eBook Subscription Part 2: The Players

We have seen the demise of the traditional book club, but we have to ask, why? Was it a case that they held onto their old model and believed that change wasn’t required, or that that their demise happened too soon before the digital opportunities were possible, or did the new Internet retailers just blindside them, or did they simply just lack vision?

We are reminded of the Michael Porter quote, ‘The greatest danger in times of turbulence is to do act with yesterday’s logic.’

We can’t bring back the BCA or Readers Digest, but we can now see their potential digital replacements. It is too early to judge the new subscription service winners and losers, but it is fair to assume that this new genie isn’t going back in to the lamp and it will have implications across the publishing value chain. 

  

The ebook subscription service that first really raised the bar was Oyster, a US based service which offers some 100,000 titles. The service wasn’t the first subscription based trade ebook service, but it was the first to get the market profile, serious funding and industry recognition. Its ‘all you can eat for $10 a month’ model is to some a somewhat relatively high price point for a service offering such a low range. As a result they must now chase content growth as a high a priority just as much as acquiring and retaining members.

Will the new model’s rewards convince all publishers to join, or will many sit on the fence and watch and so be restricted to those who wish to take limited risks? Without the industry commitment on content subscription offers may fall short of consumer expectations, with it, they might force changes on the industry that it’s not prepared for. Will they be able to sustain potentially high churn rates as readers who don’t read? Will they it offer the full range demanded by readers or will they have to restrict themselves to limited genre where it can focus and specialise? Will it be able to remain when the big gorillas enter the market? These and many other questions are not just for Oyster but for all subscription services and the one lesson from the early streaming and subscription music market was the high failure rates in services that initially competed for that market.

The surprise new ebook subscription service was Scribd, who as an online information service often was at the centre of copyright infringement issues and operating under the protection of a ‘safe harbour’. Not only did they enter the ebook subscription market, but they did so claiming three times more titles than Oyster. Scribd now joins Amazon’s Kindle Owners’ Lending Library who have some 475,000 titles and have inbuilt the option to supply into their successful KDP self-publishing service and a service also aligned to their Prime subscription.

Others include Entitle who are basically a rebranding of eReatah and who have a tiered membership of 2 books a month for $9.99, 3 for $14.99 and 4 for $19.99. Entitle have closed on $5.3 million in Series A funding. They promote their recommendation engine and selection of their 125K titles, but their price model is both predictable and offers little for the reading commitment they seek.

In the U.S., it is claimed that some 25% of people are reading ebooks, but is this enough to support a subscription model, where it’s not that you read an ebook, but more dependent on how many and how often you read them.

We then have number national offers which are restricted by language or geography with some countries having established serious offers. Some claim Russia is a rapidly growing and significant ebook market and an ebook subscription service called has been launched by Bookmate who are its Scribd type operator. However Russia has a significant pirated ebook problem so to counter this Bookmate, charges some 10% of its customer base (around 50,000 customers) around $5.00 a month for unlimited access to some 220,000 titles in both Russian and English. Is it enough to convert today’s nonpayers to pay for a subscription - only time will tell? However, Bookmate are confident and have plans to expand the service to Turkey and then countries in Southeast and South Asia.

In Europe there are several subscription start-ups; 24Symbols in Spain, Riddo in Holland which teams up two Dutch publishers, WPG Uitgevers B.V. and Lannoo Meulenhoff B.V., Riidr in Denmark. In Germany Skoobe’s  9,99 €/month offer which enables members to borrow up to 5 titles for as long as they wish, has recently been joined by Readfy who offer three subscription plans; free access based on subscribers viewing ads, 4.99 €/month with fewer ads and 9.99 €/month for add free. All the national markets may be seen as limited, but all have the ability to also take English language content and together show market potential.

We also now have an interesting new model appearing in Spain with Nubico which again offers content from major Spanish publishing houses in Spanish, English and Catalán. However it is the joint venture approach of Nubico which joins Circulo de Lectores , a successful book club, publisher and music retailer with more than 50 years in the market, a 50/50 joint venture between Germany’s Bertelsmann and Spain’s Grupo Planeta together with Telefónica, the broadband and telecommunications provider. Telefonica was working on Movistar EBooks, Círculo de Lectores had Booquo, a subscription-based eBook platform and they decided it was better to join together than go their separate ways. Nubico is looking to take a 30% share of the Spanish ebook reading market by 2015 and have set a monthly charge €8.99 which is lower than others and also has given Circulo and Telefonica´s customers a 20% discount. Nubico is also planing to expand into Latin American interestingly backed by the regional presence of Random House and Telefonica.

