New e-book selling platforms

When it comes to e-books, there are marketing and selling “game changers” around every bend. But two recent developments in e-book selling have caught our attention – the selling of e-books on a subscription based model (“eat as much as you can”), and the bundling of e-books with print books. The time for these kind of models to be implemented in bookselling is ripe. Of course these new platforms for e-bookselling will have an impact on the pricing and perceived value of e-books – and with recent price fixing and subsequent seemingly chaotic approach to e-book pricing, it’s time to reconsider what we thought we knew about e-book selling.

Subscription based platforms
It seems like a new subscription based bookselling platform has been released every second week for the past few months – Oyster, eReatah, Scribd and 24symbols to name four recent startups. It’s a model that makes sense for e-books – especially where the focus is on mobile reading, and where the “Netflix” model (“eat as much as you can”) is followed. But there are quite a few snags to sort out before vendors hit the “one million subscriber” mark they’re aiming for, including sorting out rights and licensing issues (access vs. ownership), pricing and costs, and, of course, reader expectations and adoption.
Rights, licensing and costs
An important fact to bear in mind when talking about e-books in general is licensing – consumers are waking up to the fact that e-books are, in fact, NOT like printed books in the sense that even though one “buys” an e-book, that e-book doesn’t really belong to you – you have a license to have it on your digital shelf. Some platforms also lock readers into their e-book ecosystems – meaning the books can’t be accessed offline, and if you ever decide to leave, you leave your books behind. Others, like eReatah (e-reader + cheetah) allow you to access your books even if you are no longer a subscriber. Oyster offers a Netflix* style of service for $9.99 (R97) a month, with unlimited access but not ownership, while eReatah’s service more closely resembles a book-of-the-month club with discounts. It has several tiers of service, starting at about $17 (R166) a month for two books. Document sharing service firm Scribd* recently announced that it, too, would be launching an e-book subscription service. “For power readers, this is going to be like a dream come true,” predicted Scribd CEO Trip Adler on GigaOM.com. “We think this could really change the book publishing’s business model and change people’s reading behaviour.”

Reader expectations and adoption
Jeremy Greenfield of Digitalbookworld.com
makes a good point – with new platforms like these, the focus should be on gaining the support of the youth (it is, after all, a demographic that helped build Facebook into a billion-user monster, shift some of the social networking focus to Twitter and turn Instagram into a billion-dollar acquisition). He looks to Brazil (interestingly, South Africa shares many of its reading culture and general education woes with this BRICS partner), where super successful startup Nuvem de Livros (“Cloud of Books”) was launched to offer students access to content that Brazil’s limited school libraries couldn’t provide. Terra Brasil reports that this platform was developed in partnership with the Brazilian telecom Vivo, and that it has a goal of supporting the 15 million Brazilian students who only have limited access to a library, as well as the 3 million college students taking distance-learning courses. Students pay a discounted subscription of 2 Brazilian reais per month (about R10), while regular subscribers pay 6 reais (R27) per month. Price point may be a big factor here, but Greenfield sees it mainly as a matter of youth adoption. If a service like Oyster or 24symbols can capture that audience and get the readers of the future to embrace the idea of all-you-can-eat as a model for book consumption, that would be a legitimate base on which to build and an outlet that would be hard for publishers, authors and agents to ignore.
Chris McVeigh of www.fourfiftyone.co.uk,
a marketing agency for publishers, cleverly compares the subscription model for books to a gym membership. He writes: “Sure, some super-users will squeeze the model till it squeaks to get the best value, but most users will settle into a semi-regular pattern and a large proportion will use it only very occasionally. Crucially though with a subscription model, customers are paying even if they don’t access the service – unlike the current ‘pay as you go’ model used by traditional retail channels such as Amazon.”

