July 22, 2014

What do new enterprises such as Scribd, Oyster, and Kindle Unlimited tell us?

First, they tell us that the subscription service model makes at least some sense both to aggregator and consumer. (Although I continue to find Total Boox a fascinating alternative.)

Second, they tell us that since the Big Five don’t play in any of these models, a new market is emerging. There’s no shortage of content—Amazon’s seems to be the largest at over 600,000 titles, but that’s the size of a pretty good-sized library. I predict that the discrepancy between the number of titles published by the Big Five and outside the Big Five will continue to grow.

That new market—midlist, indie, and self-published ebooks—has several characteristics. For one thing, as many readers are discovering to their surprise, it comprises a lot of well-known and experienced authors. Sometimes, established authors just want more control over their content. Some fine authors have been dropped by publishers because their second book didn’t meet sales expectations. Sometimes, authors are simply reluctant to hand over the lion’s share of the revenue to the publisher. In legacy publishing, authors make around 15% of the sale; in digital self-publishing, up to 75–85%. As a consequence, it’s an easy prediction that more and more authors will choose to go the indie route. And indeed, we’re seeing a rise in the number of bestsellers coming from outside the legacy houses. The new market is gaining legitimacy through demonstrated public demand.

By the way, it isn’t clear that the author will make significant money under the subscription model, particularly if Kindle readers read a lot, and many of them do. But this is the pot calling the kettle black; the library argument has always been that we provide exposure to the author, not a reimbursement per use.

The bottom line: Legacy publishers aren’t just isolating themselves from the library market through their pricing models; they are missing out on an emerging audience. This is an excellent strategy to feed the competition. And I predict that it will continue.

JAMES LARUE (jlarue[at] writes, speaks, and consults about the future of libraries.