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Amazon's Kindle Unlimited Is a Victim of Its Success in Japan (wsj.com)

Posted by msmash on from the bad-pr dept.

You really need to understand the market before you start operating there. Take Amazon's case for instance, which has found itself in the middle of a backlash with publishers in Japan. When Amazon launched its "all-you-can-read-subscription" Kindle Unlimited service in Japan, the company didn't know it would become such a big success. And yet it did. So much so that Amazon had to sharply scale back within weeks of its introduction in the country. Before Amazon introduced the feature in Japan, it partnered with Japanese publishers to offer their popular content, committing to pay them a premium through the end of this year when a customer reads at least 10 percent of a book or other content. It worked -- too well, WSJ reports. From an article: Since it's easy for readers to get through the first 10% of a magazine or photo book in just a few minutes, Amazon quickly found itself on the hook for large payments (Editor's note: the link could be paywalled; alternate source), a person at one publisher said. A person at another publisher said Amazon made an overture for talks in September saying it had hit its budget limit for the payments to publishers and wanted revisions to its contract with the publisher."

48 comments

  1. isn't this bots or mechanical turk? by known_coward_69 · · Score: 2

    someone gamed the system like in the USA to get paid. in the USA it was junk books where people copied crap from wikipedia

    1. Re:isn't this bots or mechanical turk? by will_die · · Score: 4, Informative

      Not in this case. It was that Amazon offered the bonus on magazines and books consisting of mainly photos. Easy content for person to quickly go through 10%.
      It would be like Amazon getting a deal with Marvel and DC for all comic books. Even if you were just browsing a bunch of series you would like go through 10% of a book before switching to something new.

    2. Re:isn't this bots or mechanical turk? by thegarbz · · Score: 4, Interesting

      Never underestimate the reading capacity of a country where a large portion of the population has an insanely huge commute to work.

    3. Re:isn't this bots or mechanical turk? by PrimaryConsult · · Score: 2

      Commutes are comparable to Northeast US area commutes (and in many cases shorter!). The big difference is, Japanese commutes almost all involve a train at one point, the perfect environment for reading. Our commutes are driving cars where we (shouldn't) be reading, or as a passenger on buses where reading is nauseating for long periods of time.

  2. Unlimited by Anonymous Coward · · Score: 2, Insightful

    The word "unlimited" should raise a red flag for anything that fundamentally costs money.

    Unlimited first posts however...

    1. Re:Unlimited by postbigbang · · Score: 1

      Bait-and-switch? Amazon?? Oh no!!!! Never happens.

      --
      ---- Teach Peace. It's Cheaper Than War.
  3. Live Bye Die Bye by Anonymous Coward · · Score: 0

    Pen

  4. A bit like broadband by Chrisq · · Score: 4, Insightful

    Unlimited as long as you don't use too much

    1. Re:A bit like broadband by Big+Hairy+Ian · · Score: 1

      Unlimited as long as you don't use too much

      Do you think they might have indulged in book shaping?

      --

      Build a Man a Fire, and He'll Be Warm for a Day. Set a Man on Fire, and He'll Be Warm for the Rest of His Life.

  5. Japan 101 by fullback · · Score: 4, Insightful

    People with even a cursory knowledge of Japan know that Japanese are voracious readers. I don't feel sorry for Amazon. They should have to pay up and chalk it up as a stupidity tax.

    1. Re:Japan 101 by Anonymous Coward · · Score: 2, Insightful

      Huge international corp. introduces new service and sells devices.

      They make a boatload of cash selling devices.

      They also pay a small portion to authors.

      The corporation exceeds their wildest dreams and rake in the cash.

      They then try to skunk out of payments to authors, saying their limit had been reached.

    2. Re:Japan 101 by phorm · · Score: 2

      Yeah, hopefully Japanese lawyers hang them out to dry on this.
      "Oops, we didn't plan this well" isn't a very good excuse for breach of contract.

    3. Re:Japan 101 by Anonymous Coward · · Score: 1

      I mean, in this case, it's probably "We'd rather not shutter this, but we can't actually justify sustaining this. Can we work something out?".

    4. Re:Japan 101 by Anonymous Coward · · Score: 0

      "Overtures for talks" sounds more like "we can't keep doing this with these parameters and would like to not just shut this down in your country" than "we're going to just not pay you with no agreement".

    5. Re:Japan 101 by Anonymous Coward · · Score: 1

      What are you talking about, those devices are sold at a loss.

    6. Re:Japan 101 by Anonymous Coward · · Score: 1

      They then try to skunk out of payments to authors, saying their limit had been reached.

