TOKYO— Amazon.com Inc. 's all-you-can-read subscription service in Japan was so successful that it had to be sharply scaled back within weeks of its introduction.
That is the seemingly paradoxical explanation being offered by Japanese publishers after a clash broke out this week over Amazon”s decision to remove more than 1,500 titles from the service.
The Kindle Unlimited service started in Japan in August, offering unlimited reading of hundreds of thousands of Japanese and foreign titles for a monthly fee of ¥980 ($ 9.60).
As part of a deal to attract customers to the service, Amazon made contracts with Japanese publishers to pay them a premium through the end of this year when a customer read at least 10% of a book or other content, and publishing company officials said. The goal was to get publishers to offer popular content.
It worked—too well. Since it’s easy for readers to get through the first 10% of a magazine or photo book in just a few minutes, Amazon quickly found itself on the hook for large payments, in person at one publisher said.
A person at another publisher said Amazon made an overture for talks in September saying it had hit its budget limit for the payments to publishers and wanted revisions to its contract with the publisher.
Amazon declined to comment on the specific reasons for the changes to its content lineup, but it said the situation was normal for an e-book subscription service.
"As is typical for many such services—in books, movies, and other categories—titles regularly rotate in and out of the catalog," an Amazon spokeswoman said in an email statement.
"Kindle Unlimited”s catalog is also a subset of our larger bookstore, where customers can purchase these titles for sale as usual," she said.
While the Kindle Unlimited is a new and relatively small part of Amazon’s business in Japan, the bad publicity could dent the company’s image in one of its most important global markets. Amazon’s Japan business brought in about $ 8.3 billion in sales in 2015, nearly 8% of the global total.
The company is a major supplier of everyday household goods and has introduced many of the same services it offers in the U. S., including unlimited shipping through Amazon Prime and one-hour delivery in selected areas.
In August, the antitrust authorities raided Amazon”s office in Tokyo over allegations that it forced retailers to set their prices lower on Amazon to give the site an advantage over rival e-commerce sites. Amazon Japan declined to comment on the allegations.
The removal of titles from Kindle Unlimited has angered publishers, which said they didn’t want to take the blame from customers over the deletions.
Kodansha Ltd., a Japanese publishing company, said Amazon made a "one-sided" decision that was a "major drawback" for subscribers.
Amazon has been a major electronic book distributors around the world, and this isn’t the first time its e-book services came under fire. Last year, European Union regulators opened a formal investigation into Amazon”s e-books business to see whether Amazon used its market power to force publishers to accept terms that harmed e-book purchasers.
Amazon said at the time it was confident its agreements with publishers were "legal and in the best interests of readers," and it pledged to cooperate fully with the investigation.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com
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