November 19, 2017

DBW 2015: Amazon, Publishers Look to Ebook Subscription Services as Discovery Platform

Russell Grandinetti

Russell Grandinetti, senior VP, Kindle, at Amazon speaking at last week’s Digital Book World 2015 Conference and Expo in New York

Officials at Amazon believe subscription-based ebook consumption is an inevitability, and will continue to invest in and build the company’s Kindle Unlimited service as part of an effort to stay ahead of the emerging trend, Russell Grandinetti, senior VP, Kindle, at Amazon explained during a candid general session interview on January 14 at the Digital Book World (DBW) Conference and Expo 2015 in New York. Michael Cader, founder of Publishers Lunch, and Mike Shatzkin, founder and CEO of the Idea Logical Company conducted the Q&A.

“We can all observe the fact, that in every single digital media category, subscriptions are playing an important role,” Grandinetti said. “In music, in movies, in newspapers—you cannot find a digital medium where subscription isn’t a model that succeeds at some level, and I don’t think books will be immune to this.”

“What we need to do,” he said to an audience of mostly publishers and ebook technology vendors, “is think about how subscription could be a great value for the customers who participate, but grow the business, and [have subscription services] be incremental” to regular book and ebook sales.

One problem, he said, is that “à la carte” sales of ebooks are currently a healthy and growing part of the publishing business. It is easy to take this growth for granted, and assume that people will always be content to purchase ebooks this way.

As a cautionary example, he pointed to the music industry, where companies now “are just so happy for anybody to pay anything for music.” Even streaming services such as Spotify compete with YouTube and outright piracy, he noted. Ebooks currently don’t suffer from this problem to the same degree. Amazon’s goal is to offer new, profitable ways to help customers access content, without damaging individual ebook sales, he explained.

“À la carte is healthy, so how can we structure [Kindle Unlimited] in a way where, for the right customer at the right time, and the right publisher or author at the right time, it helps to grow the business.”

Although Kindle Unlimited is just six months old, Grandinetti said that subscribers to the service continue to purchase ebooks, and appear to read more in general.

“One of the ways we gauge what’s happening is [by asking] ‘can we get people to read more?’” he said. “We measure this in a few different ways…. How many books do people read, that we can see? How often do they read? How many times a week do they read? And then the total amount of time they spend reading…. We have a robust sample of about 60 days before and 60 days after [customer adoption of Kindle Unlimited]—all of those metrics are up by 30 to 40 percent in the 60 days after joining the service.”

Grandinetti acknowledged that it is possible that some of this increase is due to “share shift” from other forms of reading, such as print books or other subscription services, but “the amount of growth and triangulating [data] a few other ways make us feel like there’s a significant amount of primary demand generation.”

Discovery solution

Library Journal’s Patron Profiles surveys, conducted from 2011 through 2013 in conjunction with ProQuest/Bowker and the PubTrack Business Intelligence team, consistently reported comparable data. Regular library users also purchase more books, ebooks, and audiobooks than library non-users. Essentially, the most voracious readers are more likely than average readers to consume content from multiple sources, and the more books they have access to, the more they read. These “power patrons” also rely on libraries as a discovery zone, where they can explore new genres and check out authors with whom they are unfamiliar. For example, in the fall 2012 edition of Patron Profiles, 72 percent of library ebook borrowers reported that they had purchased books by authors whose works they had previously borrowed from a library.

For Amazon and some publishers, ebook subscription services such as Kindle Unlimited, Scribd, and Oyster are being viewed as a comparable discovery solution that could generate revenue while introducing heavy readers to new content.

Although subscription service users currently account for only four to five percent of the ebook reading market, this small base of users “continue to maintain their purchase behaviors and patterns. They actually spend more than typical book buyers” after subscribing, Jonathan Stolper, senior VP of Nielsen Book Americas, said during the “Subscriptions for Ebooks: How is it Working Out?” session Wednesday afternoon. Stolper’s presentation was followed by a panel discussion with Matthew Shatz, head of strategy and partnerships at Oyster; Douglas Stambaugh, VP of Global Ebook Market Development and Strategy for Simon & Schuster (S. & S.); Andrew Weinstein, VP of content acquisition at Scribd; and Steven Zacharius, president and CEO of Kensington Publishing Corp.; with moderator Ted Hill, president of THA Consulting.

“We’ve been quite pleased so far” with subscription service partnerships, Stambaugh said, later explaining that S. & S. currently offers access only to backlist titles that are at least one year old via Oyster and Scribd. “The one factor that’s been really great for us is that there’s been a tremendous breadth of titles that have gotten both views and reads…. It’s even broader than we see on the ebook sales side. We definitely think it’s fulfilling the promise of being a discovery platform for titles. It’s not just our biggest titles. And we’re not seeing any [negative] impact, at this point, on our sales of those titles.”

Zacharius was also enthusiastic, describing subscription services as “one of the brighter spots” for Kensington’s ebook sales during 2014.

“I have only good things to say,” Zacharius said. “We are making money, I hope they’re making money. I think it’s good for the readers, and we have not seen cannibalization” of ebook sales of titles that are available via Oyster, Scribd, or Kindle Unlimited. Kensington’s frontlist and backlist titles are available via these subscription services.

Shatz and Weinstein each described the absence of a “purchasing barrier” as key to driving trial and exploration, and Weinstein described how data is helping these services offer targeted reader recommendations. Although libraries were never purported to be a topic of conversation on this panel, it was perhaps notable that libraries were never mentioned as potential competitors for those platforms, or as alternate reader recommendation and discovery zones for publishers.

“I think the one big difference that we also saw in our subscription service [Scribd] versus what publishers may see through their typical [online] retailer relationships is that retailers tend to push whatever is the most current, which may or may not be the best recommendation for an individual reader. Because all of Scribd is based on personalized recommendations, we are not tied to just recommending what is newest, but what we think is most relevant to each individual subscriber.”

Shatz said that during the year ahead, Oyster is “going to continue to add great content to the platform, and we’re really excited to focus on, as Doug [Stambaugh] said, the discovery issue, and to be the place that readers go when they don’t know what to read.”

For more recent news regarding Scribd and Oyster, follow Gary Price’s coverage at LJ infoDOCKET:

Matt Enis About Matt Enis

Matt Enis (menis@mediasourceinc.com; @matthewenis on Twitter) is Senior Editor, Technology for Library Journal.

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