What Your iPad Knows About You; Subscription e-reader services Scribd, Oyster and Entitle track your behavior to predict your next book

What Your iPad Knows About You

Subscription e-reader services Scribd, Oyster and Entitle track your behavior to predict your next book


Feb. 18, 2014 7:24 p.m. ET

You’ve finally finished the book your co-worker recommended, so what to read next?

If it is 5 a.m., chances are that you’re reaching for a romance novel—especially if you’re in Texas or Georgia. By early morning, thrillers might start to look more appealing. And if Philip K. Dick is your favorite author, books about beer are probably more up your alley than anything about wine or liquor.


These are some of the insights from Scribd Inc. and Oyster, two startups that offer unlimited e-book rentals for a monthly subscription fee. Scribd, Oyster and Entitle Books—which just launched in December—are tracking reader behavior in hopes of churning out recommendations of exactly what you’ll want to pick up next.

About 50% of the U.S. population owns a dedicated e-reader, according to a Pew Research study released last month. In addition, 28% read an e-book last year, up from 23% the previous year.

The services are expanding. Scribd, a San Francisco-based site that started selling monthly e-book subscriptions in October, announced Jan. 22 that its app is available on Amazon’s Kindle Fire and Kindle Paperwhite. After running exclusively on Apple‘sAAPL +0.37% operating system, New York-based Oyster plans to expand to Android later this year. And Entitle is considering adding an all-you-can-read feature to complement its current “book of the month”-style subscription service.

Subscription services are popular because they “reduce the emotional burden” of purchasing, says Julie Haddon, Scribd vice president of marketing. Buying a book creates pressure to finish and get your money’s worth, she adds. In addition, people might try to save money by buying a cheaper book instead of the one they really want.

The challenge is that the selection of books can be limited. Of the five main publishing houses, only HarperCollins books are available on all three services. Entitle also has a contract with Simon & Schuster. (HarperCollins is a subsidiary of News Corp.NWSA +0.40% , which also owns The Wall Street Journal.) The three also carry books from hundreds of smaller publishers.

Brian Konash, 34, who works at Web startup Squarespace in Manhattan, joined Oyster two months ago because it didn’t cause the buyers’ remorse he experienced when purchasing Kindle e-books. “You’ve already paid for the service, so you can read as much as you want,” he says. “With other models, there’s that little financial bite each time you want to buy a book and you worry that it’s going to be a dud.” Mr. Konash, who has been picking books based on the site’s suggestions, predicts he’ll read up to 10 more books a year beyond his usual 25.

An all-access subscription “lowers the activation energy for reading,” says Oyster CEO Eric Stromberg. Reading often has a high “activation energy” because there’s a time gap between wanting to read a book and then actually getting your hands on it, he says. “When you can order a book and instantly get it on your tablet, you can hear about the book and then read it right there,” says Willem van Lancker, Oyster’s chief product officer.

“From the publishing perspective, the biggest problem is how to get people to care about a new book,” says Otis Chandler, CEO of Goodreads, a site where people share what they’re reading and post recommendations. Goodreads, which was acquired by Amazon in March, uses an algorithm that recommends books that users with similar taste have enjoyed.

Oyster and Scribd ask readers to rate books, what they call an “active signal.” They also track “passive signals,” such as the percentage of a book that a reader finishes and the click rate, or how many people who are shown a book click through to learn more. The companies use that information among other factors to recommend books.

Active signals represent what we wish we read, while passive signals are more honest, says Jared Friedman, Scribd chief technology officer. A lot of people give a 5-star rating to “The Great Gatsby,” while they devour, but don’t necessarily rate, thrillers like “The Da Vinci Code,” for example. (Scribd declined to discuss data on specific books.)

Other findings: Self-help might be a popular market, yet only about 20% of people who start such a book finish it. More than 80% of people who crack the pages of a mystery novel will find out who did it. People trudge through biographies at 20 pages per hour, while they read at three times that speed for erotica. And higher “acceleration factor”—or how much readers speed up as they get closer to finishing—correlates with higher average rating for a book. One of the highest acceleration factors comes from Kurt Vonnegut’s “Cat’s Cradle,” which readers start speeding through at the halfway mark, Mr. Friedman says.

All three companies allow users to hide their reading behavior from other customers, but users can’t opt out of their behavior being collected by the company itself. Entitle, however, says it keeps track of browsing and download information only.

Personalized recommendations drive 10 times more browsing traffic than lists based on themes such as “globe-trotting memoirs” or “bad role models” that replicate racks at the front of bookstores, Scribd’s Mr. Friedman says. The company is interested in combining algorithms with lists to create a list of best sellers that someone would, based on past reading behavior, find interesting. Another possible approach is to suggest different books or genres depending on time of day to take advantage of what the company knows about time-based preferences.

At Wilmington, N.C.-based Entitle, the algorithm doesn’t just crunch behavior signals, but “reads” through a book’s text to pull out different topics, genres and subjects, says Bryan Batten, chief executive of Entitle, which used to be known as eReatah Inc. There’s also a patent-pending service called “if these books had a baby,” where users can input two books and find a third with similar themes. For example, the “baby” of Joseph Heller’s “Catch-22” and Leo Tolstoy’s “Anna Karenina” is Fyodor Dostoevsky’s “The Brothers Karamazov,” but the product of “Catch-22” and Walter Isaacson’s Steve Jobs biography is a book called “Dealers of Lightning,” about engineers at Xerox Corp.

Entitle operates on a tiered model: two books for $9.99 a month (the most popular plan), three for $14.99, and so on. For customers, the upside is being able to keep the e-books, even if they cancel the service.

The services, of course, compete with the library. But libraries have had limited e-book offerings and there are often waits for the books. Robert Wolven, co-chair of the American Library Association’s Digital Content Working Group, says demand has increased significantly in the past 18 months. He says he doesn’t see the startups as a threat.

While libraries’ budget for e-books has been growing, licensing restrictions mean that popular titles often aren’t available, says Laura Girmscheid, research manager for the trade publication Library Journal, which recently released its fourth annual report on e-books in libraries. This, combined with holds on e-books, is the largest hurdle preventing people from using library e-books more. “It’s just not convenient for instant access,” Ms. Girmscheid says.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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