Joe Wikert's DisruptorFest

5 things we learned from the demise of Oyster Books

The news from Oyster Books was disappointing but hardly surprising. They recently announced plans to “sunset” the service in the coming months, a fancy way of saying their all-you-can-read experiment is over. It’s unfortunate, as I believe there are both a market demand and a viable business model to be found for book subscriptions.

I’ve been an Oyster subscriber since early 2014 and have been quite pleased with the service. As both an Oyster customer and a member of the publishing industry community, I offer these five lessons from the Oyster experience:

1. Unsustainable business models are, well, unsustainable – Oyster had to find a way to attract readers as well as publishers. To address the latter, they made the mistake of promising to pay publishers their portion of the full digital list price as soon as a subscriber read a certain percentage of the book. This percentage was set far too low, so publishers jumped at the opportunity and Oyster ended up losing money on subscribers who exceeded the threshold on two or more books in a month. Approximately 14 months ago I suggested Oyster (and competitor Scribd) were on borrowed time and that they had about 18 months to adjust or fade away. It appears at least one of them will disappear within that 18-month window.
2. Adjusting business models is hard – Oyster tried to address the mounting financial pressure earlier this year when they announced plans to sell books as well as rent them. Even though Oyster was hardly a household brand name, the niche they carved out was clearly defined in the all-you-can-read space. It’s nice to think you can add buying to the rental model, especially when it creates one common bookshelf for the reader. The problem though is that one company already dominates the ebook selling business, so without a compelling advantage over existing models there was no reason for consumers to buy as well as rent from Oyster. 
3. Content sampling remains broken – Everyone in the industry should applaud Oyster’s efforts to solve the content sampling problem. My wife and I share our Oyster subscription, btw. When I told her that Oyster is circling the drain her biggest disappointment is that she’ll no longer be able to explore so many new books and authors. Like many, she loved the fact that you could read part of an Oyster ebook, abandon it at any point and never feel guilty. The x% free sampling model that exists elsewhere, and sometimes barely gives you something to read beyond the frontmatter, is weak at best.
4. Think depth, not breadth – Oyster wasn’t the first all-you-can-read ebook subscription and it won’t be the last. The ones that have thrived for years tend to focus on a particular genre or audience. They don’t try to lure customers in for the low, low price of $9.95 per month and they don’t pay publishers as though the book was sold. So in addition to working with a more viable business model, they tend to focus on a specific customer and offer enough depth to keep them engaged.
5. All-you-can-read subscriptions devalue content – It’s true. When you’re only paying $9.95 per month to read as much as you want you start questioning the purchase price on $10 ebooks. If you’re a publisher and you already cringe when your ebooks are discounted to $9.95 or less you’ll feel even more uncomfortable participating in all-you-can-read platforms. Then again, re-read the previous point about depth and monthly pricing before you completely opt out of subscription services down the road.

It’s unclear when Oyster will disappear but I’m glad they at least warned us and didn’t abruptly shut down one morning. As I race to finish a couple of lengthy books I started a few weeks ago I’m hoping Oyster might grant a final wish to subscribers: Let us keep the books we’ve almost completed. Publishers have already been made whole on these so I’d like to think they would support the concept as well.

Why ad blockers will help content evolve

Ad blocking is one of the more controversial features of Apple’s new iOS release. Apple prefers to call it “content blocking”, but it’s mostly intended to block all those pesky website ads that nag us every day.

Publishers are, of course, totally freaked out at the prospect of their content being consumed without monetizing the accompanying ads. And although ad blockers have been around for quite awhile, they’ve become a front-page story because Apple now makes it so easy to eliminate ads in their Safari browser.

To assess the impact of ad blockers in web browsers I think it’s worth studying the evolution of a similar medium: Television. TV started with totally free, over-the-air broadcasts. Advertisers subsidized those shows and everyone was happy.

Then cable arrived and an interesting thing happened: Most of us were willing to actually pay for all those free channels. Why? Two reasons: Better reception and more channels, although not the hundreds of channels available today. I remember our family’s first cable connection back in the early 1970’s. We went from three fuzzy stations to approximately 12 crisp, clear ones. That wasn’t a huge increase but it was important enough for my parents to sign up for a monthly payment.

Today we have cable, satellite, etc., with ad-subsidized channels, pay channels and that wonderful technology known as the DVR; each of these have their own business models. But with website content the business models still appear to be stuck in the early cable TV era.

On the web we have access to both free, ad-subsidized content as well as content behind paywalls. As ad blockers become more mainstream it forces publishers to make a strategic choice with their free content. Some will continue what they’ve always done: offering free content and now accepting the fact that more reading is taking place without the benefit of ad impression income. Others will push more of their content behind a paywall, reducing consumption but enjoying a false sense of contentment knowing that they aren’t being gamed by the ad-blocking crowd.

Others will embrace something in between. Their content will still be free and ad-subsidized, but in order to access it readers will have to agree to view the accompanying ads. Call it the “ad blocker blocker”. Technology will be developed to display the content only if the ads are also displayed. In fact, you could argue certain mobile apps and video pre-roll ads without skip/fast-forward buttons are examples of how this is happening today; perhaps we’ll see more publishers push their free content off the web and into mobile apps where ad blocking isn’t quite as easy. Yes, solutions will be developed to override this model as well, taking the cat-and-mouse game to a whole new level. But for the free ride to continue, mechanisms like this will have to emerge to ensure content creators and publishers have the revenue stream to keep producing.

