Books as a service: How and why it works
Justo Hildago (@justohidalgo), co-founder of 24Symbols — a kind of Netflix for ebooks — says books as a service not only benefits readers, but publishers as well. Hildago outlines his company’s business model and explains the benefits it offers in the following interview.
Hidalgo will also expand on these ideas at TOC Frankfurt 2011 in October.
How does 24Symbols’ business model work?
Justo Hidalgo: 24symbols is a subscription service that lets users read in the cloud, and it includes social capabilities. This means that the user does not need to download the ebook. The book goes wherever you go — read it on your laptop, iPad, smartphone, and so forth.
We have a freemium business model. Users can subscribe for free in order to read ad-supported books online. Or they can pay a monthly, quarterly or yearly fee to access a bigger catalog with no ads, and with additional capabilities, such as reading offline — on the plane, on the subway, or in any place where Internet connectivity is not available.
What we’re offering is quite different compared to what the big players are doing. We’re offering an alternative approach — a new channel where publishers can provide additional value to the readers, and where readers can take advantage of what the Internet is offering.
How does your model benefit publishers?
Justo Hidalgo: There are three main benefits for publishers:
- Piracy — Though not as high yet as in music or movies, piracy in books is clearly increasing. Publishers can either wait until the numbers get so high that nothing can be done, or they can act accordingly. The examples of Netflix and Spotify
show that if you give users a compelling way to consume paid content, they will pay for it.
- Cannibalization — We don’t believe books are dead, but rather that they will co-exist with their digital counterparts. 24symbols helps in that coexistence as a way to easily re-direct traffic to retailers — if you love a book on 24symbols, give it as a gift; if you read for a while but still prefer the printed version, buy it.
- Books as a service — The trend toward consuming content from the cloud is clear and inevitable. Publishers must start positioning themselves in an area that is already profitable in many businesses and clearly will be soon in the book industry. The benefits it brings to publishers — statistics and data gathering, close revenue control, and the ability to experiment — override the current concerns.
Additionally, we share revenue with publishers. The way to do this is by having a common revenue pool where we include all book-related ad revenue and the paid subscriptions. For a specific time range, such as a month, this revenue plus the number of pages that have been accessed throughout that period gives us the “price per page.” Then we just count the number of pages per publisher and pay each publisher accordingly.
How are publishers responding?
Justo Hidalgo: We’re finding lots of interest from publishers. Most of them understand how our model can help them and since we’re quite flexible regarding how to start, it’s easy for them to begin by publishing some content in order to experiment. We’re adding new books to our catalog every week, and we’re finishing some deals with big publishers that will provide a “seal of quality” to our project.
Is piracy a concern for you?
Justo Hidalgo: The project itself was born with piracy in mind. As I mentioned before, piracy is increasing in the ebook market. This doesn’t help the industry, as it didn’t help other cultural and entertainment industries, but it clearly shows a shift in how content is accessed and consumed. We offer a solution that’s based on a proven premise: if you provide readers with a convenient, unified and affordable way to access content, people will use it. Once that’s achieved, piracy doesn’t matter that much.
This interview was edited and condensed.
For more on how 24Symbols works, check out the video below: