The Subscription Model for Books

What It Means to Publishers, Authors, and Readers

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Subscription book services like Kindle Unlimited give readers "all you can read" access. Amazon

The subscription model for books refers to services whereby the reader pays a flat fee per month and then has unlimited access to the titles on the service. The cost of these subscriptions is especially attractive to avid readers who could spend that for a single paperback.

Made possible by the digital book landscape, the most popular subscription models are Scribd, Oyster, and Kindle Unlimited. These companies began emerging in 2013 on the heels of the popularity of the model for other media — Netflix for TV, film and video and Spotify for music are the two companies most frequently invoked for comparison.

As it was for the music industry, there were fears that the subscription book sales model would be disruptive to the traditional, one-off book sales model.

According to Dan Vidra, in Business Development at Blloon (a nascent reading service now live in the UK), “These models offer a publisher the chance to experiment with a new avenue for author discovery on their terms. Content is king. A publisher can make a specific imprint or genre available, and then gain market insights first-hand.” 

The full impact of this is no doubt still to be seen, but here's an overview:

Limited Publisher Buy-In, Backlist Selection

Despite claims of offering selections of a million titles to close to it, two out of the Big Five publishers — Penguin Random House and Simon & Schuster — have yet to throw their books into the subscription model ring with the major players. This may be because they are figuring out what the financial impact will be and formulate some best practices about — including what books to offer up.

(Or they might be figuring out how to start their own.)

Currently, the selection of available subscription titles is largely backlist — though, with a general "frontlist" window of a year, there are still many bestsellers available for reading. Because big books and big authors entice people to subscribe, the frontlist and bestselling titles will likely be financially strategic bargaining chips in the future.

That said, unless they follow a particular author's new publication schedule, most readers don't have an exact sense of how long a book has been in the market  — old or new, the books are there to be discovered.

Revenue for Publishers, Authors

The most obvious question is how the subscription model affects publisher revenue and author royalties when the reader is paying around $10 for a theoretically unlimited number of books. 

In the traditional model, publishers are paid per book and authors get a contracted royalty rate per book, as well. In the subscription model, as it's been negotiated by at least some of the participating publishers (like HarperCollins), that still holds true — at least for now.

When the subscriber-reader accesses a certain number of pages, a payment to the publisher is triggered — the same amount as if an "a la carte" ebook was purchased (in other words, publishers receive unit sales for the subscription sales). In turn, the author gets his or her contracted ebook royalty from the sale. The folks at Scribd take pains to explain to its readers that authors are fairly paid.

But while publishers and authors will no doubt fight to keep up that arrangement, in his Digital Book World, one-on-one with Mike Shatzkin, founder & CEO of the Idea Logical Company, Amazon.com's Senior Vice President of Kindle Russ Grandinetti subtly mentioned that "hardcovers and paperback books have different royalty rates"… in other words, that discussion is sure to raise its head again.

Note that many indie authors have seen their revenue disrupted by the emergence of Kindle Unlimited and the change in their royalty structures. 

Sampling Books, Discovering Authors

For voracious readers (like many Romance or Mystery genre fans), a subscription book service is a no brainer. And for anyone who reads more than a couple of books a month, the low financial investment might be appealing, despite the limited selections.

And, according to Oyster Editorial Director, Kevin Nguyen, the subscription model has an upside in terms of discovery— the modest cost for  subscriber-reader makes him or her open to dipping into a number of books and authors he or she may not have otherwise tried.

At the Author's Guild event "Navigating the Digital Marketplace: An Author's Guide to New Business Models in Publishing,"  Nguyen explained that the subscription model is creating a "sampling culture." The average subscriber-reader finishes 1 out of 5 books — but this sampling opens the door to the discovery of new books and authors.

Of course, with title counts in the hundreds of thousands and growing daily, new book promotion models will emerge to aid in that book discovery, no doubt at a cost to publishers and authors — as Kindle Unlimited authors have already discovered. 

Read more specifics about Scribd, Oyster, Kindle Unlimited and more subscription services.