The publishing industry has been pushed around and bullied in the digital world, albeit most of it Fight Club style where the protagonist is his own worst enemy, for years now. The industry that championed the industrial revolution now finds itself in need of a protector; a hero for the digital revolution, and I argue there might just be one on the horizon. You can use any number of old idioms for it: “Fight fire with fire”, “If you can’t beat ‘em, join ‘em”, even “Every cloud has a silver lining”, because this hero of the publishing industry will be born of the digital age: a platform that combines the best of what has been, a vision of how much more a publishing platform can be, along with a philosophy that might be a little idealistic. But hey, that’s what heroes are, right?
For the last year or two, there have been signs of such a hero emerging. Vessel, a startup video subscription platform planning to rival Youtube, might be the newest harbinger of such a hero. Granted Vessel is operating in the video industry, the business model of this startup bears some attention. When examined closely, it doesn’t take much to envision how this model could be adapted to suit the publishing industry. But first, let’s take a look at what online platforms exist for publishers today, and how they have evolved, in order to understand a model that might embody this hero we seek. We need to look at models that provide revenue to publishers from print books, ebooks, and subscriptions.
I’d be remiss not to start with the only major platform that does all three. Amazon, a company that started out with all the earmarks of a saviour to publishing’s diminishing sales by selling print books online. Amazon has moved from selling only print books to becoming an innovator of ebooks, and in July, 2014, joined the ebook subscription race with the launch of Kindle Unlimited with over 700,000 books available. In 2013, Amazon bought book-recommendation startup Goodreads to help better its book search optimization, a key factor in the discoverability of books. Helping connect readers to books is always a plus in the publishing industry. But we all know the story of how this would-be hero turned bully. With its great power, Amazon ended up neglecting its great responsibility to the publishing industry by looking out for number one. But wait a minute. Ideals aside, we live in a capitalist world here. Amazon, even in its monopoly, is entitled to make decisions based on what is best for them, and they do. If publishers thought this movie was going to have a happy ending, they weren’t paying attention to the motives of the main character, played by then-rising star, Jeff Bezos.
Apple iBooks, the second biggest figure in the ebook industry, recently purchased BookLamp, a startup that Laura Hazard Owen, in a 2011 Gigaom article, ‘Can 32,000 Data Points Yield The Perfect Book Recommendation?’ writes “BookLamp is different because it actually analyzes the books’ text. Its algorithm breaks books down into 32,160 elements: ‘StoryDNA’ (“setting” and “actors”), language and character DNA.” This acquisition could be used to better their ebook referral system and help iBooks join the growing subscription model fray should they choose. If they could find a way to incorporate all 2.5 million books in their library, it would instantly make them the largest online book subscription service. But publishers have had their day with Apple too, with a short-lived partnership that ended in collusion lawsuits that left a bad taste in everyone’s mouth.
To bastardize a Jedi mind trick uttered by Star Wars guardian, Obi-Wan Kenobi, “These aren’t the heroes we’re looking for.”
It’s hardly recommendable for even a hero to battle behemoth Amazon and Apple on the big dot.com’s terms, so what does that leave? An area as yet untouched by Apple, and only recently forayed into by Amazon is the ebook subscription platform. In a very competitive market, only Amazon with Kindle Unlimited, Scribd, and Oyster have emerged as leaders. Though the model has just solidly emerged in the past year and a half, Scribd had been publishing academic papers since 2007 before launching its current subscription service in 2013, the same year as its main competitor, Oyster. Both companies now maintain over a million titles on their sites. While what Scribd, Kindle Unlimited, and Oyster are doing for the industry is good, it’s not heroic.
These ebook subscription sites are based off the success of the Netflix subscription model. In essence, Netflix gives you unlimited movies and TV shows for $8.99/month. The Netflix content is what would be considered by publishers to be “back catalogue” material. The publishers long tail inventory is pretty much what is on these sites. Though major publishers like Simon & Schuster, HarperCollins, and Macmillan are now coming on board, they are only offering their long tail, or back catalogue inventory, to these subscription sites. And all three sites are charging what Netflix is and more. So how can Scribd, Oyster, and Kindle Unlimited justify their membership fees? For Netflix, it’s easy for the consumer. One boxed set of the TV show Supernatural retails for $206.00 on Amazon so $8.99 a month seems like a steal. Let’s look at ebooks that would be considered publisher’s back catalogue and three novels selling on Amazon right now: Catcher in the Rye ($4.28), The Original Illustrated Sherlock Holmes ($1.99), and Goldfinger with James Bond ($0.99). One would have to be a voracious reader to come up with the same perceived value Netflix offers. What Vessel has done is create not only something closer to a better perceived value for its subscribers, but it operates on multiple business models where members can also sign up for free. You don’t get what the $2.99/month Vessel subscribers get, which is 72-hour early release videos, and ad-free content, but this way anyone can be part of their growing network. And growing a massive network will be the key for our hero.
Now that we’ve developed a small picture of what’s out there for publisher’s and see that none of the current players fit the bill, what will this hero need to look like?
Like mentioned earlier, it will have to be all the best parts of what is out there now. It will need to have an unrivalled book-search optimization to best BookLamp, and flawless navigation with curation that includes moderators who can act as librarians. Like Vessel’s unique multiple-business-model format that has sparked an interesting shift in how subscription-based platforms operate, this hero will need to pursue various options to drive revenue and grow its network as quickly as possible. It will need big backing with big money for marketing. Fanfare will be important. Before it can solve the discoverability of books problem for their readers and publishers, it first has to solve the discoverability of its website. It will have to be different enough to raise eyebrows.
