The Shatzkin Files

The subscription model for ebooks hasn’t emerged yet, but it will

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From the beginning of Digital Change Thinking Time, which for me goes back to the mid-1990s, “subscription” has been high on the list of future expectations. That’s natural. The subscription model has emerged as the dominant one for cable TV (although there is still some pay-per-use) and Netflix works that way as well. Lots of people subscribe to satellite radio. Rhapsody is a successful subscription service for music. Pandora for music has a free model and a paid model, as does Spotify.

Subscriptions actually have a history in trade publishing too, where they were called “book clubs”. The print book club model, which also depended heavily on the club’s role in curation (or title selection), was doomed by the arrival of online bookselling. But O’Reilly has demonstrated the common sense (and worked out the mechanics) of a subscription model for ebooks with their wildly successful Safari program for the past several years.

In the past week, Publishing Perspectives offered up a thoughtful piece by Javier Celaya speculating on a free subscription, ad-supported model for ebooks like Spotify is for the music business. PP’s editor, Ed Nawotka extended the speculation to a model of piecework sales: buying a book in chunks or chapters.

Neither of those is what I have in mind. This piece by John Konczal, building on what’s being done in the textbook business, comes closer.

We’ve reached the point where Amazon with their Kindle and B&N with their Nook are perfectly positioned to make a subscription offer. Publishers will have mixed feelings about it and the agents for the top-selling authors have good reasons to be against it, but the proposition seems (to me) to be one that will be compelling to many consumers and will offer tremendous advantages to the retailer that offers it. In fact, I’m a bit surprised it hasn’t happened already.

Here’s how I imagine it working.

The retailer creates a pool of content that will be offered through the subscription service. The proposition to the consumer will be that for a price (let’s say: $50 a month), they can read all they want from the content pool. In turn, the retailer divides 70% of that money (or 75% or 80%) among the publishers in proportion to how many “pages” (a somewhat arbitrary but internally consistent measure) of their material have been read. Of course, all available public domain content will be in the pool.

I am guessing that a very high proportion of the owners of self-published and small press books will find the proposition attractive from the beginning. How the big publishers would react is less certain. My belief is that the smart ones will try it: put in some titles, perhaps from their deep backlist, to get some visibility as to how the program would work.

Meanwhile, the consumers who do this will determine the course of events from there. It seems possible that the impact of this offer will be similar to the impact of the e-ink readers: the heaviest book consumers will see the greatest financial merit in the proposition. And just like customers for Amazon Prime (one annual fee for shipping) and Kindle or Nook owners are highly resistant to buying outside those programs, customers for this subscription service would largely be lost to other book consumption. It will take a more powerful desire to read any one particular book to make it a purchase outside the subscription than it takes to buy it now.

So that, in turn, will drive more books into the program. Authors, and therefore their agents, won’t want to be left out. The early entrants to the program will reap a relative bonanza because they’re on a shelf with less competition which will drive further expansion of the title base.

The tricky part here is setting the right price. As I was thinking about this piece, a reader pointed out a conversation on the Internet about this subject from a different perspective. Here the question was: “what would you pay to read any book anytime you want?” The bidding seemed to begin at about $100 a month. That strikes me as high, particularly since the pool of titles would certainly lack most high-profile books, at least in the beginning.

But a retailer setting the price too low could cost itself a lot of money. Lots of heavy readers spend more than $40 or $50 a month buying books now and, of course, they’d be the first ones to enter such a program (to save money). The benefit for the retailer would be that those customers would be “locked in” to the service, not buying anything elsewhere.

Of course, this idea runs totally afoul of agency pricing. The publishers who are using agency will have the hardest time even experimenting with such a subscription program. On the other hand, if the subscriber base becomes large enough, it will force some reconsideration.

There are all sorts of wrinkles one can imagine beyond this initial idea. There could be a “premium” subscription that had the higher-profile books, creating a more robust revenue pool for them. There could be “vertical” subscriptions for genres or topics. There could be a special discount for subscribers to purchase books not in the pool (except for agency books, of course, whose terms would not allow it.) And a company like Harlequin or a sci-fi imprint of a major house could create their own in-house pool that might attract subscribers. (In fact, the innovative small sci-fi publisher, Baen Books, already has a subscription service!)

But with ebook consumption now climbing rapidly toward half or more of the sales for many titles, it seems inevitable that models that won’t require a transaction for each and every book must emerge. I’d be a bit amazed if conversations about an idea like this, or something like it, aren’t taking place inside the biggest ebook retail shops already.

