Last year, Bookreporter.com‘s Carol Fitzgerald had the novel insight that if there isn’t an audience for a book, perhaps it shouldn’t be published. The publishing palooza has subsided a bit (Bowker recently reported that total titles were down to 172,000 last year – an 18,000 title drop from 2004), and Chris Anderson mania has everyone chanting the importance of innumerable niche markets. Increasingly segmented audiences allow marketers to tailor their product and their pitch, but with pockets of consumers splayed in all directions, how can publishers lock in their audiences after the initial pitch has been thrown?
With the help of the web, and an eye on the success of music, DVD and even book distribution models like Harlequin or, now, Audible, publishers are re-testing the idea of subscription as a way to build and secure audiences. The choices are myriad, including up-front flat-fee subscriptions, automatically deducted micro-payment subscriptions, bi-monthly, bi-annually, and hybrid combos of all of the above Still, as Don Katz, CEO and Founder of Audible puts it, “Businesses love the recurring revenue model, but there has to be a reason for people to want to make a regular payment.”
Small Presses Use Subscription As Seed Money
In 2001 when Richard Jensen and Matthew Stadler first started talking seriously about launching a small press, the publishing industry was high on e-book hype. “We were marveling at the quality of the physical book, and we thought hey, if everyone else starts doing e-books and we’re the only ones left, it will be great for business,” Jensen laughed.
The tide turned, of course, but Jensen (as Publisher) and Stadler (as Editor) went forward with their first book, The Clear Cut Future – an assemblage of fiction, memoir, poetry, polemical essays, and art by writers and artists from the Pacific North West – mapping out the style that their budding Clear Cut Press intended to adhere to.
From the start, the duo went into publishing wanting to launch a subscription based press. They believed that if they made attractive books with unique physical qualities, people would trust their taste, and subscribe. They also believed that many publishers had lost sight of why books should be published, so they decided to publish all of their books as non-exclusive joint ventures, going 50/50 with the authors “in traditional punk rock fashion,” as they put it. “It seemed to be a fair way to share the risk,” Jensen said.
Pre Clear Cut, Jensen spent 20 years working in the independent music industry at companies like Sub Pop Records (a label credited with helping to launch bands like Nirvana and Soundgarden) and Up Records. He says when starting Clear Cut he “stole a page from the Sub Pop playbook” by getting members to pay up-front for future content. “We used to have a single of the month club,” he said. “The beauty of subscription is that you can float an idea out there and find out if you’ve got a market for it. They send in the money, and then you can begin to put the product out there.” Jensen went on to say that the subscription models used by record companies have their historical antecedents in literary publishing and distribution, making Clear Cut dually inspired by both indy music and by early 20th-century subscription presses like Hours Press and Contact Editions.
Overall, the venture is small, but picking up speed. In spring of 2004, Clear Cut touted 300 subscribers. A little over a year later, they’re up to 800. “The beautiful point where everything can pay for itself is right under a 1,000 subscribers,” Jensen said. On average, subscriptions sell about 60% of the books, with the remaining 40% being sold direct from Clear Cut’s site (www.clearcut.com), and through standard channels (distributed to the trade by SPD Books and Partners West).
Right now, Clear Cut is in the process of finishing up their first subscription cycle of 8 books and is about to make a pitch for the second series. Even so, Jensen conceded that it’s challenging to run a publishing business where books are profitable. “Tell the publishers they can hire us as consultants,” he said. “We’re looking to make money any way we can.”
Another small press, Hard Case Crime, publisher of both old and new crime fiction, started their subscription book club as a way to supplement their pre-existing single sales business. Founded in 2004 by Charles Ardai and Max Phillips, it was Dorchester, Hard Case Crime’s producer and distributor, who introduced them to a subscription option last fall. Dorchester, the mass-market publisher, was already running various genre based “book clubs” similar to Harlequin’s on their site, and offered to handle all of the distribution and back office for Hard Case’s book club. Ardai thought that the subscription supplement would be great opportunity to increase sales. “We had a leg up with a partner who had already experimented with the model,” he said.