      Amazon takes a whopping 65% cut off the selling price for kindle books priced over $10 (and the author gets a piddly 35%). For kindle books selling under $10, the author makes 70% of the selling price, but has to pay 15 cents/MB "delivery charge." What a fucking ripoff!

      Amazon is twisting authors' arms to keep books priced under $10, and that should be illegal.

    7. Re:Japan 101 by Anonymous Coward · · Score: 2, Informative

      http://www.e-ink-info.com/6-e-ink-pearl-touch-display-kindle-2011-costs-305

      Feel free to spell out another analysis that gives different values, but as much as I don't doubt Amazon is making some money on the Kindle, I don't think their margins are nearly as good as you imply.

    8. Re:Japan 101 by ravenshrike · · Score: 2

      *blinks* Just out of curiosity, how much do you think authors get paid by their publishers? Cause the answer is, barring a damn few TradPubs, the answer is jack and shit unless you are a superstar. Even then the way they count sales is fucking asinine.

    9. Re:Japan 101 by Solandri · · Score: 1

      Contracts are not iron-clad agreements. If they contain a mistake, one or both parties can ask a court to relieve them of having to honor the contract. Price mistakes on website are a common example. If Amazon lists a $1000 laptop for $100 on its website and you place an order, even though the order constitutes a contract between Amazon and you, Amazon is not obligated to honor the price because obviously it was a mistake. They might choose to honor the price in the interest of good customer relations if their losses (number of people who saw the error and placed an order) are not too great. But they are under no legal obligation to do so.

      I'm not familiar with Japanese contract law, and there's not enough detail in TFA to determine exactly what's going on anyway. But generally, business contracts which would cause one party to lose massive amounts of money if anyone tried to honor the terms (i.e. "nobody in their right mind would sign such a deal") can usually be legally tossed out as a mistake. Even if the mistake was on Amazon's part in not doing their due diligence and fully considering and understanding the terms that they were agreeing to.

    10. Re:Japan 101 by Registered+Coward+v2 · · Score: 1

      Yeah, hopefully Japanese lawyers hang them out to dry on this. "Oops, we didn't plan this well" isn't a very good excuse for breach of contract.

      True, but depending on the contract, Amazon could be well within its rights to pull titles to control costs; which is what it appeared to do in this case. So either publishers renegotiate the contact or simply don't have their titles included and thus make no money except for actual sales. Renegotiating a contract is a normal business activity and doesn't constitute a breach. As for the subscribers, it appears they are on a month to month plan so Amazon would be well within their rights to change the availability of title sand let subscribers cancel if they don't like what is offered.

      --
      I'm a consultant - I convert gibberish into cash-flow.
    11. Re:Japan 101 by Anonymous Coward · · Score: 1

      When an author selects the paper book publishing route, the publisher is taking a huge risk investing a sum of money editing, typesetting, printing and marketing the book. None of those risks/costs apply for ebooks which usually involves just operating a web server of some kind. The author should make at least 70% regardless of book price, because of the low-cost of operating a web server.

    12. Re:Japan 101 by edittard · · Score: 2

      Renegotiating a contract is a normal business activity and doesn't constitute a breach.

      Depends slightly on whether both sides agree to it.

      --
      At the bottom of the /. main page it says 'Yesterday's News'. Well they got that right.
    13. Re:Japan 101 by Anonymous Coward · · Score: 0

      When an author selects the paper book publishing route, the publisher is taking a huge risk investing a sum of money editing, typesetting, printing and marketing the book. None of those risks/costs apply for ebooks which usually involves just operating a web server of some kind. The author should make at least 70% regardless of book price, because of the low-cost of operating a web server.

      Sure, and digital downloads of software should cost less than their physical counterparts because they don't have to deal with the headaches and logistics of producing, distributing, and stocking, but they don't. In fact, for video games especially, after a few months/years frequently the digital copy costs more than a physical and you get more restrictions on what you can('t) do with it.

    14. Re:Japan 101 by Anonymous Coward · · Score: 0

      Sure, and digital downloads of software should cost less than their physical counterparts because they don't have to deal with the headaches and logistics of producing, distributing, and stocking, but they don't.

      Since cheap $8 paperbacks are able to make a profit even after paying the logistic costs, one can deduce printing/logistics are a small percentage of the costs associated with a $50-$100 book -- its price is based on IP-quality and consumer demand. Amazon wants to impose the "app" pricing model -- the model where smartphone apps cost between $1 and $3 as compared to the typical software price of $25 - $1,000. This has resulted in a glut of cheap, low-functionality applets flooding the app stores since consumers refuse to buy anything around $50 or more (unless they are tricked into making many small in-app purchases).

