Subscription services for digital media, such as movies and music, have become mainstream, making it more or less inevitable that book publishers would have to grapple with a similar model. Such startups as Oyster and Scribd offer these services already, but there has been a sense that the book market hadn’t yet heard from the big guns. Well, Amazon.com (AMZN) is about to take its shot.
The company is testing an e-book subscription service called Kindle Unlimited, according to pages on its site that were noticed by its users and the tech blog GigaOM. The service would cost $9.99 a month and give people unlimited access to about 600,000 titles as well as thousands of audiobooks. Amazon hasn’t responded to a request for comment.
The publishing industry has been waiting for two subscription-related shoes to drop, says Michael Shatzkin of publishing consultant Idea Logical. “One is the Amazon shoe, and the other is the Penguin Random House shoe,” he says. “Amazon because they have the customers, and Penguin Random House because they have the books.”
Publishers remain wary of subscription models because they could cap annual spending on books at $120, less than heavy readers would spend buying titles one at a time. Shatzkin says that Oyster and Scribd have offered unusually favorable terms to get publishers to add their titles to the library, which has persuaded the likes of Simon & Schuster and HarperCollins to add titles to their libraries. What works for publishers today might not work tomorrow, though. Oyster and Scribd have their hats in their hands now. If they build huge subscriber bases over the next couple of years, the startups are unlikely to feel so generous in negotiations. In other words, their success could threaten publishers in the same way Amazon’s has.
At the same time, Amazon will be a tough competitor for its smaller rivals. It has a head start in raw numbers, for one. Scribd says it has 400,000 titles available, Oyster boasts 500,000, and Amazon claims 600,000. This doesn’t seem to be a result of Amazon’s sweet talking. The company believes it doesn’t need to get specific permission from publishers that distribute their books through a wholesale model, where retailers buy titles at one price and sell them at whatever price they choose. Amazon is free to add those titles to a subscription service so long as it pays publishers each time someone clicks open an e-book in its library.
An even bigger advantage for Amazon could be that it owns the Kindle, which (for now, at least) is the most popular e-reader on the market. If you like reading on that particular device, Amazon’s service is the one for you.
So is it game over? Not quite. It’s not yet clear that readers will find the economics of subscriptions appealing for general-purpose reading. “I’m a big fan of subscription service if it’s something I use frequently,” writes Miral Sattar, chief executive of author services marketplace Bibliocrunch, on the Read 2.0 mailing list. “But for books, I’m not yet convinced. I don’t know very many people who read more than one book a month, so haven’t joined a book subscription service. I do see myself joining a book subscription service for kids apps or books. Sometimes we go through several books a day.”
Unlike Amazon’s other media subscriptions, Kindle Unlimited seems to be set up as a standalone service, which means it doesn’t come free for Prime Members. Given that people who pay for Prime have access to the Kindle Lending Library, an e-book borrowing service similar to a subscription, this could be a hard sell. And Amazon hasn’t undercut Oyster or Scribd on price, either.
Amazon’s service would also lack many major titles, since the biggest publishers don’t distribute their books through the wholesale model. This is why Shatzkin thinks Penguin Random House is positioned to dominate the subscription market. It dwarfs the other major publishers in size, making it more likely to launch a viable service without cooperation among competitors or technology companies. It could also offer authors better deals, because it wouldn’t have to split the proceeds with a tech company trying to squeeze money out of the subscriptions itself. If subscriptions get big, this could not only help the publisher sell subscriptions, but also lure authors from its competitors.
Penguin Random House hasn’t responded to an interview request. So far it doesn’t seem interested in the subscription model. It hasn’t put its titles into any of the other services and hasn’t given any indication it’s working on its own. But if other subscription services catch on, it would feel pressure to do so, argues Shatzkin: “If the economics say subscription works, Penguin has to go in.”