Our hero will also need to have a vision of how much better an ebook subscription site can be. The first challenge will be to find the perfect perceived value for subscriptions. It has to fit between the competitors $8.99-$9.99/month, and the free costs of writing sites like Wattpad that offer readers access to millions of stories, but they are for the most part unedited, poorly structured pieces often written by authors not yet out of high school. Is the $2.99/month that Vessel charges the ‘sweet spot’ for ebook subscriptions? Hard to say, but it has to be a throw away number; a cost that readers won’t worry about coming off their credit card every month even if there is a lull in their reading. What we’re looking for here is a number that even mild readers would be willing to pay in perpetuity for the ease of knowing they can read a book anytime anywhere without having to do anything. There is a cost associated with digital subscriptions, and figuring out the break-even point (which is a complicated calculation) would be critical, but it’s not rocket science to know that the more subscribers you have, and the longer you keep those subscribers, the more your costs like Customer Acquisition rate and Churn rate decrease. Without a network of millions, even tens of millions, our hero would be like Thor without his hammer, or Iron Man without his suit of armour.
This leaves the final component our hero will need. It has to be based on two philosophies: first, a goal to get as many ebooks to as many readers as possible. This isn’t a philanthropical stance, it is a matter of building up a network of tens of millions of subscribers. Providing a platform that creates a greater perceived value and that outdoes its competition at all levels to ensure that network. Secondly, it needs to provide a community not only for subscribers, but for publishers as well. One thing ebook subscription platforms have so far failed to do is to get publishers to relinquish their front lists (new books). Our hero will have to change that. Can you imagine a site that had just about any book you could want on it? Including newly published works? For only a few dollars a month? One could only imagine how quickly, and how vast that network would grow. But the crux: how to get publishers on board? Why would they be interested in taking a share of $2.99/month when they can have a share of $9.99/month? Why would they give up their front lists where they make most of there revenue? Again, it comes down to numbers. Netflix has passed the 50 million subscriber mark mainly because of its perceived value. If an ebook subscription could grow to half that, traditional publisher’s would have far fewer worries on their hands. Add to that, the ad revenues from the free subscription business model and you’re looking at over $100,000,000/month in ebook revenue alone. If we use Vessel’s example, 70% of that goes to publishers. As an additional part of forming a community with publishers, this platform would provide links to publishers’ sites for direct-to-customer print sales along with helping to promote new releases. The site has to have a perceived value for publishers as well; in fact, it will likely be harder for our hero to win them over than the readers. The good news is that ebooks within the subscription platform don’t carry a direct price, and, in the publishers’ eyes at least, shouldn’t devalue the print price like selling an ebook version for .99 cents does. Our hero will need to stand with and stand up for the publishing industry, but the publishing industry needs to stop beating itself up as well, to be heroic, it needs a Rocky moment, where after getting beat down, it picks itself off the mat and comes back with a vengeance. But unlike Rocky II to Rocky VII, it can’t continue doing the same thing over and over again with diminishing returns. It needs to shed its preconceived notions of traditional revenue gain, of readerships, of sales channels and of networks (something they have little experience in), and stand up for themselves alongside our hero.
As it always does with heroes, it comes down to heart. The heart of our hero must be as much cultural conservationist as it is hyper capitalist. Like Neo in The Matrix, it must believe it can stand up the Mr. Smiths (Amazons and Apples) of the world, and like John Carter, Warlord of Mars, it must band together the warring races (HarperCollins, RandomHouse/Penguin, et al.) of a planet. Only then will our hero win the day.
Hazard Owen, Laura, “Can 32,000 Data Points Yield The Perfect Book Recommendation?” Aug. 16, 2011, Gigaom, web, https://gigaom.com/2011/08/16/419-booklamp-uses-32000-data-points-to-find-your-next-read/
Gessen, Keith, “The War of the Words” Dec. 2014, Vanity Fair, web, Fri. Feb 27, 2015.
Shanahan, Matt, “How to Calculate Breakeven Point for Digital Subscriptions” Scout Research, web, Thurs. Feb. 26, 2015
Upbin, Bruce, “The Surest Way To Build A Billion-Dollar Internet Company” Apr. 2014, web, Thurs. Feb 26, 2015. http://www.forbes.com/sites/bruceupbin/2013/04/03/the-surest-way-to-build-a-billion-dollar-internet-company/2/
Bellis, Rich, “Looking Beyond Ebooks, Scribd Bulks up” Feb. 11, 2015, Digital Book World, web, Wed. Feb. 25, 2015. http://www.digitalbookworld.com/2015/looking-beyond-ebooks-scribd-bulks-up/
Bellis, Rich, “Macmillan Tries Subscription Ebooks as Major Players Stake New Ground” Jan. 13, 2015, Digital Book World, web, Tues. Feb. 24, 2015.
Pantoja, Andrew, “8 Ways Oyster Books Can Rule the Ebook Subscription Market” Mar. 2014, Publishing Perspectives, web, Thurs, Feb 26, 2015.
Hazard Owen, Laura, “Apple acquires BookLamp, which was once a great book recommendation site” Jul. 2014, Gigaom, web, Thurs. Feb. 26, 2015.
Nicks, Denver, “Amazon Just Launched ‘Kindle Unlimited,’ a Subscription Service for E-Books” July, 2014, Time, web, Sat. Feb. 28, 2015. http://time.com/3004637/amazon-kindle-unlimited/
O’toole, James, “Netflix passes 50 million subscribers” July, 2014, CNN, web, Sat. Feb. 28, 2015. http://money.cnn.com/2014/07/21/technology/netflix-subscribers/