Zola: Aims to Replace Google Books, Then Take on Amazon

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by Jeremy Greenfield,
Editorial Director, Digital Book World

A new bookselling start-up funded by authors and other investors is forming partnerships with publishers and independent booksellers and aims to replace the Google eBooks re-seller program as the go-to platform for indies interested in selling e-books. Oh, and the company plans on taking on Amazon, too.

Zola Books is a New York-based start-up that has raised $1.3 million from investors, including well-known authors like Audrey Niffenegger (The Time Traveler's Wife), Josh Bazell, (Beat the Reaper) and Chandler Burr (The Emperor of Scent) and plans to offer independent bookstores an online storefront from which to sell e-books, much like Google Books.

Founded in September 2011, Zola will offer readers a social e-reader and bookstore, independent bookstores a new place to sell e-books, and publishers another storefront to display their wares. When it launches to the public on September 19, the company plans to make a splash, offering readers a sizable selection of e-books, including titles that will only be available on Zola.

The Google eBooks re-seller program was hailed in 2010 when it was introduced as a lifeline to independent bookstores that were suffering due to sales lost to e-books. Google, through a deal with the American Booksellers Association (ABA), allowed independent bookstores to sell e-books to customers. But the program will end in late January, the search giant announced in April, because of lack of success. Independent bookstores were unable to persuade readers to buy e-books from anywhere but Amazon, the New York Times reported at the time.

"For us, it was just way too expensive," said Katie Fransen, a book buyer at One More Page Books in Arlington, Virg. and the employee responsible for the store's digital efforts. "The ABA charged a monthly fee and acted as a concierge between Google Books and the indies [independent bookstores]. They did the legwork in terms of programming the website."

The ABA charges each bookstore around $200 per month to run the Google eBooks service, Fransen said.

"It´s a lot of overhead, because with Google Books you make a really small percentage of the actual book you sell. In order to make that $200 back and make a profit, you'd have to sell a lot of e-books," she said. One More Page Has signed up for Zola's beta platform.

Moreover, the Google eBooks platform does not provide a seamless way for readers to buy e-books.

"The Google platform is limiting," said Eric Easterday, owner of Readmore Books, in Taunton, Mass. "There are a number of additional steps you have to take to get the book into the device. There were too many extra steps which prevented us from capturing a larger market share."

He added that the Google eBooks program was "modestly successful" for him and that it netted his store about $200 a month in profits.

Zola hopes to swoop in and be the white knight that Google eBooks was not.

"We want to be chosen by independent bookstores to replace Google," said Joe Regal, a former literary agent who is founder and CEO of Zola.

The plan is to offer a selling experience for independent bookstores that is easier, more attractive and more profitable than Google eBooks was.

Zola allows each independent bookstore to create its own storefront that it curates with titles it thinks its readers will like. Each bookseller is responsible for marketing their storefront but the proceeds could be worth it. Zola will pay independent bookstores 60% of net proceeds from every sale.

With Zola, publishers get a straight 70% of every sale and then Zola and its partners split the rest after paying a 4% credit card transaction fee.

For instance, if Readmore Books, which has signed on with Zola, sells a $9.99 e-book, about $7 would go to the publisher, $1.55 would go to the bookstore, $1.05 would go to Zola and $0.40 would go to the credit card provider.

So far, Zola has signed up 48 bookstores to its beta version and about half have indicated they will use Zola when it launches on September 4. Both the number of bookstores signed up for beta and those that have indicated they will use Zola when it launches are are changing daily, said a Zola spokesperson.

In addition to signing up independent bookstores, a focus of Zola's has been signing up publishers to sell their e-books. The company has recruited what it says are the top 40 publishers in the U.S. representing about 90% of the e-book market's revenue. Some 334,000 titles will be available when the store launches.

As for indie authors, Zola has no immediate plans to accept self-published works but anticipates partnering with Smashwords or other distributors of self-published work with a deal similar to the one that brought the top Smashwords titles to the Contra Costa library system in California.

