Home » Ebook Subscriptions, Royalties » Oyster Launches Spotify for Ebooks

Oyster Launches Spotify for Ebooks

6 September 2013

From Digital Book World:

Oyster, the highly anticipated, venture-backed ebook subscription platform for iPhones launched today. The app is available for iPhone devices and will soon be available on other platforms, including the iPad this fall and, later, Android.

The company is launching with 100,000 ebook titles available from publishers such as HarperCollins, Workman, Houghton Mifflin Harcourt and self-publishing distributor Smashwords. The service will cost $9.95 a month to read an unlimited number of books on up to six devices. The number of titles offered through Oyster will be “increasing over time,” CEO Eric Stromberg told Digital Book World.

. . . .

The company declined to share its business model, however — just how authors, publishers and other stakeholders are compensated for making their titles available. The company leadership only told Digital Book World that the model was a “win-win-win,” for rights-holders, readers and the company and its investors.

“It was a very hard problem that involved understanding the needs of authors, publishers and consumers,” said Stromberg, citing that he believes Oyster has it solved due to months of strategizing and in-house know-how from employees like Matt Shatz, who had been a vice president of digital at Random House.

. . . .

One enticing proposition for publishers around this new distribution model is the possibility of exposing readers to new authors and new books they may not discover anywhere else. Oyster, for instance, will use a combination of editorial, social and algorithmic recommendations to suggest new titles to readers.

Link to the rest at Digital Book World

PG generally likes new technology and business models, but declining to disclose how authors will be compensated makes him very uncomfortable. Generally new tech startups are anxious to explain how everybody wins under their business models.

Is Spotify secretive about how musicians are compensated? No. Here’s the link.

Ebook Subscriptions, Royalties

27 Comments to “Oyster Launches Spotify for Ebooks”

  1. Makes you wonder when Oyster ran the numbers whether they turned out less generous than the KLL pool.

    • For all we know, they pay a monthly licensing fee. If they don’t share, we don’t know.

      • Maybe they’ll go off the new Definition House model…


        We haven’t quite figured out financials, operating capital and accounts payable just yet so after you sign everything over to us for the book you paid to edit, design and market we’ll publish it as our own property and you’ll just have to wait and see what happens.

        Ok, I’m being cynical but if Coker says it’s a good deal it probably is. And since few good things are said about iBooks it sounds like a needed app.

  2. :bewails: I have been waiting for exactly this and it’s only available on iPhone? :sighs: Must wait until it’s available for desktop. :glum sigh:

  3. Dan the writer is all like, “???”

    Dan the reader is interested. Once it comes to Android, that is.

  4. “…the model was a “win-win-win,” for rights-holders, readers and the company and its investors.”

    Does anyone else see 4 entities listed, but only 3 Wins showing? Perhaps they were being more honest than they realized?


  5. Smashwords has some more detail from their blog: http://blog.smashwords.com/2013/09/smashwords-signs-distribution-agreement.html

    I expect Smashwords titles to begin shipping to Oyster in about three weeks. At least 72 hours before we begin shipping to Oyster, I’ll send out an email alert to all Smashwords authors and publishers. The email will contain complete financial details, including royalty rates and sampling thresholds, so you can make an informed decision about your participation. It’s an author friendly deal so I expect you’ll be pleased.

  6. Very curious to see how this plays out. I like the notion more as a writer than as a reader…I read an awful lot, but the chances that they have $10 worth of stuff I want to read every month ain’t so great. At least for now. Plus I don’t use iGadgets.

    So on the writer side: I wonder whether the royalties will take the ebook sale price into account. I’m sure Smashwords will allow some form of opt-in or opt-out, but will they be set up for separate pricing (as they currently are for libraries)?

    Some of us use freebies to get people interested in our stuff. And right now I’m kinda creating an avalanche of ‘em (or maybe my very own tsunami of …?). But I see no advantage to distributing freebies to Oyster–as freebies. ‘Specially since I’m trying to use the free stuff as a lure for my blog and mailing lists anyway.

