From regular TPV commenter, Will Entrekin:

Big news today: Kindle Unlimited.

Ten bucks per month for unlimited access to any Kindle book in the program, on any device.

Who’s got two thumbs and started his free trial within ten minutes of the announcement? Yeah, this guy.

Let’s be honest: from a reader perspective, this is awesome. Ten bucks per month? Hell, I’m lucky if I don’t spend three or four times that every first of every month on the Kindle Monthly Deals.

From an author perspective? A publishing perspective?

. . . .

According to my KDP page, by enrolling in KDP Select, my books can be part of Kindle Unlimited. And when a reader reads 10% of my book, I’d get paid. It’s not clear how much, but my guess is that, as with the Kindle Owners Lending Library, authors get an equal share of a fund dedicated to all participants eligible to get paid.

Is that more or less than I get from the 70% I get now? I’ve no idea. It may be less per book but ultimately more overall, depending on the success of the program and my hypothetical book’s performance within it.

. . . .

Netflix? Spotify? They worked with studios and labels to get the content their platform would use. Which I think prompts a question, and maybe a couple: How much do the artists get paid? How much do the labels get paid?

I don’t know the answer to that question. I’ve heard that it’s a low number–for some reason, 11 cents sticks out in my head. But I may have just made that up.

Point is, though, in the case of Spotify, authors make their royalties based on their agreements with their labels. The labels pay Spotify. [PG thinks Will meant "Spotify pays the labels."]

You probably see where I’m going with this.

What’s brilliant about the way Amazon did this is they didn’t have to talk to anyone beforehand. They didn’t have to go to the corporate publishers. They spent years building this awesome digital reading platform, and then they spent more years attracting some terrific authors, and offering incentives to those authors to go all-in with them. “Let us be the only place people can buy your ebooks,” they said, “And we’ll make it worth your while. We’ll give you free promotions. Countdown deals. We’ll let people borrow your book.”

“We’ll make you part of Kindle Unlimited.”

. . . .

Now, I don’t know for sure they didn’t talk to the corporate publishers, but I do know they didn’t launch with any.

That’s huge.

. . . .

This may just be the largest endorsement of independent authors and their work . . . pretty much ever.

Link to the rest at Will Entrekin

From TechCrunch:

Amazon’s war on publishers reached a crescendo yesterday with the leak of Kindle Unlimited, a subscription plan that would allow readers to pay $9.99 per month for unlimited access to the Kindle ebook library. No longer content with simply demanding steeper discounts from publishers like Hachette — which is locked in a bitter fight with the e-commerce giant over book prices — Amazon is finally reaching its end goal: the complete dissolution of the traditional book business model through a vertically integrated publishing platform, from writer to Kindle.

The idea of a “Netflix for Books” has been a popular startup theme for a while, and Kindle Unlimited certainly enters a crowded field. Oyster raised $17 million of venture capital over its two rounds of financing, and Scribd recently pivoted from hosting documents to a book subscription service. Yet, only Amazon currently has the scale to see such a plan become an industry standard, where it dominates ebook sales with an estimated 65 percent market share.

As a writer, I am supposed to feel wary of this turn of events. By capping the total price paid per month for books, Amazon is theoretically limiting its upside revenue from book sales. Adults in America either read a lot of books, or not that many at all, which you can interpret in the statistics from the Pew Research Internet Project.

An unlimited plan is expected to put a ceiling on a reader’s total expenses for books, therefore capping the costs of the most lucrative customers. Readers will spend less, writers will be paid less, books will disappear, and the Earth will hurtle toward the sun due to an increase in fiber from the decrease in paper pulping.

. . . .

These business models do apply to a very small handful of writers, who can option their weird vampire dramas or pubescent magic dramas to make a fortune. But unlike up-and-coming artists in video or audio, the plot twist for books is that there are almost no alternative revenue sources for writers.

Nearly all the work a writer does in marketing and external relations is to sell actual copies of books. Book talks and lectures are generally unpaid, and contributed articles to magazines and newspapers to market a book often pay a low fee if they pay one at all, and rarely if ever share in advertising revenue. The only alternative publishing model is around consulting, using a book as a customer acquisition strategy. That only works in the business and psychology section of the bookstore, and isn’t that useful for the rest of the aisles.

