Why Netflix for eBooks won't work.

Why Netflix for eBooks won't work.

It seems that not a week goes by recently when we hear about a company that is “Netflix for eBooks” or “Spotify for publishing”. While I think that the industry desperately needs innovation and fresh thinking, I have my doubts about this type of model ported from other media areas. It may very well be where the industry ends up in time, but I think for the next 2-3 years these start-ups will find it tough.

So here are some questions that we should maybe consider when discussing Spotflix for books;

1.    Will investors back these companies?

I think the answer to that one is very much yes – Oyster gets $3m to become the Spotify of books. From the outside looking in it makes total sense for a content industry – it worked in music and video – why not books?

2.   But, does it change the publishing business model fundamentally? 

When you think about it, eBooks didn't change the industry’s business model – it simply changes its distribution model. The financials behind eBooks are still based on the print principle of a wholesale price per title or book. You can argue about margins and costs and so on, but the principle remained the same.

Subscription models alter this model completely. Instead of receiving full (or discounted) revenue per title, the publisher will receive a portion of a subscription fee instead. For an industry revolving around units this is difficult to comprehend. And with no visibility on volumes or revenues it’s a tough one for publishers to gamble on.

3.       Buy-in is crucial.

For the reasons above it will be very difficult to get full buy in from the major publishing houses. It’s equally remarkable and understandable that in an industry experiencing rapid change that the major powers to be are so reluctant to gamble on new business models. Why would a publisher gamble established sales v guesstimated subscription revenue? Backlist access is fine, but what really drives a commercial model like this is frontlist.

4.       Will readers want this?

On the whole, you would have to say probably. Readers will love the convenience and most importantly the pricing. However, if full buy-in from major houses is not present then you will have an early Netflix like issue where the selection didn’t match customer expectations.

Interestingly enough, recent surveys indicate that the average reader reads (across digital & print) approximately 15 books per year or 1.2 per month. So for the average reader, does a subscription make sense in a world of daily deals and heavy discounts? It’s not a compelling argument.

It does leave that group of super-readers as a target market. The key question there is are there enough of them to sustain a scalable business?So, in summary I think that buy in from major and minor publishers alike for front list titles will be difficult to get. Like many innovations and early-stage concepts it will take a few brave publishers to go all-in and accept the consequences.

Only through demonstrating clear revenue gains and minimal impact on traditional sales, both digital and physical will the industry as a whole begin to move.

These are my thoughts – what do you think?