NOTE: Because this is a topic of interest to many at the moment, I’m responding to this question publicly on the Writer’s Zone Blog…
Q. Yesterday, Scribd pulled my books from its romance catalogue. Do I have any recourse?
A. The short answer: no. Scribd reserves the right to include or exclude books from its program. But don’t despair on the lost opportunities to connect with readers. This isn’t the end result, it’s a time of adjustment and transition.
Here’s the issue.
Rental programs on books is a new revenue stream for rental agents. Any rental program, new or established, has a finite amount of resources to devote to operational costs, which includes payments to authors of royalties earned by renting their books. The rental agent’s objective, of course, is to make a profit. That’s essential to staying in business and being fiscally responsible. (Authors need fiscal responsibility by all entities in the chain between author and reader and rely on it so they can remain fiscally responsible.) In a new rental program, the rental agent estimates its ROI—return on investment—and its profit margin.
Estimates always require adjustments. As more hard data comes in, the rental agency hones its projections. What they expected or anticipated is altered by what is. The challenge in this specific “what is” arises, I believe, from underestimating the romance readers’ voracious appetite for books. I’m not sure how much this specific rental agency underestimated but if they feel the need to cut 80-90 percent of their existing romance catalogue, I daresay the underestimate was substantial.
If you’re the rental agency and you’re having to subsidize your program each month, you’d better adjust quickly or you’ll be insolvent and out of business. Avoiding that, Scribd (and others) are making prompt adjustments essential to them staying in business. Hard as it is on authors, it’s necessary to their own survival.
In rental programs—whether for music, books or movies—the rental agency depends on averages. On more people paying the monthly rental fee and using only a small portion of its allocated costs than exceeding its costs. Some months, a reader might only borrow one or two books. Other months, none or more. So on the average the agency shows a profit.
Well, that averaging model just doesn’t work for romance at $9.99 per month. Its readers have a long history of being enthusiastic and reading a lot of books. It’s common for many romance readers to read 3-5 books per week or even more. Over the years, I’ve talked with many who read a book a day. Some series romance readers read two books per day.
If the reader is paying $9.99 per month and reading books that average $6.00 each, reading three per week, then the rental agency is paying royalties on 24 books, say, per month. You can do the math and see why this isn’t viable for the agency.
That said, I don’t think rental programs will go away. I read yesterday that Scribd will be keeping lower cost romance on its list. Will that lower-cost romance entice romance readers to continue the rental service? That remains to be seen. But its reasonable to expect the agencies to adjust their models so that they can provide readers with an appealing service and still make a profit.
Finding the right program that will appeal to both readers and agencies takes time to determine. Perhaps the agencies will adopt tiered programs. It’s a possible solution.
Authors could see rental agencies offer rentals at $9.99 for some types of books, $24.99 for other types of books, or some other amount. Honestly, I see that as a bit problematic because of optics. Rental agencies will have a challenging time telling romance readers they have to pay more for reading romance than say for reading thrillers or mysteries. (It’s never wise to offend your customers, right?)
A less problematic solution that rental agencies could consider would be to structure a tiered program based on units (in our case, of books) actually rented during a specific time (per month, quarter or year). For example, a reader’s program might allow for 1-5 books at $9.99 per month. 6-10 books at $12.99. 11-20 books at $19.99. There’s no bias due to genre; the reader pays according to the number of books s/he reads, and s/he chooses that amount of books.
My guess is rental agencies will do something like that or find a different program model that works for them and readers.
Like in anything else, when you start something new, you have to refine it until you find a happy medium that’s viable and offers maximum benefits to everyone: a win/win situation, so to speak. It’s like authors writing the first draft. It takes work and effort and analytics to get from first draft to the final one. These rental agencies are going through that same sort of process. They’ve been in the first-draft stage and are now entering the second-draft stage.
What the agencies won’t do, I don’t believe, is drop their rental programs. Scribd made this adjustment. Yesterday, Amazon made an adjustment. Other agencies too will adjust and refine—and I seriously doubt any will close the door on this revenue stream. They have adjusted and entered the second-draft stage, and like authors with books, they’ll continue to refine and revise as their programs evolve. They’ll respond to customer and program/corporate demands. That’s essential to fiscal health.
In the last few days, iTunes has started marketing a similar rental program for music. Market indicators all point to these rental systems expanding not contracting. Since they are still in infancy, it’s likely they’ll continue to expand for some time.
So my best advice is to consider this catalogue deletion a bump in the road. There are always bumps in the road on all sides and will always be more of them for everyone involved in the process.
It might help to look at this like authors do the cycling genre market. Sometimes historical novels are in demand, sometimes they’re not. Sometimes it’s romantic suspense readers are buying in droves, and sometimes it’s small town stories. Genre market cycles are something authors are very familiar with; they’ve always been with us.
The rental programs are much like the genre market cycle in that they are out of the author’s control. We see and recognize them, we work within them, but we can’t alter them.
The best we can do is to stay flexible and informed. Actively decide to participate or not participate insofar as we’re able to decide. As new models fall into place and get established, new opportunities will open. When they do, if they appeal, seize them.
This is my opinion on the matter. I sincerely hope sharing it helps.