(Of course, for three large publishers – Hachette, Simon & Schuster and HarperCollins – the relationship they have with Zola is contingent on the ruling Judge Denise Cote delivers this summer on the e-book price-fixing settlement.)

Aside from being another storefront where publishers can sell their wares, Zola will offer publishers several features that are meant to keep them interested in the platform.

Zola has integrated social tools, where readers can interact with each other inside of books and can also follow different bookstores, publishers, authors or curators, which will include a wide range of tastemakers, including professional reviewers, media properties, book clubs and bloggers. Zola will also be giving publishers a trove of data that other booksellers do not yet offer them: Information on who and where their readers are and what they like reading. Each publisher (and bookseller) will have access to analytics that Zola will provide, including demographic and geographic data.

“We loved the approach that they were taking,” said Ellen Archer, publisher and CEO of Hyperion, a New York-based publishing division of Disney that has signed up with Zola. “It’s providing yet another great tool for readers to discover great books. And we like the social aspect of it.”

Zola has patented parts of its book curation engine (and has trademarked the term “curation engine”), which is a Netflix-like collaborative filtering engine mixed with human curation on the back end that will be invisible to readers. Readers can also discover books on Zola by following stores, publishers, curators and their friends to see their recommendations. The curation engine also suggests to readers who they might like to follow. And Zola has an employee whose job is exclusively to update the pages of book reviewers on a weekly basis – about 350 reviewers will be actively tracked.

In addition to providing a storefront for bookstores, Zola is providing pages for publishers, book reviewers and influential bloggers. Books sold through those pages will net whoever maintains the page an affiliate commission, which will vary in size depending on who or what the affiliate is. Each storefront comes with tools that allow for simple integration with all major social platforms so pages can be kept up-to-date by Tweeting.

Independent bookstores have an added tool they can use to sell e-books: They can entice their customers to associate all their Zola purchases with a specific store. Readers who want to support their local bookstore can “pledge allegiance” to that store and send all their e-book retailing revenue to it – and to Zola of course. Each time they buy an e-book from Zola, the purchase will be tracked to that store using URL tracking tags, bits of code that appear at the end of a website address that will identify the purchaser.

Zola has grown considerably in 2012. Five months ago, it had four employees and now it has 18. Notable hires have been Bill Shapiro, who left his position as a senior executive at Time Inc. to become Zola’s head of innovation and strategy; and Mary Ann Naples, a former literary agent and vice president of business development and curator talent at social shopping platform OpenSky, has joined Zola to recruit curators.

The company has ambitious plans, said Regal, the founder and CEO. It hopes to recruit 350 independent bookstores to its cause by the end of the year – the same amount that Google recruited to its re-seller program – a feat it hopes to accomplish by offering those bookstores that join Zola on an exclusive basis equity in the company. He wouldn’t say how much equity but indicated it wouldn’t be insignificant.

Other goals include capturing 1% of the e-book market in the U.S. by the end of next year and becoming the No. 1 e-bookseller in the U.S. in five-to-ten years, according to Regal. If Zola can take 1% of the e-book market in 2013, it could be a $30 or $40 million business by then – if current trends continue. According to the BookStats report released by the Association of American Publishers and the Book Industry Study Group, in 2011, the U.S. e-book industry was at about $2 billion, more than doubling from 2010. If it doubles just once in the next two years, a slowdown from its current clip, it will be a $4 billion industry.

Zola intends to make a splash with bookstores and readers alike by offering big-time books exclusively on its platform. According to Publisher’s Lunch, which first reported on Zola at Book Expo America in June, the bookstore will offer Audrey Niffenegger’s hit The Time Traveler’s Wife as an e-book for the first time exclusively through the Zola platform. Zola will also be offering on an exclusive basis Maverick by surfing legend Frosty Hesson; the book is tied to an upcoming movie, Of Men and Mavericks, starring Gerard Butler as Hesson and scheduled for October release.

Sounds good, but why the name?

“Zola? We’re everything from Z to A,” Regal said, adding that it’s just like “Amazon,” but backwards.