2014-03-07

Co.Labs

Can A Startup Help Publishers Cut Out Twitter, Facebook, And Flipboard?

Connecting content creators and consumers would be an enormous coup for news sites, magazines, TV networks, and other media. We look at three startups that could help.



At magazines like Fast Company, we rely on distribution networks to get our articles to our readers. In print, the primary distribution network is the Postal Service. On the web, it's Facebook and Twitter. They're our middlemen, and lots of people in the media industry would like to cut them out.

Inkshares, Beacon, and Aerbook are three digital publishing startups helping writers and publishers use crowdfunding to eschew distribution networks and advertisers and make money directly from readers. One of them, Beacon, was founded by a former Facebook editor.

The thing is—people have tried this before. The battle to free publishers from distribution and advertising has turned once-promising companies into casualties, such as the short-lived digital magazine platform Glossi, or journalist Paul Carr’s NSFW Corp. Others like Readability failed to achieve any kind of mainstream adoption.

The New Players

First, the landscape. There are already some "lean back" digital magazines like Flipboard and OpenZine out there, as well as socially focused ecosystems like Toronto’s Wattpad, which boasts a community of 25 million readers and writers. Venture-backed content syndicator NewsCred connects brands and publishers with licensed articles, this week partnering with Sharethrough, which describes itself as the "world’s largest in-feed advertising exchange." Then there’s Repost, a 10-month-old company advised by pundit Jeff Jarvis, which claims its embeddable, recycled content is the secret sauce to page views. Down in New Zealand, the founders of Booktrack are attempting to change the way we listen to audio books by syncing customizable playlists to literature.

In San Francisco the social publisher Storify continues to experience identity issues following a September acquisition by the commenting giant Livefyre. A trio of apps and plug-ins in Hemingway, Draft, and Write Rhymes seem to be a Machiavellian play by engineers to prey on insecure scribes hungry to manufacture art, which ironically may make this one of the most viable, if not altruistic business models among the pack. Then there's a "streaming texting" offer from Spritz, promising the ability to read text as quickly as 600 words a minute.

This article wouldn’t be complete without mentioning news-centric ventures like the Pierre Omidyar-funded First Look Media, Nate Silver’s FiveThirtyEight, and Project X, a digital organization founded by former high-level Washington Post staffers including 29-year-old wunderkind Ezra Klein. There’s a smorgasbord of content in Medium, offering "everyone’s stories and ideas," and even an attempt by web entrepreneur Jason Calacanis to create a curated journalism outfit called Inside—a journalism site without journalists. If there’s one certainty in this uncertain landscape, it’s that anything seems possible in the world of digital storytelling.

Here's why the three companies I mentioned earlier—Inkshares, Beacon, Aerbook—are three potential game changers.

Crowdfunding Publishing

Inkshares is a crowdfunding publisher where writers receive the majority share of royalties generated, as well as access to online publishing tools and metrics. Cofounders Larry Levitsky and Adam Gomolin say they want to help serialized authors and long-form journalists publish print and e-books.

Levitsky is formerly of McGraw-Hill, and spent time as the publisher of Microsoft Press Interactive. Gomolin previously worked as a securities lawyer.

PBS MediaShift’s Mark Glaser, who serves as an editorial advisor to the company, calls Inkshares a game changer for authors and fans because it lets the two connect directly.

"I believe the current system for publishing books is broken and support any effort to provide alternatives that will help authors connect directly to their audience," Glaser says.

The weeks-old company plans to let authors sell a share of their book's prospects to fans. If a book becomes a commercial hit, that crowdfunding contribution is effectively a futures investment.

"That completely changes the equation for authors and fans," Glaser says.

Gomolin, who pulls double duty as Inkshares’ general counsel, says with so many players in the space, it can be hard to stand out. But he thinks his service is innovative enough to do just that. All entrepreneurs champion their cause—that’s not new. And neither is crowdsourcing. But cutting readers into profits is. And that could make this company succeed by making those same readers equal partners in the service’s success.

"We think that crowdfunding, structured in various ways, is the answer to this dilemma," he says.

Another site, Contributoria also allows funded proposals, but users are required to pay dues, and projects are voted via a point system. That site includes group submissions while Inkshares is about backing individual projects. Plus funders are cut in to a piece of the action if the work is a success. Gomolin says this isn’t donating—it’s paying for goods that have not been created yet. It's pre-order based crowdfunding, which means readers voting with investments. Gomolin thinks Kickstarter leaves writers out in the cold, a lane he hopes his site can use to drive traffic, eyeballs, and ultimately dollars.

So far over a dozen projects are in various stages of funding, with fans able to pre-order and offer micro-investments of $10, $20, or $50—or be "extra generous" and add fill-in-the-blank sums.

Right now the sweet spot for material is longform journalism, which Gomolin calls anathema to the never-ending 24-hour news cycle. "I talk to writers every day who have jobs at top places but are burned out on and jaded by the constant churning of brief pieces on popular media. There's got to be a model for paid longform other than a handful of elite outlets."

Gomolin wants to fully fund 50 projects in the next month, most in the $500 to $5,000 range. Writers receive 70% of royalties at Inkshares. Traditional publishers pay about 10% to 35% for wholesale or list price for royalties. But falling revenues have made the old way near-impossible for most writers to break in, market themselves, or pay their bills (10% of all published books covers 75% of total book revenue, according to BookScan, which complies sale data). The next step is becoming a fully licensed crowdfunder, which would let fans share in sale revenue, something that’s never been done before.

