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Summary:

Book startups face a number of challenges — not least of which is the fact that they are competing with Amazon.

stacked books
photo: Flickr / Shinealight

Over the past few years, I’ve encountered countless startups that claim they are going to disrupt or revolutionize book publishing.

I once thought we might see one of those take off. Today, I’m not so sure. Book-related startups face a particularly tough path forward. Here are a few reasons why.

When Amazon is the chief disruptor, the odds are stacked against you

Any company that comes along trying to reinvent book publishing is competing not only with traditional book publishers but also with Amazon, which is almost 20 years old but keeps finding new ways to shake things up. Print book buying continues to move online and Amazon, which is now delivering on Sundays and offering same-day delivery in a growing number of cities, has a lock on that business. Kindle, launched in 2007, is the dominant ebook reading platform and Amazon is continually rolling out improvements to the Kindle e-reader and Kindle apps — sharing, search and so on — that rival what many startups have tried to do.

amazon box, amazon prime

A couple of exceptions are two companies that Amazon has acquired: reading-based social network Goodreads in 2012 and digital comic book retailer comiXology this past April. Yet those companies, both founded in 2007, were already several years old by the time Amazon bought them. They were able to grow at the same time as Amazon’s digital book business grew. An ebook startup that launches today must grow in Kindle’s shadow.

Companies that attempt to make improvements on the actual process of reading books on a screen are hindered by the fact that if they’re not supported by Kindle, they won’t be able to gain a wide audience. One company that didn’t support Kindle but still seemed to be gaining traction was the Berlin-based Readmill, but it was acquired by Dropbox earlier this year and its technology will be absorbed into that company.

Book publishers aren’t obsolete, self-publishing isn’t going away

Unlike newspaper publishers, the large traditional book publishers are doing pretty well, thanks in part to increased profits from ebooks. This week, for instance, we saw profits rise at Simon & Schuster and HarperCollins. Titles from traditional book publishers dominate bestseller lists. A lot of self-published authors are doing well, too, but quite a bit of their success is tied to Kindle and it’s unclear that startups can do much to assist. It’s going be tough for them to draw authors away from either traditional publishers or Amazon. That’s why I’m skeptical of companies that aim to crowdsource publishing

book, open book, book pages, bookshelf

Book-related startups aren’t going to gain much traction by starting with the premise that “book publishers are dinosaurs.” As publishing consultant Mike Shatzkin wrote earlier this year:

“An incumbent’s job is to continue to maintain economic viability. A start-up’s objective, often, is to ‘change the paradigm.’ If the paradigm does change, the incumbent needs to roll with that, but they don’t need to be an instrument of change. A start-up often does. That is an inherent difference in perspective that a start-up can’t afford to ignore.”

Witness Inkling, which started out as an iPad textbook publisher in 2010, expanded with a number of digital titles that it sold through its website and apps and indexed via Google — and then shut down its consumer-facing business this week. It’s going to focus on delivering enterprise products and services to publishers. That’s not a very sexy proposition but, as Inkling CEO Matt MacInniss told Fast Company earlier this year:

“The reality is that [these publishers] actually did know their business better than we did, even if they weren’t as tech savvy as we were. We had to listen to the vision they had for themselves and find ways to support that vision with our technology.”

Text is text, social is social

Startups that focus on delivering original ebook content or on helping readers find new books begin from the premise that readers have trouble finding enough things to read. This notion seems absurd: Anybody on the internet these days is overwhelmed with an infinite list of free things to read and a zillion services trying to curate reading material for them. There is not room here for a new recommendation service that is focused specifically on books: Readers don’t have time for it. They have too much other stuff they’ve been meaning to read already, whether it’s a book or a blog post.

Similarly, I don’t think there’s room for a new service that tries to make reading more social. Goodreads, imperfect though it is — and it’s due for a major design overhaul as well — has accumulated a critical mass of readers and authors and is now incorporated into most Kindle e-readers, bringing it to a larger audience. And there’s plenty of book discussion on existing “general” social networks Facebook and Twitter, where authors are engaging directly with readers. Recently, I’ve noticed a mini-trend: When people want to share a passage from something they are reading on their mobile device, they simply screenshot it and share the screenshot (hint: You can do this on the Kindle Paperwhite too). No separate app necessary.

Discoverability is more of a publisher problem than a reader problem: Witness the failure of book publishers’ joint venture Bookish, which was sold to another social reading startup and ebook retailer, Zola Books, earlier this year. Zola, too, has failed to gain traction; while I admire the company’s mission to sell ebooks, I’m skeptical that it can succeed due to all the factors listed in this story.

