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:
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.