Publishing Startup Pronoun Looks for Path Around Amazon

To startup companies looking to enter the book publishing field, Amazon.com is a huge immovable object in the middle of the road.  Most publishing startups don't really try to compete with Amazon; instead they try to succeed by complementing it, building some capability in hopes of being acquired by it, or pretending it doesn't exist.  Pronoun, which officially launched this past Monday, has a different strategy in mind.

Pronoun is the successor to Vook, one of various attempts to build multimedia e-book authoring platforms that have failed to achieve much traction over the years.  It also rolls up two other startups: Booklr, a sales data and analytics provider for trade book publishers, and Byliner, an online publisher of long-form journalism and short-form fiction.  Vook acquired Booklr in February of last year and Byliner a few months after that; the company renamed itself Pronoun and announced its new business model in May of this year.

The simplest way of describing Pronoun is as yet another iteration of Internet-based self-publishing platforms, with a few advantages for authors over existing players.  Yet as we'll see, certain aspects of Pronoun's strategy are unique with respect to that huge immovable object in the road.

Before the Internet, self-publishing used to be known as "vanity publishing."  For $10,000, you could get a "vanity press" to publish your book -- in print only, of course -- and possibly get it distributed to some bookstores, which might even decide to put it on their shelves.  The Internet, and retailers like Amazon, changed all this.  Internet self-publishing platforms let authors submit manuscripts in standard file formats (such as Microsoft Word or PDF).  They produce books, in print or as e-books.  They obtain standard ISBN numbers for them and distribute them through online retailers.  Consumers find them by searching and browsing on those retailers' websites.

The first Internet-based self-publishing platforms were companies like iUniverse, Xlibris, and 1stBooks (which I used to publish a book back in 2001).  They charged a few hundred to a couple thousand dollars, depending on various options for customization, production, and marketing.  You had to supply your own cover image (or use something completely generic), and they kept a percentage of the revenue from retailers as sales commissions.  They mainly supplied print books; e-books were available but almost as an afterthought, because they were not popular.

Present-day self-publishing service providers are mostly incremental improvements over those first-generation services.  Prices have come down; services have gone up.  "Freemium" offers have appeared: some providers offer basic packages with e-book distribution for free, while making money on sales commissions; others charge upfront fees but do not collect commissions.  All services provide at least some automated tools for production, sales tracking, management of metadata (the descriptive information about books that they send to retailers), and various ways to help authors market their books.

All of these services distribute e-books through major online retailers -- except that some do not distribute through Amazon.  That's because Amazon has its own self-publishing program, called Kindle Direct Publishing (KDP).  All of them also let authors retain copyrights in their works and only require exclusivity with respect to the retailers they work with; some authors, for example, publish their books on Amazon through KDP and use another service, such as  Smashwords  to distribute to other retailers.  (Although these services tend to make a big deal of letting authors retain ownership of their copyrights, this is actually common practice, even in old-fashioned print trade publishing.)

Here's a table that lists some of the major e-book self-publishing services, whether they also offer print book publishing, whether they distribute e-books through Amazon and other major e-book retailers  -- Apple iBooks, Barnes & Noble, and Kobo -- and the percent commission they take on each sale.  Note that Apple, Barnes & Noble, and Kobo have their own self-publishing programs too.

As you can see, Pronoun offers the best terms of all of these: no upfront fees, no sales commissions, and access to all major retailers (also including Google Play Books).  Pronoun also offers Booklr's sales data analysis tools as well as tools for metadata creation, pricing, cover design, and social media tracking -- in all, probably the most comprehensive set of tools for authors in the industry.

So how does Pronoun plan to make money?  There are two answers.  First and most immediate, Pronoun has a revenue stream from its previous incarnation as Vook: publishers such as Forbes, the New York Times, and Fast Company continue to use it as a platform for e-book authoring.

The longer term answer is... unclear.  Pronoun wants to attract as many authors as possible, then figure out how to monetize their activity later -- like SoundCloud for music (or, for that matter, Tumblr or Twitter).  It intends to build a community of various people who can help authors create and sell books: editors, cover designers, copy editors, production designers, marketing specialists, social media gurus, publicists, and so on.  Pronoun will offer a platform for these professionals to market their services, and unlike existing freelancer sites like Freelancer.com and Upwork, Pronoun will not charge for membership or take commissions from them either.

Instead, Pronoun wants to get a sense of what services authors will be willing to pay for and offer those -- or, to put it more cynically, what revenue streams it can discover to which authors might not object. The company is tight-lipped about what those might be; some possibilities might be percentages of downstream rights, like film treatments, or services like advanced forms of marketing analytics or merchandising.  If an author gets a deal with a major trade publisher, she can simply terminate her agreement with Pronoun and move on.

So in one sense, Pronoun is merely continuing the trend that has existed since the first Internet bubble of offering more self-publishing services for less money.  But there's another sense in which Pronoun's strategy is qualitatively different from the other providers: it's getting around Amazon by using a particular aspect of Amazon's own strategy against it -- a sort of strategic jiu-jitsu move.

Amazon likes to claim that it got where it is today by focusing entirely on customer satisfaction, which it has been said to prioritize over suppliers and partners.  Yet authors in Amazon's Kindle Digital Publishing program are suppliers to Amazon.  Amazon needs to make them happy in order to attract more authors in its quest to compete with traditional publishers.  But ultimately, KDP is a volume business based on sales of e-books to as many consumers as possible.

By contrast, although every self-publishing provider claims to "put authors first," Pronoun is the only one that both isn't dependent on sales volume through retailers (like Smashwords, and Draft2Digital) and does not pose barriers to entry for authors by charging them fees (like BookBaby).  In fact, Pronoun's lack of sales commissions may be the reason why it got a distribution deal with Amazon while the services that take commissions did not.  In other words, Pronoun has set itself up to succeed in ways that Amazon could find counterproductive.

Of course, Pronoun's strategy is highly speculative; it may run out of the over $10 million that it (and its predecessors) have raised from investors to date, including a round of $3.5 million raised last June.  That and the company's current revenue streams should give it a fair bit of runway.  Yet if it fails, it will be yet another example of venture capital fomenting "disruption" by merely raising expectations that something should be free.  When that strategy doesn't work, everybody loses.