And that ultimately is the part of Kindle Unlimited that is perhaps most ominous, and why authors have been so passionate about the issue of ebook prices. Driving the prices lower isn’t likely to expand the market of readers, since book prices don’t seem to be the deciding factor on whether someone reads a book (time is). But those lower prices directly shrink the incomes of authors, who lack any other means of translating their sales into additional revenue.

Link to the rest at TechCrunch and thanks to William and others for the tip.

From The Verge:

“The everything store” was never the extent of Amazon’s ambition. Jeff Bezos has built a business that is, ultimately, about offering every kind of access to every kind of thing. You can buy shoes and coyote urine, subscribe to periodicals and deodorant, stream music and movies and TV shows. Oddly, books have been the holdout, as Amazon’s fights with publishers have largely kept it from experimenting with new forms of packaging and distribution.

That’s what’s so exciting about Kindle Unlimited, the $9.99 / month subscription reading service Amazon appears to be ready to launch. It’s the “Netflix for books” idea that a number of companies have tried, all to middling success: pay one price, read as many books as you like.

. . . .

Netflix is so successful that it seems any “Netflix for X” would be popular. But there’s some evidence that it won’t work in every market. In 2013, the average person spent 2.8 hours watching TV every day, nearly half of their so-called “leisure time.” (Some age groups spent more than four hours.) All Netflix had to do was take some of that time away from cable, and without changing anyone’s habits it became immensely successful.

The statistics on reading are comparatively damning: no age bracket spends an hour a day reading, and most read much less. The average 25- to 34-year-old spends exactly six minutes reading every day, and younger age groups are somehow even worse.

. . . .

Research firm CIRP found that Kindle owners spend $443 more per year at Amazon than those without a device. So while the potential audience might be small for Kindle Unlimited, or at least smaller than Netflix’s, it’s extremely lucrative. And Amazon, which owns 65 percent of the ebook market, according to theThe New Yorker, already has it cornered.

. . . .

And, most importantly, if it can find enough people ready to trade binge-watching for binge-reading. That might turn out to be the hardest part.

Link to the rest at The Verge and thanks to Will for the tip.

From The Sydney Morning Herald:

Apparent plans by Amazon to test a monthly subscription library for e-books has been savaged by Australian booksellers as cultural vandalism and an attack on author royalties.

. . . .

The Kindle Unlimited program appears to offer unlimited access to more than 600,000 backlist and self-published titles as well as thousands of audio books for $US9.99 ($10.65) a month – although there is no absolute certainty Amazon will go ahead with the scheme.

. . . .

Kindle Unlimited was yet another attempt by Amazon to send a wrecking ball through its competition, said Joel Becker, chief executive of the Australian Booksellers Association.

”I think the industry – authors, publishers and creators – are finally waking up to what booksellers have already known: that Amazon’s business practice create a mammoth problem for an essential cultural industry,” he said.

”’They don’t pay their fair share of taxes, they avoid paying GST, they sell significant portions of their product at or below cost and at a loss. One day their shareholders will wake up to their practices.”

. . . .

‘I think if all publishers and authors are included in the same pool, not one is going to make money, not even Amazon. Authors won’t make enough and publishers won’t make enough,” he said.

. . . .

Digital libraries utilise an author’s backlist, the long tail of which sustains many publishers, authors and bookshops.

”I am also concerned about author royalties,” Mr Page said. ”Authors are already getting a smaller cut when it comes to e-books and when you look at the music subscription services, it is the music companies who are making money and the artists who are getting less.

”I am very surprised that publishers who have resisted library e-book lending for years are now embracing subscription services.

Link to the rest at Sydney Morning Herald and thanks to Patricia for the tip.

From readwrite:

No one doubts anymore that Amazon Web Services is a big deal. But few appreciate just how unprecedented its growth has been. In fact, no other software business in history has grown as fast past the billion-dollar mark as AWS, as Businessweek’s Ashlee Vance points out.

Such growth is particularly astounding given the doubts Amazon has had to overcome relative to security, performance and more. Today those concerns seem puny compared to the overarching convenience AWS provides developers.

. . . .

Just How Big Is Amazon Web Services?

Rumors have swirled for years about AWS growth. Pacific Crest Securities now believes AWS will approach $5 billion in revenue in 2014, and top $6.7 billion in 2015.

That’s big, obviously, but the growth is even more impressive: Pacific Crest expects AWS revenue to increase 58% this year to nearly $5 billion from $3.1 billion in 2013, up from just $1.9 billion in 2012. For those doing the math at home, this means AWS revenue is doubling every two years.

