Will Amazon Find Success in Kindle Unlimited?

Amazon.com (NASDAQ:AMZN) is launching a new, all-you-can-read subscription service called Kindle Unlimited. For $9.99 per month, subscribers can read from Kindle’s library of over 600,000 e-books and listen to 2,000 audiobooks available through Audible.

Kindle Unlimited officially launched on Friday, but the subscription service made waves earlier this week, when Amazon briefly published test pages announcing the new service. Amazon has already entered the content-subscription space for TV and video, through its Amazon Prime membership program.

The 600,000 titles available through the Kindle Unlimited represent a small portion of Kindle’s total library. Amazon’s website touts that it offers 1 million books for $4.99 and under, and over 1.7 million for $9.99 and under when purchased individually.

Kindle Unlimited will compete with startups such as Scribd and Oyster, which both offer titles from HarperCollins and Simon & Schuster. Scribd offers 400,000 titles for $8.99 per month, while Oyster’s library gives readers access to 500,000 titles for $9.99 per month. Scribd has reportedly raised over $25 million, while Oyster raised a $14 million round led by Highland Capital Partners earlier this year.

While no small startup likely wants to go up against a behemoth like Amazon, publishing industry analyst Mike Shatzkin says Scribd and Oyster aren’t dead in the water just yet.

“They have a more robust selection of titles and a more powerful selection of titles,” said Shatzkin, owing to their partnerships with HarperCollins and Simon & Schuster. Indeed, the books mentioned in Amazon’s press release include “The Hunger Games,” “Diary of a Wimpy Kid” and “The Lord of the Rings” – titles not likely to wow voracious readers.

The CEOs of both Scribd and Oyster say Amazon’s entrance into the e-book subscription space is a sign their businesses are onto something big.

"The entrance of Amazon into the subscription market is exciting for the industry as a whole. It's validation that we've built something great here at Scribd. Publishers, authors and readers alike have all seen the benefit, so its no surprise they'd want to test the waters. Successful companies don't fear competition, but rather embrace it, learn from it and use it to continue to fuel their own innovation which is exactly what we intend to continue doing,” said Scribd CEO Trip Adler in a statement.

Oyster CEO Eric Stromberg said he wasn’t surprised by Amazon’s new service. “They have pivoted from transactional to subscription-based in other media, and have had limited success. They really paved the way in e-books, and it’s exciting to see them embrace the market we created as the future of books,” said Stromberg. In order to compete for the attention of serious readers, Shatzkin suggested that Amazon will need to bulk up its offerings – but said he doesn’t know how high a priority this will be for Amazon. “Amazon has different measures of success. They are adding something to an existing business, not trying to start a new business, so the bar is not as high for them. I’m not sure how urgent they will see any of this,” said Shatzkin.

Amazon has had tense relationships with publishers in the past. The company is currently embroiled in an ongoing fight with publisher Hachette over e-book pricing.

Terms were not disclosed for the relationships between Amazon and the publishers of books available through Kindle Unlimited.

Though Shatzkin said big publishers such as HarperCollins, Simon & Schuster, Macmillan and Penguin Random House may entertain working with Amazon, he said they may feel it’s dangerous to strengthen Amazon’s presence.

“I doubt very much that anybody’s first choice of a subscription partner is Amazon. Publishers don’t want to see concentration of the retail market – they want to see diffusion of the retail market,” said Shatzkin. Amazon’s shares were up 1.15% by midday on Friday.