Blloon subscription service on brink of closure

Blloon subscription service on brink of closure

Another e-book subscription service is teetering on the brink of collapse after finding the business model unsustainable.

Blloon, developed by the founders of e-reader Txtr, has stopped taking on new users and will make a decision as to whether to close for good today, its c.e.o Thomas Leliveld has told The Bookseller.

It follows the news from Oyster in the US last month that its service was to close in 2016, despite raising $17m in funding from Highland Capital Partners earlier in the year.

Blloon launched in October last year offering a raft of titles from notable independent publishers such as Bloomsbury, Profile, Faber Factory, Guardian Books, Allen & Unwin, Lonely Planet and more and had plans to roll out to the US and Germany, where its founders are based, after its UK launch.

It began by offering a limited subscription model, allowing users to read 1,000 pages for free or continue reading by sharing and recommending books, inviting others to join the service, or by upgrading to a premium membership at a cost of £3.99 for 500 pages.

However, Leliveld said the company found this model hard to communicate to users, so in June this year Blloon moved to an unlimited model, allowing customers to read an unlimited number of books for £7.99 a month. However, this move lead to two key publishers dropping titles from the service and four months later Leliveld found himself having to make a decision about whether to accept more investment to roll out the platform or to wind it up.

He said: “The service can only continue if the three parties, the users, publishers and service providers are all happy, and the users wanted more books, from companies like Penguin Random House, in our service. A lot of publishers have an issue with the unlimited model, for good or bad reasons. I was just about to hit the button of some more investment but I couldn’t see this building in the mid to long term into a financially healthy business. Then Oyster shut down and these guys had significantly more investment that I did and I said ‘if they are having trouble, this is going to be a problem’.”

Leliveld added: “The main issue was not a consumer one , it is a publisher-related problem to do with them supporting subscriptions. If they do support a version of it, it is in a way that is not financially sustainable to us. Having said that, we have had excellent relationships with the publishers which have supported us.”

Leliveld said he had a meeting to make a decision to close the company later today, but was already in preliminary talks for a potential acquisition for the technology the company created.

Rival e-book subscription service Mofibo and Bookmate have shrugged off the idea that the subscription model is under threat following the demise of Oyster.

Ahead of Frankfurt Book Fair earlier this month, Nathan Hull of Mofibo told The Bookseller: “The Oyster news hasn’t changed the challenges we faced - if anything, it has prompted more dialogue because more people are keen to learn how we are successful and generating sustainable revenues,” he said. “Publishers remain intelligent, they could see that story for what it was. Mofibo is at the fair to close deals on existing negotiations and to open dialogues with new territories that have approached us based on our success, model and approach.”

Simon Dunlop, co-founder of social reading subscription service Bookmate, added: “These are still early days for the digital reading market and there will be some failures along the way. We see that subscription works well for Millennials and readers on mobile devices—that channel is growing fast. It is incremental, and not cannibalistic, to publishers’ other revenue streams.”