How the 'Netflix of books' won over the publishing industry (Q&A)

The world in which people have to rent movies one at a time from a video store, or buy individual songs from iTunes has come and gone. These days, Netflix, Spotify, Rdio, and other services are making it easier and easier for people to subscribe to all-you-can-eat plans.

As slow and painful as it has been to get the media giants on board, they've come around. But not in every industry. Take the book publishing industry, for example, which has been even slower than its counterparts to move into a subscription system.

Still, even the book publishers are now finally coming around. Over the last few months, a number of services have launched that offer monthly subscription plans, and access to tens upon tens of thousands of books in return for a monthly fee. Even better, they are on board with making those titles available across multiple devices (essentially any running Apple's iOS 7), finally seeing that there's a way to make money, even while providing customers with the access they actually want.

Among the first to offer this type of system for books is Oyster, a New York-based startup founded by Eric Stromberg and two co-founders. For $10 a month, the service offers unlimited access to more than 100,000 titles, books that can be read across a number of devices, and at the reader's pleasure.

This is no fly-by-night operation. Already, it has signed up big-name publishers like HarperCollins, Houghton Mifflin Harcourt, and others. And those companies are, in turn, providing some of their biggest titles. That's why Oyster has been called the "Netflix for books."

CNET recently caught up with Stromberg, both by e-mail and by phone, and asked him about Oyster's origins, its goals, and how it will conquer the world of putting books in readers' hands. The following is a lightly edited transcript.

Q: Where did the idea for Oyster come from?
Eric Stromberg: Growing up, I was a big reader. I grew up in a household where I'd come home from school everyday, and my dad would ask what I was reading, both in school and for enjoyment. Like a lot of people, I was focusing mainly on required reading, but after college I fell back in love with reading for enjoyment. So in 2012, the idea for this came along in a late-night conversation with Chris Dixon, one of my mentors, and I was really excited to combine my passion for books with what I'd worked on for most of my career in technology.

Also, I was inspired by other forms of all-access models, like Spotify, and Netflix, and how they really fundamentally changed people's consumption habits, where you pay once and never have to think about it again. So that inspired me, and my two other co-founders.

How hard was it to get the publishers on board?This is an old industry that's slow to change.
Stromberg: Even in the little over a year since we launched the company, the world has changed. Publishers' reactions are changing as they're seeing the enthusiasm from the reading community around this. But in the really early days, it was about trying to identify who believed in this model, that it was fundamentally a better experience and that it was going to happen over time. We worked with those early adopters first and then moved our way on that spectrum of early adopters to later adopters, and certainly we're still doing that. But the fundamental benefit for publishers is that by creating this fundamentally better reading experience, we can grow the pie for the industry. That means getting people to read more books, bringing in new audiences, and if we're able to do that, it's ultimately a win for us as a company.

Clearly, there's a big win here for readers, but what is the bottom-line benefit for publishers?
Stromberg: We've worked hard to create a sustainable business model that provides value to our readers, alongside attractive economics for publishers and authors. We work directly with publishers and aggregators, and although every deal is different, we pay publishers each time a book is read, and the amount is based on the digital list price of the book.

How do authors benefit?
Stromberg: We work directly with publishers, who in turn pay their authors.

Have there been publishers that wouldn't participate? What was their rationale?
Stromberg: We're extremely pleased with the roster of publisher partners we have so far, from prestigious independents to self-publishing aggregators, and everything in between.

For readers who have to spend more than $10 for each e-book, $9.95 a month seems like a no-brainer. What are the biggest challenges to large-scale adoption?
Stromberg: We're just 4 months old, and we've seen everything from power readers who might read five to ten books a month all the way to people who read only a couple books a year. If you think about over the past year how many books you read -- let's say it's six for somebody. That's one number. There's the number of books you heard about and maybe want to read, and that might be 50, whether it's on Twitter, or a friend shared a link with you, or during dinner conversation about a book. What we're trying to do is close that gap between the books you heard about and the books you actually read. Our model is about lowering the barriers to trying out a new book, and so maybe we can bring you up to reading 15 books a year. Long term, that's our goal: create a platform that inspires you to read more books, and be valuable for all types of readers, from casual to more avid readers.

But what is the actual challenge to breaking through to those obvious customers?
Stromberg: The challenge is to get people to engage with the platform and start reading a book. For us, that means getting someone to read a book in their first month, or in their first couple of weeks. We find that if you do that, you see the value of Oyster. Maybe you see what your friends are reading, and then on the back side of that you start reading another book. But it's really getting people into that first experience.

There are others offering this service (Scribd, for example). What does Oyster offer that sets you apart?
Stromberg: We've put tremendous thought into the design and functionality of Oyster, and our customers have really responded to the positive user experience.

We're confident we have the best library out there right now. We were first to market with a Big 5 publisher -- HarperCollins -- when we launched in September. And our catalog includes titles from hundreds of publishers, including Houghton Mifflin Harcourt, Melville House, Rodale, Smashwords, Perseus, and more. Our publishing partners continue to send us new titles for Oyster on a regular basis.

Also, we built Oyster in the heart of the publishing world, New York. Being there has enabled us to build robust industry relationships. Our geographic proximity to our publishing partners also allows us to work hand-in-hand and face-to-face with them. There is no doubt to us that this is essential to building a product that works for our customers but also our partners and content creators.

What does the emergence of services like yours and your competitors say about the direction the book publishing industry is going in?
Stromberg: Our readers have been very enthusiastic about our product's mobile-centered design. Since they always have their phones on hand, we can provide them with access to books anytime, anywhere.

There's a famous stat about Netflix where almost every single title is viewed by someone somewhere on a regular basis. Is there a similar long tail with books?
Stromberg: For every book that someone reads on Oyster, they download and start four more books. This is a strong indication that people are browsing and discovering new books on Oyster just like they would in a local bookstore or library.