Oyster, Scribd, Kindle Unlimited & Overdrive: More Developments in Stream-Reading

Recently, there have been several big changes in the book-subscription-service world.

Oyster, an ebook-subscription service, announced in September 2015 that it would be ending all services in January 2016. In June 2015, the Scribd subscription service announced it would be limiting the number of romance titles in its catalog due to their extreme popularity. Kindle Unlimited has changed the way its authors are paid for their ebooks, from a number-of-books-borrowed to a number-of-pages-read metric.

It is hard to tell how well these services are doing. Statistics are selectively released to the public. Scribd boasts one billion pages read in 2014—impressive, yes—but we don’t know what kind of success that is for the company. Were they aiming for half that? Three times that? How much did it cost them? Kindle Unlimited paid authors more from May to June 2015 than the Nook store did, but we still don’t know what kind of reveue the company has created. Oyster and Scribd miscalculated profit and loss in a way that directly affected its readers. As a result, one is shutting its doors, and another has removed many of its more popular titles.

One suggestion is that standalone ebook-subscription services are unsustainable, but recent data show that ebook subscribers spend more on books than nonsubscribers do. This still doesn’t mean the standalone model is profitable; we still don’t have the numbers to show whether it is or not. Simply put, the readers cannot read more than the company spends on books.

Something that is often missing from this conversation is that there is already a “Netflix for books.” Public libraries have existed in the United States since the late 1800s. Overdrive is the largest of the digital library vendors, partnering with thirty-four thousand libraries worldwide. Libraries celebrated a one-day record of over half a million checkouts through Overdrive in June 2015. Many libraries, unlike Scribd, have limits to the number of titles a single user can have at a time and the number of users a single title can have at a time. These statistics might be even higher if there were no limits; 195,000 users have placed themselves on a waitlist for a title on the same day.

There are no data that show how many library users are also ebook-service subscribers attempting to cover a gap in a subscription. No one has done a study showing how many people are tired of waiting for a book and leave the library for Scribd. More data should be collected if the publishing industry wants to know who its real power users could be. Those who use the library heavily but also purchase ebooks are a very real, untapped market. Similarly, there are no statistics yet showing the number of romance titles checked out of Overdrive after Scribd pulled them from its catalog. Keeping statistics close to the vest might be good for individual services as they adapt in this rapidly changing environment. We won’t have to wait long to see what happens next.

Recent Developments in Subscription Reading Services

We here at Ooligan Press have been watching recent developments in subscription reading services closely. In May, the two largest providers of subscription reading services for trade books—Oyster and Scribd—announced that 10,000 e-books from Simon & Schuster’s backlist would become available to subscribers. Until then, HarperCollins was the only publisher of the big five to offer their content through these services. At that juncture, the viability of recurring revenue models was highly suspect. There is still no guarantee Oyster and Scribd will survive, but the addition of Simon & Schuster has increased the likelihood of success. The fact that two of the five big guys have chosen to offer their content this way suggests subscription models are becoming a mainstream way to read. Let’s more closely examine how the model currently used by Oyster and Scribd works.

Readers can gain total access to Oyster’s content for $9.95/month; Scribd is slightly cheaper at $8.99/month. Once you pay the fee, a massive library of e-books is instantly available through your chosen device. Sounds great, right? Now, neither Oyster and Scribd nor the publishers are giving full disclosure of the exact details of their agreement. They have said that a threshold has been established within a distributed e-book, and if a customer reads past that threshold, Oyster and Scribd will pay the publisher the full list price of the book. The Shatzkin Files reports anywhere from 10 to 40 percent of the e-book must be read before the publisher gets paid. If a majority of users regularly read more than two Simon & Schuster or HarperCollins books in a month, it’s hard to imagine that this model could be sustainable.

Much like gym memberships, subscription reading services employ models that are reliant upon customers not using the service to its full potential. In this case, success is contingent upon a percentage of users never reading titles offered by Simon & Schuster or HarperCollins. This does not necessarily spell failure; the services offer content from many other publishers besides the two big names. Indie e-book publisher Smashwords has partnered with Oyster, citing the potential for author discoverability as the most attractive reason for this partnership. The substantially lower price point of Smashwords titles to that of the big guys makes this partnership beneficial to Oyster, Scribd, and users seeking that kind of content.

