Amazon Goes Unlimited

Today, the market is talking about the Amazon offer, Kindle Unlimited, which certainly is a smart name as it aims to do exactly what it says on the tin. It should come as no surprise and it was only a matter of time until Amazon entered the ‘all you can read’ ebook subscription arena that services such as Oyster and Scribd have started to open up.

We have long argued that the subscription model is coming and that it starts to change how we relate to books that now can be effectively ‘borrowed on demand’, without having to worry about collecting them on virtual shelves, kidding yourself that you own them when all you own is a limited licence, and also trying to work out how to pass them on to others, share them, or divide the family collection when a relationship splits up.

The greatest challenge to the subscription market is matching the economic model to the reading habits of the members. The book clubs of old used to force feed ‘book of the month’ and expect a regular purchase, but they were dealing with relatively more expensive books and accepted that many people didn’t read on a regular rate. Importantly publishers often had Book Club royalties written into their author contracts. We now have ‘all you can read ‘models which are based on a flat monthly rate with an open to read offer against a digital library. Book s only earn when they are read and ensuing the definition of ‘read’ is a relatively minor but interesting issue.

Unlike other media subscription offers in music and film and even audio the demand and usage patterns of ebooks are very different. An ‘all you can read’ model may appeal to high volume readers who actually don’t need an incentive to read, or buy books and probably read a high volume of what they buy. It doesn’t necessarily appeal to readers who have a more erratic habit, or who collect ebooks today and don’t get round to reading them. So churn rates will be very important both in the early days and within the subscription cycles and will be probably very high compared to other subscription services.

Amazon launched Free Time in the US some 18 months ago. The service was aligned to their Prime subscription model and offered access to several media forms and importantly was aimed at parents for their children. It is not clear how successful this offer is today, but it did have all the right ingredients and if it were extended to align with Unlimited would make commercial sense. Amazon will have learned a lot from this exercise and obviously have a huge volume of customer information and reading habit data to mine and exploit. Unlimited would potentially give ‘family’ offers which cross media, align with Amazon’s core Prime service and effectively lock in customers. Importantly they will be very difficult to compete with as others would appear one dimensional and limited in their potential. However the economics of such an unlimited cross sector offer would be complex and maybe a bridge too far with suppliers today, but Amazon will have learnt much from Free Time that others have yet to discover.

Amazon has aligned Unlimited to their Lending Library and those publishers and authors who opted for this service channel now are automatically lifted into Unlimited. A smart move by Amazon and one that gives them instant traction with both content and users.

So is there room for Amazon, Scribd, Oyster and will Kobo, Apple and the ailing Nook follow? What will Wattpad do now? Can Amazon extend the Unlimited offer to make it even more compelling with premium offers on audio, film, music and even cloud services?

We just can’t see sufficient market for all players as they are position today and it will be interesting to watch the strategy adopted by others. Amazon’s Achilles heel has often been their loner approach and there are many huge subscription services that could be seen as complimentary for others to align with and thereby protecting themselves from being seen a ‘trick pony’.

What’s in it for publishers? What’s in it for Authors? How do digital distributors such as Ingram respond? How does this impact the public library debate and services such as Overdrive? There are many unanswered questions and we are only at the start of a journey which will have many barriers to negotiate, but we now are starting to see a divide between physical and digital which may prove to be healthy. The books may unfortunately remain the same but the divide between ownership and licence, between buying to maybe read or as a gift and subscribing to consume, an incentive to read more as opposed to decorating physical and digital shelves is now potentially up for change.  

This is a good thing for consumers who read. It could be a good thing for digital media users. It may get more people reading. But there are others within the value chain for which this move has many uncertainties.

Related articles:

Amazon Free Time: Give me a child….    Dec 2012

Subscription Is Coming                                  June 2013

eBook Subscriptions Part 3: The future should be significant        March 2014        

Understanding the Subscription eBook Offer      Oct 2013

eBook Subscription Part 2: The Players

We have seen the demise of the traditional book club, but we have to ask, why? Was it a case that they held onto their old model and believed that change wasn’t required, or that that their demise happened too soon before the digital opportunities were possible, or did the new Internet retailers just blindside them, or did they simply just lack vision?

We are reminded of the Michael Porter quote, ‘The greatest danger in times of turbulence is to do act with yesterday’s logic.’

We can’t bring back the BCA or Readers Digest, but we can now see their potential digital replacements. It is too early to judge the new subscription service winners and losers, but it is fair to assume that this new genie isn’t going back in to the lamp and it will have implications across the publishing value chain. 

