Ebook Subscriptions

Some High-tech firms Say Writers Gain From Seeing Readers’ E-book Files. They’re Wrong.

3 January 2014

From The Huffington Post:

The headline of David Streitfeld’s article in the New York Times on Dec. 24, 2013, nicely summarizes the latest high-tech scheme to hit the book business: “As New Services Track Habits, the E-Books Are Reading You.”

After reading what Streitfeld and others have to say about the business model of companies like Scribd, Oyster, and Entitle, it seems clear that these companies are making different pitches to different audiences. The pitch to readers is that they will be able read as many e-books as they want for a flat monthly fee, while the pitch to authors is that they’ll be able to see detailed analytics about those customers’ reading habits. Both of these pitches have big problems.

What do readers get?

These e-book subscription services offer readers access to whatever books that are listed on that particular service at any given moment. This is far less than all the books in print. There are several major publishers missing from each of these services, and even the publishers that are participating may hold back many important books. Customers may not be able to read what they want, because many of the books they’ve heard about will not be available. This is not made clear on the websites of these services. The reader may be paying for an all-you-can eat buffet, but the selection on the table is pretty limited.

Nor are prospective readers told that their reading habits will be extensively data-mined. This sharing of “reader-analytics” is the inducement for publishers to participate in the first place.

. . . .

These companies are apparently offering this data as a trade-off to publishers. Sign up your books, and we’ll give you data that shows how our readers react to them. What kind of data?

. . . .

But how about the writers? Do they get anything of value? Not really — they’re more likely to end up with problems.

Start with the money. Authors’ royalties are set by contract, but the payment per book is often drastically reduced when the publisher makes this type arrangement with a subscription service. What can the author expect? Not much. If, for example, the subscription service has 10,000 customers who each read 10 titles a month out of a database of 100,000 titles, then the average number of readers per month for each book is — one. If that reader is spending less than $10 per month to read those ten titles, then the amount of that fee that is allocated to each book is probably less than one dollar. When you divide that one dollar between the publisher, the subscription service, and the author, the amount the author gets is likely to be in the mid two-figures — and both of them are on the right-hand side of the decimal point.

. . . .

Well, maybe authors aren’t in this deal for the revenue. They’re really looking for information. But will they get it? Maybe yes; maybe no. The subscription service’s contract is normally with the publisher. Whether the publisher decides to share that information with the author is a matter of the publisher-author contract.

Link to the rest at The Huffington Post

Subscription Ebook Services Scribd, Oyster and Entitle Duke It Out For Early Dominance

20 December 2013

From Forbes blogs:

If you’re like most digitally connected folks, you probably have access to a video subscription service like Netflix Netflix, or maybe a music subscription service like Spotify. In that case, new services that do the same but for ebooks want you.

Oyster, Scribd and Entitle (just re-branded from eReatah) are all new ebook subscription services that are competing for your business. Lately, the battle has heated up.

Early this week, Entitle relaunched to the public with a new name and lower prices. It offers a catalog of about 100,000 ebooks and users can read, download and own two a month for $14.99, three books a month for $21.99, and four books a month for $27.99.

. . . .

When it comes to the competition between these services, it’s all about building a catalog and gathering customers. Oyster took the lead in this round when it comes to building a catalog. It’s the first service that Perseus has signed with. Through Constellation, Perseus is one of the largest ebook distributors in the world and potentially a very powerful partner.

Link to the rest at Forbes blogs

With his perversely legal mind, PG is inclined to wonder exactly where in the grant of rights in a typical publishing contract the publisher receives the right to include a book in a subscription service and, more importantly, what the royalty rate is.

The reason PG wonders about the royalty rate is that a great many publishing contracts include differing royalty rates for licenses and sales. Sales are usually included in the primary rights royalty sections and licenses are included in the subsidiary rights sections. Licensing of subsidiary rights usually pays higher royalties to the author than sales do.

PG mentions this because he has never seen an agreement whereby ebooks are sold to readers. In his experience, there’s always a license.

As an example, here’s some relevant language from the website of Entitle, one of the ebook subscription services mentioned above:

Unless otherwise specified, the Entitle service, and any ebooks obtained through our service, are for your personal and non-commercial use only and we grant you a limited, non exclusive, non transferable, license to access the Entitle service for that purpose. You may not download, copy, distribute, display, reproduce, duplicate, publish, license, create derivative works from, or offer for sale any ebooks contained on, or obtained from or through, the Entitle service, without our express written consent.

This is part of the terms of service that Entitle requires its customers to accept prior to downloading any ebooks.

This is licensing language which is part of a licensing agreement in click-to-accept form. If you’ve been on the Inernet for more than ten minutes, you’ve clicked a licensing agreement.

If you think hard about your experience purchasing a physical book from a bookstore, then opening the book to read it, you will not recall ever entering into a click-to-accept license. You buy the physical copy of the book, you don’t license it. The book is protected solely by copyright laws, not a license.

Under those copyright laws, because you own the physical book, you can sell your copy. You’re not licensed to do that with ebooks downloaded through the Entitle service.

Just saying.

