Kindle Unlimited, the all-you-can-read subscription service Amazon accidentally revealed earlier this week, has made its official debut. As expected, the service costs $10 a month and offers access to more than 600,000 ebooks and thousands of audiobooks, which can be read or listened to through the Kindle applications available for almost every platform imaginable.
I wrote when the service was first revealed that Amazon’s decision to enter the nascent “Netflix for books” market was unsurprising. The company wants to control the way people read, and it isn’t about to let upstarts like Oyster or Scribd usurp its throne without putting up a fight. It’s a bit like Apple’s decision to enter the streaming music market to combat Spotify’s rise, really:
In a sense, introducing this service is much like Apple developing a streaming music service after Spotify and Rdio became popular: Amazon isn’t making a revolutionary product so much as it’s preparing to dominate a market kickstarted by smaller companies like Oyster or Scribd.
The main difference is that the music industry started to embrace iTunes — thanks in part to the rise of illegal downloading, it had little choice – while the publishing industry has become increasingly hostile to Amazon’s efforts to gain more control over it in recent months.
I’m still surprised that Amazon was able to convince publishers to give it the rights required to create a subscription reading service, but that isn’t the strangest thing about the service. That honor belongs to the fact that Amazon isn’t offering its Prime customers special access to this new service – a notable departure from the company’s efforts to please those users in the past.
Maybe it’s because Amazon simply can’t afford to offer even more free goodies to Prime users. The company already gives them free access to its streaming video service, two-day shipping, and other perks meant to keep its most loyal customers coming back for more. Yet that’s not enough to justify the service’s continued expansion, as Pando’s David Holmes wrote in March:
[T]hink about the efficiency of the Prime model on its own: Forrester Research estimates that Prime costs the company between $1 billion and $2 billion a year. Netflix CEO Reed Hastings, based on his own experience with scoring content deals, estimates that Amazon loses up to a $1 billion on streaming alone. In other words, the $20 price hike still may not make Prime profitable on its own.
Then again, if Amazon wants to become the place you go to buy literally everything, Prime is a crucial component to its success. According to Consumer Research Intelligence Partners, the average Prime customer spend $1,340 a year, compared to the $529 a regular Amazon customer spends.
Amazon just can’t afford to keep throwing free things at Prime customers, even though it leads to higher sales and more engagement with the company’s myriad services. Deciding not to give those customers special access to Kindle Unlimited, then, makes perfect sense for the business. But it’s still a strange departure from Amazon’s Oprah-esque commitment to throwing goodies at its most loyal customers in an effort to keep them entertained and engaged with its services.
[illustration by Hallie Bateman]