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Why the idea of a Netflix for e-books makes sense

According to several reports, including one from the Wall Street Journal quoting several unnamed people “familiar with the matter,” Amazon (s amzn) is considering launching a Netflix-style subscription service in which users would pay a monthly fee for access to a virtual library of e-books. Although publishers don’t seem overly enthusiastic about the idea, it feels like the kind of thing whose time has come — in many ways, the book as we know it has already evolved to the point where it’s more like renting a movie than buying something to treasure forever. The kind of service Amazon is allegedly planning seems like a natural extension of that transition.

When the news of Amazon’s plan hit the web on Monday, a number of observers quickly noted that paying a monthly fee for access to a collection of books sounds a lot like something we already have — namely, a public library. So why wouldn’t people just go to the library instead of signing up with Amazon? The most obvious answer is: For the same reason millions of people have signed up for Netflix (s nflx) when they could just as easily have driven down to the local Blockbuster and rented a movie (an analogy that doesn’t bode well for libraries, since Blockbuster wound up going bankrupt).

Netflix obviously offers something more valuable than simply access to TV shows and movies. For most people, it’s a combination of convenience, low prices and electronic delivery. That kind of combination would theoretically work pretty well in Amazon’s favor for books too, especially since many people already have Amazon accounts, and the company already has relationships (although they may be somewhat strained in many cases) with the major publishing houses.

Do you care whether you own the book or not?

A simple monthly fee tacked onto your existing Amazon account, and you get access to thousands of books; that might appeal to many readers who no longer care whether they own the books or not. Offering this kind of service would also give Amazon a jump on Google (s goog), which has been fighting with publishers over the rights to scan and digitize books, as well as trying to sign up publishers to distribute their books through Google Books (although it doesn’t seem to have much traction on either front).

But do people really want to subscribe to books — in effect, renting them instead of buying them? For virtually their entire history, books have been artifacts that people tend to collect and keep forever, put on shelves and so on. The advent of the mass-market paperback started to erode that, however, and the e-book has arguably continued the process by transforming the idea of what we call a “book” into something much more transient.

Authors such as Amanda Hocking have become wealthy by publishing e-books that sell for as little as 99 cents — coincidentally, the exact same amount iTunes (s aapl) sells songs for. In some cases, e-books are more like long magazine articles than books, and some publications like ProPublica have even started offering them for free as a way of marketing their other content.

Let’s face it — you don’t really own the book anyway

So if services like Spotify and Rdio can work for music consumption — which advocates like Union Square Ventures partner Fred Wilson argue is moving gradually to streaming-only via the cloud — why not a cloud-based subscription option for books too? It’s true that books are somewhat different from music, in the sense that most people don’t read the same books over and over, but the theory still makes sense.

You could even argue that with many e-books, a rental model fits what people already get when they buy one. Not only can retailers like Amazon delete a book remotely — as the company infamously did in 2009, removing copies of George Orwell’s 1984 and Animal Farm from users’ Kindles — but e-book sellers also place all kinds of restrictions on what users can do with their books. Many don’t allow users to lend their books to others, or restrict loans (even for libraries) to a certain number. A subscription model would make it more obvious that you don’t really own the book.

As for the publishers themselves, while they may not like the idea of submitting even further to Amazon’s dominance in the e-book world, they would probably be better off playing ball with the company in return for access to its user base — as Tim Carmody argues at Wired — in much the same way that publishers of newspapers and magazines jumped into bed with Apple in return for access to the iPhone and iPad. An Amazon “iTunes for books” would theoretically allow them to make some money from their older titles, and Amazon would handle all of the billing.

The idea of Amazon competing with the local public library may not seem like such a great concept, especially if you like libraries, but all the company seems to be trying to do is come up with a service that is similar to something we are already familiar with — but which takes advantage of digital formats and mobile devices (including the Amazon tablet that is rumored to be in the wings) and the different ways in which we consume content now. That seems pretty smart.

Post and thumbnail photos courtesy of Flickr user Marya

38 Responses to “Why the idea of a Netflix for e-books makes sense”

  1. If you’re paying $5 a book at the library the way you pay for movies at Blockbuster, you’re doing it wrong. Blockbuster failed because the pricing is rediculoua for a rental. For the cost of renti g I can go to Wal-Mart and buy a movie.

  2. Great idea. Like Netflix and ZunePass, there is a market (avid readers) for a subscription service and this is certainly a natural extension of the Audible model. However, it won’t wipe out libraries, publicly funded, offering free eBooks to local residents. One of the reasons I chose Nook over Kindle was that Nook supports free eBooks and Kindle does not.

