Oyster, the Netflix of e-books, launching online store to take on Amazon

The e-book market has a new competitor, but it'll likely be overshadowed by Amazon's dominant Kindle platform.

Nick Statt Former Staff Reporter / News
Nick Statt was a staff reporter for CNET News covering Microsoft, gaming, and technology you sometimes wear. He previously wrote for ReadWrite, was a news associate at the social-news app Flipboard, and his work has appeared in Popular Science and Newsweek. When not complaining about Bay Area bagel quality, he can be found spending a questionable amount of time contemplating his relationship with video games.
Nick Statt
4 min read

Moving beyond e-book subscriptions, startup Oyster will now sell digital titles outright in a bid to rival Amazon. Oyster

Oyster, a subscription service for e-books that launched a year and a half ago, is expanding into online retail with an e-book store set to spar with Amazon's.

Until Wednesday, Oyster only sold consumers a subscription book service for $9.95 a month. But with questions remaining over the popularity and viability of e-book lending services, Oyster is expanding into selling individual books, with hopes of attracting new customers to its service.

Oyster says its efforts come at an auspicious time. In the past year, book publishers have begun setting prices evenly across the e-book market. With similar pricing, customers will choose their store based on something else, like the look and feel of a service and its ease of use.

"You'll have to compete on other things like discovery and design," said Oyster CEO Eric Stromberg, who added that titles on his company's store will often cost between $9.99 and $14.99 apiece, similar to Amazon, Apple and other digital book sellers.

The question now is whether Oyster can make a dent in Amazon, a juggernaut in the e-book industry, estimated to lord over more than half the US e-book market and even more abroad. Both companies represent an inevitable future for books that are not printed on paper but downloaded over the Internet to singular devices like Amazon's Kindle e-reader or Apple's iPad tablet. The question is how we get there, and which company will ultimately be the one selling to us.

Though Oyster users can read on a variety of devices from smartphones to tablets, the one gadget left out may be the most important: Amazon's Kindle e-reader. Oyster

That's still unclear. Unlike with music and television, Oyster's e-book subscription model, which was somewhat novel when it launched, has done little to supplant traditional book sales, mostly because binge-reading is harder to do. Binge-watching an entire season of Netflix's political drama "House of Cards" in a single weekend, on the other hand, is much easier.

Yet Oyster did make early headway within the book industry by signing up three of the five biggest US publishers, amassing a library of more than 1 million titles. But even these publishers have chosen to wait as long as six months to release their newest titles on subscription services like Oyster. There's another hitch: Oyster users can only access the service through an app for smartphones, tablets and computers -- but not Amazon's popular Kindle e-reader. (Oyster does have an app for the Amazon's Fire tablet, though).

That hasn't been enough to convince customers, who are flocking to other subscription services like Netflix (for movies and TV shows) and Spotify (for music), but are shy to sign up with the equivalent for books. Even Amazon, which last year launched its own subscription service called Kindle Unlimited, has declined to discuss how well its service is performing. The subscription model has also garnered the disdain of some of publishing's biggest names.

"'Eat everything you can' isn't a reader's mindset," Penguin Random House's CEO Tom Weldon said at the UK's Futurebook conference last November. "In music or film you might want 10,000 songs or films, but I don't think you want 10,000 books." Hachette CEO Arnaud Nourry was more blunt, calling an e-book subscription service an "absurd" and "flawed" idea catering to an "infinitesimal minority" of people who read more than two books a month.

With its e-book store, Oyster has been able to set agreements with a majority of the traditional book industry and may grow into a larger threat, one Amazon may start paying closer attention to. Oyster will still continue to expand its subscription service as well, which it plans to offer at the same price after its e-book store opens.

Wasn't possible a year ago

Prior to a year ago, Oyster would have had a much harder time offering an e-book store. Why? Because Amazon used to have much more negotiating power over e-book pricing.

With Amazon controlling, by some estimates, around a third of the US book market and more than half of all e-book sales, publishers can rarely afford to ignore the platform. Amazon also had the law on its side.

Publishers went so far as to violate antitrust laws in dealings with Apple's iBooks store starting in 2010, and Amazon's victory in the antitrust case that followed sparked a turning point for e-book pricing that ended up solidifying its business model.

But a bitter six-month dispute last year over e-book pricing with French publisher Hachette upset the market, and effectively led to publishers having more power to set their own prices. That means Amazon won't be able to use its financial might to reduce prices below what Oyster and other competitors can afford.

Even with these changes, Oyster still faces an uphill battle. Its service doesn't run on Amazon's popular Kindle, and the company doesn't offer its own e-reading alternative. Anyone hoping to read Oyster books must own a smartphone, tablet or computer, and read from the same screens they use to respond to email and watch cat videos on the Internet.

There's also public libraries, most of which offer e-book borrowing for free. Even in the age of the e-book, lending still beats buying.