Home » Big Publishing, Non-US, Subscription » Why Are Subscriptions Outside the US Succeeding?

Why Are Subscriptions Outside the US Succeeding?

9 May 2016

From Publishing Perspectives:

‘Without cannibalizing the traditional print industry’ I‘d like to bring the tired, usual subscription conversation to a new, constructive level,” says Nathan Hull.

“The debate around subscription isn’t answerable with a simple, binary ‘yes’ or ‘no’. The answer should concern ‘where’, ‘when’ ‘which business model’ – or maybe ‘which format’.”

. . . .

Hull, Chief Business Officer with Copenhagen-based subscription Mofibo, is moderating a panel titled “Why Subscription Works Outside the US Market” in Wednesday’s sessions of the International Digital Book Forum’s (IDPF) 2016 conference.

. . . .

“While the publishing world’s US subscription players (Oyster, Scribd, and Kindle Unlimited) remain everyone’s favourite punching bags — and as Spotify vs. Apple Music vs. Tidal splinters the user experience in the music world — ebook subscription services across Europe such as Mofibo (Scandinavia), Nubico (Spain), Skoobe (Germany) have to navigate unnecessarily complicated waters, constantly justifying their own positions and dodging the looming tar brush that “subscriptions are bad news” — all because of the actions of others.”

. . . .

“While US services such as Oyster and Scribd seemingly die or struggle and Kindle Unlimited still looms spectre-like over the industries shoulder, European services are thriving. Whether it be Mofibo in Northern Europe, Legimi in Eastern Europe, 24 Symbols in Spain, Skoobe in Germany or the plethora of other examples from across the continent, the arguments in favour of ‘subscription model’ are manifold. Surely, judgements on international markets shouldn’t be made based on the ill-fortunes, perceived or genuine, of US services.

It seems that country-by-country — perhaps, with the exception of the UK — new, young retailers have been able to thrive in their individual nations and generate significant new income streams for authors without cannibalizing the traditional print industry. It would appear they have harnessed an appetite to read by finding new readers via technologies and partnerships in a manner in which the publishers haven’t managed.”

. . . .

“All this highlights to me,” Hull says, “is the lack of research and international knowledge that’s out there. Or it is laziness? Or naïveté? While the print publishing world is apparently in a positive financial state, I would argue strongly, that subscription models – if you look outside the US – are are generating a similarly positive position.”

Link to the rest at Publishing Perspectives

It’s interesting to PG how often book industry analysis tries to ignore Amazon’s influence. This article focuses on everyone but Amazon’s ebook and audiobook subscription service (although KU is mentioned as looming “spectre-like over the industries [sic] shoulder.”

Amazon hasn’t, at least to PG’s knowledge, released the number of Kindle Unlimited subscribers.

Every several months, an unwise impulse overcomes PG and he opens up Excel.

The impulse struck today and PG decided to take a shot at estimating how many KU subscribers Amazon had in March, 2016. This exercise begins with some hard data, then moves through a bunch of guesses to an unreliable conclusion.

  • We know (a) the per page payout for KU authors and (b) the total payout for March, 2016. PG copied and pasted those numbers into his spreadsheet.
  • From this, we can calculate the total number of KENPC (Kindle Edition Normalized Page Count) pages read by KU subscribers.
  • To the best of PG’s knowledge, Amazon has not released any information about the number of KENPC pages in an average Kindle ebook.
  • Online discussions about how KENPC pages correlate to printed pages in a trade paperback, mass market, etc., edition show a broad range of results. For some authors, a KENPC page is almost the same as a CreateSpace page. For others, a KENPC page is half as long as a CreateSpace page (so the ebook contains twice as many pages as the CreateSpace book).
  • PG picked an adjustment factor of .8 out of the blue. For purposes of this exercise, he assumed that a KENPC page would be equivalent to .8 of a page in CreateSpace book. The result of this adjustment is a printed-page equivalent number of pages.
  • PG assumed that the average KU ebook would be the equivalent length of a 300 page trade paperback (feel free to do your own calculation with different numbers).
  • Based on these assumptions, if a typical KU member read two books during March, 2016, Amazon would have 4,156,206 KU subscribers. If the average KU member read four books, the number would be 2,078,103 subscribers.
  • Note that this calculation is based solely on self-published books by indie authors included in KU (because Amazon announces the per page payout and the total payout number every month). Classics that are out of copyright and some traditionally-published books, e.g. Harry Potter, are also included in KU and the indie payout presumably doesn’t include these books.

