NEW YORK (TheStreet) -- Flat-rate subscription pricing is turning e-books into a digital-age white knuckler.
"These new subscription services all sit around and sing kumbaya about how great it is going to be for everybody," Ian Lamont, founder and publisher of Boston-based i30 Media, told me over the phone a month or so back. "But these models only work under certain circumstances in the publishing industry."
Lamont knows the e-publisher backstory. The man's done serious publishing gigs at International Data Group, Harvard University and The Industry Standard. After a stint as an MIT Sloan Fellow, in 2012 he launched i30 Media as an e-book and print publishing house for fast-to-market, easy-to-digest In 30 Minutes guides that give readers a helping hand with common but wonky apps such as Dropbox, Google Drive and Excel.Unlike me, Lamont never lost faith in a happy ending for e-books. He relishes tinkering with the business models behind i30 Media, which he says has been profitable since its second month. "I have tried everything I can think of to get the business right," he said. "I even released the exact same title at two different prices to see the tolerance for prices for e-books or the same book in print." But when the conversation wound around to the new flock of uber-hip, flat-rate, Netflix-like subscription e-book services such as Scribd, Entitle or Oyster, which just raised a cool $14 million from Highland Capital Partners e, the eternal new-media optimist became, well ... just like me.
Lamont cuts right to the crux of the dark investor narrative looming in renting access to e-books for a flat monthly fee. He points out aptly that -- just as with Netflix for movies or Pandora for music -- competition in the subscription book biz is up. And profit margins are probably down. Late last year, early subscription e-book provider Reteah in Wilmington, N.C., rebranded itself as Entitle, basically as a lower-priced book service. Two books would now be available starting at $9.99 per month. That roughly $5 per book is about 20% lower than the $6.25 average price of the Kindle bestseller list I found on Amazon. New York-based Oyster shows just how shameless the e-publishing race to the bottom has become. It offers utterly unlimited access to more than 100,000 titles for the same $9.99 per month. And there's San Francisco-based Scribd, which sets the low bar for e-book value: All of its 300,000-plus books are available for just $8.99 per month.
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