#FutureChat: Can subscriptions pay off for all kinds of books?

#FutureChat: Can subscriptions pay off for all kinds of books?

Join us each Friday when our #FutureChat with The Bookseller's FutureBook community focuses on a topic in publishing and the digital dynamic. We'll be live on Twitter at 4 p.m. London time, 11 a.m. New York time, 8 a.m. Los Angeles, 5 p.m. Berlin, 3 p.m. GMT.

 


What if all the fitness club members actually come to the gym?

If I had a dollar for every time I had seen a pitch for a subscription-based ebook platform, I would by now have launched my own.

And right about now, you could be forgiven for feeling that The Bookseller's Philip Jones is the only guy who hasn't launched a digital book subscription. In his lead editorial for today's edition on the stands in London (page 3), Subscribe here now, he writes:

Once ubiquitously referred to as "Spotify for ebooks" and now "Netflix for ebooks," its moment has come and, in retrospect, we should not be surprised. That trade publishers did not stop for subscription never mean subscription wouldn't stop for them.

And for thee: we hope you'll join us today for our weekly #FutureChat discussion on the whole issue of subscriptions for books, brought so energetically into focus for us all when Amazon introduced its Kindle Unlimited (KU) programme a week ago. Yes, a week ago. Time flies when you're trying to keep up with the digital disruption.

Need something to read? If it only were all reference materials!

With that special charm all his own, Mike Shatzkin has titled his new commentary on the matter: Subscriptions are in the news this week.

And before you can say, Oh, really?,  he brings up the Book Industry Study Group's (BISG) extensive and remarkably timely 86-page survey report, Digital Books and the New Subscription Economy.

Our interview with one of the study's two main writers, Ted Hill of THA Consulting, is here at The FutureBook for you: As served up by our headline, A buffet of digital book subscriptions, the biggest points of the survey results revolve around the groaning-board array of variables and models that can be found on the long table called "subscriptions."

Mike Shatzkin
Mike Shatzkin

Shatzkin picks right up on this as he surveys the survey, himself:

It is hard to quarrel with the report’s contention that “subscriptions are here to stay”. The report makes clear, and documents extensively, that there are a great variety of ways subscriptions can be offered and that tools making it easier to manage them are becoming cheaper, better, and more ubiquitous. The report suggests that subscriptions could occur for as narrow an offering as one author’s works. As technology enables subscription offers to be economically viable with less and less revenue, the tendency for more and more publishers to want to “own” their customers, combined with the tendency for publishers to build up their intellectual property inventory in an audience-centric (vertical) way, either organically or by acquisition, it is easy to see how they could proliferate.

And he goes to one of the same points that Hill's explication of the study's findings does -- and that Jones, in fact, highlighted last week in his report, Safari looks to build on subscription success.

In the very broadest, most woefully over-simplified sense? Nonfiction, and especially how-to or technical material, may well be expected to find a footing in subscriptions, and Andrew Savikas' stewardship of the O'Reilly-Pearson service Safari is the proof in our buffet's pudding.

So sophisticated has Safari become at providing, say, two pages of a computer-reference book to a subscriber -- and paying its publisher through a "shared-pool" formula for just those two pages -- that Savikas is now focused on a new effort in discovery. Jones writes:

Safari’s new reading platform is an attempt to guide users to chunks of content “from deep within books”. As Savikas said: “While lots of our customers—especially those working in libraries—are still looking for what is fundamentally a reference database, we know that many others want something a bit different. They aren’t looking up something they already know they want; they’re looking to learn something new or find something interesting to read and watch, suggested to them in the kind of continuous stream. I think we’ve really nailed discovery for content below the level of a full book, helping customers find the right chapter, section, conference talk or video course.”

But what about the other side of the buffet? Can trade fiction simmer as easily in our digital chafing dishes?

And, just to make things more complicated, BISG's study makes it very clear that the all-you-can-eat "Netflix model" -- I guess that's really all-you-can-watch, don't try eating those DVDs or downloads -- isn't the be-all or end-all, either.

Catering to what's popular, but on whose terms?

