Get any group of publishers together in a room and you can guarantee that within five minutes they’ll be moaning about their subscription bureau. But as Chris Gadsby said at the iSUBSCRiBE round table last week, it’s probably our fault we have problems.
The subscription bureau’s role is a pretty thankless one. It’s a low margin business that can only make an operating profit by having large volumes go through without much variation. That’s why the bureaus all charge for every little thing out of the ordinary, including – the publishers’ big bugbear – bits of IT development.
Note I said ‘operating profit’. If a bureau needs major investment in its systems then the costs can be immense. And nearly all the major bureaus have done, are doing, or should be doing major system upgrades.
The other major problem they face is over-capacity in the market, which keeps down the rate that any bureau can charge, so their revenue stream is always lower than it needs to be.
And this is where some of the faults of the bureaus can be laid at the door of publishers, because subscription services tend to be bought like a commodity – at the lowest possible cost; we don’t want to pay any more than we can get away with. And we certainly don’t want to fund the long term investment that will be necessary to cope with digital access and bundled subscriptions.
It strikes me that the current situation is unsustainable and one of three things might happen. (more…)