Scribd CEO Trip Adler on the Economics of Ebook Subscription Models, the ‘Big Five,’ and the Competition

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Earlier this month, online document-sharing platform Scribd entered the increasingly crowded subscription ebook space, contending with players like Amazon, Oyster and 24symbols.

Scribd, perhaps more than other launches this fall, made a splash because of its established track record of success in selling people reading material and its huge user-base — 80 million monthly users, the company claims.

While some in the publishing industry are dubious about the viability of a consumer-facing, general-interest subscription ebook business, many firms are going after it and perhaps none with a better chance of success than Scribd.

I got on the phone this week with Scribd CEO Trip Adler to talk about why the company entered the subscription ebook business, what he thinks of the competition and to explain just how publishers and authors get paid through the service.

 


Learn more about the future of ebooks at Digital Book World 2014


 

Jeremy Greenfield: What gave you guys the idea to enter into the ebook subscription business? 

Trip Adler: The idea came from having a so many publishers on our site who were looking for better ways to get better distribution and more revenue.

The reason why we’re doing it in such a big way is just that we see it as a ripe space for an important company or several important companies to be built. While there has been a lot of attempts before, this is the kind of thing that’s only going to work if all the elements come together just right.

You need th publisher support, the right consumer experience and you have to get the economics right, so that people are happy to pay for it and publishers are also happy with the revenues that they’re making.

We had a very unique opportunity to make everything come together just right given the fact that we already had such a large user base and the right content and the publisher relationships.

 

JG: How long have you been working on it? 

TA: We started working on the ebook subscription service at the end of last year. I didn’t want to go down this path unless I knew we would get some support with the “big five.” We started having conversations with the big five around this since last year.

 

JG: Will you get more of the big publishers to sign on soon? 

TA: We’re continuing to add more and more content. I just signed three contracts today for smaller publishers. We’re adding small and medium sized publishers all the time. The next step is getting one more or more of the big five added. We’re in conversations with all of them. There was great interest pre-launch. I can’t say when one of them will sign up but I’m getting a lot of good responses and I’m optimistic about the future.

 

JG: What do you think of your competition, like Oyster? 

TA: I think this is a really interesting new space and if you look at both video and music, you have both ownership models and access models for subscription and I think it’s finally time for books that these access models start to exist. There’s probably going to be more of these services coming soon now that it’s easier to get publishers on board for this. I’m excited to see the whole space unfold.

 

JG: Speaking of movies and music, your company and Oyster have both been compared to the Netflix and Spotify. Which is it? 

TA: We’re like both. I can’t choose.

 

JG: So, now to the $64,000 question — can you explain the economics of how this works for publishers? Nobody seems to want to share this information. 

TA: When somebody reads a book, we pay a publisher as if they sold the book. We have a fairly complicated system to determine if a consumer actually has read the book. The amount the publisher gets is based on the digital list price.

 

JG: What about adding self-published ebooks? 

TA: Right now, we’re only working with a few dozen or so professional publishers, but we do intend to open this up to authors so they can contribute books themselves. They would have similar terms as to what publishers have.

 

JG: Most readers in the U.S. probably don’t read enough to validate paying $8.99 a month for unlimited digital reading. Have you gotten blow-back on the price? 

TA: The way I see it, we’re charging $8.99 per month for a new type of experience for books. It’s not just about getting more books for a lower price. It’s a new experience around discovering books, more flexibility to switch books, to browse books, to search for information within books. We’re charging for a new experience where people have access to a library. We’re seeing people browse books, read them in parallel — there are a lot of different kind of user behaviors happening.

 

JG: How many people have signed up?

TA: We’re not disclosing that yet, but we do plan to make an announcement when we hit a milestone. But it looks good and it’s growing quickly. Since we soft launched in January, it’s been growing 60% month-over-month and in the last few weeks it’s more than doubled.
JG: How many do you expect to sign up?

TA: In the longer term, I do think it’s a big opportunity. Netflix does billions in revenue, Spotify does almost a billion. I don’t see why it won’t be on the same order of magnitude for books.

 

JG: So, you expect 10 million people to sign up for this? 

TA: That would be a good goal.

 


Learn more about the future of ebooks at Digital Book World 2014


 

Jeremy Greenfield

About Jeremy Greenfield

Jeremy Greenfield is the editorial director of Digital Book World. Opinions presented here are his own. Read more of his work here.

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