Zola Books Buys Bookish
Here’s a head scratcher for you.
News is breaking today that indie ebookstore Zola Books has bought Bookish, the book marketing site owned by Simon & Schuster, Hachette, and Random Penguin Solutions. The terms of the deal have not been disclosed but they would have to be rather unusual.
Both Zola Books and Bookish are rather new to the ebook scene and they both launched to much fanfare but later fizzled. Zola Books launched in mid-2012 with the goal of being a major ebookstore by the end of 2013 (they missed), while Bookish officially launched in February 2013 after several years development.
According to the Zola Books blog:
At Zola we’ve been working to build the tools for that kind of serendipity for many months now. And we are about to take a huge step forward by joining forces with Bookish, a book discovery site that has the most sophisticated and unique book recommendation system on the web.
Bookish works differently from other recommendation sites.
They’re absolutely right; Bookish is more of a marketing channel than a book recommendation site.
According to recent numbers given to Publishers Weekly, Bookish has relationships with approximately 50 publishers and some 600,000 titles in its recommendation engine. It was clear from the moment Bookish launched that it existed to promote books published by its 3 owners as well as anyone else who has a marketing dept. This leaves me a little puzzled because I’m not sure how that will jive with Zola Books, which promotes itself on the strengths of its exclusive content.
And that’s not the only thing that has me puzzled today. To start, Bookish was originally started in 2010, then announced in 2011, but didn’t formally launch until February 2013. The site was sold only 11 months later, which means that the site was under development for well over twice as long as it was operational before being sold.
And it seems to have sold for a very low price. Techcrunch has a statement from a Zola Books spokesperson which says that there were several bids for Bookish, but I find that hard to believe. Zola Books simply doesn’t have the resources to get into a bidding war.
According to their Crunchbase profile, Zola Books has raised somewhere under $15 million in financing (it’s not clear how many funding rounds they have had). That rather limits what they can afford to pay for Bookish, leading me to wonder if perhaps S&S, Random Penguin, and Hachette even recovered their initial investment and development costs.
Update: Publisher’s Lunch is reporting that the 3 publishers sank "at least $10 million to $20 million in funding" into Bookish, so it’s pretty clear that this was a boondoggle for them. Of course, that doesn’t mean that Zola Books will have equally bad luck.
In any case, Zola Books is saying that Bookish will continue to operate as an independent site, while at the same time its recommendation engine will be incorporated into the Zola Books ebookstore. Zola Books will also be taking over Bookish’s content deals, which means their ebookstore will offer a larger catalog.
David Gaughran January 7, 2014 um 4:55 am
Does Zola Books get any traffic? Alexa would seem to suggest it doesn’t get very much at all…
Nate Hoffelder January 7, 2014 um 7:20 am
The Pub Lunch piece suggests that Bookish gets more traffic. Both are under half a million visitors a month.
David Gaughran January 7, 2014 um 7:53 am
Pretty paltry numbers all round.
Igor Borski January 7, 2014 um 2:01 pm
Should get better past erotica prune by majors. So there may be some sense as they need visibility.
Still do not see how general recommendations site will play with rather niche store/publisher.
Bill Rosenblatt January 7, 2014 um 2:19 pm
I think the picture should become clearer if instead of "rather unusual" you substitute "chump change," or to use the more polite term in M&A, "asset sale."
I can believe that there were multiple "interested parties," if not multiple actual (formal) bidders. This would be way, way far from the last failed startup to sell for, I’m guessing, low 7 figures after 8 figures (or more) in funding. Figure that a small portion of the total raise went to investment bankers who went out and found a handful of possible buyers, who made the effort to look under the hood.
But seriously, are you at all surprised?
Nate Hoffelder January 7, 2014 um 6:01 pm
I doubt that it sold for the low 7 figures. This feels more like the Anobii sale (only without the deep pockets), where Sainsburys picked up the startup for a British pound.
