Why Do We Keep Publishing Like It's a Launch Business When It's Always Been a Subscription Business?

Insights from Michael Evans and Emilia Rose, co-founders of Ream

My business partner Russell Nohelty and I had a brilliant chat with Ream co-founders Michael Evans and Emilia Rose as part of the new membership we’re offering through Writer MBA, where you can get access to all of our courses and community for $999/year.

One of the most fascinating things they said to us on our call was that publishing is already a subscription business where the most valuable metric you can focus on is retention. This is in direct contrast to what most authors, publishers, and book retailers think—which is that publishing is a launch business.

Michael then started throwing out interesting numbers. If your retention rate is 90%, that may sound good. But what it means is you have to replace 10% of your audience + whatever additional percentage you need to grow every single month. Within a year of charging monthly (aka putting out 12 new books a year) you will be down to about 25% of your original readership if you do no activity to find new readers. This spurs authors to have to find new readers all the time, and is a lot of the reason retailer sales have become pay-to-play.

What Michael then noted is that if you increase your retention rate by 5%, to 95%, after a year you would have retained double the amount of people and would be at a little over 50% of your original readership. That is a huge jump, and now your marketing costs drop significantly!

And of course if you can get your retention rate to 97.5%, you will retain 75% of your original readership over 12 months.

When you look at these numbers, you’ll note that the only way to keep revenue steady is to keep retention high and use marketing money to find the percentage of people you are losing to churn. The only way to grow is to keep retention high and use marketing money to find an excess of the percentage of people you are losing to churn.

Most Authors Focus On Growth Without Retention

That leads most authors to focus on growth over retention. What is every successful author looking for? More readers.

And the only way to get more readers is to spend more on marketing.

And the marketing costs to get the next batch of readers will always be higher than the last batch of readers. We market to the lowest hanging fruit first, then climb our way up the tree.

Michael made a good argument though that authors who wish to control marketing costs should be focusing on two metrics—getting more readers and retaining current readers.

Now that I’ve explained what Michael told us, I’m going to take this argument further than he was able to on our call (due to time constraints and us needing to move on). Because it got me thinking so much (as these two always do!) about how retention plays out for most authors.

The Reality of Reader Retention For Most Authors

Michael used some generous numbers in his example, and I don’t know the whole story on why he picked those specifically because we had to move on.

What I do know is that most author businesses, at least the ones that I see, have nowhere near a 90% retention rate on retailers or in read-through from Book 1 to Book 2 to Book 3 and beyond.

Successful authors often say they have a 60-75% read-through from Book 1 to Book 2 and then a 90%+ read-through for all books after that in a series. The read-through to the next series might be closer to 30-50%.

On retailers, authors can still be successful thanks to algorithms. If they push the book well in the algorithms, the algorithms will keep finding them new readers without them paying for marketing to those readers (yet). And if those readers like the books, they may consume their entire catalog and that puts a lot of money into the author’s pocket—for the first several years, at least.

What About Backlist?

Backlist is another lever that authors can pull to make the numbers of their businesses work. Backlist increases your potential size of sale, meaning that instead of having a $5 product, you can have 10 $5 products that then increase your potential sale size to $50.

The challenge I see with backlist on retailers is that eventually, an avid reader will burn through your entire backlist. Even if you had 100+ books, a reader could still blow through all of them in 6 months, a year, a few years. This often leaves authors on the writing and publishing hamster wheel, or it forces them into a game of constantly trying to find new readers wherever they can.

A backlist is an asset and it can definitely keep you in bread and coin for years and years on retailers, but eventually, your books will exhaust the audience that any retailer can send your books to, and your books will begin to drop in algorithms—usually in a way that makes it hard to recover from. While it doesn’t happen to every author—I certainly know authors who have maintained or grown their retailer earnings for a decade or more—it happens to the majority of authors. And when it doesn’t happen, it’s usually because that author has increased retention and many of the other numbers that we’ll get into shortly.

Word-of-Mouth Marketing

There is another factor that authors should be thinking about beyond retention of readers and getting new readers, and that is going deep with readers and pulling them through the 10 Stages of Audience.

Because if you can get readers to become true fans and evangelists (stage 9 and stage 10), then you start to influence the natural word-of-mouth that happens with bookselling.

In any industry and for any product, 1 out of 10 people tell the other nine what to pay attention to and what to buy. These influencers can become evangelists for a company, and in many industries it’s common to work with influencers on a paid basis.

Across all industries, about 13% of products are sold by word-of-mouth, and in the book industry, that percentage is higher because of the effort it takes to evaluate a book.

For argument’s sake, let’s just assume that around 20% of books sold are by word-of-mouth, with that number skyrocketing the more popular an author brand is, and going to near-zero for authors with no book sales. For example, Colleen Hoover, an author whose books consistently go viral on TikTok, can probably attribute way more than 20% of her growth to word-of-mouth. But an author with no or low book sales will not be able to get the word-of-mouth component off the ground, because they need sales to begin with.

So we are already in a word-of-mouth business and many author brands naturally grow through word-of-mouth and putting out consistent books. Let’s just assume it’s around 20%.

Additionally, word-of-mouth can be nurtured, and the average author (the not-yet Colleen Hoovers of the world) could potentially increase that word-of-mouth percentage to 25-30%.

And that sounds great! but it still means that they need a reader retention rate of 70-75% or they need to spend marketing money to find new readers. And as we already covered, even successful authors struggle to scrape together those levels of retention on retailers.

However, if you not only retained readers but also went deep with them, moving them from casual reader or buyer to an evangelist of your work, then you could have 50% or more growth through word-of-mouth.

How This Applies to Subscriptions and Memberships

One of the graphics that I love to show people come from my extensive work studying all the publishing platforms in detail. As I was studying them, I noticed that some platforms (like retailers) were designed specifically to get a sale from the casual reader, while other platforms (like crowdfunding platforms and live events) were designed specifically to get a sale from the fans, true, fans, and evangelists.

The graphic takes the sales journey shown above…