Scribd – An Exciting New Platform for Publishers

Scribd has 60 million viewers a month. That kind of potential book-loving viewership would have publishers drooling pools.

Three amazing twenty somethings who co-founded Scribd about two years ago have discovered that a new world demands a new paradigm. I believe they will be hugely successful.

Their business model is simple and fair. Be content to be a platform for distribution, appreciate the content creators and publishers by giving them 80% of the revenue and let them decide on the pricing. Lastly build in copyright protection, that is, take care of their concerns. They have just demonstrated the age-old wisdom to success – be open, flexible and fair. What more can anyone ask for? Just ask the publishers. No wonder they are the latest ‘unlikely fans’ that been won over.

Scribd: An E-Book Upstart with Unlikely Fans
Digital book site Scribd is wooing big publishers by offering greater control and more revenue than Amazon
By Spencer E. Ante, Business Week, June 11, 2009

Last year author Bob Seidensticker flagged his publisher, Berrett-Koehler, that a digitized version of his book Future Hype had been posted on a Web site called Scribd. Anyone could read or print it for free. Berrett-Koehler warned Scribd the copy was illegal, and the company quickly took it down.

Then executives at the San Francisco publisher started checking out the site. It had a large and growing audience of readers, including many who actually went out and bought books. So last July, Berrett-Koehler began offering free excerpts on Scribd, a marketing move that led to the selections being viewed more than 325,000 times. Last month, when Scribd opened its online store, the publisher signed a deal to sell 400 electronic books through the company. “They get so much more traffic than our Web site,” says Johanna Vondeling, vice-president of Berrett-Koehler. “We are pretty optimistic about it.”

Scribd, shorthand for scribbled, is a sort of YouTube (GOOG) for publishing, where anyone can upload digital versions of books, research reports, and other printed matter and share them easily across the Web. With 60 million visitors a month, it’s the most popular of several such document-sharing Web sites. On June 12 the San Francisco startup is scheduled to announce its first deal with a major publishing house. Simon & Schuster plans to offer 4,500 e-books for sale on the site, as well as previews of thousands of other titles. “Scribd is an exciting new platform,” says Elinor Hirschhorn, Simon & Schuster’s chief digital officer. “There is a very robust book reader audience there, and we want to be where our readers are.”

The agreement between an Internet upstart and a traditional media giant highlights the potential rewards and risks as publishers move into the digital era. With the public becoming more comfortable reading books in digital form, publishers would like to capture this small yet fast-growing source of revenue while lowering their costs. But they’re worried about piracy and losing control of their business. They’re also a bit leery that (AMZN), the largest online bookseller and creator of the Kindle reader, could become as dominant in publishing as Apple (AAPL) is in music. “Most publishers see e-books as inevitable,” says Sarah Rotman Epps, analyst with Forrester Research (FORR). “But they want control over the distribution and pricing.”

The three twentysomething co-founders of Scribd—Jared Friedman, Trip Adler, and Tikhon Bernstam—see these concerns as an opportunity. The two-year-old site, which already generates enough money from online advertising that it’s profitable, gives authors or publishers the ability to choose their own level of copyright protection and set the price for their work. Scribd keeps a 20% cut of sales. In contrast, Amazon sets the price for e-books and usually takes a bigger cut. By offering a more open and flexible system, Scribd hopes to create a viable alternative to the giant retailer. “The [online] store could be huge,” says CEO Adler. Scribd says it’s in talks with other big publishers and is working to make its content available on the Kindle and Apple’s iPhone.

There’s no guarantee, of course. Publishers are less concerned with which book site triumphs than with having a variety of outlets that help them keep control over sales and distribution. Still, Scribd is helping soothe their concerns about the risks of digital books. “[They’ve got] a very attractive package,” says Adrian Zackheim, publisher of Penguin Portfolio.

Ante is an associate editor for BusinessWeek.


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