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What’s Up with eBook Subscriptions? Kindle & Scribd Business Models in Flux

Are Scribd and Kindle’s eBook subscription services in transition for reasons that will benefit writers, readers or themselves? Did both platforms roll out monetization plans that lacked risk assessment — where payouts ended up exceeding their revenues? These and other factors appear to have been in play as both companies slowly regroup and make modifications,… [Read More]

What’s Up with eBook Subscriptions? Kindle & Scribd Business Models in Flux

Are Scribd and Kindle’s eBook subscription services in transition for reasons that will benefit writers, readers or themselves? Did both platforms roll out monetization plans that lacked risk assessment — where payouts ended up exceeding their revenues? These and other factors appear to have been in play as both companies slowly regroup and make modifications, based on sales and readers’ preferences and behavioral patterns.

Original Plans

What’s Up with eBook Subscriptions? Kindle & Scribd Business Models in FluxAs BookWorks’ publisher, Betty Sargent pointed out in her recent blog, “Does Amazon’s New Way of Paying Indie Authors Make Sense—or No Cents?” — in the case of Amazon, when a customer of Kindle Unlimited or their Owners Lending Library selected or borrowed a book, the author was paid a set fee if the customer read at least 10% of the book. According to stats culled by The Digital Reader, writers enrolled in either program earned around $1.33 per read.

With Kindle Unlimited, readers have unlimited access to over 800,000 titles [including audiobooks], which can be downloaded on any device. Plans start with a 30-day free trial, after which customers are charged $9.99 per month plus applicable tax, and subscriptions can be cancelled at any time.

Scribd launched with the goal to become the ‘Netflix’ for the eBook market. Their monthly subscription model seemingly mimics the Kindle model using the same 10% threshold for author payouts – except their monthly subscription fee is priced slightly lower at $8.99, with a 14-day free trial.

A year ago, Scribd had only 400,000 titles listed in their roster. Today it boasts more than a million eBooks, audiobooks and comics, including titles from traditional publishers such as HarperCollins, Simon & Schuster, Harlequin, Houghton Mifflin Harcourt, Macmillan, Bloomsbury, Workman, Lonely Planet, Perseus Book Group and Wiley — as well as self-published eBooks from Smashwords.

Regarding authors’ royalties, Scribd and Smashwords inked a deal back in 2013 in which self-publishing authors and publishers would earn 60-percent of their book’s retail list price [again based on the 10-percent threshold].

Same Page, Different Solutions . . .

So under the 60-percent payout scenario, it’s not difficult to understand why What’s Up with eBook Subscriptions? Kindle & Scribd Business Models in FluxScribd saw a need to tweak their model to produce a better return on investment (ROI). For example, if the digital list price of an ebook was $9.99, and a user reads portions of two eBooks per month, the service could potentially owe the writers more than the $8.99 subscription fee.

Like an all-you-can-eat-buffet, there was an historic precedent in the culinary field that addressed this dilemma years ago. After all, a restaurateur worth his or her salt knows that to make any profit from an unlimited serve-yourself meal is to offer food items, which are low in cost and/or quality – or better yet, both.

Similarly, while Kindle’s authors’ payouts were much lower than Scribd’s at the $1.33, they too wanted to bring more money to their bottom-line.

So, with that goal in mind, each company chose a different path to try to tackle the issue, and the paths affect authors in different ways. Kindle’s plan was to change the payout schedule, while Scribd’s was to reduce the inventory of one of its most popular genres.

Pay-As-You-Read Model

What’s Up with eBook Subscriptions? Kindle & Scribd Business Models in FluxIn place of the 10-percent rule, Kindle’s new formula is now based on a ‘pay-as-you-read’ sliding scale model. With this scheme, authors are only paid on ‘how much’ of each downloaded book a consumer actually reads. Essentially, Kindle is no longer subsidizing the portions of books, which are not read.

This model is not new, as software apps like Total Boox are successfully using this formula in a service they provide libraries [see my previous post, “Total Boox Extends ‘Pay As You Read’ Model . . .”]

There are obvious pros-and-cons as to how this affects authors’ pocketbooks, but suffice it to say, this is Kindle’s attempt to disallow books that don’t hold a reader’s interest from cover to cover — while producing more net revenues for the company.

Love no longer conquers all . . .

Like Kindle, Scribd underestimated just how much could be consumed at their What’s Up with eBook Subscriptions? Kindle & Scribd Business Models in Fluxall-you-can-eat literary buffet, as their number-one ‘over-eaters’ with the most voracious appetites were the fans of romance novels and erotica. Other genres presently don’t appear to be affected by this modification.

However, instead of following suit with Kindle’s pricing strategy, Scribd decided to reduce this genre’s inventory, and in an unprecedented move they are now in the process of removing 200,000 self-published books from their catalog.

“We’ve grown to a point where we are beginning to adjust the proportion of titles across genres to ensure that we can continue to expand the overall size and variety of our service. We will be making some adjustments, particularly to romance, and as a result some previously available titles may no longer be available,” noted Scribd’s CEO, Trip Adler.

