Tuesday, September 27, 2011

Ebook subscription models? Book It

Big news bubbling about Amazon's moves for Christmas, including the new Kindle Fire tablet and possible $99 Kindles, as well as a Touch Kindle. I'd never own a touch screen of any kind because I don't like greasy smears on my screen, but others like them. And I am not a techie by any means, I just want what works at a low price and doesn't give me headaches. IreaderReview is one of my favorite places to follow such Kindle developments.

But for readers and writers, the real issue is: What does this mean for ebooks? I've been predicting for about a year that Amazon will soon be bundling books into a "Netflix" model, where you get all the books you can eat for one monthly fee. Amazon already has the model in place, and they just announced new additions to its Prime offering. It's never really been a device war in the long term--iPad and Kindle never were direct competitors for the ereading audience. Just ask any author who has access to their sales numbers (and don't believe what you hear from publishing companies, who are still desperately trying to spin their Apple agency pricing as a win). People reading on iPads are using the Kindle or Nook apps. Apple maybe has 2 percent of the book market. Probably less.

The cheap Kindle will pretty much lock up Amazon's crown as the content king. At least for five years, which is eons in the technological era. Look how many different devices have come out in just the last three years. Yet Amazon continues to be the content king, with at least 70 percent of the ebook market. (Again, if you look at publisher data, publishers will claim BN has about 27 percent of the market, but their data is incredibly skewed--don't forget these two are joined at the hip through the physical bookstores.) And Amazon is rapidly expanding its world markets.

BN's problem is the weight of those physical bookstores. It's difficult to promote the Nook while still paying lip service to paper books and investing resources in managing the bookstores where books are an ever-lower percentage of their floor space.  Kobo will be lucky to survive another year. Google is still freighted with its illegally scanned books, plus they don't really have a device out there. Sony will ride the Pottermore wave until those buyers realize they really don't have a very good bookstore selection after Harry Potter.

I don't know the pricing structure of the Prime books model. I only know it's coming. It's not only inevitable, I would be shocked if it didn't happen by next summer. Amazon has already been sending out feelers to publishers, and the Kindle library lending is a big step in mainstreaming ebooks. We still don't know how authors will be paid--presumably enough to keep writing, making less per book on a higher volume of sales. And Prime is a natural fit for rolling in advertising which means even lower prices for devices and ebooks.

Is it a win for everyone? It certainly is for Amazon. And I signed a book deal with Amazon, which is where I am putting my chips. What's funny is that BN was uniquely positioned to become a publisher a decade ago, and even put out a few books under its own imprint. And traditional  publishers never built ebook stores where they could control their own catalog and peddle their own subscriptions. Probably it was the shortsightedness of having to show investors a nice return every three months.

Bottom line looks like: cheaper, faster, more. I don't know what the future holds, but I'm holding on for one hell of a wild ride!


Layton Green said...

Savvy post, Scott. I've been pondering the "subscription model" and wondering how that might affect authors. Not sure what I think yet . . .

SBJones said...

I blogged about the Amazon Digital Library a few weeks ago. Short link here: http://bit.ly/oIs2eu

I do find it absolutely odd that no industry, (music, video, book) has built their own web store to manage their catalog, but instead leave it to iTunes, Netfilx, Hulu, and Amazon to do it for them and lets them take a slice of the profit pie when they don't have to.

author Scott Nicholson said...

Layton, I know not all filmmakers are happy with the Netflix model and that's why so many movies aren't in it (as well as pre-existing rights deals). I'd say it won't work for everyone, but those with little lose have...well, little to lose.

SB, thanks for the link, I'll go check it out. I think the reason is the same thing i said in the post--the intense pressure to please shareholders can lead to aversion to long-term investments. If I were buying stock today, Amazon is one of the few places I'd put my money (well, I guess in a way, I already have...)

David Gaughran said...

Hey Scott,

From what I heard, Amazon reached out to publishers and offered them placement in their subscription store - Amazon Prime ebooks - but were universally rebuffed.

There are three others I know of pursuing a subscription model: 24symbols, Litfy, and Flatleaf - but all are at the early stages.

It will be interesting to see whether publishers' collective hatred of Amazon will give an opportunity to another player. I'm certain publishers would be willing to lose money on a deal if it took Amazon down a peg or two.

I wonder what Amazon's next step will be. The logical thing - to me anyway - would be to offer Amazon Prime placement to indies, public domain books, and small presses who don't have the same poor relationship with them.

I think larger publishers really need to see the subscription model in action before they sign up, and if Amazon can get it up and running without them, and it works well (especially on the revenue side), then the larger publishers will be forced to cave.

I don't think subscription-based models will be responsible for all reading in the future, or even most of it, but I think they can capture a significant portion.


author Scott Nicholson said...

Oh, they WILL be forced to cave, but they don't want to admit it yet! The only other option is to unify and create their own content delivery system and online store, but I think that ship sailed long ago. What are the options? Get back in bed with Apple? Try to push BN uphill? Roll the dice with Sony?

I doubt Amazon will have a monopoly on subscription models, but they are already pocketing authors (like me) who sign with them. As more traditional contracts expire, more authors will go to Amazon and Amazon already has the indies. When they have 90 to 95 percent of all books, then it won't hurt if some of the bigger players are not in it (much the way Netflix succeeds despite its relatively narrow selection.)

The one tipping point that doesn't get talked about is the point at which more "name" authors are not traditionally published than are. And I feel it's simply a matter of existing contracts expiring.

Sharon said...

I think you are right about where things are going. I would never sign up for a subscription, I don't even do it for movies, but I can see how this would be attractive to some readers, like my mom who reads an average of 3 books a week!

I like the bundling of series that amazon does. Right now you can get the Hunger Games trilogy for under $7! What a freaking deal and what a freaking awesome series by the way .