Has Amazon cracked the subscription puzzle?

[stonetools]

I have argued before that there will eventually be a subscription model for ebooks. A lot of folks were for or against the idea, with some being quite skeptical. Read the discussion HERE

With the KP lending plan, Amazon may have backed into something like a subscription plan, as one poster says HERE:

On the other hand, who else is offering a subscription service, which is basically what Amazon Prime is? Join for $79/year, get 12 books for free, video streaming, and free shipping.

(Hat tip J. Strnad)

Another way to look at it is if you pay $79 a year , you get 12 books, plus some nice benefits. Now Amazon didn't really intend it to be an ebook subscription service, but its really caught on like wildfire among indie authors and from an original pool of just a few thousand books , there are 47,000 books in the pool, with thousands more being added every day. At least a few of those books are bestsellers like the Hunger Games trilogy.
As more and more authors sign up, and maybe more bestselling authors, the book subscription feature (and video subscription feature) might become even more attractive than the free shipping feature which was originally the main benefit of Amazon Prime.
There's precedent for this- Netflix's streaming option was originally just an add-on to its DVD rental service. Now its a separate-and for many, the PREFERRED option .
So what does the forum think? Is it possible that Amazon may have backed into the beginnings of a viable ebook subscription model?

[RainingLemur]

I think that it works for Amazon since they have more than just ebooks and other streaming media. For someone who does a lot of shopping on Amazon for physical products, $79 a year for free shipping pretty much pays for itself after a few purchases.

I like it, personally.

[tdonline]

I've been advocating a Zipcar model for e-books. Pay an annual fee of $25 and pay as you read. Perhaps $2.99 for new releases and $1.99 for everything else. BN (or anyone else) would split the fee with the publisher.

I don't want to pay $10-15 for 99% of the books I read. I read a book once and that's enough. I've been a library user all my life and have only spent money on text and reference books and the occasional book that can't be found at the library. But I would be happy to pay a smaller fee to get a book on demand and not have to wait like I do for Overdrive. Give me 2-3 weeks to read and I'm happy. BN would get $50-100 plus the rare books I do buy with this model. Sure 50-100 isn't a lot of money but it's better than nothing. And I'm sure there are quite a few people like me. It would also have entice more people to buy e-readers to join this book rental model.

[mr ploppy]

Originally Posted by stonetools

Another way to look at it is if you pay $79 a year , you get 12 books, plus some nice benefits. Now Amazon didn't really intend it to be an ebook subscription service, but its really caught on like wildfire among indie authors and from an original pool of just a few thousand books , there are 47,000 books in the pool, with thousands more being added every day.

That works out at $6.58 per book. How many indie writers are charging more than that for their books? I would suspect that most of those writers have only signed up so that they can list some of their work on Amazon for free as a form of promotion for their other books. That would be the only reason I would be interested, but even then I haven't really decided if that is worth what I would need to give up.

[rcuadro]

Originally Posted by RainingLemur

I think that it works for Amazon since they have more than just ebooks and other streaming media. For someone who does a lot of shopping on Amazon for physical products, $79 a year for free shipping pretty much pays for itself after a few purchases.

I like it, personally.

That is the only reason I pay for Amazon prime. My entire family shops using my account and the free shipping paid for the prime membership in the first month

[J. Strnad]

The "list price" issue is an interesting one since it's an arbitrary number based on perceived value more than manufacturing cost, like an $800 designer purse vs. a $20 knockoff.

Amazon's profit-sharing is currently very egalitarian: a borrow is a borrow, whether the list price is 0.99, 2.99, 7.99, 12.99, whatever. Depending on the number of borrows (in December 2012, Amazon will split $500,000 among all the books that are borrowed that month), an author might get more or less from a borrow than he gets from a sale.

I get $2 for a Risen sale, based on a $2.99 list price. If Prime members borrow 250,000 books in December, I'll get $2 for each borrow of Risen, the same as I get from a sale. If they borrow fewer than 250,000 books total, I'll actually make more per book from a borrow than from a sale, and I'd say that the subscription model is working great!

The author who lists his book at $9.99, who gets about $7 per sale, might think that a $2 borrow is eating into his profit. For him, the subscription model devalues his book.

If there are 5 million borrows and our royalty per borrow goes down to ten cents, no one but Amazon and the readers will be happy and we'll all feel that our books are being devalued.

And that's the issue with a subscription plan. Those who can charge $9.99 or $12.99 or more for their work won't want to settle for a smaller royalty and will perceive the subscription plan as devaluing their books. And yet, those are the authors you need to sell the subscription plan to readers.

