Kobo has moved into the ebook subscription market by launching Kobo Plus in Europe to cover the Netherlands and Belgium and is offering authors a ‘fair share’ of the subscription revenue.
The service was developed in close collaboration with leading Dutch publishers and is a joint venture between Kobo and Dutch and Belgian online retailer bol.com.
The ad for the service on both the partners’ sites describes Kobo Plus as ‘Unlimited read’, placing it firmly as a local rival to Amazon’s Kindle Unlimited. It can be accessed through Kobo’s Netherlands site or bol.com.
Kobo Plus costs €9.99 after a free trial period of 30 days. Subscribers can have up to 15 ebooks at a time on their devices, which is more than the 12 ebooks at a time offered under Kindle Unlimited.
At present, Kobo Plus has a selection of 37,274 ebooks available and they include European best-sellers, such as Lars Kepler, Herman Koch and Kluun. The No 1 seller was DJ by Kluun, which looks to be a fascinating novel featuring the world of superstar DJs in Las Vegas and the Burning Man festival. Unfortunately, the book is not available in English at present, which shows just how localised the market can be. Kluun’s previous two books are available in English and are on sale as Kindle ebooks but not through Kindle Unlimited, so Kobo and bol.com seem to be attracting authors/publishers who shun KU.
The Kobo Plus service represents great value for Dutch and Belgian readers as many ebooks are highly priced in Europe. For example, Kluun’s DJ would cost €9.99 to buy as an ebook on Kobo, which is the same cost as a month’s subscription to Kobo Plus. The Ditch by Herman Koch would cost €5.99 to buy while Stalker by Lars Kepler (the pen-name for Swedish crime writers Alexander Ahndoril and Alexandra Coelho Ahndoril) would cost €4.99.
Kobo Plus ‘fair-share’ payments for authors
For authors and publishers, Kobo is promising payouts on a fair-share model, funded by subscription revenues, to enable a self-sustaining service built for the long term. There is no requirement to be exclusive to Kobo Plus, so you could sell an ebook on Kindle (although not in Kindle Unlimited) as well as enrol it in Kobo Plus. Authors can opt into Kobo Plus on a title-by-title basis.
There’s an example on Kobo Writing Life of how the ‘fair-share’ system will work, although it uses rather unlikely basis figures.
The example given is of 100,000 subscribers paying €9.99 and reading a total of 150,000 books in a month.
It will be interesting to see if 100,000 subscribers really is a feasible target in a small ebook market such as the Netherlands (population 17 million) and Belgium (population 11.4 million). Kobo claims to have sold 1.2 million of its ebook readers in the Netherlands, so it could well be that getting around 10% of that total to sign up for Kobo Plus is achievable.
However, the figure of just 1.5 books read per subscriber is bound to be way off the reality as it’s more likely to be five or six books a month per subscriber. Ebook subscription services attract voracious readers eager to get their money’s worth and more.
Kobo has set a lower limit of 20% of a book to be read to count for a payment, which could cut their costs as some readers abandon books before they get a fifth of the way into a book.
This was the original model for Kindle Unlimited and was abandoned by Amazon after widespread ‘gaming’ of the system which saw some authors publishing very short books which required only a few pages to be read to trigger a KU flat-rate payout.
However, as shown below, the Kobo Plus system is not a flat-rate model and is based on the price of the book.
KU has since moved to a pay-per-page system which pays according to number of pages read and which has already seen the page-count basis changed.
The Kobo example payout is based on the title’s price multiplied by the price factor. I’ve added a couple of my comments in italics.
Reading Activity Value = Total number of ‘reads’ x prices of the ebooks read
In the cited case of 150,00 ebooks read, this would be (all figures exclude VAT):
Reading Activity Value = 150,000 x prices = €1,065,000
(This total would mean the average book price would be just over €7)
Price factor = Total revenues for the month ÷ Reading Activity Value
Price Factor = €825,000 ÷ $1,065,000 = 0.77464
(The figure of €825,000 for total revenues is puzzling here as obviously 100,000 subscribers paying €9.99 would mean a total revenue of €999,000)
If a title is read 100 times and the title is priced at $7.43:
The title gets €7.43 x 0.77464 x 100 = €575.56
Author/publisher gets 60% = €354.33
Retailer gets 40% = €230.22
On the same basis, if an ebook costs €0.99 then the title will get €76.68 if it’s read 100 times. The author will get €46.01 and the retailer will get €30.67.
