Everything You Need to Know About Book Industry Startups
The book industry has traditionally been technologically averse, with a relatively small number of customer facing changes since World War II. In the mid 1990s, people started buying books through online retailers like Amazon. A few years later, the e-book was launched, which introduced a new way of reading. As new technologies increase the possibility for innovation, companies are constantly finding new ways to interact with their consumers.
This article is a follow up to Essential Facts & Figures About the Book Industry.
Today, a user can read an e-book on their smartphone, or listen to its audiobook format from the same mobile device. Naturally, a big number of companies are eyeing to monopolise these popularized formats, but before we jump into the meat of the action, let’s take a look at the bigger picture.
The Landscape in Numbers
The below numbers are from a 2017 study: “An Authoritative Look at Book Publishing Startups in the United States” by The Future of Publishing, which covers the industry starting the mid 1990s.
According to The Future of Publishing, there have been 890 book-related startups that tackle different areas of the industry. All of these startups have accumulated a combined investment of $925 million USD, with only two receiving the bulk of this capital: Wattpad, an online storytelling community with a $67 million USD investment; and Scribd, an e-book and audiobook subscription service, with a $48 million USD investment.
Among the 890 book startups, there have been two IPOs (Initial Public Offering - which mean they have successfully transitioned into publicly traded companies on the stock exchange). In 1999, the first book startup to go public was the anti-pirating company Digimarc. Digimarc specializes in piracy-deterring technologies by asserting ownership of digital content through digital barcodes, which helps in limiting illegal e-book downloads. The second book startup that followed suit was Chegg, a textbook renting and selling service. This happened a staggering fourteen years after Digimarc first went public.
What Sectors of the Industry Are these Startups Targeting?
When thinking about innovation in the book industry, consumers tend to automatically think about e-books and audiobooks. This might be linked to the fact that these innovations are mostly consumer facing. Interestingly, of the 890 startups listed by the Future of Publishing, only 43 are related to the e-book industry and 12 to the audiobook industry. However, the two book startups that have had the most successful buyouts were e-book and audiobook distribution platforms: Kobo and OverDrive, which increases ebook and audiobook’s visibility for obvious reasons. They were both bought out by Japanese e-commerce company Rakuten for 330 million USD and 410 million USD, respectively.
With that being said, it is important to look at other sectors in the book industry that go beyond e-books and audiobooks. Business professionals are building book discovery startups and retail platforms, while also creating tools and services to help publishers and authors publish books more efficiently and in a more adapted way, while also developing original content around books. The majority of the startups listed in the Future of Publishing study are thinking up of new ways not only of consuming books, but also of buying, discovering, and even of publishing them. As a matter of fact, of the 890 startups mentioned, 29.2% offer new tools and services to publishers and authors, 10.3% are focused on retail, 14.7% tackle original content around books, and 8.2% are building platforms in order to help readers discover new titles.
A Few Startups to Keep an Eye On:
The below standouts were selected based on the considerable investment they have received, the impressive following they have established, or the innovative idea they’re developing.
Book Discovery and Retail
Bookstr is a book discovery platform that helps readers find books through their content and community. Whether it be through their book and author related articles, their newsletters, or online book clubs, Bookstr users are able to discover and consequently buy their next reads. What’s more, 50% of all Bookstr book sales goes toward the NGO Room to Read, which promotes literacy in the developing world. Since its founding in 2010, this book discovery startup has raised around 2.75 million US dollars, one of the highest investment drawn for startups in the same domain.
Tapas Media is an online platform and mobile application that allows writers to share bite-sized visual stories and web comics. This startup focuses on cultivating a space for illustrators, comic artists and novelists to publish their own original content online. Tapas Media has published 23,000 creators on their platform, which boasts of 2 million users and 2 billion page views. Since being founded in 2012, Tapas Media has raised 4.4 million US dollars.
Libro.fm is an indie partner program through which independent bookstores are able to publish and sell audiobooks. Since its was founded in 2013, Libro.fm’s mission is to support independent booksellers, while also making it easier for consumers to listen to audiobooks by providing a curated selection at a fair price.The startup’s website currently has an audiobook library of around 70,000 books, and has built partnerships with over 85 bookstores across the United States.
Booktrack is a startup whose goal is to enrich the e-book experience. The company has developed an e-reader technology that incorporates music, sound effects and ambient noise to ebooks. Booktrack’s mission is to turn reading into a more immersive and heightened experience by bringing together text and sound. Since its founding in 2008, Booktrack has raised 10 million US dollars.
Where does the opportunity lie?
An interesting note to keep in mind, is self-publishing. This untapped sector is currently valued at 500 million dollars. Existing publishing startup services have only been able to claim 10% of this untapped market, leaving the self-publishing sector ripe for the taking. One of these startups is Smashwords, a distributor of independently published e-books. This startup provides a range of tools and services to help independent authors and publishers release their books. The services offered include marketing, distribution, metadata management and sales reporting. However, as previously mentioned Smashwords, or other startups like it, have yet to dominate the self-publishing market.
With that being said, it would therefore be interesting to see a platform or company that is able to unite independent authors by giving them the right tool to publish and sell their own titles. What do you think? Would such a company have the potential to sufficiently disrupt the book industry’s power dynamics, while also drawing a hefty profit?
Is the real competition coming from outside?
As we have seen in this article, there are a number of startups each competing for success, and each trying to change various sectors of the book industry. However, the real competition facing the book landscape is not actually from within, but coming from outside the book industry.
There are countless sources of content, all in an arms race for audience's’ eyeballs and earbuds. Books are competing against magazines, blogs, movies, TV series, podcasts, and that’s just to name a few. As Netflix’s CEO Reed Hastings puts it when talking about the competition facing his video streaming platform: “If you think about your last 30 days, and analyze the evenings you did not watch Netflix, you can understand how broad our competition really is. Whether you played video games, surfed the web, watched a DVD, TVOD, or linear TV, wandered through YouTube, read a book, streamed Hulu or Amazon, or pirated content (hopefully not), you can see the market for relaxation time and disposable income is huge, and we are but a little boat in a vast sea.”
So moving forward, book startups need to think of new ways of creating, discovering, publishing, and distributing books in order to stand out in the already crowded content world. Entrepreneurs and book industry professionals need to ask themselves, “What form of content will people consume in the future? Will they continue to read? And how can we continue to attract new readers?”
If you'd like to learn more about this topic, make sure to check out our white paper: What’s Shaking the Book Industry: A detailed study of Print, E-books, Audiobooks and Publishing Startups Around the World.