Prevailing industry chatter over the past several months has frequently included the leveling off, or in some cases the downturn, of e-book sales. According to the AAP StatShot report covering the trends of the past year, e-book sales in the children’s and young adult category were down 43.3% in 2015, compared to 2014.
Publishers continue to analyze and explore digital subscription services, which are often hand-in-glove with talk of e-books, and which suffered some big financial hiccups in 2015, including the shutdown of Oyster and service changes to limit some of Scribd’s offerings.
But in the midst of any negativity there are definitely some bright spots, in the form of children’s e-book subscription services.
Children’s e-book subscription service Epic, based in Redwood City, Calif., is one company that is bucking the naysaying trends. Epic cofounder Kevin Donahue shared exclusively with PW the latest statistics measuring the company’s performance. “We were up 400% last year and will probably see the same or more this year,” he notes. Officially launched in January 2014 by Donahue and Suren Markosian, Epic was born from a desire to “make e-books more available to children online,” Donahue says. At that time, iBooks and Amazon “weren’t being directed toward children,” he explains, recalling his experiences seeking out titles for his daughter. With Markosian, an Internet entrepreneur who had major success with social and mobile gaming company CrowdStar, Donahue, who was part of the original team at YouTube as v-p of content and head of marketing (pre-Google acquisition) notes, “We were enthusiastic and passionate about solving this problem.”
Epic carries more than 14,000 e-book titles from more than 100 publishers—including HarperCollins, Macmillan, Candlewick, Disney, Bellwether Media, and Eerdmans—and describes itself as “the world’s largest digital library for kids.” The focus is on providing unlimited access to high-quality content for children 12 and younger via a platform available on the Web, iOS, and Android devices, as well as Apple TV, for $4.99 per month. Content is curated by an in-house editorial team that receives input from Epic’s advisory board, which is composed of publishing and digital industry experts, including Joanna Cotler, former publisher of HarperCollins Children's Books; award-winning author Jenni Holm; and Tim Ditlow, former v-p and publisher of Listening Library/Random House, who is also Epic’s v-p of content. Read-to-Me titles, audiobooks, and Spanish-language and Spanish/English bilingual books are part of the content mix. Other notable features include an algorithm that makes personalized recommendations for kids based on their reading level and content preferences, and the ability to create personalized profiles (up to four per family) to keep track of reading materials individually within an account.
Since Epic’s debut, more than 40 million books have been read on the service. Most recently, Donahue says, six million books were read in the month of March alone, and more than 250,000 titles are being read each day. “The numbers are astounding to us, to be honest,” he says. These figures tally the activity of paying subscribers as well as students who are accessing Epic in school. The company offers Epic for Educators free of charge to teachers for use in the classroom, a bonus Donahue says they can provide “because we are doing so well with paying subscribers.” Epic currently ranks as the #2 highest-grossing app on iOS in the Kids category and the #3 highest-grossing app on iOS in the Education category.
To date, Epic is being used in more than 70% of elementary schools in the U.S., according to Donahue. Denise Witmer, a second-grade teacher at Milton Hershey School in Hershey, Pa., is one of the educators taking advantage of the free app. “Kids can choose a book they feel comfortable reading and no one needs to know what they’re reading,” Witmer says, citing one of the reasons she loves the service. “It’s another way I can get them to read and explore the things they are interested in, in an easy manner.”
In another second-grade classroom, this one in Lecanto, Fla., teacher Terry Stoufer says she uses Epic in a range of ways, from instruction and lesson planning to small group work. “We have used it also for global projects,” she says, as well as Twitter book talks with classrooms across the country, “because so many students can access the same book from different points and come together in a social media setting to discuss it.”
Epic’s publishing partners can opt out of the Epic for Educators component, but many of them have seen it as a marketing opportunity. “It’s been great word-of-mouth growth,” Donahue says. “Kids are getting to know the brand in school, and then they come home and mention it.”
Whether at home or in school, the subscription model is “well-suited to children because it’s core to their daily lives,” Donahue emphasizes. “Parents and teachers insist on reading, and kids are constantly seeking new things to read for learning and for pleasure.” By consistently homing in on quality age-appropriate books, “we develop the trust of parents and teachers,” he says.
The subscription model offers “easy access and no friction” (i.e. no advertising or in-app purchases) for kids who want to explore e-books, according to Donahue. He calls Netflix the “most obvious comparison” to Epic’s type of service and believes that there are various reasons that subscription e-book services for adults have experienced challenges. “With adults, you have to deal with specific books by specific authors on the frontlist, which means largely working with the Big Five publishers and dealing with terms of sale that are unsustainable,” he explains. “Our way is very specific to children and curated, high-quality content makes sense. Kids aren’t as brand-focused as you think.”
Donahue notes that Epic has fostered many key partnerships with a wide spectrum of publishers, while sticking to the age and quality parameters the company has established. “If you work with independent providers as well, you can obtain a wide realm of content and sustainable financial terms.” So far, the scope of Epic’s approach has been a success. “We’re thrilled it’s working,” Donahue says.
“We were one of the first to sign with Epic,” says Rana DiOrio, founder and CEO of Little Pickle Press, “and one of the biggest reasons is their commitment to excellence in children’s publishing.” She also cites “the pedigree of the principals” as a factor in her decision, offering that Donahue and Markosian were respected digital industry figures with a well-capitalized business plan that was not likely to be a flash in the pan. She was also pleased about the number of Little Pickle titles that Epic solicited. “They wanted everything on our list. Some platforms like TumbleBooks or Reading Rainbow pick and choose and tell you which titles they want.”
