Book Business — August 2014
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Access Granted
Ellen Harvey

Oyster’s Matthew Shatz is working with publishers to open books up to new readers.

Today readers want more than digital content, argues Matthew Shatz, head of strategy and partnerships at Oyster. They want access. The proof of that, he says, is in the rapid rise of access models like Netflix and Spotify. Though these companies do not always have gleaming reputations in their industries— Spotify has been largely criticized for accruing cents for non-mainstream artists—their popularity among users can’t be denied.

Founded in 2012, Oyster set out to create an access model for the book industry, providing complete, digital access to its titles for under $10 a month. As of July 2014 the company boasts the largest consumer ebook library, with over 500,000 titles from approximately 1,600 publishing partners. Scribd, Oyster’s foremost competitor, mirrors Oyster’s sales model, granting access to unlimited ebooks for $8.99 per month. Scribd is also striving to close the gap in titles with over 400,000 ebooks in its library. Both platforms are significantly bolstered by partnerships with Big Five publishers HarperCollins and Simon & Schuster, the latter of which signed on in May, bringing over 10,000 of its titles to Oyster and Scribd. As the arms race between these two services heightens, not to mention Amazon’s recent launch of the Kindle Unlimted subscription service, Shatz’s role is increasingly vital to Oyster’s success.

Shatz, the lead on many of Oyster’s new partnerships, is a veteran of the publishing industry. He headed Random House’s digital strategy from 2005 to 2010, overseeing the company’s rapid expansion into ebooks. Since joining Oyster in 2013, Shatz has worked tirelessly to move publisher relations forward. Not only has Shatz signed on new publishers like Simon & Schuster and Disney Publishing, but he has partnered with consumer- facing companies, such as The Oprah Magazine, to get the word out to potential subscribers.

Below Shatz discusses why adopting access models like Oyster should be an imperative for publishers and how the next generation of readers is changing the book game.

What led to Oyster’s creation?

Based on my conversations with the three co-founders, there were three factors that when put together spelled a big opportunity.

I think one factor was the growth in mobile devices, smartphones, and tablets coinciding with the growth of ebooks. There was a huge hockey stick there on the consumer side.

I think the second thing from a consumer side was that there was a clear trend that has only grown since then—consumers really love the access model. The convenience of having content at their fingertips is really powerful for consumers, as shown by Spotify and Netflix, which had already gained some momentum.

The third factor is the publishing industry piece—a huge channel shift was going on at the time. Borders had just gone through bankruptcy and was shutting down. The Department of Justice’s inquiry into Apple was in full swing, so Apple’s place in the future of the business was very uncertain. Barnes & Noble was facing, and still is today, uncertain prospects. I think the channel shift created several opportunities for Oyster.

What solutions does Oyster bring to the industry?

Publishers talk a lot about how to solve discovery for books. Lots of retail stores are closing which is obviously the largest platform for traditional discovery. I think this model has really solved those problems. One of the stats we often share about discovery is that for every one book a user reads on Oyster, they will begin reading four more.

We’re focused now on continuing to increase discovery and there are multiple paths to achieve this. It’s getting more subscribers. It’s building an Android app so we can reach more users. There are a lot of tentacles, if you will, off of our central goal, which is to increase readership for books that otherwise wouldn’t have it. That’s what we’re focused on.

Is Oyster a better fit for a publisher’s backlist?

How long a book has been out isn’t really the central piece for us. The way we think about it is finding readership where it otherwise wouldn’t exist. The brand new John Grisham is definitely going to find its audience. There is less of a role for Oyster in that. But there are a lot of books—it could be a HarperCollins backlist or it could be a new release from Melville House—where we’re able to build an audience for that book that they wouldn’t get otherwise.

A lot of our largest publishing partners see roughly 70% or more of their books get at least one sale over the course of a month. The sales pattern tends to be very spread out on Oyster, which is an indicator that we are driving sales of books that otherwise aren’t getting attention.

How does the commission work for publishers?

The core is that we pay a publisher or a supplier when a book is read, and “read” is defined as going past a certain threshold. That’s what we serve out. It is our core model, but not every deal is the same. We do other deals that might involve different types of economics.

What would you say to publishers with concerns about undercutting the value of their books?

The first thing I’d say is that we’re seeing incredibly rapid adoption from publishers. We’re up to 500,000 titles.

Second, I would say that many publishers realize that it is in their interest to reach the next generation of readers, and there are more and more readers who want to read and consume through this access model. If you want to reach that audience, having great products out in the marketplace that serve the needs of those readers is really important.

As a sidebar, in my mind it is somewhat analogous to where ebooks were in 2008. The Kindle was out, it was gaining some traction, but it was a small piece of the business. Still, it was clear that readers wanted it. I think publishers then may not have loved every aspect about ebooks, but they came to realize that they are far better off with products like this that allow readers to consume in a mobile way.

What stats do you have on the average Oyster user?

It is fair to say that we definitely skew younger and more male than the other leading ebook platforms out there. On average, Oyster users are reading 45 minutes a day, and they are using the iPad and iPhone fairly evenly to consume content— about a 50-50 split as far as time spent on each device.

Is the publisher-reader relationship changing and how is Oyster part of that change?

I spent five-plus years running the digital business at Random House. I have a good handle on the publisher’s view. Publishers have initially been focused on a) knowing what readers want and b) ensuring that writers reach the widest audience possible. I think that is unchanged in the digital and mobile world for publishers. Those are still the core things they do, but how they do that has changed a lot.

One place that Oyster fits into that is we are going to be in the position to share a lot of interesting data with publishers, and we are going to do a lot more of that going forward. Analytics are a huge part of a publishers’ business going forward, and in a consumer-oriented world, publishing must be an analytics-focused business.

What sets Oyster apart from other ebook subscription platforms?

Honestly the number one thing is that we really have the best team. The people here are incredibly committed to executing at the highest level every day.

I would also say that our library is ahead of anything out in the marketplace. When you look at the reports, in the last few months 50 of the 100 bestsellers were only available on Oyster. We are starting to gain quite a lot of traction with publishers to gain their books exclusively on Oyster.

What’s next for Oyster?

We are building our Android product, which is a huge project for us and will have a lot of implications in terms of the potential reach we have. We will do a lot of fun things around that when we launch this year. [Editor’s Note: On June 17, 2014, after this interview took place, Oyster launched the Oyster app for Android, Kindle Fire, and Nook HD.]