We created a “thinking about the future” panel for both of our upcoming Publishers Launch shows. They will entertain the subscription question, among other issues, with an eye to the special complexities of international implementation. At our eBooks Go Global show aimed at international visitors and their trading partners at BEA, the panel will feature Tracey Armstrong, the CEO of Copyright Clearance Center; publishers Ricky Cavallero of Mondadori and Cyrus Kharadi of Random House; and agent Simon Lipskar of Writers House. This panel of four incredibly sharp and thoughtful people, moderated by Ed Nawotka, the editor of Publishing Perspectives, represents a real diversity of viewpoints and will explore the practical barriers to this and other innovations across international markets.

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  • Ajrhomberg

    Over the 10 years of its life, Rhapsody's adoption has been quite minimal.

    One of its biggest problems has always been: how do suers create playlists easily and efficiently or they will not enjoy the service.

    The price point of $14.9 proved to be too high and had to come down to $9.(( notwithstanding that most people at the time spend way more than $14.99 per month on singles, albums and the like.

    Netflix did not disrupt DVD buying, but DVD renting. It's patch was clear NO late fees (of the kind you had to pay at Blockbuster).

    Just some food for thought.

    • Reasonable and thanks for your comments. I don't mean to suggest that

      subscriptions will become the dominant model. I just think it will become a

      viable model and an important part of the ebook revenue stream. And it

      doesn't exist at all yet.


      • Claude Nougat

        I agree with you: I'm sure that subscriptions models will become a viable alternative to outright book buying and a lot of people will go for it – and more people if there are more models available: genre-based, broad or deep selections (over 100,000) as opposed to more pointed and limited weekly or monthly offers etc In other words, something to satisfy every taste.

        What will this do to the income of writers? I'm not sure but I guess much will depend on how these models are managed, and as usual in a competitive situation, the models that pay their authors best will come on top and be able to attract easily the newer, “better” titles. And therefore be more attractive to customers…

        A brave new world! But we're not there yet…

      • Claude, there are actually two questions buried in your one question. The

        one you answered is “what will the model be for paying the writers?” The

        second one is “will the publishers' systems be able to manage the mechanics

        of paying the writers?” That's not a trivial problem for many publishers.

        And it can get very expensive apportioning out these small payments if you

        need manual intercession to do it.


  • I would buy into a subscription service for a category of books where I need steady access to a lot of what is published. For example, because I work on business books I have a need to keep up with all the interesting books published in that field–not necessarily to read them all but to at least scan them, read selected chapters, and be aware of their contents and style. It would be worth $25 a month to me–maybe a little more–to gain such access through my Kindle.

    • But then the next question would be whether, as an author, you would be

      willing to risk the revenue from lost sales that would occur if you put a

      book you wrote *into* such a service? I wonder what your agent would say…


      • Personally I would take that risk–because I think, in the long run, the more people hear about a book by whatever means, the more copies end up being sold. But only experience will show us whether my instinct is correct.

      • Karl, I wonder whether your assumption that knowledge of your work leads to

        sales extends to feeling comfortable with piracy and unfettered sharing

        (i.e. no DRM.) I think your statement that we don't know the real effects

        would still apply, but I think it is hard for many people to make that leap.


  • This has still not really caught on in music, and books have a much wider range of 'inherent value' or price per unit than songs do. I think the issue of compensation to front-list authors will be much more difficult to contend with than it was with music artists because of that.

    On the other hand, I think you are right on with regard to smaller, genre-based offerings such as romance and SF&F. People that are mainly reading sub-$3 eBooks aren't going to be concerned about whether Norah Roberts is in the program since they aren't paying for her books anyway. That's probably how this will start and grow for a few years until the 'right' models start getting figured out.

    • I don't know, Dan. There are a lot of books in the world. Even without the

      big names, a heavy reader on a tight budget could be very attracted to an

      all-you-can-eat model. And the ability of the aggregator to get stuff in

      will be directly proportional to the size of the subscribing audience.

      Music has another issue, viewed from my personal perspective. I already have

      6000 songs loaded on iTunes. I'm sure more than 5000 of them came from CDs I

      had or bought since. This body of music will always constitute a large part

      of my listening (all the Beatles, Dylan, Stones, Clapton, Emmylou Harris,

      etc. etc.) and I already have it. So the value of a subscription would be

      limited to the new stuff, and many of us 63-year-olds don't absorb new stuff

      at the rate we did 40 or 50 years ago.

