Mike Shatzkin has written an excellent post evaluating subscription models in the ebook space, concluding that they make sense more for ebook niches (i.e., specific segments) than as a general offering.
His main point is that in contrasting the success stories at Spotify and Netflix with the prospects for eBooks, one has to look at the concept of granularity; namely, the fact that there are far fewer total movies and songs produced each year (measured in the thousands) than books (measure in the hundreds of thousands).
Read the whole piece, as it covers the history of such business models in the book space, success stories, and how the evolution of online has changed the equation.
My core actionable takeaways from the piece are three-fold:
- MEDIA MATTERS: The distinctions between different media types drives their consumption patterns, which in turn drives monetization paths. After all, it was an easy evolution to unbundle the song from the album because the unit of value still worked (arguably better) at the level of the song. Even watching a movie is only a two-hour commitment. Both of these exercises naturally occur in lean back mode. By contrast, reading requires an engaged user, and a book takes days-to-weeks to consume, constraining the types of users and use cases where subscription is compelling.
- UNITS OF VALUE: With books, the challenge is to define the unit of value whereby the whole book can be 'systemically un-bundled' into smaller units, and then aggregated into a larger library so as to create the kind of deeper value that supports a subscription model. Reference books are logical places for these things, as are segments like education and business where there are new types of media/engagement units that can be cobbled together to create value (e.g., cliff notes, best practices 'recipes,' quizzes, etc).
- CATCH-22: The challenge for most publishers contemplating this path is that there is both a material cost to re-factor content AND an income risk that new ventures in this arena don't cost-justify. As such, it's a bit of a Catch-22 for these folks. Why? On the one hand, the clear trend is for publishers to get increasingly squeezed by Amazon (especially if/when there is no more B&N). On the other, the individual stakeholder at a publisher who goes out on a limb to make this type of investment has to fight internal friction to play it safe, and thus faces career risk if things go awry, doubly challenging in an industry where lateral moves are scarce.
Such truths favor upstarts over incumbents (or Amazon, of course), but this is one story whose book has not yet been written.