Last week Amazon announced a multi-year eBook deal with Macmillan Publishers, reported Bloomberg, Effective January 5, 2015, the announcement comes just a month after Amazon and Hachette Book Group settled a very public six-month dispute, and two months after Amazon and Simon & Schuster reached a multi-year deal. With more than 60% of the eBook market, Amazon is leading the digital publishing market – a $4 billion industry, according to IBISWorld – like a lion into 2015.But how does this impact eBook subscriptions from companies like Scribd, Oyster and Entitle in 2015? Will these services remain viable subscription business models? Will publishers view these services as competing with them or complementing them? Last summer Book Industry Study Group (BISG) conducted a study, Digital Books and the New Subscription Economy, to find out.Here are some highlights of their findings as explained by Ellen Harvey for Book Business:
- The publishers surveyed almost unanimously agreed that subscription revenue would play a major, positive role in their business over the next five years.
- Publishers anticipate two primary benefits of the subscription model: 1) publishers can grow revenue by offering backlist titles that customers normally wouldn’t purchase, and 2) publishers can collect data on customer habits via the subscription (e.g., what authors and titles they’re reading, how often they read, what types of devices they use, etc.)
- Major disadvantages noted by publishers were 1) some customers like to own books rather than borrow them, 2) it can be difficult to market directly to customers, 3) operational difficulties, like processing royalty payments, exist, and 4) they could lose out on one-time sales of print and digital books.
- One particularly interesting highlight was whether or not publishers are willing to work with content aggregators or subscription services like Oyster, Scribd or Safari or if publishers would sell subscriptions directly to their customers. Some publishers were willing to work with existing services like Scribd, but others said they would create their own subscription service and sell directly to customers.
- Trade publishers like HarperCollins, who has agreements with Oyster, Scribd, Epic and Entitle, were the most likely to work with such services. In the trade publishing world, it is likely that publishers don’t have enough direct contact with customers to make their own subscription model successful.
What can we learn from this? Digital book publishing continues to grow and evolve, and both publishers and content aggregators have a stake in its future. To move successfully into 2015 and beyond, the smart subscription service, whether an aggregator or publisher, will need to offer the products its audience demands at a fair price point, while maximizing its unique strengths – like inventory, backlist titles or exclusive content.
