Can a subscription service ever afford romance readers?
In the space of a month, Scribd dropped over 70% of the romance catalog and Amazon retooled the way it paid authors under the Kindle Unlimited program. Both Scribd and Kindle Unlimited’s movements signaled (to me) that the cost of romance readers was too damn high for these subscription services. Amazon was able to adapt by paying authors less (and I suspect that KU payments will continue to decline overtime) but Scribd’s response was to cut the part of the membership body that was bleeding them money.
For under $10.00, readers got unlimited access to a huge catalog of romances. Scribd paid essentially a full royalty for any book read past 10%. For a book that was $3.99 or more, Scribd would lose money on any reader who accessed more than four books a month because it’s monthly subscription was $8.99. (Assuming 60% royalty, four books would equal $9.58 paid out for one reader).
According to one Pew poll, the typical American reads five books a year. A 2011 Library Journal study pegged the Power Patron as those who log more than 47 books read per year as opposed to the 27 read by the average patron. The Power Patron would check out just shy of four books a month making a Power Patron as someone whose cost would likely just exceed the $8.99 subscription price. Just exceeding the subscription price, however, would be offset by the typical American reader who would only borrow 5 books a year.
The problem is that the average romance reader consumes far more books than 4 books a month. Some romances readers can consume 4 books a week. I read about five D.B. Reynolds books one week. There were also a number of serials on Scribd that I was happy to access and read but would never have purchased because the cost would have been more than I wanted to pay for a single book. And for Scribd, serials probably were an even greater cost. Individually priced serial releases of 8,000 words probably resulted in one “book” exceeding a subscriber’s fee. I suspect serials were a big reason that Amazon moved to paying a per page price instead of a per download price.
In sum, romance readers were on a pace to break Scribd. (How they will deal with comic readers, I don’t know).
Since Scribd moved away from romance readers, I kept thinking about the price point. Is there a price point at which a service could provide a full royalty to authors and still be benefit to romance readers? Probably not. I spent $50.00 last month on 13 books but I read far more. I have a KU account and the benefit of free books. Despite reading fewer books last month due to other things, I still read about three a week. That’s one Scribd subscription a month.
While I’d be willing to pay $50 to have access to anything I want, I have a hard time saying $50 per month for a limited library. Even before the Scribd dramatically cut its offering, there were still several books I wanted that weren’t available on Scribd. Even if Scribd offered a tiered payment service, how many people would take them up on this?
$9.99 is the anchoring price point for streaming services. Netflix is $9.99. Hulu is $7.99. HBO Go is the most expensive option at $14.99 a month. Hulu has an interesting pricing system. It’s $7.99 and then they have “premium add ons”. The only one is Showtime for an additional $8.99. For music, Apple offers a $9.99 individual subscription and $14.99 per month for family access.
Getting anyone to pay more than $14.99 for books is unlikely.
The only other option for a subscription service is to pay the creators less. Amazon changed the way it paid KU authors from per download to per page read. The amount authors are expected to receive per page is approximately .0056. Netflix licenses content for a fixed fee and it’s suspected that Amazon does the same for the Amazon Prime movies. It’s not feasible for subscription services to pay per download. Subscription services for books are likely stymied by existing contracts between publishers and authors. For individual self published authors, a potential solution is to offer a per book flat fee, i.e., $100 per year to offer a book for unlimited downloads. Unfortunately, I don’t foresee this happening in the near future.
And I wonder whether anyone but Amazon is going to be able to afford offering a subscription service to romances readers. We just consume too much.
I suspect it’s not possible for subscription services to really serve romance readers (and I’m also puzzled at how they’ll deal with comic readers – at the height of my comic book addiction I was reading at least 20 books a week). The type of super fast dedicated readers that a book subscription service appeals to, are exactly the readers that are too expensive to maintain.
JA Konrath has some interesting comments on his first months KU results:
http://jakonrath.blogspot.co.uk/2015/08/konrath-kindle-unlimited-numbers.html
I’m not sure book subscription services are really sustainable at all.
