Partners’ Corner: BEA 2015 Edition

One of my key takeaways from conversations and panels at BEA is the necessary degree of paranoia that publishers feel as they face new selling models in a digital world. The bottom line at the panel on subscription offers is that publishers and authors make the same amount if their book is read as part of a subscription offering that they do if it is bought as an individual title. So the question becomes, why would anyone care which approach is used?

And the answer is a familiar one…especially if you think back to the early days of Amazon.

Back then, publishers sold at traditional wholesale terms and Amazon took the hit if they decided to offer the book at a discount. Sales went up; publishers did very well — and everyone worried. Why? Because it seemed clear that sooner or later, the boom would fall and publishers’ margins would be negatively affected.

And the boom fell.

So the same fears seem to be at issue with the new subscription model. How can an Oyster or Scribd continue to pay publishers fully if users are getting unlimited books for a low monthly fee? There are no guarantees of how long publishers will be paid in full, and if consumers become accustomed to spending only $8.99 a month for their reading, and if single book sales subsequently weaken (think music industry), publishers may be at the mercy of subscription companies’ new terms.

So the debate rages between addressing consumers’ desire for content at good prices and the economics of the business…and maybe it’s time for publishers to look at the numbers from a different point of view.

For the last 3 or 4 years, publishers have reported improved profits due to the impact of the higher margins that digital publishing affords. Given the lack of inventory and returns, the effect of converting 20-30% of sales to digital has had an impact that would have been a pure fantasy less than 10 years ago. So yes, publishers needed this vast improvement to overcome other increased expenses and waste, but perhaps it’s time to think of the extra margin as means to support new sales streams in the interest of broader marketing.  What if people did start to consume books through monthly subscriptions? Would more people read? Would there be a hunger for a new title so if publisher chose to window for a short time, the individual sales would go up? Would there be other benefits in terms of awareness of books among the average consumer? Now that television and video have shown that subscription models can spur  improved quality, they have become a far more respected and accepted art forms. Could books gain ground in a similar way, if access and price were more in line with other entertainments?