    Will the book recommendations take the cost (to Oyster) of the books into account? ‘Cause that’s clearly to their advantage and an argument for including freebies. But readers might not like it.

    They could sidestep all that by paying a flat sort of “royalty” for whatever the readers read. Or will it be based on word count? What about illustrations? (Maybe we’ll finally find out whether they’re worth a thousand words apiece!)

    OTOH all my stuff’s free for libraries if they want it. So…hmm. There’d be lots to think about if we had more info.

  7. Okay most likely they will base the payouts on a worse case scenario.
    A) Everyone in the pool gets a pinch, regardless. So if the company takes $0 and we round the $9.95 up to $10. Then with 100,000 books, each book earns a net of 1/100th of 1 cent. Did I mention that the company will take a cut to stay in business, as will the publisher…who will take the lion’s share. As such, I’m thinking that Scenario A is out.

    B) Payouts are based on the maximum expected reading per that month. So a fast reader can read a book in a day. 30 Days to a month, thus 30 books. $9.95 per reader, less Oyster’s cut, divide by 30…and it’s very little. If Oyster only took $0.95 off each reader that leaves $9.00 for 30 books. That leaves $0.30 per book, before the publisher takes the lion’s share…then the agent takes a cut of the leftovers. That’s a pretty glum payout too…

    C) Payouts or on a per borrow basis and collected out of a general pool. Assume the average reader only reads 5 books a month, though note this service is going to appeal mainly to people who read books like fish drink water. $9.95 to start. Oyster is feeling charitable and only takes $0.95 per subscriber for itself (yea right). $9.00 remains in the pool per user, average user borrowing 5 books. That’s an average payout of $1.80 per book. Then the publisher takes their cut, if its a traditional publisher that will probably be at least 70%. Being generous assume that $0.50 remains. If your agent is between you and a publisher at the standard %15, that’s 8.25c gone…hope they round down, not up. If they’ve rounded down you’ve got $0.42 left per book, provided there are no other hidden fees. This seems to be the most profitable scenario and you’re still going to need a day job.

    Now to be evil and compare KDP 70% of a $2.99 book sold, not loaned. That would be about $2.09 per book. Does anyone else see why there where only 3x “Wins” in that statement…not 4?
    (Edit: Typos, sorry)

    • Good math. 42 cents per book is what I received from Crimson Romance’s subscription service. And look! Crimson is involved in this too.

  8. As a reader I might be interested, though reading only on my iPhone is something of a draw back. I do read on my iPhone, but I much prefer my Kindle, iPad and Laptop. Perhaps this is one way they intend to limit the amount of content that their subscribers can consume.
    However it’s academic as I live in Ireland and they are launching only in the US.

    As a writer I publish/distribute through SmashWords so my books might be included in the service, even if I can’t actually subscribe to it as a reader. I say might because as PG points out they’re not telling anyone the terms. SmashWords have always paid a good royalty with no limits on price or geography*, so I am expecting them not to be recommending a bad deal. However there are several scenarios that might please me as a reader and worry me as a writer. For instance there are many short stories on sale on SmashWords (and amazon, etc) priced at $2.99. I personally won’t pay $2.99 for a three thousand word story, but if I were paying a flat fee then I could read as many as I like. Let’s say that I read one a day for thirty days that’s $87.90. SmashWords currently pays 85% royalty on sales at their site. So that would mean a payout to the authors of the 30 Short stories of $76.25. Meanwhile I’ve only paid Oyster $9.95. Is this a sustainable business model?
    And that example assumes that I only read one such short story a day. I could easily read more.
    So the only conclusion I can make is that authors are going to get a much smaller royalty, or some kind of cut from a fixed fund based on the number of reads of their books. Either way a lot less money than for a sale.

    * Unlike Amazon which drops to 35% for prices below $2.99 and for most countries in the world.

