Tuesday, June 30, 2015

Scribd Cuts Romance Catalog

Scribd, the fast-growing ebook subscription service, today announced dramatic cuts to their catalog of romance and erotica titles.

Effective immediately, I estimate 80-90 percent of Smashwords romance and erotica titles will be dropped by Scribd, including nearly all of our most popular romance titles.  Books priced at free are safe and will remain in their catalog.

Based on what I've been able to glean, the lower the price and the higher the word count, the better the odds the book will remain.  Few books priced $3.99 and above will remain.  Scribd is not publicly revealing the formulas for what stays and what goes, probably because much of this is still in flux. They're cutting all publishers and distributors with the same blunt knife.

It's ugly.  The problem for Scribd is that romance readers are heavy readers, and Scribd pays publishers retailer-level margins for the books.  In a letter to publishers and distributors delivered earlier today, Scribd said:
Dear Publisher

As you know, in starting Scribd, we bore the majority of the risk when establishing a business model that paid publishers the same amount as the retail model for each book read by a Scribd subscriber. Now, nearly two years later, the Scribd catalog has grown from 100,000 titles to more than one million. We’re proud of the service we’ve built and we’re constantly working to expand the selection across genres to give our readers the broadest possible list of books for $8.99 per month.

We’ve grown to a point where we are beginning to adjust the proportion of titles across genres to ensure that we can continue to expand the overall size and variety of our service. We will be making some adjustments, particularly to romance, and as a result some previously available titles may no longer be available.

We look forward to continuing to grow subscribers, increase overall reading, and increase total publisher payouts in a way that works for everyone over the long term. We of course want to keep as many of your authors and titles on Scribd as we can, so we’d love to discuss our plans and how we can best work with you going forward.

Thank you for your business.

Bottom line, romance readers - readers we love dearly at Smashwords - are reading Scribd out of house and home.  Scribd's business model, as it's set up now, simply can't sustain the high readership of romance readers.  They're not facing the same problem with readers of other genres.

Even after the cut, thousands of Smashwords romance and erotica titles will remain, but that offers little solace to our bestselling romance authors who are already offering low-priced, high-word-count books.  The point of the purge is to eliminate the most popular (i.e. most expensive to Scribd since they must pay per qualified read) romance books.

I remain a big fan of Scribd, but today's news is especially disconcerting to those of us working to promote a diverse ecosystem of multiple bookselling options.  Romance represents a huge portion of ebook readership, so anything that harms romance authors and their readers is not good for the future of publishing.

While I understand Scribd's need to stem the bloodletting, and I support their decision for this reason, I don't think they found the right solution yet.  I think a better solution - one which would strike the right balance between the needs of readers, authors, publishers and Scribd - is to introduce tiered subscription options that would allow moderate readers to enjoy the Scribd service at the $8.99 level, but then offer heavier readers another subscription tier - possibly priced at $14.99 or $19.99 or whatever - that wouldn't break the bank to the detriment of all authors.  These additional tiers would still provide heavy readers great value and convenience while still allowing Scribd and authors and publishers to earn their well-deserved profit.

Today's news is not necessarily good news for the authors of other genres and categories either, because most romance readers I know also read other genres.  If romance readers abandon Scribd, other authors may see sales declines as well.  It's too soon to predict how this will play out.

Our friends at Scribd have made it clear to me that this is just the first iteration of their changes with romance.  They're investigating new approaches (which might or might not involve new subscription tiers) that could allow them to reintroduce more romance titles back into the catalog.

There are a few silver linings to today's announcement for romance authors:

1.  For the romance titles that remain, these books will face dramatically less competition for romance reader eyeballs, which means the remaining titles and authors will probably see dramatic increases in readership.