. . . .

It’s also much faster than other explosive software businesses have managed.

Link to the rest at readwrite

So it’s not just about books.

From veteran publishing consultant Mike Shatzkin:

Harvard Business Review published an article recently by Benjamin Edelman called “Mastering the Intermediaries” which gives advice to businesses trying to avoid some of the consequences of audience aggregation and control by an intermediary. The article was aimed at restaurants who don’t want their fate controlled by Open Table or travel companies who don’t want to be beholden to Expedia. The advice offered is, of course, scholarly and thoughtful. It seemed worth examining whether it might have any value to publishers suffering the growing consequences of so much of their customer base coming to themthrough a single online retailer.

The author presents four strategies to help businesses reduce their dependence on powerful platforms.

The first suggestion: exploit the platform’s need to be comprehensive.

The author cites the fact that American Airlines’ strong coverage of key routes made its presence on the travel website Kayak indispensable to Kayak’s value proposition. As a result, AA negotiated a better deal than Kayak offered others or than others could get.

Despite some suggestions in the late 1990s that publishers set up their own Amazon (which they subsequently half-heartedly tried to do with no success) and a couple of moves to cut Amazon off by minor publishers that were minimally dependent on trade sales, this tactic has never really been possible for publishers on the print side. Amazon began life by acquiring all its product from wholesalers — primarily Ingram and Baker & Taylor — before they switched some and ultimately most of its sourcing to publishers to get better margin. But the publishers can’t cut off the wholesalers without seriously damaging their business and their relationships with other accounts, and the wholesalers won’t cut off Amazon. So for printed books, still extremely important and until just a couple of years ago the dominant format, this strategy is not worth much to publishers.

However, the strategy was and is employable for ebooks, which are sold via contractual sufferance from agency publishers, even if the sourcing is (sometimes, not typically by Amazon) through an aggregator. That was the implied threat when Macmillan CEO John Sargent went to Seattle in the now-famous episode in 2010 to tell them that ebooks would only be available on agency terms. Amazon briefly expressed its displeasure by pulling the buy buttons off of Macmillan’s print books. (Publishers can’t cut them off from print availability, but they can cut publishers off from print sales!) In the meantime, Amazon’s share of the big publishers’ ebook sales has settled somewhat north of 60 percent, and those Kindle customers are very hard to access except through Amazon. This is considerably more share than Kayak had when American Airlines threatened their boycott.

In fact, it is likely that Amazon could live without any of the Big Five’s books for a period of time, except for Penguin Random House, which is about the size of the other four big publishers combined. The chances are that PRH’s size will prevent Amazon from treating them the way they are now treating Hachette. And the massive share that Amazon has of both print and ebook sales makes it extremely difficult for Hachette, or any other big house except PRH and possibly HarperCollins, to sustain an ebook boycott (with consequent print book sales reductions) for any significant length of time. In other words, for publishers dealing with Amazon, this horse has left the barn.

. . . .

Amazon is well on its way if not already past the point where they sell more than half of the books Americans buy (combining print and digital). Book consumers are highly influenced by the suggestions made and choices surfaced by their bookseller, whether physical or virtual. That is: the process of buying books is inextricably linked to the process of discovering books. So Amazon is getting a stranglehold on recommendations which for many consumers also means a stranglehold on marketing and promotion.

The “damage” to society that results from results being gamed in fiction is probably minimal, and restricted to Amazon promoting either its own published titles, its favorite self-published authors, and books from other publishers that have paid to play. But, with non-fiction, the consequences could be much more severe and of real public interest.

Imagine a persuasive book arguing that the government should sharply increase the minimum wage and let’s also imagine that Amazon corporately doesn’t like that idea. Is it really okay if they suppress the awareness of that book from half or more of the book-buying public?

This is the kind of an argument that can arouse the government which, so far, has shown scarcely more interest in Amazon’s dominance of book commerce than they would if they dominated the commerce in soft drinks or lawn fertilizer. Can they be awakened by publishers to this concern before dramatic cases affecting public awareness and policy are documented? We don’t know, but we do know that Hachette sent lawyers to Washington early in the Obama Administration to call attention to Amazon’s growing marketplace power and their willingness to use it. That apparently had no affect (unless, in some perverse way, it contributed to the government’s interest in pursuing the “collusion” case).

