I'm selective about what I read, and will only pay for what interests me, not for a generic service provision.
If, on the other hand, the "you" refers to the mass market, then I think it'll be split. I have no doubt there are others like me that will only buy what they want, but I also have no doubt that there's a large market that would go for the deal you outline. After all, it works (for some people) with "free notebook/netbook with your broadband contract", and it works with a lot of people with a "free fancy phone (or upgrade) with a mobile contract (or contract extension)".
But those marketing models don't appeal to me. I won't take a free fancy phone if it ties me into a monthly phone contract, because it doesn't suit the way I use phones. Anyone that's seen my comments on phones knows I only want to make and receive calls, and don't give a fig about fancy phones or all the extra services. That's why I use a £5 ASDA phone. It makes and receives calls, is small and light, and if I lose it, oh well, get a spare out of the drawer. Also, of course, as a PAYG customer, if I lose it, the most it can cost me is that £5 and whatever credit is on the phone, and that's usually only few quid. There's no risk of hassles arguing over large phone bills if the phone has been used, or the account abused.
So subsided hardware isn;t something that much appeals to me if the price is a contract tie-in.
It's obviously a viable business model to subsidise the hardware if you can lock people into a monthly contract, because you lock in as known amount of profit, and lock in a predictable revenue stream, and then rely on inertia to keep most of those people onboard after the contract ends.
The ONLY way I'd go for that subscription model, though, is as a strictly time-limited way of getting subsidised hardware, and at the prices you mention, I'd need to be absolutely sure I'll get content to the value I need in the contract period, and that the hardware and content is useful after the contract ended. If, for instance, DRM said that after I end my subscription, I no longer have access to the content I downloaded, then I wouldn't take it in the first place.
So in the scenario you suggest, critical to me would be what the DRM is. If it were like a book club, where I pay £x per month and can have my choice of y books per month from a catalogue, then maybe I'd go for it, if I was convinced that there'd be enough books that I actually wanted to justify the cost. But once I've got the books, they're mine. They can sit on the shelf, and I can refer to them months, years, even decades after the club subscription ended.
If, on the other hand, that subscription were like a subscription to a library service where a large (or effectively unlimited) volume of material was available, but once the subscription ends, you don't even have access to that which you used during the subscription, then personally, I have no interest at all. I'd rather just buy the books I want, one by one, and put them on the shelf. That way, I build a perpetually accessible library of my own. Building my own e-library has a value to me, though limited in ways I'll explain in a sec, but a monthly subscription to a library servicedoesn't. Not at all.
And personally, it's not just that I like reading, but that I like books. E-books will only ever be an adjunct to that. They're useful for travel, and as a reference library on some subjects, but by no means all. For instance, I have a decent collection on art, particularly painters and most especially, Impressionists. No way does an e-book substitute for a large, high quality art book, replete with large colour photos printed on high quality paper.
Unless and until (as I said earlier) e-readers feature revolutionary technology (which as far as I know, we don't have yet, certainly not in production) that combine the e-paper feel of e-readers and their associated battery life, with large and high resolution screens, then e-readers will only ever conceivably be a highly compromised and only partially useful solution to me. They suit some purposes, most notably travel, but are utterly hopeless at others, like showing art books.