E-book Subscription models: What works for the readers drags down the business (Proved by Oyster and Scribd) by Renata Zamida

When we got used to e-book selling and started to talk about e-book lending, almost immediately commercial lending platforms in the shape of various subscription models appeared – not only in the US but also in Europe (e.g. 24Symbols in Spain or Skoobe in Germany). As streaming services such as Amazon, Netflix, and Spotify fundamentally reshape consumer expectations, it was difficult to believe this shift will not affect the book business. And it did. However, it’s not easy to offer a Netflix-like experience, or cash-in the same revenue with e-books.

With each of these e-book subscriptions, you get unlimited access to their entire book libraries for a monthly fee. You can read as many books as you want, for as long as you want, and with each service, you can download books for offline reading. Unlike a traditional library, there are no due dates, so you can hang on to a book for as long as like, just like you would with a Netflix DVD. But like a library, you do not own the books you read, and if you cancel your subscription, you can no longer access any of the titles you’ve saved.

This is the US experience: Firstly, Scribd launched in 2012 (and remained the cheapest one with its $8.99 per month). Then the Oyster subscription service came with much fanfare in 2013 ($9.95 per month). Last but not least, in 2014 Amazon unveiled its Kindle Unlimited service ($9.99 per month). This autumn, Oyster has posted a note stating it will be exiting the business in 2016 and is offering refunds to subscribers who request them. The service provides access to more than 1 million e-books. So what happened? The service drew praise from readers and gained attraction with many publishers by offering a model that paid publishers their full retail cut for e-books read by subscribers. Now, that doesn’t sound sustainable, does it? Especially if the biggest rival, Scribd, has the same headache. Their CEO said this summer, that Scribd was “facing some growing pains” and some romance titles (most popular with readers!) would no longer be available as part of its basic monthly service. Obviously, the cost of paying for their subscribers’ reading consumption is exceeding the revenue brought in from monthly subscription fees.

However, readers simply demand a high-end service from subscription based platforms and there is no end to their appetite. They want a great variety of choice and they want the newest releases. In fact, for models based on access over ownership you need high-quality content. So subscription services need to make publishers happy, in order to get the content, which makes the readers happy. In addition, access cannot be valued higher than 10 units (the prices set in the USA were also adapted in Europe). Who can sustain this kind of subscription business? Moreover, how can one make it even grow? The CEO of 24Symbol has a good point in this quote: “If publishers want e-book subscription to be a viable channel, we need to have win-win terms, rather than win-lose terms.” It has to be said though, that publishers feared all the way that the model of paying full retail prices for books read in subscription was too good to last forever, and the decision will be theirs now to approach half way in the other direction. They did earn some respectable income from subscriptions so far, and it’s hard to imagine they would rather give up on this income completely then to compromise…

By Renata Zamida

This blog was originally published on ELit Literature House Europe‘s website on 25 January 2016.

Category: ELit Literature House Europe Observatory


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