Readmill first gained attention for its clean ebook reading interface, which lets users highlight and share passages from ebooks without leaving the app. At launch, the app only supported DRM-free EPUB files, limiting it primarily to DRM-free public domain titles. Last October, though, Readmill added support for Adobe DRM and PDFs, opening it up to a much broader range of titles, including those from Kobo, Barnes & Noble and Google Play. (Kindle books still aren’t supported, though, because of Amazon’s proprietary DRM.) Twenty-two independent ebookstores also have a “send to Readmill” feature, so that a user can buy an ebook and immediately sync it to his or her Readmill account.

Readmill’s new iPhone app syncs with the iPad version, so a user can start a book on one device and pick up where he or she left off on another. “We were finding that a growing number of our users wanted to read their ebooks in this way, and the ability to read via a smartphone has been the most requested feature within our existing community to date,” said Readmill cofounder and CEO Henrik Berggren, “so this was a natural next step in development.”

Berggren previously led business development at Berlin-based social music company Soundcloud. Readmill raised its first funding round, an undisclosed amount from Wellington Partners, last June. The company would not disclose how many members it has, saying it’s focusing on user experience for now.

The latest version of the iPad app — which adds a social layer to reading, allowing you to highlight and share DRM-free e-books — will include two new features that simplify life for those on both sides. First, the “Library” function simply creates a cloud-based index of all the book files you have access to, allowing you to access them all with a touch — wherever they are stored. It’s something that seems obvious, but is missing from the current picture thanks to the widely varying approaches taken by independent online retailers.

Meanwhile the Berlin-based company is also giving publishers an easy-to-embed “send to Readmill” function that allows users to send a copy of a book they’ve just purchased to their library without any fuss.

Both are essentially two sides of the same thing: trying to make the experience smoother and more straightforward for people who purchase from indy bookshops. And between them, these moves could help level the playing field between large, closed systems and small, open ones, says the company’s community manager, Matthew Bostock.

“Users spend a lot of time trying to find their e-books, but people like Apple and Amazon have a fantastic user experience,” he told me. “We want to have that user experience, but we want to let independent sources have a way to give it to their users… This is a way of bridging the gap between buying from these stores and being able to share books.”

The new services already have some pretty good partners, launching in conjunction with a range of companies from the start: A Book Apart, Bookrix, Leanpub, Free-ebooks.net, Jotify, OR Books, Publit and Bibliocrunch. It’s also teaming up with Readability to support its new Readlists feature.

It’s also got some good news on the funding front too, with Wellington Partners (Spotify, Xing, Hailo) backing the company with a Series A funding for an undisclosed amount.

In the grand scheme of things these features are probably a minor update — but right now it feels like it could be a significant step forward for the company, which has a great idea but is hampered by the fact that a significant amount of the e-reading market is owned and controlled by competitors who are extremely closed and use lots of DRM.

Publishers don’t control engagement

Start off by assuming that social reading means being able to interact with a book through social media or with social features inside the book, and discoverability is the challenge of finding new authors and books.

Part of the challenge comes from the fact that many of the parties trying to come up with solutions are startups or retailers rather than the publishers themselves. Tony O’Donoghue, UX (user experience) lead of mobile applications at Kobo, noted in a social reading panel that “at the moment it’s retailers like us” adding additional features into e-books, but “eventually publishers could add them directly to their EPUBs. I do see us moving toward the publisher having control over this type of engagement in the book.”

O’Donoghue also claims that readers are going to want e-books “to be like the rest of the web that they use every day, with Google integration, Wikipedia, all the social networks.” But those may actually be things that Kobo wants readers to want.

Bookstores are going down and taking discovery with them

Social tools haven’t taken the place of brick-and-mortar bookstores, which are declining as a source of discoverability for books, industry consultant and analyst Peter Hildick-Smith noted in a Publishers Launch BEA panel on Monday. His company, Codex Group, tracks discoverability by asking readers where they bought the last book they read. Two years ago, 31 percent of respondents found the book in a bookstore. As of the end of May 2012, that number has decreased by 45 percent — down to 17 percent.

That’s bad for book sales, Hildick-Smith said, because bookstores prompt a lot of spontaneous purchases. The Codex Group asked book buyers if they had a specific book in mind to buy the last time they went to a brick-and-mortar bookstore. Only one in three had a specific title in mind; the rest were going to browse and buy. Kindle owners are even more likely to browse in bookstores — 76 percent go in spontaneously — suggesting that online solutions (like Amazon’s algorithms) aren’t yet doing the trick for discoverability.

