Amazon’s Kindle Unlimited Ebook Subscription Service – Great For Readers, But What About Authors?

Go Global In 2014

So the long-rumoured ebook subscription service from Amazon is finally out in the open. Sort of.

Amazon has been keeping quiet and everyone else is wildly speculating about how successful it will be. Now it appears to actually be live, in a beta sort of way, and no doubt more details will emerge.

Obviously it’s going to be huge. For readers it’s a no-brainer. The best thing since the Kindle was launched. The big question is why it took Amazon so long and they let rival operators get a head start.

The answer to that of course lies at the heart of the wider issues to be addressed here.

Obviously Amazon has the tech skills, the content, the contacts and the financial muscle such that it could have done this years ago. That it is only going down this route now is testament to two things: First the success of Scribd and Oyster. Second, that the ebook subscription service is not easily compatible with Amazon’s existing business model.

At risk of stating the obvious, Scribd, Oyster, Epic and the other early-movers in this field are not retailers. Yes, you can buy direct from Scribd but that’s not its key role.

On the other hand Amazon is an ebook retailer. The subscription service, no matter how you look at it, is an afterthought brought in reluctantly because Scribd and Oyster proved the model works and they are eating into Kindle market share. Amazon has no real option but to compete head to head with Scribd and Oyster.

And no doubt it will now do it extraordinarily well.

The issue for Amazon, and for we authors, is that once it goes live Kindle Unlimited is going to impact not just on the wider ebook market, but on Amazon’s own sales.

In operating a subscription service Scribd and Oyster are not cannibalizing their retail sales because they don’t already have a retail store where readers are already spending a ton of money. Amazon on the other hand…

 ~ ~ ~

Logical to assume subscription ebooks will not be as lucrative as direct sales, else Amazon would have gone down this route long ago. Make no mistake, we love the idea of an Amazon subscription service. For how long now have we been saying subscription ebooks are the new black? But this is unquestionably a reluctant,  reactive move by Amazon.

And indies may feel the pinch.

Put simply, anyone spending more than ten bucks a month on ebooks from the Amazon Kindle store is going to be better off in future using the subscription service.

And there’s the thing for indies – subscribers will inevitably gravitate towards higher-priced books because they will get more value for their money.

There are already several big (but not Big 5) trad players on board with Amazon’s subscription service, and safe to guess that the wildly-speculated-over negotiations between Simon & Schuster and Amazon have nothing at all to do with a takeover bid and everything to do with getting S&S titles into the subscription store. Both S&S and HarperCollins have substantive inventory in the Scribd and Oyster catalogues, so it would be no great leap for them to sign up with Amazon for the same service.

What impact will that have on indies?

Quite a dramatic one, is our guess.

Consider: Once you’ve invested your monthly ten bucks into the Kindle Unlimited service (which will no doubt be a recurring deduction from your card, so you won’t even need to think about it after day one) then why would you bother downloading that 0.99 title from Joe Nobody (at which rate you would need to read ten ebooks a month just to break even on your payment) when suddenly you can get all those much more expensive titles from names you know and trust, or names you know and have been tempted to try, but were never going to risk six or seven dollars each for?

Yes, indies can of course increase their prices – but then suffer the consequences in the main Kindle store where by and large indies have an impact because they can price low.

This will inevitably skew the playing field yet further towards the bigger publishers, and towards Amazon’s own imprint titles and Amazon-exclusive White Glove titles (which naturally will get heavy in-store promotion).

It will also skew the charts.

Safe to assume any full read of a subscription ebook (by the look of things that will mean anyone who reads more than 30%) will count as a sale for the charts.

So taking the above scenario that subscribers will gravitate towards downloading known names at higher prices from trad publishers and heavily-promoted titles from Amazon imprints / White Glove, and throwing in the logical assumption that subscribers will only ever “buy” direct from the Kindle store if a title is not in the subscription service, the extra traffic generated is going to shift inexorably away from most indies.

More trad pubbed titles in the charts mean more visibility and therefore more sales, both direct and through subscription downloads – which in turn means more visibility, and therefore more sales…

Without at least some of the Big 5 on board the Amazon subscription service is going to find it hard to compete with Scribd and Oyster, so a safe bet Amazon will be pulling out all the stops – and making whatever short-term concessions are necessary – to get at least a few of them on board.