2.  Free series starters, especially those that contain enhanced backmatter, will become even more powerful (indirect) money-earners because of their ability to introduce readers to new authors and series, which will then drive some readers to make single-copy sales at our other retail partners.  Based on early data from the upcoming 2015 Smashwords Survey, series with free series starters already earn 66% more income for authors than series without free series starters.  Free works for series by hooking readers who are then motivated to purchase the remaining titles.

3.  Scribd is working to ensure the viability of their business.  Although I'm disappointed to see most of romance titles disappear from Scribd, I understand their need to tweak the model because their long run viability is in the best interest of all authors in all genres and categories.  I'm optimistic that Scribd will eventually iterate their way to a viable solution to accommodate more romance titles.  They NEED to do this if they want to become a complete reading solution for all readers.

One solution I'm not amenable to is the option for Smashwords to accept lower payments for each qualified read.  To accept lower payments would create a slippery slope down the path to devaluation from which these is no return.  There's an argument some subscription services will offer that goes like this:  "Earning a smaller amount is better than earning nothing at all."  While there's certainly truth to that argument (I do believe that subscription services help authors reach readers they would not otherwise reach), the moment authors and publishers start devaluing their books is the moment that all single-copy retailers will feel forced to lower their single copy payouts, because in the long run if a customer can purchase unlimited books for a cheaper effective price via subscription, the single-copy retailers won't be able to compete.  The fact that Scribd and Oyster pay authors and publishers single-copy rates in and of itself acts as a check on such devaluation and provides a level playing field for subscription services and conventional retailers alike.

We've already seen first-hand with Amazon's Kindle Unlimited what happens when authors allow subscription payouts to drop.  Authors who agree to the lower payouts earn less per book, and authors who don't agree and who try to earn income with single-copy sales at Amazon find themselves disadvantaged.  With KU, Amazon determines the value of each qualified read, and they determine the value independent of the author's list price.  In my post last year, Is Amazon's Kindle Unlimited Bad for Authors, I examined some of the likely implications of the Kindle Unlimited model, much of which we've seen play out the months since with lower per-read payouts.  Little prevents Amazon from deciding the value per qualified read should be 50 cents or 5 cents or a penny.  They can change the rules midstream, as they'll start doing in July when they tie payouts to pages read.  I don't necessarily disagree with their plan to tie compensation to readership (I don't like it, but I understand why some do), though it's a reminder that if Amazon decides your 500 page book is worth 25 cents for a full read, they have that power, especially if the indie author community continues to support KU by providing it a critical mass of titles.

With today's Scribd news many naysayers will jump on Scribd and similar subscription services with a big fat, "I TOLD YOU SO!"  The naysayers can have their day in the sun today, but I'd caution critics to understand that the story's not over yet.  As I blogged in 2013 in my two-part series examining the business models of subscription ebooks, the challenge and the great opportunity for these services is to fine-tune their models to the point where they find that common intersection where the interests of readers, authors, publishers and the subscription services themselves are aligned.  Today's news, while painful to many romance authors, is indicative of the fine tuning that is still necessary before the subscription services can prove their model.

If they make the right moves, and if they fully leverage their access to high-quality low-cost indie ebooks, I think these services can succeed.

What happens next for Smashwords authors:  All Smashwords authors should remain opted in to Scribd, because it's uncertain which titles will remain and which titles that were cut today will reappear.  At a minimum, all Smashwords-delivered titles - even if they don't appear in Scribd - will still be fingerprinted by Scribd's piracy prevention systems.  This will automatically prevent unauthorized copies of your book appearing at Scribd.


K.C. Taylor said...

Not the news I wanted to see today. :(

Gabriella West said...

This is frustrating. OK, I have a question. Will the title/s still be available as "single" titles, just not in the subscription package? I thought Scribd had that option.

Monique said...


Mark, you said, "They're cutting all publishers and distributors with the same blunt knife." Does that mean these cuts will be coming for trads as well? I know they have a big deal with HQ, will those books also be affected?

Mark Coker said...