Oyster

29 October 2013

From Mark Coker at Smashwords

Oyster Shipments to Begin in Three Days.

On September 5, Smashwords announced a distribution agreement with Oyster, a new and innovative ebook subscription service. Oyster offers consumers unlimited access to more than 100,000 ebooks for only $9.95 per month.

At the time we announced the deal, we also announced that we wouldn’t begin shipping to Oyster until at least 72 hours after we shared the financial terms with you.  The clock starts now.

I also stated at the time that I believed the terms were author-friendly, and that Smashwords authors would be pleased when they learned the details.  Today, via this email, I’m sharing the details.

Here’s a link to our original announcement here. 

 

From Guest Blogger Randall with a thanks to J.M. for the tip.

Scribd, HarperCollins Offer E-Book Subscriptions

2 October 2013

From ABC News:

Online document-sharing site Scribd is taking a page from Netflix’s success story as it sets out to create the world’s largest subscription service for digital books.

The opening chapter in Scribd’s quest begins Tuesday with the introduction of an e-book subscription service that will boast thousands of titles published by HarperCollins before July 2012. HarperCollins, which is owned by News Corp., becomes the first of the five largest U.S. publishers to join a service vying to create an alternative to buying individual titles.

Scribd will charge $9 per month for a service that offers unlimited access to most of HarperCollins’ back catalog, as well as an assortment of other books from smaller publishers. Recent best sellers from Harper Collins aren’t included in the subscription service, although customers will be able to buy new titles individually on Scribd’s site.

. . . .

 HarperCollins and authors will be paid based on how much their books are read under a complicated formula, Adler said. He declined to provide more specifics about the financial arrangements.

Link to the rest at ABC News and thanks to DJ for the tip.

Digital bookstore Emily Books launches iOS subscription app for ebooks

1 October 2013

From GigaOm:

Independent digital bookstore and publisher Emily Books already offers subscriptions to its monthly ebook selections through its website. Now it has launched an iOS app, “Emily Books Reader,” that lets users subscribe and read the ebooks on their iPhones or iPads.

. . . .

Emily Books, the independent ebookstore and publisher cofounded by writer and former Gawker editor Emily Gould, has offered readers a subscription model since its launch in 2011: One ebook a month, for $13.99 a month or $159.99 a year. Now the company is taking that model to iOS, with a new reading app that also allows subscriptions.

. . . .

The app, “Emily Books Reader,” was built by 29th Street Publishing, a New York-based startup that has also built iOS magazines for publications like Serious Eats and The Awl.

. . . .

“I got really excited about the idea of an iOS app because that’s how I read books. I loved the idea of just getting a push notification that a book was ready for me to read.”

Link to the rest at GigaOm and thanks to L for the tip.

Netflix for Ebooks or Spotify for Ebooks?

9 September 2013

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

Are Publishers a Match for Kindle MatchBook?

7 September 2013

From Publishers Weekly:

When Amazon announced on Tuesday that it was launching a program to bundle print and e-books, called Kindle MatchBook, the effort drew little response from publishers, and even less participation. Among the major houses, HarperCollins is currently the only one participating, and it is doing so in a limited fashion. With publishers largely unwilling to talk about the program—most houses PW contacted declined to comment on MatchBook—the question remains whether publishers are not yet willing to try bundling, or whether they simply don’t want to try it with Amazon.

. . . .

Bundling has been a simmering topic in the publishing industry. Some executives, like Evan Schnittman, formerly at Bloomsbury and now at Hachette, have publicly said that the approach could be beneficial. What Schnittman conceived, though, was not a program along the lines of MatchBook. In a previous story, Schnittman told PW about what he calls the “enhanced hardcover,” a bundle with print and e-book editions of a title offered at a price point 25% higher than the standard hardcover price point. The enhanced hardcover, he felt, would entice consumers, while also working towards the profits of both authors and publishers.

MatchBook is nothing like Schnittman’s enhanced hardcover concept and, for some, the price points it offers are underwhelming. One publisher, talking off the record, said he was nonplussed about MatchBook. He felt the low prices in the program “further devalues e-books,” and makes them “look like a throw-in item.”

. . . .

Agent Robert Gottlieb is even skeptical about whether publishers have the right to submit their books into the program.

Gottlieb, chairman of Trident Media Group, said MatchBook exemplifies “a further erosion of the value of authors’ work.” More importantly, for Gottlieb, is the question of whether a program like MatchBook is covered under existing contracts authors have with publishers. “I don’t believe there are provisions in contracts for this type of arrangement,” Gottlieb said, noting that clauses around digital rights ownership in standard contracts do not cover a transaction like the one proposed by MatchBook.

Link to the rest at Publishers Weekly and thanks to Abel for the tip.

Here’s a question from PG – If Gottlieb is right and the publishing contracts in question do not grant publishers the right to put books into MatchBook, if those publishing contracts include a broad reservation of rights clause for authors, does that mean Big Publishing’s authors can license Matchbook rights directly to Amazon?

PG thinks that would be cool.