The people who read five books a year will never join. While they’ll get a number who read two or three books a month, those will be outnumbered by those who read four or more a month because they’re the ones who’ll generally view it as a great deal.
And when they take steps to deal with the problem, the last group will probably be the most vocal about their annoyance, scaring off a number of new potential subscribers.
I could just about deal with the reduced romance offerings on Scribd, because it’s so useful for other books. But it is close to losing me because of a new ‘feature’ of it’s app on the iPad. When browsing landscape, when you go to the description of the book it reverts to portrait. Very frustrating if you have a landscape type case, as I do.
I asked Scribd about this, (aka complained) and they said sorry, no ETA on fixing it. I complained again, still the same, and were basically like, whatever.
Doesn’t say much for their attitude towards customers. Perhaps it says something about the sustainability of the model overall too, that they cannot afford to spend time getting the app right for a key device like the iPad.
“Amazon was able to adapt by paying authors less”
You should have waited a couple days before posting this, because the facts don’t support your premise. (It’s much more complicated)
Konrath shared his earnings yesterday (they went up). Another author reported getting an average of $2.68 for each time her novel was read. That is double what she would have earned under the old system.
On the other hand, as I sit here writing this comment I realized that there is another way to do the math. If one applied the 10% rule to her earnings rather than assuming a book was read cover to cover, then she only earned 27 cents per read.
One could choose one figure over the other, or one could split the difference. The last option would result in a slight increase in the average payment.
But it doesn’t matter which one you choose, because my point is that it is much more complicated. The change in the payment system can’r be summed up in such a simple statement as “paying authors less”.
Just FYI, the new payment system for KU was a significant improvement for me in July.
@Lexxi – you are still paid less than a full royalty which is what Scribd was paying. And Amazon is able to keep tweaking its payments to self pub authors to fit whatever monetary scheme that works for them. A new entrant into the field like Scribd and Oyster was attempting to be can’t play by those rules/terms. Thus a robust subscription model that includes a broad scale of offerings like what Scribd had before the reduction is unlikely.
Given the amount of money scribd WAS saving me vs buying – I think I would be willing to Pay $15-20 a month – as long as the same library was available. I was reading between 10-15 books a month. I found many of my favorite publishers were putting their new books on scribd within a few days of release and instead of having to decide whether to spending the 4.99 – 6.99. Also, I was reading many many new authors and gloming all their and my favorite authors backlists. However, I the past two months, I’ve read three books off scribd due to its limited selection. So, I’m giving it two more months then will probably cancel my subscription unless I start using their audiobooks more since their selection isn’t worth the money and frustration.
@Eve – Their CS has aways left something to be desired. It’s hard to get a real answer from them.
And another thing:
There’s no evidence to support or refute the premise that Amazon can’t afford to support romance readers (aside from the fact that they keep increasing KU funding, which suggests that they can afford it). The stated reason for the switchover was leveling the playing field, not the reading habits of romance readers.
In short, the only evidence that a sub service can’t afford romance readers is Scribd. On the other hand, Oyster apparently can afford romance readers. The latter service didn’t shoot itself in the foot by recruiting said readers.
The real problem has to do with how the various subscription services are compensating the authors. The change at Scribd had nothing to do with the change at Amazon because their payments for stories read worked very differently.
Scribd was paying the author the full retail price of the book/story for each reader. When high-volume readers, like the passionate romance or erotica readers, took advantage of of the service, that resulted in too high a cost to be sustainable for Scribd. Their solution was to drop most of the category that was costing them unsustainable charges. The problem for Scribd is just as you point out, the people most likely to subscribe are those interested in high-volume reading and if Scibd doesn’t have what they like to read, they will stop subscribing.
Amazon’s first version of Kindle Unlimited, which paid authors from a relatively fixed “pool” based on a reader reaching the 10% point in a story. That avoided the cost situation that Scripbd faced. Amazon was only on the hook for that fixed pool no matter how many books the subscribers read. The downside was that with high readership of all the books in Kindle Unlimited, the payments to authors became smaller and smaller. Further, with that payment being triggered at 10% of the story, there was an incentive for authors to write short (and often very short) stories for Kindle Unlimited to trigger that threshold after only a couple page turns. During that time, Kindle Unlimited became the best-paying market for short stories or children’s books that authors had ever experienced.