  3. Scott D.R.

    e-Audiobooks, (@TB 24 books per year, is not enough! :). OverDrive through my public library let’s me check out 10 at a time. I have to “return” them (expiration of lending period; 7,14,21 days) before I can check out new ones. If OverDrive, or something like it, had a two tier plan, 1) Limited selection (share licenses with other members, where you have to wait in line (like waiting in the queue and for the mail) and 2) a truly Unlimited plan(like streaming), they could make some money (since the Library doesn’t always have everything I’m looking for). Also, have someone edit reading list for kids and continuing ed.

    • I use the Columbus, Ohio library and OverDrive. We are limited to 14 days, no extensions. I outlined above that although I use the service as much as possible, the selections are really limited and I usually encounter a wait list for nearly every book.

  4. This would be great, but would depend on price. Only some eBooks goes for 99c, the vast majority of them is nominally cheaper than the actual paperback books. Another trick missed by the big publishing houses, the same as the music industry missed the mp3 movement.
    Having any digital content in a library type system with a monthly fee and then use of the library would be awesome.

  5. I don’t buy the general premise here that people tend to keep books. I know several people who read voraciously. If they kept their books, on average, they would soon find themselves on that hoarding TV show.
    Most people I know get rid of their books. Pass them to friends or donate them to library fund-raisers or sell them to used book stores or at garage sales. Usually a combination of all of the above.
    I don’t see how this would hurt authors so definitely as some people mention.
    Libraries have been around a long time – but still authors survived.
    I imagine it won’t be long before new authors are clamoring to be included in the free books – knowing the public will consume them readily.
    That means that if they author is correct in their feeling of the genius of their own work – it will soon be read and reviewed up the wazoo as such.
    And you know what – when their next book comes out it will be big news and perhaps not be in the free pool. In the mean time their actual paper book sales will probably go up, as well as sales to people not having a membership.

  6. It makes absolutely no sense whatsoever, unless you want to severely limit the amount of works available.

    Everybody is comparing it to Netflix, but it’s more like Spotify or Pandora, and that will spell death to many writers.

    Musicians get paid fractions of a cent for each play, and if Amazon’s service is at all modeled like this, authors will not be able to make a living writing.

    Musicians have tours and merch to supplement their income, and traditionally musicians make money via tours and merch, not music sales.

    Authors do not have this kind of support- it’s the sale of a book, and ONLY the sale of a book, that keeps them employed.

    With respect Matthew, I don’t think you fully understand the economics of this situation, nor the long term ramifications if this actually launches.

    There’s no way Amazon can money on this (assuming the rumors are true about them tacking it onto Prime) and the author certainly won’t make anything, so only the publishers will rake in the dough. (Authors make very low royalties as it is, self pubbers actually make more per sale than most signed authors.)

    When you actually look at this from ALL sides, not just the consumer, this really doesn’t make sense at all, especially long term.

  7. I use my local library for ebooks as much as possible, but the selection is limited (mostly due to publishers), the checkout time limited to two weeks, and no renewals. I would gladly pay for this service that Amazon is considering, but this should be offered jointly by the libraries and Amazon. This would placate the publishers, help keep our libraries strong, and not further cripple the authors or book business.

  8. Stan Tarnovsky

    Problems with public libraries:
    – you need to go there to check out and return books
    – choice is limited
    – all the problem with physical format
    Problems with checking ebook from public library:
    – choice is practically not existent
    – it’s an extremely cumbersome process
    I hope Amazon (or BN) can make it useable

    • I am not sure which public library you visit, but I’d hardly call my library’s ebook collection choices “practically not existent.” I have no problems checking out an ebook from them – easy as pie. I’m sure everyone’s mileage may vary, depending on the size of a library’s budget goes toward ebook collections, and what interface is used. I’m sorry that your experience at your library has given you a bad impression.

    • I was recently on vacation in Spain when I finished reading an ebook I checked out from the LAPL. When I was done with it, I logged onto the website and checked out 5 more in much less time than it would have taken me to go to the book store and browse for something I wanted to read.

      I was annoyed by the article, particularly the comparison between Blockbuster and the library. It seems the author doesn’t understand the difference between a for-profit corporation and a public service. The article itself seemed to be a stream of consciousness piece (much like this post) that was neither well thought out or well researched. It seems as though the author was not aware that libraries currently lend ebooks at no cost to the borrower.

      Personally, I like the idea of a paid service. I hope to see something soon and would be happy to fork over a monthly fee for access to books I was excited to read.

  9. Lars Hochner

    I’d like to point out the fact that this argument is moot for many citizens of the community who simply cannot afford the technology needed to access ebooks. Not everyone has Internet access or the ready funds to purchase an ebook reader. Where do they go? To the public library, of course – a place which offers more than just physical books on shelves, by the way (programs for toddlers and young adults, literacy programs, workshops for job searchers and senior citizens, free community meeting spaces, etc.). I wonder if the writer of this article has bothered to step into a public library lately? Maybe Mr. Ingram isn’t in need of the services of one, but he should at least do his research before making broad declarations about any type of library. There is no need for Amazon and public library systems to be in competition. They fulfill different needs for different people. And I’ll say a couple more things for the public library – they won’t yank back a book out of my hands while I’m borrowing it, and they won’t collect and store information about my reading choices and habits.

