NEW YORK (MainStreet) — Voracious readers may soon have a new way to get their fix as Amazon (Stock Quote: AMZN) is rumored to be launching an e-book rental service similar to what Netflix has done for movies, The Wall Street Journal reports, but just how much this kind of service should cost remains a matter of debate.
According to the Journal, the digital book rental option would most likely feature older works and be offered as part of Amazon Prime, a $79-a-year service that provides users with free two-day shipping and instant movie streaming. If the book rentals prove popular, analysts say other companies could follow suit, raising the issue of what pricing model would entice consumers and publishers to sign up.
“It will depend on the success Amazon has. If the Kindle tablet takes off, coupled with this service, then Apple will have no choice but to respond,” says Rob Enderle, principle analyst for the Enderle Group, referring to the tablet Amazon is also rumored to be working on. Enderle predicts that Barnes & Noble (Stock Quote: BKS) may decide to dabble in book rentals as well and says he’s surprised they haven’t tried to do so already.
While Amazon can use the service as a value-add to incentivize consumers to sign up for their $79 premier plan, Enderle suggests that other companies might choose to market it as a stand-alone feature whose price essentially matches the $7.99 Netflix charges to stream unlimited movies every month. For this price, he expects that Amazon customers would be able to rent a large number of e-books on their Kindles at any given time and would have access to those books until they return them or cancel their membership.
“I do expect it will be probably closer to the streaming model for Netflix,” Enderle says. “Most folks can’t consume more than a few books a month, but if you get a power reader, it’s like the heavy guy who goes into the all-you-can-eat buffet and makes up somewhat for all the light eaters.”
Other analysts such as Rebecca McPheters, founder of McPheters & Company and the former president of Simmons Market Research Bureau, estimate the cost could be a little higher, at about $10 or so a month, in part because of the need to provide more of a monetary incentive to publishing houses.
The great difficulty Amazon and other companies might face with this rental service, the analysts say, will be the actual books that are available. Any book that has come out within the previous year generally comes at a higher premium – as evidenced by the cost of hardcovers compared with paperbacks – making it less likely Amazon will be able to offer this with its service.
“For a heavy book buyer, the books they want to consume probably won't be in the service,” Enderle says. “So it will be interesting to see if Amazon can balance the quality of the content with the price of the service.”
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