PUB 401 — Short Paper #2: The Viability of Subscription-based Ebook Services

Adam Van der Zwan (301206119)
PUB 401 — November 9, 2015
Short Paper #2
Word Count: 1432

The Viability of Subscription-based Ebook Services

 

It has been speculated that there will be dramatic changes to future trends of the book publishing industry in that content will be predominantly ‘accessed’ and not ‘owned’ (Polanka, 2013, p. 65). While libraries have been accomplishing this for ages, the dominant business models in the market book industry have been vastly reshaped due to the proliferation of digital publishing, the Internet, and shifts in copyright laws that allow for the proper connections to accessing ‘new age’ books. Such components have changed the way these books are produced, distributed, marketed, acquired and read, in order to provide a way for authors make a living without selling their content directly. Though, submerged in the abundance of fresh business models is the subscription-based model that this paper will explore further. In examining the strategies and implications of third-party ebook subscription services, such as Amazon’s Kindle Unlimited and Scribd, I’ll determine their influences on individual authors, publishers, readers, and the publishing industry as a whole. This exploration will then support the thesis that subscriptions services are not, in fact, the most convenient or viable business model for today’s publishing industry.

Firstly, a subscription-based ebook service offers its customers free and unlimited access to hundreds of thousands of digital books on iPhones, computers or digital tablets, for a monthly or annual subscription fee. While a few of these services are offered directly by the publishing companies who own the books (Polanka, 2013, p. 65), most are provided by the top three third-party subscription companies, which include, Scribd, Amazon’s Kindle Unlimited, and until recently Oyster, which has now announced that it will be “sunsetting” in January, 2016. Each of these companies provide services between $9 and $10 per month, and while they each provide access to enormous collections of books a flat rate, it must be noted that each collection is subject to its own limitations with regards to which publishing companies have agreed offer certain titles. For example, according to a Forbes post from April 2015, both Scribd and Oyster offer backlist titles from three of the five major publishing houses, while at the time of the post, Kindle Unlimited offered no major-publisher titles to readers.

In examining the advantages of a subscription model one will conclude that it allows companies to work quickly and conveniently with customers, and as a Dosdoce.com study from April 2015 called “New business models in the digital age (Dosdoce.com, 2015, p. 17).” states, it provides companies with a “fixed client base and a specific timeframe [which] translates to a constant flow of revenue.” While this may sound like an ideal utopian business model, the study also briefly discusses drawbacks to a subscription service, citing the potential degradation of valuable publishing markets in that their services essentially see diminished profits because third-party service providers reap the benefits of their products, and also because these subscription services feel pressure to make sure there is a wide variety of books from each of the publishers to ensure that readers will stay interested (p. 23). Needless to say, as with most things in life, subscriptions provide for both benefits and drawbacks. The question is, do the benefits outweigh the drawbacks enough for this business model to be truly viable in furthering the creative industry?

One can first answer this question by analyzing the role of the author and the publisher in the business model. If a publisher is willing to submit its books to a subscription service, a contract is made between the publisher and the service so that each time a title is used, the publisher receives a cut of the profits. Conversely, the publishers must then devise a strategy to pay the authors of those titles (Polanka, 2015, p. 65). While Kindle and Oyster operate in this manner, Scribd deviates slightly in that it allows independent authors to submit their work directly, and thus directly receive compensation each time their title is used. Scribd entices its authors to its service by claiming that once a book has been published online, it’s available to millions of readers who can easily access each book without a “check out” process,” which means that Scribd authors will have a greater chance of their book being read. Authors with publishers who’ve signed contracts with similar subscription services all presumably receive the same benefits.

