These discussions around subscription based business models have boomed lately. Customers have been already rejoicing around Netflix and Spotify which satisfy all their needs for movies and music for a fixed monthly payment. Personally I just love Spotify. For a mere 15 euros per month, I can listen to good choice of artists as much as I want. They also have put effort for usability, so all the songs are also available in offline mode for my phone. So no pesky DRM’s to hinder my user experience. I would probably go for Netflix too if they were operating here in Finland.
It is quite easy to understand why some people prefer subscription based models. They like predictability of the fixed monthly fees and the fact that in some models you can engorge the products in all-you-can-eat style. It is also pretty convenient, there is no need to whip out that credit card every time you want to do a micro scale transaction. So in another sense, people including myself are insecure, greedy and lazy. And businesses are abusing this fact. For them it also means more predictable business with steadier flow of income and some motivation to actually develop the product. Because buyer can just cancel the subscription if he/she is not happy with the service received. At least I hope it is so.
From here on, lets concentrate on subscription models in publishing. This week it was being rumored that Amazon is probably going to offer a subscription based service for its Prime customers. Also an interesting spanish version of the same idea by 24symbols have just popped up.
Finnish publishing company Otava launched this kind of service “Luekirja” or “Readbook” with a HTML5-based reader earlier this year. This decision to create their own reader is probably made to avoid Apple/Android app market royalties. Otava has created a pricing model where you can buy one month subscription for 20 euros per month with a limit of three books. Another option is three books for two months for 25 euros. I have not tested out the service for a while, but in the beginning it was filled with technical problems. But kudos to them for at least trying. It would be interesting to know how it has proven to be business wise.
So When you think about media consumption there are tons of subscription based services selling magazines, newspapers, movies and music already out there and doing just great. Now when you think about it, we have had these so-called book clubs for decades here in Finland. Now e-books and online reading devices just make the delivery part now so much more cost-effective.
This is not without implications too, this will need a lot of work on the publishing contracts and how the revenue is trickled down to the author. There has been some nasty comments around Spotify, like Lady Gaga getting played over one million times and getting royalties for 112 euros. As you can imagine, a lot of artists then quickly pulled their songs from the service. But I have not heard such news for a while, but seems like there is still a lot of debate around this subject. I think if done properly and in honest sense, it is possible to create a subscription based model, where all three major participants (service, publisher, author) benefit from it.
I have no doubt in my mind, that there will a Netflix or Spotify for books. But by whom and when, that is the question. Amazon has a pretty good chance, unless they mess it up somehow.