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What should independent authors do about Kindle Unlimited and other predatory platforms?

By Blog, Industry

This post originally started out as a comment on Mark Coker’s blog post about the demise of Oyster, but it has actually been brewing for a long time, since the launch of the Scribd and Oyster ebook subscription services and the appearance of Amazon’s predatory Kindle Unlimited subscription plan. I’ve decided to expand my thoughts on the In 30 Minutes blog and seek feedback from writers.

I have long thought that in the battle of the platform marketplaces and their business plans, the content creators — whether they be musicians, filmmakers, or authors — seldom get a seat at the table. We have seen this happen with Spotify, where artists get scraps while the platform owners and investors (including the big music publishers) grab money and control. Following the launch of the Oyster and Scribd ebook subscription plans, I wrote:

“As for the venture-funded book subscription services, I’ve taken a look at Scribd and read some of the recent news about Oyster, too. I find it very telling that Scribd.com heavily promotes unlimited books for readers, and offers resources for publishers and partners, yet there isn’t a single page in their support section that explains to authors what they will be getting from the service. Clearly, authors are not a priority.”

Amazon Kindle Unlimited buffet - Depolo_cc_2-0_attribution_flickrAlthough Coker was eventually able to get a reasonable rate from Scribd and Oyster for authors participating in his Smashwords distribution service, it was overshadowed once Amazon decided to jump in with the Kindle Unlimited subscription plan. It’s cheap, fully integrated with the Kindle, and absolutely terrible for most participating authors. Just like the $10 buffet at the local Chinese restaurant, the cheap, all-you-can-eat subscription plan that Amazon launched requires cheap stuff in order to work. It’s great for readers, it’s great for Amazon, but for the authors and content creators? Not so great. Authors who participate (via Amazon’s KDP Select self-publishing service) are getting crumbs in the form of a per-page reading rate that is the same for all ebooks. In the long run KU is terrible for authors, except for a tiny minority who can achieve scale. This will reduce the size of the pie and leave a lot of talented authors struggling or even giving up.

I think it’s time for indie authors to look at the music and film industries to not only see where things are headed, but what can be done to preserve or strengthen our collective power. Withholding the best content from marketplaces (as HBO has done with Netflix and Amazon Prime, and some artists have done with Spotify) is one strategy, although it’s unclear how effective it can be unless lots of content is withheld and there are viable alternatives for audiences to turn to.

Sharing data and shining a light on the ugly reality of treatment of content creators is another, as artists have done for years with Spotify and Taylor Swift did most recently (i.e., Spotify’s claim it had paid out $2 million, vs. Swift’s revelation that it was 1/4 that figure).

However, one thing artists and filmmakers have been unable to do — in part because of the industry structure involving studios and publishers with misaligned interests — is band together to demand a seat at the table, and fight for their rights. In the publishing world, while some author organizations have taken a stance against Amazon, they represent relatively small numbers of authors. I think there is a huge opportunity to unite the population of indie authors (including self-publisher authors and professionals) who are not represented by these organizations, and are not beholden to the large publishing houses. With a strong voice, the ability to shine a light on the good and bad players in this industry, and the power to issue recommendations, it may be possible for independent authors and other content creators to finally get a seat at the table or take action when platforms behave badly.

What do you think? Is this an effort worth pursuing?

(Note: This post reflects my views only. I welcome dissenting views and discussion in the comments below, but please be respectful)

Image: Chinese Buffet, Steven Depolo/Flickr, used under Creative Commons 2.0 Attribution license

Authors as an afterthought in the ebook subscription marketplace

By Blog, Industry

Last October, I wrote a blog post titled Scribd’s ebook subscription service: Why authors should be skeptical. The post generated a lot of interest. However, I was limited by a lack of information — at the time, neither Scribd nor Oyster (a competing ebook subscription service) revealed what the payout would be for authors. Since then, more information has come to light, including payout percentages for a subset of authors. However, far from making subscription services a slam-dunk for authors, the plans reveal a business model based on naive assumptions about reader behavior and what authors want from digital distribution platforms. The plans may not be sustainable, and authors — whose hard work is required to make subscription services like Scribd work — may end up getting tossed under the bus when financial realities kick in. In this post, I’ll elaborate on these points. As usual, I welcome feedback from readers, authors, publishers, and the subscription services themselves.

Let’s back up a little, and look at the universe of digital subscription services that provide digital media (music, games, video, etc.) to consumers through Internet and mobile connections for a monthly fee. Once they reach a critical mass of content and users, subscription services are great for consumers and ultimately for the people or publishers who control the platforms. Netflix and Spotify are two well-known examples. However, for the content creators, the artists or musicians or actors or writers or whoever, the formulas typically leave them with a very small piece of the revenue pie. Sometimes, it’s just crumbs. That’s because the subscription services usually deal with middlemen – the big publishers, partners, and rights-holders. Their needs get addressed first. As for the content creators, they are seldom given a seat at the table when these models are being worked out.

In the case of ebook subscription services, supporters suggest that the people creating the content (i.e., the authors) care mainly about exposure, or would like data about how readers are consuming their books. Wrong. Authors want sales, and they want to be paid fairly — as they should, considering the content creators are the ones providing most of the value to audiences.