The new rules for Amazon’s Kindle Unlimited changed so that while still paying from a relatively fixed pool, the payment was determined by the pages read (and Amazon came up with a standardized Kindle Edition Normalized Page Count, KENPC to go with that) and simply divided the pool by total pages read in that month. That removed the incentive to write short works that quickly triggered the payment to the author, but it also hurt those short story and children’s book authors who loved the previous system. Under the new payment system, some Amazon authors find that they are making more when a Kindle Unlimited author reads their entire story than when they sell that same story. in this new system, Amazon is rewarding authors for writing page turners that readers keep reading.
That “fixed” pool for payments from the Kindle Unlimited program is the key to things working for Amazon. There is no open-ended payout going to authors as happened with Scribd. The downside is that if Kindle Unlimited becomes more and more popular the payments from that “fixed” pool don’t increase and the authors get paid less and less. In reality, Amazon has been increasing that pool every month and was trying to keep the per story payment under the previous system in a small range of payment (about $1.50 down to $1.35) and, though the new Kindle Unlimited payment system has only been in place for a month, it is expected that Amazon will do similarly with the payment per KENPC pages read.
Whew! That was a long response, but I hope it was of some interest to the readers here.
I’m really disappointed about scribd. I love harlequin categories but now that most of those are $4.99 I just can’t read them like I used to. $5 for a book that honestly often turns out to be mediocre and that I can read in 2-hours just ain’t gonna happen. Scribd had such a large selection of them and it was perfect. Almost my entire library is gone now though. So disappointing. I get the pricing problems, but unless the publishers find new models that won’t bankrupt me for a month of reading I’m going to have to go back to getting most books from the library, which means a lot less romance because my library just doesn’t have a ton.
@JR Holmes – thanks for the comment. I think the key here, though, is that subscription services really can’t afford to pay full royalties and still serve the romance crowd. KU works for some authors but not all and does not include the majority of the content that many romance readers would like to see. That is probably the result of the requirement to be exclusive, the reduction in overall payment per book read (at $1.50 to $1.35 it is still below the 70% royalty payment). Unfortunately at Amazon, they are really pushing KU and rewarding KU books by increasing their visibility.
@Jane:
Jane, that isn’t correct. With the per KENPC page read, many authors are have found that they are making more per book then they do via a sale on Amazon. Just for example, we had someone with a longer work that they were selling for $3.99 on Amazon (which results in about $2.80 going to the author). The KU payment for their first month under the new system was $0.005779 per KENPC page read and, in this case that worked out to about $3.40 for people who read the whole book.
Now, I’ve said that sort of payment wasn’t good for Amazon and suggested that Amazon MAY change that in the future to the payment being as shown per KENPC page until it reaches the level of a sale and then stop there.
@Jane: I guess I prefer to look at the big picture. Does it matter if I’m paid less per book if more people are reading it and my income increases and I grow my readership? I think that’s a win not a fail.
As far as subscription services being sustainable. I think its too early to tell. I’d like to think they’ll work something out. A lot of the traditionally published books on SCRIBD are old back list titles. I’m willing to bet publishers haven’t made money on some of those titles in years. Amazon has though. They figured out how to make a cut of used book sales a long time ago. You’d think the publishers would see subscriptions as an alternative to losing out completely to a used copy sold on Amazon or in used books stores. Maybe it would be worth it to them to take a reduced amount from the subscription services for a book they would otherwise make nothing on.
And as far as Amazon tweaking how I get paid, I knew that going in. Enrolling in KU was an option and no one held a gun to my head. And I think it’s funny that the people gaming the system to increase their profits by uploading a lot of short stories are outraged because Amazon changed the model to increase Amazon’s profits. Whose playground do they think this is?
