My plan to pay for one million books

Yesterday I wrote about three eBook distribution companies who are working on new approaches to streaming and making eBook titles available. The basic concept is something like Spotify, Pandora or Netflix for books. You pay a monthly fee and in turn, you have access to a massive library of music.

Today I want to explore what a payment model could look like for this new technology.

As with other industries (music and film), there is very little set in stone at this point, and pretty much everyone is still adjusting to the fact that there is way less money in selling product now (CDs, DVDs, books) than there was 10 years ago, and that leaves less to go around. At the same time, the big music, film and book players don't want to shrink as companies.

So, how much should each stakeholder get paid when a book gets read on one of these new services?

That's the question.

I'll start with how much those stakeholders earn now.

For a self-published book, the only folks making money are the retailer and the author. Authors make anywhere from 30-70 percent of the retail price (if it's an eBook  the author may also need to pay a cut to their distributor). So on a $10 book an author makes $3-$7, and the retailer makes the rest.

For a traditionally published book, an author will get 5-25 percent of the retail, and the rest goes to the retailer and the publisher.

An eBook streaming model

Let's say people are, as yesterday's survey indicated, willing to pay $5 a month to access a library of eBooks. That's $60/ year.

Of that $60, I would say that 50 percent should go to the service and 50 percent to the authors and publishers, based on the ratio of how often people are viewing/reading their book.

But the kicker, I think, is that each book should have some sort of "tip jar" where the reader can give a tip to an author if they particularly like the book.

What do you think would be a good way to split up payments from eBook streaming services?

Image courtesy of HM Education