    • I’m not buying the idea that “many citizens” can’t afford a computer, given what else they do afford. But I already use something like what is being proposed through my local university library. It’s called link+ I am an avid and wide reader and my library rarely has the books I wish to read, and many can’t be purchased anymore anyway, so I get them interlibrary loan. It’s incredibly efficient for me: just a click on a webpage and the book shows up at the reference desk in a few days from any of three states. Of course, it is incredibly inefficient all told since the books arrive by courier and the university pays thousands of dollars for me to have this service. But the subscription model is so very good for readers. We just have to work out how to pay the authors, just like in the music biz since iTunes. I don’t want to starve authors for their hard-earned research. But the subscription model works, and work very well for learning. It changes the way you read. I read way, way more than I could afford to buy. But if I ever left the university, I’d pay a good sum to have a subscription service.

    • And then there are those of us Nook users who want to leverage our investment in local libraries by using the free eBook collection. I can’t advocate more for our library system. In my view its one of taxpayers best investments for the reasons you cite. Everyone should support and use their local library and that include use of eBooks.

  10. Quick response to Darren’s comment from a librarian – the reason libraries have unwieldy models for supplying ebooks to our patrons is that the vendors that supply the content insist on them. We’ve been trying to pressure them to remove such restrictions (google “HarperCollins boycott”) but libraries aren’t gigantic for-profits like Amazon. In getting this kind of model off the ground, their main impediment will be the big publishers – and they simply may be able to throw more money at the problem than we’ve been able to.

  11. Zaq Robinson

    Ummm. Most libraries circulate movies too. And magazines. And audiobooks. And music CDs. And music and book downloads. And so far it’s the commercial entities that have gone out of business, not the library.

  12. Darren DeMeulenaere

    Ok, the main reason I like this idea, is that the library are now offering ebooks, but it is the the standard library model. if the book is available you can download it for 3 weeks or whatever time. No one else can download that book until it is done. For me this is hard, as an example, I have 3 books I want to read, all are on hold. I am number 1 in line on one, 2 on another, and 4 on that last one. I get the first one, download it, and have 21 days to read it. I am not a speed reader, so 6 days into reading the 1st book, book two comes available. Ok I have 4 days to download it…now i have 21 days to read that one…I am starting to run out of time to read all the books.

    Another good reason for this approach would be selection, since libraries do not have the widest selection of ebooks. If Amazon, B&N and Borders jump on this band wagon…I think I would jump in. Granted…I think the Library should be the group to do this…it just might save them.

      • Mathew, your comparison of public libraries to Blockbuster is unfair due to terms: free vs paid. Also as opined out libraries share ebooks albeit more limited inventory at the moment. I hope the Amazon / Overdrive deal works financially for all parties but needs to be non exclusive. There should be parallel business models allowing the unlimited access to a paid service with the time limited, copies limited model of shared public licenses a la libraries. This fits with historical tradition and should have similar effect of increasing demand and overall readership. Seems like a replay of hundred years ago when publishers asked why would anyone ever buy a book when they could get it free at a library. Those negotiated licences have since created a nation of readers and a huge publishing industry while opening a door to the world’s knowledge for anyone. The library as a pillar of democracy while also serving stimulating market demand for paid services/objects.

    • Actually, Amazon announced earlier this year it will be working out a library lending plan for its catalog through Overdrive (the public library ebook service), expected this fall. How that squares with this new thing I don’t quite see.

    • Wow, you get 21 days to read the ebook? At my library it’s 14 days, which is a joke. And you can’t renew it. It just automatically becomes unreadable when it’s due back. I am also a slow reader, and sometimes don’t know what I’ll be in the mood to read until the last minute. My family all use the library (paper form) and they don’t understand why I have trouble using the library for reading novels, but it’s all about timing. I will say that the Amazon idea is not the same as a library, because of one important reason: it is usually paid for by taxes and is free for EVERYONE. That is why it should never go away. And I still use the library for many things (don’t forget research materials, DVDs, CDs, internet access, community gatherings), and for my kids, too. I am very interested in this Amazon subscription program even if it’s for books older than a year, as long as it isn’t too pricey for slow readers.

  13. Thomas Baekdal

    There is no question that it makes sense in some way or another. Few people ever go back to the same book. In many ways, this already exists for audiobooks with the Audible Platinum account (24 books per year).

    The problem, of cours,e is that we must not devalue the price of content any further than what it already is. Books sold for 99 cents is a joke. It means that a book is not even worth a cup of coffee at Starbucks (one that you drink in 10 minutes).