And then there is the question of whether a read at a subscription service DESERVES a full royalty payment to an author. The reader hasn’t bought the book and it is unknown what payment would be generated if that same reader read the book again.
If re-reads generate a second payment to an author would a less than full royalty payment be fair? Where would be the line for that?
I haven’t seen anything specific about that at ANY of the subscription services, but it would be interesting to know.
Author Rachel Aaron posted her numbers for the new KU on her blog yesterday: http://thisblogisaploy.blogspot.de/2015/08/lets-talk-numbers-its-official-if-you.html
She gives a very detailed breakdown of her earnings and how they compare to her earnings under the old system – the new KU is very much an improvement in her case.
It’s definitely worth a look. She writes SF/F, not romance, but that doesn’t change the math.
The only thing you said that makes any real sense in relation to the headline is the second to last paragraph. Yes, subscription services are a TOTALLY different business model and most authors go into KU understanding that, so I fail to see how this can’t “afford offering a subscription service to romances readers.” The pages-read model doesn’t treat romance books any different from any other book and romance READERS can consume as many books as they like in KU (those books enrolled in the program). Just because Amazon does not do business the same way as Oyster or Scribd doesn’t have any impact on Kindle Unlimited. Amazon set up the model, they offer it to both readers and authors, and those people decide to opt-in or not. There’s not a set of rules for subscription programs and Amazon is taking advantage of that. It’s a different income stream for authors and not the same as selling books. I think the sooner authors see it as a different entity altogether, the better they’ll feel about the change of the marketplace. Yes, not every book is offered on KU. Not every movie on DVD is offered on Netflix, yet people still love Netflix because if you want those DVDs you can pay a little extra to get them (this is analogous to just buying those books you want that are not in KU).
I believe we do need to treat subscription services differently, not only for the writers but for the readers. I have a KU subscription. I got it recently in part due to a good price, but also to allow me to sample new-to-me authors at low risk. Previously, as a book purchaser, I was frustrated by the advent of serials, many of which were as few as 30 screen pages long, that were being sold as “books” at prices as high as US $4.99 each. I stopped buying anything serialized as I realized they arose from people trying to game subscription systems. They had the right to do that. I had the right to avoid that.
But one thing that isn’t yet clear about the subscription models is how they correlate to sales. I don’t think they do, in the same way that not finding a movie on Netflix doesn’t automatically mean you go out and buy it. Subscriptions are just another means of getting product to an audience.
No matter what, everyone works to move the system to their advantage. Authors write in a way that gets them more money. Readers find the cheapest way to get books, whether that’s through the library, buying used, etc. And publishers and distributors will work their creation and distribution methods to give them a profit and a stable basis. All of this is just like any other business.
After all, Harlequin thrived on print subscriptions sent to people’s homes.
I’m not an author, just a reader, but I did wonder about Scribd paying full whack for a read. As a reader, I didn’t own the book and 95% of the books in my Scribd library have gone poof! It seems as if all those authors/publishers were paid the same as if I had purchased the book (where I would own it and still be able to read it) the they did ok out of the deal? I would have expected something more like a library payment model (though I have no idea how libraries get paid).
I do know I was very unprofitable for the service. Rough numbers, it looks like between Feb and Aug I read about 150 books on Scribd. Most of them disappeared on Aug 13th and I’m waffling over whether to cancel or hang on a few months to see if it’s still worthwhile to me.
The iPad bug is driving me spare, though.
Why do you always think of something else to say 2 seconds after you hit post?
If the KU changes discourage authors from posting 40 page ‘books’ that end on a cliffhanger I’m 100% behind them. I’m careful to check these days, but I’ve really been annoyed by those when I don’t expect them.
In the third paragraph, I think you meant to say that Power Patrons check out four books a month (not a year).
@Susan – yes, you’re right. Thanks.