The future of fiction on Twitter

In a 7x20x21 panel, where authors have seven minutes to give a twenty-slide presentation (each slide appears for 21 seconds), writer Robin Sloan (whose novel will be published by Farrar, Straus & Giroux in October) said “interesting, identifiable formats are going to be the future of fiction on Twitter.” Sloan thinks author Teju Cole has mastered this more than anyone else with his “small fates” tweets — all drawn from hundred-year-old newspaper reports. “Just the language, something about the structure, the rhythm, the tone, [you see one of these tweets and] know immediately it’s one of his ‘small fates,’” Sloan said.

“A Supposedly Fun Book I’ll Never Read Again”

Author, comedian and Brooklyn bookseller Dan Wilbur does his part to spread the word about literature at @betterbooktitles and betterbooktitles.com, as he explained in his 7x20x21 presentation. A few rewritten titles: “Hamlet” becomes “Ghost Dad,” “Mrs. Dalloway” becomes “A Quaint, Midafternoon Panic Attack,” “James and the Giant Peach” becomes “It’s Ok if giant fruit kills your aunts so long as they were bitches,” and David Foster Wallace’s “Infinite Jest” becomes “A Supposedly Fun Book I’ll Never Read Again.” Penguin’s Perigee will publish Wilbur’s own book, “How Not to Read: Harnessing the Power of a Literature-Free Life,” this September. Wilbur promised, “It’ll be the last book you’ll ever read.”

Illustrations from betterbooktitles.com: Hamlet; Animal Farm; The Girl with the Dragon Tattoo

The apparent signs of a precipitous decline in some of Facebook’s “frictionless sharing” social-news apps set off a a minor frenzy in the blogosphere on Monday, with many critics taking considerable delight in the collapse of something they openly despise. Further investigation by TechCrunch and others, however, showed that the drop-off is likely a result of changes that Facebook has made to its algorithms rather than a mass exodus of users. That in turn reinforces a lesson media companies need to keep in mind at all times: namely, that Facebook is the information gatekeeper now, and you are just a provider — and only one of many.

Jeff Bercovici at Forbes was the first to point out the massive decline in monthly average users of the Washington Post‘s social-reading app, noting that the newspaper had lost more than 50 percent of its users in the last month — dropping from around the 18 million mark to about the 9 million level. Buzzfeed’s John Herrman then looked at some of the other social-news apps from outlets such as The Guardian and Yahoo and found that they also suffered dramatic declines in users during the same period. This triggered a wave of schadenfreude from many in the media industry and the tech sector who see the apps as spammy and irritating rather than helpful or interesting.

Facebook giveth and Facebook taketh away

Not long after these charts first appeared, however, others started asking questions about whether the declines were really caused by a mass exodus of frustrated users, or whether they were triggered by changes at Facebook. Jeff Sonderman at Poynter raised the question in a post — and then TechCrunch and Inside Facebook dug into the changes a bit further, and noted that Facebook has been fiddling with the way that links from social-reading apps appear in a user’s news feed. Whereas they used to come in a big chunk that many found irritating, now there is a smaller box with just a single “trending articles.”

The big lesson from this, as Sonderman notes in a follow-up post, is that Facebook giveth and Facebook taketh away. If you look at charts that cover a longer period than just a single month, you can see a massive spike in the user-base of some social-reading apps like The Guardian‘s — presumably driven by the same spammy quality of shared links that irritated so many users (Note: this is also a good lesson about how you should check data for more than just a one-month period before arriving at conclusions about user behavior). Then the new changes take effect and the spike is more or less erased.

image via TechCrunch.com

After all is said and done, these social-reading apps still have a significant number of readers: the Washington Post‘s app may have seen a 50-percent drop-off, but it still has nine million monthly average users, which is pretty substantial for a newspaper with just 500,000 subscribers outside of Facebook. And the Post deserves some credit for being one of the first to jump on the “frictionless sharing” idea — which publisher Don Graham (who has a fairly close relationship with Facebook CEO Mark Zuckerberg) described to Om last year as “going where the readers are.”

Handing control to Facebook is a Faustian bargain

At the same time, however, the deal that the Post and others have made with Facebook is very much a Faustian bargain, as I tried to point out when these social-reading apps were first launched. Can they drive traffic? Obviously they can. And it’s true that going where the readers are is a good strategy — just as it was when newspapers created portals inside America Online or CompuServe, or distributed “interactive CD-ROMs.”

