Found this on an Authors site, Great question for the worlds readers.
Would you use a business for reading books that was set up like Netflix is for movies?
A monthly fee to read all the books you desire?
Read this professional look at this idea, would you the customer benifit? yes.
But would the Author or Publisher system benifit or end up producing for virtually no incomes for the years it takes and efforts of many to produce a great book?
Read it, and comment what you think, feel about this possible future for book readers.
Association of Authors' Representatives, Inc. - All You Can Read
25 Mar 2014 10:01 AM | Brian DeFiore (Administrator)
There has been an awful lot of talk recently (and several million dollars invested, I imagine) concerning a subscription business model for publishing. The intent is for someone to create "the Netflix of books," (I'll call it NFFB) which several different start-ups are claiming title to.
The question for us as agents, of course, like in everything we do: Is such a thing good for our clients, the authors?
I frankly don't see how it can be.
I think it's pretty obvious: Let's say a consumer can buy access to all the books they can read in the course of a month for, say, $10. That's the price point that seems to be the 'sweet spot' at the moment. No one is charging more than that for a subscription service, and it's hard to imagine in fact that the price won't drop as competition mounts, as it has done at Netflix and virtually every other digital subscription business.
The same $10 can buy you one e-book. Or fewer than one trade paperback. Or less than half a hardcover.
I have heard (but have not yet seen on royalty statements) that publishers who are participating in these programs are being paid for each loan (and are they technically loans or purchases?) as if it had been an e-book purchase, and that they are in turn paying authors the full digital royalty that would be due if the subscription copy had actually been bought at retail. If that's true, in the short term, no terrible damage has been done to our clients. In fact, it might well be a plus. More consumers being drawn into the book marketplace thanks to the lower pricing model. And the publisher and the author get paid as if the book had been bought at full e-book price. Enticing...
But how can anyone believe that this model is sustainable for the long term? If a customer reads more than one book a month (or maybe two if the books are low priced), the subscription service loses money. And if that customer is not going to read more than one book a month-- then why join NFFB? There's only one way this works: the 'gym membership' phenomenon: the majority of people who sign up and pay their dues don't use the service much (in this case, an average of less than one book a month) and their negative usage is more than the positive usage by the power readers. If so, the service makes money in the aggregate.
So it seems to me that, sure-- maybe NFFB will bring in some new customers who think that they SHOULD be reading and would like to read more. They pay their $10 a month and buy three books a year. On those customers, the service has made money and if they can sucker in enough of those people their model has worked. The customer has gotten $30 worth of books for $120. But at some point the consumers drop out when they realize how little they are getting. Maybe it takes a year, maybe two, but if they are spending for a service that they don't use enough, at some point they will wise up. In the gym membership business the consumer base, seemingly, never ends: not only does virtually EVERYBODY want to get fit each January... the same people often re-sign year after year, or every other year, hoping that this will be the year they stick with it.
But is the same thing true of readers? This is what really scares me about this model. I've been in the business quite a long time, as have most of you in the AAR. And I think it's profoundly naive to believe that the market of readers in this country is endless. The reading of book-length material has always been one that has a relatively small and intensely devoted customer base, and in particular when compared to the true mass market media businesses: movies, television, music. We all know this: we are THRILLED when a book sells a hundred thousand copies. In those other businesses, executives would lose their heads for sales at that level. Books are simply not a true 'mass' business.
This industry has always been sustained by the relatively small percentage of people who read new books, bolstered by the occasional phenomenon that brings in people who don't normally read books (50 Shades, Harry Potter, Hunger Games etc.) and the deep backlist full of the gems that live forever. It seems to me that this model gives the limited number of customers who buy A LOT of books the ability to do so at a staggeringly reduced cost. Good for them, sure... and for as long as the business model stays the way it's structured now, I guess it could be good for authors and publishers. But how can we trust that the model will stay the way it is now? What happens when a huge percentage of power readers switch over to NFFB and read two, three or five books a month the way that they do now? Those additional sales come out of the retail marketplace, and eat into the profit margin of NFFB. So again, in order to believe this is sustainable you have to believe that either 1) NFFB will continue to grow its customer base indefinitely, making up for the losses on power readers with more and more January gym rats; or, if that's unsustainable 2) they will stop paying publishers full price and then, therefore, publishers will pay authors a lower royalty per read. At that point, either the publishers agree to a new, lower fee structure, or NFFB closes its doors and all their customers are left hanging and angry-- likely to blame publishers and authors for being greedy, which seems to be the default marketplace mood at the moment.
