On Friday,
While Amazon's ability to keep products under wraps is questionable, its intent with "Kindle Unlimited" is clear, taking a tested approach to books that has already been successful with other forms of media. By bundling books for $9.99 a month, the online retailer is hoping that customers will become more reliant on its growing content platform, which through Amazon Prime already includes movies, television shows and music.
However, the $9.99 a month, 600,000-title service that Amazon presented on Friday is far from being the final product. By launching last week, Amazon not only confirmed a persistent rumor, but also revealed that its willing to play the waiting game with the "Big Five" publishers and other e-book subscription companies in what promises to be a battle for the next frontier of readership.
For the five major U.S. publishers--Penguin Random House, Hachette, HarperCollins, Macmillan and Simon & Schuster--Kindle Unlimited's unveil came at an awkward time. With book pricing talks with Hachette having turned into a public blame game, Amazon now faces the prospect of engaging the other four publishers in separate contract negotiations. Not surprisingly, the Big Five have not made any of their books available with Kindle Unlimited.
That's more than fine with Amazon, says Scott Jacobson, a former manager who worked on the first Kindle reader. Now a partner at Madrona Ventures, he pointed out that the Seattle retail and media giant has a history of launching programs with small catalogues and expanding over time.
"Prime shipping had a small number of SKUs initially," he says. "Amazon MP3 had participation by the major labels at launch, but very little of the front end of their catalogues. And Prime Instant Video also started small, with little to no exclusive content. In every case they expanded and continue to expand methodically to the point where these are robust services."
In order to become a robust service Kindle Unlimited will need to find traction. Loaded currently with titles including The Hunger Games and the Harry Potter series as well as 2,000 audiobooks, the service will need to show Bezos--and publishers--that it won't cannibalize the sales of individual e-books. If it can do that and serve as another money-making distribution channel for authors, as Amazon would hope, writers may pressure their publishers to link up with the program.
"If Unlimited really starts getting traction, it could be another meaningful revenue stream for authors and another reason for them to put pressure on the major publishers to deepen their relationship with--and dependency on--Amazon," says Jacobson.
For now, Scribd CEO Trip Adler is hoping that his company's relationship with two of the major five publishers in e-book subscriptions will give his company a leg up over the gorilla entering the market. Kindle Unlimited aside, Scribd and Oyster have pioneered the nascent all-you-can-eat e-book sector, with Adler's company now offering 400,000 titles--including some from HarperCollins and Simon & Schuster--at $8.99 a month.
"Publishers definitely want more distribution channels for their books," says Adler, who noted that his company had become the third-largest digital revenue stream for some publishers behind Amazon and
Having soft launched its product in Jan. 2013, Scribd is now seeing about 50% user growth month-over-month, though Adler would not disclose the actual subsciber number. He did note that publishers were coming around to the idea of a subscription service, which pays them a fee every time one of their books in the collection is read. Currently, the average Scribd user is reading a little less than a book a month, says Adler, assuaging publishers' worries that subscribers would be voraciously taking advantage of the model when they could have been buying books separately.
"When we started these discussions it was nebulous for everyone," he says. "Finally, we kind of got HarperCollins involved. They saw the benefits and then Simon & Schuster came on board... Getting the first two should be hardest part."
That's two more than Amazon currently have for Kindle Unlimited, with the pair of publishers dominating Scribd's recent Top 10 most-read list that included Paulo Coehlo's The Alchemist (HarperCollins) and Stephen Chbosky's The Perks Of Being A Wallflower (Simon & Schuster). Adler, however, knows that advantages can be fleeting against the ruthless challenger that is Amazon.
"They are a strong competitor and I usually respect them," he says. "They're a fun competitor to have."
Between three companies, five major publishers and thousands of authors, the e-book subscription market will certainly see its fair share of "fun" in the coming years.
Follow me on Twitter at @RMac18 or email me at rmac@forbes.com.
