December 31, 2012 at 21:00 PM EST
Legimi Wants To Be The ‘Spotify For Ebooks’ With A Business Model That Relies On You Reading Less
Legimi is definitely a startup I'll be watching closely in 2013. Put simply, it aims to be the 'Spotify for ebooks,' in which for a monthly subscription, users get access to a potentially infinite library of reading material, all accessible via the cloud. But more than that, this Polish startup, whether it succeeds or not, epitomises the collision of old media business models with new technology and new consumer habits.
main-promo-ipad

Legimi is definitely a startup I’ll be watching closely in 2013. Put simply, it aims to be the ‘Spotify for ebooks,’ in which for a monthly subscription, users get access to a potentially infinite library of reading material, all accessible via the cloud. But more than that, this Polish startup, whether it succeeds or not, epitomises the collision of old media business models with new technology and new consumer habits.

After years of being told that one day consumers will access all of their media from the cloud, anytime and anywhere, thanks to the likes of Spotify, Deezer and Rdio (music), or Netflix, Lovefilm and Hulu (film and television), that day has finally arrived. The subscription, cloud-based model, combined with new consumption devices — tablets, smartphones, and Internet-connected TVs and set-top boxes — and near-ubiquitous broadband, has ushered in an era where consumers no longer feel the need or desire to own the media they consume. So, why not apply that same consumption model to ebooks?

Well, as it turns out, there are a number of companies who already are, but in many ways it’s still very early days. Niche offerings, such as Safari Books Online, which specialises in professional and developer-related content, have been around for a while, where a subscription model is viewed by publishers as less-risky because the audience is already somewhat ring-fenced, and content becomes outdated quickly. More mass-market is Amazon’s Kindle Owners’ Lending Library, but this is still very limited and can hardly make the claim to be anything close to a ‘Spotify for ebooks.’ Then there’s the much-hyped and Founders Fund-backed Oyster, which is yet to launch but plans to offer an all-you-can-eat subscription model with an emphasis on mainstream content.

However, the New York-based startup is remaining tight-lipped about which publishers are signed up, and it’s here where many commentators predict that any subscription-based ebook service will fall down at the last hurdle: They simply won’t be able to strike the content licensing deals required, with the number of publishers needed to make the all-you-can-eat proposition a reality. That’s because the new consumption model requires a new licensing model where publishers are given a share of subscription revenue based on the number of books accessed.

Or does it?

This is where we return to Poland. Legimi thinks it’s found a way to change the consumer offering without having to tear up the legal or commercial framework that already exists for ebooks on a pay-per-download basis.

“Our approach is different; we pay the whole price of an ebook once an end user exceeds its free sample (approximately 10 percent of the book),” Legimi co-founder and CEO Mikolaj Malaczynski tells me in an email. The premise being that most readers never make it past the free excerpt, but if they do, the company pays the full wholesale price to publishers. “We have statistically calculated the average consumption for tablet users and smartphone users, which is lower than one book per month,” he says.

Or maybe another way of looking at it is that the business model relies on a tl;dr generation (my words, not Malaczynski’s) where multiple content and services are constantly vying for a user’s attention, and that this is especially true when content is consumed on an always-connected tablet or smartphone. Whether or not consumers are reading less long-form content or not, however, perhaps misses the point. As long as the number of books read past the free sample remains inline with the overall economics of a monthly subscription, then the model could work, or at least act as a bridge until such time when publishers are more willing to embrace the idea of a subscription model.

To that end, Legimi has already launched an MVP in the form of an iPad app in the startup’s native Poland, while an iPhone version should follow in January, with Android and Windows Phone also in the pipeline. I’m told that major publishers locally are playing ball, too, such as W.A.B., Insignis, Muza, and Buchmann, enabling Legimi to offer a range of popular international and domestic titles.

Moving forward, Malaczynski says that the priority is to keep expanding the available catalogue and to optimise the business model, presumably to find the sweet spot in terms of what to charge. But much more ambitiously, Legimi is planning to launch in two additional European markets next, likely Germany and the UK. It’s at this point when the licensing ‘loop hole’ and assumptions about consumption will really be tested.

“If you ask about the average consumption of one book per month, I am not sure if it’s a universal figure,” concedes Malaczynski. “We will need to test it market by market, but we have an algorithm to verify it.”

On the upside, Malaczynski says that the rights infrastructure for publishing doesn’t differ too much between countries, meaning that Legimi can hopefully avoid spending “years negotiating new agreements with publishers, which don’t really understand the subscription model.”

And that’s where we come full circle. In the end, a ‘Spotify for ebooks’ seems inevitable, as consumer habits find themselves ahead of the market once again. It’s probably more a case of when not if. Perhaps Legimi, or another startup willing to take its model and run with it, can help to make it happen sooner rather than later. Here’s to 2013.


Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here