Do you subscribe to subscriptions?

Do you subscribe to subscriptions?

This story was originally written as a walkup to Friday's #FutureChat. Join The Bookseller's FutureBook digital community on Fridays for #FutureChat at 4 p.m. London (BST), 5 p.m. Rome (CEST), 11 a.m. New York (ET), 10 a.m. Chicago (CT), 9 a.m. Denver (MT), 8 a.m. Los Angeles (PT). 


Many young, digitally oriented companies enjoy taking a specific kind of staff photo these days, I'm sure you've seen it. In such a photo, everyone is happily gregarious but individualised. Several staffers laugh together. Two or three peer at some paperwork as if it were intensely interesting. Another small knot of employees watches something on a screen. Personality and camaraderie are the order of the moment. 

Here is just such a shot, and it's well done. This is the  Mofibo ebook subscription team. Based in Copenhagen, some of these folks are seated on Arne Jacobsen chairs -- you can see the back of either an Ant Chair or a Series 7. Many in the photo wear bright red headphones — audiobooks, what the Web site calls "reading with your ears," play into Mofibo's service. The image is from our profile of Mofibo c.e.o. Morten Strunge, by Lasse Winkler and translator Johanna Westlund.

And you might notice something else: books. Hardback and/or paperback books. Several staffers read from these books. A small pile of them is on the floor. At least one staffer looks at her book a bit gingerly, as if if's the first time she's encountered one of these throwbacks to a paper era. Only a couple of staff members seem intent on their phones — from which they might be reading. Otherwise, we don't see any identifiable digital reading going on.

As far as this pleasant photo goes, it's a minor factor. 

But in terms of subscriptions today in publishing, this peculiar mix of media in that image is telling: robust arguments seem to lie on both side of publishing about subscriptions. 

'Really taking full advantage of these new insights'

From Strunge's company, we read chief business development director Nathan  Hull writing about the importance of the reader-behavioural data that Mofibo develops and shares with its participating publishers:

Mofibo seeks to truly understand the reader and then inspire them. In fact, our whole existence is based on giving our users the right book at the right time. We aim to identify emotional considerations so our users can find books based on tonal and mood search and recommendation, not just on metadata and keyword searches. In short, we understand the relationship between books and our readers deeply — and this is exactly the data we share with publishers. 

In fact, Hull — who left Penguin Random House's digital directorship to take up the post with Mofibo — sees subscription and its ability to generate insights as as transformative for the industry:

When we truly understand reader habits, there are some fascinating, imaginative questions we can begin to ask ourselves about the future of storytelling. For example, what innovative new shapes could narratives take when authors know certain audiences read every day for exactly 16 minutes on their commute?

'To take the model even further'

That question of "innovative new shapes" is on the mind of Olive Software's Joe Wikert, too.

In The evolution of ebook subscriptions this week, he writes:

Today’s ebook subscription providers offer a nice value proposition for avid readers. It’s great that the all-you-can-read models from Oyster, Scribd and Kindle Unlimited provide consumers with something other than the print model where you buy one book at a time. Now the industry needs to think about how the subscription option can evolve further and enable even more interesting business models.

And Wikert is ready with a couple of suggestions.

  • He talks about "a great opportunity to create a one-book subscription," as odd as that sounds. What he's talking about is technical, nonfiction material -- "how-to guides and reference materials." Knowing that this kind of book often has rapid updates and additions, he writes: "For $x/year the publisher offers to keep the digital edition up-to-date and the consumer is reassured they haven’t bought an obsolete product."
  • Wikert also is interested in "small libraries of highly focused content," and he uses sports books as his example here: "As a baseball fan I can tell you that Oyster’s sports library is pretty shallow. The problem becomes even more noticeable this time of year when publishers are releasing a bunch of new titles for opening day; you typically don’t find many new releases in the ebook subscription programs.Rather than leaving new titles out, why not feature them in a mini-all-you-can-read library for a topic like baseball? If one publisher has the title depth they could do this on their own. Most topics would benefit from a multi-publisher solution though. In that case, a provider like Oyster could offer this as an add-on to their current $9.99/month model. I would gladly pay an additional $5/month for access to newer releases of baseball books in my Oyster subscription."

Wikert goes on, however, to write that "the industry's aversion to risk" suggests that reaching for deeper innovation in the model may not happen easily:

It took the combined efforts of two startups, Oyster and Scribd, to get the publishers this far in embracing the subscription model. Let’s hope another startup comes along to take the model even further.

'I don’t believe in subscription'

If Wikert worries that publishers aren't eager to look at more potential in subscriptions, my colleague Philip Jones (pictured) at The Bookseller has one major publisher on record this week saying just that. 

Jones has an extensive interview with Tim Hely Hutchinson, chief of Hachette UK, about to make its move to new offices at Carmelite House in Victoria Embankment, and in that conversation, Jones draws out Hely Hutchinson on the topic of subscriptions as an option. Jones writes of Hely Hutchinson:

He doesn’t see subscription as the answer—“people are always pitching new models to me, and the first thing I say is that the existing model works really well. I don’t believe in subscription. I don’t see how it would do anything other than cannibalise the business we already have. I know other people take a different view. Within the limits of the law, I hope [HarperCollins UK c.e.o.] Charlie Redmayne will explain it to me, because I don’t get it.” Neither is he interested in selling direct—“I don’t think the consumer wants it. The last thing I think we should be doing it undermining our customers, the retailers.”