Though the real problem lies within the publisher’s domain. To begin with, it’s reasonable to assume that publishers aim to make the most profit that they can from their books. As Sue Polanka notes, “sales are revenues” (2015, p. 66). There are far greater monetary benefits to both publishers and authors if a book is sold separately as its own product, rather than to be clumped together into a large collection of books sold at a monthly flat fee. A subscription model undoubtedly causes sales to drop which can harm the publisher’s business objectives as well as its relations with authors, by having to convince them that they will receive similar royalties from their work in a subscription service. In addition, Book Buzzr Blog sheds light on how independent authors lose out on valuable revenue from their books, which may leave them struggling to conceive of new self-marketing strategies, and in many cases leaves them unsuccessful altogether.

Furthermore, subscriptions pelt the publishing industry with new marketing obstacles; they now have to brainstorm ways to market a collection of books rather than the book itself. The act of doing so seems contradictory to the idea that a book is its own creative product. Michael Shatzkin voices in a blog post from 2012 that each book is “a separate creative and commercial endeavor, down to having its own contract, its own development path and schedule, and its own marketing requirements.” A novel is unlike a song or a film — the final product created after months, even years of hard work, provides an experience that cannot be digested as easily and quickly as an album can. Subscription services for different media, that operate in a similar “all you can eat” manner, such as Netflix (films) or Spotify (songs), all offer products that have a higher replay value than do books. In other words, it more sensible to clump large amounts of songs together and offer unlimited access to them, as they’re likely to be used more than once.

A third problem that should be mentioned is that in many cases, publishers may not have the rights from authors, artists, and other people involved in the production of the book, in order to distribute the ebook through a subscription service (Polanka, 2015, p. 66). This barricades publishers from divulging certain titles that would be valuable market-wise to Scribd and Kindle in the long run.

Finally, and very unfortunately, Scribd has recently come under fire for offering pirated versions of books. As noted previously, the service allows independent authors to upload their titles, many of which are the scanned pages of books that do not have a contract to be sold on the service. In November 2013, Teleread cites a story of how the novel To Kill A Mockingbird, by Harper Lee, was found to have been illegally uploaded multiple times for Scribd users. The blog relays that Scribd has set out measures to deal with piracy concerns, such as by updating their terms of agreement, by checking uploaded works against a pre-existing database, and by asking subscribers to report any potential abuses, though it’s safe to say that this service is far from perfect. While piracy occurs in other instances, Scribd is yet another avenue for consumers to steal from the author’s and the publisher’s benefits.

In the end, subscription-based ebooks benefit the reader. For those who read substantial portions every month, cheap, quick, unlimited access to thousands of books is like something out of a dream. However, before long it simply won’t be enough to encourage creative product and further the publishing industry’s aims due to the list of problems that directly harm both publishers’ and authors’ revenues, create legal confusion, and downplay the hard work and effort put into creating each individual book. Subscription ebook companies further prevent publishers and authors from controlling the flow of their products, and creating a direct relationship with their readers. If subscription services are to continue, they should be placed in the hand of publishers themselves, which would provide them with opportunities to establish this direct interaction with appropriate niche markets, while making full profits from their products, and allowing individual authors to benefit as well. To avoid such action may weaken the publishing industry as a whole.

 

Works Cited:

Oysterbooks Blog

http://blog.oysterbooks.com/post/122942822025/o

Dosdoce.com study on publishing business models in the digital age

http://www.dosdoce.com/2015/04/07/new-business-models-in-the-digital-age/

What do Subscription E-Book Services Really Mean for Indie Authors

http://www.bookbuzzr.com/blog/product-service-reviews/what-do-subscription-ebook-services-really-mean-for-indie-authors/

Scribd and Piracy: What Are They Doing to Stop it?

http://www.teleread.com/scribd/scribd-and-piracy-what-are-they-doing-to-stop-it/

Scribd Website: DMCA copyright infringement takedown notification policy

http://support.scribd.com/entries/22981-DMCA-copyright-infringement-takedown-notification-policy

Scribd: How do authors benefit from Scribd’s premium membership program?

http://support.scribd.com/entries/64067067-How-do-authors-benefit-from-Scribd-s-premium-membership-program-

