Apple, Amazon and the uncertain future of the book startup

Gigaom

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.

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-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.

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.

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