Revenue Share vs. Breakage: Calculating the Publisher's Cut in Subscription Services
There are three factors at work that has driven this focus of interest on subscriptions. First, the launch of a number of high-profile initiatives, such as the consumer-oriented Oyster service, has gotten the attention of the industry since the beginning of the year. Second, there is increased clarity among publishers as to the level of revenue they can expect from ebook sales. And while ebook revenue is clearly a welcome and significant new revenue source, for most publishers, it is insufficient to fully replace lost print sales -- something else must fill the gap. Finally, there is the observation that, broadly speaking, the digital media economy is increasingly shifting to the subscription revenue model, as opposed to discrete transactions for individual products. HD Netflix subscription is far more indicative of the road ahead for digital media delivery than Blu-Ray disc sales, or even pay-per-view. As fellow members of this digital media landscape, book publishers are contemplating what significance the "subscription economy" has to their strategy.