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Sept. 22, 2015, 2:46 p.m.
Mobile & Apps
oyster

Google’s grab of Oyster suggests ebooks, like news, are becoming “content” read on big platforms

Oyster’s strong tech saved it from being another sad ebook startup failure story, but it’s another case of platform power edging out an independent startup.

Check out four things that have happened in the ebook world in just the past couple months:

— Amazon announced that, for the self-published titles in its Kindle Unlimited subscription program, it’s going to pay authors by the number of pages read, rather than by the borrow.

— Ebook sales continue to drop. They dropped every month for the first 5 months of 2015 (the most recent month that data’s available from the AAP); for that period in total, adult ebook sales are down 3.2 percent compared to 2014, while young adult ebook sales (think books like Hunger Games and Divergent, which have a huge adult crossover audience) are down 43.3 percent.

Way more people are reading ebooks on phones, while dedicated e-reader usage is falling. “The future of digital reading is on the phone,” Judith Curr, publisher of Simon & Schuster’s Atria, told The Wall Street Journal last month. “It’s going to be on the phone and it’s going to be on paper.”

— On Monday, ebook subscription site Oyster announced that it’s shutting down — pardon me, it is going to “sunset…over the next several months.” Then Recode reported, and Google confirmed, that Google has hired many of its employees.

Google’s dealings with Oyster are more than an acquihire, though. I’m hearing that Google acquired Oyster’s assets, including its tech, its discovery tools, and its editorial content — that includes The Oyster Review, the online literary magazine run by Kevin Nguyen, who joined Oyster from Amazon in 2014.

Here’s what Google has not acquired: Oyster’s contracts with publishers. This deal doesn’t mean Google is building out its own ebook subscription service (or is interested in doing so). Instead, Google is interested in bringing Oyster’s really nice mobile reading experience, plus book-related editorial content, to Google Play.

With Oyster’s demise, there are essentially two general-interest ebook subscription services left standing in the U.S.: Scribd, which has made cutbacks to its service in recent months, and Amazon’s Kindle Unlimited. It’s never good to be the only one left next to Amazon.

The business model that Scribd and Oyster used to get big publishers to sign on — one in which the publisher was paid, essentially, an ebook’s full wholesale price when a reader completed just a portion of it — doesn’t appear to be sustainable, especially when the customers willing to pay a flat monthly fee are also those who read a lot. There wasn’t much downside for publishers to try it out, but small companies like Scribd and Oyster can’t eat those losses indefinitely, so at some point their business model has to change in order for them to survive. That’s when you get something like Kindle Unlimited, which works on a completely different model that is way less attractive to publishers and authors.

The bulk of the ebooks on Kindle Unlimited are by self-published authors who have agreed to make those ebooks exclusive to Amazon for the period that they’re included in the program. The authors are paid out of a set pool of money, the amount of which is set at Amazon’s discretion each month — and again, starting this summer, the authors are only paid by the number of pages read, a fraction of a cent per page. This isn’t a good deal for many authors (and plenty of them complain about it) but it’s a pretty good deal for Amazon and for readers.

Any claims that Oyster failed because it didn’t have enough good content to read miss the point. Oyster had plenty of good content to read (even if it wasn’t brand new), but it was too good a deal for the publishers (and for customers who read a lot) to be a sustainable business. Ebook subscription can work, maybe, if it’s done the way Amazon is doing it: With tiny payments for authors, backed by a giant company that can actually also afford to take a loss on the program (though we have no proof that Amazon is taking a loss on Kindle Unlimited). But it appears that it can’t be done in a way that is particularly attractive to publishers of big well-known titles.

So Oyster joins a line of other promising-seeming ebook startups — Readmill (acquired by Dropbox in 2014), Push Pop Press (acquired by Facebook in 2011) — that were acquired by big companies not because they specialized in books but because they had good mobile reading tech that can be used to read any sort of content, not just books. It makes Oyster look pretty prescient for focusing so hard on its technology and mobile reading experience (as it did from launch — and which was surely one of the main reasons it raised $17 million from big VCs), because otherwise the company’s exit would only stand as a symbol of the fact that ebook subscriptions don’t work.

As it is, consider this acquisition a symbol of the fact that big tech companies are thinking of ebooks less as discrete units that are bought and sold (or subscribed to) as individual objects, and more as pieces of content that exist alongside a whole lot of other content being read on mobile phones. If the ebook business model hasn’t caught up, that doesn’t really matter to Google, which finds value in Oyster in spite of the books. Amazon is off in another direction, attempting to create a subscription platform that cuts publishers out entirely.

Push things farther forward, though, and look at the various accoutrements that once accompanied ebooks to make them seem “special”: Those are now falling away. Special ebook apps are being slurped up for their tech; ebook subscriptions don’t work; people are buying fewer ebooks, and they’re reading the ones that they are buying not on e-readers but on their phones, alongside a ton of other competing content that is formatted for mobile and that is in many cases free. When you consider all this, it looks pretty stupid to launch any kind of startup around ebooks.

Good thing publishers still have print — and that print book sales were up in 2014.

POSTED     Sept. 22, 2015, 2:46 p.m.
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