Netflix for Books

What started as a social network for bookworms has turned into the largest site for readers and book recommendations with 65 million members, 2 billion books added, 68 million reviews. Goodreads leveraged crowdsourced reviews, a sticky offering (more you use it more valuable it is), and reaped the rewards when Amazon purchased them in 2013.  

Goodreads was started in 2007 as a social network to enable people to exchange book recommendations among friends. Instead of relying on NYT best-seller lists or only reading Pulitzer Prize award winners, goodreads users could get reviews from their friends and others who love the same books as them. But with enormous growth, goodreads became its own crowdsourced review vehicle, with a Netflix style recommendation engine to suggest what books to read next, an enormous trove of member generated content and thoughtful reviews, and over 10,000 virtual book clubs.

Goodreads collects data from users who input what books they’ve read to their virtual “bookshelf,” ratings and reviews of these books, what genres users like, and what books they are currently reading. Users are incentivized to build their personal shelves so they can see all the books that they’ve read, and get better recommendations for what to read next. These recommendations (originally) were more likely to be trusted as goodreads was not selling anything, and most users were building their library for their own and friends benefits.

Because of this, goodreads became highly sticky – the more time you invested in detailing your book list, and following your peers, there was lower incentive to use competitive products. The more time you invested, the more valuable the site became in recommending books you may enjoy next, or helping you discover new genres and authors. Because goodreads is open, you also don’t need to have friends using the site to reap the benefits – you can still get recommendations for what you may like and see other users (with similar profile) who’ve read books you may enjoy. Also, any user can read and write reviews.

The literary landscape has changed a lot in the past decades. In 2012, research showed that on 19% of Americans were doing 79% of non-work/school required reading; and, the way that readers decided what to read was shifting away from brick-and-mortar browsing and recommendations from online retailers (such as Amazon) and shifting more heavily toward social media and personal recommendations.

To capture these influential super-readers, Amazon spent ~$150 to buy goodreads.  Instead of Amazon using their own user generated reviews and ratings, goodreads had better credibility and recommendation engines that the 20M users trusted. Rather than rebuild from scratch, Amazon bought the company to reap the benefits, and to incorporate with their new Kindle platform. Also, because Amazon reaches a wider audience than goodreads, they have the ability to amplify the reach of the highly engaged super-readers/reviewers on goodreads platform to the more general population.

However, of course, there was backlash to the new ownership on goodreads. Some users even decided to stop contributing.  Users “liked that goodreads was crowdsourced, and that you couldn’t buy reviews on the site.” However, there were attempts to keep the organizations separate, not allowing purchasing of reviews, and benefiting from Amazon’s global data to help them grow the online collection, and Amazon web services to scale their operations.

While goodreads community of reviewers drives significant value for the site, monitoring the crowd has caused many problems for the business. Goodreads has run into controversy on multiple occasions as they’ve changed policies on review content and censorship.  Policies such as removing reviews that “were created primarily to talk about author behavior” sparked outrage from users who commented on controversial figures (ex: holocaust deniers) in book reviews instead of writing actual reviews of their titles. In one sense, goodreads must protect the content created on the site so that ratings and reviews are about the actual titles, to keep the data valuable. On the other side, reviewers felt their “rights” in the community had been ignored, and that goodreads was protecting authors and not the community. As goodreads continues to grow and cater to the interests of different stakeholders (authors, publishers, Amazon), protecting the needs and sentiment of their valuable user base is extremely important. How they choose to delicately balance the power across the paying stakeholders and value generating users is critical to their continued success.




CookUnity – a New York food delivery start-up of home cooked meals prepared by a community of local Chefs.


Quantopian: the democratization of Wall Street?

Student comments on Netflix for Books

  1. I just recently started using Goodreads, so really enjoyed reading your post! My natural inclination was to view Amazon’s purchase of the company as a positive – easier access to quickly purchasing books that are highly recommended by your friends or trusted followers on goodreads. I hadn’t considered the potential backlash that you brought up, but think that’s a real serious threat. I think Goodreads needs to do something to ensure the legitimacy and security of the platform reviews, or it risks losing its entire business.

Leave a comment