Joe2020The year is 2020 and I’m about to make a digital content purchase. It’s amazing how much the industry has evolved in the past five years. For example, pricing is no longer a one-size-fits-all, take-it-or-leave-it component. I now have multiple pricing models to choose from:

Social bulk discounts – That digital newspaper subscription I’m considering offers a 50% discount if I can get at least 30 of my social network friends to subscribe as well. Yes, the Groupon model is still alive but with a twist. In order to take advantage of the deal I first need to rally commitments from my friends. If successful, all the participants are also committing to broadcast their purchase via Facebook, Twitter or whatever other social network they opted in with.

Advertising-subsidies – It finally happened and publishing purists are still complaining about it. Meanwhile, the rest of us are thrilled to choose from two different options and price-points when we buy ebooks. Those who prefer the traditional ad-free approach pay full price while others pay less and are presented with ads as they read the book. Even deeper discounts are offered to consumers who agree to share their name and email address with sponsors and advertisers. I’ve completely embraced the ad-subsidized approach and find the same as reading a magazine or newspaper.

Clubs – Ever wonder what happened to the old record and book clubs of yesteryear? They’re back in the digital world. I get to choose from 3 deeply discounted ebooks to open my account and then I commit to paying full price for at least 10 additional ebooks over the next 12 months. If I fall short of that commitment my credit card gets hit with a penalty charge at the end of the term, so better to just buy all the books I want rather than pay a fine with nothing to show for it.

I hope you agree that tomorrow’s pricing models are terrific for consumers. The data and buying commitments ought to be good for publishers and retailers too, right?

You probably quickly surmised that Amazon isn’t a fan of any of these, mostly because they want to own all the data and sell it to publishers. That’s OK though because all the other retailers recognized the benefits and now offer all three models. Publishers are also using them in their direct-to-consumer efforts on their websites. As a result, the retailer playing field has been leveled a bit, benefiting both consumers and publishers.

Rest assured, the future is bright (but the Cubs still haven’t managed to win a World Series).

(Orignally published in Joe Wikert’s Digital Content Strategies.)


  1. The ebook club idea has failed twice in the past month. Both Librify and Entitle tried this but they couldn’t make it work. They went out of business.

    Audible is making it work, yes, but it’s becoming apparent that they are succeeding because they don’t have any competition, not because it’s a good model.

    If this were a good model then Amazon would offer it, and so would Bookspan (it runs a couple dozen book of the month clubs).

    And as for the advertising idea, that advert-subsidized ebook will be on the same page as a $3 ebook with no ads and a free ebook with no ads. Why would anyone choose the ads?

  2. Hi Nate. You’re absolutely right that if the exact same model is tried again and again after failed attempts it will indeed fail yet again. I can’t say I have the magic element of the formula that needs to be changed but I’m confident someone will find and exploit it.

    Btw, I’m glad Edison didn’t give up on the incandescent light after a few failed attempts.

    Regarding the advertising, you said, “a $3 ebook with no ads and a free ebook with no ads.” That’s not what I’m suggesting. Using your example, what I’m suggesting is a $3 ebook with no ads and a free ebook *with* ads. In that case, the consumer gets to decide whether they want to pay more for an ad-free reading experience.

  3. I don’t know about Entitle, Nate, but Librify had actual delivery issues which are evident from customer complaints. And they have been acquired by Scribd, which continues to apparently thrive.

    These payment options will serve certain, not all, customers. Just as many people go to the movies and pay full price (but participate in loyalty programs), while others are firmly in the “wait until it comes on TV” camp, and just as some people are willing to pay for TiVo or use online services to avoid ads, others will view TV in more traditional ways and take ads that now approach 1/3 of program running time.

    Right now it’s not that great from a creative perspective. Please enlighten me as to how any great number of FREE or even $3 ebooks can be reliably produced? Or is it just any old thing on the screen? There is a certain truth to “You get what you pay for.”

  4. I’m not sure I follow your logic, Nate. I seriously doubt a publisher would ever offer a book for $3 and the exact same book, with no ads, on the same purchase page, for free. I’m wondering if you’re suggesting two completely different books. Maybe one spy novel is $3 and a totally different spy novel is free. If so, yes, all things being equal, of course the freebie is going to generate a lot more interest. That’s not what I’m saying though. I’m suggesting the exact same book is available in two different formats: One at $x with no ads and another format at less than $x with ads.

  5. Ah, the ad supported ebook scheme has popped up again like a game of whack-a-mole. I don’t think it will ever work – the economy couldn’t support it. I would love to see some hard numbers to say otherwise. For example, how many ads would it take to bring an ebook down to a zero cost?

    Also, who are the ads pitched to? The three buck ebook demographic isn’t a lucrative source, I would think. But maybe I’m wrong. I’m not a CEO will a 100 million dollar bonus each year, but I am a computer programer with enough disposable income who doesn’t have to fuss too much at the price of books. I’m sure that looks better to the admen. The thing is, I’ll never, never, never go for ads. If I somehow had a choice between a FREE ebook or paid papetback, I would rather pony up the cash and say farewell to the Kindle.

    What may happen, if the author’s pipe dream comes true, are ebooks you pay (probably close to full price) for but are nonetheless stuffed to the gills with ads. Never believe for a moment the consumer will have the option to choose.

  6. @ Joe

    Perhaps I should have said the “free with ads ebook will still be competing with a truly free” _title_. Then it would have been clear what I was talking about.

    But either way, your assumption that ad supported ebooks will be sold in isolation is simply erroneous. They will have to compete with regularly-priced ebooks, including ebooks that go on sale.

  7. @ Greg

    You raise a good point, Greg. Advertising isn’t even a good revenue model for funding web content, and it’s getting worse all the time. By the next time someone tries to add adverts to ebooks there simply won’t be enough money in the idea for it to be worth testing.

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