The half-a-million-dollar decision that still haunts the book industry 

Narrative Muse was awarded $500,000 to boost sales of New Zealand books. Three years later, industry insiders report that it has had little, if any, impact. What went wrong? 

The Spinoff Cover Story is our premier long-form feature offering, made with the generous support of our members. Read our other cover stories here. 

It’s 2021 and the Covid-19 pandemic has ruptured systems everywhere. The New Zealand government is working, at an unprecedented scale and pace, to hose out money to prevent economic and industrial collapse. 

As revenue from live events and commercial streams plummets, the arts sector needs funds, and fast. The sector is used to applying for funds from Creative New Zealand: they know its people, its processes, its values. But it’s the Ministry for Culture and Heritage Manatū Taonga that will administer most of the Covid recovery money. MCH receives an initial $150 million dollars, of an eventual $374 million, to disseminate via a series of contestable funds. It creates, at great expense, a new funding platform to process applications and administer funds, and recruits shoals of staff, many of whom will be working in funding administration and alongside the arts sector for the first time.  

One of the contestable funds — the Innovation Fund — is designed “to support innovative projects that: improve the sustainability and resilience of the sector; provide commercial opportunities; improve access and participation.” 

There is urgency among arts organisations — including a strained books sector trying to maintain core operations while adapting systems to a new contactless reality and author events are wiped from the calendar — to adapt to the MCH processes and access what is described as a once-in-a-generation injection of resource. If successful, the level of investment would be transformational, particularly for organisations used to much smaller pools of money granted only when there’s a clear track record of success.

Enter Narrative Muse. The results of successful Innovation Fund recipients are posted and the arts sector learns that a little-known tech startup has been awarded the astounding amount of half a million dollars — enough to publish 50 books as a ballpark equivalent — “to help New Zealand content producers of books, movies and TV increase sales of content”. 

The response from within the books sector in particular was swift. Newsroom reported that members of the industry were “aghast”, that the decision was “a shocking undermining of the New Zealand books sector which works so hard to support authors and publishers.” The various responses essentially boiled down to: What the hell is Narrative Muse? And, They better have something excellent up their sleeve to justify all that money. 

This is the story of all that’s happened since.

The public-facing prong of Narrative Muse is a digital arts recommendation platform for books, movies and TV. Users sign up, fill in a form to give their preferences, then Narrative Muse will give content recommendations. 

The other arm of the company is analytics: Narrative Muse takes user data insights and sells it to “content producers” (ie publishers, film distributors, TV producers, and funders) to help inform decisions on where best to direct their resources. 

In its application to MCH’s Innovation Fund, obtained under the Official Information Act, Narrative Muse Limited said it would improve sector sustainability and resilience by helping “content producers of books, movies and TV increase sales” by helping them understand their audiences with data insights; while also putting New Zealand content onto its audience recommendation platform. It said it would boost sales of books, movies and TV for underserved markets including Māori, Pasifika, Asian and rainbow, female, and gender diverse audiences. And it said it would improve access and participation in the arts, culture and heritage by helping New Zealand audiences find local content with a focus on those underserved markets. 

The how of that work revolves around the concept of “deep tech”, a hard-to-define term even for those committed to investing in it. In its application, Narrative Muse said its product was needed in Aotearoa because content producers here have “no access to audience insights and deep data”. It cited Netflix as a “big data player” whose content is driven by insights derived from its closely-guarded secret systems.

The list of funded activities in Narrative Muse’s agreement with MCH includes: grow New Zealand and global audiences with a focus on those underserved markets; add a minimum of content pieces to the matchmaker platform, and accelerate the development of the platform; commercialise audience and content insights; and strengthen relationships with key New Zealand content producer stakeholders. A budget that breaks down exactly how the half a million would be allocated to achieve this was either not included or not released to The Spinoff. 

A bold orange slide on the Narrative Muse pitch deck supplied to MCH reads: “every content producer we’ve approached has asked, ‘when can you start?’” There are no accompanying testimonials of support from either the literary or screen sectors (key content producer stakeholders) or evidence that those sectors had been consulted by Narrative Muse ahead of its application. 

