Where's My "Netflix for Books"?: Exploring the Book Industry's Evolution

While I'm not an expert, I've always been fascinated by the intersection of media and technology. Today, I aim to explore the impact of technology on books and will revisit other forms of media in future posts.

Interestingly, unlike sectors such as music, news, and television, the book industry has shown remarkable stability in the face of the internet “revolution”. Even though digital books are prevalent, the fundamental ways we discover and enjoy books have remained largely unchanged since before the internet era. There seems to be no viable "Netflix for books." Let’s examine why.

Perceived Value and Willingness to Pay: Readers still appreciate the value of a well-written book, irrespective of format. They are prepared to invest in authored content, a stark contrast to the news industry, where an influx of free news and casual blogs has significantly expanded supply, diminishing the willingness to pay for traditional newspapers.

Cost Structure: Publishing continues to incur significant overheads, including author advances, editing, and marketing, even with digital distribution. For instance, the cost of printing a book can be less than $2. Unlike music, where digitalization has practically eliminated distribution costs, the economics of book production haven't fundamentally shifted.

Limited Impact of eBooks and Digital Platforms:? Many readers still prefer physical books. The tactile experience, ease on the eyes, and even the “smell” of a book have an enduring appeal that can't be fully replicated digitally. While audible formats and eBooks have become popular, they haven't taken over the market in the way digital has dominated music. Digital platforms like Amazon have literally bankrupted many big book chains, but local bookstores still thrive. Can you say the same about video rental stores?

Bundling: Even with e-Books, the way people consume books differs significantly from how they engage with music or video content. Books require a level of engagement and immersion that does not lend itself to the 'snackable' consumption enabled by digital for other media. The value of having access to every book ever written doesn't hold the same appeal because reading is a time-consuming activity that doesn't fit into the multitasking nature of digital media consumption. Kindle Unlimited, for example, has fewer than 10 million subscribers, highlighting this difference in consumer behavior.

Also worth contrasting is the win-win situation with music bundling and subscriptions. Note that with music streaming, the value proposition to consumers is much stronger – you can access any song anytime and listen to it essentially for free as long as you pay a monthly fee. At the same time, revenue for the music industry has taken somewhat of a U-shaped curve – it initially declined with pirated music and other factors, but then with streaming, it has rebounded (see figure below). There's still a lot of room to grow – many more people could subscribe to streaming music.

The Long-Form Question

With the overload of information in today's world, it's intriguing that books have retained their long-form structure. Wouldn't our time be better spent reading shorter, more focused works? This, of course, excludes use cases requiring deep dives or the simple pleasure of an engaging long-form narrative. Kindle Singles pioneered this concept, but it hasn't gained significant traction.

The Challenge of Subscription Models

Even if rights issues were resolved and stakeholders agreed to bundle unlimited books for a fixed monthly price, would enough consumers subscribe? It's possible only avid readers (who purchase books heavily anyway) would sign up, potentially leading to an overall loss for the industry. This underscores the lack of a clear win-win scenario, at least for now.

Possible Solutions

Tiered subscriptions, curated collections, or a hybrid model (credits for full books alongside a rotating library) could lessen this risk. The industry needs in-depth analysis of consumer behavior and careful modeling of different scenarios.