Scribd has augmented their business model once again and readers are going to be the ones who suffer. Starting this March subscribers will be issued Monthly Read credits that will enable them to read three e-books and one audiobook every month from the full Scribd library, while still being able to read an unlimited number of books from Scribd Selects, a rotating selection of titles.
Scribd CEO Trip Adler says that the company decided to make the change only after reaching out to Scribd users for feedback, and noted that Scribd’s data shows that 97% of its customers read less than three books per month, and will likely not be negatively affected by the change.
The unlimited e-book subscription model is not a viable business model and many of the companies that participated in this space have all closed down. Entitle and Oyster raised a hundred million dollars over the years and still weren’t able to make the concept work.
The publishing industry has also stated on numerous occasions that the existing system is broken. Penguin Random House UK CEO Tom Weldon said “We have two problems with subscriptions. We are not convinced it is what readers want. ‘Eat everything isn’t a reader’s mindset. In music or film you might want 10,000 songs or films, but I don’t think you want 10,000 books.”
Tim Hely Hutchinson, chief of Hachette UK simply sees the current generation of unlimited websites as being total failures, “people are always pitching new models to me, and the first thing I say is that the existing model works really well. I don’t believe in subscription. I don’t see how it would do anything other than cannibalize the business we already have. I know other people take a different view. Within the limits of the law, I hope [HarperCollins UK c.e.o.] Charlie Redmayne will explain it to me, because I don’t get it.” Neither is he interested in selling direct—“I don’t think the consumer wants it. The last thing I think we should be doing it undermining our customers, the retailers.””
Meanwhile Hachette Livre chairman and c.e.o. Arnaud Nourry said in a recent interview that e-book subscription sites are a flawed idea. “Offering subscriptions at a monthly fee that is lower than the price of one book is absurd,” he said. “For the consumer, it makes no sense. People who read two or three books a month represent an infinitesimal minority. And there are bookshops. If I seem like a dinosaur, so be it. My colleagues at Penguin Random House say the same thing.”
Scribd has raised over 72 million dollars in the last few years to keep their company afloat. They have to pay publishers whenever a reader consumes 10% of an e-book and Scribd is bleeding money like crazy. Investors are starting to run for the hills and in order for Scribd not to go out of business they need to limit the amount of e-books that customers can read. This might not be the most popular business move with binge readers, but Scribd has to make each paid monthly account profitable, instead of a net loss.