  9. I think from a reader perspective this is the only way to do it- flat fee, all you can read, for a reasonable monthly cost. I personally will not sign up as a reader bc there are more months than i care to count wherein i don’t have time to read one big-pub 9.99 book, much less the 3-5 self-pubs, that i would have to consume each month to have the service pay for itself. That said as a writer i love the prospect and barring horrendous terms will enroll my books in it. Curious what comes from smashwords when they send the opt-in email.

    • Smashwords already signed me up for all my ebooks w/o asking. I figure they mean well, but I may not end up agreeing with that choice. I hope I do, though.

      ‘Course if I do end up using Oyster I’d rather not have a third party standing in between (all else being equal, which it may not in fact be). So I emailed them to see how they respond to me, an author acting on my own behalf. Might tell me something about the company.

      • I went to my Smashwords account and opted my books back out of Oyster, for now. When we get details on exactly how the money works, if it looks like a decent deal, I’ll opt back in. I don’t mind having wider distribution and visibility, but I’m not desperate enough for those to let myself get taken advantage of.

        As for going through Smashwords instead of direct, I don’t mind that as long as I know what the deal is and, at least from what I’ve heard about Barnes&Noble and Kobo, Smashwords is a lot easier to deal with from my end. I’m not holding out hopes that Oyster will be any easier.

  10. Who opts in to a program without knowing any of the details of how they’ll be compensated?
    I suppose it’s some of the same people who willingly sign over 15% of earnings for life plus 70 years.

    • Did you notice the part about Smashwords auto-choosing “opt in” for everybody using their service? At this point we’d have to opt out.

      I think the idea is that you have to opt in to Smashwords emails (sent 72 hours in advance, this time, we’ve been promised) or you can find yourself signed up for stuff you may not have actually chosen. Which isn’t so cool–OTOH Amazon sends me a way-spammy KDP “newsletter” from time to time and the “unsubscribe” link doesn’t actually work at all (didn’t even have one till recently), so…


      I’m still hoping Oyster gets back to me directly. But if they had a standard email for authors I think they’d have sent it already. I didn’t even get an auto-reply saying they’d received the email. Since those are awfully easy to set up…hmm. What else aren’t they doing that might strike outsiders as obvious steps?

      • I contacted them yesterday and they got back to me about a few things. I don’t know what you asked, but my questions were geared towards potentially going direct with them (will they have their own publishing platform like other places, or do we need a distributor to get on their site?), potential royalty rates, content restrictions (if any), if they were planning on adapting to the Android/Google Play market, and things like that. I did mention that I heard about them through the Smashwords news release, too.

        They got back to me relatively promptly (5 hours later, but it was midnight, so that’s pretty impressive to me), and…

        They literally didn’t answer any of my questions. They said that Smashwords could tell me the details of payments and all of that. I contacted the email address they specifically mentioned for “Publishers and Authors that want to work with us” on their About page, so I figured they… actually wanted publishers and authors to want to work with them?

        No, apparently not. The one thing they mentioned that kind of answered one of my questions was that they don’t currently have a publishing platform that would allow me to go direct (in which case I honestly wonder why they have an email specifically for authors/publishers to contact them? Why not just say you can get on them through Smashwords or similar?).

        I understand if they want to remain tight-lipped about some things, but payments to the people that will literally make up the entirety of their service is not something they should be tight-lipped about.

        The Spotify reference is kind of bad, too. Spotify pays the artists pretty poorly, but then they make up for it in bulk listening, because who listens to a song only once? Netflix is notorious for paying really poor licensing rates for what they buy (I’ve read about indie film makers getting -maybe- a few thousand dollars for Netflix to have the rights to stream their movie/content to unlimited viewers for multiple years. Considering the costs of making a movie, the producers probably barely make even on the deal). Netflix also doesn’t accept wide distribution and will decide if they want to buy rights or not, so it’s not really the same.