 

Apple + “Netflix for ebooks”

Two ebook subscription services, Scribd and Oyster, launched last fall. (Scribd already existed as a document-sharing site but changed its focus.) They both offer users access to an unlimited library of ebooks for under $10 a month. I don’t think both of these services will survive, but one of them might. Both are expanding, though neither has shared user numbers — Scribd now has over 300,000 titles and Oyster has over 500,000. A lot of these titles are self-published books (via a deal with Smashwords), but an increasing number of traditional publishers are also participating. HarperCollins is the only big-five publisher making its titles available to either service thus far, but that company has commented publicly on its success with the model, and either Scribd or Oyster or both will likely sign another big-five publisher soon.

Oyster children's

So here’s an idea: What if Apple bought one of these companies, as it is rumored to be buying hardware and streaming music service Beats? It would be a bargain — far, far less than the rumored $3.2 billion Beats is going for — but Apple would be acquiring the work that these services have already done in terms of securing rights to the books included through them. Amazon is reportedly considering launching its own ebook subscription service as well (separate, apparently, from the Kindle Owners’ Lending Library, which is essentially a marketing tool for self-published authors at this point) and this would allow Apple to get ahead. (Since Apple was found guilty of conspiring with publishers to fix ebook prices last year, it’s highly unlikely to launch a service like this from scratch; even such an acquisition might come under scrutiny.)

An ebook subscription service, fueled with content from traditional book publishers and backed by and distributed through Apple: Now, that could be revolutionary. But the revolution wouldn’t be coming from one company alone. It would come from a combination of forces, new and old. That’s the kind of disruption that readers might actually be able to use.

  1. Amazing…

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  2. Interesting read!

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  3. Derrick Schultz Saturday, May 10, 2014

    One possibility is that these startups, rather than starting up, go work for publishers. It’s certainly a lot less sexy, but as Matt MacInnis points out: publishers, in fact, do know their businesses, but don’t always have the technical resources to compete with bigger players like Amazon or Apple.

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    1. Good point. If that becomes a trend, I think that we will see fewer outsiders founding (or funding) these startups; rather, they’d come from people who already worked in digital publishing in some way, and funding might come from publishing houses and not outside VCs.

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      1. Rufus Weston Monday, May 12, 2014

        The point being that most publishers are actually pretty bad at technology, and these start-ups give them the capability to short cut the solution rather than distracting from their core competancies

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  4. Good overview.

    But I believe that startups who are into book publishing can still beat Amazon’s KDP. Startups should focus on improving the overall experience of reading and showcasing the authors book.

    There many authors who hate KDP Select program and kindle countdown deals.

    KDP sucks! when it comes to book pricing, sakes overview,support…
    But many authors still publish with KDP due to amazons market share.

    The faith of amazon KDP would change, if the startup in book publishing would focus on providing value to authors and readers.

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    1. Thanks for the comment! How would this service be different from Smashwords?

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      1. It would (could) differentiate itself from Smashwords by sending me fewer E-mails and respecting my opt-out preferences… but seriously, folks.

        Smashwords is dominant, but hardly impregnable. Its great strength–just give us a Word file!–is also its great limitation–JUST give us a Word file! I don’t know what a comic book, math textbook, or art history book looks like as a .docx file; but I’m quite sure I don’t want to.

        One trick would be to aim the “Phase I” product at publishers (such as us) instead of at consumers. I hear publishers griping all the time about Amazon/KDP. But customers? Customers love Amazon, and they don’t really care about publishers’ jeremiads. (Anyone who thinks large swaths of the book-reading public takes the long view should consider what Borders/Barnes &Noble did to small bookstores, and what Amazon did to Borders/Barnes &Noble.) Look at Hachette today to see how eagerly publishers would embrace an alternative.

        Somebody who came up with a software suite that allowed small presses to ditch Adobe CS at $50/month and create iBooks/KF8/EPUB3/PDF/POD would make great inroads with publishers large, small, and self. Amazon would be unlikely to notice or care; they’re not in the consumer or B2B software game. But Phase 2 could be a platform for discovery and side-loaded sales.

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        1. Re: aiming the Phase 1 product at publishers: I think that is smart. It kind of reflects what Inkling’s Matt MacInnis said, too. I think that a lot of these startups have aimed at readers trying to get them to change their behavior, and I don’t think it’s worked. In addition, the primary way that a lot of startups until now have wanted to work with publishers is “give us your content,” whereas I think a better model for the publishers might be “here is a tool for you.” Certainly not as sexy a model, though.

