Transcript: Future Uncertain For Book Startups

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Interview with Laura Hazard Owen, GigaOm

For podcast release Wednesday, May 21, 2014

KENNEALLY: For every Facebook and WhatsApp, there are countless digitally driven startups that expire online without so much as a whimper and, for many of those, without very many customers either. So what does it take to survive and thrive if you’re a book startup?

Welcome to Copyright Clearance Center’s podcast series. My name is Christopher Kenneally for Beyond the Book. The business of publishing is in disarray and experiencing disruption.

But for a generation of whiz kids, that’s the good news. They see opportunity. If and when they can find venture capital, they pursue their dreams of paradigm shifts with energy and enthusiasm. Never mind Amazon, never mind Apple, never mind even the big five, who often behave very little like the dinosaurs of whiz kid fantasies.

Are pioneers in publishing just crazy or crazy like the fox? Laura Hazard Owen reports on book publishing for Gigaom, a new site covering emerging technologies. And she has the book startup report card. Welcome to Beyond the Book, Laura.

OWEN: Thanks for having me.

KENNEALLY: Well, we’re looking forward to chatting with you because we spotted an interesting essay that you recently published for Gigaom that looked at the book startup world.

And you began by telling people that, you know, once upon a time, you thought someone out there would succeed, but you’re not so sure right now. So handicap the horses for us. What are the factors in favor of the ponies, and what are the conditions on the track?

OWEN: So I started writing about book publishing about six years ago. And at that time, it seemed to me that we really might see a startup emerging, where we would be able to look back now and say, wow, that business really came along and changed publishing – book publishing – as we know it.

And six years later, I really haven’t seen a startup that has done that. One of the main reasons I believe that that’s true is that Amazon is still primarily the chief disrupter out there. Amazon is not a startup anymore. It’s a 20-year-old multi-billion-dollar company. But I would say that it is still innovating in the e-book space and the publishing space in a way that other companies find very hard to compete with.

KENNEALLY: Indeed, Laura. And today, particularly with the landscape so full of Kindle, any e-book startup – anybody in that space – is going to have to grow or die in Kindle’s shadow.

OWEN: Exactly.

KENNEALLY: However, there have been some startups that have done well. And you make a point of calling out two. But of course they did well by getting acquired by Amazon.

OWEN: Yes. The two startups that I mentioned are Goodreads and ComiXology. Goodreads is the social reading platform. And ComiXology is a digital comic book retailer. They were both acquired by Amazon – Goodreads in 2012, ComiXology this year.

And I think that one of the unusual things about those two companies is that they actually – they aren’t really startups anymore. They both launched in 2007. And that’s the same year that Amazon launched its first Kindle. So these companies were kind of able to grow alongside Kindle rather than having to really compete with Amazon in that same way. And then, by the time Amazon acquired them, they were fully fledged companies with users of their own already.

KENNEALLY: Well, it’s funny – you know, you can’t talk about the book business these days, Laura, without hearing Amazon almost every other word. In fact, so far, we’ve done that. It’s been Amazon almost every other word. They really are the giant to be reckoned with all of this. And so, frankly, if anyone does want to get into that space as a startup, they have to reckon with Kindle and they have to make sure that whatever they are offering is going to be supported by Kindle.

OWEN: Yes. That’s right. And I think that that’s true. I think a lot of startups have tried to get around Kindle by focusing on reading apps for IOS devices, for example, or focusing on e-books in the EPUB format, which Kindle doesn’t support. And I kind of think that there’s only so much you can do there. If your books aren’t – if your project isn’t supported by Kindle, if it doesn’t work with Kindle books, it’s going to be very hard for you to scale.

KENNEALLY: Yeah, indeed. And, you know, what’s interesting about all of this is we’ve heard a great deal about disruption across the media spectrum, but disruption isn’t the same in each of the very narrow bands. So, for example, you point out in your essay for Gigaom that the book world is markedly different from the newspaper world. For one, book publishing is doing fairly well – at least relative to the sorry state of newspaper publishing.

OWEN: Yes. You know, I think that the sort of conventional wisdom is that book publishing – big book publishing companies – are doing badly. But when you actually stop and look at the earnings reports coming out of these publishers’ parent companies – the ones that do release those, at any rate – you can see that these companies are actually doing pretty well – that their profits are increasing, thanks in part to e-books, even if their revenues are flat.

It’s not as if they’re sort of like wildly runaway successful. It’s not massive growth. But they are not – I would not say that they are dying, as a lot of people might argue.

KENNEALLY: Well, it’s an interesting point, because again – Laura Hazard Owen, a news editor for Gigaom – there is a conception of book publishers – the big five and others – as being dinosaurs – you know, part of an old world that is on its way out. And you argue that that’s far from the truth, and you cite some examples where people have learned that the hard way – in particular, for example, Inkling.

OWEN: Yes. So something that I thought was really interesting about Inkling is that Inkling – for those people who aren’t familiar with it – it’s a startup. It’s based in San Francisco. It started out as a digital textbook publisher, so a much more consumer-facing business, with a platform that could publish interactive e-books – not just textbooks, but cookbooks and how-to guides and things like that, first for iPad and then gradually for other platforms.

