Looking on the bright side of friction points

Looking on the bright side of friction points

A quite interesting point I read recently about why subscription models would have several hurdles in order to reach a good enough acceptance by the publishing industry is that publishers typically require "friction points" in business models outside the main one (i.e. selling books in a bookstore or e-bookstore for that matter); for instance, publishers are happy to let libraries lend books, as long as the process is hard enough for patrons to consider purchasing the book. 

Matt Mullin, author of the post and I had a very interesting talk a few days later, and he very nicely wrote a second part to his post stating some reasons why a model like the one proposed by 24symbols could actually be successful.  

But there was one thing that I couldn't get out of my head. Though Matt's experience in the publishing industry is so much deeper than mine, I just couldn't believe that a publisher's take on alternative business models could always be "OK as long as it doesn't take any piece out of my main cake" [*]. This concept of "friction point" is foreign to my take on what a business should be. My experience in other industries (such as IT or education) tells me that if one can find a sweet spot where technology, user experience and ROI live together, companies seriously consider it, forgetting (at least a little) about how to set traps or friction points. 

And where's that sweet spot? 

Technology

No need to repeat the many discussions and news about how the following years are going to be hectic and marvelous in terms of how ebooks will be evolving and offering both multiplications of current features and benefits, as well as disrupting the concept of a book with new and unexpected capabilities. In my opinion, the concept "Book as a Service", though geeky enough, defines well the base from which the rest of technologies will evolve from. Once the book is "in the cloud", one can only imagine what publishers and authors and readers together can build. Here I embed a very introductory video I created for a 3-minute presentation about the future of books (the original talk was in spanish, I have translated the presentation into English.)

The Future of the Book according to me :)

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Justo Hidalgo

User Experience

Business just cannot go against their customers (yes, I mean customers this time.) Readers are eager to try new ways to enjoy books, as shown by the number of eReaders sold worldwide, the increasing percentage of ebooks that have been purchased and the number of companies that are pushing forward about it; but they are also frustrated by how painful and expensive it is to have access to books, which is giving grounds to an increasing use of piracy and an outloud request for new alternative ways (as has been shown but how we at 24symbols, with 0 EUR/USD/GPD spent on marketing, were able to have more than 25,000 users on our facebook page BEFORE we had a product to show. We might have done one or two things right, but we were mainly just exposing something everybody wanted.)

ROI

But this is the magic acronym. Nothing makes sense from a business standpoint if, at the end of the day, there's no more cash on the table than at breakfast. And this is the main reason why friction points exist. Maybe in another economic climate the two previous bullets alone would be good enough reasons (specially the user experience, as it provides a compelling way to capture new potential readers) but now only numbers are expected. 

But "numbers" can come in several ways. The two main ones we at 24symbols are pushing forward are the following:

1. Pure, simple, revenue. A proposal like the one offered by 24symbols requires a critical mass of users that love the product and take advantage of the free+ad option to read, and a good enough "conversion rate" of those users that find reasons to switch to the premium area. Those users want to have that little extra when reading: more catalog, no ads, offline read, etc. Once this happens (notice how I don't say "if"; it's not that I'm an optimist by nature, but that I am firmly convinced this WILL happen one way or another) ROI simply comes to publishers and authors. 

Of course, the main question is "ok, but when will that happen? I might not want to wait for five years of giving my books almost for free and cannibalizing the rest of my channels." But taking a closer look at it, and without having to put a spreadsheet in the middle of the table, there are a few more things to consider:

-         If the service is not successful, then there is no risk as the rest of the business will not be cannibalized.

-         The system is secure enough, so this will not be a "source for piracy". Actually, an epub or pdf, with or without DRM, is much more prone for piracy than a cloud-based service, where pages are served. In addition, the security system can be improved immediately... but if a local DRM system is broken... are you going to be able to change it out of all your books? And are you able to do it immediately?

-         If the service works just great, and hundreds of thousands, or millions of users start using it... then it is 24symbols' goal, by closely working with publishers, to develop a good enough conversion rate strategy.

2. While reaching that critical mass, why should publishers join the band? That's where the second main reason of existence of the 24symbols platform comes into place from a business perspective. 24symbols works as a marketing platform. As readers share what they like throughout their social networks, books and authors become better known (even well known authors and books reach farther, and at a lower cost), and as that happens, the 24symbols pages pointing to each of the books become more and more relevant. This creates a virtuous cycle, where the most recommended books get higher in the search engines' results, and therefore are accessed by more and more people. This is working extremely well as social media is core part of our system. And, because our users love to share things they actually get to see: they browse, or read the whole book *before* actually sharing it. Again, there is an immersive experience where users don't just talk about or share books they read elsewhere.

There are, of course, many other related challenges. An important one is the current contractual framework most publishers and authors are bound to. Going to a subscription model as an alternative channel is a tough call to publishers that have hundreds or thousands of authors. But this is subordinated to the previous ones. If the final decision is "GO", then the tactics will encompass the legal issues. For instance, some publishers are starting this process by working with innovative authors that want to test and experiment with the subscription model, while others are creating an alternative contract or annex that, as it is signed by authors, automates and increasingly adopts the book uploading process to the system. 

At the end, friction points only exists when the alternative choice is worse. Publishers just couldn't see a way to monetize and protect content when library books also became digital, so they created those "artificial constraints". It's fair and understandable from their point of view. Having worked in the IT industry for years, I've seen that as a common, and fair, strategy. But I believe that a subscription model, seen as an alternative channel and even as a complementary one makes a lot of sense for publishers to embrace without putting too many roadblocks on the way.

[*] Maybe Matt didn't explicitly mean to say this, but hey, it was a great excuse to write this post :)