The ramifications for this change will not only affect romance novelists, but also publishers like Smashwords, which has provided Scribd with the lion’s share of their inventory in these categories. Smashwords founder Mark Coker estimates 80-90% of his company’s romance and erotic titles will be dropped by Scribd.

Subscriptions going forward . . .

Whether or not these current strategic moves will prove to be advantageous to either company is yet to determined. However, it is most likely that Scribd and Amazon will keep experimenting with their subscription models until they can settle on a satisfying formula that works best for their respective companies.

For you self-publishing authors who are directly affected by these changes, please let us know what your experience has been with these new models. And, if you feel there are alternate solutions that might have a more satisfactory outcome for writers in the long run, please lets us know what those might be. We welcome your input.

Readers & Writers: I look forward to your feedback, comments and critiques, and please use BookWorks.com as your resource to learn more about preparing, publishing and promoting self-published books. My blogs appear bi-weekly on the 1st and 3rd Fridays of each month.

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7 thoughts on “What’s Up with eBook Subscriptions? Kindle & Scribd Business Models in Flux”

  1. Great post Ron. I never subscribe to e-books

  2. Angus Whitton says:

    I tend to read free stuff, mainly articles and news, which are available everywhere.

    Somewhere on one of my backup discs I have about 25GB of various free classics – and in over three years I’ve not had time to read a single one.

    My wife has a kindle and I think she occasionally buys stuff.

  3. Andrea says:

    Ron,
    I have a lot to say on this and don’t know where to begin or even if some of what I believe is even technically correct! 😉 As someone with a best-selling business book AND a writer of a fictional paranormal suspense series drifting in a sea of content with others like me, it’s an interesting time to be a writer.

    These companies want to make things good for the consumer and I think subscriptions are great. However, for my business books, I have not opted to be a part of that and it’s important that it is not forced onto authors. For fiction though, it is a better model, at least for us.

    In addition, the fact that authors get paid on pages read and not downloads should actually weed out people who write a book a day, throw it online and see what happens, crowding the marketplace. It’s like rewarding for value as opposed to marketing skill! I think Amazon does a good job of trying to respect authors and the works, even though for fiction, unfortunately, books have turned, almost into a commodity.

  4. Gary Loper says:

    Most of the ebooks I have subscribed to have been used to validate my own knowledge
    many of the auto responders that follow the subscription tend to be a bit spammy – not educational, simply a pitch for something else they are doing
    I publishing ebooks – I have tried to take all this into consideration by providing information that many others are charging for – which are the essentials people need
    Very few people subscribing to ebooks – have not moved in paid programs
    Ebooks have become an essential aspect to create a perceived level of expertise – without it you will not be noticed, but even with it – the ebook is essentially a business card to potential opportunities – only if your words and actions match the messages of your writings

  5. Carla King says:

    Ron, thanks for this. I’m glad to see this update. When Amazon Kindle Unlimited showed up last year I penned a piece for PBS MediaShift on which program treated Self-Published authors the best (most $). I see it needs updating now. I think the psychology is there (in my article) that explains why we should be in these programs. My recommendations stand to use Smashwords and BookBaby to get into Scribd or Oyster, which puts your self-published books right up next to those by major publishers. Unlimited I’m not so fond of, because I don’t like the exclusivity of KDP Select. Too many authors choose it (they bombard you with “opportunities” to join as you go through the KDP publishing process), and don’t really plan a good marketing strategy around it. Then they’re stuck for 90 days, unable to sell anywhere else. Also, Amazon is just not attracting a whole lot of book publishing houses. Hmmm. Gee. Wonder why? Anyway, here’s the link to my piece from August last year – http://bit.ly/1HHEC8d – And yay, I’m happy to be joining the BookWorks blogging team with my first post next week!

    1. Profile photo of Ron Callari Ron Callari says:

      Carla, thanks for the feedback and the article [might have some questions for you after I sit with it.] And welcome to the team – great to have folks of your caliber on board!

  6. Jackie Weger says:

    The way I see it is our digital industry is always in flux. What works today to sell books, might not next week or month. I am exclusive to Amazon. I have colleagues who are not. Few of their books are selling across all venues. I have a title that came off of a FREE promotion on 9/28/15 and Amazon reports above a half-million pages read, plus direct sales of 350 units through 10/17/15. That is a pay check. Colleagues who are not in Select are earning $$ because they are monetizing their blogs and FB pages, selling promo slots to indie authors for $10 a book post and a tweet. I’m in a group of indie authors and we search for ways to promote as inexpensive as possible and are going with smaller promotions…we don’t make the lists, but we do see an ROI. And we do manage 5,000 downloads on a FREE unit using no paid sites which generates a smaller return once back to priced and borrowed. The goal is to sell books. We don’t see grand slams, but we do see borrows steady on. Oyster is closing it’s doors. Scribd is pulling 200,000 romance books. Those authors have to put their books on a virtual shelf somewhere. B&N is still looking to unload its digital service. The virtual bookshelf is infinite, but marketing is getting super costly.

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