For outright sales, Kobo pays royalties of 70% for titles priced at $2.99 or above (£1.99 in the UK and €1.99 in the European Union) and 45% royalties for books priced below this level.
Obviously, you can’t expect to get the same payment for a ‘borrow’ as for an outright sale but it’s interesting nevertheless to compare the differences:
- The author of the €7.43 book would get €354.55 for 100 Kobo Plus reads compared with €520 for 100 sales.
- The author of the €0.99 book would get €46.01 for 100 Kobo Plus reads compared with €44.55 for 100 sales.
Let’s look at perhaps more realistic figures than the example given by Kobo and say there are 100,000 subscribers and 300,000 reads (even that’s a fairly low rate). That would mean the payouts being halved:
Reading Activity Value = €300,000 x prices (€7.10 average) = €2,130,000
Price Factor = €825,000 ÷ $2,130,000 = 0.38732
If a title is read 100 times and is priced at €7.43:
The title gets €7.43 x 0.38732 x 100 = €287.77
Author/publisher gets €172.66
Retailer gets €115.11
Despite the gap between sales and ‘borrowing’ revenue, there are benefits to authors in having titles in ebook subscription services as readers are far more likely to try out a writer if they’re included in the subscription choice. That can pay dividends in attracting a larger number of readers.
It remains to be seen whether the Kobo Plus payout model will prove to be sustainable for Kobo and Bol.com as well as being fair to authors but if it does well in the Netherlands and Belgium then we could see Kobo Plus widening its reach.
Combinations are the key for Kobo
Kobo is keen on building partnerships with booksellers and completed a deal in January which saw it take over Tolino, the leading ebook marketplace in Germany. Kobo supplies the technology platform for an alliance of German booksellers to sell ebooks. In March 2015, Kobo’s owner Rakuten bought OverDrive, which is one of the major suppliers of ebooks to libraries.
Rakuten Kobo executive vice-president Pieter Swinkels says, “Globally, the demand for unlimited access to music and movies has really taken off, and we believe books is the next category that will benefit from barrier-free access. By combining bol.com’s and Kobo’s knowledge and reach, we can now offer Dutch-language readers the ultimate reading experience and make digital reading even easier.
“Kobo Plus allows readers to discover new authors and try out new genres that they might not otherwise try, encouraging people to read more. The extensive selection available through our subscription service means the only thing readers need to consider is what book to read next.”
Bol.com general manager Daniel Ropers says, “Our new ebook subscription service provides an even better answer to customers’ frequent requests to have a large number of books available at an attractive price, including best-sellers. We have found an excellent partner in Kobo. With their digital reading platform, which includes world-class e-reader options, we work towards the same goal every day.”
Patrick Swart, CEO of Dutch publisher WPG Uitgevers, says: “It will take some time for those involved to become accustomed with this new way of delivering books to readers. For publishers, a new business model entails a different approach to marketing books and for our authors it means they get compensated in a different way.
‘As Kobo Plus allows booklovers to choose from thousands of titles, they no longer have to choose just one book at a time. This “unlimited” reading solution complements the evolution we are seeing in consumer reading habits as well as book subscription trends globally. We are excited for the launch of this new product, which makes digital reading even more accessible and possibly further limits digital book piracy, and are confident it will be a success.”
Bol.com was set up in 1999 and has around 6.5 million customers. In March 2016, bol.com was voted Best Web Store in the Netherlands. It has a selection of nearly 15 million products, within dozens of specialty stores, including books and ebooks, music, movies, games, electronics, toys, jewellery, watches, baby products, gardening and DIY products, as well as goods for the home, pets, sports, leisure and personal care.