For Narrative Muse to find success both financially and in meeting its MCH promises, a number of things had to happen: the company would need to form meaningful relationships with publishers, booksellers, literary organisations, producers and writers to understand the ecosystem and needs; the matchmaker website would need to grow its awareness across online platforms frequented by local readers (whether Goodreads, Booktok or plain old Instagram); and lots and lots of people would need to register and frequently use Narrative Muse.

Across almost all of their pillars and aspirations, Narrative Muse would struggle. 

‘We remain confounded about the role they are meant to play’

After securing funding, Narrative Muse representatives set about meeting with a number of stakeholders in the books industry, with mixed results.

A former employee of Penguin Random House NZ (made redundant in the recent restructure), who wished to remain anonymous, said when they were at PRHNZ they held a number of meetings with Narrative Muse but didn’t end up using any of their services because it was never clear what their offer was. “I was interested in discussing ways we could use their platform for marketing,” the employee said, “but it quickly became clear that their NZ user base wasn’t large enough to warrant the spend.

“They were presenting themselves to us in very broad terms and then asking us to tell them how they might be valuable to us. Rather than presenting some actionable ideas with a clear value proposition.”

While publishers left meetings disappointed, others are still waiting for the call. Renee Rowland, association manager of Booksellers NZ, says “they [Narrative Muse] have never reached out to optimise — or even establish — their relationship with booksellers or libraries as far as I’m aware, and we remain confounded about the role they are meant to play in developing engagement with NZ authors and books.”

Rowland’s sentiments are echoed by others in the industry. As well as Booksellers NZ, The Spinoff spoke with the Publishers Association of New Zealand (PANZ), The Coalition for Books, Read NZ, The Book Discussion Scheme, and publishers Penguin NZ, Allen & Unwin NZ, Hachette NZ, HarperCollins, Te Herenga Waka University Press, Huia Publishers, and the Māori Literature Trust about their engagement with Narrative Muse. At the time of writing, none of the above are in an active relationship with Narrative Muse, let alone a client. 

It’s a similar story for the screen sector. Film producers and distributors (Piki Films, Madman, Umbrella, Studio Canal), Spada (Screen production and development association), and a number of individual members of the screen industry spoken to for this article had not heard of Narrative Muse, apart from one person who had a vague memory of seeing their stall at Pasifika Festival one year.

NZ On Air confirmed it engaged with Narrative Muse over a series of meetings requested by the startup. A spokesperson said the meetings were focused on the analytics service aspect of Narrative Muse but didn’t evolve into a client relationship due to the lack of clarity around the model and its value.

One organisation did in fact collaborate with Narrative Muse. The Book Discussion Scheme (BDS) — a 50-year-old nonprofit supporting 1,300 book groups around Aotearoa — was contacted by Narrative Muse in 2022. Renee Blackburn, who heads up promotions for BDS, was interested in their aligned values of raising the profile of underrepresented creatives and audiences, and found her discussions with Narrative Muse to be friendly and enthused. Their collaboration took the form of a book club offer that 12 participants signed up to. Narrative Muse didn’t offer any financial support for the book club, but Blackburn was happy with the poster they designed for it. 

Despite the success of the initial NM x BDS book club, another is not yet planned as it’s been six months since Narrative Muse were in contact with BDS/Blackburn, and BDS are, like most literary nonprofits, tight on resources. Blackburn said that in the last email she received it was mentioned that her Narrative Muse contact’s tasks “were being reprioritised”. “At the time I just took it at face value,” said Blackburn, “but on reflection she said she was also picking up part time work elsewhere. I followed up twice after that but haven’t had a response.”

Co-CEO of Narrative Muse Brough Johnson (who declined to be interviewed by The Spinoff but did respond to some questions via email) described engagement with the book and screen sectors as “so important”. 

“Our mission is representation and belonging in entertainment, and we’re doing this through our vision of building and strengthening connections between underrepresented audiences and content producers. To achieve this, we need to bring stakeholders on this journey with us.” Johnson went on to admit that “finding these partnerships locally has been challenging, but we remain committed to doing whatever we can to build local relationships and work alongside the Aotearoa book and screen industries to fulfil our mission.”

When asked why finding partnerships had been challenging and what “doing whatever we can” meant, Johnson answered in the macro. “Startups often face challenges when introducing something new to the market, and it takes time to educate on the ‘why’. This has been our experience, and it’s what we mean by the journey.”

