Navigating the modern business of book publishing

Are eBook subscription sites going to change the way we buy books?

Book Subscription Services

Would you pay a monthly fee for all the books you can read?

The book publishing industry has been riding a rising wave of digital disruption for a number of years now, and the previously accepted revenue stream from Reader – Bookshop – Publisher – Author is now being completely restructured. New entrants to the book trade, including tech start-ups, online retailers and self-publishing services, not to mention Amazon, Google and Apple, are rapidly changing how readers consume books and where they go to discover and buy them. Publishers (and authors and retailers) who want to stay relevant in the changing marketplace need to innovate in two directions, summed up nicely by Chris McVeigh on Future Book:

(a) Build something that attracts people to it.
(b) Go where the people already are.

One type of business model that is gathering momentum for its potential to achieve both of these objectives is the concept of eBook subscriptions. The idea isn’t a new one with many examples from other industries such as music, film, and print media to borrow from. These subscription models generally fall into two main categories: third party sites that aggregate content from multiple sources; or direct-to-consumer subscriptions operated by the publisher themselves.

In this post I am going to explore in detail a number of new and existing Third Party sites and assess which ones are most likely to succeed. I will address Direct to Consumer Publisher subscriptions in a follow up post.

How do Third Party eBook Subscription sites work?

Spotify for eBooks?

Is it as simple as setting up a “Spotify for eBooks”?

This concept is borrowed from similar subscription models in the music and film industries, such as Spotify and Netflix, who charge users a monthly fee for unlimited access to a comprehensive range of downloadable titles. Payments could be made to publishers based on a flat licensing fee for each title included in the database (like Netflix) or through a royalty scheme that divides allocates membership and advertising revenue proportionally based on downloads (like Spotify).

One of the key features of these digital subscription services is the ability to monitor the behaviour of individual readers and provide much more granular data about their reading behaviour, such as book completion rates, page views and viewing time. Pioneered in the book space by the digital library Books24x7, this allows subscription sites to meter usage and allocate revenues more accurately to publishers and authors and opens up other billing possibilities, such as pay-as-you-read book streaming. Perhaps the most successful example of digital book subscriptions in the market currently is Safari Books Online, a technology and computer book specialist with over 21,000 titles available to individual and corporate clients. Safari Books is a special case, however, as it began as a collaboration between two publishing houses, O’Reilly Media and Pearson Technology group, and as such I will discuss it in more detail in the next post.

To supplement member-based revenue most subscription models also include in-book advertising. This not only adds to the revenue pool but gives members an incentive to upgrade to a premium, ad-free service. The public response to in-book advertising is not yet clear but the indication so far is that discrete, book appropriate ads are generally accepted as a fair trade-off for free or very cheap content.

Who are the companies to watch?

Oyster Founders

The founders of eBooks subscription start-up Oyster

The start-up grabbing all the headlines with its tagline “Spotify for eBooks” is Oyster, who announced in October 2012 that it had received over $3 million dollars in venture capital to launch a comprehensive eBook subscription service. Madrid based 24symbols is already in operation with a modest range of books available in English and Spanish and offers a cloud-based freemium subscription service.

Bookboard is taking a niche approach, focusing on the children’s market, allowing parents to open accounts for their children to read books on their iPads. The aim is “to create an addictive chain reading experience” according to co-founder Nigel Pegg, by letting kids “unlock” new titles as they read more books.

Bookboard launching soon

Bookboard “creates an addictive chain reading experience” for kids

Amazon is also dabbling in subscription services. In 2008 it bought audio book site Audible, which offers a credit-based subscription option that allows a limited number of free downloads and 30% discount on other purchases. Then in 2011 Amazon unveiled the Kindle Prime Lending Library, providing members of its Kindle Prime service access to a limited range of eBooks that could be “borrowed” for limited amount of time. The scheme is license-based, with publishers receiving a flat fee each month for including their titles in the library, although many authors and publishers refuse to participate for fear that it devalues their titles and cannibalises sales.

