After Oyster, What’s Next for E-Book Subscriptions?

September 26, 2015 - Kindle Unlimited

After one of a industry’s many buzzed-about upstarts announced this week that it is shutting down, questions have mounted about a viability of e-book subscription services. Oyster—billed as a Netflix of books—confirmed final week that it will stop operations someday in 2016.

It was suggested that some of a Oyster group will pierce to Google, fueling conjecture that Google has acquired Oyster and competence be angling for a subscription use of a own—a probability that has tantalized attention observers. But sources pronounced that Google has no evident skeleton for an e-book subscription service, and that a association worked a understanding to collect adult some of Oyster’s talent, and to differently “soften a blow” from a failure.

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Launched in 2013, Oyster charity subscribers entrance to some-more than one million e-books for a monthly cost of $9.99. The use drew regard from readers and gained traction with publishers (including 3 of a Big Five) by charity a indication that paid publishers their full sell cut for e-books review by subscribers. But Oyster’s disaster has amplified critique that a subscription indication is not sustainable, following on a heels of a Jul closure of Entitle, a identical service, and a new proclamation by Oyster’s categorical rival, Scribd, that it is scaling behind offerings in certain genres.

Smashwords owner Mark Coker speculated, in a post on a company’s website, that Oyster and Scribd were confronting a same headwinds: a cost of essential for their subscribers’ reading expenditure is simply surpassing a income brought in from monthly subscription fees. In July, Scribd (which, like Oyster, pays publishers their full sell cut for books review by subscribers) was forced to cut intrigue and erotica offerings, given intrigue fans—notoriously starved readers—were apparently reading distant some-more than expected, pushing adult Scribd’s payments. Scribd executives have not commented on their skeleton given a Oyster proclamation was made.

But attention observers advise that a disaster of Oyster’s business should not be seen as a disaster of e-book subscriptions with consumers. “There is a consumer ardour for mass marketplace subscription services,” pronounced Andrew Savikas, CEO of Safari Books Online, a long-running and essential e-book subscription use that specializes in record and business titles. Echoing Coker’s observations, Savikas pronounced a cost of essential full sell cost for calm and a cost of appropriation new business competence not compare what is generated in revenue.

Justo Hidalgo, CEO of 24 Symbols, a European e-book subscription service, also emphasized that there is flourishing direct among consumers for models formed on “access over ownership.” But, he stressed, “you need high-quality content.” To attract improved content, Hidalgo says he switched 24 Symbols to a payout complement identical to Oyster’s—publishers are paid formed on list cost once a commission of a book is read. But even yet that indication has captivated many some-more publishers—24 Symbols grew from charity titles from several hundred publishers to some-more than 3,000—Hidalgo says there is now many reduction income for him to means a business.

“We indispensable to grow, though essential on a indiscriminate indication competence not work,” Hidalgo said. “Publishers need to know that. If publishers wish e-book subscription to be a viable channel, we need to have win-win terms, rather than win-lose terms.”

Both Savikas and Hidalgo charity a accumulation of possible, despite admittedly imperfect, tweaks, including caps on consumption, tiered levels of access, and revenue-sharing formulas. Hidalgo suggested that destiny e-book subscription models competence obey wire TV, with lower-priced simple e-book packages and reward add-ons for specialized access, either for frontlist titles, or genres such as intrigue and scholarship fiction.

Meanwhile, supporters of e-book subscription entrance contend that publishers should not usually wish a indication to succeed, though that they need it to. Consumer habits are changing in a mobile age dominated by smartphones and tablets. Quick and easy entrance to calm is now expected. And as streaming services such as Amazon, Netflix, and Spotify essentially reshape consumer expectations, it is formidable to trust this change will not impact a book business.

At a well-attended BEA row this summer, Scribd v-p of calm merger Andrew Weinstein stressed that subscription entrance should be noticed as a earnest new channel for e-books during a time when sell has flattened and turn some-more concentrated. “It’s about a change in a ecosystem, and we would disagree that a ecosystem is approach out of change right now,” he said, alluding to a elephant in a room: Amazon.

Amazon, of course, has a possess subscription service, Kindle Unlimited. Under a model, Amazon pays publishers in Kindle Unlimited from a monthly income pool (the volume of that Amazon unilaterally sets) according to pages read, terms deeply unsuitable to many normal publishers and authors. Currently, Kindle Unlimited participants (mostly self-published authors) acquire roughly a half-cent per page—about $1.50 for a 300 page-book. Indeed, a conduct of one vast publisher pronounced he would support a standalone subscription use on principle, as an choice to Amazon, as prolonged as a terms during slightest “reflected a value of a content.”

Notably, all 3 of a Big Five publishers that work with Oyster and Scribd have reported glorious results. At final year’s Frankfurt Book Fair, HarperCollins’s CEO Brian Murray pronounced e-book subscription services were a many earnest of all a new ventures. “Subscription has incited out to be unequivocally successful in unequivocally merchandising and mining a backlist,” he said. Macmillan stretched a subscription offerings by Scribd and Oyster over a summer. And in a turn of timing, a proclamation of Oyster’s passing came usually days after SS CEO Carolyn Reidy praised e-book subscription services during her keynote residence during a BISG annual assembly in New York, revelation attendees that Scribd and Oyster haven’t cannibalized SS’s imitation sales, and were pushing both income and discovery.

The doubt now is either publishers, authors, and agents have seen adequate good from subscription (and adequate bad in a stream sell market) to support a some-more tolerable business model. Is a value of a marketing, discovery, intensity data, and a further of a new income channel itself (especially a channel not dominated Amazon) adequate to perform a change in terms? Perhaps, though removing there competence not be easy. “While some authors would do fine holding reduction per book in a subscription model, either given they are building a code or creation aged books newly discoverable, many will remove money, and a lot of it,” pronounced Authors Guild executive executive Mary Rasenberger, stressing that calm enclosed in subscription packages would need to be evaluated on a book-by-book basis. “Asking everybody to take a cut to support a business indication that works usually for some is a nonstarter.”

At BEA, Scribd’s Weinstein concurred that some publishers feared that a indication of essential full sell prices for books review in subscription skeleton was too good to final forever. “But all is too good to final forever,” he added. “Ask publishers if they are being paid a same volume from their retailers they were 5 years ago.”

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