Monique, yes, with the caveat that for publishers on wholesale (Smashwords is agency), the calculus might be slightly different and slightly less severe (except they typically have higher list prices than us so there's a chance they could be hit equal or worse.

Monique said...

Thanks so much for the reply and information.

Mark Coker said...

Gabriella, good question. Unfortunate answer: no. Right now, their systems are all or none so purged titles are remove from their single copy sales store. Fwiw, their single copy sales are low compared to their subscription "sales" which have been red hot and in record territory in recent months.

Sue Moorcroft said...

So they keep all the free books? It seems to me just one more example of everybody wanting free or cheap content. Always the writers whose income suffers.

Thomas Knip said...

Customers won't accept a price increase. Why would I pay 14,99 for the same service I paid 8,99 for last month?

Both the Amazon way and the Scribd/Oyster way are very likely to lead straightaway to an "accept what we pay you or drop out" condition for subscriptions. And if you got authors there, it's but a small step for that condition to be applied on sales in, say, a year or two.

Ros Jackson said...

I don't think I've ever sold anything through Scribd, but it's still worrying because it's like the canary in the coal mine. It makes me wonder how sustainable any subscription service is.

I'm really looking forward to the 2015 Smashwords survey, though, and particularly what it tells us about permafree. Thanks for doing this every year, Mark.

Mark Coker said...

Sue, yes. Free helps make the subscription services viable because these titles provide hours of reading pleasure at no cost to the subscription services. It's not necessarily a bad thing, for two reasons: 1. We want these services to be viable as long as they provide retailer-level payouts on the qualified reads of priced titles. 2. Free romance titles are probably 99% provided by indie authors, and many of these are series starters that drive readers into priced titles. This means indie authors with free titles have an opportunity to build and monetize their readership faster and more effectively when competiting against traditionally published authors and books. I share your concern about devaluation. It's why we've refused to supply titles to subscription services that offer to pay our authors out of a shared pool (the Kindle Unlimited model).

Mark Coker said...

Thomas, no doubt, all consumers appreciate a deal and some will resist paying more. Yet it needs to happen. We have a situation here where moderate romance readers have just had their book selection cut 90% simply because other romance readers read more, so that's not fair to the moderate readers (and not fair to authors or Scribd either). If one reader wants to reads two or three books a month, they shouldn't have to face a limited collection simply because other readers are reading 20 or 50 books a month. Just like at a restaurant, the super-size option can still offer tremendous value to the consumer. I'm not saying readers will love paying more, but at the end of the day I think most readers will understand it's about fairness. In the long run, if the reading experience doesn't lead to direct or indirect profit for the author/publisher/subscription service, then all readers lose out in the end.

Mark Coker said...

Ros, the romance challenge represents both a threat and an opportunity for the subscription services. If they can find the formula to profitably serve these readers and keep them happy, then all will be good. But if they only way they can profitably serve these readers is to lower author/publisher payouts a la Amazon KU, then yes, then it's a tough road ahead. The subscription services are in a difficult bind, and to some extent it's a bind exacerbated by the indie author community which has enabled the rise of Kindle Unlimited. Since KU pays authors less, it means Amazon KU can profitably provide a greater selection of romance titles. It puts Scribd and Oyster at a competitive disadvantage because Scribd/Oyster pay single-copy retail rates off of the digital list price. KU also puts all authors who resist KU at a competitive disadvantage too, because Amazon actively encourages their customers to consume KU books over single-copy books because the single-copy books (at 70% to the author) are more expensive to Amazon than the KU books. Everything's so connected in this business! :)

Ian Lamont said...

"To accept lower payments would create a slippery slope down the path to devaluation from which these is no return."

All-you-can-eat subscription services by their very nature seek to devalue content. It's the only way to attract readers and ultimately create a profitable business. We've seen it with Netflix and Spotify, and now we are starting to see the trend with e-book subscription services such as Scribd, Oyster, and Kindle Unlimited. These services target readers, and ultimately seek to ensure fat payouts to investors, platform owners, and large publishing partners. Authors have been treated as an afterthought.