Another start-up, Total BooX, is taking the metered usage functionality in a different direction, proposing a pay-as-you-read option that only charges readers for the pages they read. Their proposal (the site still hasn’t launched yet) allows readers to place as many books as they like on their digital bookcase and only charge them for the pages they actually view. This idea has great appeal to readers, especially for technical books and guides such as cookbooks that might only be relevant in certain sections. Like other subscription services, this reduces the cost barrier for “purchasing” a book and should increase readership overall. Many publishers may find this model more favourable because the price per page is proportional to the RRP, providing a revenue stream more in line with the publisher’s own valuation of the book’s worth.

What are the challenges?
While it is tempting to compare books directly with music and film, they are very different products, consumed in very different ways and we can’t automatically assume that a “Spotify for eBooks” will work. Mike Shatzkin does a great job of outlining these differences, but the main problem stems from the fact that individual songs and movies are consumed far more often, by far more people than any single book, making the value proposition for any third party eBook subscription much less favourable to both readers and publishers. How much are readers willing to pay for a monthly subscription when the average person reads only one or two books a month? And how do you compensate publishers and authors fairly without devaluing their books in other marketplaces?

24symbols iPad App

24symbols currently offers subscribers access to titles from 29 different publishers through its web-based service and its iOS and Android Apps

The biggest question hanging over eBook subscriptions is whether they can generate enough revenue for authors and publishers to justify their participation. For example, based on 1 million members paying $5 a month, Andrew Rhomberg estimated that a mid-range publisher with around 200 authors may receive as little as $7.50 per author per month through a proportional royalty scheme. In a direct response Justo Hidalgo, founder of 24symbols, challenged Rhomberg’s conclusions and claims that, with a strong member base, the price per page is comparable to traditional book sales and points out that subscription sites attract more readers, binding them more strongly with greater opportunity for marketing a data collection. This may be true but in any royalty based subscription service the bottom line always depends on the total revenue pool which is dictated by membership size.

Licensed based models offer guaranteed revenue stream for publishers but would require wholesale changes to their author contracts which, as literary agent Simon Lipskar explains, is fraught with trouble. Licensing can also be extremely expensive for aggregators who must pay a flat fee for each title, regardless of whether it is ever used. This places cost boundaries on the size of any subscription database and for this reason Licensing models are really only practical for specialist, niche libraries.

The other unanswered questions over third party subscription sites are: How much are readers willing to pay for a monthly subscription when the average person reads only one or two books a month? And how do you compensate publishers and authors fairly without devaluing their books in other marketplaces? The pay-as-you-go model offers a reasonable solution to these major concerns from publishers, and sites like Total BooX provide the best value proposition for readers, publishers and authors. However, readers may look for more from a site that, after all, still asks the full RRP of books that are read in full. To achieve this, sites like Total BooX will need to incentivise or gamify the reading process by providing rewards, bonus credits and discounts to members as they complete books.

Picking Winners

Total Boox Logo

Total BooX offers a pay-as-you-go twist on the subscription book model

Setting aside Amazon, who enjoy a monopoly in the audio book market and are able to subsidise the licenses for the Kindle Lending Library through their marketing budget, a successful subscription site needs to achieve three key things:

  1. Build a large member base by providing discounted access to a significant range of desired titles, either within a specified niche or more generally;
  2. Secure publisher participation by demonstrating value through a viable revenue stream, sales data provision and opportunities for effective book marketing;
  3. Compete for market share against existing retailers and other subscription sites by offering superior customer experience, incentives and opportunities for social reading.

I believe the pay-as-you-go model, exemplified by Total BooX, is best able to achieve all three of these objectives. While Royalty and License based subscription services certainly offer great value to readers, the commercial challenges they face bringing publishers on board limits their ability to build anything beyond niche, genre-specific libraries. Pay-as-you-go promises publishers all the tertiary benefits of the other models, including increased readership, targeted marketing and granular sales data, but with much greater pricing security and clarity.