Shatzkin says it for many of us:

The consumer ebook business is a different animal and it is far from obvious (to me) that a model can be constructed that will satisfy all the stakeholders and provide profits for the model owner. But the pieces are certainly in place for us to find out.

It is clear from the catalogs presented by KU, Oyster, and Scribd that the jury on subscriptions is still out because big publishers are still reluctant to participate. No Big Five house has put books into Kindle Unlimited.

Readers of today's The Bookseller, in fact, will find on pages 4 and 5 the report Subscriptions call contracts into question. In it, Jones and our colleague Sarah Shaffi take note that HarperCollins UK has followed the lead of its New York headquarters in making an agreement with Scribd. In the UK, some 3,500 backlist titles are headed to the subscription service later this summer.

Philip Jones
Philip Jones

Whcn Shaffi and Jones describe the deal, they explain:

Under the terms of the agreement with Scribd, HarperCollins receives a fee for each title once a user reads beyond a certain point—believed to be around 10%. Redmayne stated: “Any browsing above this initial amount will qualify as a sale to the consumer, with a fee being payable to us by Scribd and upon which we will pay our e-book royalty to our authors.” The arrangement is similar to how Oyster operates, and how Amazon is paying publishers whose titles it has put into Kindle Unlimited in the US.

And here is the other main mode of remuneration for books from subscription services, as Hill and BISG delineate in their study: The "net sales" model, as opposed to the "shared pool" model, is the one in which after reading a certain percentage of a book -- 10 percent seems to be the going number at the moment -- a "sale" is credited to the publisher or author who is to be paid for the subscriber's use of the book.

This comes into play in the new Amazon KU model, but with a very controversial combo:

  • If you're a publisher (and there are some in the KU program, though no Big Five houses yet), after that 10-percent threshhold is reached, you're paid the wholesale rate for the book.
  • If you're a self-publishing author whose book is read to the same 10-percent threshhold, you're paid from a "shared pool" called the Kindle Direct Publishing (KDP Select Global Fund, from which you're also paid for free borrows of that book in the Kindle Owners Lending Library. The payment per book credited as a read is expected to be around $2, based on the lending-library operation.

And -- since we do love controversy in the industry! the industry! -- to be part of the new subscription programme, Amazon's independent authors, unlike publishers, have to enroll in KDP Select, with its reqirements of exclusivity (Amazon-only) for three months at a time.

Well, you can imagine where that takes us:

Is all this fair to the authors?

Today's Bookseller coverage takes note of a quickly developing quarrel (what, in publishing?) in which the Society of Authors (SoA) and the Association of Authors' Agents (AAA) are questioning how a 10-percent read of a book can be considered a sale. Why? Because authors get that much-debated 25-percent royalty for an ebook sale. But they get 50 percent of a sub-license. So, to these authors' groups, that sale sure looks like a sub-license.

And, oh, yes, there's more. Even before we say "academic and scholarly publications."

Impact, imagined and otherwise

Our brother in journalism, Michael Cader of Publishers Lunch, has done us all the favor since KU was launched by Seattle, of keeping an eye on what that may mean to the Amazon top-100 paid Kindle rankings of books.

His new calling is keeping us all abreast of, in fact, some eye-opening shifts in how those rankings shake out, too.

As those authors' agencies (SoA and AAA) are debating, a subscription "borrow" or "rental" is counted as a "sale" -- but is free, remember, to the subscriber, in this case to the $9.99 monthly KU programme -- what doe s this do, then, to a ranking that just eight days ago was driven by direct sales of the books it listed.

Well, as of Thursday's report, Cader could tell us that the 75th anniversary of Batman's creation seems to have done a number of its own on things, the Caped Crusader "taking over 10 slots, including the No. 1 position) on Wednesday. Holy comics clout, Robin.

But this can probably be regarded as a condition that won't persist much past the anniversary, and Cader was able to handle it this way:

KU books still claim half of the top 50 titles, though (25 today, versus 24 yesterday), and Amazon Publishing's own titles still show the biggest boost. The traditional publisher titles included in KU lost the most ground, sliding from 15 yesterday to 10 today.