@Sj Pajonas – your argument and others pertain to self published authors and I read a lot of traditionally published authors which was why I preferred the Scribd offerings. They had a great mix of trad and self published offerings. The revision to the KU model indicates to me that a per book model isn’t viable as payment method which means a subscription service must either license (for a catalog of offerings) or do something akin to what Amazon is doing. Plus, Amazon can tweak the KU at any time per the terms of its KDP Select agreement with authors. Existing trad author deals don’t have that in their contracts with publishers. I don’t even think new ones do.
For a subscription service to be viable for romance readers, I think it has to include publishers like Harlequin, Avon, Berkley/Jove/Signet. Even KU is missing major self published names.
@Jane
Subscription services are *rental* services.
Readers are only paying to read, they do not receive any property rights in return.
Authors in subscription services aren’t selling anything so why should they be paid sales-level payouts?
You mention Netflix and Hulu and neither pays out sales-equivalent money but you don’t see the studios crying because they understand that subscriptions are added income atop sales, not another sales channel.
I understand that, unlike music and video, books don’t have a deep history of rental services to compare payouts to (you have to go back to the mid-19th century to find commercial lending libraries in the US) but expecting sales-equivalent income in any other rental business would get you laughed out of town.
It can’t even be argued that subscriptions are cannibalizing sales because there is both anecdotal and published survey reports that show subscribers keep on buying ebooks, usually more than before.
As Hugh Howey’s recent report on his own KU experience points out, subscriptions are a marketing tool that pays the author for promoting their brand.
My own take is that subscriptions serve the same purpose as permafree but generate income while boosting visibility. (As long as the other essentials are met: good cover, blurb, writing…)
Finally, as Nate pointed out above, the KU2 payouts can range from 27 cents to well over two dollars depending on assumptions about checkouts. Which are interesting numbers because published reports have pegged traditional Harlequin *sales* payouts as low as 25 cents and the recent lawsuit identified an entire class of authors that were getting payouts well below 25 cents.
KU is not for everybody and results will vary and I’m not sure every author should put *all* their titles in KU, but rotating a representative set seasonally? Wouldn’t that beat permafree? Or even long free promos?
As Nate said, KU is complicated; it is an entirely new business model alien to publishing which hasn’t seen anything like it in the US in almost two centuries. But just because it pays out differently is not enough to say it pays *Authors* less. Not when a good chunk of scrubs and oyster titles are traditionally published and those authors only get a fraction of the rental payout. (Yes, that too is complicated.)
As for Scribd’s pruning of romance titles? Wait a while; they’ll be pruning SF&F next. And mysteries after that.
The issue Scribd faces isn’t (just) that romance readers are voracious, it is that subscription services strongest appeal is to heavy readers of all kinds. They also appeal to open-minded readers willing to try out new-to-them authors, especially when the monetary risk is low.
To your headline I would say that (unconstrained) subscription services can’t ever afford heavy readers of any genre, so long as they pay near-sales level for rentals. Especially in services stocked with traditionally published titles where there are too many intermediaries grasping for their share of the loot.
That does not mean that *other* kinds of subscription services (quite a few are being floated in Europe) might not be viable. But in this case “other” requires a full re-think of what the service is to offer, to whom, and at what price. And, let’s face it, the publishing establishment isn’t exactly fond of re-thinking anything these days.
Subscription services are by nature complicated, whether for music, video, or books.
Trying to run one without thinking things through is just a waste of venture capital.
I’m curious about something: I haven’t noticed any difference in my Scribd Romance offerings lately, my library is still there and they still recommend me a bunch of stuff. Now I’m wondering if I just got lucky in my preferences or if there’s any difference in the offerings in different countries (I’m from Brazil). Anyone has info on this?
I looked into it and found some info about their strategy in Australia that mentions a specific australian catalog so I assume it varies according to country, but I don’t know by how much. The only time I noticed any difference in the catalogs was when I tried accessing an audiobook and Scribd said it wasn’t available in my country (the ebook was, though, so I assumed it had something to do with different licensing in audio format).
