Oyster raises $3 million from Founders Fund for "Spotify for books"

By Erin Griffith , written on October 10, 2012

From The News Desk

First, the news: Oyster, a digital book reading app, has raised $3 million in funding led by Founders Fund, with participation from SV Angel, Founder Collective, Shari Redstone’s Advancit Capital, Chris Dixon, and Sam Altman.

The New York-based company is founded by former Hunch business development head Eric Stromberg, former DoubleClick for Publishers exec Andrew Brown, and former Google Maps UX Designer Willem Van Lancker.

It might the first time a startup has raised funding on an idea we proposed. Not that we can take credit -- Oyster had been in the works for months before Hamish's high impact story on applying the Spotify/Netflix model to magazines came out in March.

I met Stromberg shortly after the story, where he explained he was building just that for book publishing. Bundle books onto one platform and charge a monthly subscription for all-you-can-eat consumption on an iPhone. He's not the first to try it, but I knew he had the right approach, because he had already secured deals with the content creators first. Oyster has agreements in place with several publishers and is expanding its catalogue every week, Stromberg says.

Earlier this week, venture capitalist David Pakman explained why this matters in a breakdown on which categories of media are controlled by the content creators and which are controlled by the distributors. In the case of publishing, hits like "Harry Potter" are important, which means the power lies in the hands of the content creators. Amazon has a bit of a monopoly on the electronic book distribution side, and content creators are scared of it. Up until now, it has been argued, subscription book businesses only work when they're run by the publishers.

Oyster is slowly allowing users in (request an invite here), focussing on discovery of books, access to many books, and a mobile experience, the founders wrote in a blog post today. They wrote, "We are building Oyster for an audience that aspires to read more. Read all the books you wish you’d read."