That hasn’t stopped Ambassador Enterprises, a Fort Wayne, Ind.-based venture firm, from investing again. “By serving authors and publishers in a process-oriented, measurable way, BookShout is eliminating the guesswork and building tools that let content creators take control of their audience,” Ambassador CEO Daryle Doden said in a statement.

BookShout, which is available on the web and for Android and iOS, recently rolled out tools for digital bulk sales and promotions. It offers gift cards and promo codes and added an “author circles” feature that lets authors communicate with their fans. The company says it is working with 250 publishers and sells over 100,000 ebooks on its platform. But it would not reveal how many users it has.

As for the Kindle and Nook importation — which seemed suspect at the time it was launched, even though CEO Jason Illian said the company wasn’t breaking Amazon or Barnes & Noble’s terms of service — the feature is turned off for now but could return, Illian told me. “We’ll see if we do [turn it back on] or not based on our relationships and partnerships with publishers,” he said. “We are here to serve them.”

BookShout was founded in 2010 and has gone through a number of incarnations before its current model. It has also received backing from Ingram Content Group CEO John Ingram. Including the newest round of funding, the company has raised $8.75 million in total.

The Dallas-based startup is doing this with the support of large publishers. The startup has already signed deals with Random House, HarperCollins, Macmillan and Wiley, and is “finalizing” agreements with Simon & Schuster, Penguin and Hachette, along with other publishers. Ingram’s publisher clients can sign up directly or through Ingram.

A login workaround — not breaking DRM

BookShout founder and CEO Jason Illian explained to me — sort of — how the process works. The company’s app doesn’t break DRM on Nook or Kindle books. Rather, Ilian compared BookShout’s model to personal finance site Mint, which imports transactions from users’ bank accounts. Neither Mint nor BookShout relies on APIs (Amazon and Barnes & Noble don’t make their APIs public). Rather, to import books to BookShout users log in to the app with their Amazon or Barnes & Noble user name and password. The app verifies their purchases and then — if a consumer has bought a Kindle or Nook book from one of the publishers that BookShout works with — lets the user access the publisher’s version of the file through the app. These publisher files are protected by DRM.

“The great thing is, it’s just your book,” Illian told me, adding, “It’s not taking Amazon or Barnes & Noble’s sale. If you want to buy from them, great, keep buying from them.”

The advantage for readers is supposed to be the ability to integrate their ebooks with BookShout’s social reading capabilities — a goal that many startups have focused on, though it’s unclear that many readers actually desire these features.

The advantage for participating publishers, Illian says, is more data about their readers: “We want to be able to give information back to the publishers on how people are reading, where they’re shopping, what they’re sharing.” The Kindle and Nook book importing, though, doesn’t actually provide publishers with much information about their readers other than which platform they’ve bought a book on. Rather, BookShout’s hope is that publishers will choose to run promotions and let their authors interact with readers through the BookShout platform. BookShout is also selling ebooks directly — through its website, not its apps — and takes a cut of those sales. So far, most of the titles on BookShout’s website are Christian and religious titles from Thomas Nelson, which is now owned by HarperCollins.

“They said it was impossible”

It seems like only a matter of time before Amazon and Barnes & Noble shut down BookShout’s import function. “I think they’ll find us,” Illian told me, smiling. “I’ll be interested to see what Amazon thinks. My argument to them is, one, we’re not taking your sales, and, two, we’re not breaking any terms of service because we’re not taking any files from you. Will they try to shut it down? Maybe. Amazon is notorious for protecting their ecosystem. We’ll see how they react.”

What about Barnes & Noble? Illian leaned in close. “What do you think Barnes & Noble would do to have our technology?” he asked.

BookShout is ambitious — “They said it was impossible to import your books from Amazon and Barnes & Noble,” Illian bragged at Tools of Change Frankfurt Tuesday evening — but when I tested the import function through its iPad app (the function is not yet available on the BookShout website), it didn’t work at all for Kindle books. (I asked Illian about the problem in a follow-up email and was told that other users had been able to successfully import Kindle titles; as of this writing, BookShout was working to address my problem. but I wonder if Amazon has already moved to shut the function down.) The app appeared to login to my Amazon account successfully, but then I got a message saying “No books could be found to import.” (There are over 70 books in my Kindle account, including many from the publishers that BookShout says it is working with.)

The app was able to login to my Barnes & Noble account and showed the purchases I’ve made there, but because none of those purchases were titles from publishers working with BookShout, I couldn’t access them.