      We don't want a glut of cheap $1-$10 books that Amazon is encouraging/forcing. Authors should be able to charge $50 for a textbook and not have to give up a sizeable chunk (65%) to Amazon for simply operating a web server.

    15. Re:Japan 101 by jabuzz · · Score: 1

      Due to the advent of computers, typesetting costs are minimal these days. For a novel it is less than a days work and you could produce a camera ready PDF yourself if you wanted very easily. Back when it all done by hand or required expensive equipment you might have had a point. However in 2016 you can do it on the cheapest of netbooks for a software cost of $0.

    16. Re:Japan 101 by Registered+Coward+v2 · · Score: 1

      Renegotiating a contract is a normal business activity and doesn't constitute a breach.

      Depends slightly on whether both sides agree to it.

      That's why it's called a negotiation. Ultimately, both sides need to agree to any changes; absent that both are free to act within the agreed upon terms. If Amazon was not contractually obligated to carry certain titles they can drop them whenever they want and baring an agreement to pay some minimum amount not owe the publishers any more money.

      --
      I'm a consultant - I convert gibberish into cash-flow.
  6. Selection very limited in the US by caseih · · Score: 4, Interesting

    I've had Kindle unlimited for a while and find the selection very limited. Sure they have a lot of in-house books listed there, but the quality is extremely varied. For the amount I read from unlimited, I am spending more on unlimited than I would if I were to simply buy the books I've read and enjoyed. I suspect I'm not alone in this. So for Amazon in the US, the unlimited has been wildly successful I think. It's a check-cashing service for them.

    I've encountered a few good indie books on unlimited. But the author didn't make much money if any because of my unlimited reading. Amazon's contract was designed to benefit Amazon first and foremost. Therefore I have little sympathy for Amazon Japan's problems. A contract is a contract. They agreed to it, they need to follow through until the contract is fulfilled.

    1. Re:Selection very limited in the US by FatdogHaiku · · Score: 1

      ...Sure they have a lot of in-house books listed there...

      Well, I guess that's better than having a lot of out-house books listed... cause those kinda stink!

      Seriously, if the contacts don't have provisions for some sort of a bailout or adjustment then Amazon needs better lawyers negotiating for them. One thing is certain, someone did not do their due diligence before putting the deal in writing.

      --
      You have the right to remain sentient. If you give up the right to remain sentient, you will be elected to public office
    2. Re:Selection very limited in the US by Anonymous Coward · · Score: 1

      There are millions of books available. More than you can read in 10,000 lifetimes. You just want $FLAVOR_OF_THE_MONTH for free. Stop being such a fucking sheep and freeloader.

      And stop with the K.U. lies. indy-authors make good income from titles in the program - providing they're actually getting read - which is the hard part. All but those that get picked up for movies will tell you this 100x over in the many communities dedicated to these authors.

      You also choose to ignore that Kindle is a business in itself. The devices are dirt cheap to make in Chinese slave-shops, and they're limited to Amazon's own store. They may not make as much as Apple or Google, but they're making the best part of $10^8 per year using little more than e-commerce built into their existing infrastructure. Do you not read financial statements before spouting rubbish- they're freely available.

    3. Re:Selection very limited in the US by DogDude · · Score: 3, Interesting

      For the amount I read from unlimited, I am spending more on unlimited than I would if I were to simply buy the books I've read and enjoyed

      Amazon's contract was designed to benefit Amazon first and foremost

      Yet you still give them money? Did I miss something obvious in your post?

      --
      I don't respond to AC's.
    4. Re:Selection very limited in the US by mattack2 · · Score: 1

      Any contract is designed to benefit each side (in their opinion) the most.

      I don't care what their contracts are for the most part (within legal, moral, etc., concerns), as long as their products and prices are appealing to me.

    5. Re:Selection very limited in the US by Razed+By+TV · · Score: 1

      A contract is a contract. They agreed to it, they need to follow through until the contract is fulfilled.

      I think this is important to keep in mind. If a small publisher had negotiated poorly with Amazon and wanted out of a contract, would Amazon let them off the hook?

      Amazon is trying to leverage their way out of the situation. They have removed some of the publishers' content from the service, which will probably lower their costs for the rest of the contract. But it also sends a message, "Well, look at how much exposure we give you. It would be a shame if we had to cut back on it."

