The membership economy
Meet Millennia. Millennia doesn’t take a taxi to the airport, she books an Uber ride. She doesn’t buy a novel at WHSmith while she waits for the plane, she loads up the latest instalment of her favourite Wattpad serial on her mobile. When she arrives, she doesn’t head for a hotel: she’s going Airbnb and staying with locals, and she eats at the restaurants recommended by TripAdvisor, not a guidebook, wearing the new maxi-dress she bought off eBay, not the high street. While she’s away, she remembered to find someone on TaskRabbit to look after the garden.
Millennia doesn’t know it, but she’s a poster girl for the sharing economy, enabled and driven by the internet (which is itself of course fundamentally a peer-to-peer network) and disrupting pretty much every industry in the process.
But there’s a new business model on the block, which holds significantly more promise for businesses: the membership economy.
Strategy expert Robbie Kellman Baxter, author of The Membership Economy and my guest in The Extraordinary Business Book Club this week, explains:
‘The membership economy is a massive transformational trend that is really transforming virtually every industry, moving from an emphasis on ownership versus access, moving from the transactional to the relationship, moving from anonymous to known relationships, moving from one-way communication to community. All of those things together are creating all kinds of new ways to build business models and, most importantly, to build long-term relationships with your customers.’
In the membership model the assets belong to the company: sharing economy businesses provide the marketplace for discovery and transactions but don’t own the assets themselves. In contrast, Netflix – an exemplar of the membership economy – allows its members to access its own content, rather than giving them a way to share their own films.
A related trend is the subscription model, which has been the cornerstone of library journal and ebook acquisition for years, but membership need not involve a subscription, and a subscription alone is just a way to pay; it doesn’t necessarily imply membership. As Robbie puts it, ‘Membership is a mindset… there’s an emotional component there. A sense of belonging. A sense of building a tribe or people with a connection.’
Given how good books are at stirring emotions and building connections, it’s not surprising that smart publishers are tapping into the power of the membership economy. Small scholarly societies have been doing this for years of course, but more recently initiatives such as Pottermore and Osprey Members have shown what’s possible for trade publishers too.
In an adjacent space, The Guardian has successfully established its membership model as an alternative to the other two dominant models in journalism: paywall and advertising. Guardian membership appeals to the readers’ values (‘fearless and independent’) and sense of identity, and the various levels of membership (supporter, partner, patron) allow a range of price points – how often do publishers allow those who really love what they do to spend serious money with them?
So many of the most interesting initiatives in the world of books use the sharing model, driven by the passionate desire of readers to dive deeper into their experience with books, to connect with each other (and ideally their favourite authors), create their own stories based on the characters and worlds they love. Just take a look at some of the start-ups featured in the Bookseller’s Futurebook recently – Litsy, The Pigeonhole, Oolipo to name but a few – plus of course well-established players such as GoodReads and Wattpad. It’s been hard for publishers to gain traction with these models, with distrust flying in both directions.
The membership mindset, on the other hand, gives publishers the opportunity to host the conversation, rather than sitting outside it, and to create new revenue streams at high margin. It’s a model worth taking seriously.