Aside from the relatively high probability of PG screwing up his Excel spreadsheet, his guess about the number of KU subscribers is based on several other guesses, so don’t take this very seriously.

Per Page Payout – March 2016  $         0.00478 per Amazon
Total Payout  $   14,900,000 per Amazon
KENPC Pages Read 3,117,154,812 calculated
KENPC to Printed Page Adjustment 0.8 guess
Printed Page Equivalent 2,493,723,849 calculation/guess
300 Print Pages per book 8,312,413 Books read in March calculation/guess
Books Read Per KU Member in March 2 4,156,206 Subscribers calculation/guess
Books Read Per KU Member in March 4 2,078,103 Subscribers calculation/guess

Big Publishing, Non-US, Subscription

39 Comments to “Why Are Subscriptions Outside the US Succeeding?”

  1. the Other Diana

    Companies are moving toward Subscription type programs because of PROFITABILITY.
    Why charge ONCE when you can keep charging?

    This makes sense for some things, but not for everything. Nor does every person love the idea of shelling out money for everything. Companies like to charge customers and KEEP charging them, but they are not so happy about increasing pay checks.

    I have KU and Netflix. I have cable. Cell phones.
    But I refuse to pay for a Photoshop subscription. If they would just let me buy the program outright, I would. But they want to ensure a revenue stream, so I will stick to my old old old version of PS.

    Companies should give people the option–it’s short sighted to force one way because stubborn/independent people like me will dig in and refuse to cough up.

    Eventually my windows machine will render the old PS unusable. Even then, I won’t subscribe. Not when it’s cheaper to pay someone else to make covers.

    • I finally broke down and bought Photoshop CC, Diana.

      I wish I could tell you the new subscription version is lots better than my old Photoshop, but it’s pretty much the same.

      • If you use it all the time then it might pay for itself, but if it’s only every now and then then it’s a rip-off.

        (lucky for me the old-old-old photoshop still loads/works on windows 7 (another reason I won’t be going to 10!)

      • Thanks for sharing the info, PG. I am in Diana’s position, using an older version of PS that I purchased. However, when I am eventually forced to update the OS on my Mac, I will probably cough up the cash to subscribe to Photoshop CC. I know how to use Photoshop, I can make it do what I want it to, and I’m not that keen on learning a different app which may or may not do the things Photoshop does.

        Can you reassure me that CC is not worse than your older version?

        • Marvin Waschke

          For real cheapskates, I recommend Gimp. It’s free and intended to be the equivalent of Photoshop. Apparently it has been used acceptably in commercial game development.

          Gimp’s user interface is not the same as PhotoShop and the documentation is not great, but it is not hard to use after you climb the learning curve. Free open-source projects typically have utilitarian rather than polished user interfaces, but the developers take great pride in what their product can do.

          Gimp is free and will probably do what you need, after you learn how to do it.

          • I found Gimp very easy to use and successfully created the kind of book cover I wanted for my novel (you can look at it if you want to–I use my pen name here). I’ll use it again for my upcoming nonfiction book cover. Sure beats spending a boatload of money for something only needed once a year or so.

        • I haven’t noticed any ways in which CC is worse than the last version, but people use Photoshop in many different ways, so I may not have stumbled across worse parts that may be lurking in the dark somewhere.

    • I find $50/mo for the entire Adobe creative suite, that’s video editing, web design, graphics, and layout to be a great deal. And it’s a tax deduction. But then I use all of those programs.

      • Exactly: it’s a business expense!

      • I don’t use them all, but I do use Adobe Acrobat regularly. I use InDesign, Fireworks, and Photoshop relatively often, and yes, $600 a year for all the Adobe programs is a steal considering how expensive they used to be.

        It also gave me the opportunity to use Adobe Muse for a really difficult website assignment at work. (I got them to get a CC subscription for work after building it with my own to show them what it could do.)

        If you use the web suite, you are definitely saving thousands. And the upgrades have been just fine for me, no problems.

    • I had been upgrading a copy of Photoshop since 1997. Every two releases on average. (I think the upgrade price was valid for up to two versions back.) Even with the upgrade discount and skipping every second upgrade, the monthly subscription is still cheaper.

      • Unless the one you already have is ‘good enough’ and you step off the upgrade merry-go-round and it costs you nothing more after that.