Remember that as yet no Big Five publishers are participating in the KU programme. And what Cader's week-by-week comparisons of the last month or so and this past first week of KU show us is a sharp and pronounced uptick in Amazon Publishing and KDP Select titles, along with those of several publishers (non-Big-Five) that are participating in KU.

Lisa Campbell
Lisa Campbell
Sarah Shaffi
Sarah Shaffi

In other words, the advent of KU appears to be skewing what is reported as the Top 100 titles in the Kindle world, and in a robust jump-around of the numbers. We'll be looking to Bro Cader for more of these insights.

And meanwhile, when thinking about impact, we do have to remember what Jones points out in his editorial, looking as he does at one service in particular:

Scribd's Achilles' heel is that the more its customers read, the less it will make.

You often get this as the fitness-club-membership analogy: When you subscribe to the gym, its head office hopes you won't come too frequently. The more monthly fees that come in the better. But if everybody turns up to work out, there won't be room to shrug your trapezius and the line for the Smith machine will be four blocks long.

Similarly, an all-you-can-eat (or -curl) model for a book subscription of the fabled "Netflix for books" kind depends on a lot of people not reading -- at least not past 10 percent of a book -- so that the service isn't paying too frequently for books used.

Trip Adler
Trip Adler

Who's undaunted by all this? Why, the personable and upbeat Trip Adler, of course, founding CEO of Scribd. (He tells me it's pronounced "scribbed" -- or "sribb'd" to be exact. Horse's mouth.)

Adler tells The Bookseller's Shaffi and Lisa Campbell:

If you look at other spaces such as video or music, subscription and streaming models have gone mainstream. I can definitely see a future where the majority, or a really large proportion, of reading activity switches to the subscription model.

And like our gym owner, Adler's watching the parking lot and hoping it doesn't fill up any time soon:

The average reader reads a little less than one book a month and that’s how we have been able to make the model work profitably. We definitely do have the binge readers who read 20 or 50 books a month, but it’s a pretty small fraction of the overall user base.

And this is a pretty small fraction of the ins and outs of the digital-book subscription issue.

Let me give you three things to mull while waiting for our #FutureChat to start:

(1) As BISG tells us, the whole field of subscriptions is more complicated than we think -- and it's here to stay in one manifestation or another. It's not even that new, the study points out. It's just newly challenging as digital gives it fresh leverage.

(2) As Shatzkin ponders:

What if Scribd and Oyster and KU build big subscriber bases? And what if those subscriber bases tend to buy fewer books outside the subscription offering? It is in a publisher’s DNA to push books into any channel that will take them. They have resisted the subscription offers so far because they don’t want to empower an aggregating intermediary the way Amazon is now empowered (which is why KU has the hardest time pulling big publisher books into its aggregation) to beat them down on terms. This is good forward thinking if staying out stops the subscription services from reaching viability. But what if it doesn’t? How long can publishers refuse to participate in revenue opportunities for their books and authors?

(3) And as Jones asks, doesn't the arrival of Seattle on the scene mean that there may well be some sort of glitter, if not gold, in these hills? He hits several important buttons this way:

Amazon’s decision to launch its own subscriber platform—Kindle Unlimited—suggests that it believes one of the newer players has at least a small chance of succeeding—and that too should focus minds. It is the first time I can remember Amazon launching a more expensive, worse service purely as a defensive measure. In co-opting self-published titles into its offer, it also runs the risk of alienating its fiercest supporters, the indie writers who, unlike publishers, must share a pool funded by Amazon, based on a reading threshold Amazon reserves the right to alter.

So. Can subscriptions work for all kinds of books? How about for all kinds of authors? And for all kinds of publishers? And for all kinds of readers?

Come help us sort it out today in #FutureChat. No subscription required.

 


Join us each Friday when our #FutureChat with The Bookseller's FutureBook community focuses on a topic in publishing and the digital dynamic. We'll be live on Twitter at 4 p.m. London time, 11 a.m. New York time, 8 a.m. Los Angeles, 5 p.m. Berlin, 3 p.m. GMT.

 

Main image - Shutterstock: Kzenon