Which makes us wonder if one of the sticking blocks for Hachette in their negotiations has actually been about Amazon demanding they put their titles into the subscription service.

Even without the Big 5, Amazon is claiming to have 600,000+ titles in the scheme. Compared to about 500,000 for Scribd and Oyster, both of whom have two Big 5 players on board. We know both Oyster and Scribd have substantive indie titles on board through Smashwords and D2D, so safe to presume the Amazon numbers include – and probably mostly comprise – KDP titles.

Amazon are also throwing in audio-books via its Audible arm, but indications so far is that these will number mere “thousands”, which in Amazon-speak could mean anything between 2,000-9,000 (7,000-8,000 seems a common guess). Most likely indie ACX titles.

UPDATE: It appears “thousands” s indeed just 2,000, but you also get a free three-month subscription to Audible.

In both instances it looks like indie titles will be part of the mix whether we like it or not, which will present an interesting dilemma for the many indies who have so far eschewed Scribd and Oyster on principle, because they think subscription services are bad news for authors.

UPDATE: initial reactions are that only Select titles are in, and maybe not all of those.

Assuming we are co-opted in, like it or not, the issue of author remuneration arises.

Publisher’s Lunch has a story behind a pay-wall suggesting Scholastic and similar big (but not Big 5) players will be getting a full payment for every title downloaded and read 30% of the way through or more. What that full payment will be will depend on their contract, of course.

With Scribd and Oyster indies typically get about 60% after the aggregators take their cut. The question is, can indies expect 70%, or even 60%, from Amazon?

Our guess is maybe, if in Select.

Obviously the more Amazon can claim it has exclusive material not available on rival subscription sites, the bigger its appeal. So this seems like an ideal opportunity for Amazon to follow the well-established precedent (think India, Mexico and Brazil Kindle stores) of just 35% for non-Select titles, and 70% as a reward for going exclusive with Amazon.

An alternative to a fixed or two-tier percentage rate, and one being hawked around the Amazon forums, is that indie authors will be paid from the KOLL fund that currently is shared among authors who get a book “borrowed” by Prime members.

Which raises two issues.

First, to keep with the video and music download options Amazon could make ebooks “free” for Prime members. The monthly ebook subscription would cost more than Prime membership over a year so it be an incentive to get people to sign up to Prime.

But – second issue – if the KOLL fund (currently at $1.2 million) was used to share between the many more indie authors who would see downloads through the subscription services, even allowing for the skew as outlined above, then the amount each author got would reduce dramatically.

A simple expedient (and most likely) would be to increase the fund. Small change for Amazon, and giving authors the hope of making more. But the existing KOLL arrangement favours higher-priced indie authors, for the same reasons that were outline above that will favour higher-priced subscription ebooks – it’s simply better value to choose the highest-priced ebook(s) from those that interest you.

One other key question as yet not being asked is if this will be a US-only scheme or whether the other Kindle countries will be allowed to play ball. Past experience suggests it will be US-only initially, then rolled out to the UK and perhaps Germany.

Many parts of the world already have their own subscription services (that long pre-date Scribd and Oyster) but the UK is notably lacking. Brits can use the Scribd subscription service but few even know it exists.

No question if Amazon were to launch a Kindle UK ebook subscription service that would be very, very well received this side of the pond.

But that brings us full circle to our initial point. We are unlikely to see a UK ebook subscription service from Amazon unless there is a serious UK competitor to compete against.

As above, while Brits can sign up to Scribd few even know it exists, and the likelihood that Scribd would set up an independent subscription service in the UK geared to a British audience is remote.

And so to this parting thought – totally speculative, but not beyond possibility.

There is one UK player that has deep enough pockets, good enough standing with the content providers, a big-enough customer base, and the motivation to bring a “Netflix for ebooks” model to the UK.

Could we see a trad-pub only subscription service launched in the UK by Britain’s breakout supermarket ebook store Tesco Blinkbox?

 

Ebook Bargains UK

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Far more than just the UK.

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