This week has seen three pieces of sad but not unexpected news emerge from the UK's digital publishing sector. Tesco announced that Blinkbox Books, the ebook retail site it had launched as part of a bid to capture a slice the UK's entertainment on demand market, would close in February with the loss of 60 jobs. Meanwhile Bardowl, a business that tried to apply the Spotify streaming model to audio books also announced it would shut its doors. And over in continental Europe, Txtr, the Berlin-based ebook store also announced that it had run out of money and would close.
The demise of these businesses has been mourned within the publishing industry as a sign that the disruptive start-up economy that has revolutionised everything from photography to taxis is stalling when it comes to the books. Or at least that the successive wave of disruptions affecting other sectors can't happen in publishing because of Amazon's over-mighty position in the market. There are strong arguments that Bardowl, Blinkbox and Txtr failed to grow into viable businesses because of Amazon's power. Blinkbox's entry into ebook retail a full seven years after the launch of Amazon's Kindle Store, meant Tesco's platform could never achieve the scale it needed to be a real competitor. Txtr also struggled to find a place for itself, shuttling between hardware and software-based solutions. It also varied focusing its business models, sometimes seeming to favour selling ebooks to consumers and at other times focusing on selling white label solutions to physical book retailers and mobile carriers. Meanwhile Bardowl, with its tiny catalogue of 10,000 audio books, couldn't compete with Amazon's subsidiary audio book company Audible in terms of resource, choice of content or marketing spend.
There is another way of looking at this problem though. The tragedy of Bardowl, Blinkbox Books and Txtr is not that they failed, but they disobeyed one of the key rules of the start-up economy: if you're going to fail, fail quickly and then move on. None of these businesses were ingenues. Bardowl has been an active, public-facing business since 2012, though it has been possible to see a drop in energy from the service ever since its founders took positions in other companies. Blinkbox has an even longer pedigree. It originally started in 2007 as an ebooks platform called Mobcast, backed by the former special forces agent turned author Andy McNab. Mobcast attempted to steer a path between building a consumer-facing business and providing white-label ebooks platforms to the likes of WH Smith and mobile operators before selling out to Tesco in late 2012 for a reported £4.5m. Even with Mobcast's platform to build on, it took a further 18 months before Blinkbox Books was open to the public. By this time Amazon's Kindle enjoyed as much as two-thirds of the UK ebook market to itself. This means that altogether the business that eventually became known as Blinkbox Books had eight years to find an audience and failed. Txtr followed a similar trajectory to Mobcast, starting in 2008, except it didn't find itself bought by a larger company. It received stays of execution twice. In 2011 it signed a deal to provide cloud library services to 3M, and in 2013 announced it would pivot into hardware by creating a 3G ereader that mobile carriers could provide as a value-added service to their subscribers.
Bardowl, Blinkbox Books and Txtr were what in Silicon Valley is called 'zombie start-ups'. To an investor's eye they were stalled businesses that their founders, managers and partners hoped would turn a corner if they kept going long enough. If you're interested in what the term 'zombie start-up' means, I recommend you read this blog by Danielle Morrill which gives an excellent checklist. There were many reasons why Bardowl and Blinkbox Books they didn't turn out to be viable businesses - they took to long to launch, they were ahead of their time, they were unlucky. But from the sentiment I'm reading from many people in the publishing industry, our collective will for them to succeed also stopped them from making the changes or pivots they needed to make.
Start-ups are often lampooned for pivoting. This is the term applied for businesses that change their propositions, strategies and products in order to find that all-important product-market fit. Yet interestingly neither Bardowl nor Blinkbox Books moved very far away from their original positioning or business models. They didn't or couldn't move quickly enough or far enough to take a meaningful slice of their market.
Indeed this pretty static approach to creating and articulating a business model seems to be one of the defining - and dangerous - traits of the publishing start-up. Much of this can be attributed these start-ups' dependency on the publishers themselves. They needed publishers to supply them with content or to pay for the products and services they had created. That meant that all too often they were focused on creating services that publishers might buy into instead of providing what customers wanted.
To its credit Txtr did pivot and in late 2013 spun off another pay-as-to-read start-up called Blloon which may yet live to fight another day. Txtr's demise shows that even when a business successively tries every revenue-generating niche in an industry, there is a chance that it just won't work.
The book start-up is far from dead. There are many interesting new companies springing up with a different approach to selling and commissioning books. Start-ups rise and start-ups fall and the failures will always outnumber successes by many times. Yet in an environment where there is a lot of dead wood it can be difficult to see the green shoots. So perhaps we'll look back on the first part of 2015 not so much as when the start-up dream died for publishing, but as the period where the businesses that could never take on Amazon closed, and everyone could at last focus on the ones that might.