Subscription Services: Evolve or Die

By Anne Kubek
EVP, General Manager
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The digital space remains an evolving and dynamic world for both consumers and publishers, particularly after yesterday’s announcement that Scribd, one of the most successful of the new eBook subscription services, will remove a substantial portion of the romance and erotic fiction titles from their catalog selection. Here’s what Scribd said in their letter to publishers and partners, including INscribe:

We’ve grown to a point where we are beginning to adjust the proportion of titles across genres to ensure that we can continue to expand the overall size and variety of our service. We will be making some adjustments, particularly to romance, and as a result some previously available titles may no longer be available.

Scribd is implicitly acknowledging that their service has in some ways grown too successful to maintain at status quo, as journalist Porter Anderson points out in this helpful overview in The FutureBook. Subscribers are signing up and readers are reading – that’s the good news.  But we know that it’s highly likely there will be more changes ahead for eBook subscription services. Some companies simply won’t have the financial funding or runway to last. Others may not have the right selection offering, pricing or user experience, and will have to evolve or perish.

We don’t agree with those who are preemptively calling this the death of eBook subscriptions. Instead, it is ​a​ repositioning – something that we expect to see a few times before subscription services realize their full potential. Staying in the game will require tweaking the model, as Scribd has had to do. New options for subscription services could include tiered pricing for consumers, perhaps according to the volume of books a customer reads, or how soon consumers can access the best or most relevant content after publication date. As subscription services modify their author payment models, publishers could also create tiered pricing for subscription services, just as they have profitably created tiered pricing for libraries.

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INgrooves Music Group

Publishers have typically had two comments since the launch of services like Scribd and Oyster. The first comment is that, given that the model was to essentially pay the publisher as if a subscription read were an actual sale, why not participate in the model? The second comment was that the model was just not sustainable in that form. So, it’s no surprise to us that the model is changing. It’s just a question of how much, when, and what new forms will evolve.

Our sister company, INgrooves, has a long experience with subscription and streaming models in the music industry, and tells us that this process has only just begun: existing players will evolve, early players will exit the market, new players will enter, and consumers will dictate which offerings win in the long-run.

Our guidance to our clients has been that authors and publishers explore and test the subscription market, and support services that make the most sense for their business model. We particularly endorse subscription services that pay authors according to the Suggested Retail Price of a book, rather than a share in a pool of overall revenue generated by subscriptions (see our recent white paper on the pros and cons of eBook subscription services for authors). We still believe that it’s worth looking for solutions that are more beneficial to authors and publishers than a pool-based model, and that dedicated subscription services like Scribd and others will find those alternatives.