The "Netflix For Books" Business Model, And How It'll Change The Way You Read

Mark Coker of Smashwords, which recently inked a major content deal with Scribd, weighs in on how the all-you-can-read model changes the way we read, how authors make creative choices, and how everyone gets paid.

Is a “Netflix for e-books” nearing viability? Yesterday, Smashwords, the largest distributor of self-published e-books, announced a new deal with Scribd, the document-sharing platform that has reinvented itself as an e-reading service, including an $8.99 all-you-can-read plan. “They’re trying to do for e-books what Spotify does for music and Netflix does for films,” Mark Coker, the CEO of Smashwords, told Fast Company.

The Smashwords deal greatly expands Scribd’s service, making over 200,000 titles available; it also makes these titles available for individual purchase through Scribd’s platform (for readers who still prefer a la carte pricing). A competitor called Oyster is trying something similar at a similar price point; Coker has a deal with them, too.

But is the all-you-can-read model really viable in the long term? How will such a service alter the publishing landscape? And who reads books anymore anyway, when there are so many great GIF listicles competing for our attention? We caught up with Coker--who last crossed our radar as defender of erotica against a squeamish PayPal--to explore these and other questions.

FAST COMPANY: How does the all-you-can-read deal with Scribd work for Smashwords authors?

The first 10% of every book from page one forward is available as a free sample. If readers read an additional 20% more, the author and publisher get credit for a full sale of the book, 60% of the list price. Another interesting component is that Scribd will also pay in cases where the reader reads more than the first 15% of the book, but less than 30%. In that situation, the author gets a “browse credit.” For every 10 browses, they get credit for a full sale.

It strikes me that a business model like this, if it caught on, could actually shape the forms of books people write. It seems that there might be an incentive to write shorter books to trigger credits sooner, and it seems like authors might prefer to write “modular” books--short story collections instead of novels--if readers' attention is divided.

It’s an interesting question, and it’s an unknown. If content creators start modularizing content in a way that interrupts the enjoyment of that content, it will reduce sales. And if everyone starts writing shorter books but continues to charge high prices, that would undermine the economic model of businesses like Scribd.

There is some debate over the viability of the business model to begin with. What do you think?

I think the model can work. The subscription model creates a cool experience for the reader--it creates what I call a frictionless reading environment. The reader can surf around without regard for price, so the reader is relieved of the cognitive load that the reader would normally have to bear when browsing through a typical bookstore. Another reason this model can work has to do with the rise of self-publishing. The average book on Smashwords is priced at $2.99. Over 30,000 are priced at free, which means that Scribd customers read them without Scribd having any obligation to pay a fee to the author.

If you’re an author and you price a book at free and it becomes a runaway best-seller, then... that was kind of dumb, no?

Many of our writers doing free books are using free as a promotional tool to introduce their author brand to readers. Once a reader trusts your brand, they seek out your other books that carry prices. A lot of our best-selling authors write romance. They’ll write a multibook series, and price the first one at free to get the reader hooked. But many writers are writing for different reasons than just making money. If making money on one’s written works was a requirement, there would be very few books in the world. Writers write because they need to write.

Why do you think subscription services like Scribd and Oyster are potentially important to publishing as a whole?

Everyone is always looking for the magic silver bullet, the best way to sell books, but the answer is that consumer behavior is as diverse as humanity is. People like to consume and discover books differently. People like to shop at different places. I think the subscription model is going to appeal to readers who want access to a lot of books at a low fixed cost per month. The world I would like to see in the future is a world of many virtual bookstores, with many book consumption methods, and many successful companies that are dedicated to putting books in front of reader eyeballs. I think the world will be a better place if these subscription services can gain a foothold and survive and thrive.

I’m a little bothered by the idea of a world full of books that were only read a fifth of the way through. Then again--in the days before the e-book, how often did people actually read the books they bought in the store?