The Hard Case book club differs from Clear Cut in that there are numerous subscription options, and subscriptions currently make up only about 10% of overall sales. To join the club is $6.99 a month for one book – the same price as the books sold individually, plus $2 s&h – with the added incentive that subscribers get a free backlist title with every new book they receive. There are various other subscription offers – $58 to receive all books at once, or a mix and match option that allows any reader who wants to buy retrospectively to create her own package. Similarly, any reader who wishes to buy prospectively can place their order and receive a special discount.
Although it’s difficult to judge which model will work in advance, Ardai ventured to guess that the secret lies in the price point. “The pay up front isn’t necessarily a bad model, but it really depends how much it costs,” Ardai emphasized. “$30? ok. $40? a little much, but still maybe. $50? $60? $70? That’s a lot of money to subscribe to something you’re unsure of.”
Ardai doesn’t have any hard numbers, but his impression is that almost everyone who subscribes to Hard Case has bought at least one book à la carte, first. “The classic e-mail that we gets goes something like – my brother/mother/uncle gave me one, I read it, loved it and signed up,” Ardai said. Other than on the Hard Case and Dorchester websites, the subscription offer is only advertised on bind-in cards inside the books.
Hard Case’s edition of Stephen King‘s The Colorado Kid launched the book club, and the subscriber base grew rapidly, jumping to a few thousand subscribers overnight. Since then, subscriber rates have slowed, but are still coming in steadily.
In addition to Clear Cut and Hard Case, there are a handful of other small presses turning to subscription as a means to supplement sales. Nearly all of them operate on a flat-fee up-front payment, with the incentive that shipping and handling are free, and books are delivered before they are made available to the general public. McSweeney‘s began the McSweeney’s Book Release Club this year offering 10 books (one-a-month as they’re published) for a pay-up-front flat fee of $100, and Soft Skull Press began a poetry subscription earlier in the year (see chart). Other subscription small presses include Ugly Duckling Presse (offering a mixed book and magazine subscription); Wave Books (offering limited subscriptions to signed first edition poetry books); Les Figues (offering a prose, poetry, and plays package); and Kelsey Street Press (women’s poetry, with special student subscription rates).
Susan Weinberg, Publisher of Public Affairs, who began her career at BOMC, thinks that although the subscription option is an interesting idea for small presses, it is difficult to implement with a larger publisher since lists tend to be broad. “I think that even the most avid Public Affairs’ reader would have difficulty keeping up with all of our books,” she said. However, she noted that if a reader likes one Public Affairs’ book, they usually like the other titles Public Affairs has published. To that end, Weinberg says they’ve been making a push to build the subscriber base for their free e-newsletter. “So far, we’re extremely pleased with the response,” Weinberg said. “Hardly anyone opts-out.”
Furthermore, publishers have not previously had the opportunity for direct contact with their customers, so targeting or retaining them has not been a priority (though the larger houses such as Random and Penguin are tentatively moving in that direction).
The Book Related Biz: Audible & Zoobafication
Audible has fiddled with its subscription model since its inception, molding it to fit with both consumer desires and company needs. In the beginning (a now unimaginable pre-iPod world) Audible gave a free digital device to subscribers so that they would be able to listen to the content. In order to make the give-away worthwhile, Audible made consumers subscribe to their content for a year to ensure a long-term commitment. As devices became more readily available, and ease of use increased, Audible upped the price of subscriptions, and dropped the free device. As CEO Katz explains it, “Originally, we invented [subscription] as an expediency. With time, however, the membership sensibility created for a more habitual relationship.”
Audible employs numerous subscription models – with the most popular Audible Listener (started 4 months ago) charging $9.95/yr. for a 30% discount on all Audible titles. Other plans offer varying rates over varying amounts of time, giving members the option of more or less content. (see chart on page 6).
