Scribd’s CEO Thinks Scribd’s eBook Subs Could Hit $1B a Year in Revenue – I Say He’s Wrong

Scribd's CEO Thinks Scribd's eBook Subs Could Hit $1B a Year in Revenue - I Say He's Wrong Streaming eBooks Subscriptions Scribd launched their ebook subscription service yesterday to much fanfare and media coverage. For a mere $9 a month readers all over the globe can read as many ebooks as they like from a catalog  that includes at least one major publisher's backlist.

I've tried the service and it is pretty decent, and I am sure it will see some success in the market. But I don't think it will be nearly as successful as Scribd CEO Trip Adler is  predicting (AP):

Adler said he believes Scribd's subscription service eventually could produce $1 billion in annual revenue, particularly if other big publishers sign on.

I think that belief is wildly optimistic, and if you look at the figures I think you'll agree.

A Billion Dollars

First, let's consider the scale of the billion dollars in revenue. It's a heck of a lot of money for the ebook market, and if Scribd pulled it off then they would instantly become one of the top 3 or 4 ebookstores.

No one has any real data on the size of the global ebook market (just estimates), but it is safe to say that Google, Kobo, and the other small fry don't generate that kind of revenue (yet).

Amazon is certainly selling that much in the Kindle store every year, and given that Apple is selling a couple billion each quarter in content and accessories it's likely that they sell a billion dollars worth of ebooks each year (source). And B&N may have hit a billion dollars in ebook revenue at their peak. I'm not sure how much they're earning this year or the next, though.

So if Scribd hit a billion dollars a year in ebook subscription revenue they would instantly be one of the major ebookstores. I just don't see that happening.

The subscription segment as a whole might hit a billion dollars, but that would likely be split among the competitors that were inspired by Scribd's success.

10 Million Subscribers

A billion dollars in revenue would require 10 million paying subscribers. Given the state of the current ebook subscription market I think that is a tad unrealistic.

The world's second largest ebook subscription service, Brazil's Nuvem de Livros, only has a million subscribers. And even the Kindle Owner's Lending Library, which is effectively a freebie given away to Amazon Prime members, has at most 4 2 million active users each borrowing one free ebook per month.

That 4 2 million is my SWAG based on the fact that Amazon is paying KDP Select authors for about 400,000 ebook loans each month (according to the monthly newsletters). If we assume that the KDP titles made up about 10% of all KOLL loans then we have a ballpark membership of 4 2 million active users.

Scribd thinks they will sign up more consumers than are interested in using the free KOLL? I doubt it.

Addendum

I'm not sure it has been discussed elsewhere but before you can reliably predict the growth of the subscription ebook market you first have to consider the effect on the existing market.

I am pretty sure that much of the hypothetical billion dollars would be generated at the expense of existing ebook sales. That is based on the current state of other media markets like movies and tv shows where we've seen subscription services like Netflix affect DVD sales. The major publishers know that a service like Scribd will cut into existing ebook revenue, and that could cool their interest in it.

It might also inspire them to play Netflix-style games by offering and then removing content, which would cool customer's interest. I, for one, won't pay for Netflix because of the randomness of content availability, and I doubt that I am alone in that.

All in all, I think it's a little too soon t0 throw around billion dollar figures. There's just nothing to back it up.

Nate Hoffelder

View posts by Nate Hoffelder
Nate Hoffelder is the founder and editor of The Digital Reader: He's here to chew bubble gum and fix broken websites, and he is all out of bubble gum. He has been blogging about indie authors since 2010 while learning new tech skills at the drop of a hat. He fixes author sites, and shares what he learns on The Digital Reader's blog. In his spare time, he fosters dogs for A Forever Home, a local rescue group.

7 Comments

  1. yuzutea2 October, 2013

    I think the ebook subscription sector globally could definitely hit 1 billion in revenue, but I wouldn’t sign onto a service that cost more than Netflix but only had the catalog of one major publisher.

    Reply
  2. Becca2 October, 2013

    I might be more interested if they supported eink devices. As it stands, no thanks.

    Reply
  3. fjtorres2 October, 2013

    They might hit $1B…
    …after ebook sales hit $100B.

    Reply
    1. Nate Hoffelder2 October, 2013

      I think you’re too pessimistic.

      Reply
      1. fjtorres2 October, 2013

        I thought I was being optimistic.
        I don’t see their pricing structure–publisher per-read expectations, reader valuation of the product–reaching closure.
        I doubt they’ll get the other BPHs on board and I doubt their catalog will ever justify $120 a year to enough people. At current ebook price levels you can buy a lot of books with $120, you know.

        Reply
  4. […] last year Scribd CEO Trip Adler predicted that Scribd’s ebook subscriptions would reach a billion dollar a year in revenue. I still think that is optimistic, but today’s news has convinced me that the […]

    Reply
  5. […] Adler made a prediction in late 2013 that the leading player in the subscription ebook market would be seeing annual revenues of a billion dollars. It's happening, just not happening to his […]

    Reply

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