Earlier this month, Santa Barbara-based zuuka Group, the publisher behind the iStoryTime (www.istorytimeapp.com) line of children's books on the iPhone, announced a first round of funding. We thought it would be interesting to hear from co-founder Graham Farrar, to hear about how the business of books-as-iPhone apps works, what the firm is doing with the funding, and what's next.
Congrats on the funding. First of all, for the folks who haven't run across your children's story books on their iPhone or iPad, talk about what your firm is all about?
Graham Farrar: Zuuka's brand is iStoryTime. We have over 100 apps now in the App Store. Basically, we're a kids content publisher. Everything we do is focused on children, mostly those in the two to ten or two to twelve age range. We've done lots of titles with DreamWorks, Cartoon Network, Sony, FOX, Nickelodeon, as well as many unpublished authors and many books you have never heard of. We've also published books which you see plastered across buses, and which have full page ads on the New York Times, such as a recent line of Smurf books we just launched.
How long have you been publishing books on the iPhone?
Graham Farrar: Really, the company started about two and a half years ago. That's really about as old as you can be in this space. In part, we started it because we were trying to scratch our own itch. We were all parents with two kids, and I had a daughter who inspired the whole thing. We used to travel with her, going to restaurants, with a backpack or bag full of books to keep her entertained. Then, we got iPhones, and that pulled on her like a magnet. The only problem was, the only content out there were things like video games, movies, and things like that. The convenience of getting to that content was causing me to provide her with that content, even though it was not my first choice. I thought that instead, we could bring the wholesomeness of books to the convenience of the iPhone, so that you could take apps everywhere, make it inexpensive, and so you would be able to have 30 books in your pocket but not have it weigh any more.
How were you funded before this round?
Graham Farrar: We've been entirely self funded, and this is the first round we did. We bootstrapped the company, and just started making books. At the beginning, it was a new market, and we were not even sure if people would go for books, or books for kids. We started making them, and we were lucky as people liked them. We took those revenues, and folded them into the company. These days, it's no question if the market will happen, it's only a matter of how fast. We see iOS exploding, and at the other end of things, every day paper is getting smaller, and digital is getting a little bit bigger. The transition is assured, and it's only a question of it will take two years, three years, or five years. It's really a fun market to be in.
Where you have see the most interest and adoption of your apps?
Graham Farrar: Our best selling titles are the name brand ones. The awareness of the brands helps, particularly as curation is an interesting issue with the App store. With 500,000 apps, it's an interesting challenge on how to get things noticed. Our apps, like Kung Fu Panda, and the Smurfs, are names people know. But, one things we find is that they start with one of those books, but more than half of our users have more than one title on their device. We find that lots of the time, parents might get the Kung Fu Panda title, which parents feel good about to keep their kids occupied at the grocery store or restaurant, and end up looking at the rest of the library for Little Red Riding Hood, How To Train A Dragon, and out other titles. That's the nice thing about our library, which is it's another form of curation--parents can shop for apps by our brand, and know it's something good.
How did you get from unknown authors and titles to your brand based books?
Graham Farrar: It's actually been a lot of hard work, and some good luck. We started with one title, because the market was so new, and didn't think anyone would pay much attention to it. So we started making apps from books, and were featured by Apple, and that did very well. Soon, we had interviews with Publisher's Weekly and others, and our first big break came from Dreamworks, which reached out to us because they were looking for a model and engine to apply to their movies. That's where we started, with Dreamworks, and that kind of spread through the network, to Sony, Cartoon Network, Fox, and so on. Now we've done all of the Dreamworks Movies, and are on to future projects.
We hear people talking about how it's difficult to make money with just apps, what's your view on that opinion?
Graham Farrar: In general, I wouldn't say it hard to make money with apps. What I think, is it is hard to make things people want to buy. It's the same thing with apps, as it is with content. The App Store has lowered the barrier of entry, so that lots of people are making an app and putting it into the market. But, if you're the 500th and one app out there doing something, how do you get people to care about it? That's the challenge. That challenge has existing for a long time in trying to sell anything. That's why with our library, we see lots of people touch us and find us, and once they do look at things and find apps they like, they will browse through and buy more. Name brand properties are also high on the radar in terms of awareness, and that also definitely helps with discovery as well.
Diverging a little bit, can you talk about the structure of your firm--it looks like you merged with a firm earlier?
Graham Farrar: Zuuka is actually the combination of FrogDogMedia, the company we originally started two years ago, and Zuuka, a company in Germany which was doing similar type of work. They were slightly different, in that they were in a smaller market, doing contract work with an in-house team. We were in a big market, with licenses, but did not have an internal team, so we decided to put it all together so we could leverage our licenses and market, and we could leverage the team they had built, so now we're doing everything from content creation, to animation, to artwork, to development, to marketing, all of that is onw in house. We put the companies together and changed the name to Zuuka Group, which encompasses both companies. We sell everything under the iStorytime brand.
So now that you have financing in hand, what's next for you?
Graham Farrar: We are doing more and more of what we have been doing. The money is going to go towards hiring, better development, and more creative work. We're definitely looking to get things spiced up in terms of interactivity. It's been such fun. I'd argue that--maybe a bit dramatically--that this is the biggest change to happen in publishing since the printing press. More realistically, it's definitely the biggest thing to happen since Amazon came onto the scene with the Internet, making it so you could get books without having to drive somewhere. We've now taken that a step further, allowing you to get content immediately, at half the price, and made it so you are not confined to the printed page. We've reinvented storytelling. Without the limits of the printed page, you can use things like the accelerometer, microphone, and touch screen to tell a story even better than you used to.
Finally, what do you think is the key to success in the app market?
Graham Farrar: A lot of it is looking to see where the market is going, and aiming at where it is going, rather than where it is. A lots of success is being in the game when the game happens. If you want to join halfway in, it's harder than if you're already in it when it develops around you. That's definitely what we're seeing. I believe Apple sold more iPads than PCs last quarter, and there are 220 million accounts with credit cards on the App store, and it's growing 20 percent a quarter. The market is definitely growing around us, and the transition from print to digital is essentially a foregone conclusion. Then, you just have to run as fast as you can.