Hiptype wants to be the Google Analytics for ebooks

Retailers like Amazon (s AMZN) and Barnes & Noble (s BKS) are already collecting data about how users are consuming ebooks on their platforms — but the book publishers themselves have no access to that retailer data, and they often have no idea who’s reading their ebooks or how readers are consuming them. The founders of Hiptype, a startup in Y Combinator’s spring 2012 class, hope to solve that problem with a plugin that provides publishers with detailed data about how people are reading their ebooks.
Once Hiptype’s plugin is added to an ebook, it provides insights like reader demographics, reading behavior (where people start or stop reading; what they skip), conversion patterns (who buys an ebook after reading a free sample); and sharing and highlighting behavior (which passages readers highlight or take notes on). Publishers then log into their Hiptype accounts to see a dashboard with visualizations of the data. Hiptype also helps publishers run Facebook campaigns and target readers with personalized recommendations.
Hiptype launches in beta this week and is working with a limited number of publishers, whom 26-year-old founder and CEO James Levy (cofounder is 19-year-old Sohail Prasad) would not name — though a sample book profile for 50 Shades of Grey suggests Random House might be one early client. Other publishers — as well as self-published authors — can request access on Hiptype’s website and will be invited to join in waves. The first book is free. After that, Hiptype will charge $19 per month per book for a basic package (including data from up to 1,000 readers and basic insights and trends) or $99 per month per book for a pro package (including data from up to 500,000 readers, detailed insights and trends, ad management and personalized backlist recommendations for readers).
One possible concern is privacy. “We don’t want to discourage the conversation about privacy,” Levy said, noting that while all of the data Hiptype collects is anonymous, users can opt out completely. The company is also looking for ways it can improve its service for readers. In beta, end users have requested that Hiptype make its data available to them. For example, Levy said, a teacher could track how students are interacting with the books they’ve been assigned to read.

It doesn’t work everywhere yet

Hiptype’s largest limitation is that it doesn’t work on every platform. The plugin only works on platforms that support HTML5 and allow Javascript to be embedded within a book. Apple, which supports EPUB3 and HTML5, is in. But e-ink devices, like Kindle and Nook e-readers, web-based readers like Kindle Cloud, and desktop e-reading platforms are out.
Apple is estimated to have about 10 percent of the ebook market, with Kindle at 55 to 60 percent and Nook around 25 percent. In the case of Kindle and Nook, we don’t know how much of their usage comes from devices versus mobile apps, but for now Hiptype is missing a large portion of the ebook market.
Levy says Hiptype works on most iOS (s AAPL) and Android (s GOOG) e-reading apps, but wouldn’t clarify what those are beyond “some of the most popular e-reader apps on the most popular operating systems.” He says Hiptype is in discussions with ebook retailers and it’s “paramount to our success that we have an open line of communication.”
When publishers do see the data on their books, “it can be a little bit depressing,” Levy said. Publishers testing Hiptype in beta, for instance, were surprised by “how low conversion rates are” — early data suggests that only three to four percent of people who download a free ebook sample go on to buy the book — and how few people who do buy a book finish reading it. “It can be a bit of a bummer,” Levy said. “But as soon as you start measuring, you can do tests and see what moves the needle. We’re already doing research on the data we’re collecting. As data hackers, we think there are underlying patterns here even if they’re not apparent at first.”