'Growing pains': Scribd's romance 'purge'

'Growing pains': Scribd's romance 'purge'

Mark Coker: Smashwords' Scribd sales may 'drop at least 50 percent'

Coming in the context of Amazon's Kindle Direct Publishing (KDP) Select's controversial new per-page payments in its Kindle Unlimited (KU) and Kindle Owners Lending Library (KOLL) services, the news from Scribd may not raise independent authors' spirits. One key platform c.e.o., Smashwords' Mark Coker, refers to it as a "purge" in initial comments to us.

As we are reporting overnight at The Bookseller, Scribd has announced that it is "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." 

This, as interpreted by Coker and Kris Austin, c.e.o. of the self-publishing and distribution platform Draft2Digital, respectively, hardly seems good news for writers. 

How much impact could the Scribd changes have?

Coker (pictured), in response to my request for comment, says that he expects to see Smashwords sales at Scribd "drop at least 50 percent compared to recent months, which have been in record territory."

In his remarks to The FutureBook, Coker tells me:

Any time our authors lose market opportunity, it's a disappointment. You don't normally expect to see your bestselling titles targeted for a purge, but thus is the new reality as subscription services learn to cope with popular books... It's a punch in the gut but doesn't change the fundamentals of our business.

And this may interest those who have felt that Smashwords may be more dependent on subscription than Coker says it is, despite a 2013 deal that saw 225,000 Smashwords titles from 70,000 authors and small publishers go to the Scribd service. Coker tells me Tuesday night:

We're a profitable business without any contribution from Scribd.  Scribd is our fastest growing retailer over the last 12 months, but they're still smaller for us than iBooks, B&N, Kobo and the Smashwords store.  We have a sizable catalog of free books, and many of them are series starters, so those will ultimately drive readers to our retail partners.  I also expect some percentage of Scribd subscribers to cancel their subscriptions and return to single-copy sales at our retail partners.

For Scribd's part, Adler (pictured), in his address to Scribd readers, posted at 6:15 p.m. at the company's San Francisco headquarters, 2:15 a.m. BST, casts the move as a defensive one in a business that must experiment with its model for survival. Writing that "we are facing some growing pains today," he offers these five points to Scribd reader-subscribers:

  • First, it means that romance is here to stay. We are maintaining a robust catalog of thousands of romance titles.
  • Second, it means that any affected book you’ve already started reading or added to your library will stay there. Titles affected by the catalog changes will remain in your library for 30 days.
  • Third, it means that some books that you saw on subscription may no longer be available. We know this may be frustrating news. But we still have thousands of great titles from small and big publishers alike including HarperCollins, Simon & Schuster, Kensington, Open Road, Harlequin, Draft2Digital, and Smashwords.
  • Fourth, we’ll be tweaking our catalog on an ongoing basis, rotating titles in and out, so that romance readers always have something fresh to read.
  • Fifth, we’re working hard to establish more mutually beneficial terms with our publishing partners, so that we can continue to grow our catalog.

The fitness club dilemma 

Almost a year ago, I covered the Book Industry Study Group's release of a major evaluation of ebook subscription services here at The FutureBook. Even then, the question of these programmes' financial viability was easily paralleled with the challenge of the unlimited-usage fitness club membership, the big question being: what if all the members come to the gym?

All-you-can-read subscription programs, like fitness programmes, are predicated on the assumption that most subscribers will not use them, or at least won't use them with any serious regularity. Scribd's model makes a retail-value payment per borrow for each title. The romance-reading community, famed for its high rate of content consumption, thus is like part of a fitness club membership overrunning the workout equipment, costing the service more, apparently, than is sustainable. 

So while an $8.99 subscription may look like a bonanza to those readers, their zeal quickly can become an outsized drag on the overall service. 

Despite a reported $22 million round of funding announced in January and led by Khosla Ventures, Adler is not sounding like a man whose enterprise is riding high. In his Tuesday night statement, he writes:

We’re a business in uncharted territory, and as any successful startup business knows, innovation requires iteration, and that’s the process we’re going through now. We’ve extensively explored a variety of options, and we feel this solution has the potential to best serve our audience. 