Entitle Books to Close Tomorrow, But It Will Have Little Impact On the Subscription Ebook Market

http://the-digital-reader.com/2015/07/20/entitle-books-to-close-tomorrow-but-it-will-have-little-impact-on-the-subscription-ebook-market/

Are Ebook Subscription Services Worth It?

http://lifehacker.com/are-ebook-subscription-services-worth-it-1513205735

Subscription Services for Ebooks: Like Netflix, Spotify, or Not at All?

http://www.forbes.com/sites/billrosenblatt/2015/04/24/subscription-services-for-e-books-like-netflix-like-spotify-or-not-at-all/

Amazon Unlimited vs. Scribd vs. Oyster: Ebook subscriptions battle it out

http://www.cnet.com/how-to/amazon-kindle-unlimited-vs-scribd-vs-oyster-e-book-subscriptions/

Subscription models seem to me to be for ebook niches, not a general offer

http://www.idealog.com/blog/subscription-models-seem-to-me-to-be-for-ebook-niches-not-a-general-offer/

 

Polanka, S. (2013). Ebook Access: Business Models for Subscription Services. Online Searcher, 37(2), pp. 65-67. Retrieved from: ebscohost.com

 

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The Viability of a Subscription-based Ebook Service by Adam Van der Zwan is licensed under a Creative Commons Attribution 4.0 International License.
Based on a work at https://pub401adam.wordpress.com/2015/11/11/pub-401-short-paper-2-the-viability-of-subscription-based-ebook-services/.
Permissions beyond the scope of this license may be available at https://pub401adam.wordpress.com/2015/11/11/pub-401-short-paper-2-the-viability-of-subscription-based-ebook-services/.

PUB 401 – Short Paper #1: How Technology Has Affected Advertising in the Publishing and Pharmaceutical Industries

PUB 401 – Short Paper #1

October 6, 2015

  

Marketing Drugs and Books:

An Analysis of How Technology

Has Affected Advertising Practices in the Publishing

And the Pharmaceutical Industries

By Adam Van der Zwan

Student No: 301206119

Within the last 20 years, technology has influenced many aspects of both the publishing and the pharmaceutical industries. Yes, these industries may be incredibly different from each other, but the fact of the matter is that both are consumer industries that aim to sell product for profit. As such, both must employ certain marketing strategies to grasp the attention of their target consumer audiences, which can be achieved most diligently through using modern technologies that appeal to the consumer base. This paper will examine three marketing aspects that have been rapidly shaped by advancements in technology, and which both the publishing and the pharmaceutical industries use to attract consumers from the ever-increasing digital age. Such topics will compare and contrast how technology has created and influenced 1) the use of ‘samples’ as a means to attract a buyer, 2) social media usage as an entity in our digital technology use, and 3) peer-to-peer or ‘consumer’ marketing, through consumer-created content on websites such as YouTube. In this way, one may better understand how technology has dramatically shaped the evolutionary marketing practices of both industries.

To begin, technological innovation has been paramount in maintaining success in business industries. On the pharmaceutical end, developments in nanotechnology over the past 30 years have led to an explosion in the discovery and synthesis of pharmaceutical drugs, along with the Big Pharma’s need to apply current digital trends to its marketing and distribution practices (Cardinal, 2001, p. 19). On the publishing end, digital innovation and the emergence of the World Wide Web has allowed for books to be digitized and transmitted instantly from one consumer to the next. As such, both industries have made use of ‘sampling’ as a valuable marketing tool, by allowing consumers to ‘taste’ a product before considering whether or not one should purchase it.

The book publishing industry has made excessive use of sampling through taking advantage of the Internet’s intangibility. Booksellers, such as Amazon and Google Books, allow consumers to read a set amount of text before they are made to buy the book if they are to read any further — a marketing practice that can only be made effective through information technology, rather than a physical book. Similarly, the upsurge in new prescription drugs, as brought about by rapidly developing laboratory technology, has fostered increased competition amongst pharmaceutical companies vying for physicians’ attention. While drug samples are physically distributed to medical practitioners, doctors most often make cost-effective use of e-Sampling and promotional websites in order to research and order these free samples for their patients (Ding et. al, 2014, p. 514). Drug sampling, in this case, (though it easily applies to both industries) has been described as “the most effective way to introduce a new product or to create new excitement for an existing one” (Ding, 2014, p. 510). Samples are undoubtedly effective in promoting products and increasing sales.

