Companion Novels/Novellas: What is the purpose of them?

It largely depends.

Sometimes, readers are just excited and dying for extra material. They want the extra perspective, extra moments, extra anything that will keep them in the world longer. And in some cases, the authors are happy to give it. It's not truly essential, per se.

Is it a money grab? Maybe. But it's the best of two worlds, I think. The author makes a bit of extra money (since these are usually digital releases -- no need for a full print run, etc.), while the readers get more content that they want.

That said, there are some stories where the extra content is crucial to the stories. The first example that comes to mind is Pittacus Lore's stuff. For a long time, the extra stories were optional material, but since the latest book, so much of the plot development ties into the novellas that it becomes a detriment to not read them.

But I just don't trust James Frey (dba Pittacus Lore) because he's a hack -- and I don't trust ANYONE named Frey after the Red Wedding. So I think he's definitely in it for the money grab, along with Cassandra Clare (though to be fair, her novellas are definitely optional).

On the other hand, one of my favorite YA duos is getting a novella that is sorely needed -- Gayle Forman's Just One Night is coming out at the end of the month, after Just One Year kind of ended in ... not disappointment, per se, but very unresolved.

My WIP is currently a three novels and a novella. And the novella is definitely a critical part of the story. It just doesn't fit very well into the individual arcs of the novels (it comes between books 2 and 3), but it fits superbly into the overall arc.

Prodigy said:

Then there was another series by a popular author who I wont name, who had novellas, but they literally contribute absolutely nothing to the plot. Nothing that can't have been left out.

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I'm not sure why they should contribute to the plot?

If they're necessary, then they should be part of the same work. But otherwise, what's wrong with telling other stories set in the same world?

If a sequel, for example, is completely standalone, does that make it superfluous since it doesn't "contribute" to the plot of the previous novel?

If I'm thinking of the same author you're thinking of, I'd say those novellas are more "extra padding cut from the novels" than they are actual stories.

I'm self-publishing 2 short stories and 2 novellas set in the same world as my series. For me it's:

1. A way to learn more about self-publishing
2. A way to bridge the wait because the third book in the series is delayed, for numerous reasons.
3. A way to tell stories from other character's POVs that I can't do in my main story, which is first person. 3 of them are origin stories set before the main series kicks off. This way, if people want to, they can learn more about these characters.
4. Yes, making a bit more money. I currently make nowhere even close to minimum wage from my books, and making a couple hundred extra bucks would be really useful to me.

One of the reasons why readers accept companion novels and novellas is due to the perspective used in YA. First person, while great, can really limit the depths of side plots outside of the main character's direct experience. This is where companion stories can feel in the gap.

I prefer it like this: Your have six main character in a short story, and you have six versions of this story to tell. Understanding each perspective short story is crucial in solving the mystery.

Prodigy said:

Over the year, I've noticed that other series have companion novels and it makes me wonder

Is this an attempt to make more cash off fans or are they necessary?

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Personally I don't think they are either automatically. I mean if it's just a fluff story that has no bearing on the plot of the main series, I guess it could be viewed as being a cash grab. Then again, some readers like to have extra side stories just so they can be a part of the fictional world a little longer.

Also, they aren't necessary but they can help to shine more light on a subtle plot within one of the main books. I know for my upcoming novel I am writing a short novella to follow it. The story in itself isn't necessary, but does address some tension that is present in the main books between two characters.

I'm suddenly reminded of these books I read a few years back, called the California Diaries. I think each book, which had a different narrator, used different fonts in the style of handwriting. Not the same book, but the same series. I thought it was an interesting idea at least. I don't know if that kind of style is viable in the Kindle age though.