Can Oyster, The ‘Netflix For Books,’ Be Successful?

oysterWhen Netflix launched its DVD-by-mail service, it seemed like a no-brainer business model — pay a reasonable amount of money each month and never have to go to the video store again. Netflix successfully transitioned that model to streaming video and it’s now been parroted by others, and not just in the video business. Spotify, Google, Mog, and others have launched music services based on the Netflix model. It seems inevitable that Netflix-for-e-books is the next step, but are the pieces in place for it to work?

The makers iOS app Oyster has just launched a beta version of the e-book subscription service (you can request an invite at OysterBooks.com). It charges users $9.95/month for access to its library of e-books, which the company claims is around 100,000 titles.

Oyster’s creators are looking at their service as a smart investment for people who want to spend money on books but don’t because they aren’t always happy with the results.

“You don’t have to decide, do I want to spend $12.99 on this single book?” co-creator Willem Van Lancker explains to Wired. “We want to eliminate the barriers to get you into content because we know that the most enjoyable experience someone is going to have with Oyster is finding a book that they fall in love with.”

That’s all well and good, but the big question remains as to whether subscibers will get enough variety and selection for their $9.95/month. So far, it has only been able to reach a deal with two major U.S. publishers, HarperCollins and Houghton Mifflin. It will likely require most, if not all of the remaining “Big Five” publishers — Penguin Random House, Simon & Schuster, MacMillan — to provide a catalog that makes the service tempting for the largest number of consumers.

What also remains to be seen is how comprehensive these catalogs need to be, and whether the newest and biggest titles will be a lynchpin in Oyster’s success. Netflix — and competitors like Hulu Plus and Amazon Prime’s included streaming selection — have not had to worry very much about offering the latest box-office blockbusters by offering sizable back catalogs of TV shows and movies, along with titles that were hard to find or unavailable for streaming. Will Oyster subscribers be content with waiting several months for some much-awaited new title to become available, or will they be content with a large archive of existing books to choose from?

“You will not find hot new bestsellers here,” writes GigaOm’s Laura Hazard Owen, who has taken a look at the service. “But you will find real books that you have heard of, published within the last decade, from publishers that you have heard of.”

And that may be good enough to lure in enough subscribers to make the business a success.

However, there is the looming concern about what leverage huge e-book players like Amazon and Apple might use to make it difficult for a startup like Oyster to succeed.

“[T]he all-you-can-eat subscription model is a potential threat to Amazon’s status-quo ala carte model,” writes PanoDaily’s Hamish McKenzie, “particularly when it comes to casual readers who aren’t fussed about getting their hands on the new bestsellers as soon as they’re released.”

“What’s to stop Amazon from offering the same service and shucking Oyster before it gets out of its shell?” asks CNN Fortune’s Beth Kowitt.

During its transition to a primarily streaming business, Netflix had the luxury of still operating a successful DVD-by-mail operation. This gave the company time to roll out its service, hone the catalog, and figure out what customers wanted to watch the most. Meanwhile Oyster must rely on backers like venture capitalist and PayPal co-founder Peter Thiel to keep it afloat while it makes deals with publishers and learns about subscriber behavior. If that takes too long, then a bigger player like Amazon could easily swoop in and lay claim to this relatively untouched territory.