As a primarily romance reader, I really enjoyed the access Scribd gave me to e-published short stories and novellas. In six weeks, I finished 40 titles on the service (many of them shorter works not available in traditional print). I’ve now lost over half my library on Scribd. I’m staying with the service until I finish out those books which are still available, but then I am reassessing whether to keep the subscription. As another wrote, I’d be willing to pay $20/mo or accept a limit on the number of books from a particular genre to have access to the catalog Scribd had. I can’t find many of those I enjoyed on Scribd through my public library, and while I want to read some, I have no desire to own them (especially as I can’t really lend an ebook to my friends). Amazon is out – too many customer service problems. Are there any other online subscription services for romance readers?
I read between seven and 21 books a week. A lot of them are rereads as my “appetite” for new fiction can’t be fulfilled with newly published material every week. I cancelled both my Scribd and my KU accounts. I can go back at anytime with KU and might in the future. Scribd took almost 85% of my library out when they discontinued romance. There is no way that Scribd saw me coming. It was great using it while it lasted.
I am an extraordinarily high volume reader. I am sticking with Scribd for the time being, because I am a heavy reader in other genres (YA, SF/F, historical fiction) as well as romance and the selection in those genres remains good. After thinking about it a bit, I think part of the reason Scribd had troubles (and needed to jettison so many romances) is that it was insufficiently strategic about its offerings; it just threw a bunch of books up there, as many as the publishers/authors would allow (*many* of them brand new releases as well as popular backlist) and invited us to gorge (and we did, and it was wonderful for a year or so!). Now, Tor (an SF/F unit of Macmillan) basically seeded Scribd with the first volumes of many of its popular series. That’s strategic; it forces me to buy (or borrow elsewhere) books 2-N if I like book 1. It also benefits Scribd, because fantasy/SF books take me longer to read than romances. And it forces me OUT of the service to keep gorging on that one series (i.e. fewer costs to Scribd than if I read Scribd offerings and nothing else). *If* these subscription services can become more strategic (and this will probably involve working with publishers on curating the collection better) they have a chance of lasting. I hope they will last. I find them a great value.
For what it’s worth, the comparison to costs for Hulu/Netflix/etc. are a bit different, because a movie streams at a constant rate–it’s pushed out to the viewer at one second per second (more or less) while books can be read at varying rates by the reader. That means there is an upper limit on the movies that can be streamed in a day, while the upper limit on the number of books that can be read in a day….well, it’s probably, given that these services now offer children’s books, in the low double digits…
Scribd stopped stocking Dreamspinner and Samhain books which took out over 95% of my library. I also notice that, of the 5% left, if I go to Amazon or ARe, a lot are free books. And I think they took out all the Harlequins as well, but I’m in the UK so I never had access to those.
As an no-name self-published author, I look at how subscription models work on reader behavior. It’s tricky to get readers to pay money for books by authors they have not read or even heard of before. On the other hand, just giving a book away does not work all the time, because there is no incentive to read the book right away, and after a while you forget you have it.
A subscription model can overcome this barrier because the user has paid money to read books, but if she doesn’t like one, she can dump it and get another one. The 10-at-a-time limit Kindle Unlimited imposes actually furthers this because it encourages readers not to wait to read the books they have,
eBooks are different from print because (absent any fudging on the reader’s part) the vendor can tell how far the reader got into the book. In some ways, the new KU model is a stroke of genius because it provides a reward to authors who write readable books and a disincentive to participate to authors who write less enthralling books. The authors assume the risk, not Amazon.
In romance, are voracious readers actually finishing all the books they borrow? Some probably are, but I will bet some start a book, get bored– or mad when the hero is too much of an alphahole– and stop. So maybe the page-count thing is a way to make the subscription viable for romance readers? Or possibly a service like Scribd could offer tiers of subscriptions: $X for 10 books per month, $Y for 20 books, and so on. I don’t think we have seen all the possibilities where subscriptions are concerned. It seems too incredible to think that subsections can’t work for those who want them most.
@carmen webster buxton:
Oh, yes, I often don’t bother finishing a book that bores or angers me. That’s true across genres. I think page count is a better way of reimbursing authors/publishers–I think 10% of a book is low for full royalty. by 10% I am not always sure about whether I want to go on with a book or not.