"If each of those authors brings in 50 to 100 backers, it will be a humble, but meaningful month," Gomolin says, "but one that validates the model."

A few weeks ago Gomolin and chief product officer Thaddeus Woodman visited Professor Dan Pacheco’s class at Syracuse’s Newhouse School via a Google hangout. Pacheco, who is not an advisor or paid by the company, calls the startup a unique experiment blending "the best aspects of traditional publishing with crowdfunding and eventually microlending."

Connecting Writers With Audiences

Imagine letting readers decide how much writers get paid. Or how about forking over a flat monthly rate in return for a stream of content from your favorite wordsmith? Oh yeah, and how about folding down four fingers and raising one to the concept of page views? That’s the premise behind Beacon, which pays writers via subscriptions, and per project, with top performers making as much as $5,000 a month in bonuses, in addition to subscription revenue.

Launched in September, cofounder Dan Fletcher says the site is now outperforming similar publication projects on Kickstarter, with attempts like Climate Confidential exceeding funding and raising almost $45,000 in only one day.

The stable of writers on the site have bylines from major publications like Time and The New York Times. In total, there are more than 90 writers, authors, and artists, many in areas traditionally underrepresented by mainstream media, like science and the environment.

"We want to build a paying platform," explains Fletcher, the former managing editor of Facebook, and ex-social media director at Bloomberg. Fletcher wants to target journalists and serialized authors—their work, not how many eyeballs are on-screen. "Page views are a lousy metric for what's actually valuable because it only measures broad popularity and even then much of that may be totally unreal. What we have now with page views is a system that lets ad buyers dictate quality even though often they are wholly agnostic to what's actually written," he says.

In this crowdfunding model, readers pay $5 a month for access to every story on the site. Readers can also fund specific campaigns; subscribers are notified when writers publish. Over 90% of projects are fully funded. Beacon is based in Sunnyvale, Calif., and venture-funded through the Y Combinator accelerator.

Fletcher says the site is a haven for established acts to translate their online following into paying subscribers. Building major social footprints on sites like Twitter and Facebook has made those platforms, and their owners, rich—not the content creators. Fletcher wants to change that.

"Journalists create tremendous amounts of value," he laments. "They get no cut of that [on social media]. If we can take some of their followers and get money for their work, that’s pretty cool."

One of those creators is Tim Wut, a contributor to TechZulu. His project, a series of interviews called Life in the Startup Trenches, reached 256% of its funding goal, from "people I never even expected," he says. "As a freelance writer I’ve always been struggling how to go past the paper article model. It surprised me that I was able to find people from my network able to support my project. For me as a writer that was huge."

The revenue share is 70% for creators, the other 30% used for distribution. There are no ads on the platform. Right now Beacon doesn’t take a cut, instead focusing on building a network. But Fletcher says when Beacon does take a piece, the company won’t take more from writers, instead deducting a portion of the funds going to distribution.

An early problem with the model, however, is syndication, or lack thereof. If a big-name writer publishes something on Huffington Post, for instance, it likely won’t make it on Beacon. That’s because most organizations have strict content ownership rules that cut writers out. Beacon’s projects are largely independent of news organizations—and fully owned by their creators.

Similar to artists eschewing the studio system for the independent route back in the 1990s, the question here is if their work can be as captivating with just the creator headlining it.

From Writer To Reader: A New Way To Sell

Direct-to-fan sales is the play at Aerbook, a commerce vehicle allowing readers to preview material, and writers to sell anywhere on the social web. The four-year-old service offers easy web publication and distribution—anything from a coffee table book to fiction, by essentially dragging and dropping files into the site’s browser. Creators can use photos, audio, video, text boxes, animation and then export and print onto the major e-book formats.

Sensing the need for authors to target readers, and the desire for fans to consume that media in a streamlined, graphically rich way, chief executive Ron Martinez decided his service would target in-stream, in-app commerce, which Aerbook debuted in February.

Native advertising is the fastest growing category of ads, says Martinez, the former vice president of intellectual property innovation at Yahoo. So far sales from the new Aerbook offering, introduced in February, have been in the single digit thousands. But Martinez, an idea guy trying to leverage social into sales, senses he’s onto something. If you view the link in app, you can buy in-stream, a play on our impulsive, quick-buy culture, which is only accelerated by the click-heavy online set.

"A friend of ours say this is Amazon for Twitter," Martinez quips. "Really is an apt statement."

Around 3,000 books are available from mid-range publishers. To promote interaction, drive attention, and hopefully dollars, readers can share any book's page on social media. And because of public domain and partnerships with mid-sized publishers, there are a lot of good titles, like James Joyce’s Dubliners, and The King In Yellow, the book HBO’s True Detective is based on.

Aerbook takes 15% from each sale, plus a small processing fee. For $29 a year, authors can view sale metrics, and add links to other retailers via Aerbook’s selling page, driving traffic to sites like Amazon, Nook, Kobo, and Google Play. The $59 annual package is aimed at heavy marketers, with the above features plus preview options on social posts. There is a separate cost for illustrated or PDF to e-book conversion.

Targeting brand affinity and impulsive social media users, buying and selling products via tweets is producing results for companies like Chirpify, which reported more than 300,000 consumers purchasing, sampling products, or accessing content between November and January.

Martinez says he’s confident that being able to preview and embed transactions inside a social stream will drive major interaction and sales. It’s still early, but if a big publisher and a few star authors get onboard, Aerbook could be a winner.

[Image: Flickr user pittaya]






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