Oyster Launches Spotify for Ebooks

6 September 2013

From Digital Book World:

Oyster, the highly anticipated, venture-backed ebook subscription platform for iPhones launched today. The app is available for iPhone devices and will soon be available on other platforms, including the iPad this fall and, later, Android.

The company is launching with 100,000 ebook titles available from publishers such as HarperCollins, Workman, Houghton Mifflin Harcourt and self-publishing distributor Smashwords. The service will cost $9.95 a month to read an unlimited number of books on up to six devices. The number of titles offered through Oyster will be “increasing over time,” CEO Eric Stromberg told Digital Book World.

. . . .

The company declined to share its business model, however — just how authors, publishers and other stakeholders are compensated for making their titles available. The company leadership only told Digital Book World that the model was a “win-win-win,” for rights-holders, readers and the company and its investors.

“It was a very hard problem that involved understanding the needs of authors, publishers and consumers,” said Stromberg, citing that he believes Oyster has it solved due to months of strategizing and in-house know-how from employees like Matt Shatz, who had been a vice president of digital at Random House.

. . . .

One enticing proposition for publishers around this new distribution model is the possibility of exposing readers to new authors and new books they may not discover anywhere else. Oyster, for instance, will use a combination of editorial, social and algorithmic recommendations to suggest new titles to readers.

Link to the rest at Digital Book World

PG generally likes new technology and business models, but declining to disclose how authors will be compensated makes him very uncomfortable. Generally new tech startups are anxious to explain how everybody wins under their business models.

Is Spotify secretive about how musicians are compensated? No. Here’s the link.

Publishing Hears Echoes of Netflix Business Model

3 September 2013

From The Wall Street Journal:

Offering unlimited television shows and music for a flat monthly fee has worked forNetflix . . . and Spotify AB. Will it work in the book industry?

It is a question of intensifying debate in the publishing industry right now, as two digital startups plan launches of rival e-book subscription services this fall. If successful, the new services could pose fresh challenges for brick-and-mortar bookstores already struggling to cope with the growth of e-book sales and low prices of physical books offered online.

Still, both services face plenty of challenges, starting with persuading publishers to make their books available.

. . . .

Industry insiders express skepticism whether consumers, who tend to read only a few books a month, will embrace subscription plans that don’t offer all the hits—particularly given the discounts available on e-book sales. “Success comes when you solve a problem, and from a consumer point of view, I don’t see the problem,” said Amy Rhodes, a former publishing executive who is now a partner in consulting firm Market Partners International Inc. “You’ll need very attractive prices for people who read a lot of books, and even then you’ll need all the big titles.”

Resistance also reflects uncertainty about the impact of a new business model on the industry, including on bookstores that now sell lots of books. “There’s a general fear of the unknown,” said Matt MacInnis, chief executive of Inkling, a San Francisco developer of interactive e-books.

“Publishers have operated their economic model for 100 years,” he added. “They don’t know how to model this.”

. . . .

Some publishers and author representatives have embraced eReatah’s limited offering. Subscribers can choose among paying $16.99 a month for two new titles; $25.50 for three books; and $33.50 for four. Subscribers to eReatah will keep their books and authors will get regular royalties on each download.

. . . .

But eReatah’s pricing levels might not persuade many consumers, others say, given that it is effectively charging about $8.50 for a book. “The value of most subscription models, be it cable or magazine, is the perception of getting more than you paid for,” said Forrester Research Inc. analyst James McQuivey. Consumers might be less willing to embrace a model where they only get several books a month. “Going unlimited is the only way this will work for books.”

Bryan Batten, eReatah’s founder and CEO, said more than 75% of the site’s titles cost more than $8.50 at regular sales outlets. He said he never formally pitched an all-you-can-consume model to publishers because he expected complications with author contracts.

. . . .

“The problem with an all-you-can-eat model is that authors stand to make pennies, not dollars,” said Evan Schnittman, chief marketing and sales officer at Lagardère SCA’s Hachette Book Group. “I love the idea of different business models, but don’t forget the author.”

Link to the rest at The Wall Street Journal (Link may expire) and thanks to Joshua for the tip.

There’s no mention of whether indie authors will be included in these services. Of course, Amazon would be ideally placed to offer this type of service.

PG will second the concern about typical publishing contracts, which don’t provide a clear basis for calculating ebook royalties for an all-you-can eat style program like Netflix.

The subsidiary-rights licensing provisions of Big Publishing’s contracts with authors are generally written with licenses of only single ebooks in mind, not entire catalogs of ebooks. Since subsidiary rights licensing provisions often provide that the author receives 50% of licensing revenues instead of the industry-standard 25% of net revenues for individual ebook sales, publishers will definitely not want to go down that path.

Presumably, a publisher will be paid a portion of the monthly subscription fee regardless of whether any ebooks are downloaded or not.  Presumably, a publisher will not feel the need to pay royalties if a subscriber doesn’t download any ebooks during a month (or a year).

If a subscriber signs up for three ebooks per month and downloads only one, presumably a publisher will not feel any obligation to pay the author of the downloaded book a royalty based upon the total subscription fee instead of one-third of the subscription fee.

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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