The exigent demand these two companies face is to appease all parties involved. The reason that Simon & Schuster’s decision to join in the subscription experiment is so momentous is because it raises the stakes. Two big publishers are well on their way to becoming a crowd. If there are no serious complaints in the next year, you can bet other big names will follow. Yet, entering the game means that risk of failure is much greater. Can Oyster and Scribd find the goldilocks scenario needed to keep publishers and readers happy? To do so, they will need not only to sign up readers, but to sign up the right kind of readers. If millions of users join but never read more than one book past the magical threshold, publishers will lose faith and withdraw. Losing the support of a big publisher will severely reduce whatever social capital the companies may have accrued by this juncture. To complicate their situation further, these companies still have their own well-being to consider. If they sign up too many gluttonous readers, turning a profit will be impossible.

You can bet we will be keeping a close eye on these companies over the next year. The success or failure of this model will play a decisive role in the future of e-books and in the way those in the industry think about and produce content, and that is pretty close to all of our hearts at Ooligan Press.

Publishing Roundup: Harlequin Romance, Oyster, and the Rise of the Independents

It’s time for another publishing news roundup, straight from the Ooligan source! Sometimes, it’s easy to get caught up in the bubble of our little publishing house, but it’s important to remember that there’s a whole lot happening out in the publishing world right now, given that the whole industry seems to be teetering on the brink of a massive overhaul.

News for big publishers is a bit bleak this month as Harlequin, the classic romance publisher of Fabio-covered, bodice-ripping fame, was sold to News Corporation and, consequently, HarperCollins Publishers for $415 million at the beginning of May. Following the announcement of their sale, Harlequin reported a 14-percent decline in profits from the first quarter of 2013 to the first quarter of 2014—no doubt a consequence of their continued struggle to keep up with the increasingly digital market of the romance industry. A larger than average number of romance readers consider themselves frequent or avid readers, and they appreciate not only the anonymity of reading romance on e-readers but also the instant accessibility and decreased price of the e-book format. Because of this, romance as a genre is shifting to a primarily digital format faster than many other genres out there. Indeed, a 2012 survey by the Romance Writers of America found that nearly 50 percent of romance readers are likely to buy books to be read on an e-device, and there is little doubt that this number has since increased. Harlequin is an old enterprise, having been founded nearly sixty-five years ago, and publishes nearly 110 books every month. However, the New York Times reported that, in 2012, 50 Shades of Grey outsold Harlequin’s entire North American retail sales, and even though that romance giant provided a boost for romance sales everywhere, Harlequin did not manage to survive the most recent round of mergers (starting with the merger of publishing giants Penguin and Random House in 2013) that drastic changes in the publishing industry have brought about.

In other digital news, Oyster Books, a book subscription service that is quickly attempting to become “the Netflix of book borrowing,” made a leap toward its goal in early May as it partnered with over 500 new publishers and now offers over 500,000 titles for borrowing. Among these publishers is giant HarperCollins, which alone added nearly 10,000 titles to the Oyster database, including massively popular titles such as Life of Pi and American Gods. Many sources are calling Oyster’s claims to be the Netflix of books hyperbolic. As the International Business Times points out, it’s impossible to compare the way that people consume books to the way people consume television. The monthly price for Oyster is $9.99 for unlimited borrowing, unlimited being the buzzword here. However, people read a lot slower than they watch films and television shows. IBT estimates that, at the rate at which the average person reads, each book would still cost them about $2.49 apiece at Oyster’s monthly rate. That’s only a little bit less than the cost of owning the books in an e-book format, nevermind the fact that many of these books are available through library e-book lending services for free. Oyster CEO Eric Stormberg insists that he’s competing by offering not only a larger volume of works but also works that can be attained more quickly after a book’s release than it might be through the library. Right now, that time gap is probably be the key to Oyster’s success. Given that they still haven’t even stretched themselves to the Android market, their success or failure remains to be seen. Only time will tell if people are willing to buy into an e-book subscription service.

Lastly and most optimistically, the market climate seems good for independent publishing houses right now. As big publishers continue to squabble and generally have a hard time adapting to change (see the battle happening between Hachette and Amazon currently), independent publishers such as the profiled and discussed in Publishers Weekly are really finding their place in the market. The same is true for independent bookstores, which, in an increasingly Amazon-centric world, are finding more and more business from people who miss the warmth and community of visiting a local bookshop. Hopefully, these trends will only continue to bring success to the little guys.