Amazon.com has announced that it is instituting a monthly subscription service that will allow as many e-books as a customer wants. The service, called Kindle Unlimited, gives customers access to Amazon's catalog of 600,000 Kindle books and "thousands" of audio books.
For a monthly fee of $US9.99, Kindle users will be able to browse the Amazon bookstore and wherever they see the logo for Kindle Unlimited, they'll be able to download the title at no additional cost. Decide that you don't like a book halfway through? Pick another one.
The business model should look familiar to anyone who's binged on "House of Cards" and "Orange is the New Black." But it's now being applied to a very different industry. And if it takes off, Amazon would be the perfect company to extend it to even more retail sectors. (Amazon chief executive Jeffrey Bezos owns The Washington Post.)
All this is happening against the backdrop of a larger struggle between Amazon and publishers who disagree over how much Amazon should pay its suppliers for e-books. The question is, will Kindle Unlimited drive e-book prices even lower? Or could this alternative help drive more money to companies like Hachette?
To understand what might happen, consider how the revenue is determined. Typically, once a subscriber has read a certain percentage of a given book, it's considered a "sale," and the company that runs the subscription pays the publisher for it - at retail prices, not wholesale, according to Robert Gottlieb, chairman of the Trident Media Group.