Do the Top Five Publishers Increase Quality?
In my last post, I raised some questions about the financial repercussions of a partnership between publishers and the subscription sites, Oyster and Scribd. As an avid reader and an Oyster subscriber, Joe Wikerts offers some thoughts on how publishers and subscription services should operate. For him, and I imagine many others, Oyster and Scribd’s limited catalogues and lack of recent bestsellers act as a deterrent to readers and low membership does little to entice the bigger publishers from partnering with these sites. With fewer consumers, books have a lower chance of being discovered. Fewer consumers means less revenue.
It’s not that Oyster and Scribd lack titles; it’s the selection of their titles. Wikerts tries to compare Oyster with cable subscriptions, veering away from the popular Netflix analogy, to suggest why publishers might be reluctant to collaborate with subscription services and offer their backlists. He argues that the average American household now has access to 50% more channels than six years ago, yet they still watch the same number of channels as they did in 2008. Meanwhile, cable bills have risen exponentially. Cable packages today force the consumer to buy an expensive subscription that includes hundreds of channels they’ll never watch, just so they have access to the premium content that they want.
Apparently, this leads back to the networks, who force cable companies “to carry their unpopular channels” which “drive the price up even higher.” Wikerts considers what would happen if Oyster used this tactic: instead of paying wholesale fees for a percentage of each ebook that is read, Oyster could follow in the vein of the cable model and offer a flat rate for all the books in a publisher’s catalogue. Publishers, then, could charge a much higher price, and more money might attract the larger houses to join Oyster.
Although a more “premium” catalogue of books would attract more consumers — perhaps even those light readers — Oyster would likely have to raise their subscription fee. (Thinking back to Jane Tappuni, a higher monthly fee is even less cost effective for the consumer.) While Wikerts is willing to pay upwards of $19.99/month for a premium book subscription that includes the top five publishers, he does recognize that others may not be prepared to fork out that much for a book subscription. Instead, he suggests tiered pricing with the basic $9.99/month for the initial catalogue sans the Top Five.
Although Wikerts argues that discoverability increases with more content “and consumption of content that wouldn’t otherwise have been read,” I wonder if that holds true. In the very least, it depends on how Oyster and Scribd display their titles, which is in the Netflix style. There are about 12 subcategories to choose from, mostly organized by genre and them (also categories such as “Simon & Schuster favourites”), and within each row, there are 25 books. I’m assuming the algorithms for organizing the displayed books are based on publication date, popularity, and recommendations based on reader preference. How then, does healthy competition work for titles? Right now, Oyster and Scribd receive backlist titles, roughly a year old, but according to Oyster co-founder and CEO Eric Stormberg, the focus is on recent releases, books “about three months after their initial publication.” Unless Oyster and Scribd are offering the same royalty rate for a hardcover sale of a newly released book, the author and the publisher would lose enormous sales on allowing such books to be included in subscription catalogues.
At the time that Wikerts was writing, only HarperCollins had signed up with subscription services, so I understand his concern that the top publishers need enticing to also join. Since his article, Simon & Schuster has partnered with Oyster and Scribd (read more).
In the case of HarperCollins, their chief digital officer, Chantal Restivo-Alessi, saw “an overall increase in ‘discoverability’ for Harper titles” and found that “subscription services are a complementary channel that helps expose deep backlist titles.” Like Wikerts argued, consumption of content that otherwise wouldn’t be read is a selling feature for publishers, and reading ebooks for the price of a subscription fee might encourage print sales of those books as well. Oyster CEO Stromberg and Restivo-Alessi agree that the subscription service provides “significant revenue for its publisher partners.”
In Simon & Schuster’s press release, Carolyn Reidy, President and CEO, said that Oyster and Scribd “will encourage discovery of our books, grow the audience and expand our retail reach for our authors, and create new revenue streams under an author-friendly, advantageous business model for both author and publisher.” Some of these advantages include access to reading data and purchasing activity, which has become increasingly invaluable.
Although Wikert’s concern that publishers are dissuaded from partnering with Oyster and Scribd seems to be unfounded for now — with Simon & Schuster’s recent decision — his argument for discoverability still leaves me unconvinced. Even HarperCollins and Simon & Schuster’s success stories don’t dispel my lingering doubts. Yes, they have both signed up with Oyster and Scribd, but let’s not forget that both subscription services have a large percentage of self-published books that could bombard and disorient the consumer. Subscription services will continue to innovate and gain popularity, I have no doubt, but a smorgasbord isn’t always appealing. It isn’t a premium channel.
Update: Since writing this post, Mike Shatzkin has written about the possibility that Oyster and Scribd could be offering publishers 70% of the retail price for each book read. Additionally, Nate Hoffelder addressed talk that the CEO of Scribd, Trip Adler, is canvassing for funding to pay hesitant publishers upfront advances, which is an “untried business model,” that could prove lucrative to publishers who never earn out their advances.