November 21, 2017

Oyster Shuts Down; Perseus for Sale | PubCrawl

Francine FialkoffOyster, the $9.95 all-you-can-read monthly ebook subscription service that came on the scene in 2013, quietly announced on its blog that it “will be taking steps to sunset the existing Oyster service over the next several months,” according to tech news site Re/Code September 21.

A competitor to the previously launched Scribd ($8.99/mo.) and to Amazon Kindle Unlimited ($9.99; mostly self-published authors), Oyster had deals for ebooks with several Big Five publishers but was the smallest of these three services and never gained the same traction.

In their blog post, the Oyster leaders, CEO Eric Stromberg and cofounders Andrew Brown and Willem Van Lancker, stated, “We believe more than ever that the phone will be the primary reading device globally over the next decade…. Looking forward, we feel this is best seized by taking on new opportunities to fully realize our vision for ebooks.”

The “new opportunities” they refer to, as Re/Code also reported, include the departure of Stromberg, Brown, and Van Lancker to Google Play Books, an online bookstore. Gary Price on LJ’s infoDOCKET posited that “Google [could] launch/rebrand Oyster to compete with Scribd and Amazon’s Kindle Unlimited in the ebook subscription space.”

In reporting on the shutdown, Wired reinforced such speculation: “It’s unclear whether Google is planning to launch an ebook subscription to compete with Amazon, but the hiring of most of Oyster’s team should at least give the tech giant a boost if they ever want to pursue that venture.”

Oyster is not the only ebook subscription service struggling with the Netflix-like model. This summer Scribd cut back on both its romance offerings (and audiobook titles), citing the high cost of supplying voracious romance readers. Instead it added nonfiction and other fiction genres from Macmillan and 300 children’s titles. In contrast to Netflix, which licenses content, Scribd pays publishers the wholesale price for each title, as does Oyster.

“In general, the model has worked well, but in some genres, particularly the romance genre, it hasn’t worked out with a huge number of titles,” Scribd CEO Trip Adler told Wired. “What we’ve been doing is just balancing the selection for some genres such as romance to get the popular dynamics just right.” In a column titled “All You Can Read Unless You Read a Lot,” LJ’s Annoyed Librarian gave a tongue-in-cheek take on the problem Scribd and similar services face.

Perseus Explores Sale

Perseus Books Group, home to publishers including Basic Books, Da Capo Press, Running Press, Public Affairs, and Avalon Travel, as well as one of the leading providers of distribution and client services to 600-plus independent publishers through PGW, Consortium, Legato, et al., announced in early September that it is once again up for sale. The move came 13 months after a deal in which Hachette Book Group was set to acquire Perseus’s publishing arm and Ingram Content Group its distribution business collapsed just days from completion in August 2014.

“We had a number of expressions of interest that led us to announce a formal process, and we have received a significant number of additional expressions of interest since the announcement,” said Perseus CEO David Steinberger, who had agreed to stay on after last year’s deal fell through. “While this process goes on in the background, we remain very focused on our authors, clients, books, and people.”

While the previous deal proceeded independently, this time around the company said in a press release that it had hired Greenhill & Co., a firm specializing in mergers and acquisitions, to “explore a potential sale.”

“Perseus Books is a digitally innovative company, with a proven business model and a demonstrated record of successfully growing sales and profits,” said Greenhill managing director Gregory Miller.

Since February 2014, the company has been owned by Centre Lane Partners LLC, a private equity firm that took over the assets of Perseus LLC. “The Perseus Books track record speaks for itself,” said Quinn Morgan, managing director of Centre Lane. “Perseus Books just completed the most successful three-year period in its history.”

“Fiscal 2015, which ended June 30, was a historic year for our company with the total sales of client and in-house books reaching an all-time record level, and that momentum has carried into FY16, with the company off to a great start,” Steinberger told LJ. “We have some very exciting titles in the market right now, including the movie tie-in edition of Black Mass from ­PublicAffairs, the 25th anniversary edition of Friday Night Lights from Da Capo, and our surprise best seller from Running Press—You Are a Badass…. As always, we focus on results in the near-term while building for the future.”

The Wall Street Journal reported that, according to “a person familiar with the company,” the firm had sales of “$131 million…for the fiscal year ended June 30,” including “$40 million in revenue” from the distribution business. The unidentified source also said Perseus “had posted a 4.9% annual growth rate over the last six years.”

But, as Mike Shatzkin pointed out in the Shatzkin Files, “It will almost certainly take a combination of two companies to swallow this particular elephant”—“a Big Five or very large publisher [that can] absorb the publishing assets of Perseus” and “an Ingram” or “new entrant” for the distribution business. Of course, another private equity firm might step up and keep the company intact or sell it piecemeal.

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This article was published in Library Journal's October 15, 2015 issue. Subscribe today and save up to 35% off the regular subscription rate.

Francine Fialkoff About Francine Fialkoff

Francine Fialkoff (ffialkoff@gmail.com) spent 35 years with LJ, and 15 years at its helm as Editor and Editor-in-Chief. For more, see her Farewell Editorial.

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