Narrative Muse’s ability to generate monetisable data insights would depend on a critical mass of active, Aotearoa-based audience members, and Aotearoa content, to make its analytics truly valuable. From the time of the funding agreement through to the time of writing, Narrative Muse did not have a strong social media presence (575 followers on X; 2,963 followers on Instagram; 120 on TikTok as at 10 September 2024), nor is it part of niche or general bookish discourse which tends to thrive and proliferate in digital spaces (such as Good Reads, BookTok, Bookstagram). 

‘She has never heard of Narrative Muse and says she has never encountered a customer who uses Narrative Muse’

Bookseller at Unity Books, Melissa Oliver, has written about her avid use of online platforms for book recommendations and discussion. She has never heard of Narrative Muse and says she has never encountered a customer who uses Narrative Muse. 

When asked about the number of Narrative Muse users three years after its $500,000 funding award, co-CEO Brough Johnson said the company has “grown our overall user base by 200% to a total of 75,000 people. 6,500 of these users are based in Aotearoa New Zealand, marking a 333% increase.” In Sam Brooks’ recent article in Metro magazine about Narrative Muse, he clarifies that 6,500 users is the total number of registered users and is not an indication of current active users. 

Johnson said Narrative Muse’s analytics service was being used “by a variety of people and organisations” and that they were getting testimonials, but for now wouldn’t be disclosing specifics. 

One of the issues with Narrative Muse brought up by multiple stakeholders is the laborious nature of the platform. When the same ex-Penguin employee went away to test the platform, she was left unconvinced of its usefulness overall, “which isn’t a great start if you’re asking a publisher to spend money with you.” 

‘Local work rarely comes up’

In Metro, Brooks describes his trial of the matchmaker platform: “Unless a user’s preferences are specifically set as wanting to read or watch stories from Aotearoa (labelled here under the category ‘New Zealand, Australia, Oceania and the Pacific’) or that same user is from Aotearoa and desires to engage with stories from ‘Real countries similar to where they live’, local work rarely comes up. Those stories that do are ones that are well known already (the bone people, Michèle A’Court’s autobiography) — titles which would also come up after a quick, less laborious, Google search.”

Renee Rowland from Booksellers Aotearoa New Zealand tried to work with Narrative Muse with regards to Booksellers-founded, owned and operated platform, BookHub, which aggregates information from bookshops all over the country so that readers can search the title they’re looking for, see which shop stocks it, and buy accordingly. In this article on Newsroom from October 2021, published in response to the MCH funding, co-CEO of Narrative Muse Brough Johnson said: “One of our key struggles that we have here in Aotearoa is a core source for data of all of the content that’s available inside of each bookseller. We’re trying to find a way in which we can know for instance what’s at Unity, or what’s at the Women’s Bookshop, so that our readers will have an easy pathway to books that are available in their region.” 

BookHub, then, would appear to provide the solution to the above problem. However, Rowland’s conversations with Narrative Muse ran dry after it was discovered the the cost of developing a way to link BookHub with Narrative Muse was high, and Booksellers decided that “given Narrative Muses’s lack of influence, their inability to generate recommendations for NZ books and therefore to create foot traffic for bookshops, it wasn’t a worthwhile investment, and that we were better off investing in other optimisation”. Narrative Muse did not offer to invest in the cost of linking the two sites. 

When Rowland tested the Narrative Muse platform, the filter didn’t result in any Aotearoa authors being recommended to her.

The hefty investment by the New Zealand government in Narrative Muse is particularly sore for Rowland given Booksellers created BookHub (recent winner of the Innovation Award at the Industry Book Awards) with quarter of the money Narrative Muse was given and yet the tangible impact of BookHub on the literary sector has been almost immediate.

“No member of Booksellers Aotearoa NZ has reported that Narrative Muse has had any discernible, traceable or material impact on book sales at all,” she said. 

In the funding progress reports obtained from MCH under OIA, Narrative Muse says that slower than expected progress was due to hiring delays, though there is no explanation of why hiring was difficult. 

