Incorporated as “Cadabra” in 1994 by Jeff Bezos, the company went online the following year as amazon.com. It started as an online bookstore but soon diversified into DVDs, CDs, MP3 downloads, software, video games, electronics, apparel, furniture, food, toys, and jewellery. Apart from online retailing, Amazon also produces consumer electronics, notably the Amazon Kindle e-book reader and the Kindle Fire tablet computer, and provides cloud computing services.
Amazon unveils 'rent an e-book' monthly subscription plan for mobile devices
Monthly subscription will offer unlimited access to the online giant's catalogue in a move that could shake up the industry
Online giant Amazon has unveiled a Netflix-style subscription plan for unlimited access to e-books, a move which could shake up the world of publishing.
The US$9.99 per month Kindle Unlimited programme offers access to around 600,000 titles in the Amazon Kindle format.
Subscribers will be able to access the books on Amazon's Kindle tablets, as well as other devices with a Kindle app, including iPads and iPhones, Windows devices and Android-powered mobile gadgets.
Amazon is using a model made popular by Netflix for films and television programmes, but also by services such as Spotify for music.
Colin Gillis, a technology analyst at BGC Partners, said the move to subscriptions was part of a trend towards "a 'rent, not own' society. We see it with music, with movies. It makes sense that they would do that with books".
Gillis said the move was "a logical extension" for Amazon but would not produce "meaningful" revenues anytime soon.
James McQuivey, an analyst at Forrester Research, said most new or bestselling books would not be offered because Amazon did not have the rights to include them in subscription packages.
Amazon would initially have many self-published books and titles from small and independent publishers but could use its market power to force the hand of major publishers, he said.
"The subscription idea is very popular with consumers for digital content," McQuivey said.
"Amazon sees this. And they could wait for publishers to come in or they can try to make it happen and control it. Someone is going to figure out how to build a consumer brand around subscription books and force publishers to participate, and Amazon can't afford for it not to be Amazon."
Publishers, meanwhile, are resisting the subscription model because it effectively cuts the price of books and royalties paid.
"If you're a publisher and a big one, you don't want the world to think the new Dean Koontz novel is free," McQuivey said. "You're already mad that Amazon discounts it. The big publishers don't want the price pressures."
Despite this, Amazon knows that some of its readers will be receptive to this model, McQuivey said.
"Amazon knows its customers," he said. "They know if you read a mystery every week, they know whether they are in a position to make you an offer you can't refuse."
He noted that this could be a great offer for a segment of Amazon customers but not others.
"If you're a one-book-a-month reader and a bestseller person, this isn't going to work for you," McQuivey said.
Wedbush analyst Michael Pachter echoed that point, adding that the limited book selection might be disappointing.
"Amazon is throwing a lot of stuff at the wall and seeing what sticks," he said.
Roger Kay, analyst at Endpoint Technologies Associates, said the new Amazon system has the potential to change the economic model for publishers and authors, because the price of US$9.99 is roughly the cost of a single e-book.
"If I'm a big reader, I like it," Kay said.
"And then I begin to wonder what happens to the authors. They get paid usually with a percentage of the sales. So this further destroys the economic model that has been feeding the authors."
The Kindle Unlimited service will also include audio books.
The service is being launched for US customers, with other countries likely to follow.
In the book segment, similar services are offered by Scribd, which offers some 400,000 titles for US$8.99 per month, and Oyster, which charges US$9.95 for access to its catalogue of 500,000 books.
Additional reporting by Associated Press