      With books, on the other hand, the stuff I've read is not an issue. I don't

      re-read very often. It's always about new stuff.



      • LOL…my musical tastes are largely stuck in the 60s-70s as well, but there are always new consumers who need to build those libraries (ignoring the issue of piracy of course) and even for them, subscription models (of which I've been involved with a few) have a really hard time gaining traction because when you stop subscribing, you no longer have access.

        Now for most people, music is much more 'reusable' than books and that may be a large part of the difference there. But my concern is that some readers will only want a service if they can get everything (think of how big a deal it was for iTunes to get The Beatles) and that the top authors won't see the value of being part of such a program. That leaves the bargain-readers (of whom there are many more, at least visibly, these days) as the low-hanging fruit for this type of model.

        Again, all opinion for now, but certainly one that will inevitably be tested.

      • Well, Dan, we could certainly listen to music together and have a very

        civilized discussion at the same time. And it is refreshing to have more

        evidence that (as I wrote two years ago) “the book business is not the music

        business.” More differences than similarities, I think…


    • Just FYI, last I checked romance was at least 50% of the paperback marketplace, so it isn't really smaller, as niches go. It's kind of a cavern.

  • Brilliant! I'd certainly pay a monthly fee. I'm a Rhapsody user, and have been for many years (@92521bfa5e790f90da56cedc6878b737:disqus Not sure what the “Playlist” issue is, I have several playlists, but that's OT)

    One thing about Rhapsody, which might be useful in this situation, is it can only be used on one computer at a time, and to transfer the song to a mobile device, one must purchase the track ($.99 currently)

    • Thanks. The restriction to one device is a way for the sellers of music to

      create “friction”: something that isn't quite as good in your subscription

      as it would be if you bought. As you demonstrate with your loyalty, however,

      there's still plenty of value.


  • Bibliofuture

    Netflix has their pool of “Watch it Instantly” movies that cost $9 per month. There are thousands of movies in the pool. They do not put new releases in the pool but there are movies that I paid full price a year ago to see in the theater that are now in the pool. If we were looking at an equivalent pool of books that were a year or more old I think an equivalent price would be reasonable. If you could get 2 million subscribers nationwide that were paying $10 per month. You would have $240 million per year to divvy up for the books in the pool.

  • Nuttall James

    I now consume most of my reading on my iPod Touch. Subscriptions are the future. Let's look at pricing. Rhapsody $9.95/month, XM Radio$12.95/month and my local paper 18/month. This is for all you can digest in a month–unlimited. So$50/month for books, think again. $10-$15/month seems more reasonable. What you need to focus On is increasing you subscriber base to make it profitable.

    • I think we can do better than you think. Maybe you won't subscribe if the

      price is higher, but I think a lot of people will. The comparison that

      matters is “how much am I spending on books now?”, not “how much are

      subscriptions to other things?”


      • Is it? Not for me. I have always thrown books into my grocery basket, or on a sale — or justified a full price impulse buy as “necessary research expense” (a perq of being a writer). I couldn't tell you how much I spend for books in an average month, or how much dh does (a lot, I have no doubt). But both of us would think long and hard about a $50 fee (I can say this with complete assurance, as we have a tri-monthly conversation about cutting off cable service and one day, cable's going to go). You have the “invisible” grocery purchases competing with the “steady” monthly expense. Maybe it isn't logical, but it is definitely human nature.

      • Yes, that's why both models will co-exist.


  • Mike Perry

    Something more like a book club than this digital library might be better for the average reader, particularly clubs that cover one genre (say romance) or topic (history). Each month's selection would be modest. Most selections would be recent titles, with readers getting to pick a set number that's small enough that the average reader wouldn't feel like he is paying for more than he is using. Readers would also have the option of getting titles from previous months or carrying forward unused choices.

    It'd also be like Amazon in that, once selected, the book and any notes you might have taken would be retained by the club and available for download as long as you're a member. You wouldn't have them cluttering your Kindle or Nook and new gadgets would have access to all your titles.

    There's also be a club for clubs. Friends could share a club-for-clubs membership, getting the same group-selected title and having the ability to share their notes with one another. And they could be living anywhere in the world.

    • Of course, the correct answer, in time, is “all of the above.” That's the

      Internet for you!