Mark Coker said...

Ian, there's a big difference between the Scribd/Oyster model and Amazon's KU. Scribd/Oyster are paying authors their share based on full list price. A qualified read at Scribd or Oyster earns you the same as a sale at iBooks or B&N. KU pays out of pool. Prior to this month, they were paying about $1.30 per qualified read. That worked well for a 99 cent ebook, but represented a 50% pay cut for books normally priced at $3.99. Starting this month, Amazon is paying about 1/2 cent per page under their new model.

There are also different forms of devaluation. One is earnings to the author. Scribd/Oyster preserve earnings to the author as mentioned above. The second form of devaluation is the perception in the reader's mind of what a book is worth. Yes, there is some risk that readers who can consume a lot of content for a fixed price may see the content as of less value. Though Oyster/Scribd, because of their business models (and unlike KU), have business models that in the long run can't sustain such overconsumption. Their model acts as a natural check again overconsumption, as we're seeing all too clearly this week with Scribd's romance purge.

Re: fat payouts, as authors we should want our retailers and subscription service providers to earn a fair profit margin. They provide a valuable service by connecting readers with books. Same with investors who invest millions to create these valuable services. "Fair" is the operative word. Most investors in publishing lose their shirts. In Scribd's case, they've been losing money on some of these books, and that money's gone into the pockets of authors. So I can't criticize them for trying to build a sustainable model for the benefit of themselves, authors and readers. They've invested a lot. When they first launched, they gave every Smashwords author a free subscription. That cost them a pretty penny too. That's the risk these new models take.

Shoshanna Evers said...

Scribd has already cut all of my romance & erotica books, save for the two free novellas, and two non-fic writing books I have.

Gherick said...

I know this is not Smaswords' fault. Scribd made a decision, as this chancy move they made isn't the only option that was on the table, I am sure. They could have went many routes, including charging a slightly higher premium for those who want to read vast quantities of Romance and Erotica. Sexy sells, and the retail world knows it, but instead of trying to formulate a solution that serves all of their clients and customers... chop chop chop?

Out of my 16 published works, only three are Romance. All three got chopped. I am not the kind of author who is a cheap date. Either you publish all of me, or none of me. Love all of me, or not at all.

The only way that Independent authors such as we can make our statement in the only manner we know how. Scribd either sells all of my content, or none at all.

Sorry. I know it's not what Mark wants to hear, but it's something Scribd needs to feel, and big time. If the Scribd business models is having problems, punishing me isn't the way to go. So I have punish them back, so no other in this field may think such a move is a good one.

Sharp Teeth Publishing said...

With this news, I checked to see if any of my books survived. Instead of nine titles I now have five there. I have a four book series which the first is a free title. So what I saw made me giggle. The first and the fourth book survived, while the two in the middle didn't.

However, I do have the series in an "all in one", and that also made the cut. Maybe this is the way to go?

But like the rest of you, I'll wait to see what falls out. I just thought it was kind of bizarre.

Mark Coker said...

Sorry to hear that, Gherick. I hope you'll see fit to return them in the future. Best wishes.

Leigh J said...

Romance readers may read a lot, but I bet they also make up a LARGE portion of the paid membership. I am a big romance reader. Just quick easy reads for me during my lunch break or on the weekends. I am probably considered one of the heavy readers. I do love Scribd, but this was a really poor business decision. If people went to Ulta to buy their cosmetics and one day they did away with 80% of their cosmetics do you think those people would keep shopping there? I hate to say it but there are a lot of avenues in which people can find books. People pay for the convenience of Scribd and having a lot of titles in one easy to find place. Take the titles away and they flock. I will most likely drop the service soon and can bet over the next couple of months they will see quite a few doing so. Sad part is, I would have paid more, that said I am talking $9.99-$10.99 more and not $14.99. I can assure I won't pay $8.99 for what is there now.

