Publishing Predictions

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2016

The main skill in writing predictions for the coming year is to find those things that are newly launched or in the pipeline and look like they could make the headlines in the coming year. It is hard to make predictions for 2016 because there is a dearth of such new or recently announced innovations. There were major changes in 2015 that might presage a new direction in the industry, but such guesswork is just asking for an apology next New Year for what you called wrong.

The major transformation is likely to be the future of the ebook subscription market and one easy prediction to make is that one of the major services, Oyster, will close for business in mid-January. That is an easy prediction to make as it was announced in September 2015. Many commentators have surmised that the ebook subscription market will fold as no company could survive once Amazon launched its rival service Kindle Unlimited in 2014. That is, however, to ignore why Oyster closed. It was bought out by Google, who then hired its senior staff.

The Oyster team posted on their company blog that this was a way to implement their vision for ebooks and mobile reading. It is unclear whether Google want the team to improve the Google Play ebook reader or whether Google wants to enter the ebook subscription market, five years after it entered the streaming music market. What is equally unclear is why Oyster closed and lack of competitiveness with Kindle Unlimited and Scribd or an over-generous publisher compensation level has not been given as a reason for Oyster closing. Nothing has been given as the reason for Oyster closing and all we know is that it fulfilled the venture capitalists' dreams by being bought out by one of world's richest companies.

The disadvantage that Oyster shared with Scribd was its reliance on the ebook sector. It expanded out of a purely subscription service by launching an ebook store in April 2015, but less than six months later announced that the entire business would close. The disadvantage remained that unlike Amazon, Oyster's business depended entirely on the ability to sell either library subscriptions or ebooks. Amazon can use ebooks to bring in buyers for freezers or groceries to put in those freezers. If Google use the Oyster team to launch a subscription service then they can use it to derive more advertising data for its core business. Apple may choose to follow up the launch of a music streaming service in 2015 with a ebook library in 2016, with the same purpose of driving more sales of iPhones and other hardware. The Oyster team will now be part of the will they won't they debate about Google and subscription ebooks, which leaves Scribd and other services such as 24Symbols.

Scribd acknowledged that their publisher compensation model was a weakness when they removed many romance novels because that genre's voracious readership where too large a burden on Scribd's profitability. With Oyster gone and 24Symbols not firmly established outside its core Spanish readership this could be a year of growth for Scribd. I would not expect it to close in 2016, but I would expect there to be a resetting of publisher compensation levels, particularly with the indie publishers supplying novels via Smashwords and Draft2Digital. Scribd has the advantage of many more trade published books in its system than Kindle Unlimited's indie dominated service and that may be its key source of retaining the loyalty of non-romance readers.

Amazon is on the second version of its publisher compensation model for its Kindle Unlimited library service, after the initial model of paying a per book fee was switched to paying a per page read fee. The previous system favoured shorter books and so the change was in part about encouraging more authors of longer books to place them in Kindle Unlimited. The downside of being in Kindle Unlimited is that it requires being exclusive to Amazon for three months, while the incentive is that each download of a book by the user is credited as the equivalent of a sale in the ranking system. As a result many books in Kindle Unlimited appear more successful than they actually are, which brings the Amazon ranking system into disrepute.

Some authors are doing incredibly well from Kindle Unlimited, but many are not and are considering removing their books from the service. 2016 will probably witness a lot of authors withdrawing from the service and Amazon tweaking the system again to try to entice them back inside. One much-needed tweak is to expand Kindle Unlimited to all Amazon customers as Japanese, Australian, Austrian, Swiss, Irish, and Dutch authors currently face the prospect of making their book exclusive to Amazon in return for entry to a system that they cannot personally use.

Away from the world of ebook subscription another major change is that the average prices for major publishers' front-list has shot up. This is the result of those publishers fighting a long and acrimonious battle with Amazon over the ability to set the price that a book is sold at via Amazon. This has led to a reduction in ebook unit sales, but improved profit per unit for these publishers. 2016 may see some re-balancing as the major publishers decide if the high prices are driving customers to purchase different books or waiting for special promotions. It may have the effect of encouraging greater paperback sales, especially in Europe where there is a large tax discrepancy between a print book and an ebook in terms of Value Added Tax. A safe prediction is that 2016 will see a lot of inconclusive evidence presented for either the death of digital or the death of print, while readers continue to buy both in large numbers.

Beyond those issues it is difficult to make reliable predictions for the 2016 publishing industry, especially from an indie perspective. So much depends on the plans of Google and Apple and whether Amazon will choose to be a global player rather than vary its current approach of favoured territories. As in so much else in our contemporary world we are in the hands of these tech giants when it comes to predicting the future.

© Mercia McMahon. All rights reserved

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