IN DEPTH
Subscription services Reaching readers
W
e live in the age of the subscription, the monthly fire-and-forget commercial missile of the modern age. Netflix, Spotify, Birchbox, Audible.
Everything neatly delivered in exchange for a discreet monthly fee, making our lives smoother, simpler, beter, more productive.
Consumers have happily embraced subscription prod- ucts in recent years. Forbes announced this year that “the subscription e-commerce market has grown by more than 100% a year over the past five years, with the largest retail- ers generating more than $2.6bn in sales in 2016, up from $57m in 2011”. For content providers, the model promises recurring revenue, rich customer data and low atrition rates, and research firm Gartner noted that “markets are telling firms [that] if they don’t put a ring on it and move to a recurring revenue model, they are going to end up alone living with cats.”
CHARLES DICKENS: THE ORIGINAL SUBSCRIPTION MARKETER?
Waving, not drowning: Navigating the subscriptions pool
Many media markets have been fundamentally altered by the introduction of streaming and subscription services. Could books follow suit? And if so, how can publishers best exploit their content on such platforms?
Written by Huw Alexander
Publishers have long been puting a ring on it. Subscription is not a new model within the publishing world: its history can be traced from the 1836 serial publi- cation of The Pickwick Papers by Charles Dickens, through the subscription services of Mills & Boon and Reader’s Digest, to the later-day Amazon Prime express delivery and aggregated journal and book packages. Despite these manifold chapters of experience, subscrip- tion models can still pose a disruptive challenge for publishers. The recurring, overexcited headline of a “new Spotify for books” stalks a publishing industry fearful of exchanging dollars for cents. The digital age has released a flow of data, and usage statistics are now driving purchas- ing decisions. The “wastage” economy of overflowing shelves of unread books and automated library approval plans is being replaced by a data-engineered “usage” economy of just-in-time purchase plans, evidence-based acquisition and subscription pools. So how do publishers navigate the murky depths of the subscription pool without loss of revenue? Subscription is a finite rather than an infinit pool; the revenue pool being the total amount that subscribers pay across a given period. This pool is shared proportionally between the vendor and the publishers based on accumulated views and usage. Increased revenue share is dependent on grow- ing the subscriber base or dominating usage.
A fine balance These factors mean publishers must be judicious in the tpe of content they make available. The goal with any subscription model is achieving a balance between the amount of content and maintaining a sustainable revenue stream. If we take a swimming pool and divide it into three sections—shallow, medium and deep—we can identify the tpes of subscription models and recommend possible strategies. Being “shallow”, although not an option for every publisher, would mean building a publisher-centric platform, it would offer the reassurance of total control and no revenue sharing. This is the (expensive) toe-in- the-water approach, and represents a closed garden of one publisher’s content. It also opens up the possibilit of making textbook and frontlist content available. “Medium”, or slowly submerging, would see publish- ers partner with an aggregator that carefully curates Continues overleaf
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