        I’m opting out all of my books except for freebies and $0.99 loss leaders, because the point of those isn’t really to make money, anyways. Presumably anyone with the Oyster app can then go buy the rest of my books on iTunes, since it’s iPhone specific at the moment. That’s fine with me, I guess.

        How sustainable is that, though? How long are they going to be able to keep up a business model where it’s more than likely just “teaser” books, first in a series, loss leaders, etc.? Would anyone pay $10 a month to watch unlimited movie trailers?

        I may change my mind depending on royalties. KOLL is ~$2, but they manage that by only offering one free borrow a month. I’d probably be willing to take ~$1 (after Smashwords takes their cut), which is still a steep drop, but I’d also probably not opt in a lot of my newer stuff and keep it more towards my backlist.

        Either way, anything I do is not going to be because I like Oyster or their business model. They don’t come across as very professional or caring towards authors. They have an interesting idea, and a pretty looking app, but other than that, I’m not impressed or excited about them. Any decisions I make will be strictly business, as opposed to actually feeling excited and invested.

      • Yet another reason to keep my books out of Smashwords. On top of their 10% cut.

  11. An interesting development, but I don’t like how little information is available. I opted out today until more comes out about it. I do not like that I was automatically opted in on something like this.

  12. Thanks, PG and TPV visitors! I somehow missed this and would have continued opted in unknowingly. Just visited Smashwords to opt out. I want to know the specific terms before I opt in!

  13. Wow, Smashwords is signing people up without their direct permission and without clarifying terms first?

    That’s wrong. That’s the kind of move toward an author that I’d expect from a Big 5, not Smashwords.

    As for Oyster not being transparent with terms, I am sick to death of people trying to manipulate authors.

    • To be fair, though, they do that with every new distribution point, not just Oyster.

      Oyster doesn’t want to share up front what its terms are (unlike any other distribution service I know of). So until I know what they are, I don’t want them to automatically distribute there.

      I’m sure Mr. Coker means it when he says he finds the rates fair to authors. I’m sure he’d be the first to go to bat if they weren’t. But under what context are they acceptable? And would I be willing to sign up under that context?

      For all I know, it’ll operate just like KDP Select, but without the exclusivity. In that case, I’d probably give it a few months to work out the kinks and then opt in based on the response from authors. If it’s an even weirder model, I’d probably wait even longer. And if they’re still pulling veils over the exact nature of payout, I won’t opt in at all because it leaves plenty of room for cooking the books and less for paying the authors of cook books.

  14. Thanks for letting us know (especially you in the comments who mentioned we’re automatically opted into the program).

    Will wait and opt back in if I like the terms.

  15. Just an FYI for those few who may care- Oyster is indeed a “closed reading environment” per Mark Coker in the comments here: http://www.blogger.com/comment.g?blogID=7436915084701775452&postID=2824469926554910399

    Lots of people will find that reasonable for a subscription service, and it may be inescapable for one that charges readers based on the page-count read. I’d think a DRM-free download of any ebook read all the way through would be possible, though…and if Oyster makes that possible I may well opt back in.

    FWIW I have my own ideas for subscriptions that use trust/goodwill in place of intrusive/exclusive tech and reliance on threats employing current IP law, which I may even try out in a few months. Maybe it’ll work out, and maybe not.

    Anyway. I’m opting out of Oyster regardless of the financial stuff to be disclosed, ’cause I don’t want anybody to ever get hassled for something as innocuous as converting one of my books to another format. Also I discovered (maybe you guys already knew?) that Sony applies DRM to ebooks distributed via Smashwords, so I’ve opted out there too. I had the price for everything set to “free” for libraries…but DRM. Hmm. Opted out there too, now.

    For all I know I’m the only person who feels this way about DRM & legislation making its removal illegal (which does not appear to me to take the copyright holder’s view into account). But that’s okay; I’ve been diagnosed as weird in other ways too.

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