Decoding the Subscription Economy

Another benefit-especially if you are working with a subscription aggregator or a big subscription service-is that publishers can collect a lot of data on customer usage habits through subscription.

The major disadvantages and concerns amongst the publishers we surveyed were: customers' preference for ownership, difficulties marketing directly to customers, operational difficulties (such as processing royalty payments), and the possible cannibalization of print or digital one-time sales.

Did you notice any trends within the segments that you surveyed?

Subscription is lagging behind the most in the trade sector. One of the questions we asked was, "How are ebook subscriptions impacting your organization's revenue?" We found amongst trade publishers, only 7% said they are seeing significant revenue at this point.

On the other hand, 27% of scholarly publishers said that they are already seeing significant revenue selling subscriptions into libraries. In the higher ed space 33% said they are seeing revenue, mostly from selling to universities things like integrated learning systems, which offer ebook collections, assessments, and interactive features. They are moving more toward seeing themselves as software companies as opposed to just publishers.

What strategies are publishers pursuing to implement subscription models?

The main question we asked there was whether they would be likely to work with something like an aggregator or a subscription service like Oyster or Safari, or whether they would sell ebook subscriptions directly to customers. We saw a split. Most of the professional publishers that we talked to indicated that they have really strong direct-to-consumer sales relationships and most of them would continue that model if they moved toward subscription. They would be likely to create their own subscription service with their content and sell that directly to their customers.

Amongst trade publishers, there seemed to be agreement that they would much more likely work with some kind of service provider to get their content into a larger collection. For example, HarperCollins has been doing a lot of this. They made agreements with Oyster, Scribd, Epic, and Entitle. Amongst trade, those who will get into subscription will likely follow that model. They generally don't have enough titles or enough direct contact with customers to launch anything of their own.