    6. Re:Selection very limited in the US by caseih · · Score: 1

      Yes I am, bot not for long. But you see this service is so successful because of people like me. Ones who don't really want to keep paying Amazon, but I have enough money to not really miss it each month and forget to unsubscribe from month to month. Plus there's the issue of those 2 or 3 books in my unlimited selection I've been meaning to read but haven't yet. The psychology Amazon uses really works! I don't fault them for this. There's no contract here, so they aren't holding me over a barrel. I just need to walk away.

      The contract with authors in Japan is a completely different story.

    7. Re:Selection very limited in the US by caseih · · Score: 1

      Well if a contract can be renegotiated at any party's whim that seems to cheapen and weaken the whole point of contracts. No wonder dishonesty is so entrenched in the business world. Contracts seem to be good as long as they benefit me. The moment they start to move against me, it's time to renegotiate! If both parties agree, then I have no problems with that, of course. I deal with contracts in another industry all the time and, once the deal is signed, we follow the terms. There is an out of course, but in order for it to be fair, it involves monetary compensation. If Amazon could do that I wouldn't complain. I agree Amazon did a a poor job negotiating their contract in the first place.

  7. Golden rule of business: by Anonymous Coward · · Score: 2, Insightful

    Often forgotten but essential: the one thing you must never ever be unprepared for is success. Because if you are, where is the point in even starting?

  8. oh, that easy, huh? by micahraleigh · · Score: 1

    "You really need to understand the market before you start operating there."

    Directly observing the invisible hand ... piece of cake !!

  9. Who cares for their budget? by bickerdyke · · Score: 2

    Why should publishers care for amazons budget? Was it part of the contract? I don't think so.

    Ever tried that with a doctor's bill? "Oh sorry, I have reached my monthly budget on your bills"

    --
    bickerdyke
    1. Re:Who cares for their budget? by Yalius · · Score: 1

      Uhhhh... yeah. I've had bills reduced or even waived by my doctor in the past because they were significantly higher than I'd planned. Have you ever tried?

    2. Re:Who cares for their budget? by bickerdyke · · Score: 1

      higher than YOU planned or how he planned?

      --
      bickerdyke
    3. Re:Who cares for their budget? by Yalius · · Score: 1

      Me. The conversation went kind of like this... "I don't have enough to pay for all that this month." "Well, ok, we can work with that. How much can you pay? Yeah, that will do it."

    4. Re:Who cares for their budget? by NormalVisual · · Score: 1

      And then there's "I don't have insurance". "Okay, let me cut this bill in half. Getting cash up front and not dealing with insurance saves me money."

      --
      Please stand clear of the doors, por favor mantenganse alejado de las puertas
  10. This follows Amazon's business model by subanark · · Score: 1

    Amazon banks on most people not maximizing their use of a service. E.g. there is so much in Prime right now that it is pretty to have Amazon lose money on an individual. Twitch just offered "Twitch Prime", part of Amazon Prime, which includes 1 free subscription per month. That 1 free subscription translates to $2 to $3 a month to the streamer per subscription.

  11. if amazon were an internet service provider.. by Anonymous Coward · · Score: 0

    they'd bitch and whine more than the current providers do when people actually *use* what they're paying for, then lose every 3rd packet in an effort to slow down consumption, and finally introduce a new 'prime internet' where you pay $100 a year extra just to have the service you used to.

  12. Reasonable behavior from Amazon by cmseagle · · Score: 1

    Company offers a service. Company realizes service is not profitable. Company ceases offer of service.

    What about those users who signed up for Kindle Unlimited purely for the offerings of these publishers? It's a monthly subscription. Cancel. From my own experience and from the anecdotal evidence I've heard, their customer service department is likely to offer you a pro-rated refund on the current month, if it really matters that much to you

  13. INTENTIONALLY LEFT BLANK by wardrich86 · · Score: 1

    Solid "Get Rich Quick" scheme - keep the first 10% of your books "intentionally left blank"

  14. It's Manga right? by Anonymous Coward · · Score: 0

    Did Amazon make the mistake of including Manga? They should have known that 99% of Manga is fetish/child/tentacle porn. Give people unlimited access to pornography and of course they are going to soak it up (well, soak something.) All of that black & white crude line drawing would be a perfect match for a low res black & white Kindle display.

  15. Amazon offered 1st book of manga series... by Anonymous Coward · · Score: 0

    And Japanese customers decided to use this service to check which series to buy as actual book to add to their collections.
    Since it is easy to read the entire manga book even if you don't like it very much, every downloaded manga was read.

    So Amazon ended up offering free samples to customers who didn't plan on buying from Amazon Kindle anyway and suffered a huge loss.