Are Subscription Models Crucial for the Future of Books?

Are Subscription Models Crucial for the Future of Books?

Originally Published August 15, 2018 by Molly Flatt in The Bookseller.

In their new book Subscribed, Tien Tzuo (the founder and CEO of Zuora, the leading Silicon Valley subscription management platform) and Gabe Weisert (its managing editor) claim that “companies like Netflix, Spotify and Salesforce are just the tip of the iceberg for the subscription model. The real transformation – and the real opportunity – is just beginning.”

The book is a persuasive, case-study-stuffed evangelist for the subscription and streaming models, aimed at companies that want to transform their products into a service. Like, er, publishers and booksellers?

In 2015, Hachette Livre chairman Arnaud Nourry called the book subscription model “flawed” and “absurd”, while the UK chief executive Tim Hely Hutchinson (at the time) also trashed the concept, saying “I don’t see how it would do anything other than cannibalise the business we already have.” But with startups like Perlego, Bookmate and Blinkist representing a new generation of book subscription services – not to mention all those boxes flooding the market – has the time for one of the industry’s most-hyped but least-successful models finally come?

We sat down with Weisert – who has also worked in digital content for Yahoo! and Forbes – to get his take.

Why do you believe the subscription model is so crucial for businesses going forwards?

Because consumers are demanding it. This is where the market is headed. We’re witnessing the end of ownership. People (particularly younger people) want access to things (media, transportation, housing, etc), without the hassles of ownership. Why buy a car, when you can just grab a ride? Why buy an office building, when you can rent from WeWork? Why spend lots of money on on-premise software that you have to maintain, when you can just sign up for a plug-and-play SaaS solution? Subscriptions are exploding because today’s consumers want on-demand services, not static products.

Plenty of book-related subscription services have started up…and folded. Does this model really apply to a ‘static product’ that takes so much time and effort to consume?

I have no doubt that it could work, but I think the mistake people make is that it’s a zero sum equation, that a subscription book service would necessarily mean less people buying books. Maybe there’s a service that incorporates digital downloads as well as discounted books. Books are still really, really good at what they do. Personally I enjoy reading both digital and physical formats. I don’t think anyone’s made a successful effort at trying to reach readers like myself.

Publishers rarely deal directly with consumers, or have much consumer data. How does this square with a subscription model?

Publishers are in good company! Car manufacturers don’t know who’s driving their vehicles. Television networks don’t know who their viewers are. Packaged goods manufacturers have no idea who’s consuming their products. Now, contrast that with Netflix, who knows exactly who’s watching what. Or a car service that understands your commute. Or even a toothbrush company like Quip, which sends you replacement parts every month. Or a publisher that might offer access to its entire back catalog for a fixed monthly fee. It’s pretty straightforward – subscription models allow you to build direct relationships with your customers, so you can make relevant offers, spin up new services based on usage data, and build a base of steady, recurring revenue.

As readers, wouldn’t book subscription services lock us even more firmly into our filter bubbles?

That’s a fair point. Personally, I’m a huge fan of mid-century American crime fiction – writers like Jim Thompson, Raymond Chandler, Donald Westlake, Dashiell Hammett, etc. I would happily subscribe to a subscription service featuring those authors. But I also really enjoy keeping up with the smart non-fiction stuff – Sapiens, The Big Short, Thinking Fast & Slow, etc. So you could see a more eclectic subscription service built around those kinds of titles. That’s a big part of the appeal of those monthly subscription boxes — the surprise element. Every month is Christmas.

What’s the most common mistake businesses make when attempting to adapt to a subscription model?

They just assume that it’s business as usual, except now you’re slapping a monthly fee on your product. Everything changes with a subscription model, because now you’re actually talking to your customers – sometimes on a daily basis! It’s the difference between a one-night fling and a committed relationship. You have to listen to what’s going on, focus relentlessly on reducing churn, keep your subscribers happily surprised on a regular basis. Lots of subscription companies have customer success departments that focus exclusively on those kinds of issues. It’s very different than customer service – much more proactive.

Can you think of a case study from another industry that would have real resonance for the book trade?

Look at how the music industry has bounced back from the long crash that followed the CD sales boom of the 80s and 90s. Thanks to streaming services like Spotify, music retail sales are up 11% this year after 15 years of 4% decline. The music industry is actually growing again! Streaming has triggered all sorts of positive ancillary effects – there’s more discovery, so concert attendance is growing. Artists are getting paid directly. And vinyl has made a huge comeback. I think book subscription services could work the same way – more readers would discover more great writers, with all sorts of positive downstream effects.

Order your copy of SUBSCRIBED: Why the Subscription Model Will Be Your Company’s Future — and What To Do About It now!

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