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Subscription ebooks: Amazon's new foray into chainsaw juggling
Amazon's talking to publishers about a "digital library" or subscription ebook service, like Netflix. I like the idea; I can't see it working, at least, not soon.
Movie contracts have had, for many years, a provision for royalties for broadcast; adapting that to paid-subscription broadcast instead of open-public broadcast is a lot simpler than creating a provision for broadcast from scratch. Book publishing contracts generally don't have a clause about rental royalties--because when books are sold, the new owner can rent them any way they want. Selling digital access is a licensing fee that doesn't fit the standard contract structure, and authors are likely to be suspicious of whatever they're offered.
Especially given the bad accounting and rights grabs and bizarre royalty change demands that publishers are often prone to; authors have little incentive to just agree to whatever terms publishers suggest for subscriptions.
It's not an impossible situation--everyone would like ebook subscriptions to be available, and that's a strong motivator to find terms that authors, publishers, distributors and readers all agree to--but it's an entirely *new* economic and technological model in an industry that's known for "this is how it's always been done" contracts and digging in its heels to avoid new technology for as long as it possibly can.
While there are indeed several kinds of options for subscriptions, and some of them already work with books ... those are niche groups with a specific pool of books to start with, not pitched at the general public. For a larger-scale rental/subscription system, they'll have to juggle a whole swarm of competing factors, and some of those factors have sharp edges.
Some hard limits:
Readers will pay maybe $10-15/month for content. Whether that's a limited pool ("up to three books per month for $10/month") or an unlimited all-you-can-read from the basic catalog, or some kind of crossover, doesn't matter. The sweet spot for subscribe-to-entertainment is between $5 and $20 a month, and for $20 they'd have to provide a side of dancing boys and chats with pornstars. Which some MMORPGs can offer; ebook publishers can't.
The service provider--Amazon, in this hypothetical case--is going to insist on a percentage, quite likely a substantial one like 25% of every subscription. More, if they think the software is going to take real time to create & maintain. Author fees & publisher profits have to come out of what's left.
Authors are going to want to being paid for every reader who reads their books, not an amorphous percentage-of-subscriptions. (Whether they can insist on this is a separate issue; they'll at least make noise about it.) Some authors will refuse to go along with the game, and if they're influential enough, the whole thing could be scuttled.
Publishers are going to scream about the importance of DRM. Most readers won't care--but those who can't read the way they want to, won't subscribe. While the number of cloud-based devices is going up, I don't think it's high enough yet to support a business model that's going to have a high number of technical & legal setup problems. (Notice how Apple is *not* releasing any iBookstore sales numbers?)
Someone has to pay for customer service, because (1) all software has the occasional glitch or bug and (2) some customers are idiots, and it doesn't matter whether the customer utterly failed to follow basic instructions; bad PR from idiot customers is just as damaging to future sales as bad PR from customers who were paying attention. So customer service will have to accept a certain level of "oops, I didn't mean to click that button; uncharge me for that" and "whaddaya mean, it now only works on my cousin's iPhone? No! I was just showing her how it worked, not signing her up! Fix it!" They'll also need to deal with actual tech problems--server hiccups causing lost books/deleted registrations, outages resulting in irate customers (who will not care if the contract terms allow that; they won't *renew* if they're not getting what they want to pay for), and of course, poorly-formatted books--something Pandora doesn't have to deal with.
I like the idea of ebook subscriptions; I don't see a way to make it work like Netflix or Pandora.
Movie contracts have had, for many years, a provision for royalties for broadcast; adapting that to paid-subscription broadcast instead of open-public broadcast is a lot simpler than creating a provision for broadcast from scratch. Book publishing contracts generally don't have a clause about rental royalties--because when books are sold, the new owner can rent them any way they want. Selling digital access is a licensing fee that doesn't fit the standard contract structure, and authors are likely to be suspicious of whatever they're offered.
Especially given the bad accounting and rights grabs and bizarre royalty change demands that publishers are often prone to; authors have little incentive to just agree to whatever terms publishers suggest for subscriptions.
It's not an impossible situation--everyone would like ebook subscriptions to be available, and that's a strong motivator to find terms that authors, publishers, distributors and readers all agree to--but it's an entirely *new* economic and technological model in an industry that's known for "this is how it's always been done" contracts and digging in its heels to avoid new technology for as long as it possibly can.
While there are indeed several kinds of options for subscriptions, and some of them already work with books ... those are niche groups with a specific pool of books to start with, not pitched at the general public. For a larger-scale rental/subscription system, they'll have to juggle a whole swarm of competing factors, and some of those factors have sharp edges.
Some hard limits:
Readers will pay maybe $10-15/month for content. Whether that's a limited pool ("up to three books per month for $10/month") or an unlimited all-you-can-read from the basic catalog, or some kind of crossover, doesn't matter. The sweet spot for subscribe-to-entertainment is between $5 and $20 a month, and for $20 they'd have to provide a side of dancing boys and chats with pornstars. Which some MMORPGs can offer; ebook publishers can't.
The service provider--Amazon, in this hypothetical case--is going to insist on a percentage, quite likely a substantial one like 25% of every subscription. More, if they think the software is going to take real time to create & maintain. Author fees & publisher profits have to come out of what's left.
Authors are going to want to being paid for every reader who reads their books, not an amorphous percentage-of-subscriptions. (Whether they can insist on this is a separate issue; they'll at least make noise about it.) Some authors will refuse to go along with the game, and if they're influential enough, the whole thing could be scuttled.
Publishers are going to scream about the importance of DRM. Most readers won't care--but those who can't read the way they want to, won't subscribe. While the number of cloud-based devices is going up, I don't think it's high enough yet to support a business model that's going to have a high number of technical & legal setup problems. (Notice how Apple is *not* releasing any iBookstore sales numbers?)
Someone has to pay for customer service, because (1) all software has the occasional glitch or bug and (2) some customers are idiots, and it doesn't matter whether the customer utterly failed to follow basic instructions; bad PR from idiot customers is just as damaging to future sales as bad PR from customers who were paying attention. So customer service will have to accept a certain level of "oops, I didn't mean to click that button; uncharge me for that" and "whaddaya mean, it now only works on my cousin's iPhone? No! I was just showing her how it worked, not signing her up! Fix it!" They'll also need to deal with actual tech problems--server hiccups causing lost books/deleted registrations, outages resulting in irate customers (who will not care if the contract terms allow that; they won't *renew* if they're not getting what they want to pay for), and of course, poorly-formatted books--something Pandora doesn't have to deal with.
I like the idea of ebook subscriptions; I don't see a way to make it work like Netflix or Pandora.
no subject
Er, I'm not sure that's true. I mean I have no objection to them being available but I am concerned about the increasing move over time away from ownership by consumers and towards a rental model for everything. For example, in the UK they have currently amended laws that previously would have made it criminal to copy CDs into digital form for use elsewhere. The reason is because consumers feel perfectly entitled to use whatever they "own" in whatever way they choose and there was no way to enforce the legitimacy of this law onto a vast existing behavior. This argument will lose traction though when people don't actually own anything and have less ability to manipulate what they access.
To me, the rental model is an attempt to reassert a position for labels/studios/publishers as intermediaries between artists and consumers which digital distribution has eroded, and in the past neither consumers nor artists have benefited from these industries controlling the money involved and dictating terms.
In terms of money there's a similar setup to, say, cable vs. On-Demand. If one is an irregular viewer then On-Demand works best. If one is a heavy user or, importantly, in a multiple person household where everyone wants different things, then the cable model is better. So I'd say a rental model works if a whole household is using the account.