spotifyFor years people have been telling the publishing industry to look at the music industry for lessons learned on piracy, DRM and other issues.

eBook subscription services have obviously been one area in which publishing has paid attention, with services like Scribd, Oyster, Kindle Unlimited and others, like the new Readfy service in Germany popping up and expanding their offerings. I’ve been following the growth of reading subscription services, and I do wonder about their long-term money making prospects, which is why I was interested to see two stories cross my Twitter stream this morning.

The first was the announcement that Spotify has launched in Canada. The Canadian terms are similar to the US terms. You can listen for free, if you’re willing to put up with ads, or you can subscribe for CA$10 a month to get rid of the ads and download playlists to your mobile devices.

The second was an article about how streaming still isn’t making money for record labels.

Streaming music has finally overtaken the CD in music sales. But can it be the new business model for the music industry? A new report from the Recording Industry Association of America last week shows that, despite strong growth, sales of streaming music still aren’t making up for sliding sales of both CDs and digital downloads.

Interesting. I wonder if we are in a similar situation in publishing. I’ve heard anecdotal stories on both sides from authors on KBoards (some seeing sales plummet after the introduction of KU and others seeing excellent revenue from borrows), but that’s only the indie side of the story. Almost every voice I read in publishing, including those I generally agree with, like Dean Wesley Smith and those I generally don’t agree with, like Mike Shatzkin, state that the current revenue structure of subscription services is not sustainable, and I tend to agree with them. Another quote from the above article resonates with me as someone who follows the publishing industry:

Streaming, after all, has been the most attractive to power-listeners — as in, the ones who were probably buying the most music anyway.

It’s difficult to find hard data on the profitability of the services, although in May of this year, Trip Adler, CEO of Scribd, did say that the service was making a profit each month.

Music services have been around longer than ebook services, and Spotify clearly thinks expansion is worthwhile. It’s probably too early to forecast long-term health for ebooks. Players do continue to enter the arena, which is a good thing, but so many of the lessons from music are applicable to books.

I plan to keep an eye on Spotify and others to see if those lessons are applicable as well. Like possibly requiring ads, as Readfy is attempting. I don’t know about you, but I dislike the idea of ads inserted into my books. I don’t mind them on the Home screen of my Kindle, but I do mind them within the text. Ads are also the reason I don’t use Spotify (I don’t listen enough to justify the paid cost) and why I don’t watch Hulu.

Anyone else want to prognosticate? The comments are open.


  1. Interesting article. I share your concerns. It is surprising to hear that streaming services appear to grapple with profitability. If they can’t make it work spare a thought for the content providers who have to make do with the minuscule share of takings allocated to them. I am more and more coming to the conclusion that the streaming model and many similar offerings are unsustainable in the long term. They are child-in-sweetshop fantasies made real, and just as unrealistic. I dread to think what they will do to writers and publishers alike over the coming years.

  2. I welcome Readfy.
    We’ve grown listening to the radio and watching tv for free in exchange of ads. I find it natural that this model is used in music and, finally, the ebook market. The more options users have to assess, the better.

    Most subscription services are offering just one affordable unlimited plan. If there is a profit, probably publishing houses consider it minimal. So, in the near future, maybe they’ll readjust and diversify plans (less and more expensive), let create your own or expand it with extras.

  3. You can’t be too sure about the profitability of these streaming services. When Netflix first started its DVD-by-mail business, a lot of people thought that they couldn’t make money at it. After all, if the customers were heavy users, the operating costs would sink them. Most of the initial customers were heavy users, but when the service became more popular, they started getting a lot of users who paid the monthly fees, but didn’t go through as many disks. Netflix grew into a huge business.

    I see the current debate about sustainability as the same sort of thing. If a streaming service can become popular enough to attract casual readers, it can make money. If it only attracts the heavy readers, it won’t.

    • @Thomas, ah, I was exactly one of those Netflix users. I think just before we cancelled the DVD portion, we were only getting one or maybe two disks a month. I agree. It’s all about the casual users, of which I am not one, so I hope plenty of casual users sign up to pay for my reading.

  4. I see this all you can eat approach working for certain genres (Harlequins, serials, business papers, etc) but not for general reading tastes. But really you don’t need to invent a whole new platform just to create what are essentially Book of the Month clubs.

    I couldn’t find the link, but according to latest estimates, the average American spends $15 on music per year, and if you exclude the zero spenders, the median becomes about $40 per year. Getting a premium membership to the streaming services raises the spending to about 80-120$ which still isn’t that good considering it’s an all-you-can-eat kind of membership. I know Cory Doctorow and his ilk favor blanket licenses, and they have their advantages, but I think it’s fairly easy for individuals to sell through whatever channels offer the best cut.

  5. It’s an obvious point, but books (like movies) generally are read once; after that they lose commercial value. Streaming services have a chance of succeeding because people typically like to replay the same song lots of times. As an aside, I use streaming music services as a way to preview which music I plan to buy through emusic. Perhaps this could happen in all you can eat book services as well. I don’t know. (I think fans are generally loyal to authors and don’t mind purchasing a book they really like after reading it for free– but that’s my opinion).

    • @Robert, I think it depends on the reader and the book. I’m mostly using Scribd for the types of books I’ll read once, enjoy, but probably never read again. I have already and will continue to buy front list titles from some of those authors, but I’m not likely to go back and purchase back list titles for them since most of them aren’t the types of books I will read again and again.

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