Penguin Random House Might Not Understand the Subscription Market, But They’re Getting Into It Anyway

Penguin-Random-image-[1]Penguin Random House UK CEO Tom Weldon might not have understood the subscription business model in November 2014, but that hasn't stopped him from signing a deal to distribute audiobooks to Scribd as well as the Danish subscription ebook service, Mofibo.

Several news sources have reported this morning that Penguin Random House Audio is now distributing 9,000 audiobook titles to Scribd and 5,000 titles to Mofibo. This going to boost Scribd's audiobook catalog to 45,000 titles. I'm still waiting to hear how many audiobook titles Mofibo carries.

Scribd offers an all-you-can-read service with over a million audiobook, ebook, and digital comics (including some titles from S&S, HarperCollins, and Macmillan) which costs $9 a month. It's available globally,and Scribd has offered audiobooks since November 2014.

Mofibo, on the other hand, is a more limited service focused on Scandinavia. It launched in Denmark in July 2013, and expanded into Sweden last fall. Mofibo added its first audiobooks in March, and at the beginning of April they also added a new personification option which added localized regional Danish and Swedish accents to the audiobooks.

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So what do you think of the news?

There's been very little commentary so far, possibly as a result of the suddenness of the announcement (Scribd only contacted me at 1pm yesterday). I'm still thinking this over, but I can already see that this is a radical turnabout from Weldon's statement 5 months ago - one which PRH is hoping we won't notice.

They're trying to downplay the sudden change, and even convinced DBW that PRH "sees the Scribd deal as a continuation of its distribution model for the format, pointing out that its digital audiobooks have been long available for subscription through other channels like Audible and Audiobooks.com".

Those two sites are much closer to being "audiobook of the month" retail sites than subscription services like Scribd, so the comparison is simply nonsense. Scribd has a very different business model and different payment plan from Audible, and comparing them makes about as much sense as comparing Netlfix to Best Buy.

And now Penguin Random House is dabbling in the market. Given that audiobooks are a smaller market than paper books or ebooks, this is not a huge risk for them. It's closer to the pilot test which I suggested last November.

But no matter how you frame it, today's news is the first step towards a radical shift in policy. According to Mike Shatzkin, the US branch of PRH was quite emphatic in its opinion of subscription ebooks:

A NY-based executive of PRH told me a year ago that I had the subscription thing all wrong. From PRH’s perspective, it is unwise to offer a service and pricing plan that seems designed to give substantial discounts to your very best customers: those who buy and read many books. This is not a crazy perspective. If PRH sells about half the commercial books, then, on average, they get half the sales from these heavy book readers. Why would they want to help them reduce their book spending?

And now PRH has decided that this position no longer applies to audiobooks.

I can't tell you whether PRH will follow suit and offer ebooks through the subscription services, but I would not be surprised if that happened.

Remember, Macmillan first tested subscription ebooks in June 2014, and then announced a deal with Oyster and Scribd in January 2015.

If PRH follows a similar time frame then, assuming that this pilot works out, they could announce a deal with Scribd and Oyster in late 2015. I'm thinking it will happen in October, with the announcement to be made at the Frankfurt Book Fair.

But of course that is pure speculation.

 image by spykster

About Nate Hoffelder (11598 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader:"I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

6 Comments on Penguin Random House Might Not Understand the Subscription Market, But They’re Getting Into It Anyway

  1. offtopic but i wanted to point out that you’ve missed the eink back cover for the Huawei P8 –high res pic waring– http://images.anandtech.com/doci/9164/IMGP7079.JPG
    the screen is 4.3 inch , got no other details

  2. PRH were/are already in the subscription market for audiobooks. The majority of their ebook sales come from Audible, whose most popular product is monthly subscription for ‘credits’ to claim audiobooks each month. As such this new deal is no great change. It’s massively different to ebooks, with a completely different customer profile and scale.

    • Audible is more of an “audiobook of the month club” while Scribd is closer to Netflix. They’re not even close to being the same market. One is essentially retail, while the other is all-you-can-read.

  3. Maybe PRH has finally figured out that books are a commodity, all of the publishers are producing the same books (effectively), and their competitors are getting the revenue when the Scrib subscribers read books.

  4. The addition of more audiobooks made me re subscribe to Scribd. I was just about to buy The Interestings on Audible which was on sale for $12.00, but then saw they have it now on Scribd. My $8.99 will at least pay for the audiobook, plus anything else I get a chance to read this month. I think it’s a great deal even if I only use the audiobook selections. And the best part, if I don’t like what I’m listening to, I can move on to a different one without paying any more!

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