Bundling print and digital
The concept of bundling has been stretched and tried in every possible bookselling scenario – and what’s not to love: consumers feel like they’re getting value for money (if the bundle is done right), and publishers and booksellers are selling more books. Bundling print with digital has also been around for some time – Academic publishers in particular have been bundling software with textbooks for years.
Since the arrival of e-books booksellers and publishers alike have been scratchingtheir heads over “e-book economics” – they seem to be experiencing an overall increase in profit margin through digital publishing, while seeing overall revenue shrink at the same time: e-book sales generate less revenue because of lower prices. According to David Wilk, publisher of digital children’s book startup Frederator Books on Digitalbookworld.com,
bundling has the potential to restore some of that lost revenue to print publishers with extensive backlists. And, as Amazon stated, bundling is one of its most-requested customer features, which drove them to develop a type of “retrospective” bundling service called MatchBook, launched in September. It makes complete sense – if you’ve bought the print book, you should be able to get the digital or audio version for a minimal amount. Some publishers and observers have already criticized MatchBook, suggesting that this move will devalue e-books. But the low priced e-book sold as a bundle with a print book is a completely different value proposition for the consumer. There is a longstanding tradition in consumer marketing of bundling related products at lower prices – we instinctively understand that we are getting a deal for the combined purchase we could not get otherwise. Unlike other forms of bundling, which can come directly from the supplier as a bundle, OR can be bundled and sold on by the retailer, the e-book/print book bundle needs to come from the publisher. It enables booksellers to sell digital alongside print without getting involved in the intricacies of digital selling, DRM-issues etc. It enables customers to buy e-books in the shops where they discover them, thereby addressing the growing concern of the “showrooming” trend. It is a good opportunity to cross-market print and e-book versions – and allowing customers to realise that as far as platforms go, its not really a question of either/or, but as one study shows, more and more readers are making use of both print and e-book versions – they simply have different applications.
Pricing
Art Brodsky recently wrote a fascinating piece on Wired.com about how e-book pricing is an “abomination,” because it’s designed to price people out of reading. He points out that we should think more about e-books like we think about apps, since that’s a much more direct comparison than books. Following that logic, new models of selling e-books will not devalue them, but rather provide a new and better way of living with books.
Where does this all leave bookselling? A lot will depend on what publishers (and, crucially, Amazon) do next. Consumers want this – these are models they’re comfortable with. As always, innovators have risen to the challenge to offer them what they want, and to a large extent, the success of subscription based bookselling and digital/print bundling will depend on the willingness of publishers to experiment and take strategic leaps of faith in these new directions. For now, booksellers should start thinking out of the box, and into the future.
*Netflix, Inc. is an American provider of on-demand Internet streaming media. The company was established in 1997. It started its subscription-based digital distribution service in 1999, and by 2009 it was offering a collection of 100,000 titles on DVD and had surpassed 10 million subscribers. As of mid-March 2013, Netflix had 33 million subscribers. That number increased to 36.3 million subscribers (29.2 million in U.S.) in April 2013.
Scribd is a commercial music streaming service providing Digital Rights Management-protected content. Launched in October 2008 the service had approximately 10 million users as of 15 September 2010, about 2.5 million of whom were paying users. Total users reached 20 million by December 2012, 5 million of who pay a monthly subscription fee that varies based on locale. Scribd principally operates under a so-called ‘Freemium’ model: basic services are free and more advanced or additional features are offered at a premium. (Source: Wikipedia)

Scribd Enters Increasingly Crowded e-book Subscription Market, www.digitalbookworld.com
E-book Subscription Platforms: Look to Youth, www.digitalbookworld.com
Comparing e-book Subscription Services Oyster, eReatah and Kindle Owner’s Lending Library: Content, Price, and Availability, www.the-digital-reader.com
Oyster Launches Spotify for E-books, www.digitalbookworld.com
You know what’s cool? A billion dollars, that’s what’s cool, www.futurebook.net
E-book subscription startup Oyster expands to iPad and opens to all; some stats from Scribd, Gigaom.com