- The market for paid content has literally exploded in recent years. You can find anything here. But people won’t pay for anything for long 😉 Long-lasting business here can only be built on conditional news. Why conditional?
- Because we’re talking about any new information on a topic—information that people and companies immersed in this topic want to be aware of. But how do you launch such a business? Why will it become long-lasting?
- Take this new startup, which has just decided to tackle this. If you look at it and think about it, you can identify 4 steps that need to be taken to build such a business in any topic:
Project Essence
Outread aims to “make knowledge accessible to everyone.”
To achieve this, it has created a service where users can read brief summaries of research articles from various journals. Subscribing to all popular journals in one’s field would cost at least $100,000 per year.
In contrast, a subscription to Outread will cost an individual user only $120 annually or $20 monthly. For corporate subscription rates, one must contact the startup directly.
The startup was founded just last year and by the end of that year was accepted and graduated from the Techstars accelerator. Hence, it is still in its very early stage, with their service offering just over 1,000 summaries from 20 research journals. Nevertheless, new summaries are added every week, gradually expanding the service’s knowledge base.
The topics covered by the journals and articles are highly diverse—ranging from mathematics, physics, and biology to economics, philosophy, history, psychology, veterinary science, healthcare, social sciences, data analysis, and even business and startups.
Summaries are available to subscribers via the Outread app, where they can be not only read but also listened to. Additionally, the startup processes the text of the summaries, adding definitions of encountered terms as well as links to images and videos explaining them.
As mentioned earlier, the startup is still in its early stage, having raised “only” $750,000 in investments from Techstars, where it underwent acceleration, as well as from Google’s Chief Researcher (yes, that’s a position) and Vice President of Finance.
Interestingly, the startup founders revealed that they were initially seeking only $500,000, but they were practically “forced” to accept $750,000 😉
What’s Interesting
Utilizing AI to create summaries from articles and books seems like an obvious application for building a service using this technology. Especially considering that services offering book summaries have been around in noticeable quantities for quite some time.
However, almost all such book summary services are small. Perhaps the most successful story in this market is Blinkist, which had around 1 million paid users last year, including employees from 1,500 companies with corporate subscriptions. Its latest investments were raised in 2018 at a valuation of $160 million. On one hand, since then, the service has grown, but on the other hand, market conditions and startup valuations have significantly declined.
However, in this case, success means that Blinkist was partly acquired with cash and partly with shares by the educational startup Go1, about which I even wrote a review last spring. So, creating a service with book summaries, even with the use of new AI technologies, seems like not a very promising venture.
Especially considering that reading books—whether entirely or in summary form—is now an optional activity. People read fewer books now, and as a result, fewer books are being written. This is because books capture fundamental knowledge with a delay, and things are changing too fast nowadays, with books not keeping up. Moreover, demand for fundamental knowledge has significantly declined—everyone wants something simpler, more practical, and completely fresh 😉
On the other hand, there are research articles. Everyone who is seriously engaged in a specific topic has to study them to keep up with what’s happening. Moreover, over 5 million such articles are published every year!
These millions of articles are published in tens of thousands of journals. In 2020, there were around 47 thousand such journals, and this number has only grown in recent years.
Additionally, 25% of research journals are not in English.
This is because the most research articles are published in China. Furthermore, among the “research-rich” countries, there are Germany, Italy, Japan, and France, as well as Canada, which is half Francophone.
Thus, to keep up with research in even a narrow field, you need to be aware of what’s written in tens of thousands of articles published in hundreds of journals. Subscribing to all these journals is too expensive, and reading all these articles in full is impossible. Especially if a quarter of them are written in a language you don’t understand 😉
Even if you don’t subscribe to journals entirely, paid access to a serious article from a serious source can cost $40–50. To pay such money, you need to understand that it contains exactly what you need—which is not always possible to understand from the standard open teaser.
Outread’s summaries are longer and more informative—their length is up to 10 minutes of reading. Moreover, the startup claims to respect copyright when compiling these summaries, which includes, as far as I understand, a combination of length restrictions for summaries (thank goodness, research articles are usually long) and possible agreements with journals and leading databases of research articles.
