Digital Book World: Startups Are Entering 'A New Age'

One intention of the Digital Book World conference, which wrapped up in New York City on Wednesday, was to serve as a showcase for new ideas in digital publishing. Sprinkled throughout the show’s agenda were presentations of new technologies. A presentation on Wednesday morning discussed Thad McIlroy's new report on startups within the publishing industry, along with the trends re-shaping the publishing world. The report, which was first produced in 2017, was updated last fall and now covers more than 1,366 companies. including 558 companies focused on publishing tools and a further 778 providing services, plus including companies working in emerging technologies, such as blockchain and artificial intelligence.

Jim Milliot, editorial director of PW, which published the new report, introduced the discussion, while John Warren, director of and associate professor of the Masters of Professional Studies in Publishing at George Washington University led the discussion.

“In all, the companies in the database represent $3.4 billion [in funding] raised,” said Warren. The company with the largest investment is Barnes & Noble's NOOK e-book platform, which raised $300 million (which came from Microsoft), followed by textbook rental service Chegg ($220.4 million) and content and e-learning company Callisto Media ($169 million).

"Most publishing startups are bootstrapped, said Warren. "The average investment for funded companies is $12.9 million; median is $2.3 million, and 37% of profiled ventures are no longer in business, while 10% have 'exited'—merger, acquisition, or listed on a stock exchange." OverDrive led the overall value in company, having turned over twice, first to Rakuten and then to KKR, for a total of $1.185 billion.

Startups creating original content were the most numerous in the database, followed by those working in self-publishing, retailing, e-reading and marketing.

Overall, the most dynamic category for startups has been book discovery, observed Milliot. In recent years, startups related to digital audio have also exploded. He observed that the database records several key instances in the history of startups that have had a significant impact on the the industry. Those include Amazon’s acquisitions of Audible and Goodreads, both of which grew into dominant players in their respective niches of audiobooks and book discovery tools, as well as Rakuten’s purchase of Kobo and Naver's purchase of Wattpad.

As demonstrated by the conference, there are still a wide variety of companies looking to harness innovation to transform digital publishing. Digital Book World featured presentations from blockchain book retailer Book.io, DIY audiobook platform Audiyence, and NFT service Creatokia. In one memorable presentation, Padmasree Warrior, CEO for virtual book club and social reading app Fable, offered a TikTok video in which a young woman urging her audience to 'get your book club on."

“‘Room for innovation’ differs from ‘ripe for disruption,’” said Warren, who pointed out that many of those who earlier promised to reinvent the reading experience in the earliest days of digital reading, have since disappeared from the industry. Still, there are always new ideas and business opportunities, and problems that are not easily address, such as returns. Sometimes, doing the improbable is possible. “Who would have thought that Bookshop.org could actually be viable and compete with Amazon,” he asked, rhetorically.” And “Sometimes a publishing startup may be nothing more than a website and good intentions."

And sometimes innovation looks quite conventional: Warren pointed to the success of Beehive Books, a direct-to-consumer book publisher that raises money on Kickstarter for collectible, limited editions of books illustrated by top visual artists that sell from $100 to $1,000. Earlier in the conference, organizer Bradley Metrock interviewed Alexandra Grant, the publisher, X Artists' Books, which has produced 18 books by underrepresented and female artists.

Warren was asked if his students were interested in working at publishing start ups or innovating in publishing in some way. "Every one of my students want to be a YA editor at a trade publishing house," he admitted. He then cited a student who went on to establish the audiobook program at National Geographic as one success story.

"Publishing is a stable landscape of continuous change," said Warren, by way of conclusion. “While the startup scene is difficult, and inflation and other factors are making it harder to find money, the pace of book startups is picking up again. I think we are entering a new age.”