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        2. John Wilhite Sunday, July 20, 2014

          Bicyclecomics, yes, indeed, what you said, especially the last paragraph. As the writer of children’s nonfiction illustrated books I have been extremely frustrated by the proliferation of ebook devices (Kindle, Nook, iPad) and their proprietary software (publishing) formats (mobi, EPUB) because the whole scenario is solely for novels. It’s obvious that when you say “books” to the nitwits involved in the current chaos and fiasco of ebook publishing and distribution they only think in terms of romance, mystery, sci fi–just lots and lots of words. They disregard what is necessary to publish comics, manga, children’s books, travel books, textbooks, etc. The devices and the formats can’t handle anything but narrative so a simple task like keeping the text on the same page as an illustration (fixed format rather than reflowable) is a near impossibility. And let’s not even get into enhanced ebooks with their tremendous educational potential for children. That potential will never be realized thanks to Amazon’s and Apple’s “lock” on ebooks. I’ve wished for the same software suite you describe but I’ve changed my mind about wanting it to create iBooks/KF8/EPUB. I want to boycott Amazon and Apple. Consumers, libraries, schools shouldn’t be forced to buy their devices when they already own desktops, laptops, and notebooks (I realize they have “apps” so that their books can be read on these) and, again, their offerings are limited to novels. I think the best solution would be a software suite that would afford the user WYSIWYG operability to produce HTML5/CSS/JAVA that could be read on the web or downloaded and read on any computer.

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  5. Christopher Moon Saturday, May 10, 2014

    If Apple were to purchase either Scribd and Oyster, it would likely negate the agreements that both services have in place for content (if it mirrors the types of agreements for content that happen in the music sector).

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    1. That is a good insight. What would happen with Beats’ existing agreements? Would Apple have to renegotiate those?

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      1. Oliver Blynden Sunday, May 11, 2014

        I have heard speculation that Apple will keep Beats as a separate company – and keeping the agreements alive that way.

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  6. Thank you, Laura, for this very thoughtful post. As a former bookseller and book publisher, I’ve mused over these topics for a while now. I’d add a couple of nuances to you otherwise great observations. Retailers compete for consumers based on value proposition. Amazon’s strength in bookselling is low price, breadth of selection, and ease of ordering. It is possible to sell books online and not necessarily compete with Amazon’s value proposition. Lots of specialty retailers do just that. See for example, Christianbook.com, Chroniclebooks.com, Shambhala.com.

    The question of whether discovery is a problem for consumers is inherently speculative. No doubt readers can find tons of books online in myriad avenues but is what they’re discovering of relevance and value to them. The growth of online book publishing is likely to be degrading these outcomes.

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    1. Thanks for the comment, Peter. I would love to see more experiments in retail but I think that they will be niche by necessity and that will dissuade a lot of people from entering the space. I think that this is similar to the independent bookstore argument and we have indeed seen anecdotal evidence of these stores holding their own.

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      1. Thanks, Laura, for your reply to my comment. I think the issue is how to scale niche with bookstore-as-service and leverage user data across niche ecosystems. I agree with your point about the indie bookstores. The question to ask is why anyone buys from them when you can get what you want cheaper and next day via Amazon. That question is also an opportunity it seems to me.

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  7. What about us at Qpeka? ;) You think we will survive?

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  8. Errol Winston Saturday, May 10, 2014

    brilliant post dude..

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  9. Very interesting article

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  10. Good piece, Laura. One comment, though: Zola hasn’t failed to gain traction; we haven’t yet launched. We are still in beta, still working to complete the platform (and to integrate various pieces of Bookish). With luck that’ll be later this year, though one lesson I can share from startup land is that a tremendous amount of technology is required to do something seemingly very simple – because of DRM, walked gardens, and the like – and giving exact dates isn’t always wise.

    But you are right: coming into a thriving business as a startup means arriving with a transformative offer for ‘users.’ It isn’t easy to do. We think we will, but it takes time, money, and vision. With Zola and Bookish, we won’t really know until we launch.

    Joe Regal
    Zola Books

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    1. Thanks so much for weighing in, Joe. In that case, Zola has been busy in beta and I am looking forward to seeing the launch!

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      1. And that should be “walled” gardens, but I see no edit function! Oh well.

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