Finally, we have the vertical subscription offers.

The STM (Scientific, Technical and Medical) and academic and professional segments have long enjoyed subscription services. Here it is more about essential access to authoritative content, information and references, abstract, citations etc. Scarcity lends itself to subscription both at an aggregated level as well as direct from publishers. The completion is often Open Access and finding the balance is a constant challenge but subscription prevails.

The new subscription segment would appear to be children and associated education. Here service providers want to capture and retain what is seen as a lucrative market. Amazon has its FreeTime which again built on their Prime service offers curated media on subscription and toed to parental control. Epic is a new US service designed by former game developers and publishing industry veterans aimed at children 12 and under and offering unlimited books for just $9.99 per month. The company has closed $1.4M in seed funding.

Some other niche offers will always come to market. Some will succeed and others fail and in many cases it’s down to target community, content authority and brand awareness.

Tomorrow we will look at the new opportunities for subscription services.

Rethinking the Digital Future

Technology is not only changing how we do business and is introducing a significant challenge in reducing the time to do business. As technology speeds up processes it also highlights those age old time blockages and inefficiencies that didn’t matter, or could not be addressed yesterday. Technology now enables us need to look afresh at the end to end business and consider how we can do things quicker and smarter.

Today when we look at publishing, we often see a market littered with ‘gatekeeper’ checkpoints. These barriers were not only aimed at introducing quality control, reducing the flow of traffic and they also often to slowed down the process itself.

Manuscript submissions, acquisitions, development and production can take months if not years. There may appear to be perfectly good reasons why it should be as slow as it is, but it is now clearly restrained by people rather than technology. The way works are also marketed, promoted and sold, could be said by some to belong to a bygone age that was more obsessed with feeding the shelf, events and calendars and those 13 week windows, than satisfying today’s real time world of instant gratification.

However, like many markets, we are obsessed with the consumer end. After all, the consumer is the only one that puts money is and despite what some marketers think, is the only one who decides the true winners. When we look at the end to end process we often view it as not one marketplace but a series of linked marketplaces each with their own gatekeepers, fiefdoms and find that they are often overly protected from each other. Despite the huge advances and improvements to Supply Chain communications, some what suggest that we still do business by ‘slipping notes to each other under the door’.

What if we could tear up today’s processes and redefine the role of the gatekeepers?

What if we could view the business as one end to end marketplace?

What if Michael Porter’s linear Value Chain model was a virtuous circle with no start and end?

What if we viewed the business as one integrated marketplace with content and associated rights at its core and the players and activities being just that and periphery to that core. More importantly, what if we recognised that all players could effectively participate at any time?

Imagine consumers being able to access and comment on manuscripts alongside agents, publishers and retailers, some will say its already happening. Imagine living bibliographic records being managed as ’wiki’ records where they are developed not so much in a vacuum but as crowdsourced documents that never stop being updated, appended to and refined. Imagine the elusive rights registry being open to all.

An inclusive ‘book’ marketplace perspective could change not only how we do business, the speed in which we do business but the relationships within the business? It could remove some of the adversarial and holier than thou attitudes that continue to dog the industry. It could create a new level of interest and participation that is more organic and spontaneous than today’s often ‘manufactured’ approach.

This holistic marketplace may appear unfamiliar, dangerous, exciting and to some a bridge too far, but it is the direction that technology, social networking and networks are clearly taking us today. We don’t fully understand the implications on today’s roles, processes and business and the route is somewhat dynamic and unpredictable but it is happening and the genie is not going back in the bottle.

The key is to see one holistic marketplace.

When we look at the likes of Amazon, Kobo and others we see businesses uncluttered with yesterday’s thinking and ready to redefine how we do business tomorrow not just at the consumer end but within the new virtuous circle of value.