And so it started out as this company that was basically going to sell e-books to consumers. And it recently semi-announced that it’s phasing out that business – that it’s going to focus on providing a publishing platform, providing its solution to publishers instead.

And the CEO of that company said, basically, we came in, we had ideas for these publishers, and we had to actually – in order for our company to work out, we actually had to sit back and listen to them – listen to what they wanted, not sort of foist what we wanted onto them. Otherwise, we weren’t going to be able to work with them. That’s something that a lot of startups might be faced with.

KENNEALLY: Right. And I think that’s a really good point. You know, in my own discussions with people in book publishing and with startups, Laura, I’ve heard that said – that, at least on the book publishers’ side of things, they could take meetings with these kinds of companies all day long, and there would still be others waiting outside the door to talk to them at dinnertime. So there’s quite a number of these. And they all want to rewrite the publishers’ business. And the publishers’ question is why should I do that?

OWEN: Right, exactly. And they want the publishers’ content. You know, they see these great authors that traditional publishers are still publishing. And they want that content for their platform. And I think a lot of publishers don’t really see why they should give it to them.

KENNEALLY: Yeah, I can understand why they would think twice with that. You know, we are chatting right now with Laura Hazard Owen, a news editor and reporter on book publishing for Gigaom. And we’re looking at the world of startups in the book publishing sphere.

And, you know, social has been a buzzword across the media landscape for some time now, of course. And you make a point as well that this effort to make reading social runs up against roadblocks every time too.

OWEN: I definitely think that any efforts to create sort of a separate social platform for reading – we’ve seen startups, for example, try to focus on letting readers interact with each other within the margins of an e-book or comment in an e-book and share their comments with others.

I really don’t think that there is a need for these separate social platforms just for books. I write in my article that I think that social is social and that readers are using existing tools, like Facebook and Twitter, to discuss books with other people. I don’t think that they need or want a service that is just for books.

KENNEALLY: I think you’ve got that one right. There are a number that come to mind that have made that effort to sort of establish a platform, and I’ve always sat in the back of the room at those presentations and, again, wondered why they would work so hard at something when there already is a Facebook.

OWEN: Yes, exactly.

KENNEALLY: Yeah. Well, there is one area that again has shown at least there’s been a promise that it will come to fruition at some point for quite some time. And that’s subscription services. And you end your piece on something of an up note for an otherwise very pessimistic report on this particular field. And you see some promise, some opportunity in the book subscription services – what everybody calls Netflix for books.

OWEN: Yeah. So I do see promise in two, and they are Scribd and Oyster. They’re both offering readers access to an unlimited library of e-books for under $10 a month. I should note that a lot of people in the industry who I think are very smart thinkers really don’t think that these subscription platforms have much of a future, so we’ll have to wait and see if I’m too excited about them or not.

But these platforms are signing up big publishers. The only big five publisher that either of them is working with so far is Harper Collins, but I do think that more are on the way. And I think that these services may be valuable for readers who aren’t really sure what they’re going to read next. They maybe think that they’re spending too much on books already. They just want to pay one price and have unlimited access.

They would have to not be too interested in having access to new titles through these services because those are largely not available. This is mostly backlist stuff. But we’ve seen on Netflix, for example, that Netflix has plenty of subscribers without having a lot of new movies and new episodes of shows.

So this approach can work. I think that they’re gaining traction, but we’ll have to see. They’re both very new.

KENNEALLY: And you see an opportunity in an existing player absorbing one of the subscription services, because it would bring a kind of – oh, here it comes, that word – synergy to what they offer.

OWEN: I do. So I think that, if Apple were to buy one of these services, they could possibly bundle it with one price for both.

Of course Apple was obviously in hot water with the government – big lawsuit against Apple from the DOJ for conspiring with publishers, and Apple was found guilty in that case. So I honestly don’t know if that’s something that Apple could even do – if it could buy a service like this.

There’s also Amazon, of course. Amazon could buy one of these subscription services – Oyster or Scribd or Amazon could try to launch its own subscription service. It would need cooperation from publishers, obviously, to do that. And it hasn’t really worked out so far in that sense with the Kindle Owners’ Lending Library, which doesn’t have very much content from traditional publishers.

KENNEALLY: Right, indeed. Well, if any of that does ever come to pass, Laura, we’ll expect to read about it in your reporting for Gigaom. We’ve been speaking today on Beyond the Book with Laura Hazard Owen, a news editor who covers book publishing for Gigaom. Thanks so much for joining us today.

OWEN: Thanks for having me.

KENNEALLY: Beyond the Book is produced by Copyright Clearance Center, a global rights broker for the world’s most sought-after materials, including millions of books and e-books, journals, newspapers, magazines and blogs, as well as now images, movies and television shows. You can follow Beyond the Book on Twitter, find us on Facebook and subscribe to the free podcast series on iTunes or at our Website,

Our engineer is Jeremy Brieske of Burst Marketing. My name is Christopher Kenneally. For all of us at Copyright Clearance Center, thanks for listening to Beyond the Book.

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