Business model of Scribd

Customer Segments

Scribd’s product offerings target distinctly different customer groups. Its subscription service is used by mass market consumers, including individuals across a range of demographics in more than 190 countries who wish to consume fiction and non-fiction e-books and audiobooks on demand.

The Company’s self-publishing and document-sharing platform is utilised by a range of individuals and organisations that wish to easily share files and papers – including students, academics, scientific researchers and businesses – as well as authors and large publishing houses that wish to monetise their content portfolios.

Fortune 500 companies such as Ford and HP are reported to use the platform to share documents, while prominent publishers Macmillan, Harper Collins and Bloomsbury provide e-books and audiobooks to the site.

Value Propositions

For users of Scribd’s document-sharing platform, the key value proposition is the ease and immediacy with which they are able to share documents and files with a global audience, at no cost.

Publishers are also attracted to the Scribd platform, as it enables them to command higher royalty percentages than are possible with traditional paper-and-ink books. The platform’s pay-per-read model, whereby publishing houses receive a payment close to full retail price each time a user consumes just 20% of a book’s content, means that publishers are required to shoulder only a small amount of risk.

Both free users of Scribd’s document-sharing platform and publishing partners that provide content to the Company’s digital library and marketplace, benefit from exposure to Scribd’s subscriber-base of 80 million monthly readers, as do advertisers and marketing agencies using the site to broaden their global audience.

Channels

Scribd can be accessed through its desktop and mobile websites, as well as via Apple iOS and Google Play apps. Apps are available on the Amazon Kindle Fire and Nook e-readers, as well as on mainstream mobile devices.

Customer Relationships

Scribd’s document-sharing platform has a self-service model, through which users are able to upload files instantly, without interacting with the Company directly.

The platform is also largely community-driven, with a large proportion of the Company’s 60 million shared documents being provided by its base of free users. Publishers and advertising agencies receive a more personalised service, requiring a greater degree of interaction with the Scribd sales and marketing team.

Key Activities

Scribd is engaged in the development and maintenance of an e-book subscription service and document-sharing platform. It also manages relationships with publishing houses that provide much of the platform’s digital content, and generates revenue through website advertising.

Key Partners

Scribd’s key partners are concerned with publishing, advertising and software development. Much of the platform’s digital library is provided by established publishing houses on a pay-per-read basis. Scribd also has distribution agreements with several major self-publishing platforms, including Smashwords and BookBaby, in order to capitalise on a burgeoning independent publishing market.

Scribd has an API which was previously made available to developers in order to integrate with third party applications. The Company, however, is no longer offering new API accounts. Scribd already has integration tie-ups with social media platforms via Readcast, which allows documents to be shared automatically on Facebook and Twitter. It also integrates Facebook social plugins on its content, which allow users to apply like, comment on and share documents via Facebook without leaving the Scribd site.

Scribd uses Google’s Double Click for Publishers ad-serving solution for a portion of its content, as well as Google’s Dynamic Allocation service, which enables Scribd’s ad servers to select the highest bids for advertising space in real time. The Company also partners with a number of advertising agencies to provide advertising content.

Key Resources

Scribd’s platform itself and the content it houses are its most obvious key resources. In turn, the Company’s content providers – its user community and publishers themselves – are key to the platform’s success. Scribd also has a proprietary copyright protection system named BookID which scans uploaded files before they are published.

The Company, however, has no applications filed with the US Patent and Trademark Office. In terms of personnel, Scribd’s sales and marketing division, through which partnership deals are managed, comprise a key component of the Company’s business model.

Cost Structure

Scribd’s major costs come in relation to its publishing agreements, platform and technology maintenance and development, and retention of personnel. Scribd’s pay-per-read publishing deals have proved particularly costly as a result of a small group of users who consume many times more than the price of their subscription each month. The Company has been forced to adjust its subscription model in order to balance these costs.

Revenue Streams

Scribd’s revenue is generated primarily by its subscription service, which permits users to access three books and one audiobook per month, and consume an unlimited number of documents, sheet music files and selected e-book titles, for a monthly fee of $8.99. A proportion of Scribd’s revenue is also generated by on-site advertising and contextual advertisements placed within documents.

This hybrid limited/unlimited model was introduced in 2016 after the previous fully unlimited model was found to be insufficient in offsetting publishing agreements that have been deemed too beneficial for publishers. In addition to self-service subscriptions, Scribd products can also be shared via gift cards and gift memberships.

A small amount of revenue is also generated by Scribd’s online marketplace where anyone – including professional publishing houses, students, scientists and amateur authors – can publish and sell documents, books and research reports. It remains free for authors to publish works on the store but Scribd takes a 20% share of all sales revenue.