    How can we even rationalize that a book, which took months to write, is not even worth the cost of a cup of coffee?

    We are in danger of destroying our own world of content. This is not a problem for Amazon because they control the long tail. It is the same with Google and Adsense. Blogs using Adsense are rarely able to make even a measly level of income. But Google, controlling the long tail, makes billions.

    We do not want Authors to end up in that kind of situation.

    However, I’m currently selling one of my books on Amazon for $9.99. I have no problem with a Netflix type of business, if I still get paid the same for each book read.

    • Thanks for the comment, Thomas — I think the industry (and by that I mean publishers, retailers, distributors and readers) is still trying to figure out what the right price is. You may think 99 cents is too little, but Amanda Hocking has made millions by selling her books at that price.

      • Thomas Baekdal

        …and I envy her for it :)

        I wonder how much of her success is contributed to her being one of the first. The question is, would she have made millions if every book cost 99 cents?

        I totally agree that we still haven’t found the right price. But the right price is not a price so low that the majority cannot make a profit. Almost every other product in the world costs more today than in the past. We have this strange idea on the internet that we should get as close to zero as possible :)

      • Thomas, how do you know $10 is the right price? That price comes from a world where the cost of the physical book plus distribution was a big part of that. So naturally the price extended to somewhere around $10 (or more if it’s a high quality hard cover, etc).

        Just like you can’t sell a phone for $100, if it costs $300 to make, so you couldn’t sell a book for $1 if it cost $5 to make and distribute around the world – each one of them.

        I’ve read through some forums regarding Kindle books, and people confirmed what I was already thinking. At $1-$2, the books became an impulse buy, where at more than that, they have to give it serious consideration whether they want it or not.

        The digital world is different. I don’t think content should be “priced per unit” anymore. We’re moving away from that. You can’t stop the inevitable, you can only delayed it. In a world of sharing, pricing per unit of content doesn’t make sense. Music streaming was available since a decade ago, but the labels managed to delay it. Even if the publishers delay the subscription thing for books now, it will arrive sooner or later.

    • Comparing price per copy to total value is what is a joke. It makes perfect economic sense (for the creator!) to sell their content at a lower price if it sells a higher volume. The nominal cost of creating an extra ebook file is essentially 0.

      In your second and third paragraphs you claim to be outraged by pricing months of an author’s work at the same cost as a 10 minute coffee. This outrage would only be justified if you hand-wrote that book and afterwards only had the one copy.

      In your last paragraph you’re then happily plugging your own book for $9.99, as if comparing a book to a coffee is ludicrous, but a large burrito is much more appropriate.

      The very fact that you’re willing to sell your work for $10 means you’re already in agreement with the 99cent price on the condition that it can generate 10 times the number of buyers.

      • Thomas Baekdal

        When was the last time you heard anyone getting a 10x increase in sale in any market? There is a big difference for a niche author between 10,000 books and 100,000 books.

        You theory is correct, if I (and other authors) could sell 10x more books by lowering the price to 99 center, then I would be happy about that. It just doesn’t match reality. If I lowered the price I might sell 3x more books.

    • As an Aspiring writer, I understand what you mean about devaluation of books.
      But you need to be realistic. How many readers buy a book for the full Hardcover price of $24.99? And how many MORE wait for the Massmarket? And we can’t forget the people who wait and buy the Massmarket used…usually from amazon, for as low as 99¢.
      Our Economy is in the Crapper. People can justify $3 on a coffee that wakes them up. But even I have a hard time justifying $25 on a book I may hate, and may only read once.
      If you told me I could sell 200,000 copies of my book at $7.99 a piece or 1,000,000 at 99¢-$1.99? I’d sell the million. Yeah, my profit is smaller but I still reached that many more people.

      And the other half of my Argument? I was a Collector. I had every issue of Hellblazer an Punisher, plus several full book series like the Dresden Files, Language books and more.
      When my apartment burned I was left with Ash and Mush.
      So now I own DIGITAL copies of the books. My full digital library fits on a 16gb Micro SD card. I can keep copies in multiple places. I will never spend thousands of dollars on paper books again, when I’m limited to that single easy destroyed copy.

      Just my opinion.

    • Stan Tarnovsky

      Why book should be more expensive than the a movie? Movies are a lot more expensive than books to produce. Plus, most of the books are a complete single use pulp (just like movies).

      • Avneesh Ãœbermensch Balyan

        Comparison with movie is not right. The consumer is different (in terms of mass and targeted). You dont need to use to watch movie…. so whole world is consumer… Cant say about book… ;)

      • Avneesh Ãœbermensch Balyan

        Comparison with movie is not right. The consumer is different (in terms of mass and targeted). You dont need to use brain to watch movie…. so whole world is consumer… Cant say this about book… ;)