Is Amazon’s Readers’ Subscription Another Poke at Book Publishers?

By Paul Ausick Updated Apr 27, 11:51PM EDT · Published Jul 18, 9:50AM EDT

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There are at least a couple of interesting considerations related to Friday morning’s announcement from Amazon.com Inc. (NASDAQ: AMZN) of its Kindle Unlimited subscription service. Information about the e-book and audio book service was inadvertently leaked on the company’s website earlier this week, and Amazon has apparently decided to make an omelet out of some broken eggs.

There are a couple of interesting things about the Kindle Unlimited service. First is its $9.99 per month cost. Amazon essentially gives away its streaming video service as part of its $99 per year Amazon Prime two-day shipping offer. One might argue that the video subscription is more valuable than the book subscription because, well, who reads anymore?

Amazon is first with an unlimited book subscription and was way behind Netflix Inc. (NASDAQ: NFLX) and others in the streaming video sector. Being first gives Amazon a chance to charge a fee and expect that readers will be willing to pay a higher annual subscription price than the company charges for Amazon Prime. Kindle Unlimited is surely another try by Amazon to beef up its profits.

Which brings us to the second interesting thing about the book subscription service. Amazon is poking its finger in the eye of book publishers with which Amazon is currently battling over the fee structure. When Amazon began selling books in the mid 1990s, the company’s retail discounts battered independent booksellers, but publishers were making more money than ever on sales volumes.

Now, Amazon wants to change the split it has with publishers and maintain its discount pricing, and the publishers want no part of it. The online retailer has even offered to pay writers 100% of an e-book’s sales price directly to the writer. The Kindle Unlimited service is another attempt to boost readership and show writers that low prices at big volume are better for them than the publishers’ blockbuster mentality. So far, writers are not buying the offer, presumably preferring the devil they know to the one they don’t.

Amazon’s shares traded up about 0.6% shortly after Friday’s opening bell, at $354.25 in a 52-week range of $279.33 to $408.06.

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About the Author Paul Ausick →

Paul Ausick has been writing for a673b.bigscoots-temp.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.