[EDIT: Please note that in the original article I had noted that the 24symbols website was down and posted a picture of the error message. Justo Hidalgo has since commented to let me know that the store is back up after an upgrade to the system and I have amended the article to remove reference to the Server Error]

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Categorised in: All Posts, Bookselling, Publishing News, Technology

7 Responses »

  1. Hi Richard,
    this is Justo Hidalgo, from 24symbols. I guess you connected right when we were deploying our brand new web-based version of our service. Please take a look as we believe it’s a quite different and attractive way to find and read books.



    • Hi Justo, and thank you very much for responding so quickly. I’m glad to see that the web service is back up and running and I’ve updated my article accordingly.

      I’ve taken some time to try the new site and had a lot of fun browsing through your selection. I’m looking forward to seeing 24symbols expand and add more publishers and titles to the library.


      • Hi again Richard,

        thanks for taking into account these new changes. Yes, we’re still adding more and more publishers, and I would only add that in addition to the number you mention, there are more than 70 other publishers in spanish, for a total of over a hundred, and increasing every week. This, and our more than 120,000 users make us believe in the viability of this model. But working everyday to make it happen, of course 🙂


        • Thanks again Justo!

          Perhaps this is a chance for me to explain in a little more detail the specific structure of 24symbols, because there are some interesting features that I think are very clever:

          – The Freemium service model provides a free option to readers with the incentive of an ad-free Premium service that allows access to a larger range of Premium titles and offline reading on mobile devices. From the publisher’s point of view, having the option to make a title available only to paying ‘Premium’ subscribers is a smart move, allaying their fears that making the book available for free would cannibalise sales elsewhere. This is especially true for Front List books.

          – Settlements with publishers are determined using a standard “Minimum Price Per Page” which is calculated by dividing 70% of the total revenue pool (memberships + ad revenue) by the total number of page views. Each book is then allocated revenue based on it’s own total number of page views. Crucially, Free books and Premium books (that is, books that a publisher has specifically chosen to reserve only for paid member access) are paid at the same rate. This ensure that their is an incentive for publishers to make their books available for free, perhaps once they move to backlist, so that they receive more total page views. This is important to ensure that the Free service receives a constant flow of contemporary books to attract new users.

          – The development of a recommendation engine is obviously intended to customise the book discovery process for each member. With a number of book discovery sites such as Bookish competing to be the prime digital showroom for books, a sophisticated recommendation engine that returns satisfying results to readers is essential. It’s also a vital feature for publishers looking for the next place to focus their marketing attention.

          – 24symbols also offers free Premium access for a short time to members who recruit their friends. So for example, if 30 new members sign up through the following link I will receive 12 months free Premium membership – a good way to drive word of mouth:

          I’m also very curious to see in your FAQs that you believe the critical goal is to convert 10% of your members to Premium Subscribers, at which point the Minimum Price Per Page “gets really interesting”. If this is indeed the case and 10% is the magic number then it is very encouraging that a subscription site may need only 1 in 10 of its members to pay for the service (although I’m sure that’s no easy task in its own right). However it still leaves me feeling that there’s a tremendous balancing act going on to keep the value proposition to readers and publishers both in the sweet spot. Of course, any book book venture these days is a balancing act on a tight rope of razor thin margins and I have been more than impressed with the execution of 24symbols so far.

  2. Hi Richard,
    Thanks for this overview of the latest twists in epublishing. I’m very pleased to tell you that Total BooX is up and running – please visit us at and let us know what you think.



  1. Selling Direct: Why book publishers are offering subscriptions & how it will change their brand | Fiction et al
  2. Grazie ad HarperCollins il catalogo di Bookmate si allarga ancora di più - Finzioni

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About Richard

Richard Bilkey has been selling, marketing and distributing books for over ten years, managing independent bookshops, a major online retailer and, most recently, one of Australia's largest Independent Book Distributors, Brumby Books.

Contact Richard directly at
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