It’s an evolution and only the strong and efficient will survive. But it’s also an important step leading to what I believe will be a future with deeper content engagement. After all, if readers find your ads so irritating, doesn’t that say something about your website experience? The ad-blocking movement should be a wakeup call for publishers everywhere, forcing them to do something radical: make the advertising experience more engaging and less annoying for readers.

Rethinking your mobile strategy

Scan today’s news and you’ll undoubtedly see plenty of stories about how the majority of content is being consumed on mobile devices. In fact, you’ll probably use your own mobile device when you do that scan.

Like many of you, I read all my books on a tablet and most of my short-form content on my iPad Mini or my Android phone. Even though I spend several hours in front of a computer every day, the majority of that time is spent using productivity tools like PowerPoint, Excel and Outlook. I’ll read the occasional web page on my Mac but my phone and tablet are my go-to devices for business and casual reading.

The pundits say that publishers and content distributors need to think about smaller screens and shorter pieces of content. They’ll go on to tell you that responsive design is a must and it’s critical to granulize content so it can be read in smaller slices of time.

The oft-used scenario is someone standing in line at the grocery store. They’re bored and looking for something to do. Their phone is always with them, so how can you take advantage of that opportunity and cater to their need?

I think we’re missing a huge opportunity by simply saying existing content needs to be restructured and apps need to optimize every square inch of screen. Publishers should be thinking more about companion content for mobile, not just reformatting what they’ve already produced.

Here’s an example: I finally got around to reading David McCullough’s wonderful book about Harry Truman. Each night I read a few more pages before I go to bed. There’s no way I’d ever consider opening that ebook on my phone and trying to read it in line at the grocery store. In order to really engage I need at least 20-30 minutes of book reading time, not two or three minutes in a checkout line.

So although I’ll never read Truman at the store, I’d be thrilled to spend that time in an app that provides tidbits about Truman. Let’s take that a step further and suggest the app should offer more than random facts or stories about him; rather, it should use information about what I’ve read so far and it tailor today’s suggestions accordingly.

This app will know that I’m currently reading about the 1948 presidential election, so it gives me links and summaries of all the activities from that fall. The app also knows what today’s date is, so it’s able to provide noteworthy info from “this date in history” (e.g., September 14) as it relates to Truman’s life.

In short, the companion mobile app leads me to deeper engagement with the book I’m reading each night. Having access to something like this would only make me more excited to read the next installment of the book.

Don’t overlook the marketing opportunity this represents. Give the app away for free and promote other related titles inside it. That means tossing in samples of other related books. You might want to include other types of advertising in it as well. I don’t care how you monetize it; just make sure it truly serves as a valuable companion to the book I’m reading.

The UI for this could follow the same metaphor the Google mobile app uses. Simply tap the cards you want to want to open and swipe to discard the ones you’re not interested in. The app learns what you like and adjusts future recommendation cards accordingly (e.g., maybe you prefer more YouTube videos and less long-form articles).

Although a mobile strategy certainly needs to consider the screen size and a consumer’s on-the-go reading habits, sometimes the content’s original format shouldn’t be altered. Instead, think about the deeper engagement opportunities a companion mobile product could offer.

Direct-to-consumer (D2C) starts with building community, not owning the sale

More and more book publishers seem to be focused on building a better direct relationship with consumers. Some of these direct-to-consumer (D2C) efforts are well thought-out while others are nothing more than publishers following the crowd.

How else do you explain so many publisher sites that are simply catalog pages with the option to by print or ebooks direct? What’s the compelling reason for someone to come to the site? Even if they find the site why would a consumer consider buying direct rather than from their favorite retailer?

It reminds me of the old days when everything was driven by seasonal (print) catalogs. The accounts insisted on having enough lead-time to promote titles, so the summer titles were presented the previous fall or winter. The print catalogs were then left behind with the buyer as evidence of the sales call presentation.

Most of today’s publisher websites are nothing more than the digital version of those seasonal catalogs. And since there’s no compelling reason for consumers to discover and explore them, many of these websites are ghost towns.  Publishers create them and then wonder why nobody visits or buys.

Here’s something most D2C-focused publishers overlook: It’s virtually impossible to change a consumer’s buying habits. The larger my Kindle ebook library, the less likely I am to buy my next ebook from a retailer not named Amazon, and that includes an aversion to buying direct from the publisher. It’s that wonderful retailer walled garden phenomenon; and those walls are something publishers helped create by insisting on locking their books inside DRM.

So if that spiffy website is unlikely to generate direct sales why does it exist? If your answer is “to increase discovery”, do yourself a favor and study the results of a Google search for your top titles, series and authors. If your pages aren’t among the top search result links you’re kidding yourself with the “discovery” justification. The top results are the ones getting all the clicks.

Rather than trying to change consumer buying habits and owning the sale, publishers should instead focus their D2C efforts on building community. Publishers own the relationship with authors, so as a publisher, what are you doing to build community around your authors? What are the top three reasons are you giving consumers to come to your website?

Btw, authors are just one component. Many publishers have popular series or dominate a specific genre. What are you doing to build community around that brand or genre?

It’s OK to still offer direct buy buttons on each title’s catalog page but your D2C buy buttons should be offered alongside buy buttons for all the popular retailer sites.  That includes buy buttons for print as well. Let the consumer decide where they want to buy and don’t force them to hunt for your product on a retailer’s site.

If publishers don’t spend the time building this community with consumers, who will? The retailers aren’t going to do it. Their focus is way too broad.

So although most publishers missed out on the opportunity to go direct in the digital era, there’s still plenty of time to establish a strong consumer relationship by using your site to build and foster community. Just be sure to keep your priorities straight and focus on community first and owning the sale second.