Bruce A. Borders said...

I don't see subscribers being very pleased with this. "Pay us the same amount you were but now for fewer titles!" Not a good business slogan.

fiona64 said...

Wow. I just went over to check, and sure enough -- my Regency romance is gone. Just ... wow.

fiona64 said...

And so is 50 percent of my series. I'm gobsmacked.

Ruth Ann Nordin said...

I like the tier system. Those who read more should pay more. I pay more when a service I often use goes up, and I don't mind it. Businesses need to make a profit to stay open. They have to pay their expenses in order to keep running, and the people who own the business and any employees have to eat and pay their bills. As authors, we want to see a profit, and some of us want to earn a living at it. It's no different from Scribd wanting to stay in business. Sometimes I put off writing a category in romance because I know it won't yield a certain amount of sales. In order to keep writing, I need to make a certain amount. Otherwise, I'm off looking for another way to make money. It's business, and business decisions (sometimes hard ones) have to be made based on potential for profits.

I guess the only word of encouragement I can offer from personal experience is that I have some free books in Obooko, and there are times I get emails from people who thank me for allowing them to read some of my books for free. From that, I'd say half of them will tell me they went on to buy more of my books in other avenues. Though they would probably have loved to have read all of my books for free, they were willing to buy those not offered on Obooko because they enjoyed my writing style. I think Scribd might be used in this way for the interim. It could be a way to attract readers who will be willing to buy our other books. Obviously not everyone who enjoys our free books will pay for others, but some will. And who knows if someone who reads a free book (with no intention of buying any of our paid books) might pass our name along to another reader who is willing to buy our books?

Marta B said...

Mark, thank you for sharing such a detailed post.

Do you know what happens to the books removed from the directory that we have saved to our libraries before the cut? I have one that I can still read even though it is not listed anymore. Will the author get paid for it?

Mark Coker said...

Hi Marta. The cut books that are still in your Scribd library will remain there for a few more weeks, according to this blog post from their CEO - http://blog.scribd.com/2015/06/30/a-message-from-our-ceo. Yes, the author will be paid for it if you read it. Thanks for asking. :)

Karen said...

I'm just a reader, a heavy reader but this just makes me sad. I am even sadder to hear that the authors didn't even know their books were gone. I have been asking Scribd since June 15th where all the books went and they just kept saying it was an algorithm change but that I should branch out and read other genres.

I would certainly pay more for a return to what I had a month ago ($19.99 seems fine to me) but I won't pay $8.99 for a bunch of free books. When the 30 days are up and my saved library vanishes i will vanish also. Back to KU I guess. Much as I would love to pay full price for all my books I have a 2 book a day habit that I can't support.

helenajust said...

Thank you this detailed explanation. Trying to get any information from Scribd as a reader subscriber proved impossible. I think they have made several errors:

-- I don't understand how they could not know in advance that romance readers tend to be heavy readers. Do they think that vast industry in romance book sales results from people buying books just to look at the pretty covers? The most basic research should have caused them to question their model.

-- Having identified the problem, they chose the wrong solution. Romance readers are also discerning readers, and generally are not prepared to read just any book so long as it's a romance. They must have popular authors and books and sub-genres to retain subscribers and attract new ones. I will almost certainly end my subscription once the dust has settled and I can see what is and is not there.

-- I agree that a tiered subscription would probably have worked, except that I suspect that even at $19.99 they wouldn't make money out of many romance readers!

-- They should have told their customers what was going on. I had to find out via author and other blogs because I did not receive any communication at all from Scribd until I contacted them. That is very poor business practice, and would make me cautious about dealing with them in the future in any event.

Scott Gordon said...

Instead of kicking out a large number of romance titles, a better solution would have been to rotate titles in and out, similar to what Netflix does. Sure, it would take some effort on Scribd's part, but at least they'd hang onto their subscriber base.