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It'll be interesting to see how royalties are paid though.
I'm not sure what you mean. If you opt-in at Smashwords, it is simply another sales channel option, just like all the other aggregators (except for the fact that no one ever actually owns the e-book, they're paying for a monthly service). Oyster pays Smashwords and Smashwords pays their authors. You can view all the sales/payments through your Smashwords account. Smashwords pays royalties quarterly.
most of the people who buy ebooks don't subscribe to Oyster so when someone tells them about a great ebook they read on Oyster
This seems to contradict itself. If most people who read e-books don't subscribe to Oyster, how can they tell other people about an e-book they read on Oyster?