“A lot of our growth comes from membership sensibility because of the character of the product,” Katz said. “It’s a different mindset than many people in the publishing industry have about their wares. The publishing community has a single unit sensibility. This is a service that people wake up and use everyday – in 2005, the average member consumed 17 books. When I tell publishers that, they can’t believe it.”
According to Katz, the majority of Audible’s revenue comes from its members (the subscriber to à la carte purchaser ratio is about 3 to1), although significant sales come from Apple (where individual downloads are sold through iTunes). Although no official numbers are given out as to how many subscribers were previously just a la carte users, Katz says that there’s been a “really significant migration.”
“A single user is incredibly productive,” Katz says, since every listener is paid for, and content can’t be shared. “I’m always getting calls from people trying to get into [a subscription based business], but what they don’t realize is that there’s a lot of overhead. It’s a service, and a service requires energy to maintain, the customer has a sense of entitlement.”
Zooba, the latest Bookspan spawn, launched their website at the beginning of 2005 as a Netflixian club for hardcover books. Like Netflix, Zooba’s subscription model revolves around members maintaining an online queue – or “reading list” in Zooba-speak. Also, like Netflix, Zooba operates on a micro-payment model that automatically deducts $9.95 from your credit card each month. Unlike Netflix, Zooba members buy their books rather than rent – with no extra charge for shipping and handling.
“We’ll be truly launching the product this fall,” says Michelle Berger, head of the Zooba initiative and SVP Chief Innovation Officer at Bookspan. The full-scale launch proves that the past year and a half of beta testing has shown Zooba to be a sustainable subscription model – according to Berger, the site has exceeded expectation and was profitable in its first year. The official large scale ad push will coincide with the all-around Bookspan makeover and website re-launch. The ads (both print and online) will include a direct mail push and FSIs, although Zooba is currently an exclusively online venture.
One Zooba perk, is that in addition to the monthly book, subscribers can also purchase an unlimited number of individual titles at the same $9.95, with no s & h charge. The books are club editions, funneled into Zooba from other Bookspan clubs. At this point, Zooba carries about 8,000-9,000 titles, primarily hardcover (the draw to the low price point), as well as a small percentage of softcovers. In order to ensure that the venture is profitable there is a “cost cut-off” in choosing the books (the majority are black and white, with only a few illustrated 4-color), but there is no editorial selection – the goal is choice for the consumer, not choice by an editor.
With a subscription model that breaks away from traditional Bookspan clubs, Zooba is shooting for the “club-resistant” demographic – both ex-members who fell by the wayside due to negative option aversion, and a younger generation of readers which has never been enticed by standard book clubs.
Although at this point Zooba offerings are strictly print editions, there are plans in the works to sell both ebooks and audiobooks in the future. Currently, Zooba is in a partnership with Audible that allows members to listen to audio samples of select titles, with a click through to Audible where they can be purchased. As part of their expansion this fall, Zooba will offer other subscription options as well, allowing members to pay bi-monthly, or quarterly.
For now, Zooba is supplementing, not cannibalizing the other Bookspan clubs, but Berger made the point that even if Zooba did begin to steal subscribers, the subscribers are more profitable at Zooba than at other clubs. “It would be wonderful to transition folks into this mode,” Berger said. Depending on Zooba’s success, Berger said that other clubs – especially clubs that tend to be more online, with a focused subscriber base, like Sci Fi – could get “zoobafied.” Zooba is also looking into adding gift memberships this fall, and entering into the gift card market, a first for Bookspan.
Michael Cader, who runs his own version of a subscription based business with Publisher’s Marketplace/Lunch summed it up with his usual cogency: “Generally, subscriptions remain a great model when they work, and are particularly well-suited to anyone trying to deliver the same kinds of content to same type of reader over and over again. Given that many publishers believe this is what they do, there should be a lot of room for experimentation and business development yet to be exploited.”