Was MCH’s decision to fund Narrative Muse an error of judgement? Joe Fowler, deputy chief executive te aka tūhono – investment and outcomes at the Ministry of Culture and Heritage, says that the thinking behind the Innovation Fund — whose panel did see value in Narrative Muse — was that as Aotearoa moved out of the pandemic, it needed new ways of attracting funding to allow the sector to recover. “It’s worth clarifying that the Innovation Fund was different to the other funds,” he says, “in that it was explicitly designed to look for opportunities and to take some risk and support in projects and initiatives that could return significantly in the future. Obviously, when you do that, you may invest in some things that don’t achieve their full objectives.”

Fowler explained that when he was appointed to the role (following Anna Butler) in September 2021, he “was appointed with explicit direction to make sure support got out and quickly.” By the time he got the job his predecessor, Butler, had already led the design of the recovery funds. Butler’s previous portfolios included general manager building system performance at MBIE, and before that general manager housing, income support and employment, social change at MSD.

MCH’s Innovation Fund was articulated with startup language and shaped within a startup framework. A notable feature of startup culture is that failure is baked in. The rate of failure is well-documented: 90% is an oft-cited statistic. The resource-starved literary sector’s dismay at news that a tech startup got half a million dollars was tied up in the fact that the fund was a departure from the funding environment they knew, and the arrival of a system that enabled tech companies to apply for and receive arts and culture investment.

“We’ve got a tech-focused startup receiving funding on something based on its potential, and an art sector that’s used to getting funding based on a solid project,” explains Fowler, “where every business plan and every dollar in the future and every likely impact is kind of known in advance. You’re absolutely right, that is a clash.”

But Fowler has no regrets about the Innovation Fund. From MCH’s perspective, the fund performed as intended: some projects overachieved and some underachieved. But did they learn anything from the fund? “Absolutely. You learn, and you build on that and take it into your next work. I’m proud of what the team did with the Innovation Fund, and I know that there’s a lot happening on the ground because we were brave enough to make and design and implement our fund in that way.” 

Fowler says that for the Regeneration Fund, which followed the Innovation Fund as the last of the Covid-recovery funds, MCH created a mechanism by which anybody from the sector could comment on the proposals being considered. Fowler says that if they learned anything from the Innovation Fund it was that “you do need a way of engaging the sector, pre-decision, that has to be put into the design of the fund, which is what we did for the Regeneration Fund. That mechanism was not designed into the Innovation Fund, so it was not there for us to call on.”

In March 2023, the same month that the MCH funding contract with Narrative Muse ended, Narrative Muse launched a PledgeMe campaign inviting pledgers to purchase shares in the company at a minimum of $48.96 dollars, or 17 shares. The campaign successfully raised $390,369 from 105 pledges, which is an average of $3,171.8 per pledge; a striking number.

‘Close to one million dollars has been invested in the company’

The language of the PledgeMe campaign is aspirational, pitched in the future tense: “We’re building a technology that uses forward looking data to learn what diverse audiences would like to read and watch – even when these stories don’t exist yet.” 

A gold box states what Narrative Muse Limited has done so far, and includes the statements: “We have begun to receive customer queries from around the world, including in the US, UK, Australia and Aotearoa New Zealand.”

“We collaborate with organisations such as Book Discussion Scheme, The Ākina Foundation, Manatū Taonga Ministry for Culture and Heritage and Pasifika Festival.”

“We are also in discussion with The Publishers Association of New Zealand/Te Rau o Tākupu (PANZ) and The Māori Literature Trust.”

Nobody in the literary sector spoken to for this article has heard from Narrative Muse since December 2023. PANZ told The Spinoff they were not in conversations with Narrative Muse. And while The Māori Literature Trust did have a series of meetings with the company, MLT concluded that the decision to sign up to Narrative Muse must be left up to individual writers and publishers, and no formal partnership was entered into.

Narrative Muse Limited has also received funding from Callaghan Innovation and The Ākina Foundation. The Spinoff calculates that with those grants, the MCH amount and the PledgeMe campaign, close to one million dollars has been invested in the company.

In its final report to MCH, Narrative Muse was asked to reflect on the work undertaken with the $500,000 of Innovation Funding. “If your project failed, what did you learn?” was the prompt. Narrative Muse’s answer was short. 

“Our project hasn’t failed but we have learned so much! We’ve learned a lot about relationship-building and the challenges that come with building something new in a way that hasn’t been done before, all while being mindful of intercultural safety.”