By Simon Dunlop, CEO, Bookmate
Simon Dunlop, CEO of Bookmate
Oyster was a great, purist reading experience for its customers, but it was a deeply flawed both as a product and a business model.
Being U.S. East Coast–centric, it was taking on Amazon’s more sophisticated readers who expect the widest possible selection of books just a click away — but not all the major publishers were on board with the subscription model, and this was always going to be an issue. Oyster’s move to include a retail pay-per-title offering alongside its subscription earlier this year sounded the death knell as they struggled to increase their catalogue by any means possible.
On the product side, Oyster lacked the social and viral features which, in Bookmate’s experience, are an essential part of the mobile reading experience.
But mostly, it was the publishers that killed Oyster, where there was never much interest in seeing it succeed because it challenged their existing and highly profitable ebook business model in their home market. Many publishers in the U.S. live in fear of the commoditization of ebooks and view subscription as the catalyst in a price race to the bottom for their titles.
U.S. publishers mostly sell their titles on traditional pay-per-download (PPD) terms which are financially unsustainable within a subscription service and put the publisher at conflict with the service: the more books that are read, the more money the subscription service loses. (Witness the recent move by Scribd to delist most of their romance titles and set a cap on monthly listening to their audiobooks.)
From our experience subscription is not a replacement for existing reading options, rather an incremental channel that attracts primarily a younger and mobile audience. The value proposition for the reader is different and requires a different approach and business model for publishers to really reap the benefits. In particular, as ebook sales stagnate in the U.S., subscription is the optimal way of reaching English-language readers in non-U.S. markets.
Given more time and data, I expect publishers will better understand where subscription fits in the overall landscape of reading options and will agree a different and more sustainable commercial model. Bookmate has seen its subscriber base grow 7x from 2014 to 2015 as we have added new markets and distribution partners, and the active subscriber base will surpass 300,000 this year. There is a big, healthy market out there to address, given the right product and partnerships.
Oyster’s demise is a pointer to both publishers and new ereading startups to get incentives aligned and make sure you are building something actually innovative and not just beautiful.