4.1 From Product to Service

Bookselling methods have not changed much since, well, forever. Even the transition to digital form tried to conserve the materialistic “bookshelf”.

In this chapter, we will shortly review current book sales methods, digital sales methods of other content mediums and the possibilities for the new model for the platform for digital reading.

Book Stores.
It is interesting to see that the selling methods for both the physical and digital books have quite a lot in common. Both are selling the books through a wide range of shops, different in scope and circulation range. In The Netherlands, thanks to the social approach, all books will be priced the same in all stores. Online, the situation is similar. An e-book can be sold on Amazon, Apple Books or bol.com, and they all maintain the same price. In this case, price equality is not thanks to social regulations, but to the fact that the comparison online is so easy.

Entering a large book store nowadays, you’ll see many other products than books: gift cards, calendars, diaries, phone chargers. What might be just an addition to attract people to buy books in the physical stores, has grown in major scales digitally, with the online stores of Amazon and bol.com. Both starting as bookselling platforms, they have now grown to sell almost any product on earth, from clothing through toys to TVs. On the path to financial growth, books became just another product.

Content Stores.
But while bol.com and Amazon went from one-product market to multiple, another took their niche and expanded it, big time. We are talking, of course, of Netflix. Starting as a blockbuster video-tapes distributor, Netflix has taken its original content – movies and TV series – and created the largest video-content distributing platform in the world. Their success came thanks to a few fundamental changes in the concept of video consumption, where above all they saw television (and later cinemas) only as a platform. The content and its consumer’s wishes were the heart of the vision. Accordingly, they curated and produced their content and established display-on-demand on any device. Netflix’s app was unique, becoming an example to other medium providers to follow. We will expend on Netflix’s model in the guide for the new reading experience.

The financial crisis that reduced newspapers’ revenues did not skip the music world as well. The drop in sales of CDs and the online pirate jungle forced the industry to re-invent their earning model. On the one hand – free music videos on open channels such as YouTube are released to promote concerts and merchandise. On the other, the growth of music streaming in designated channels such as Spotify, Apple music and Sound Cloud. All apps, all mobile-designated, the new music consuming model are libraries of (almost) infinite music tracks, being sorted and presented to their listeners.

Libraries.
As opposed to the stores, libraries have a different model – you do not buy a single product, but rent access to many. Libraries hold a wide range of files relevant to their variety, whether it is a national library, university or a museum collection.

There are many online libraries at the moment. Their content is combined with word documents, scanned PDFs, e-pubs and audio books. Libraries such as Europeana(*) (the European Library), the French Gallica(*) and more make digital exhibitions on their website, to promote content on changing topics.

Being sponsored organisations, you could find much of their content free of charge, or combined with a yearly subscription.

Subscriptions.
It seems like wherever you look, subscriptions are the business model right now in every medium. Monthly or yearly commitment for payments from the users is a true reflection of the high-speed changing technology. How did that happen?

Looking back at the transformation of the daily news can teach us quite a lot on this subject. The digital platform was expected in the beginning to be a costs reducer. The online newspaper was perceived by the public as worthless, and the masses got used to consuming news in quantities – for free. It took news publishers time, and we daresay the process is still developing, to find a successful financial model.

The change came with re-defining the approach to the products: instead of selling a physical, tangible object – selling a constantly renewing stream of content. Nowadays, it is becoming more and more common to pay for many services that used to be products: from music records to Spotify, from software cd’s to Office 365, from videotapes to Netflix.

From Product-Base to Service-Based.
Our first examples for service would be Amazon and bol.com – companies who do not produce the products themselves but focus on the logistic delivery, making it steadily faster and friendlier. When referring to content companies, the service appears in the form of a shared platform, providing a range of products produced by either the company itself (Microsoft and Office) or by others (Apple Music and musicians). The next phase that began with Netflix was a hybrid – both a shared platform and production of their own content. Apple(*) and Disney(*) have just joined the party with content-platforms of their own.

Moving from product-based to service-based thinking has a few key features that fit modern times. Service-based content platforms enable a constant change in products without a set date; it allows the user to understand charges but handle it on his/ her own terms; it grants the company the capital for developing new content and the service continuously.

But the most significant difference between the methods is that service-based thinking cannot be about the single product anymore. It needs a combination of multiple products to give the user value for money. It needs a library.

The Platform’s Model.
In this chapter, we shortly reviewed existing models from related platforms. We see many valuable examples and would further investigate existing ways of earning content models.

Our suggested way for having a lucrative platform for both makers and readers is multiple contents in one platform. The following phase will include working out calculations for such set-up.

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