And Hely Hutchinson's (pictured) rationale is based in revenue as the prime directive. Innovation, yes, he tells Jones, but not for its own sake -- which is almost ironic in the question of ebook subscriptions because of Hachette's deep catalogue in digital books. Jones quotes Hely Hutchinson:

“Everyone wants to make themselves out to be the most forward-thinking publisher, but I’ve taken a more hard-headed approach: you get no marks here for simply innovating, everyone’s energies are focused on generating revenue. We have the largest market share in e-books, at around 30%. Of course I encourage innovation, but what I’m really looking for are new ways of making revenue. Others talk a good digital game, I tell my people to talk about the money.”

'Customers who read occasionally or very seldomly'

It's in Winkler's profile of Mofibo's Strunge that we get the element of the major subscription services that tends to make them seem at best unsavoury and at worst unsustainable. We might call this the "Please Don't Read Any Books" problem. As Winkler writes:

The key to success, Strunge says, is to get enough customers who read occasionally or very seldomly. All of Mofibo’s advertising is aimed towards this market.

What's different at Mofibo — which to date is in Denmark and Sweden and will soon begin operating in The Netherlands — is Strunge's (pictured) apparent comfort with this reality and willingness to pursue the sector without remorse. My normal analogy here is the gym member who works out only in January and then is never seen again. Many fitness centers thrive on just such memberships but they don't usually talk about it. Strunge talks about it, telling Winkler:

We will only make a profit if we manage to reach the ‘medium’ and ‘almost-never’ readers. And in that case, we will expand the market.

Like Hull, Strunge stresses the benefit of reader data for publishers. You do have to wonder, though, how much data from committed readers is coming in if, as Strunge tells Winkler, only some three percent of subscribers are doing 20 percent of the reading. Maybe it's the data of the "medium" and the "almost-never" readers that publishers are after. If so, Mofibo may offer 97 percent of its subscriber base as value. Winkler writes:

Publishers can see which books are read and how often. They can also see how the books are being read: for example, they can find out if lots of readers stop reading a particular book at the same point. ”Can the publishers use this knowledge in order to make the next book better? We want our readers to finish a book, so we get happier clients,” said Strunge.

#FutureChat on a present topic

Watch for more, much more, about subscriptions. Perhaps to the surprise of many, the two majors, Oyster and Scribd (pronounced "Scribb'd") are still with us. Early forecasts that they'd implode under partial reads and without major commitments of new material haven't panned out. 

At Orna O'Brien's Publishing for Digital Minds conference (#PDMC15) that opens the London Book Fair (at Olympia London) on the 13th of the month, Hull chairs a panel called "Subscriptions: Busting the Myths." 

At Rüdiger Wischenbart's Publishers Forum in Berlin (#pf15) on the 27th and 28th, it's Hull again, presenting his rationale for how subscriptions could change "the entire value chain" in publishing.

At The Bookseller this morning, my colleague Lisa Campbell quotes Hachette Livre chairman and c.e.o. Arnaud Nourry joining Hely Hutchinson in condemning subscription as a viable alternative, and in no uncertain terms. Campbell:

Nourry said the subscription model was a “flawed idea” even though it proliferated the music business. “Offering subscriptions at a monthly fee that is lower than the price of one book is absurd,” he said. “For the consumer, it makes no sense. People who read two or three books a month represent an infinitesimal minority. And there are bookshops. If I seem like a dinosaur, so be it. My colleagues at Penguin Random House say the same thing.”

In fact, Campbell points up the unusually sharp divisions in the industry on the topic, noting Penguin Random House's Tom Weldon last year nixing subscriptions in his on-stage keynote talk with Jones. Weldon uses the "cannibalising" phrase in his evaluation of the model. But HarperCollins' Charlie Redmayne has declared himself a fan. Writes Campbell:

HarperCollins, along with Simon & Schuster, has signed up to several subscription platforms including the US-based Scribd and Oyster. The publisher's c.e.o Charlie Redmayne spoke of the merits of the digital subscription model in a recent speech at the Publishing Scotland Conference in February. “It's beyond me why other major publishers have not followed us; the model protects authors' content and the value of it, and makes sure publishers make more money for the books," he said. "It's part of the publisher's role to develop new models [in the industry)." 

  • Could the flat-rate subscription flourish at Amazon's Kindle Unlimited without what some authors consider to be punishing exclusivity requirements and a near-caste system that pays self-publishers from a pool but traditionally published authors regular percentages to their publishers?
  • Have we turned some sort of corner on the outlook for the Oyster-Scribd-Mofibo model? Or are we still on implosion watch for these huge catalogues of mostly backlisted and self-published (from Smashwords) material by unknown authors in tens of thousands of titles?
  • Strunge at Mofibo likes to say that by going after the reluctant reader, his service expands the market. Is that the case? Does a subscription like Mofibo widen reading to a greater mass of customers? Or do the "medium" and "almost-never" readers stay just that and only chip in their monthly fee until they remember to cancel it?

 


Join The Bookseller's FutureBook digital community on Fridays for #FutureChat at 4 p.m. London (BST), 5 p.m. Rome (CEST), 11 a.m. New York (ET), 10 a.m. Chicago (CT), 9 a.m. Denver (MT), 8 a.m. Los Angeles (PT).

Main image - Pixabay: Bonnybbx