National Geographic came on board with Epic in part because “they were different from the others in the sense that they were offering more game-like elements,” says Rachel Graham, senior director of digital book publishing. “The [Epic] goal is to engage kids and get them excited about reading by rewarding them.” For example, Epic users earn badges to encourage further reading, such as a Weekend Warrior badge if they read during a weekend. Graham says National Geographic started with 20 titles on Epic in May 2014, and last summer amended its agreement to add 50 more titles to the service.
“As the largest Canadian-[owned] children’s book publisher, you can imagine that we get approached pretty regularly about new pilot projects,” says Lisa Lyons, president of Kids Can Press. But when Epic came calling, she saw much that appealed to her. “It’s clever, the offering is different than other services, and we have seen real material growth with them.” She praises Epic’s ability to “evolve their model,” and adds that “they’re using the feedback they’re getting and reacting to the marketplace, and being nimble about that. I think that’s one of the reasons they’re succeeding.” Lyons’ experience echoes that of a number of Epic’s content partners. DiOrio at Little Pickle recalls, “Our first check was $250, which is better than a sharp stick in the eye. But the next quarter we got a check for $2,500. I had to call them because I thought it was an accounting error. We have enjoyed a terrific number of views for our books.”
For James Colandrea, president and CEO of Rourke Educational Media, seeing “very nice numbers” in revenue for his titles is very appealing. “In the juvenile, nonfiction, and education categories, you need to find all the revenue sources you can,” he says. “E-books are not nearly as copyright sensitive as print; they have a much longer usage life. Revenue is revenue. If I can publish a good book, I want to find every way possible to capitalize on my investment.”
A Widening Market
As Epic enjoys some rarified air in a still emerging segment, other children’s e-book subscription services are certainly in the mix to varying degrees. Donahue calls Amazon “potentially our largest competitor,” but notes that its Amazon FreeTime Unlimited e-book subscription service for children, which also offers video and other types of media, is currently available only via Amazon devices.
Houghton Mifflin Harcourt jumped into the subscription model fray last October with the launch of Curious World, a children’s platform that offers “all types of media under one roof – e-books, games and video,” according to Caroline Fraser, senior v-p of development and acquisition for HMH’s Consumer Group. The site is an answer to what HMH believes is parents’ desire for “curated top-quality content, within a walled garden without ads, with a growing library of new content each week.” As Fraser explains, Curious World’s content is curated and created by HMH learning experts and is “tied to eight key learning areas that are essential for two- to seven-year-olds.” The site offers a blend of original and licensed content from HMH and other partners and features such popular HMH properties and characters as Curious George, Gossie & Friends, and Tacky the Penguin. Fraser says the content mix on the site “inspires curiosity and encourages kids to also move away from their screens and engage in activities and play.”
Though Curious World is marketed as a product for kids to use at home, Fraser says the educational foundation of the site makes it a great fit for teachers, and that many of them are using it in the classroom. HMH offers Curious World free of charge to early education teachers (preschool through grade two), and teachers can then pass along the app with a discount to their students’ parents.
Each e-book in Curious World features audio narration by an actor and synched highlighted text. In 2016, the content mix is planned to reach 500 e-books and 500 videos. Those titles will join a current count of 100 educational games (with another 50 scheduled to be added during this year). Parents who use the platform have access to resources for supporting their child’s learning, a dashboard that measures children’s progress, age-appropriate learning activities to do offline, and a retail shop selling books and educational gift items. A subscription to Curious World is currently available for $7.99 per month or $64.99 per year and is available on iPad and iPhone and will be expanding to AppleTV soon. Since its launch seven months ago, Curious World has reached 800,000 downloads. And the app continues to evolve with updates and improvements based on user testing and customer feedback. Some of the latest changes include new search and content-discovery features.
Reading Rainbow Skybrary Family is another popular children’s-only subscription e-book platform, inspired by the long-running PBS program of the same name. It launched in May 2015 with money raised via a crowdfunding campaign initiated by the show’s executive producer and star, actor LeVar Burton. Skybrary Family offers unlimited access to more than 500 e-books and in excess of 150 video field trips for children ages two to nine. A parent dashboard, read-to-me options, and interactive book animations are among the other features subscribers get for a $9.99-per-month membership. A version for educators, Reading Rainbow Skybrary School, debuted earlier this year.
Last fall Disney launched DisneyLife, a family-oriented streaming service that includes movies, e-books, TV shows, and music in the U.K., with no imminent plans to make it available stateside. Some children’s e-book titles are available from Scribd, and several other streaming e-book platforms are aimed at the education market, including Scholastic’s Storia, Tumbleweed Press’s TumbleBooks, and Capstone’s MyON.
But the playing field is bound to pick up new players as digital technologies evolve, and as customers’ preferences for consuming digital media for children become more focused. As Fraser puts it, “It is worth underscoring again the growing demand for educational and ad-free content for kids, as evidenced by a lot of the moves by the various platform companies—Hulu, Netflix, Amazon—to invest in these areas. We believe that parents are increasingly looking for specialty content as a service, and it is an area that we will continue to focus on, given our breadth of both beloved characters and strong learning expertise.”
Similarly Donahue believes that Epic’s success is proof that there’s room for the subscription business model to rise. “Subscription for children is working in a really big way,” he states. “We’ve been quietly signing up incredible publishers, and they’ve been pleased with the results. By doing this, we will benefit the entire industry as we help develop a new generation of readers. The secret sauce for getting kids to read e-books is giving them control.”