New York-based startup Oyster just announced a new funding round, according to the New York Times. New investor Highland Capital Partners is leading the round, with existing investor Founders Fund also participating.
As a reminder, Oyster is an ulimited subscription service for ebooks. For $9.95 a month, you get access to hundreds of thousands of books on your iPhone or iPad — Android support should come soon.
When it comes to media startups, content deals are very important. For now, HarperCollins is on board, but the four other big publishers have yet to be convinced (Hachette, Macmillan, Simon and Schuster, and Penguin Random House). It’s a great service to read books from indie publishers Workman Publishing, Perseus and countless of others.
One of Oyster’s partner publishers, Smashwords, told its authors how Oyster actually structures its content deals. If a subscriber reads more than 10 percent of a book, the publisher gets 60 percent of the book’s retail list price.
These deals are very publisher-friendly, but also shows that the service counts on casual subscribers. If a reader reads more than, say, 3 or 4 books a month, Oyster won’t be able to cover the costs with the $9.95 subscription.
Oyster has integrated lightweight community features to keep existing users and differentiate itself from Amazon’s lending library, such as browsing what your friends are reading or are planning to read. The company also features titles every week.
The next important step for the company is probably to get more mainstream publishers on board. The product works — the app is well-designed and it’s a joy to browse the book library. Many publishers are convinced. Now, let’s see if signing major publishing houses is a difficult feat.