In 2017, I set a personal goal to read 50 books during the year. But I quickly ran into some frustrations. First, it was hard to find new books to read—50 books is a LOT of books. Second, it was hard to vet books in advance. When you’re racing through 50 books, a bad book that’s a slog to get through can throw you dangerously off schedule. And third, I didn’t have good ways of tracking what I had read. I built an Excel tracker but it took too long to fill out and so I often didn’t.
A friend then told me about Goodreads.
Goodreads is a platform for authors and readers with over 125 million members. Users search its massive database of 3.5 billion books to find new books and rate and review books they’ve read. Goodreads uses users’ rating data to provide personalized recommendations on what to read next. Comment boards for each book, forums, and contests create spaces for readers to engage and create communities. Users can follow each other, allowing users to stay up-to-date on what their friends are reading.
It’s also an invaluable space for authors. Goodreads allows authors to register for special accounts that mark them as such and provide special privileges on the site. They can engage directly in conversation with readers about their books, run marketing campaigns, publish blog posts, track their audience using a dashboard and easy-to-use tools, and curate a fanbase.
Goodreads was acquired by Amazon in 2013, who recognized that it represented both a significant threat to and opportunity for Amazon’s own literary business. With this deal came valuable new functionality: Goodreads users could seamlessly purchase books on Amazon.com and Amazon Kindle devices came with Goodreads automatically installed. In real time, a Kindle reader could now post quotes, notes, and progress on their readings to their Goodreads account.
The Amazon acquisition also brought a critical development: revenue. Goodreads today has three primary revenue streams: affiliate links, targeted ads, and giveaways.
Affiliate Links: Since its early days, Goodreads had captured some revenue from affiliate links: users could easily purchase books they discovered from Goodreads through bookstore websites like Barnes and Noble and Amazon, with some small commission collected by Goodreads. The deep integration of Amazon and Goodreads meant more affiliate revenue and likely also higher per-purchase commissions (though this is personal speculation).
Targeted Ads: Amazon also helped Goodreads launch more sophisticated advertising programs. Unlike other websites and apps, the ads on Goodreads are only for books. Users are occasionally suggested sponsored books to read, which are targeted based on the user’s reading preferences. For example, a reader who enjoys Agatha Christie novels might see a suggestion on their feed for a newly released mystery thriller from Penguin Random House.
Giveaways: In 2020, Goodreads launched a program that allows authors or publishers to run book giveaway campaigns of up to 100 books through its platform, charging $119 for its Standard package and $599 for Premium on top of the cost of the free books. The program is highly attractive to sellers; Goodreads claims that over 40,000 users register for Giveaways every day.
This brings us to the question of Goodreads’ sustainability and scalability. Competing platforms (e.g., The StoryGraph, LibraryThing, Anobii, etc.) have launched in the last decade, many of which closely mimic Goodreads’ features. But I don’t believe that any of these platforms represent a meaningful threat to Goodreads’ long-dominant market position. Goodreads’ user base, massive book database, and synchronization with Amazon are competitive advantages that will continue to afford it a wide strategic moat.
The company’s actions seem to support this view: Goodreads has long been teased/chided for having a remarkably outdated and frankly terrible UX. But despite this consistent and loud feedback, it has apparently made no investments in the platform experience since the early 2010s. And why not? Because they’re a monopoly. Why invest in platform improvements if you have a captive audience with no meaningful alternatives?
Goodreads’ growth strategy is less predictable. Their primary focus so far has been on English language books, readers, and authors, but the platform does already have foreign language assets and capabilities. It’s unclear what’s holding them back from more aggressively pursuing other audiences, though it seems likely that they’ll be similarly successful when they do.