Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.
A report released today by the Book Industry Study Group (BISG) finds that 80% of publishers believe subscription ebooks becoming a major part of the publishing business is “inevitable.” The launch last week of Amazon’s subscription service, Kindle Unlimited, would appear to corroborate that finding — but are they?
Professionals within the trade, scholarly, professional and higher education sectors interviewed for the BISG report had differing views on the various subscription-based models most likely to take hold in their respective categories. Among all those interviewed, however, there is a widespread belief that subscriptions are already playing expanding roles in each of those sectors, and that that trend will continue dramatically upward. Among trade publishers, only 7% of respondents said subscription services contribute significantly to their overall revenue today, but 59% expected that to change within the next five years. This is a case where the majority could be mistaken.
Why? Because the most crucial questions for how — and how dramatically — ebook subscription services will reshape the industry are ones that no report can answer: Just how many authors and publishers will jump on? How deep will their participation be? And, ultimately, will readers buy?
“One major concern surrounding the increase of ebook subscriptions,” the BISG report concedes, “is the potential degradation of high-value markets.” Yet the report indicates a prevailing belief among the various stakeholders in the publishing ecosystem that the benefits more often outweigh the costs: “New revenue from the emerging markets reached by subscription ebook options promises to offer some relief to publishers as they struggle with diminishing print sales.”
But while price degradation, on the one hand, and upticking revenues from new subscription models, on the other, are possibilities, neither should be considered “inevitable.”
It’s instructive to look for patterns in other forms of media where subscription services have taken hold, as the BISG report does, but publishing folks are often quick — and right — to point out that books are unique because, among other reasons, they’re consumed in a fundamentally different way than music, TV and movies. According the Bureau of Labor Statistics, the amount of time Americans spend watching television and movies far dwarfs the amount of time they spend reading. It makes sense to have a service that lets you choose what you want to watch and watch as much of it as you want. The same doesn’t necessarily go for reading.
Besides, book publishers and authors have largely succeeded at continuing to get readers to pay for each time they consume content, even as the business models for newspapers, magazines and music have been upended and TV and movies continue to suffer from widespread piracy. As some of the latest figures from the U.S. and UK markets suggest, revenues from both print and ebooks are more than just holding steady; they’re increasing.
This growth is being seen in a market dramatically shaped by Amazon’s deep discounting and the transition to cheaper ebooks from more expensive print books. If readers were fleeing in droves from existing retail channels or being converted en masse to the notion that paying anything more than a couple of dollars for a book (or anything at all, for that matter) is highway robbery, then authors and publishers would have far greater incentive to pursue subscription ebooks aggressively.
But to all appearances, they don’t really have that incentive — at least not yet. Readers are still showing a willingness to spend on individual books.
Furthermore, in order for publishers, authors and the service providers themselves to each cash out favorably, subscription models must perform a difficult balancing act that relies heavily on user behavior. On the one hand, they need to encourage many people to sign up; on the other, they need to make sure they stay signed up and reading, but not reading so much as to cost the services more than they make from having them as subscribers. One analyst writes that even Kindle Unlimited may be doomed right out of the gates as a consequence of that challenge.
Publishers and authors, having watched ebook subscription services like Oyster and Scribd gain footholds in the reading market, are now familiar with that difficulty. On balance, publishers have shown considerable caution adding their titles to those catalogs. And authors have already stepped forward to criticize the way Kindle Unlimited proposes to compensate some of them.
In light of all this, the scope and nature of ebook subscription services’ impending impact on the industry looks if not more limited, then at least less “inevitable” than respondents to the BISG study anticipate. In a live debate Digital Book World hosted in June, in which executives from Scribd and Smashwords faced off with a business journalist and the head of a global ebook distributor on this very question, the skeptics carried the day, convincing a greater share of the audience that the potential costs to publishers, authors and readers outweighed the potential benefits. Even though the majority of attendees continued to feel optimistically about the place of ebook subscription services in the world of publishing — as do the publishers BISG surveyed — the fact that such caution remains in ample supply suggests that an industry-wide embrace of subscription ebooks is still far from certain.
While it may not have impacted the results, it’s important to mention that the BISG survey was sponsored by ebook subscription providers Safari and Scribd, among others. Learn more about the report and purchase it here.