Or I guess there is a third possibility. One of these services gets enough of a market share that Wall Street (or a company with Wall Street money) keeps it operating without it needing to earn a profit. We know how well THAT has served the competitive market for books.
And yes, I know-- NFFB would be good for consumers. And what's good for consumers is always good for business. Isn't that what everyone in the know says? Particularly Wall Street?
Well, I don't buy it. A $99 round-trip ticket New York-Rome would sure be good for consumers. As would a $15 main course at The Four Seasons and a $45 pair of Manolo Blahnik's. But those things aren't happening.
Why? For the same reason $.99 e-book titles are selling fewer copies than THE GOLDFINCH or INSURGENT or THE FAULT IN OUR STARS or SYCAMORE ROW at seven, eight, nine, ten times the price. Because quality books are worth paying for. Consumers care more about the time it's going to take to read a book than about the price they have to pay for it. They want quality, they want sure things, they want an experience that is going to be a fulfilling one. They want to spend their precious time reading the books that they want to read-- for whatever reason. And they are willing to spend more for them.
And also because good things cost more to produce. Yes, we all know that a digital copy costs virtually nothing. But I'm not going to rehash the argument about all the effort and expense it took to get a book to the point that it is ready to be downloaded and/or bought in a retail store. Right now I'll only mention one: the year or two or ten that it took a single creative individual to write it. That author put a huge investment into their own work. Risking their ability to profit from that work on an unsustainable business model seems reckless to me.
We need to protect our client's ability to earn a living from the work that they do, and I don't see how this NFFB model is going to help. In the best of worlds, this model means that most of the income will be coming in great part from people who are NOT reading the books but paying for a service they're not using. Or by investors betting on the misguided belief that the market of readers is endless if only prices were lower. I would love to believe the selling point: that authors' incomes will be bolstered by the massive numbers of new readers enticed into the marketplace by these services. But until there's some evidence, I think the risk is higher than the possible reward. We have had enough trouble keeping the market strong with the downward pressure on prices from e-books and mass retailers. Do we need to throw this dangerous model into the mix?
Would you use a business for reading books that was set up like Netflix is for movies?
A monthly fee to read all the books you desire?
Read this professional look at this idea, would you the customer benifit? yes.
But would the Author or Publisher system benifit or end up producing for virtually no incomes for the years it takes and efforts of many to produce a great book?
Read it, and comment what you think, feel about this possible future for book readers.
Association of Authors' Representatives, Inc. - All You Can Read
All You Can Read
The question for us as agents, of course, like in everything we do: Is such a thing good for our clients, the authors?
I frankly don't see how it can be.
I think it's pretty obvious: Let's say a consumer can buy access to all the books they can read in the course of a month for, say, $10. That's the price point that seems to be the 'sweet spot' at the moment. No one is charging more than that for a subscription service, and it's hard to imagine in fact that the price won't drop as competition mounts, as it has done at Netflix and virtually every other digital subscription business.
The same $10 can buy you one e-book. Or fewer than one trade paperback. Or less than half a hardcover.
I have heard (but have not yet seen on royalty statements) that publishers who are participating in these programs are being paid for each loan (and are they technically loans or purchases?) as if it had been an e-book purchase, and that they are in turn paying authors the full digital royalty that would be due if the subscription copy had actually been bought at retail. If that's true, in the short term, no terrible damage has been done to our clients. In fact, it might well be a plus. More consumers being drawn into the book marketplace thanks to the lower pricing model. And the publisher and the author get paid as if the book had been bought at full e-book price. Enticing...
But how can anyone believe that this model is sustainable for the long term? If a customer reads more than one book a month (or maybe two if the books are low priced), the subscription service loses money. And if that customer is not going to read more than one book a month-- then why join NFFB? There's only one way this works: the 'gym membership' phenomenon: the majority of people who sign up and pay their dues don't use the service much (in this case, an average of less than one book a month) and their negative usage is more than the positive usage by the power readers. If so, the service makes money in the aggregate.