  • Yuzutea

    Something like Netflix's prices sound reasonable ($8 to $10/month), especially as probably the most desired books (new releases) probably won't be part of the program in the beginning. However, I totally agree that probably, especially if new releases aren't available to subscribers, what this will probably disrupt is renting… i.e., the public library, which does fit in with your post on the potential decline of the public library due to ebooks.

    As a reader though, I personally am not sure whether I would need “all you can eat” access. For music, you can listen to a hundred songs a day if you wish. I think a lot of people would be satisfied with maybe a weekly limit on the number of books they can check out.

    • Another way to do it would be “tiered.” For $10 a month, you can touch two

      books a week. For $20 a month, you can touch five books a week. And for $30

      a month, you can touch all you want.

      It's complicated. And changing prices in mid-stream will be complicated too.


  • EricLandes

    Baen's not the only one. Check out Safari Books Online. (
    $43/month for an individual subscription that includes full access to books from dozens of technical book publishers. (There's a cheaper rate that gives you access to 10 books at a time, and you can swap them out.) Creative Edge is a similar service for design and digital media content.

    • Hey Eric, can I refer you to the last sentence of the second paragraph of

      the post?


      • EricLandes

        Whoops! Thanks for politely pointing out my reading comprehension failure.

        I'll try to save myself by saying I think you're much more likely to see a subscription service take root within a genre than as a general service. I could easily see Harlequin doing this, Baen already is as you've mentioned, and I wouldn't be surprised to see some other genre imprint go this route. Angry Robot, perhaps, once they've got enough titles under their belt.

      • I don't disagree. There were lots of niche book clubs when Book-of-the-Month

        and Literary Guild ruled as general interest clubs. All of the above…

        One more thing that makes Safari work is that it is *professional*. Many of

        the people who subscribe use it for their living. That's one of the reasons

        I have generally been reluctant to cite it as a model for trade publishers,

        although I've been aware of its great success for years.


  • Toby Green

    A subscription model for ebooks has existed in scholarly publishing since the early 2000s – and is working very well. The model is simple: an institution (university, government, corporation) subscribes for 12 months paying a fixed sum. In return, anyone at the institution can download as many ebooks as they need. Access is controled by IP range, so users don't even have to login or worry about passwords. Publishers offering ebooks on subscription include OECD (who pioneered this new way of offering ebooks in 2001), World Bank, Wiley, Elsevier, Springer, Royal Chemical Society – the list goes on. I see no reason why this model couldn't also work in the consumer marketplace.

  • Do you know
    24symbols is a platform to read eBooks on the Internet, with your friends and based on a subscription model.

  • Do you know
    24symbols is a platform to read eBooks on the Internet, with your friends and based on a subscription model.

  • OverDrive is partnering with Amazon to lend books in libraries, it will happen next year.

    • Not sure I see the connection, but next year is a reasonable guess.


      • Bibliofuture

        >>next year is a reasonable guess

        Amazon has a press release about this so it seems to be a definite thing —

      • That's not the same thing. The press release (and a previous comment) refers

        to Amazon's deal with Overdrive to enable library lending of Kindle

        editions. There's no subscription involved; just a library card. And there

        are limitations — you can't borrow a copy if somebody else has it (you'd

        have to wait) and the time you can keep it is limited by library policy

        (usually to two weeks, I think).


  • Peter Turner

    I would venture that the “hard part” isn't pricing but curation of eBook content in a way that delivers added value.

    • If by curation, you mean help with navigation and decision-making by

      providing data and a superior presentation, then I get it.

      If by curation, you mean in any way limiting the choices, I don't see that

      ever being an advantage in a digital context.


  • Peter Turner

    So you don't feel niche, boutique oriented digital content sites (which by definition limit content) “have a future”?

    • Not unless they're tied to something much bigger. If you've got somebody's

      attention, you might be able to sell them content (or anything else.) But if

      the question is whether people will “shop” limited selection online

      “stores”, I'd be pretty skeptical.


  • Peter Turner

    I may be dense, but I'm not clear what distinction you're making between being able to “sell them content” from a shop with limited content vs. being “sketical” that “people will 'shop' limited section online”?

    • You can't sell them stuff from a shop with limited content. If you have a

      community, you can probably sell them stuff related to their membership in

      the community. But very few stores with limited selection will get enough

      traffic to make a living.

      Putting it another way: curation is necessary, but not sufficient.