But there is also an important reality when you make an arrangement like that, and it is that Facebook owns you, in the sense that it controls access to your content. It controls who sees it and when, and it controls how it is displayed — or even whether it is displayed. Turning over your reader comments to Facebook can be a double-edged sword in exactly the same way: yes, it takes care of things like trolls and spam (to a certain extent) by outsourcing all that to Facebook, but you may not always want Facebook to control whether a comment is posted or not.

As Michael Zimbalist of the New York Times research lab pointed out in a comment on Twitter, this is the same kind of lesson that startups of all kinds have had to learn about Google, which has a habit of changing the terms of its APIs and other services suddenly, thereby crippling or even killing entire business models with one fell swoop. Amazon — another platform disguised as a company — has done similar things with its APIs, which has also been a wakeup call for young companies.

Apple, of course, has by far the most iron grip over what content and features publishers or anyone else can offer — and even how they can offer it, something that has soured a growing number of magazine and newspaper publishers on the iTunes model. The lure of these giant platforms is undeniable: they can expose your content to far greater numbers of people than you could ever do on your own. But never forget that they control every aspect of the crucial levers driving that business, not you.

Post and thumbnail images courtesy of Flickr user Klearchos Kapoutsis

Taking the idea that book-based conversations are best prompted by the people who actually have something smart to say about the books, a startup, Subtext, is today releasing a free iPad app that collaborates with big-six publishers and authors to add commentary to and start discussions around books like A Game of Thrones and The Magician King.

Subtext is working with Hachette Book Group, Penguin Group, Random House, Simon & Schuster (NYSE: CBS), Byliner, Algonquin and other publishers and offering enhanced titles like A Game of Thrones by George R.R. Martin, The Chairs Are Where the People Go by Misha Glouberman and Sheila Heti, and The Magician King by Lev Grossman. The company’s CEO is Andrew Goldman, who sold video game developer Pandemic Studios to EA in 2007.

Subtext received $3 million in seed funding from Google (NSDQ: GOOG) Ventures, Mayfield, New Enterprise Associates and Omidyar. The platform is integrated with Google Books, but readers can add any e-books in the Adobe (NSDQ: ADBE) DRM format to their Subtext shelves–i.e., not Kindle books. “We’re the first app that does technically support open reading,” Rachel Thomas, VP of marketing and strategic partnerships, told me. “We have people now reading a dozen editions of A Game of Thrones and we’ve figured out how they can have conversations around different sources and editions.”

Subtext worked directly with publishers and authors to add enhanced content to their books. Amy Stewart, author of Algonquin’s Wicked Bugs, added notes and video links to show some of the grossest things that bugs do in action. George R.R. Martin’s editor, Anne Groell, and researcher Elio Garcia added hundreds of notes about life in Westeros. Frances Mayes added updates about all of her characters in Under the Tuscan Sun and wrote about how Tuscany has changed since the book was published. Lisa See’s Snow Flower and the Secret Fan includes scenes from the upcoming Searchlight film. Most authors have “overdelivered,” Rachel Thomas, VP of marketing and strategic partnerships, told me. They found they had a lot to say at the passage level and the sentence level and could also answer many of the questions that they are repeatedly asked by readers.

The notes are readable by clicking links in the text. “We’re trying to keep the margins very precious” so as not to overwhelm the screen or reading experience, Thomas said.

Users earn points for participating, and use them to unlock the author and expert content in the text. They can download free previews of the books, with enhanced content, from Google; once they buy the books, they use their points to subscribe to the additional content. (Content created by other readers is free.) “Paying” with points for extra content is a way to accustom users to the fact that there may eventually be a transaction around some of the enhancements, Thomas said. “Everyone’s got a book they’d pay extra for the notes for. We believe there is a market for this,” she said.

Publishers have been trying to sell more expensive enhanced versions of e-books, including extras like reading group guides or author interviews, for awhile now, and for the most part it hasn’t worked. “These are not enhancements. These are marketing materials,” Kassia Krozser of Booksquare wrote last year. Subtext gives users a chance to try better enhancements for free and lets publishers see the types of additional content they are interested in.

The app’s virtual bookshelves provide another opportunity for monetization. The company is thinking of them as the “modern version of the staff picks table,” Thomas said. The app may eventually include bookshelves sponsored by, for example, NPR, the New York Times (NYSE: NYT) or independent bookstores–selections of books curated by those publications. Subtext is in discussions with possible partners but was not ready to announce anything yet.