Q&A: Trip Adler, CEO and Co-founder of Scribd
Adler says the future is subscriptions, and bundled ones at that. Scribd’s chief executive told The Idea about the growth of his own service and how it plans to thrive in an increasingly crowded content subscription space.
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The Idea: How many subscribers do you have, and how did you get there?
TA: We have over 750,000 subscribers. We first built the service for publishing and sharing written content, and that has allowed us to reach over 100 million monthly uniques. Having that built in free audience was really helpful first step for us. Then we launched the world’s first subscription service for books. We partnered with all the big book publishers such as HarperCollins, Simon Schuster, and Macmillan, and we offered all of their books on a subscription. So I think that having a free audience combined with a subscription service for premium content allowed our growth to take off.
When did you introduce news and magazine publishers to the platform?
In the last year or two we decided to expand into news and magazines. We previously had user-generated content, books, audio books, and sheet music, but we realized there was a big opportunity for shorter form content such as news and magazines.
On the newspaper side we partnered with a number of newspapers like The New York Times, The Wall Street Journal, The Atlantic, and on the magazine side, we partnered with Time Inc. and Hearst. We brought all of this content together in one subscription. Our idea was really to offer this content all together in the same bundle as books and audio books, allowing subscribers to just pay once and really easily read and browse whatever they like. By putting all of this together we can really cross-promote different types of content. So if you have a particular interest — let’s say global warming — you can search that interest and see the relevant books, documents, and news articles on that topic.
How did you pitch your service to initial partners?
The pitch was that we have a large audience and we can give publishers access to new audiences and a new source of revenue. The big idea here is that we want to expand the number of people who pay for news. We believe it’s good to have people paying for news, as opposed to having it be free. We want to build a really large bank of subscribers that are paying for content. By offering books and news products together we can build a really large subscriber bank. If we increase the number of people that are paying for news, it will ultimately increase the money that goes back to journalists and authors.
The big idea is really to expand the number of people who pay for content by offering it all together in one subscription.
Scribd is one of the only providers of books, magazines, and news all under one subscription. There are other organizations that are trying to be the “Netflix of news” or the “Netflix of reading” like Medium, Apple with its acquisition of Texture, and Amazon via Kindle Unlimited. What is your strategy with respect to competing with these players?
I think the general of a concept of a subscription is a really interesting idea — and that’s why we’re seeing a lot of different companies in the space or entering the space. Our strategy is really just two things: more, and better content and a really great experience for discovering and exploring that content. In a number of different niches we’ve taken a really unique approach in the market. In user generated content, we have over 80 million documents that are unique to Scribd. On the book side, we have deals with the Big 5 publishers and offer many books that aren’t available in a subscription anywhere else. On the audiobook side, we’re the only service to offer unlimited audiobooks and do so at a really low price point of only $8.99 a month. On the news and magazines size, we have a whole unique set of deals that we’ve bundled together in a unique way. And then we just do all of this together in one subscription for a low price. It’s a pretty unique approach to the market unlike any other company.
With that low price point, are you profitable right now?
We are, yeah.
Can you talk a little bit about your pricing model and how that works with news and magazine publishers?
On the revenue side, we charge $8.99 a month. Last year we did around $55 million, but we’re up quite a bit this year.
In terms of costs, we pay publishers fees. Every publisher thinks very differently about how they want to be paid for content. It differs between types of publishers and even within news and magazines, so there are different kind of deal structures in play. Sometimes we’ll pay for every single piece of content that’s read; sometimes we pay an up-front licensing fee for a piece of content; sometimes we’ll create a pool of revenue that we split based on usage. We’ve done a whole bunch of deals.
Additionally, it can take a lot of work to develop our algorithms and our search tool to prioritize various content at the right time, but it allows publishers to be paid fairly for their content. It’s one of our key principles: we want to make sure that publishers, authors, and journalists are paid fairly and that they make more on Scribd than they would on other platforms.
How do you prioritize content as it appears on search?
We basically just prioritize the most relevant search results we can. You know really, on the news and magazines front we have a whole search team and we really try to surface all the best content at all times. The only times when our recommendations will not prioritize the most relevant search result for the extreme group of voracious power readers which is you know less than 10% of our subscribers which will read a very large number of books a month. What we’ll do is temporarily reduce the catalog for a portion of the month and that’s how we manage profitability for our most extreme power readers. On the news and magazine front, we’re always trying to provide the best search recommendations that we can.
Where do you see subscriptions going in the next year or the next few years?
Besides just getting bigger and more popular, I think there will be a continuous bundling and unbundling subscription trend. There will be times where it makes sense to bundle multiple types of content or subscriptions together and there will be times when it makes sense to separate them and have separate types of subscriptions. I’m particularly excited about the bundling trend because there are so many different subscriptions right now. It’s kind of difficult for consumers to keep track and manage so many different subscription options. One thing we’ll be seeing is bundling them together so that consumers can make fewer choices and just buy a particular bundle and then get access to multiple services.
Among the types of content that Scribd offers, which gets the most engagement?
By non-paying users, user-generated documents get a huge audience. But among paying audiences, ebooks and audience books get the most engagement. Actually been trending towards audiobooks.
Finally, what can we expect for Scribd to prioritize the next few years?
I think we’re just going to keep trying to offer and create content as we can, and keep making the experience — in particular, the discovery experience — as good as we can. As long as we keep doing those two things we’ll really grow our subscriber base. And the more people in our subscriber base, the more revenue we’ll have to return back to publishers and authors and journalists.
Create content?
Yeah — it’s something we’ve been thinking about exploring, but we haven’t committed to any big plans around that.
This Q&A was originally published in the May 7th edition of The Idea. For more Q&As with media movers and shakers, subscribe to The Idea, Atlantic Media’s weekly newsletter covering the latest trends and innovations in media.