  

The ebook subscription service that first really raised the bar was Oyster, a US based service which offers some 100,000 titles. The service wasn’t the first subscription based trade ebook service, but it was the first to get the market profile, serious funding and industry recognition. Its ‘all you can eat for $10 a month’ model is to some a somewhat relatively high price point for a service offering such a low range. As a result they must now chase content growth as a high a priority just as much as acquiring and retaining members.

Will the new model’s rewards convince all publishers to join, or will many sit on the fence and watch and so be restricted to those who wish to take limited risks? Without the industry commitment on content subscription offers may fall short of consumer expectations, with it, they might force changes on the industry that it’s not prepared for. Will they be able to sustain potentially high churn rates as readers who don’t read? Will they it offer the full range demanded by readers or will they have to restrict themselves to limited genre where it can focus and specialise? Will it be able to remain when the big gorillas enter the market? These and many other questions are not just for Oyster but for all subscription services and the one lesson from the early streaming and subscription music market was the high failure rates in services that initially competed for that market.

The surprise new ebook subscription service was Scribd, who as an online information service often was at the centre of copyright infringement issues and operating under the protection of a ‘safe harbour’. Not only did they enter the ebook subscription market, but they did so claiming three times more titles than Oyster. Scribd now joins Amazon’s Kindle Owners’ Lending Library who have some 475,000 titles and have inbuilt the option to supply into their successful KDP self-publishing service and a service also aligned to their Prime subscription.

Others include Entitle who are basically a rebranding of eReatah and who have a tiered membership of 2 books a month for $9.99, 3 for $14.99 and 4 for $19.99. Entitle have closed on $5.3 million in Series A funding. They promote their recommendation engine and selection of their 125K titles, but their price model is both predictable and offers little for the reading commitment they seek.

In the U.S., it is claimed that some 25% of people are reading ebooks, but is this enough to support a subscription model, where it’s not that you read an ebook, but more dependent on how many and how often you read them.

We then have number national offers which are restricted by language or geography with some countries having established serious offers. Some claim Russia is a rapidly growing and significant ebook market and an ebook subscription service called has been launched by Bookmate who are its Scribd type operator. However Russia has a significant pirated ebook problem so to counter this Bookmate, charges some 10% of its customer base (around 50,000 customers) around $5.00 a month for unlimited access to some 220,000 titles in both Russian and English. Is it enough to convert today’s nonpayers to pay for a subscription - only time will tell? However, Bookmate are confident and have plans to expand the service to Turkey and then countries in Southeast and South Asia.

In Europe there are several subscription start-ups; 24Symbols in Spain, Riddo in Holland which teams up two Dutch publishers, WPG Uitgevers B.V. and Lannoo Meulenhoff B.V., Riidr in Denmark. In Germany Skoobe’s  9,99 €/month offer which enables members to borrow up to 5 titles for as long as they wish, has recently been joined by Readfy who offer three subscription plans; free access based on subscribers viewing ads, 4.99 €/month with fewer ads and 9.99 €/month for add free. All the national markets may be seen as limited, but all have the ability to also take English language content and together show market potential.

We also now have an interesting new model appearing in Spain with Nubico which again offers content from major Spanish publishing houses in Spanish, English and Catalán. However it is the joint venture approach of Nubico which joins Circulo de Lectores , a successful book club, publisher and music retailer with more than 50 years in the market, a 50/50 joint venture between Germany’s Bertelsmann and Spain’s Grupo Planeta together with Telefónica, the broadband and telecommunications provider. Telefonica was working on Movistar EBooks, Círculo de Lectores had Booquo, a subscription-based eBook platform and they decided it was better to join together than go their separate ways. Nubico is looking to take a 30% share of the Spanish ebook reading market by 2015 and have set a monthly charge €8.99 which is lower than others and also has given Circulo and Telefonica´s customers a 20% discount. Nubico is also planing to expand into Latin American interestingly backed by the regional presence of Random House and Telefonica.

Finally, we have the vertical subscription offers.

The STM (Scientific, Technical and Medical) and academic and professional segments have long enjoyed subscription services. Here it is more about essential access to authoritative content, information and references, abstract, citations etc. Scarcity lends itself to subscription both at an aggregated level as well as direct from publishers. The completion is often Open Access and finding the balance is a constant challenge but subscription prevails.

The new subscription segment would appear to be children and associated education. Here service providers want to capture and retain what is seen as a lucrative market. Amazon has its FreeTime which again built on their Prime service offers curated media on subscription and toed to parental control. Epic is a new US service designed by former game developers and publishing industry veterans aimed at children 12 and under and offering unlimited books for just $9.99 per month. The company has closed $1.4M in seed funding.

