Macmillan Tries Subscription Ebooks as Major Players Stake New Ground

Macmillan becomes the latest Big Five publisher to test out the subscription ebook model today, adding 1,000 back-list titles each to leading providers Oyster and Scribd.

The two subscription ebook services’ deals with Macmillan provide the latest validation for the growing model as Oyster and Scribd strive to distinguish themselves in a market that’s grown more crowded over the past eight months.

Oyster Scribd Macmillan subscription ebooksIn May of 2014, Oyster added about 8,000 additional titles from HarperCollins and gained the entirety of Simon & Schuster’s back-list, two deals that together “transformed the library,” Oyster Co-founder and CEO Eric Stromberg recalls.

At the time, Oyster estimated it was the fifth largest ebook retailer for certain publishers, and even though its competitor Scribd offered about 100,000 fewer titles, the latter claimed it was the fourth biggest revenue source for some suppliers of ebooks.

Today, Oyster’s catalog boasts more than 1 million titles, making it now roughly twice the size of Scribd’s, but the latter has since expanded into audiobooks and recently closed a $22 million round of funding.

Stromberg declined to wager where Oyster currently stands in terms of publisher revenue, but Scribd Co-founder and CEO Trip Adler reports that “some publishers have…expressed that we’re in the top three” of their revenue sources for ebooks to date. Scribd added 15,000 ebooks from Harlequin in October last year, extending its partnership with HarperCollins, which became the romance publisher’s parent company in May.

Competition in the subscription market has heated up since Amazon’s launch of Kindle Unlimited in July 2014. Since then, skepticism of the subscription model in general and of Kindle Unlimited in particular hasn’t dulled. Claiming the payouts they’re seeing from Kindle Unlimited are less than satisfactory, some authors have pulled their titles from the program. And even though more publishers are testing and expanding their involvement with ebook subscription ebooks, many remain wary.

To all appearances, that includes Macmillan.

The publisher’s decision to enter the subscription market comes despite what CEO John Sargent said he sees as the “significant long-term risk” that the model “will erode the perceived value” of print and ebooks alike. Yet in a letter to authors last month announcing the publisher’s new distribution contract with Amazon, Sargent explained the move toward subscription ebooks as a way of countering what he called “one of the big problems in the digital marketplace”: the e-tailer’s outsize market share.

Oyster Scribd Macmillan subscription ebooksOyster and Scribd have both moved swiftly to position themselves as critical tools for publishers to explore alternative distribution channels. The latest Amazon contracts reached by three of the Big Five publishers (Simon & Schuster, Hachette and Macmillan) seem likely to intensify the need for ebook subscription services to stake out new territory in order to grow.

“As publishers move toward agency pricing,” Stromberg said, “it’s harder for retailers to rely entirely on price to compete. When you can’t compete only on price, differentiation moves to user experience and discovery.”

To that end, Oyster launched an online magazine in November, which it now claims boosts reads of featured titles tenfold.

Even within the subscription world, the concern has even been voiced that offering only unlimited, subscription-based access to ebooks isn’t enough to sustain the model.

One goal Scribd set itself in moving into audiobooks was to drive “crossover usage” in both directions. In the first two months after adding 30,000 audiobook titles to its platform, Adler says Scribd has seen “a healthy amount of ebook readers who are trying out audiobooks for the first time.”

Digital Book World 2015, kicking off today in New York, is taking a close look at the current state of the subscription ebook market, with leaders at the major services speaking live. It isn’t too late to join in.


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