Smashwords' Coker and, to some degree, Draft2Digital's Austin, are not so sure.

'Limiting the most valuable inventory in the service'

If you'd like to see just how easily Scribd can overweight its demand to the romance side, consider that just as E.L. James' new Grey: Fifty Shades of Grey as Told by Christian is going through the roof in sales, the subscription service is running a tweet advertising the audiobook's availability on the subscription. 

Coker says to me on Tuesday evening, "I'm encouraging Scribd to create tiered options that would allow them to balance the needs of readers, authors, publishers and Scribd. I think they're already considering [it]. It's important to view their action today as a first step, albeit a drastic step. As they iterate, I think they'll try to find a way to return more of the titles to the service."

Both Coker and Austin point to Scribd's choice of romance for "adjustment" as questionable.

Coker:

Unfortunately, this first step [has] targeted the most popular, most expensive (where expense = DLP * number of qualified reads).  A much more reasonable solution long term is for them to find a model to profitably serve these amazing romance readers.  I think the right model would involve tiers for the heavy readers so the heavy readers still get great value, but the moderate readers aren't denied the amazing selection. [Scribd's] action today served the short-term needs of their balance sheet and P&L, but left authors, publishers and readers dismayed.  This is a radical new concept, where popular books are targeted for removal.

In a separate comment to The FutureBook, Austin (pictured) echoes this concern:

It's a shame how much this move feels like it targets romance writers and readers...because those two groups are foundational to this industry. I only hope that subscription services will involve their supplier partners to manage future adjustments. Surely we can find a better solution than limiting the most valuable inventory in the service.

Austin goes on to speak, as does Coker, with understanding of Scribd's need to try different approaches for long-term viability, saying to me:

Obviously, Scribd's new policy is disappointing. The subscription model is a great thing for the digital book market, and especially for independent authors who benefit from the visibility and discovery it provides. We've seen strong growth in that sector, and we're optimistic about the future, but setbacks like the one we've seen today are probably inevitable. Clearly the business model is wrestling to find a sustainable shape as Amazon also recently announced an abrupt and significant change to their subscription payment calculations. 
 

'No respect for the authors...no respect for the readers'

What Adler, Coker, and Austin probably know is that many reader-subscribers and romance writers may not be in much of a mood for Scribd's suddenly shifting "iterations". The news will not reach many in the romance community until later Wednesday. Early commentary Tuesday night is not flush with patience.

On Facebook, author Madison Sevier writes:

Am I the only one who is pissed that they feel it's okay to just delist books from their online/virtual shelves that truly don't cost them anything by sitting there? I'm not really sure that I like a company who will just remove authors and toss their work away like that.

I'd rather pull my work from their site instead of leaving it up to them to "chop me" or have to watch as they show no respect for the authors whose books make that site what it is. And they show no respect for the readers who buy those books. What about the readers???

Customers and authors who are annoyed by Scribd's moves may also be less than enthralled with its move one week ago into new digs that look anything but inexpensive.

And Coker says he learned about the coming action last week: "Once I talked through the numbers with them, it wasn't such a shock. Their all-you-can-eat model needs to be tweaked to accommodate romance readers."

He sees romance, Coker says, as the defining challenge for the subscription model as it stands today.

And what we all can see developing here, in the process, is one of the first major tests of the independent publishing movement's clout. Just how far is a service like Scribd prepared to go in risking the displeasure of such a well-connected community of writers and readers in active touch with each other?

Coker:

I think if Scribd can crack the romance nut and make it profitable, their long-term success is assured.  But if they or Oyster can't make romance profitable, it won't augur well for their long-term viability. How can a reading service not offer the broadest possible selection of the most popular genre?  Indie ebooks will be key, because our books are priced lower, and because we have a lot of free books (over 50,000 at Smashwords).  Indie authors will be expecting that these services find a way to serve their readers without devaluing the author's cut. Indie ebooks are already low cost.