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The four stages of the “Spotify for eBooks” adoption model

... or why I believe in a bright future for ebook subscription

During the 2013 edition of the O’Reilly Tools of Change conference in New York City, I will be participating in a panel that has been called ‘The Elusive Netflix of eBooks‘. The title implies the notion that a subscription service for ebooks has not fully worked yet. While it is true there is no 500-pound gorilla selling subscriptions yet, my point of view as someone behind one of the companies offering such a service, is that this is just part of the process. A process that is just taking the right steps in the right direction.

Let me explain what I mean by going through four main stages, loosely taken from what any innovative product adoption lifecycle typically looks like.

Creation and evangelization: The ‘what the heck!’ stage

Electronic book subscription starts as an evolution of print book clubs, and the subscription services coming from other entertainment and cultural industries, like music or movies. A place where, instead of purchasing ebooks one at a time, a user can get potentially unlimited access to a commercial catalog provided by publishers worldwide. When a company like 24symbols started its venture, there already had been talks and articles about potential “Spotify for books” or “Netflix for books” services. Safari was already pretty established as a subscription service for technical ebooks. But not much more had been actually done.

Hence a stage of evangelization started, where we had to explain to publishers how our vision for ebook subscription worked, how different this business model was but, at the same time, how a subscription service could be a valid channel for publishers and an incredibly attractive offering for readers.

This is the stage where many questions would come from interested publishers about the technicalities of our offering (mainly focused on how we would protect the ebooks, a-la DRM), how well-versed we were on the intricacies of the publishing contracts, and, in many cases, about our own commitment as a company. But most importantly, questions about what the new model means, with new concepts such as the “page read” as a new measurement element, or how a freemium model (where freely registered users can read a limited subset of the catalog) actually helps the overall sales by creating engagements that wouldn’t otherwise take place. It is hard, and any reader that has ever worked in a company with new offerings knows what this stage requires endurance and resilience. 

Early adoption from true innovators: The ‘it’ll never work’ stage

But along the way one always find travel companions. People who love the idea and push the company to keep thriving. Innovative publishers and authors who see this as an opportunity to engage new and existing readers in novel ways of reading.

The infamous chicken-and-egg problem of how to get users without content, and how to get content without users, starts to break when the “product” dimension enters the room. A multi-device product that engages readers to check it out, start reading, and finding how, for instance, cloud-based synchronization is actually quite useful in an environment where more and more people have smartphones, tablets and laptops to spare. A service that promotes engagement with recommendations based on the reader’s ACTUAL readings, that enables her to see what her friends read and like, or that relate to her typical apps like Facebook, Twitter or Pinterest to add her preferred books and quotes to her social timeline.

But of course, this stage is about early adoption, and not everything is easy. Some challenges always confront you:

  • Legal contract and the relationship with authors. This is a technical issue that truly slows down a full adoption of the model… but does not impede experimentation! And that’s key for publishers today.
  • This is an alternate channel that potentially brings high revenues, but depends on time and growth. Any publisher not willing to experiment and bet on subscription platforms to better understand how useful it might be will have problems accepting any subscription vendor’s value proposition. What is the mistake here? Not seeing the present value of a subscription service as an engaging mechanism for readers, as a marketing platform for new and existing authors, and as a powerful analytics tool to better understand the behavior of a new niche of readers that understand culture in a somewhat different way.
  • This is a mid-term race.  A subscription service is not elusive because it is not working, but because it requires time. And a reader community is not like a pure social network or other vertical areas where millions of users are going to be signing up, especially when we require content to attract users. Even a great service like Goodreads has grown in a quite linear way (again, compared to other social networks.) This requires investment, resilience and patience, and any subscription vendor must have those assets and keep them there as long as the growth is clear (real growth, not just vanity metrics to show off).

We are in this stage right now. Most subscription vendors are. Our KPIs show an accelerating growth in number of users, reader engagement in time and number of pages read per month, increasing number of paying subscribers, number and quality of publishers signed up, etc. Every time we look at the stats a smile appears in our faces.

But it is not enough, and that is why resilience is everything here: constant growth; joint work with publishers in book clubs and campaigns; finding channels that help us reach those potential readers for which our low-cost effort alone is not enough. And having a product that is loved by everyone who uses it.

Taming tornadoes: The ‘it was evident’ stage

And what will happen next? One never knows, but my vision is that, little by little, publishers will see this as yet another channel to take advantage of. Readers will be happy with the titles shown, with the product used to access them, and with the terms and conditions (be it freemium or other alternatives.) Worries like cannibalization of other models will be seen as obviously wrong when taking into account the benefits brought by new, previously-unreached readers.

It will then become apparent how the subscription financials are similar, or even better than the previously-used ones. A moment known as “tornado” in the standard product strategy literature, where suddenly the service grows and grows, and the “this is never going to happen” transforms into the “of course it works“.

Suddenly, it will become clear to many that the charm of a subscription service is its engagement: at a fair price, readers will love having a simple way to access their favorite books and authors with one single payment decision. For publishers, a constant revenue source from both complete readings and page browsings from a growing number of subscribers will definitely make sense to them. And if publishers and authors have appropriate deals in place, both will see clear benefits to the service.

The normalization stage or ‘you’d better watch out again’

Finally, and this can take years, a moment might come when ebook subscription is as global and available as purchasing ebooks online currently is. A moment where according to most systems analysis theories, the importance will reside on the control side, just as it happens now with Amazon doing its best to get a good hold of the industry. Amazon can do it. Not easily of course, since contract negotiations need to still take place, but the depth and breadth and financial resources of Amazon could make it happen. But on the other hand, do publishers want to make one single bet? For a real tornado to take place more than one reliable and global service must be ready and running.

When that moment comes, subscription vendors and publishers should be watching for the next business model that will disrupt the industry. It will probably be just a few unknown startups claiming that their offering will change how people read and purchase content.

The Netflix for Books is not being elusive. Any new business approach appearing in an industry with successful, long-term pricing and relationship models takes time to become known, understood, tested and fully adopted. There will be lots of work, challenges and disappointments on the way. But if we, product and business developers, keep focused on what readers want and ask for, and continue finding ways for publishers to engage in the venture, there will be a time, sooner rather than later, where the theme of a TOC talk will be “A case study: how the Netflix for eBooks became a successful paradigm in the publishing industry” :-)

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  • http://www.facebook.com/edea.krammer.3 Edea Krammer

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