Some other niche offers will always come to market. Some will succeed and others fail and in many cases it’s down to target community, content authority and brand awareness.

Tomorrow we will look at the new opportunities for subscription services.

Understanding The Subscription eBook Offer

Subscription services are today’s alternative solution to owning what may fast become yesterday’s technology.

Imagine buying eight track cassettes, cassettes, vinyl, betamax, VHS, mini discs etc, today. Yes, some still do but for the majority of us, these are yesterday’s technology both in terms of devices and media. During the last ten years we have achieved many things in the ebook arena and many old formats and devices have come and gone. Do we expect tomorrow to be any different? Do we expect to still be able to read and enjoy that ebook download in say 10 or 20 years? Do we even want to read the book again?

Subscription services coupled with deep and board repositories and on demand technology start to change consumer behaviour and values. Technology devices are becoming media agnostic, or should that be the other way around? Media is no longer confided to what your device can hold or a location but is now dependant on the network, or initially at least.

However as subscription serves and fail to grasp that ebooks are different to journals, film, music and even short form works.

So we have the question of ebook subscription and whether it can follow other media and be successful in the on demand world? The answer is yes and no.

First the yes would appear to be logical. A sort of return to the old book club but not restricted to a limited number of physical stocked titles but open to all titles. A club that cater for the eclectic tastes of readers. A place where readers can discover new authors, experiment with new genre and do so often within an ‘as much as you can read’ contract. A place where authors can show their wares and potentially engage with their readers. In addition it could offer a service where your library is virtual and the shelves never swag under the weight of old book s.

However, the reader has to get value for effectively licenced access as opposed to outright ownership. The challenge is that there is not an average rate of reads per month, per week or per year. To the person who reads a book a week or even more than this the offer may sound like ‘manna from heaven’, but to the person who struggles to read one book a month or is somewhat erratic in their habit, they offer may have little appeal. The point is that we are trying to get more people reading and not just appeal to the minority who are already hooked. This is a serious issue and one of the main reasons for the demise of the old book clubs who found themselves trying to feed a habit which was on the wane as their members became increasingly time poor.

The STM journal market has been built on subscription model but is very different in its creation and consumption model. The authors give their material for free, the articles are often peer reviewed for free and the journals are ‘sold’ back to the institutions on a title not firm commitment basis. In other words there is no guarantee that a said member of issues or articles will be published and there is no refund at the end of the year. The material itself is a ‘must have‘ for the institutions and the publishers offer review and authentication within their value proposition. This is far removed from the trade sector and today’s ebooks that it is somewhat irrelevant.

We must remember that there are two critical people in the value chain, the reader and the author and that any subscription model for any media must also work at both ends of the spectrum.

We have all read about the difference of opinion that has been aired over the royalties being received by artists from Pandora, Spotify and others. This itself does not mean that subscriptions are wrong or not rewarding for artists but says that the contracts and commercial arrangements made were not always in the interests of all parties. We must also remember that the music business entered into such contracts on a different basis than would publishers and the volumes involved are significantly larger.

The LoveFilm and Netflix market is also very different in and although it offers some interesting insights it is very different from the ebook trade and marketplace.

We have the practical or impractical sides of measuring a ‘read’. Irrespective of whether the overall model is based on ‘as much as you can eat’ or not, the royalty payments have to be based on discovery, access reading or some element that constitutes a ‘hit’. It is only right that the books which are read should be paid a royalty. After all we don’t have to pay to enter a bookshop or library and it is the selection that should trigger payment. However, what constitutes a read? If I select a book open it ead the first page and put it down does that count? If I get half way through it and tire and again put it down, does that constitute a read? If I select a book one month but don’t read it for six months or even over six months, when is the royalty due? These and many more interesting options have to be clear to all parties. Also there has to be measures that obviate counting abuse and provide transparent audit by interested parties.

Finally, there is that often thorny issue of whether the existing author’s contracts permit digital subscriptions, or whether it an assumed right? The transparency also needs t flow to the author’s royalty statement and not be buried in ‘net receipts.’

When we engage with a new business model, or channel, we have to assume that it may be a major source of income in the future and therefore ensure that unlike some other sectors the terms are sustainable and equitable  both today and potentially as the service grows.

So subscription services look attractive to many and should be rewarding for all, but they should be entered into with eyes wide open and not half shut. 

Spotify For Trade eBooks?

Many talk about creating a ‘Spotify for eBooks’, but all too often they fail to grasp the differences between the media, marketplace and cultures and once again see all as the same. There is no reason to doubt that a subscription service will work for some book sectors, but there is plenty to question whether it could prevail across all sectors.

Academic, professional and educational sectors have a captive audience and market and often also have ‘must have’ content. This makes subscription services potentially viable in these sectors. There are questions about who can aggregate the offer and whether the subscriber is the user or a secondary intermediary service, but the content is often mandatory either way. The challenge is establishing that one stop shop and recognising that multiple ‘must have’ offers don’t always work in the eyes of the buyer.

Music, newsprint, magazines, film, TV along with services such as broadband and mobile service provision are ideal for subscription. The nature of these services also can lead to collaborative offers which can exploit additional memberships and add additional value. Importantly with regards to the content it is less about individual files and more about access to databases and collections.

Trade ebooks however have several challenges. The market and consumer reading is still very mixed between ebooks and pbooks, The readers are likely to only read a mere handful of books a year and often in an inconsistent and unpredictable time manner. Heavy readers tend to be eclectic in their habit and therefore do not want to be restricted to one genre and whereas ‘Twigging’ works best in a ‘must have’ market it is often far less important in a trade market where depth and range can be easily provided and search and discovery become more important.

The emergence of MOOCs such as edX and Coursera have started to radically change the content and business model in academic and education sectors. Jimmy Wales, founder of Wikipedia reflects on his own experience, ‘I was taking an advanced calculus class and my instructor was reputed to be a fabulous researcher, but he barely spoke English. He was a very boring and bad teacher and I was absolutely lost and in despair.’

‘So I went to the campus tutoring centre and they had Betamax tapes of a professor who had won teaching awards. Basically I sat with those tapes and took classes there. But I still had to go to the other one and sat there and wanted to kill myself.’

We now have TED Ed, MOOCs, Khan etc all built around offering the best teachers, content to all irrespective of location. The emergence of the virtual and universal course is forcing institutions to rethink their models and here access to quality can be best achieved by a subscription model.

Even the software industry is ditching its perpetual licence model and starting to move to a subscription based one. This drive is being led by the likes of Microsoft with their Office 365 which is now offering subscribers full office mobile on the smartphone.

Streaming services and faster mobile bandwidth are changing media markets such as music, film, TV sports. We are now seeing a clear shift from download and buy, to own to subscribe to access on demand as much as you want. Large subscription based services such as Sky, Vodaphone, EE, BT are all now also having to offer complimentary and added value services to maintain their member bases and avoid churn. Vodaphone are offering new 4G contracts with either Sky mobile sports or Spotify bundled in the UK. In other words you can now subscribe to one umbrella service and get the others at discount or even free. It’s about community and lock-in based on a single subscription.  

So what about books?

Today we have a number of attempted subscription based services; Nuvem de Livros in Brazil and Argentina, 24Symbols in Spain, Oyster in US. We have the potential return of the subscribing library and offers such as Amazon’s lending library. However these have to compete with a market which is still in a heavy discount war and undergoing fundamental relationship and value chain changes. The subscription offers that have emerged are not doing anything new and it could be argued are appealing to students and so tapping into the ‘must have’ segment not the trade.

We also have the potential of our Read Petite venture and subscription model and we would argue that this is different content to trade ebooks and a different new marketplace.

Subscription models are appropriate where there is a high reliance on the access and ’must have’ content, the captive audience and the alignment with mobile and online streamed services. We would suggest trade ebooks are not there today and are unlikely to make that transition anytime soon. 

Three Start-ups That Could Change The Market?

New services are appearing weekly and all offer to either, save publishing, or redefine it within the new digital world. This last week has been no different and has seen three new services gain visibility, drive interest and create a significant volume of debate amongst the industry thinkers, and advisors.

What is now interesting is that services are being launched with outside funding and these are not only different, but are potentially very disruptive in how they challenge the way we do business and interact within the market.

Are objective today is not to decide the winners and losers but to explore some of the challenges and their potential to disrupt tomorrow.

Humble Bundle

Humble Bundle create a package of ebooks from different authors and offer these at a consumer driven price. In other words the consumer chooses how much they want to pay. If they pay more than the average payment they can receive additional ebooks and they also get to choose how their money should be divided. The files themselves are DRM free.

We all remember the famous event when Radiohead did the same consumer driven pricing for their album release, ‘In Rainbows  ‘. Some gave a cent, others paid a responsible sum, others paid a fee aligned to the standard RRP. It caused a stir, gave Radiohead loads of publicity and as a one off promotional exercise and according to who you listened to, worked, or didn’t. 