Though, while both industries employ sampling techniques to entice consumers, there is a significant different in the ease of sampling access between books and drugs; one that’s contingent upon tangibility. While consumers can digitally sample books ‘on the go’ through a publisher’s direct-to-consumer (DTC) advertising technique, competitive pharmaceutical companies do not have such a luxury. Drugs samples are limited not only because they are a physical substance rather than virtual information, but also because they cannot be legally distributed from the manufacturer to the consumer (p. 510). Doctors and other medical practitioners act as the “gatekeepers” to pharmaceutical drugs, thus driving up the cost of distribution, and limiting consumer (patient) choice (p. 510). To sample an online book — a product comprised of information — can be instant, flexible, significantly cheaper, and in most cases free, whereas to administer a free drug sample to a patient requires time, transportation and distribution costs. It’s also worth noting differences in consumer satisfaction; consumers are compelled to buy a text in order to satisfy their desire for the final product; free prescription drugs are often accessed by patients who are satisfied after drug-use, and whom take advantage of quick access to reduce their medical expenses (p. 510).

The publishing and pharmaceutical industries also make use of advertising through social media — interactive platforms brought about by the Internet. Publishers use Facebook, Twitter, FTP services, and video-sharing websites like YouTube to promote their books to mass audiences. In April, 2013, Michael Shatzkin, outlines, on his blog The Idea Logical Company, one of the main forces shaping the publishing industry: the process of “atomization,” in which any person on the web has the necessary tools for publishing content that can be accessed by anyone at any time. Publishers have taken advantage of this open-based publishing arena in order to target audiences with their advertisements, and have now even branched out into using smartphone apps to promote their products. Advertising companies are also using the web to teach authors and companies how to make the most of their online promotions by using certain strategies on social media — as evidenced by StandoutBooks, a company dedicated to “serv[ing] authors and companies world-wide” so they can “make the most of the change and opportunity enveloping the publishing industry.”

In Canada, pharmaceutical companies have been trying to navigate their prescription drug markets through the social media landscape, though not as successfully. You see, in contrast to the United States, Canada has banned all pharmaceutical direct-to-consumer (DTC) advertising through traditional media. This poses a problem for Canadian pharmaceutical companies in that they cannot advertise their products on the radio or television; they can, however, circumvent Canadian laws by advertising on social media. This posed considerable controversy in 2013 when, as The Vancouver Sun reported, Canadians were “inundated” with ads on all social media platforms, while policy experts from the B.C. Medical Association (BCMA) voiced their concerns that the federal government should place stronger focus on vetting sneaky pharmaceutical companies who were supposedly breaking the law. In using the same social media advertising strategies as publishers, ‘Big Pharma’ has challenged the validity of Canadian laws, and have influenced policy officials to enact stricter law enforcement strategies.

Though, just last August, The Toronto Star reported that Canadian company Pfizer had released a new pharmaceutical website aimed at extending reach to social media users including physicians, and thus again threatening Canada’s weak security laws. In the U.S., however, pharmaceutical companies have traversed all areas of social media and have made great progress in influencing consumers to purge their doctors for certain brand-name drugs.

