Breaking News: PRH Still Doesn’t Like the Subscription eBook Model (The Fools!)

21625536454_d208556476_hPenguin Random House has in the past denied that readers want an ebook subscription service.

What with Kindle Unlimited now paying authors and publishers more than the Nook Store, and possibly even more than Kobo or Google, that excuse was getting a little thin, but recently PRH changed its tune.

The global CEO of Penguin Random House, Markus Dohle, was speaking at the Global Top 50 Publishing Summit at Beijing International Book Fair in China earlier this week . According to The Bookseller, Dohle said that:

PRH had not signed its titles up for any subscription services, such as Amazon’s Kindle Unlimited, Mofibo or Scribd, because the ‘all you can eat’ models threaten to “devalue” intellectual property (IP) at a time when most authors can barely afford to earn a living.

In the US, Dohle said 40% of the readership accounted for 85% of publishers’ revenue, so "heavy readers" switching to subscription models would have a “huge impact” on the industry.

He explained that the industry’s existing publishing model, successful for over 500 years, was "robust" and "not broken at all", and argued that subscription models were "not in the reader’s mindset". If they became popular, they would ultimately lead to "lower prices" and "a huge devaluation of IP", Dohle said.

"A la carte is not broken [...] I don’t see us supporting subscription models, because we just don’t need it," he said. "Somehow we have to protect the measure of our intellectual property. Take an e-book for $12, that’s entertainment for 15 to 30 hours. That’s a fair deal compared with a movie and other media formats. I think we have a very robust pricing model in the market and subscription would just change the whole dynamic."

I don't know whether he was misquoted or what, but that is just a crock of shit.

For one thing, the book publishing industry's model has changed multiple times in the past five centuries as technology, society, and laws changed.  Five hundred years ago books were a luxury, and they have gotten cheaper as technology as improved and as the populace started having more and more disposable income.

Just in the past hundred or so years the book publishing industry has had to change in response to the introduction of cheap paperbacks (where were first ignored, then fought, and then co-opted and smothered) and new copyright laws.

And then there's magazines and serial distribution of novels, a model which hung around for close to a century before dying out in the mid-1980s*.

But that's really beside the point.

The real issue here is that Dohle is responding to innovation like the typical entrenched giant. He's clinging to the old way and inventing excuses why the new way won't work.

This is a common response from established players; they have a lot invested in the current system and they don't want to see it disrupted (this is also why the Big Five are maintaining high ebook prices).

This is a behavior we have seen in the past, including from Blockbuster. And we all know what happened to them.

Coincidentally Blockbuster is an example of what happens when a company fights an innovation or disruption rather than embracing it, and it is also an example of how an entrenched company might not innovate even if the senior management wanted to.

Blockbuster's second to last CEO, John Antioco, was fired in part for responding to Netflix by dropping late fees and starting an online service. This cut into Blockbuster's profits, and lead to Antioco being ousted.

And where's Blockbuster today?

Chew on that, and then ask yourself whether Dohle is right, or has his head in the sand.

Given that Penguin Random House's policy on ebook prices is based on fighting market trends in order to prop up the old system and that their position on subscription ebooks can be summed up as not wanting to disrupt existing ebooks sales, it's pretty clear that both positions are equally flawed.

This will inevitably lead to Penguin ending up on the scrapheap of history, but until then the legacy industry will likely continue to pretend that there is absolutely no reason to embrace change.

P.S. A number of Dickens' novels were first published in magazines before being collected in book form, and that trend still existed in the SF genre until at least the 1980s.

image by ActuaLitté

About Nate Hoffelder (11464 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."

12 Comments on Breaking News: PRH Still Doesn’t Like the Subscription eBook Model (The Fools!)

  1. If he is so worried about authors barely getting by, then he should get rid of “Hollywood Accounting”, and quit legally screwing them.

    • Exactly.
      The switch from 50% ebook royalties to 25% of net was started by Random House itself. They have always been at tbe forefront of ripping off authors. Under Dohle himself, they bought vanity press Author Solutions and when the stink got to high spun it off on paper but continue to use it to rip off the unwary.
      Hardly the last people who should be bemoaning the precarious finances of tradpub authors.

  2. I want him to say what he really thinks about libraries. The original “subscription” all you can read.

  3. How does he know that 40% of “the readership” in the U.S. makes up 85% of the revenue? I’m pretty sure that’s not true. And I know the PRH has no way of estimating that figure. Unless Amazon told them.

    • I suspect he is going by the surveys that try to identify avid readers and social readers.

      The actual numbers might be off but the concept is probably true: avid readers drive the bulk of genre sales and genre is the bulk of non-fiction. Add in the avid readers of bio, history, and other forms of narrative non-fiction and it’s not implausible. Especially if you consider that the buzz that draws casual readers is generated by the avid readers.

  4. Apparently on 14th of April 1912, a number of passengers refused to believe the Titanic was sinking as well.

  5. You can only utter stupid things for so long before folks start believing you to actually be stupid and that time is rapidly approaching for Big Publishing; much as it already has for Donald Trump.

    These fools deserve neither your respect nor your business.

  6. I wonder if any PRH titles are ever sold through the _Book of the Month Club_ or by other similar “clubs” that distribute paper books?

    Obviously this would “devalue intellectual property” in exactly the same way as he says an ebook subscription plan would.

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