Humble Bundle are doing the same in other media sectors with their ‘brew’ bundles and now have extended it to ebooks. The collection on offer featured books by the likes of Cory Doctorow, Neil Gaiman, John Scalzi, etc. The titles offered are mainly backlist with the exception of one new Tor title.

Some may be forgiven to thinking that the children had actually taken over the chocolate factory.

The ebook bundle certainly  gives new meaning to the term ‘net receipts’ and raises many questions on rights, other renditions and the model’s sustainability if it were widely adopted.

Cory Doctorow claims combined sales have exceeded $400k. However how many of the bundle have or will be read and what is the percentage that is merely there to pad out the bundle to make it look attractive? Are the receipts spread evenly or do they go to the better known authors and to the detriment of others?

It certainly is a great promotional way to sell backlist, and maybe mix in some front list to add spice. It would also work were there is a clear genre attraction, but is it just another Groupon in the increasingly ‘Voucherclouded’ world? We can only read one book at any point in time and a bundle would suggest a high percentage will be mere shelf fillers to aid a promotion.

When ebooks are being sold at 97% discount, you can’t blame Humble Bundle’s for asking , how much?

Oyster

No it’s not the latest swipe card for London Transport, but a new start up which offers a different sort of a potential ‘pearl’ to publishing.

It is not the first, nor will it be the last start up to offer ebooks under subscription. However, it’s well funded and determined to push the increasingly visible issue of ‘licence versus ownership’ . Oyster claim to be the new ‘Spotify for ebooks’ and we can’t argue that this make sense and is long overdue.

However, just as Spotify have found in changing the music culture, there are many questions  and challenges Oyster now face in its drive to change book culture.

Oyster offer a  ‘much as you can eat’ for a straight monthly subscription. This makes good sense but we are all constrained by time and they are highly unlikely to have the field to themselves.

 The subscription has to offer a true value statement and match or compete with the current high discount offers in the market. This is becoming increasingly difficult as some front sellers are being discounted at ridiculous levels such as 97%. The traditional retailers can easily undermine the Oyster offer by heavy discounting on the leading titles and Oyster’s ability to respond may be somewhat limited.

The next challenge is on range. If Oyster offer the full range, then how will they be seen as different and what compelling reason will the consumer have to tie themselves into a contract as opposed to playing the market? They could ‘twig’ content and feed vertical niches, but as readers are eclectic in their habit, they will fall into the hole the big book clubs did before them. 

They could align with vertical interest groups, but today they have not said this is a route they are planning to take.

Then we have the commercial model and rights whether these sales fall under business as usual, subsidiary sales, or whatever. Asking publishers to revisit contracts can be a big negative and roadblock to getting content. Therefore publishers need to be able to square the subscription model against their existing contracts.

The subscription model is logical in a licenced environment but changing culture is not easy and the digital market has a reputation in being somewhat fickle even if there may be a pearl in the oyster.

Bookshout

Finally we come to what may be the most contentious of the start-ups, Bookshout. The new operation is attempting to aggregate readers ebook libraries, by what some may described as the back door.

A member gives Bookshout their Amazon, Nook and whatever logon details and allows Bookshout  to use these to effectively log on and verify their purchased ebooks. Bookshout then sets up copies of these ebooks on their service, enabling the reader to be effectively device and retailer independent. The new copy is provided by the publisher on the basis that Bookshout has established proof of previous purchase. Bookshout can not only consolidate a reader’s library onto their platform, they can also consolidate reading information and activity information and feed this back to publishers.

Obviously, Bookshout retails ebooks in their own right too.

Questions remain as to what DRM they are using and how what is effectively therefore a fresh licence can square with the like of the lack of a first sale doctrine on media today. The publishers appear happy , BookShout are happy, but how long before Amazon and Nook shut the back door? It somewhat like making a business on stealing someone else’s sale and expecting them to roll over.

Who does the customer have a contract with?

Obviously, their unique proposition is based on the member being willing to give them their personal access credentials and that the publishers accept that they have established proof of purchase of the original licence. Most importantly it is also based on them being able to operate, within what some may say, is a loophole in Amazon’s and Nook’s terms both with publishers and their consumers.

So is Bookshout the reading platform for all? Will it be the place of choice or merely somewhere one goes to aggregate their library? It may depend on how many people have ebooks from both Amazon and Nook which no one today can really answer but is a big question on which to build a business.

The interesting thing is that all three if successful are disruptive, but how do we measure success and is it sustainable or merely a flash of first mover excitement?