Book sales during the pandemic have increased, and it appears the amount we read has increased too. Now Inkitt, the startup that operates a popular free platform of the same name for anyone to write and post stories – stories that Inkitt then analyzes using data science to determine which of them. They’re taking it to the next level to produce longer work for its paid app, Galatea – has raised $ 59 million in funding that could help it capitalize on this moment. The valuation with Series B is not disclosed, but from what I understand from a reliable source it is around $ 390 million.
The funding will be used by Berlin-based Inkitt to continue to develop its algorithms and technology, which is important because the conservation of the stories – including the choice of what catapults from the free app to the paid app like longer work; and acting as “editor” with A / B testing variations in the directions of the story – are all generated by these algorithms, not by humans. It will also use the funds to hire more people, particularly to expand further into the North American market. And he finally plans to work on how he could extend the platform in the longer term. It might involve more formats beyond playback (it’s now taking first steps in audio, for example), and it might also involve creating APIs and SDKs so that other parties, such as other publishers, can use its tools to also test shorter works to see what might work as books.
Inkitt has experienced strong growth over the past two years – the company now has 7 million users (AKA readers) and a community of 300,000 writers, nearly three times the 1.6 million readers and 110 000 writers she had when I covered her last round of funding in 2019. The paid Galatea app, meanwhile, has an execution rate of over $ 38 million (this figure has been multiplied by more of 6: it was only $ 6 million two years ago).
The startup has also caught the attention of other players in the publishing industry, highlighted by those investing in this cycle.
Scott Sandell, Managing Partner of NEA, co-led the investment with German publishing giant Axel Springer. Michael Lynton, president of Snap (and in his previous lives, CEO of Penguin Books and senior Disney executive who started Disney Publishing); and Stefan von Holtzbrinck, chairman of the eponymous publishing giant (which owns Macmillan among others), also participated, alongside Kleiner Perkins, HV Capital, Redalpine and Speedinvest. Kleiner led Inkitt’s Series A.
The platform’s writers – at least those whose early chapters match Inkitt’s algorithms well, which they then turn into longer works that resonate with readers – are also seeing big numbers, with some notable fairy tales. among them.
Seemran Sahoo, from one of India’s poorest states, Odisha, has earned $ 2.7 million so far from The arrangement, a novel that she wrote and published on Inkitt entirely on her smartphone. Sapir Englard from Israel originally wanted to use the product of his germinated Inkitt book, Millennial Wolves, to finance his tuition at Berklee College of Music in Boston. Tuition is expensive at American higher education institutions, but despite this, she ended up doing a little more than that: So far, she has made $ 8 million so far from the novel. (Note: Both were released before Inkitt’s last round of funding: they continued to generate a lot of sales.)
Both of these are outliers, but Ali Albazaz, Inkitt Founder and CEO (pictured below), says most of those who are successful for Galatea do very, very well compared to other publishing environments.
âThe majority of our Galatea writers have made over $ 100,000 in sales,â he said. But if books, and in particular some sort of blockbuster, are at the heart of what Inkitt does today, Albazaz is inclined to describe his broader vision of Inkitt much more than just reading. The company has started to take small steps in audiobooks, and there are plans to develop movies, TV shows, merchandising, games and maybe even a theme park: “the Disney of the 21st century” , in his words.
This trip is consistent, but it’s not done at breakneck speed: that’s almost exactly what Albazaz told me is his plan in 2019 as well. (Some things didn’t stay that important: The company’s original selling point on Galatea was a set of “effects” that it added to books – sounds and jerks that make the experience They’re still there, but it seems like they’re not the focus of every experience anymore, and even Albazaz only brought up the effects of our conversation after the fact.)
As to why Disney’s vision has yet to be realized, to be fair, we have been in a pandemic period. In addition, âgoing fast, breaking thingsâ is not always the best way forward.
Albazaz said the company receives “between two and four requests each week from television, film and production companies” to create content-based Galatea / Inkitt books (as publisher Inkitt owns film rights and other options), but he hasn’t signed any deals yet. Part of it is because of this idea of ââDisney: Inkitt wants to play a role in the sequel.
âWe are looking for what is best for us,â he said. “We want to leave the possibility of having a video on Galatea.” This is also another area where Lynton, who also spent years as CEO of Sony Pictures Entertainment, could help.
Like other self-publishing platforms like Wattpad – which went further in its own “Disney” ambition, with a wide array of videos and other content from works that got their first oxygen on. its platform; Wattpad earlier this year was bought by Korean Naver for around $ 600 million. in the world. There are already plenty of places you can do that, of course, sites like FanFiction at Amazon and everything in between.
As for the latter, Albazaz is unequivocal about his contempt for the e-commerce giant, which “took away all the margins and lowered the profits” on books and ruined the reading experience with its Kindle. That feeling, he said, is what prompted him to create Galatea in addition to Inkitt, as previously the company used to move the books to Amazon once they expanded to the -beyond the central short format of the flagship application. But, it must be emphasized, Inkitt also has his own quirks which are not suitable for everyone.
One prominent author – whose name has not been released – was curious about how a new work could go through the Inkitt machine and submitted a chapter for publication.
Inkitt’s data science engine – who doesn’t care who writes, just what might ‘do right’ – “measured that readers weren’t interested in the story and would stop reading very quickly.
The author was “furious,” said Albazaz, as was the author’s editor – not least because of what the author had done with it. their delivered. The author ignored comments and the book was published as the author wrote it (the entire book was already written when the chapter was submitted). The book has sold 1 million copies, which is fine for some, but nothing to do with the author’s previous blockbusters.
âThose 1 million bought it because of the author’s name,â Albazaz said categorically.
Longer term, it will be interesting to see if Inkitt can not only support its growth, but exploit it, as it wishes, in a bigger media game. Potentially, it won’t just depend on how Inkitt is running, but also what happens in the wider market.
Because so many ideas for other content sprout from the stories you read, it’s inevitably an area that Amazon, and others like ByteDance (which already gives chills in the publishing world). ), might also want to explore over time. Amazon has extensive A / B testing for other parts of its operations and a formidable arsenal of data science and AI that it uses across all areas of its business. So far, he hasn’t made huge strides in creating a product to incorporate all of this into his self-publishing effortsâ¦ not yet, at least.
On a more positive note, however, this also speaks of great opportunities and the current traction, both of which are what investors like to see.
“Inkitt is well positioned to become the future of storytelling, having already moved beyond traditional forms of content to new, innovative and engaging formats for millions of readers,” Sandell said in a statement. âA critical change is taking place in the way people consume stories, and Inkitt understands that. We are delighted to partner closely with Ali and the rest of the Inkitt Board of Directors to help drive what is sure to be an exciting and exponential growth phase. “
âInkitt’s technology is amazing, very successful and truly exemplifies the future of storytelling,â DÃ¶pfner added. âWhen you consider the number of highly commercially successful Inkitt authors, you can clearly see how deeply this business has disrupted the way people consume books. We are excited to be a part of the further development and to work with them throughout their journey. “
Update: Article clarified to note that Inkitt did not suggest alternative plots to the anonymous author; has just told the author that, as it is, the story would not interest readers much.