Subscriptions: Models of change, greed, or more of the same?

Passionate LAMP developer, author, and friend, Ali Syed, emailed us from Lahore with a question and observation about ePublishing:

“I thought about you when reading of recent events in publishing—Apple’s announced subscription pricing for iBooks, followed by the announcement of Google’s One Pass service. For pushing subscription content to iPhones/iPads, Apple requires publishers guarantee the lowest price point available and then keeps a hefty 30% fee. One Pass is less restrictive and Google only keeps 10% of subscription sales. How will Apple against this sort of competition?

“WalrusInk may want to look into a subscription model as a channel for distributing eBooks; i. e. similar to the way the music industry has evolved, especially the digital streaming apps that divide the subscription revenue to the labels/content providers on certain metrics (combination of flat monthly rate and amount of their content streamed).”

To which we say, the more things change, the more they stay the same!
The WalrusInk tusk-trust has been considering subscription models for a while, and for certain kinds of content, we think it provides a compelling alternative to the monolithic bound book. It’s not a new idea. Dickens’s novels were for the most part written in serial form and first published in periodicals, which proved to be remarkably profitable for all involved.

Apple’s addition of subscription pricing to iBooks and the iTunes App store has been anticipated for some time and is actually a welcome new feature. Previously, there was no way to subscribe to a publication and receive next issues automatically through push notification. The fuss over Apple’s demands for pricing equity are probably justified, but the 30/70% revenue split is the same model Apple has used from the start of the iTunes App store. It doesn’t seem as though anyone should be surprised by this, much less irate about it! In fact, this deal is downright generous compared to the ~50% discount model used in standard book distribution and pricing.

I know that Apple can seem quite overbearing and unfairly random at times, but this time, everything is above board; no favoritism, no randomness. Unfortunately for Apple, success has made them the easy target. And while this may not be entirely fair, it’s not necessarily all bad in that it provides an opportunity for competitors to show Apple a better way (assuming such a thing exists).

At the moment, Amazon dominates ePublishing distribution, but their Kindle platform is technologically stone-age. All of the other e-readers, like the Nook, Kobo, and such, compete against Kindle. Apple’s iPad is light years beyond the basic e-readers, but content, the stuff we used to buy as books and magazines, hasn’t advanced much beyond the Gutenbergian ideal. From a pragmatic point of view, Apple’s iOS devices have not made much of a dent in the Kindle’s market leading position as the e-reader of choice.

Interestingly, Amazon’s eBook pricing is pretty much the same as Apple’s 30/70% revenue split, which has not been seen as outrageous. Amazon doesn’t demand price matching from publishers, but instead demands better terms, which means that they get a bigger discount which then allows them to sell at a bigger discount. There are many ways to gain the upper hand, and while publishers certainly feel the squeeze, consumers are unaware of this type of back-room business dealing.

Google, which has strayed quite a distance from “Don’t be evil,” is both a worthy competitor and distinctly different from Apple. Just thinking about iOS and Android and what a wide spread of options this has led to makes me smile broadly. But as an eBook seller, Google more closely resembles Apple than Amazon. Google and Apple may differ on the specifics of pricing and in the way they choose to control their “bookstores,” but they both tend toward more open business practices and policies that favor the little guy by not showing favoritism to the larger behemoths of traditional publishing.

In short, when paradigms shift, the old business rulebook is pretty much worthless, and a period of creative experimentation ensues. At the same time, my business vision for WalrusInk is not dependent on Apple, Google, Amazon, or any of the other combatants. Even as WalrusInk is likely to be most successful with eBooks for iOS and Android developers, the simplicity and flexibility of our business model doesn’t limit us.

We will be serializing content and we will be making subscriptions available in every venue that makes such a service available. Like all ePublishers, we’ll abide by whatever structures our vendors provide and we’ll figure out how to make money within these limitations. The market will let us know if Apple’s behavior is insupportable or if Google has no clothes. Such is the nature of doing business.

For WalrusInk, our key differentiators will be the quality of our works, our innovative approach to content creation and publishing, and our dedication to treating authors with mutual respect. None of these recent announcements will change our basic tenants of ePublishing.

Clay Andres
Publisher and Walrus-in-Chief