Amazon’s Proposed eBook Subscription Service — a Round Peg in a Square Hole?

Amazon's Proposed eBook Subscription Service — a Round Peg in a Square Hole?

The Wall Street Journal weighed in over the weekend with a very interesting and surprising rumor. Supposedly, Amazon has been shopping an “ebook subscription service” around to publishers, in an effort to bundle ebooks with Prime membership. Sort of like Netflix for eBooks. The closest analog to this is the old “Book of the Month Club” type deals, but this is definitely a step up. It benefits consumers, but does it actually benefit the business of selling books?

First, let’s look at the specifics, as far as they’re known right now according to the Journal: Inc. is talking with book publishers about launching a Netflix Inc.-like service for digital books, in which customers would pay an annual fee to access a library of content, according to people familiar with the matter.

It’s unclear how much traction the proposal has, the people said. Several publishing executives said they aren’t enthusiastic about the idea because they believe it could lower the value of books and because it could strain their relationships with other retailers that sell their books, they said.

Amazon didn’t immediately respond to requests for comment Sunday.

The proposal is another sign that retailers are looking for more ways to deliver content digitally, as customers increasingly read books and watch TV on computers, tablets and other electronic devices. Seattle-based Amazon makes the popular Kindle electronic reader and is expected to release a tablet to rival Apple Inc.’s iPad in coming weeks, people familiar with the gadget have said.

Amazon has told publishers it is considering creating a digital-book library featuring older titles, people familiar with the talks said. The content would be available to customers of Amazon Prime, who currently pay the retailer $79 a year for unlimited two-day shipping and for access to a digital library of movies and TV shows.

On the surface, this sounds like a great deal for readers! $79 a year for subscription books! But follow the money for a minute. Even backlist titles have some value. Let’s say they sell for half the current bestseller prices. That’s still some residual cashflow to the author and publisher every time the book is sold. Presumably, there’s some sort of payout that Amazon will offer as part of this new subscription plan. The one that will come free with Prime. The same Prime that offers free shipping. And now free movies and television. Either Amazon is giving up a big chunk of their Prime margins, or they’re loss leading to get people hooked on these new services.

Not only that, but this assumes that ebooks can and should be treated the same as movies and music. Movies have several opportunities for higher sales prior to hitting  Netflix. There’s usually a first-run in theaters, a DVD release, television showings, etc. Not that all of this (or any of it) necessarily brings in the big bucks, but it does offer up other revenue streams. Not to mention, a movie takes around 2 hours of your time. There is no windowed release anymore for books, really; major books are released in ebook and hardcover form at the same time or within a few months. Add that to how long it takes to read a book. Even a fast reader may take 3-4 hours of unbroken time to finish a book. And how big is your ‘to be read’ pile? My guess is that if you’re an avid reader there’s always a stack, physical or electronic, that you want to get to but just haven’t yet.

So what’s the point of this comparison? If books take longer to get through than the average movie, and generally don’t have a multi-format release schedule, where’s the incentive to buy a new book? I can just wait a year for something to hit the new “subscription” Prime service, and add it to my virtual pile then. This has serious potential to unravel book sales, which are already seen as a precarious and weak revenue line.

This could do a few things. One, maybe nothing changes, beyond what we’ve seen. Publishers attempt to adapt and savvy authors look to self-publishing as a way to better promote themselves. Or maybe even more authors go the self-publishing route, as publishers themselves get squeezed out as the middleman. After all, a subscription service probably won’t pay what a per-book model pays, and authors aren’t going to sit and watch their paychecks shrink. My fear is that it drives book sales further into a spiral, and exacerbates the problem of already razor-thin book margins.

I look at this as a consumer, and I think, “Heck yea!” But when I think about it from a bookselling standpoint, and from the perspective of someone who wants to see the written word continuing on, in Kindle, paper, NOOK, etc., for a long, long, time, something just doesn’t sit right about this idea. I just don’t see how you can stretch the dollars involved to an equitable payout, and I don’t see Amazon taking a margin hit forever. I hope I’m wrong. Amazon has been great to readers and I want to see that continue. But when I see even hardcore ebook readers get enthusiastic about this service because it’s a way to keep a “to be read” pile going, I have to wonder — if ebooks are offered through a Prime subscription, will anyone buy bestsellers anymore?

What’s your take on this rumor? Am I totally off base? Sound off in the comments!

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About the Author

Zek has been a gadget fiend for a long time, going back to their first PDA (a Palm M100). They quickly went from researching what PDA to buy to following tech news closely and keeping up with the latest and greatest stuff. They love writing about ebooks because they combine their two favorite activities; reading anything and everything, and talking about fun new tech toys. What could be better?