Amazon enters the fray of e-book subscriptions, but their unlimited service has limits
By G.F. | SEATTLE
MAURICE Sendak said that "there's so much more to a book than just the reading," and in the burgeoning economy of e-books, there's so much more to a service than just the number of titles. Amazon entered the marketplace last week, with many describing their Kindle Unlimited service as "the Netflix of books". It is a subscription-based, unlimited-use e-book lending library, such as that offered by Oyster, Scribd and others. For $9.99 per month, Kindle Unlimited subscribers—Americans only for now—can read any of over 600,000 books and listen to thousands of audiobooks (from Amazon's Audible division). Oyster claims over 500,000 books for $9.95 per month, while Scribd charges $8.99 per month for over 400,000 titles. These are loans with limits of 10 or 20 at a time.
The size of each catalogue may seem impressive until the surface is scratched. Amazon, for instance, offers Michael Chabon's "Wonder Boys", Michael Lewis's recent "Flash Boys", all the "Harry Potter" books and the trilogies of "Hunger Games" and "The Lord of the Rings". Yet most of the books on Kindle Unlimited, Oyster and Scribd are classics, self-published or from smaller publishing houses. The "Big Five" publishers (HarperCollins, Simon & Schuster, Penguin, Random House and, it goes nearly without saying, Hachette) aren't part of Amazon's offering. Oyster has some books from six of the ten largest American publishers, while Scribd offers 10,000 from Simon & Schuster (mostly backlist titles).
The comparison to Netflix, however, is inapt beyond the general lack of popular or mainstream work. Movies and television shows have vastly larger numbers attached to the cost of production, revenue and distribution. Films in particular have a precise release schedule designed to maximise revenue at each stage from theatrical release through digital and physical distribution through premium-cable-channel and television broadcasts. With certain exceptions and side arrangements, Netflix typically cannot stream a movie until all the profit has been wrung from those who cannot wait to consume. (Such limits are part of Netflix's entrance in the production of their own series.)
Movies and television shows are made in relatively small numbers—fewer than 900 new films were screened across all theatres in New York in 2013, one of the most diverse cities for releases. Dozens of television shows may produce 20 to 30 episodes each season, but with most in 20- to 60-minute chunks, they can be consumed in a few hours to days of binge-watching. But a medium-length book might take dozens of hours across many days to complete, limiting the sheer quantity a reader can reasonably consume.
A better label for Amazon's offering might be "the Spotify of books". As with music streaming, the greatest benefit for unlimited e-book reading accrues to the aggregators: the firms offering subscriptions and those rights-holders with the biggest pieces of the pie. Music is produced in vastly larger numbers, at least in the low millions in America, though the upper bound is hard to discern. A casual listener might play dozens of songs a day, a committed one perhaps hundreds. But musicians see minuscule royalties, even for songs listened to millions of times. (Musician Zoë Keating releases her data regularly.) Spotify is not a precise match to Amazon's entry either, because musicians have many paths to make part of a living, including touring and merchandising. The vast majority of authors have a book to sell and little else.
In America, the number of books borrowed and bought is about the same. Some 2.59bn books, according to the Association of American Publishers, were sold in America in 2013, while U.S. libraries circulated 2.44bn materials, mostly books, in 2011 (the most recent year for which data are available). Libraries have seen a circulation increase over 10 years of 29%, with population rising just 10%. In major cities, libriaries lend e-books too.
Among adult Americans, the Pew Research Center found that 76% of those surveyed read—not merely purchased, but read—at least one book in 2013, though this included audiobooks. The mean number for adults was 12—a book a month—with a median of five. It is hard to imagine someone who reads a handful of books a year, some of them likely borrowed at no cost from a library or a friend, purchased cheaply as a used title, would add $100 to $120 of yearly expense for a subscription offering. People do not spend rationally, but such an outlay has to provide a compelling utility. Amazon's Prime service came with free, faster shipping, then added a set of streaming video, and a surprisingly Kindle Unlimited-esque service called Kindle Owners' Lending Library, all to justify the $99 price (recently up from $79).
Should the most avid readers switch to subscriptions, this could cut at the root of revenue for both publishers and authors, reducing the number of titles that appear. Or it may shift yet more power to Amazon, which has in-house publishing imprints. But what people want to read should provide a strong market force. Publishers already wary of Amazon during its brutal Hachette negotiations may be disinclined to grant more power to the firm by allowing their catalogues to increase the volume of volumes on offer.
Netflix, Spotify and their ilk made the argument that people constrained by cost would watch and listen more with a flat fee for streaming, and that a sufficient number of subscribers would provide the right revenue for their operations and for content creators. This is proving true for video; for music, it has proven trickier. What this economic argument means for Amazon is trickier still, because there is so much more to the e-book economy than some are reading into it.