      • Here's something I've been thinking about since the TOC conference in Feb: readers as curators. That's a community based model, and may be the next bookstore of sort (I'm lucky to live in an area with many…though diminishing…independent bookstores that cater to reader tastes, not bestsellers). The hard part for me is that I'm not a niche reader, I'm definitely a reading omnivore. I find it interesting but limiting to go into a strictly SF, literary, mystery or romance bookstore. But I don't think many other readers feel that way — they like what they like, and they build community around it.

      • That's the idea behind Copia, Goodreads, and Library Thing (among others.)

        Readers talking about what they like, creating circles of information. It is

        pretty certain that there are many people who benefit from that kind of

        information-sharing, but I'm not sure how widespread it is or whether

        publishers have really figured out how to tap in to the capabilities at

        scale for marketing.


  • Peter Turner

    I understand, though my experience with online retailing has suggested other lessons to be learned. But we can agree to disagree.

  • Javier Celaya

    Dear Mike

    I fully
    agree with your thoughts

    As I
    mentioned in my article, the
    Spotify of books, a free access
    model based on a ads revenues is not the most appropriate business model today
    for the trade publishing industry.

    The key to
    success to any streaming e-book subscription platforms is determining the right pricing for the users. The pricing, as
    you mentioned , should not be based on how much are subscriptions to other things such as Spotify
    or Netflix, but rather on how much a reader is spending on books today.

    subscription based model could be of interest to heavy readers, but unfortunately,
    books do not even raise half the interest created by music. According to
    various indicators, about 50% percent of the Spanish population does not even
    read one book per year. I suspect this reader base is more or less similar in many other markets.
    Most people read 2 or 3 books a year (bestsellers). With this low reading
    demand, it will be difficult for that kind of readers to monetize a
    subscription based model. The lower the monthly subscription rate, the more tricky
    it will be for publishers to monetize their assets since low subscriptions
    rates can cannibalize unit sales.

    There is no
    doubt that one of the main sources of income for trade publishers in the
    digital era would undoubtedly be a streaming reading. However, the key for
    authors and publishers is when and how to do so.

    Javier Celaya

    • Music is more popular than books, as you point out. This may not mean

      consuming music is more popular than consuming *words *but words come in

      many forms besides books.


  • Very interesting! However, I don't think any good subscription model will try to capture all a reader's reading purchases, just the primary buy. That's the way book clubs worked — the clubs didn't stop readers from buying from bookstores, the supermarket, or borrowing from libraries. And I subscribe to cable and Netflix (but have never yet paid-per-view, or subscribed to a premium channel like HBO). …I agree with Karl that this would be of extreme interest to people trying to cover a particular area of expertise in depth (my area is dyslexia and some of the books are very tough to get hold of).

    • It could happen and be applied many ways. It's cheaper and easier to manage

      multiple models on the web than it is in a physical world. I think the idea

      of adding *other* material beyond books for a subject is on target, but

      that's where I think we're more likely to see it be part of a larger

      community or entity, which could be a corporation or a trade association or

      some other not-for-profit.


      • Hi Mike,

        I like the idea of adding *other* material beyond book or to be more precise: adding *other* material 'in' books beyond books. I think one big advantage of eBooks is the possibility of playing multimedia content on some devices (smart phones, tablet PCs). A huge benefit therefore and an unique selling proposition, could be animated scribbles to describe technical processes than just having one picture of the process. Even books for children could have an animated train with sound instead of just the picture of a train.

      • The things you describe are definitely happening.


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  • Eric Welch

    I'm frankly astonished that Amazon, which owns Audible, has yet to adopt the Audible subscription model. I buy a years subscription getting me 24 credits which works about to $9.95 per audiobook.  And it's renewable as often as you want so I get all my audiobooks at much reduced prices regardless of list. It would be really easy to do this with ebooks. Before they went under I subscribed to Hard Case. Subscriptions make good sense.

    • It would appear that Audible operates pretty independently of Amazon which

      probably helps them maintain their relationship with iTunes! But you're

      right that Audible knows all about subs so Amazon has the expertise it needs

      to think about this right inside their shop.


  • Bkolosseus

    I would welcome the subscription idea.

  • Baen's Webscription ebook store is /not/ a subscription service. The very page you linked to says:

    'These are discounted bundles of books and are not a “subscription.” You can buy any month you like at any time and nothing is automatically charged.'

    • A nuanced distinction, but I take the point. Thanks.


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  • Amazing write-up! This could aid plenty of people find out more about this particular issue. Are you keen to integrate video clips coupled with these? It would absolutely help out. Your conclusion was spot on and thanks to you; I probably won’t have to describe everything to my pals. I can simply direct them here!