So it seems to me that, sure-- maybe NFFB will bring in some new customers who think that they SHOULD be reading and would like to read more. They pay their $10 a month and buy three books a year. On those customers, the service has made money and if they can sucker in enough of those people their model has worked. The customer has gotten $30 worth of books for $120. But at some point the consumers drop out when they realize how little they are getting. Maybe it takes a year, maybe two, but if they are spending for a service that they don't use enough, at some point they will wise up. In the gym membership business the consumer base, seemingly, never ends: not only does virtually EVERYBODY want to get fit each January... the same people often re-sign year after year, or every other year, hoping that this will be the year they stick with it.
But is the same thing true of readers? This is what really scares me about this model. I've been in the business quite a long time, as have most of you in the AAR. And I think it's profoundly naive to believe that the market of readers in this country is endless. The reading of book-length material has always been one that has a relatively small and intensely devoted customer base, and in particular when compared to the true mass market media businesses: movies, television, music. We all know this: we are THRILLED when a book sells a hundred thousand copies. In those other businesses, executives would lose their heads for sales at that level. Books are simply not a true 'mass' business.
This industry has always been sustained by the relatively small percentage of people who read new books, bolstered by the occasional phenomenon that brings in people who don't normally read books (50 Shades, Harry Potter, Hunger Games etc.) and the deep backlist full of the gems that live forever. It seems to me that this model gives the limited number of customers who buy A LOT of books the ability to do so at a staggeringly reduced cost. Good for them, sure... and for as long as the business model stays the way it's structured now, I guess it could be good for authors and publishers. But how can we trust that the model will stay the way it is now? What happens when a huge percentage of power readers switch over to NFFB and read two, three or five books a month the way that they do now? Those additional sales come out of the retail marketplace, and eat into the profit margin of NFFB. So again, in order to believe this is sustainable you have to believe that either 1) NFFB will continue to grow its customer base indefinitely, making up for the losses on power readers with more and more January gym rats; or, if that's unsustainable 2) they will stop paying publishers full price and then, therefore, publishers will pay authors a lower royalty per read. At that point, either the publishers agree to a new, lower fee structure, or NFFB closes its doors and all their customers are left hanging and angry-- likely to blame publishers and authors for being greedy, which seems to be the default marketplace mood at the moment.
Or I guess there is a third possibility. One of these services gets enough of a market share that Wall Street (or a company with Wall Street money) keeps it operating without it needing to earn a profit. We know how well THAT has served the competitive market for books.
And yes, I know-- NFFB would be good for consumers. And what's good for consumers is always good for business. Isn't that what everyone in the know says? Particularly Wall Street?
Well, I don't buy it. A $99 round-trip ticket New York-Rome would sure be good for consumers. As would a $15 main course at The Four Seasons and a $45 pair of Manolo Blahnik's. But those things aren't happening.
Why? For the same reason $.99 e-book titles are selling fewer copies than THE GOLDFINCH or INSURGENT or THE FAULT IN OUR STARS or SYCAMORE ROW at seven, eight, nine, ten times the price. Because quality books are worth paying for. Consumers care more about the time it's going to take to read a book than about the price they have to pay for it. They want quality, they want sure things, they want an experience that is going to be a fulfilling one. They want to spend their precious time reading the books that they want to read-- for whatever reason. And they are willing to spend more for them.
And also because good things cost more to produce. Yes, we all know that a digital copy costs virtually nothing. But I'm not going to rehash the argument about all the effort and expense it took to get a book to the point that it is ready to be downloaded and/or bought in a retail store. Right now I'll only mention one: the year or two or ten that it took a single creative individual to write it. That author put a huge investment into their own work. Risking their ability to profit from that work on an unsustainable business model seems reckless to me.
We need to protect our client's ability to earn a living from the work that they do, and I don't see how this NFFB model is going to help. In the best of worlds, this model means that most of the income will be coming in great part from people who are NOT reading the books but paying for a service they're not using. Or by investors betting on the misguided belief that the market of readers is endless if only prices were lower. I would love to believe the selling point: that authors' incomes will be bolstered by the massive numbers of new readers enticed into the marketplace by these services. But until there's some evidence, I think the risk is higher than the possible reward. We have had enough trouble keeping the market strong with the downward pressure on prices from e-books and mass retailers. Do we need to throw this dangerous model into the mix?
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