Spotify and Pandora are disrupting the heck out of the music business model.

http://www.digitaltrends.com/mobile/d...

That's what I'm worried about happening for publishing. With Amazon's foray into subscription e-book services, I can't help thinking that it's inevitable that such services will come to dominate.

Consider this.

Casual readers (1 or 2 books a year) will not switch over to a subscription service. But what books do such readers buy? For the most part, they *already* only buy bestselling titles that their friends tell them they have to buy.

Moderate readers are on the borderline--it might be worth it to them to subscribe, it might be worth it to them to only buy the specific titles they want. This is the segment of the market that subscription services can win over as their catalogs get bigger and bigger--there's a point at which moderate readers (1+ books per month) won't have a reason to *not* subscribe.

The voracious readers get immediate and incomparable value for subscribing. This is a big problem, because it's the voracious readers who do the most discovery of new authors. Outside of the bestseller lists, books will tend to be read *only* by the voracious readers, and once they sign up for a subscription service, sales for everything except bestselling titles will drop.

I was chatting about this on Facebook with Charles Tan and he sent me a link to the Smashwords/Scribd terms, which seem very generous... If subscription service terms could stick to that, I would have no worries, in fact, that could probably increase income.

http://blog.smashwords.com/2013/12/sm...

The problem is, I don't think it's sustainable. The company would take a loss on any "power-user" who makes multiple qualifying reads per month, and can only profit off of those borderline moderate users.

If the ratio of borderline/power user stays high, is this a problem? Maybe not...

Except that moderate users will tend to read the high volume titles too--there's not going to be much motivation to explore too far down the bestseller lists when there are going to be so many more titles than they can read per month.

What I'm saying is, it's not just sales of individual titles that will drop. The *pool of money* itself will drop. The subscription fees won't make up for the loss in sales. Just like how Spotify and Pandora are making music sales drop and aren't making back that money in fees.

http://www.digitalmusicnews.com/perma...

And more than that, it's possible that there will be the double-whammy of sales dropping, plus each read on a subscription service being worth less to everyone other than the bestselling writers. I suspect it's the power users that are going to drive the money--and the money is going to go disproportionately to the high volume authors who can generate 100s of thousands of reads, while authors who generate some thousands of reads per title only will probably get a significantly smaller slice.

In order to sustain an equitable royalty per read regardless of reader volume, a service is going to need a really high ratio of moderate readers to power readers, or a huge amount of ad revenue.

It's possible, but I just don't know.

Only "power" readers, the voracious readers that go through multiple titles a month, are going to explore beyond the tops of the rankings. This situation already existed before subscription services, but each exploration before *was an income-generating sale* whereas now it is a read-through... which turns power-readers into an income loss for the service if they read more titles than is equivalent to their subscription fee. They can drive down the royalty rate for lower-volume audience titles, so that the service can still pay fair value to the big guns who bring in lots of reads.

So, yeah. I could be wrong, and I'm hoping I'm wrong. The problem is, we've already seen what happened with Spotify and Pandora. Are e-books different enough from music to result in a different consumer pattern that can sustain rewarding midlist and niche writers? I guess, with Scribd steadily gaining customers and Amazon throwing its muscles into the mix, we're going to find out.