[elemenoP]

which publishers have signed on to Amazon's prime lending program?

eP

[rcuadro]

on a side note Nan... I just bought Risen... looks like a book that is right up my alley

[J. Strnad]

Originally Posted by elemenoP

which publishers have signed on to Amazon's prime lending program?

eP

I'm not sure any of the Big Six have!

Amazon did an end run around them by treating each "borrow" as a sale, paying them for it as if Amazon had purchased the book and gifted it to a Prime member. The publishers didn't agree that this was legal and protested.

[stonetools]

Originally Posted by mr ploppy

That works out at $6.58 per book. How many indie writers are charging more than that for their books? I would suspect that most of those writers have only signed up so that they can list some of their work on Amazon for free as a form of promotion for their other books. That would be the only reason I would be interested, but even then I haven't really decided if that is worth what I would need to give up.

Of course, that would not how it would work in the end. My model-the popular Netflix streaming plan- evolved considerably from a free add-on for Netflix's best DVD customers, and the process took several years.
How could an ebook subscription plan evolve out of the current set up? The first thing to remember is that it will only happen if there is something in it for Amazon, the authors and the publishers. We can then plot a way forward.
The first step would be for Amazon to offer the one free ebook per month plan to Kindle owners. Kindle owners are customers who have shown a commitment to Amazon by buying a dedicated device for the reading and consumption of Amazon books. The free ebook per month plan would be a way of rewarding the loyalty of such customers, as well as a way of enticing non-Kindle owners to take the plunge.

Once you get Kindle owners hooked on getting a free eBook per month, Amazon could offer a for-money subscription plan : for $79 per year ( or 7.99 per month) you get to select a book per week. Over a year that works out to $1.52 per book. THat's attractive to the heavy reader.
Now the pool would consist of mostly indie authors. What's in it for them ? Exposure to the universe of Kindle owners. The authors who have signed up for the program as now constituted have made the calculation that they have a much better chance of being noticed than otherwise. The subscription plan's audience would include not only Kindle Prime owners but the larger universe of Kindle owners.
Would the Big Six authors and publishers join in? Well, they aren't going to put their crown jewels ( full length work by best selling authors) into such a plan . It would be economically stupid of them to do so. However, I could see them putting Kindle Singles( short fiction by established authors, long form journalistic articles) into the pool. The idea would be that the subscription plan audience would then move on to buy the full length work by those writers ( the crown jewels).
Again , this is one path. There is probably more than one path, grasshoppers.

[Andrew H.]

Originally Posted by stonetools

So what does the forum think? Is it possible that Amazon may have backed into the beginnings of a viable ebook subscription model?

No. :-)

I don't think Amazon will be able to offer a subscription plan that many people will be interested in, mostly because I don't think that they will get authors/publishers to agree to the kind of price cut that would allow them to offer a subscription at a price people would pay for.

Netflix is having this exact problem - publishers pulling movies - now that streaming has gone mainstream and they can rent/sell movies individually.

[stonetools]

Originally Posted by Andrew H.

No. :-)

I don't think Amazon will be able to offer a subscription plan that many people will be interested in, mostly because I don't think that they will get authors/publishers to agree to the kind of price cut that would allow them to offer a subscription at a price people would pay for.

Netflix is having this exact problem - publishers pulling movies - now that streaming has gone mainstream and they can rent/sell movies individually.

Oh yee of little faith

I think you are mostly right about Big Six publishers, but we're talking about the Amazon Prime "subscription" plan , which relies on indie authors.

[khalleron]

Please stop using the word 'free' in relation to the benefits of Amazon Prime. It's not 'free' if you have to pay for it.

[stonetools]

Here is an incisive article by a self-publisher on KDP .His thesis is that KDP is indeed the beginning of Amazon's attempt at a subscription model. Money quote:

Either way, whether you like it or not, subscription models are going to form a big part of the reading mix in the future – probably in the immediate future. This isn’t something like enhanced e-books where the jury is out. This is happening now.

And whether you think subscription models are the right way to sell your work or not, that decision is out of your hands. Readers are in charge here. If that’s how they want to read your stories (and it’s how a large portion of people now like to consume music, television, and movies), then that’s how you will have to sell them.

LINK

He says that for authors, KDP is a bad deal as it now stands, but Amazon has shown a willingness to improve things. The article ends with a clarion call for writers to speak up and negotiate better terms. But he is certain that Amazon will be offering a full blown subscription model in the near future.

[tubemonkey]

Originally Posted by J. Strnad

I'm not sure any of the Big Six have!

Amazon did an end run around them by treating each "borrow" as a sale, paying them for it as if Amazon had purchased the book and gifted it to a Prime member. The publishers didn't agree that this was legal and protested.

If that's the way it's done, why would they care? They got their money.