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I think the question you have to ask with a subscription service is why the publishers/authors would offer it. For it to work, there has to be some value added for the publisher/author above what they get under the existing system.
The most plausible service would be something like the book of the month club, where you get books at a discount, but are obligated to buy a certain number of books (maybe you subscribe for a year and get a 20% discount). One problem with this system is that the universe of books you can choose is somewhat limited, though.
And maybe you could have a system with deeper discounts for older books that aren't selling as well.
I really can't see a Netflix-type system, though. Unlike movies, there has never really been a successful rental model for books, and I don't see that changing.
Similarly, I don't see a rhapsody or e-music type subscription model working because I don't see how the authors/publishers can make any money from it - it would basically just cannibalize sales.
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