        I may be the odd one out though. I still have a couple older systems with windows 2000 on them acting as my NAS and music players (no, they don’t/can’t see the internet, I have an external drive that gets virus scanned before getting moved between the internal and external networks — why yes, I’ve had to clean up after a major mess a time or three — how’d ya guess? 😉 )

        I’m hanging on to the stuff that doesn’t have to ‘phone home’ to be activated, I have no idea how good/bad it is in the Mac world, but at the rate Microsoft is going I’m afraid your every keystroke and mouse wiggle and click will be theirs to examine and sell to third parties …

        • Stepping off the upgrade merry-go-round can be problematic if you collaborate with other people. I’ve gleefully jumped off several times when that wasn’t an issue.

          • Like with Word … 😉

            Open Office was my rescue for that, it could read the different Word formats and save in the one you preferred. (Though Word didn’t have a problem reading older files, it just saved them in a manner the older Word couldn’t read, a little ‘forced upgrade’ gift from Microsoft, who is learning that their one trick pony is going lame …)

        • I’m still using Macromedia Fireworks for the few things I need to do to pictures.

          I have GIMP. I hate it. 😉

    • I won’t buy a subscription to Photoshop, either. Should I ever update my computer and find PS won’t work, I’ll just keep the old system and use it to make covers or do whatever I need to do. I’m hoping I never have to go the subscription route, because I hate the idea of paying so much for something I don’t really use that much.

  2. the Other Diana

    As to the number of subscribers- PG you are probably close to the real number.

    Some months I’m voracious but when I’m writing, I don’t read much. I will have to keep track of my books and figure out my “average” and see if we can’t use that to extrapolate to KU membership.

  3. This is an interesting, and generally credible, bit of analysis… but for one thing.

    The “typical” trade paperback is probably not 300 pages. It is probably 224 or 256 pages, including all of the blank pages and front/end matter that appear not to count in Amazon’s count. It might be interesting to see this rerun at different “lengths”, especially including 240, keeping in mind that that’s a major factor in how commercial publishers would determine prospective print runs (the closest analog to “subscriber count”… and admittedly not that close).

    We all need to remember, too, that the marketplace of e-books available on Amazon through KU is not congruent with the marketplace of printed books… especially self-published printed books.

    • The “typical” trade paperback is probably not 300 pages. It is probably 224 or 256 pages

      ???

      I think this is genre dependent. I’m used to trade paperbacks of 400 pages and up. I’ve mostly only seen fantasy / sci fi / horror appear in trade paperbacks. Or classic literature, e.g. Brothers Karamazov, or Shogun. Not mysteries, for some reason.

      If a book is 500 pages and up it’s probably 6×9 trim — hello, A Song of Ice and Fire! If it’s shorter than that it’s probably 5.25 x 8 trim, which a lot of YA books in those genres (Cassandra Clare, Hunger Games, etc) seem to go with. Or the 5.5 by 8.5 trim. The 5+ x 8+ trims usually come to 300 ~ 400 pages; if they’re longer it’s often a sign that the publisher expected them to sell well. Remember that printing is cheaper for tradpub than indies using POD.

      I have to do the math on this, but 225 pages seems a waste at trade paperback sizes. Not saying it can’t happen, but trade paperbacks seem to be reserved for longer books, period. Especially if those books would have a hardcover edition. The biggest exception is non-fiction.

  4. Don’t forget all those scammers and the “page reads” they’ve been getting (enough to warrant not only a cap on book size, but also a push for authors to place their TOCs in the front).

    Yep, let’s not not forget any of that.

  5. If the $14.9m was the totality of subscriptions paid and if each subscriber were paying, say, $10 per month (plus a whole lot of other “ifs” which are also unlikely to be true) there would be 1.5m members.

    I guess that we can come up with a whole range of equally plausible numbers all of which will be wrong. The one thing we can be pretty sure about is that Amazon is not going to tell us.

    • A Reader/Author

      You are right. At $10 a month per subscriber and a payout to authors of $15 million, Amazon breaks even at 1.5 million subscribers–which is the best approximation we have.

      • breaking even except for costs (hosting, programming, etc)

        I would guess that Amazon is cutting the margins close, but not operating at a loss.

        The reason I don’t believe that Amazon is operating KU at a loss is the simple fact that if they were, it would be reason for an anti-trust lawsuit.

        Monopolies aren’t in trouble for being a Monopoly (and no, I don’t think Amazon is one, but assume for the sake of argument that they are)

        Monopolies get in trouble for leveraging their success in one field to force their way into another field.