I think it’s a well known dirty little secret--not even a secret--that many books are purchased that are never read. I can step into my library at home and see thousands of books my wife and I have purchased that we would like to read or aspire to read but will probably never read. Reading is an aspirational activity--all of us aspire to read more books than we actually do. Which is another reason this business model can work. It’s like health club memberships. Come New Year’s, people feeling guilty from Thanksgiving and Christmas turkey make a resolution and join the health club. They go a couple of times, but don’t go for the rest of the year--yet they’re paying the subscription fee every month. I think that kind of aspirational purchase will happen with these subscription services. On some months, I imagine Netflix loses money on me, but many other months they keep my entire subscription fee and I don’t consume anything. Services lose money on gluttons every month, but I’m betting the vast majority of subscribers will be moderate consumers.

I know the feeling of having books piling up, and sadly admitting to yourself that there are many you will never read in your life. And it's only grown more difficult over the last few years.

I feel the same way. These pressures that we all face will only grow stronger in a world where our attention is fragmented. But I also think that for the people who can find refuge in a book, it offers them focus. It offers a break from that fragmented world of sensory overload. For people who do manage to read, it’s one of the most precious things in their lives.

Related in Fast Company: "George Plimpton Never Did This"

This interview has been condensed and edited.

[Image: Flickr user Gonzalo Díaz Fornaro]

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11 Comments

  • Tracy Campbell

    It's definitely an interesting model, and as a book-lover, I would most likely subscribe -- I spend at least four times that much a month on books as it is. But I am curious to see what impact it would have on how books are written. Personally, I'm less interested in short story collections compared to full, one-story novels. But I do think some authors would be enticed by the idea of writing multiple short books and providing each as an individual "purchase" in order to generate money faster.

    That being said, I also believe that many authors let their stories unfold on their own terms, rather than sticking to a set page/word count. I know I have a very difficult time writing short stories because my mind creates stories and worlds that require a lot of time to delve into what's happening. Short stories are a challenge for me, and usually feel forced when I do choose to write one. But that's just my style.

  • Valerie Strawmier

    As an avid reader, this would be amazing and I love the opportunity to have unfettered access to all those books for one flat rate. However, as an author, I'm not sure that I would feel paid enough for my work when my book was lumped into such a service. The price point for each one would make a difference, in my opinion, and the authors should definitely get paid what their creations are worth. The readers make out on this deal for sure, because depending on how fast you read, you could get two or three times the value out of your subscription service.

  • Lynne Constantine-Johns

    Great interview! Certainly it is very thought-provoking. I would be interested in getting his thoughts on how this model might be applied to textbooks.

  • Michael Lederman

    I think this is a horrible idea which will change how books are written. Some of the best books don't even get started till after you've read a third using the first third to just set up the plot. Books written to attract readers in this model will be front loaded to keep you interested and lose the momentum.

  • Holly Jahangiri

    No, it will just change which authors and books get published through Smashwords.

  • But isn't every book written that way? In grade school you're taught to write your paper with a "hook." People praise the way a book opens. I think a good book is worth its attention from page one.

  • Samir Shah

    "Netflix for Ebooks" model is worth a try. I wish more and more media companies adopt that model.

  • Carrie

    This was such a great interview. That last part really got to the core of readers' motivations. It's so true that reading is a refuge. Finding the time to sit down and read others' stories and enter another world for a little while is essential. Escaping through stories and feeling belonging and connection in stories is so human, no matter how you consume them.

    Thank you for this, David. I'm Carrie, Scribd's new head of community, and I truly believe that reading is a deep experience that brings people together. I love libraries and bookstores and still am a patron of both despite my having a Scribd subscription. These things can live in harmony-- we're all out to serve the same passionate readers. :)

  • Guest

    This is not a "Netflix for books"! It is a Netflix for EBOOKS. Some of us still prefer the old fashioned page, or at least not having to constantly upgrade devices to read with. A lot of what is worth reading isn't even available in ebook format.

  • Michael Lederman

    I have one device, a tablet upon which is loaded a B&N app, Kindle app, Google Play app (my main choice) and a host of stand alone apps for reading. I can read any format book and have over 11,000 ebooks sitting on a hard drive waiting for me to read them. I used to hate finishing a book and having to trudge upstairs to the home library to get the next read. Now I don't have to do a thing, just load up the next book and keep going. It took a lot to get me to cross over from paper to ebook but I am glad I did.