Finally, peer-to-peer marketing has played a role in attracting a consumer base for publishers and pharmaceuticals, though these marketing strategies have been far more prominent and successful with publishers. YouTube offers an ideal video-sharing setting for authors to promote their books, and consumers to promote the books they have read. DW posted this past summer that the practice of making videos (vlogs) about books, coined “BookTubing,” is a relatively novel form of marketing that publishers have leapt on in recognition of its advertising success; one video has the potential to reach thousands, even millions of potential buyers. High profile consumers from the pharmaceutical industry have also made attempts to promote prescription drugs through peer-sharing or social media platforms. One such instance includes celebrity Kim Kardashian, who, as The Guardian reported, teamed up with drug maker Duchesnay USA this past August to promote a morning sickness drug called Diclegis, on Instagram. Government officials then contacted the drug maker to demand that Kardashian remove the Instagram post, claiming it to be “false or misleading” in that it “fails to communicate any risk information associated with its use and it omits material facts.” Once again, the pharmaceutical industry has faced legal controversy over its DTC marketing tactics, while evidently violating U.S. transparency laws.

Conclusively, technological developments in both the publishing and pharmaceutical industries have created and influenced new-age marketing techniques in each respective industry. It’s interesting to examine how two vastly different products, one tangible and the other intangible, have managed to employ, to some degree, the same marketing strategies, though with varying success. While publishers have been given the ‘easy road’ in promoting their information-products through an open, available Web, Big Pharma has risen to the challenge of employing the same sampling, social media, and peer-to-peer advertising tactics, but has been bombarded with criticism and legal controversy, due to restrictions in DTC advertising. It’s compelling to note how an industry that provides drug products that can significantly impact one’s life strives to reach out to consumers in the same ‘nonchalant’ open-web style as used by book publishers — who have nothing to fear from producing harmless content. This may lead one to speculate as to whether pharmaceuticals should re-think their advertising practices so that they do not potentially endanger the lives of their consumers. Nonetheless, technology, through expanded innovation and increased competition, has played just as profound a role in shaping the pharmaceutical industry as it has with book publishers.

Works Cited:

Cardinal, L. (2001) Technological Innovation in the Pharmaceutical Industry: The

Use of Organizational Control in Managing Research and Development.

Organization Science 12(1):19-36. http://dx.doi.org/10.1287/orsc.12.1.19.10119

Ding, M., Eliashberg, J., & Stremersch, S. (2014). Innovation and Marketin in the

Pharmaceutical Industry. Emerging Practices, Research, and Policies. New

York: Spring Science. Print.

Michael Shatzkin: The Three Forces That Are Shaping 21st Century Publishing

http://www.idealog.com/blog/the-three-forces-that-are-shaping-21st-century-book-publishing-scale-verticalization-and-atomization/?doing_wp_cron=1444193657.3127040863037109375000

StandoutBooks

https://www.standoutbooks.com/finding-first-readers/

Vancouver Sun: Medical Association wants to crackdown on online drug ads:

http://www.vancouversun.com/health/Medical+Association+wants+crackdown+online+drug+advertising/8020266/story.html?__lsa=8112-a75e

Health Council Canada: Direct-to-Consumer Advertising Report:

http://www.healthcouncilcanada.ca/tree/2.38-hcc_dtc-advertising_200601_e_v6.pdf

The Toronto Star: Big Pharma likes social media for advertising:

http://www.thestar.com/news/insight/2013/08/05/big_pharma_likes_social_media_for_marketing.html

DW: How BookTubers are changing book marketing:

http://www.thestar.com/news/insight/2013/08/05/big_pharma_likes_social_media_for_marketing.html

The Guardian: Kim Kardashian’s drug promotion:

http://www.theguardian.com/media/2015/aug/12/kim-kardashian-selfie-morning-sickness-drug-instagram

Book Marketing in 2015:

http://www.publishersweekly.com/pw/by-topic/international/international-book-news/article/68094-canadian-publishing-2015-book-marketing-in-2015.html

Creative Commons License
How Technology has influenced advertising in the publishing and pharmaceutical industries by Adam Van der Zwan is licensed under a Creative Commons Attribution 4.0 International License.
Based on a work at https://pub401adam.wordpress.com/2015/10/07/pub-401-short-paper-1-how-technology-has-affected-advertising-in-the-publishing-and-pharmaceutical-industries/.