Amazon gets it. (Not anymore: See Amazon’s Kindle Unlimited subscription plan screws self-published authors) They’re not a subscription service, but they created a formula which gives Amazon’s original digital downloads formula gives a fair payout to authors. For every $5 Kindle edition of Google Drive & Docs In 30 Minutes that Amazon sells to U.S. customers, the formula works out so Amazon keeps 30% (about $1.50) plus a digital delivery fee that’s a little over 40 cents per sale. My company i30 Media gets the rest, which works out to just over $3, or more than 60% of the price.

When I think about the problems that book subscription services might encounter a few years down the road, I look at Spotify. The music subscription service is a global hit with consumers, yet recording artists get a fraction of a cent per play. There’s a reason why some bands are refusing to join, or severely limiting their catalogues — they’re not getting fairly paid, and it cannibalizes sales elsewhere.

As for the venture-funded book subscription services, I’ve taken a look at Scribd and read some of the recent news about Oyster, too. I find it very telling that Scribd.com heavily promotes unlimited books for readers, and offers resources for publishers and partners, yet there isn’t a single page in their support section that explains to authors what they will be getting from the service. Clearly, authors are not a priority.

One thing these platforms need right now is content. So the subscription services are going to the middlemen — big publishers and other platform owners. Mark Coker, the CEO of the independent self-publishing service Smashwords, cut a deal that places its premium authors in the Scribd service. On his blog, he said that Smashword authors “will earn 60% of the list price on all sales” as long as 20% of the title is read (note that it’s not clear what other authors and publishers are being offered by Scribd).

I have a lot of respect for Mark, yet he admits that the model only works “if most readers read in moderation.” What if they don’t? What if readers pile onto the service, and are heavy consumers, just as they do with Spotify and Netflix? If that’s the case, Scribd can kiss its margins goodbye. Then the pressure will be on from investors to rejigger the payout formulae. Guess who will get the short end of the stick in that scenario?

Oyster books

Oyster was profiled in the NYT a few weeks ago, and they suggested that an “easier” reading experience will attract readers. Baloney. Superior content attracts readers. And an easier reading experience on an app is only a competitive advantage when there is no competition. The problem is, there is a lot of competition. Device makers (Amazon, Apple), other platforms (Scribd, Nokbok, etc.), and other app developers will quickly catch up.

Another thing these subscription platforms haven’t considered is the impact on digital sales elsewhere. If I’m telling audiences through my marketing and distribution channels that they can buy a half-dozen of my ebooks through Amazon for $25, or they can get access to all of them plus a couple thousand more for $9 or $10 per month, which do you think they’ll choose? Oyster is even offering a free trial right now, which gives another reason for readers not to buy those titles that happen to be in the Oyster catalogue — why should they, when they can read the book they want for free, and then cancel the subscription? While authors should receive a payout for each read or partial read on the subscription services, a model based on free giveaways and binge reading is not sustainable. If readers come to expect unlimited books for $120 per year, it reduces the size of the digital books pie and will take sales away from digital downloads elsewhere — just as Spotify takes away business from iTunes digital music library.

So, my advice to any authors considering putting their work in Oyster or Scribd: These services target readers, and ultimately seek to ensure large payouts to investors, platform owners, and large publishing partners. Authors have been treated as an afterthought. I don’t see any compelling reason why authors should rush into any agreement with services that threaten to cannibalize digital and print sales and are unsustainable if consumption habits or subscription revenue fails to meet expectations.

I welcome your comments below.

The “Spotify for books” model: Great for readers, terrible for authors and publishers

By Blog, Industry

I am a fan of Spotify, the streaming music service that offers millions of tracks for free over the Internet. As a listener, I love the ability to find old favorites or discover new artists. Having to put up with occasional ads is not much different than listening to radio. If I had more disposable income, I would pay the $5 monthly fee for Spotify Premium — which does away with the ads and lets you download music to portable devices, like iPods and mobile phones. Would I be interested in a Spotify for books? There are such services popping up, like Bookboard for kids books and 24symbols in the U.K. for adult readers. Amazon also offers free downloads for some ebooks.

As a reader, free books are very appealing. I already use the library to borrow books, and the idea of getting free ebooks on my iPad or Kindle is attractive.

But as an author and publisher (The In 30 Minutes catalogue includes Online Content Marketing In 30 Minutes, Dropbox In 30 Minutes, Excel Basics In 30 Minutes and a Google Docs for Dummies alternative) I’m very concerned about any model that depends on free giveaways that result in little or no returns for the writers and publishers.

Spotify for books and Amazon KDP

For instance, the “free days” on Amazon’s KDP Select (which are the source of the free downloads on Amazon.com) have turned into a joke for me and other authors. KDP Select requires indie authors and publishers to only distribute through Amazon (no iTunes or Nook!) and in return gives them five days every 90 days in which they can price their book for free. The free days are supposed to attract lots of downloads from Amazon readers, while delivering a nominal price to participating authors. However, the last time I looked, my single KDP Select title delivered an average of 1 cent per download from the KDP Select fund. That’s comparable with the money musicians get every time someone plays one of their tracks on Spotify, according to various sources.

I withdrew my single title from KDP Select, and have no plans to use the KDP Select service again — unless Amazon can figure out a plan that brings more than a few pennies each time readers download books on the free download days. The same goes for other services that try to ape the Spotify for books model, or depend on loads of free giveaways. Unless there’s something tangible in it for authors, I’ll pass.