Posted on December 10, 2013 in Archive

Big publishers should be investing in startups

10Dec

Netflix for ebooks. It’s a term that we’ve bandied about before – paying a regular subscription fee to receive ebooks whenever you want, wherever you want. It’s a concept that has mainly been floated by publishing startup companies, but now some of the “Big Five” are starting to sit up and take notice.

“The Big Five” consists of HarperCollins, Macmillan, Simon & Schuster, Hatchette, and Penguin Random House (it used to be Big Six, I guess, but that didn’t sound as good). Now that subscription services like Oyster and Scribd are taking off, HarperCollins has decided to start offering their backlist to these companies as a kickstart of sorts. Newer titles not included in the backlist will be available to read upon individual purchase. So far, they are the only ones to do so for a subscription service. I’d like to know – why? I thought gangs were supposed to stick together.

This subscription business has worked incredibly well in other formats, so that might be a factor in the HarperCollins decision to invest. Netflix (along with YouTube) accounts for half of the Internet traffic in the United States, and Spotify is also incredibly popular.

It may not look like much is happening between the bulk of publishers and startups, but there are small signs of movement. Corporate venture arms of big publishing houses are sometimes prompted to invest if startup companies impress in a meeting. The evidence is definitely there that publishers are looking for startup companies as a way to innovate the business and image of the Big Five. Random House had a go at mobile gaming with physics based game Catch the Berry, while Macmillan New Ventures is an initiative aimed at buying and developing technologies for educational products. However, HarperCollins is still the biggest (which perhaps should mean loudest in this instance) investor in new business models.

Liquid State - Big Publishers

Scribd claims to be the first digital library in the world – a claim that HarperCollins is keen as mustard to get in on.

Then again, some people feel that these days it isn’t such an issue if big publishing houses don’t invest in start ups like these from the ground floor. Mike Shatzkin champions this argument – at any stage of development or operations, if a Big Five publishing house offered to invest wads of cash in your business, you’d accept. Which unfortunately means that these startups will spend a lot of time floundering in the Sea of Startups before landing on the Island of Successful Businesses.

I, the good people of Twitter, and our CMO Kit, don’t think that’s what’s happening though. Earlier this month Kit wrote an article for Citizen Tekk, explaining why big publishers like the Big Five need startup companies. Turns out he was right on the mark, according to the Chief Digital Officer at HarperCollins, Chantal Restivo-Alessi. In a recent article on Mashable, she was quoted as saying “If you are early, you get more leverage… You can have a bit more say on the terms because you got a premium for being there early.”

HarperCollins certainly is aiming to get in early at a lot of places. In addition to Scribd and Oyster, they are also showing interest in experiments like Inkling (which they hope will enhance HC’s digital publishing platform) and Curriculet, in order to test the concept of renting ebooks to schools that also allow teachers to enrich texts by inserting their own learning materials such as quizzes, questions and media.

Like Kit said, HarperCollins seems to realise why startups are becoming so important. Currently Amazon is the only company able to to provide an ebook subscription without the assistance of one of the Big Five – so supporting potential rivals like Scribd and Oyster is a clever move that other members of the Big Five should be aware of.