started out as the equivalent of a public circulation library exploiting the “first sale” doctrine, which says once you own a book or DVD, you can do with it what you want, including lending it out. Its DVD-by-mail business has been a huge success, but the shift to digital distribution changed all that. Now the content owners can demand extra compensation for the right to lend their content or can prohibit their content being “rented out” altogether. The legal framework for digitally distributing content is very different to physical distribution (note that the content on DVDs is actually digital, but that doesn’t matter — it is the physical format/distribution that matters). It’s the Internet, stupid!
Thus Netflix has evolved away from a “get any movie you want” model to a proposition of in-house-created premium content, complemented with “long-tail” content of TV shows and old movies. Note the huge gaps in its digital streaming catalog.
Many have commented on how Netflix is becoming more like HBO.
Link to the rest at Digital Book World