Bill Rosenblatt January 8, 2014 um 3:42 pm
You mean you think it went for 6 figures or less?
I would guess — and I have no inside information, it’s just a guess — $1-2 Million. That’s based on the fact that Bookish developed some valuable technology, has some traffic, has a distribution agreement with Baker & Taylor, and is transferring, as I understand it, roughly a dozen headcount. Figure that:
– The infrastructure alone is worth something in the low-mid 6 figures
– Cost of recruiting and training equivalent headcount would be somewhere in the mid-high 6 figures
– The cost of amassing 300k monthlies, and other goodwill, ought to be worth a couple more hundred k
On a back-of-nakpin basis that adds up to somewhere in the $1-2M range. I’ve seen startups raise that much cash and fail to launch but still raise that type of money in asset sales.
Nate Hoffelder January 8, 2014 um 4:52 pm
Do we know for sure that Bookish actually developed the new tech? All I have to go on is the press release, which we both know isn’t worth anything.
Bill Rosenblatt January 9, 2014 um 10:59 am
I think it’s pretty well established that they developed novel recommendation or discovery technology. (I assume they contracted out for the development, but they must own the rights to the technology; they would be fools not to.)
Here’s another roughly parallel example: roughly 10 years ago, there was an early online music store called pressplay, a JV of two of the (then) five major record labels. It had success roughly equivalent to Bookish’s success in the e-book market, i.e., modest (compared in this case to iTunes) but not nothing. The two record companies spun pressplay off to an audio tools company called Roxio, which used the technology platform to launch a retail music service. This became the new "legal" Napster (Roxio bought the rights to the Napster brand name from Bertelsmann). Roxio paid about $40M for pressplay.
Nate Hoffelder January 9, 2014 um 6:41 pm
If it was that great then why did Google pass on buying Bookish? Why did Kobo? They both have the funds and the interest, so why didn’t they outbid Zola Books? (Amazon was probably not even offered the chance to bid.)
I’m not saying you must be wrong, but there are many details that don’t add up here.
fjtorres January 9, 2014 um 8:54 pm
They didn’t outbid because the only value in Bookish is the recommendation engine and it isn’t all that good yet. Lots of added work (and time) needed. By the time the tech is ready for primetime it might be late night.
And Napster? It never really prospered and was bought out by Rhapsody.
Bill Rosenblatt January 9, 2014 um 9:30 pm
There are many possible reasons why Google and Kobo (or, for that matter, Sony) might have passed on Bookish. Here are some I can think of right now:
– Google and Kobo might have been interested in Bookish’s recommendation technology, but the owners of Bookish refused to sell that by itself.
– Google and/or Kobo did serious deep technical diligence on the recommendation engine and didn’t think it was all it was cracked up to be, whereas Zola was credulous or incapable of the same level of diligence (or, I suppose but doubt, did the diligence and came away with a more favorable opinion).
– Google and Kobo both have much larger user bases than Bookish, meaning that they wouldn’t want any other pieces of Bookish.
– Google has an NIH attitude; they wouldn’t want any technology that either duplicates what they already have (infrastructure for selling e-books) or that they feel their own engineers could duplicate with a couple of weeks' effort (recommendation engine). This would be typical of Google, Microsoft, or any other major silicon valley company.
– Neither Google nor Kobo was impressed enough with the talent to want to hire them.
– Zola is a small company and Bookish’s employees and user base could make a real impact.
– The sellers wanted to sell to a small yet promising company, one on which they could assert influence and that would actually do something with the technology, infrastructure, user base, etc., and not just throw it into a huge organization where it would most likely disappear.
– Google and/or Kobo and/or Sony did make bids but they were lowball. Just because they have deep pockets doesn’t mean they would bid lots of money. You yourself mentioned Zola’s overweening ambition; companies with that type of management and/or investors are more likely to make "big bets."
Like I said, many possible reasons…
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