        Selling at a loss in a second field to drive the competition away is a classic Monopoly Misbehavior sign. I don’t think Amazon is stupid enough to do this when so many people are accusing them of being a monopoly.

        I could easily believe that they are operating at near zero profit, but I don’t believe that they are loosing millions on this.

        • Monopolies are frowned upon because their market position allows them to increase prices while limiting supply to maximize profits with a given demand. They pull back supply to achieve the profit max.

          So consumers get higher prices and less supply.

          Amazon has no anti-trust problems from KU because they are lowering prices and increasing consumer supply. That is the opposite of the problem a traditional monopolist creates.

          In the Progressive era, the focus was on the welfare of other suppliers. That’s still the idea that the anti-Amazon folks favor. But we have had 100 years to observe that supply doesn’t need protection.

          It’s very hard to claim a firm that lowers price and increases supply is a problem. If it did start acting like a traditional monopolist, then the situation changes.

          And if Amazon is subsidizing its KU unit? So what? Firms do that with start-ups all the time.

          • I’ll point out that Intel got into trouble in the last decade or two for their practices that were locking AMD out of the market, even though they were doing it by making their prices lower than AMD

            Also, the problems that Microsoft got into about using their monopoly of the desktop to block different browsers, and to block the sale of computers that had any other OS on them.

            In both cases, this was a case of a Monopolist leveraging their power in one area to get control of another area.

            But even using your criteria of lower prices for the consumer, it’s very obvious to everyone that it’s not possible to have a viable long-term business selling at a loss, so at some point you will have to raise prices, and it makes perfect sense to sue the Monopolist while they are selling at a loss, and before all their competition dies.

            Amazon is not stupid, when they’ve been getting accused of being a Monopolist for years, they aren’t going to start selling things at a loss, especially when they have direct competitors who are struggling or going under. That would make any anti-trust lawsuit a slam dunk.

            When they started KU, they didn’t really have any subscription services to compete against, and so they could run a loss for a few months. But after all these years, and with Oyster and Scribd publicly struggling, selling at a loss would be a gift to their competition.

            • and it makes perfect sense to sue the Monopolist while they are selling at a loss, and before all their competition dies.

              That’s the Progressive Era supplier oriented position. It lost out to the consumer oriented position. We can’t prosecute people for what we think they might do.

              It’s not illegal to be a monopolist. It’s illegal to act as a monopolist by curtailing production and increasing prices. Nor is a firm responsible for what third parties think it might do someday.

              Every business sector Amazon entered operated at a loss for some period. KU is no different.

              We might also ask if it is possible to be a retail monopolist without being a monopsonist. Amazon is not a producer, so it doesn’t control supply.

            • Felix J. Torres

              The Microsoft case is not a good precedent to go by because the judge actually found them innocent but since the trial was politically motivated (they were made an example of for not contributing to the political parties–long story, well documented at the time) he labeled them a monopoly, anyway, by defining the relevant market as essentially Microsoft’s market, deprecating the Mac, Unix workstations, mini-computers, mobile OSes, etc.

              Since then the direction of the tech industry has proved conclusively MS was in the right: a web browser belongs in tbe OS and a consumer OS without a browser is useless. Which is why every OS in use today has its own native browser.

              Don’t expect to see another such case any time soon.
              Mostly because all big tech companies have become big political players, unlike pre-lawsuit Microsoft.

  6. Felix J. Torres

    “While US services such as Oyster and Scribd seemingly die or struggle and Kindle Unlimited still looms spectre-like over the industries shoulder, European services are thriving.”

    I would like to see their definition of “thriving” as those markets are all places where ebooks are far from US/UK penetration levels so the demographics and charaterization of their customer bases are going to be very different from the US/UK customers. Also their book markets are very different from the US market. If they want to compare those small companies to Amazon, how about telling us how many books they carry, how many customers, what fraction of those book markets are ebook sales and ebook rentals?

    That is something we see in…other areas…where the media and pundits like to hold up small Scandinavian countries with the population of a midsize US city as examples of practices to be applied to the whole of the US.

    Just for starters: all the listed countries have higher average book prices than typical in the US, smaller native language sales markets, and relatively big foreign book markets. So the buy vs rent equation has very different parameters over there.

    The only reason the pundits keep dredging these businesses up is they are desperately looking for an alternative to Amazon’s position on sales.

