E-book subscription service Mofibo has already carved itself a niche in Denmark and Sweden. But can the same model be as effective in the UK? Lasse Winkler and Johanna Westlund (translator) report
Oyster, Scribd and Amazon’s Kindle Unlimited may well be household names, but an earlier player in the e-book subscription market was Danish company Mofibo. Already established in Denmark and Sweden, and launching in the Netherlands this summer, Mofibo now has its sights set on the UK market.
The Copenhagen-based company is led by c.e.o. Morten Strunge, who could fairly be described as a prodigy. At 19, Strunge started mobile operator Onfone. He sold it five years later for £31m and in 2013, at the age of 26, he launched e-book subscription site Mofibo.
He is clear that—after Holland—the UK is the next target market for the company. ”We are not sure exactly when that will be. We are currently negotiating with publishers, but we will not launch until our catalogue is strong enough,” Strunge told The Bookseller.
Every nation’s market has its own characteristics, but one thing always reoccurs in negotiations with publishers: their fear—and conviction—that an e-book subscription service is cannibalistic by nature. The received wisdom is that it will take publishers’ best consumers, the heavy readers, and give very little in return.
But Strunge does not agree. The business model of Mofibo, built on Strunge’s experiences from his years with Onfone, takes into account that there will always be a group of clients who cost more than they give in return. “Three per cent of our clients account for 20% of our costs. That was also the case in Onfone’s business. There were mobile users who used their mobile subscriptions so much that they in fact represented a loss [to the business]. But they were outweighed by the mass of clients who did not use their plans as much.”
Creatures of habit
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.
According to Strunge, a subscription—regardless of whether it is to a newspaper, a magazine or a book—is in its foundation an irrational type of activity that is mostly about comfort. For instance, Strunge himself subscribes to a daily newspaper at a cost of 5,000 Danish krone (almost £500) a year—but he rarely has the time to read it. The most rational thing to do, he says, would be to buy single issues only when he has the time to read them. But comfort and habits govern his choices.
Strunge does not believe the target group he wants is the same group of people who buy most of their books in physical bookshops or online. He therefore believes that Mofibo, if successful, will increase the number of readers and reading generally. ”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,” he maintains.
Mofibo’s business model, as used in Denmark and Sweden, is based on it paying a publisher for every book read, after certain thresholds are met. First, there are—just like in Amazon’s Kindle store—a number of free pages, then Mofibo pays per “chunk”, depending on how far the reader (or readers) make it through a book. It may sound complex, but Mofibo pays—at least according to Danish and Swedish publishing houses—“competitively” in comparison to other retailers.
Strunge also believes it is a model that incentivises Mofibo. It mainly offers its subscribers backlist titles. In Denmark it also has quite a few new releases, but in Sweden it carries only a small number of new books from the bigger publishing houses. ”The publishers get paid every time a book is read. We’re taking the risk here. This means that we have a natural interest in driving backlist, since that is cheaper for us,” says Strunge.
So, how should publishers assess Mofibo’s role? Strunge cites its data. He says that it shows, for instance, that Danish subscribers now read more than one million pages using Mofibo every day. “The publishers have free access to the data for their titles. We don’t hide any data in order to get a better deal.”
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.
Strunge argues his case well and, so far, he has—despite some publishers’ hesitation—received a positive response in both Denmark and Sweden. But in those countries Mofibo is in relatively underdeveloped digital territory; what will happen when Mofibo enters a mature e-book market, such as the UK, is not so clear.
In Strunge’s world, Mofibo is here to expand the market and to get more people to read: ”We do massive marketing and we talk about books and reading on television and other mass market channels. Not many people do that.”