There could certainly be some consumer blowback to the gaming of search results by a platform, perhaps including Amazon. The Harvard article says Google changed algorithms that seemed to be burying Yelp because consumer sentiment, partly measurable in search queries, showed dissatisfaction among the public. But in the absence of an aroused government, it would seem unlikely that this suggestion will do publishers large or small much good.

. . . .

This is probably the 20th year in a row, dating from their start in 1995, that Amazon has gained market share for sales of books to consumers. And that’s because consumers are making what for them is the obvious choice for convenience, total selection, and competitive pricing, as well as getting tied into Amazon through their PRIME program. Unless one of the other two tech giants in the bookselling world — Apple or Google — decides to make a dedicated effort to take some of that market share away from Amazon in both print and digital (and neither of them is much interested in print), it is hard to see where a serious competitor can come from.

Link to the rest at The Shatzkin Files

As PG has opined before, those who accuse Amazon of a devious scheme to gain dominance with various strategies, then use that dominance to rule as an evil king are often engaging in psychological projection wherein they’re ascribing their own inner attributes to others. It’s one manifestation of Amazon Derangement Syndrome.

As with other discussions revealing the current state of tradpub’s thinking, the idea that only government intervention can save Big Publishing’s role in the future of books is, in PG’s mind, evidence the folks in New York are beginning to believe they’re toast in a competitive marketplace.

From author Amy Erie:

The Fall of Rome is still debated. How could such an empire fall? Various theories are floated; taxes were too high, barbarians joined the army, borders became too porous, corruption and incompetence were rampant.

But I would argue that these were mitigating factors. Empires always fall for the same reason.

They stop adapting.

Adaptive Capacity is the technical term for an ecological or social system’s response to changing conditions in the environment.

A system that cannot adapt, self destructs.

Traditional publishing is just such an empire, built over half a millennium (if we go by the invention of the Gutenberg press) the industry has had a long run. Now, e book publishing and print-on-demand technology have changed the landscape. Within a short amount of time, the book market has transformed. Some of the new players are Amazon Kindle Direct Publishing, Kobo, Apple iBookstore, Barnes & Noble Nook Press and distributors like Smashwords and BookBaby.

. . . .

The Amazon/Hachette debate is not just a negotiation, it’s a skirmish between the new world and the old. The latest salvo comes in the form of a letter signed by a number of brand-name authors who support Hachette’s point-of-view. In response, a petition was circulated and signed by the indie writing community supporting Amazon.Why did a simple business exchange create two opposing camps? Because the argument represents deeper, more treacherous currents between a crumbling empire and an evolving system.

. . . .

Before Nielsen’s BookScan arrived in 2001, the only data publishers collected was the zip code of the brick & mortar store selling the book. Bookscan was initially greeted with skepticism, then suppressed. Publishers had already seen what happened when Nielsen’s Soundscan hit the music industry in 1991, irrevocably shifting the power base and heralding the rise of previously ignored music genres like rap and christian. The new data threatened publishing’s control of perceptions. By 2004, publishers were purchasing data at $100,000 per year and not letting anyone see it, including authors. Writers in the system report being stonewalled or receiving book sales reports that were six months old. This careful parsing of data served publishers well, allowing them to control the perceptions of writers and readers.

They were continuing an old tradition pioneered by the New York Times Best Seller List, which releases rankings, but not actual sales figures. These rankings are based on a mysterious process of unverifiable estimates and surveys of secret reporting bookstores.

. . . .

When JK Rowling’s book sales unexpectedly overwhelmed the list in 2000, taking all the top spots, they needed to take Rowling off the adult list because her sales undermined a system that brought in tremendous revenue from publishers who bought ads. So the NYT Children’s Bestseller List was created in order to accommodate Rowling’s swelling numbers. As the NYT editors at the Book Review put it at the time, “The change (in the NYT Bestseller List) is largely in response to the expected demand for the fourth in the Harry Potter series of children’s books.”

So by the time barbarians showed up at the gate, publishing had built a bloated, convoluted system that relied on manipulation of data, brick & morter bookstores and an antiquated remainder’s system.

What could go wrong?

. . . .

Publishers did not understand the technological frontier. The Internet was just another way to sell books. Amazon was an outlet, not a competitor. But Amazon’s CEO Jeff Bezos did understand the potential of the Internet. He was playing the long game and was willing to explore innovative programming, algorithms, data-mining and exciting new ways to track reader habits.

