Amazon has recently launched an ebook subscription service following hot on the heels of Scribd and start-up Oyster. For around $US9.95 per month readers are able to access as many ebooks as they want with each catalogue limited to backlist titles (books older than 12 months). This has been hailed as the “Netflix for books” but does the book industry need a “Netflix”and what are the real costs of offering books on subscription?
Each subscription service has been limited to backlist titles with publishers obviously wanting to protect frontlist, new release sales. This sends the impression that backlist sales are not worth very much to the industry. Publishers invest heavily in frontlist titles with nearly all of publishers’ marketing money directed towards new releases. However according the Nielsen Bookscan figures backlist accounts for 46% of book sales. It is the long tail of the book industry. As more and more books are published the tail gets longer and longer and while individual backlist books do not sell in bestseller numbers their combined number is the lifeblood of the book industry.
This is not the first time the book industry has undervalued and underappreciated backlist titles. The book industry has operated for decades on a Sale-or-Return basis. However around ten years ago backlist was no longer given sale-or-return status, only frontlist. This saw a drop in the amount of backlist bookshops were willing to carry and a decline in backlist sales. Publishers also cut back on the backlist they carried in their warehouses with slow-moving backlist tiles sourced from overseas rather than held in stock.
The devaluing of books has been a huge issue as ebook sales have grown. Amazon in particular has been at the forefront of driving consumer expectation of ebook prices down to $9.95 or lower. This was often done at a loss driving or keeping competition out of the ebook market. It was also damaging publisher revenues and saw some publishers start to window the ebook release. This then led to the agency model for ebook pricing which took discounting away from ebook retailers. The agency model was later struck down by the US Department of Justice as some publishers were found to have colluded with Apple. In the meantime ebook prices have pushed lower and lower. Now half a million ebooks are apparently worth only $9.95 per month.
Scribd, Oyster and now Kindle Unlimited have all be hailed as the “Netflix for books”. Comparing books to a movie subscription service is a false and poor serving analogy. The film and television industry has more money than sense and the creators of films and TV series are well remunerated before their movies or TV series hit the subscription service. The more apt analogies would be Spotify or Pandora in the music industry where to combat continued piracy record companies have agreed to put up their entire catalogues to subscription services. Advertising revenues mean people do not even have to pay for these subscriptions. And the people who seem to be missing out are the artists. The only way for a musician to make money now is through touring and merchandise not the sale of their music (if that even occurs).
And this is where my biggest concern lies, in author royalties. Writing books is not a profitable career choice. Most authors have to supplement their writing careers with other incomes with only a lucky few able to write full time. Authors have already taken a cut when it comes to ebooks and will take another cut with ebook subscriptions. From what I understand companies like Oyster do not have to pay the publisher until a set percentage of a book is read. I do not know what cut the publisher gets per book or whether royalties for authors are less but as we have seen with other subscription services it is the artist who misses out.
I am also surprised by publishers’ willingness to support ebook subscription. Library lending of ebooks has been a bone of contention for the last four years with many publishers arguing ebooks should not be available for free. This is despite libraries paying for the ebooks and the fact that ebook lending does not give readers unfettered access; ebooks can be out on loan and using the service has some obstacles.
I have a lot of concerns over eBook subscription models. While current models do not include new release books the backlist is the so-called long tail which sustains many publishers, authors and bookshops which a subscription service would effectively lop off. The fact that Amazon is going to enter the subscription market with their already anti-competitive Kindle device has me very worried for the viability and sustainability of the book industry as a whole.