Netflix for Books

Over the past few days Amazon has once again shaken up the world of ebook publishing by announcing its Kindle Unlimited (KU) program, a subscription service which allows members (currently in the US only) access to a more or less unlimited number of ebooks and audiobooks for the payment of a $9.99 monthly fee.

This is being touted as a Netflix for Ebooks in some corners and it has caused controversy and much fevered discussion among indie authors. Lots of people have expressed opinions about the upsides, downsides and possible strategies for indie authors. For what it’s worth these are mine.

Of course, KU is not the first attempt at such a subscription model. Oyster and Scribd are attempting something similar although neither of those seemed to have a sustainable business model on their current terms.

The deal both those services offered indie authors was great. Basically each read of more than 10% of a book was counted as a sale and was rewarded as such. If your price was $4.99, you got paid as if you had made a $4.99 sale. Since the subscription fees were $9.99 per month, you can see how there might be a problem. Most of the people to sign up for an all-you-can-eat buffet of ebooks are likely to be heavy readers. Simple math says those rates of pay were unsustainable when the company is only collecting $9.99 a month and would need to go down. Getting your book read on one of those subscription service would in the long run most likely earn you way less than selling it. Think of Spotify and musicians and you could see where that ends up.

Amazon has chosen a different payment model, essentially the same as the one it already uses for its Kindle Lending Library. It allocates a fixed pool of money for the purposes of payment and this pool is divvied up among all the eligible recipients based on the number of downloads their books get. If things follow the Kindle Lending Library model, this payment will likely work out at somewhere around $2 per reading but at least Amazon has (sensibly from its point of view) capped its potential liability for payments here. $2 is around what anyone enrolled in KDP (Amazon’s self-publishing program) gets for the sale of a $2.99 ebook.

This seems like a more sustainable model for a subscription service but it still has the net effect of probably paying authors less than they would get from making a sale unless their books are priced at $2.99 or under. On the upside, people who price their books at under three bucks are going to make more.

Of course, the main difference between Amazon and Oyster/Scribd is not their payment model. It is the fact that Amazon is a dominant player in the e-reader/ebook space, not a startup with an unsustainable/unproven business model. Amazon has very deep pockets, has shown itself willing to lose money for long periods of time to gain market share and has already capped its potential financial liability anyway. Amazon’s entrance into this space means subscription services for ebooks have just gone mainstream. They are here to stay. Writers are going to have to live with the consequences of that.

These don’t just take the form of potentially lowered royalty payments for those who price their books at higher than $2.99. The subscription service model has other ramifications. Based on my extremely unscientific survey of one person (myself) and taking Netflix as the model, here’s what I see happening:

  • Binge reading becomes a distinct possibility. When I find a series I like on Netflix. I watch it until I run out of episodes. I tend to do the same thing with books (I’m looking at you Matt Scudder and Harry Dresden) and I can’t see taking price out of the equation will intefere with that. This is good news for prolific authors with series.
  • Purchase price will no longer a consideration so people may well be tempted to sample authors unknown to them. If Amazon’s recommendations engines are anything like as good as Netflix’s (and I strongly suspect they are) then people may well find their way to lots of new authors. There’s no financial risk in it. I’ve started watching a few series I had never heard of based on Netflix’s recommendations.

Those are the upsides that I can think of, and I am sure there must be a few more. Here are the downsides I can foresee.

  • People may become less willing to spend on new e-books. I know I have bought far, far fewer DVD boxed sets than I once did since I joined Netflix. These days I am only likely to purchase something that is not available on Netflix.
  • Those things that I do buy tend to be things I already really, really like. I am far less likely to risk money on a DVD set for a series that’s unknown to me. Why cough up the cash when there’s plenty of alternative viewing that I have already paid for with my subscription fee? I’ve become risk tolerant within the system and risk averse outside it.

Of course, films and TV programs are not books and we should be wary of making too exact a comparison between them, but these things don’t sound too far-fetched.

If we have moved into a new world, what can indie authors do to adapt to it?

Well, we can start by looking at Netflix and seeing what happens there. One thing that’s immediately obvious is that Netflix is not the place the film and TV companies put their front list. It’s where the deep backlist goes. The studios stripmine their content before sticking it on Netflix– movies go into cinemas and DVD before they get released on Netflix a year or two later. The same thing seems to happen with most TV programs.

This suggests to me that the studios see Netflix as a revenue generator for backlist stuff and a way of developing audiences for the new stuff. This would perhaps be a reasonable way of looking at Kindle Unlimited.

Except of course for one thing– in order for an indie to be in KU, they need to be exclusive to Amazon. Their books can’t be available anywhere else. This means that in order to get access to one source of revenue, they need to cut themselves off from others. For many this will be a no-brainer. I am not one of them. I earn a significant portion of my income outside Amazon– around 20% and that’s been rising over the past few months.

I confess I am troubled by Kindle Unlimited. All-you-can-read subscription services are a very good deal for readers, but not such a great deal for authors. The first part of that sentence means that I think they are here to stay. The second part means I suspect that life as an indie author is about to get a lot more difficult.

(This is my immediate emotional response to the KU announcement. For an alternative and considerably more upbeat view on the subject, complete with a lot more math, take a look at what the always interesting Rachel Aaron has to say.)

If anybody has any other thoughts on the matter I would be happy to hear them.

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