Digital Directions: Subscription Service Readiness Checklist
The overarching question all publishers must ask, the existential über-question trumping all others, is: Where will revenue and earnings come from in the future? The answer to this question is fundamental. All other aspects pertaining to digital media—whether it is asset management, metadata solutions or social media strategies—are dependent upon future revenue dynamics.
Selling an ebook is remarkably like selling a print book. It is essentially just a new delivery format. And while ebook revenues have certainly been encouraging, most publishers realize that simply selling the traditional list in ebook form does not create a complete revenue strategy in terms of earnings and growth. If significant new forms of revenue are to be created, publishers must create and deliver new forms of value by exploiting unique characteristics of digital delivery.
One way to provide a new form of value is to provide customers with the opportunity to access digital collections of related titles on a subscription basis. Groups of titles that are organized around meaningful subject foci offer more than just the sum of their parts. Such digital collections can serve as a significant information resource to specific market segments. Subscription services that offer access to collections of book-based resources are particularly valuable for professional and reference publishers that focus on specific industries.
While the pricing model of such services is based on subscription, it bears less resemblance to periodical delivery than it does to online services like Spotify or Netflix. These online services provide access to resources of value. If the service provides a valuable function to a market segment, particularly in the professional arena, then retention will be high and revenue steady.
For many book publishers, significant future revenue will be derived from similar services that provide access to collections of their content to individuals and groups. While many publishers are familiar with providing libraries with digital access to titles through digital aggregation services, revenue generated from such programs have not been significant. But publishers can drive greater returns by providing their own branded subscription service, based upon their titles alone, and marketed under their brand.
The attractiveness of publisher-branded subscription services over third-party aggregators include:
- the control the publisher has over pricing and presentation
- the consistency of the annuity revenue streams they generate
- the percentage of income retained by the publisher
- the strategic value of having a direct relationship with the customer
Are you ready to pursue a branded subscription service that provides access to collections of your titles? If so, what are some of the issues that need to be tackled before a successful subscription program can take wing? Let the following checklist guide your planning.
The Subscription Service Readiness Checklist
1. Content Focus
Do your current book offerings have one or more key areas of subject matter focus? Do acquisitions and product development take place within the context of a publishing program, with strategic areas of focus, or is frontlist serendipitous, based upon editorial whimsy? In subscription services, book publishers deliver value by providing access to collections of thematically related works. Subject matter focus is an absolute requirement.
Not only should there be domain focus to the list, there should also be an ongoing investment and product development commitment to these key subject areas. One critical success factor to retention of a subscriber base is the regular and ongoing addition of new materials to the subscription service.
2. Critical Mass
If there are particular areas of content focus, do one or more of these areas represent a critical mass of content, a collection that represents sufficient value by itself? If a publisher does not have critical mass of focused content, then it cannot offer a viable subscription service. Without critical mass, a publisher must be resigned to throwing titles over the wall to institutional or consumer aggregation services and hoping for the best.
3. Market Segment Viability
Not all market segments can sustain a subscription program with strong earnings and lasting power. Professional reference is a rich area in which to pursue such offerings. In a workplace, in which time is money, curated collections of information resources are especially valuable. Healthcare, legal reference, energy and environmental fields, and engineering content are some of the areas that are especially suitable.
4. Sales and Marketing Readiness
If your opportunity meets the criteria above, congratulations! You have a potential service offering that would have value to a defined audience. Now: are you ready to sell them? With publisher-branded subscription services, publishers sell directly to individuals and organizations. This carries many benefits:
- First you don’t have to give the lion’s share of revenue to a middleman.
- Second, you don’t lose control of the customer relationship to an intermediary—you can create and maintain a direct relationship with the customer.
- Finally, the insights gleaned through the direct interaction with customers, and the analytics data this interaction yields, allow you to revise and improve the service—something impossible to do when going through most distribution intermediaries.
After working primarily through channel partners, many publishers have become unaccustomed to interacting directly with customers. Carpe diem, folks, and say hello to your audiences. The key to this emerging digital services landscape is to interact directly with your customers, understand them through analytics, and use that understanding to retain them as customers. Apple knows this. Amazon knows this. Oyster knows this. You should too. If you don’t create a relationship with your customers, someone else will.
5. Content Readiness
In order to support content-based subscription services, content must be prepared in a markup-based format to support the efficient ingestion of volumes of content without a lot of elbow grease. You likely already have your titles in EPUB2 or EPUB3 (I hope so), in which case you are all set. What is most important, however, is not necessarily the supremacy of one data format or another (EPUB2 vs. EPUB3 vs. NLM vs. TEI), but rather that it is in a structured, markup-based format, and that standards are applied consistently. The consistent application of data standards is the key to automation, which in turn is a key to cost containment in the deployment of content services.
(One point on content readiness: No, Virginia, PDFs are not a markup-based format. The use of PDF seriously compromises the manner with which content can be managed, transformed, and delivered. While there are some inventive solutions in place that try to leverage PDF-based content in digital service delivery for publishers that have no other option, these do not represent long-term delivery solutions.)
6. Organizational Commitment
The final, and perhaps most important, ingredient for success is the level of organizational commitment to the program. The promise of annuity revenue streams is attractive, yet requires management buy-in to support ongoing commitment from across the organization.
- From sales and marketing: Ongoing commitment to create and maintain relationships with customers
- From editorial and production: Ongoing commitment to continue to add to collections within defined subject domains to support renewals
- From finance: Understanding and commitment to the dynamics of subscription-based revenue models, which deviate significantly from the revenue trajectories of traditional book offerings
This cross-organizational commitment is essential for success. No matter how clearly the opportunity may be seen by some, the success of subscription programs is significantly compromised if the organization does not strive with a shared sense of purpose.
The creation and delivery of subscription services represents a significant shift for book publishers. It is a vastly different financial model, as well as a significantly different relationship to the customer. However, for those organizations that have such opportunities, and are able to profitably pursue them, subscription services will figure prominently in their emerging revenue strategies and play a significant role in ensuring the sustainability of their organizations.
Related story: Independent Publisher Turns to Subscriptions to Boost Sales