    • Felix, a little correction to your numbers : not including Iceland, all Scandinavian countries have populations between 5,2 and 9,9 million people. That makes them more populated than all US cities save New York (Sweden is even more populated than NY).

      • Felix J. Torres

        I was talking metro areas, not just city centers.
        Of those there are ten in the 7M and higher range.

        https://en.m.wikipedia.org/wiki/List_of_metropolitan_areas_of_the_United_States

        NYC metro is pushing 30M all by itself.
        By contrast, California runs 37M.
        American cities are often the smaller part of a cultural/economic zone so a city under a million is actually the hub of a much bigger regional entity.

        My point being that sometimes raw size matters or as the napoleonic era quip says: “Quantity is a quality all its own.”

        In the context of ebooks that means that what can be considered a “thriving” ebook business in Spain would be considered “barely staying afloat” in the US.

        Amazon’s full ebook customer base runs well north of 40M people. If you include casual readers buying a book or two a year, much bigger. In that context, even KU at 1-4M customers is just a small piece of the puzzle. And Scribd, estimated at under 100K subscribers, well…

        My take on this particular story is that they are asking the wrong question.

        Instead of asking why ebook subscriptions are “succeeding” in europe they ought to be asking why twelve years after the Sony Librie–9 years after Kindle–the continental european ebook *sales* markets still register low single digit market penetration.

        Long term that should be the real concern: European markets cover a half billion people about as afluent as North America yet the number of ebook buyers and the number of books being purchased is much lower than that bulk would imply.

        • A Reader/Author

          “European markets cover a half billion people about as afluent as North America yet the number of ebook buyers and the number of books being purchased is much lower than that bulk would imply.”

          You make a good point. Are there ebook publishing platforms in French and German and Italian as easy to use as Amazon’s? I don’t know. The trade publishers and bookstores in Europe probably have the same Luddite inertia as the trade publishers and bookstores in the U.S., but do the authors have an easy and accessible digital platform? Also, it may be much easier for unknown authors to get print published on the Continent than here, especially in France and Germany.

          • Are there ebook publishing platforms in French and German and Italian as easy to use as Amazon’s?

            Can a French writer in Paris or a German writer in Berlin use KDP like an American writer in Denver?

            I don’t know how it works, but is it possible they are simply using KDP?

            • In France we can use KDP as easily as US authors, it is even in French, as well as iTunes for iBooks for Apple and Createspace. The main difficulty is getting a US EIN or TIN or whatever and completing the US fiscal papers asked for by those companies.
              The we have Kobo also, which partners with FNAC, a big chain retailer. It is frankly the easiest to use, but not the most efficient for sales.
              Sales vary, some people claim having good sales on iBooks, it is not the case for me. My revenue is 1/Createspace 2/ KDP 3/ FNAC via Kobo. An Apple sale every blue moon.
              In Germany they have Tolino which competes quite effectively in numbers for ebooks against Amazon, if I understand correctly.

              • Felix J. Torres

                Tolino competes in percentage.
                They are neck and neck with Amazon for the single digit portion of the german book market that is digital.

                The issue isn’t how the ebook market is divided but the fact that the market itself is typically less than five percent of the total book market and that buyers are typically techies and ebook hobbyists. Which was the state of the US market pre-Kindle. But where in the US/Uk the arrival of Kindle led to ebook adoption by mainstream readers, the arrival of Kindle (or any of the dozens of eink readers available on the continent) hasn’t moved the needle on ebook adoption at all.

                Not even going to speculate why but right now it looks like it is never going to grow beyond techies and hobbyists.

      • If you go strictly by the city limits, many US cities clock in at 1 to 3 million. But if you include the metro area, the population is 10 to 12 million.

        • Felix J. Torres

          Yup. Even the official government numbers fall short because, particularly in the case of mid size cities, they don’t count exurbs. This is particularly noticeable in the midwest and west but even in parts of California.

          The true cultural and economic reach of cities like Indianapolis goes much farther than their nominal borders, spanning multiple counties.

  7. Regarding the framing in the article, my usual reminder: Publishing Perspectives is owned by the German Book Office, itself a subsidiary of the German Publisher & Booksellers Association (imagine some hideous lovechild of the AAP and the ABA), so it is, quite literally, a mouthpiece of the industry. And Porter Anderson is a consultant who sells media exposure to companies. In the case of this article, presumably the IDPF conference itself is his client, but it could be any of the companies mentioned because he doesn’t disclose.

    Modern journalism, people.

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