On the surface, the Internet was a communications curiosity, but revolution was in the air. In 1993, the year Amazon appeared, the Internet only communicated 1% of the information flowing through two-way telecommunications networks.

By 2000 (when JK Rowling was being tossed into the kiddie pool) that communication figure grew to 51%.

By 2007 the Internet carried 97% of tele-communication information. 2007 was also the year Amazon introduced The Kindle, offering free e books in the public domain and cheap downloads of new books.

The Kindle sold out within five hours.

. . . .

In late 2007, Amazon was also beta-testing a structure for writers to self publish, offering 70% royalties. In publishing circles, this was heresy. A cold war started on the Internet. The old guard released a torrent of saber rattling blog posts, warning aspiring authors not to self publish. It’s dangerous! Reckless! they shouted, insulting Indie writers, calling them vanity press, substandard and illiterate. Like priests defending their temple, publishers, writers, agents, trade organizations and bookstores closed ranks. There was no way e book writers would cheat their way inside the hallowed gates of publishing. Publishers even fought for out-of-print back-lists previously left to rot. Bookstores refused to stock indie books or anything from Amazon’s Publishing Imprints.

The most unsavory aspect of this predictable reaction was the marked lack of concern for art. But publishing had jumped that shark a long time ago. (Anyone who’s ever walked into a Barnes & Noble and witnessed the geegaws and novelty books piled high on the bargain tables knows what I mean).

. . . .

So far, Big Publishing’s reaction to the brave new world of e books shows a lack of adaptive capacity. They have tried to force Amazon into capitulation with their old system rather than adapt to new market forces.

When technology is involved and those in power lack vision, a deadly form of myopic denial can develop. This denial of reality pervades the publishing industry at a time critical for its health. The more publishing refuses to look toward the future, the bigger the chance it will decline and collapse. Instead of Visigoths, Vandals and Huns, the publishing industry is defending itself from a strange and wily opponent, the future. The problem is publishing companies see this paradigm shift as an opponent rather than an opportunity.

Link to the rest at Amy Erie and thanks to Robert for the tip.

From GigaOm:

Amazon is testing an ebook and audiobook subscription service called “Kindle Unlimited” that offers “unlimited access to over 600,000 titles and thousands of audiobooks on any device for just $9.99 a month.”

. . . .

Amazon’s service, which has been rumored for a couple of months, would compete with existing ebook subscription services Scribd and Oyster. Publishers Lunchreported last month that Amazon was speaking to U.S. publishers about participating in such a service.

One page, still active at the time of this post and titled “KU Test,” shows 638,416 available titles, and you can browse through them. Among them are many books from Amazon’s publishing imprints, and many books that were already available through Amazon’s Kindle Owners Lending Library, which allows Prime members who own a Kindle to borrow one free ebook per month.

Link to the rest at GigaOm and thanks to Matthew and others for the tip.

From Bloomberg:

Amazon.com Inc.’s e-books clash with a publisher is on the European Union’s radar after EU officials said they’re seeking to understand the dispute, which also spurred a German antitrust complaint by booksellers.

Germany’s association of booksellers said they were told of the EU’s interest by Germany’s Federal Cartel Office.

. . . .

Book retailers already sought a German probe of Amazon’s negotiation practices for buying rights to e-books in a dispute with Amazon over delays for deliveries of Bonnier AB physical books to force it to accept lower prices, according to a complaint filed last month.

The European Commission is “trying to understand the issues involved,” said Antoine Colombani, a spokesman for the commission, in an e-mailed statement.

Link to the rest at Bloomberg

From The Wall Street Journal Digits blog:

Hachette isn’t the only book publisher facing down Amazon.com.

The country’s largest bookseller is also in talks with Simon & Schuster, said Leslie Moonves, CEO of the publisher’s parent at the Fortune Brainstorm Tech conference in Aspen, Colo. Moonves added that he’d personally met with Amazon CEO Jeff Bezos at a recent conference in Sun Valley, Idaho.

“Amazon has a definite point of view about what should be done in the publishing business,” said Moonves. “It’s going to be a very interesting thing to watch.”

It wasn’t immediately clear what the nature of Amazon’s talks with Simon & Schuster are, and a spokesman for the book publisher declined to comment. An Amazon spokeswoman didn’t respond to a request for comment.

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