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Publishers need to start setting up their own subscription services and understand that revenues will come further down the line, managing editor of software firm Zuora Gabe Weisert has said.
In a speech to the Independent Publishers Guild conference, he said a lot of subscription services started off in the red before their users became profitable but this should not put publishers off.
He said companies had to shift to a mindset where they shifted from annual reports of what happened last year to a “situation where you potentially have 30, 50, 70% of your annual revenue waiting for you next year”.
“The money doesn’t go away, it's getting pushed out, three years, four years, five years out,” he said. “That revenue is turning into recurring revenue, deferred revenue. It’s a different kind of mindset. You can start with a really basic recurring plan, as you develop that and as that service gets stronger, adding some kind of usage element to it like your cellphone plan can work really well for you. We’re also finding with this model that you’re getting growth.”
He spoke about the company Scribd, which now has one million e-book readers on subscription although he said licensing agreements were driving up the money they had to pay out, with the romance genre really pushing up the cost. New York's Serial Box allows people to download 30 to 40-minute bitesize “episodes” to read or listen to.
Explaining the model, Weisert said: “You start with your subscriber, you wrap services and experiences around them across the channels that they’re at.”
He said the subscription idea was spilling out across industries from furniture and clothing to car companies where people paid for “the ride” rather than the vehicle itself. Weisert said books were a perfect product for the model, which, when done well, built up closer relationships with customers.
Asked about the tiny amounts artists earn from music streaming companies such as Spotify, he said that was something that needed fixing and publishers needed to set up their own subscription services.
He said: “This is why I’m leaning on this idea of doing it yourself. These platforms are obviously something you’re going to have to contend with and work with and partner with but the overall goal is to establish direct relationships with your readers, relationships which may have not previously existed, and then you can introduce, hopefully a lot more fairness and quality into the system.”