E-Book Subscription Service Oyster Gets $3 Million in Funding, Wants to Be Spotify for Books
E-book subscription service Oyster has secured $3 million dollars in venture funding that it will use to build a sort of Spotify for e-books: a subscription service for which users will pay a monthly fee and then read as many titles as they want. Unlike other subscription e-book services, the content on Oyster will be a wide variety of fiction and non-fiction meant to appeal to the mass market.
The New York-based start-up, founded in July 2012, will be using the venture money to hire staff and invest in product development. The funding round was led by Founders Fund, a San Francisco-based venture capital fund run by outspoken investor Peter Thiel with a portfolio that includes new media, machine learning, aerospace and other kinds of companies. More than a half-dozen other funds joined the round.
Publishers have been experimenting with subscription services for e-books. Most recently, HarperCollins announced that it would license the use of some of its business books in such a service for a company called Skillsoft. Up until now, these services have mostly been specialized, focused on art books (F+W Media, parent to DBW, and Safari Books Online) or romance titles (Sourcebooks and others). Oyster intends to aim for a wider audience.
Despite the apparent opportunity, Oyster and similar companies face many challenges: Who holds the rights to publish the work in this manner? How are publishers and authors compensated for their work? And what measures will be taken to ensure the books aren’t pirated or that their value is diminished for other markets in some way?
“We try to be very thoughtful about what makes sense for both publishers and authors, and have crafted our product and model to align with that,” said the company’s CEO Eric Stromberg of himself and the two other co-founders, adding that they’re relatively new to the world of publishing. Stromberg has held positions at a start-up called Hunch that was acquired by eBay and as an advisor at venture capital fund Founder Collective; Andrew Brown, another of the co-founders, has held positions at Google and Microsoft; and the third, Willem Van Lancker, has spent time at Google and Apple.
While industry observers have said that it can’t be done, there is a very promising model for Oyster to consider emulating: The Kindle Owners’ Lending Library. The program from Amazon gives Kindle device owners who also have Amazon Prime access to read one e-book a month from a selection of nearly 200,000.
Unlike KOLL, Oyster would be all you could eat. And while the company won’t share with Digital Book World which publishers it has signed on to its service so far, it said it will be focused on quality over quantity.
“The most important to us is the quality of our library. We want to set the expectation that if it is on Oyster, it is worth reading. To that point, we are being selective about the books and genres on the platform,” said Stromberg.
The company has no planned launch date yet but interested readers can submit their email for updates on the company’s site.
The functionality of the product will be optimized for the iPhone, said Stromberg.
“We want to be the best way to read books on your phone, and think phone reading is a big opportunity, especially on the discovery side of things because it is with you all the time. What excites us is the idea that you could be 20 minutes early to a coffee meeting, take out your phone, and discover and start reading your next favorite book,” said Stromberg.
Smartphones are the most commonly owned e-reading device in the U.S. Nearly half of U.S. adults own one. By comparison, about a fifth of U.S. adults own an e-reader and about the same proportion own a tablet computer.
Related: Do You Read E-Books on Your Phone?