It may seem that the main target audience for Outread is research institutes and other scientific institutions. However, this is not the case at all! Scientific organizations are not interested in subscribing to the service. Instead, consulting firms (including the “Big Four”) and technology companies (including Google) subscribe to the service, as they need to always stay at the forefront of progress.
This reminded me of an old Soviet anecdote when a hypothetical Chukchi was admitted to the Union of Writers, and then they asked him if he had read Tolstoy, Dostoevsky, and others. To which he proudly replied: “Chukchi is not a reader, Chukchi is a writer” 😉
Apparently, the same thing happens here—employees of scientific research laboratories are too absorbed in their own research to regularly study others’. Such behavior is understandable but not entirely logical.
However, in the startup scene, many behave in exactly the same way. When a founder starts their startup, for some reason, they stop paying attention to what other startups in different or related fields are currently doing—except for a few most direct competitors. As a result, the founder starts to “narrow down”—losing touch with the present moment and the opportunities to transfer experience from other markets or related topics, which includes choosing directions for pivots, without which a successful startup usually cannot do.
Where to Head
The market for paid internet content has grown dramatically. Previously, this market only included digital versions of magazines and newspapers, and many analysts still estimate its size based on them. However, since then, there has been a sharp increase in the segment of bloggers with paid subscriptions—some of whom have even turned from individuals into businesses.
Therefore, I even hesitate to provide any estimate of the size of this market, as different estimates differ by orders of magnitude. But it’s definitely billions of dollars. The question is whether it’s tens or hundreds 😉
If we take just one popular service for content newsletters, Substack, it has already amassed 17 thousand authors who are paid by 3 million people for their content. Besides Substack, there are other newsletter services, and moreover, nothing prevents authors from attaching paid subscriptions to their individual blogs. Additionally, the option to create paid groups on social networks has emerged.
These paid subscriptions can roughly be divided into two major categories. The first is exclusively authored reflections on a topic of interest to the author. The second is reviews of what is happening in a topic of interest to the author, which can be conditionally called “news.” Although this boundary is highly conditional, as news reviews are often combined with authorial reflections on them and a selection of additional information, as in the case of FastFounder 😉
The second category seems more “long-lasting” because purely speculative reflections by one author on the first model may eventually become tiresome. However, the need to “stay informed” for people engaged in this topic will remain as long as they are immersed in it. However, unless these people turn into “Chukchi writers” 😉
The format of “being informed” can vary. News reviews, summaries of new articles, dry or diluted with reflections and additional information—it doesn’t matter so much. What matters is that in this case, newsletters (in the form of actual newsletters or any other form) are not pulled out of thin air but are created as a result of processing a large amount of “raw material” that appears daily—which each specific person lacks the time, strength, and perseverance to do.
Therefore, the main direction of movement is towards creating services for “news” subscriptions. “News” is in quotes because it refers to any newly emerging information on a topic—for example, new research articles, as in the case of today’s Outread.
And here are the steps needed to take for this:
First and foremost—there needs to be a constant influx of “raw material” in this topic, a large amount of newly emerging material from various sources that can be processed daily. Next, it’s necessary to understand who will be willing to pay for the opportunity to receive such newsletters (in any form). It’s just important to note that these may not be “usual suspects” like scientific institutions in the case of Outread 😉 After that, find out in what form these people will be comfortable receiving the necessary information—meaning how it should be processed and supplemented. And will we be violating anyone’s copyrights in doing so? Now—figure out how to create an AI machine that will process this raw material and produce the desired result, which live people will need to edit, at worst. Are you or people or companies you know interested in being informed? What sources of raw material exist for this? How should this information be processed and supplemented? Can this process be automated using AI?
Everyone has been saying for a long time that there is too much information around. So do something so that the most important parts of this information can be obtained in time and quickly perceived. And then people will pay for it—if the information is genuinely important and you offer it to those who genuinely need it 😉
About the Company
Outread
Website: out-read.com
Last Round: $750K, 04/26/2024
Total Investments: $750K, Rounds: 1