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February 08 2012

Tip for B&N: Don't just follow Amazon

This post is part of the TOC podcast series. You can also subscribe to the free TOC podcast through iTunes.

I follow dozens of publishing blogs and tweet streams, but there's one that always rises above the rest for me. Any time I see something from Joseph Esposito (@JosephJEsposito), president of Portable CEO consulting, I make sure I read it. He's a frequent contributor to the Scholarly Kitchen blog, and one of his recent articles there got me thinking about the need for better competition in the publishing industry. I sat down with Joe to discuss Amazon's dominance, what B&N should do to improve its position and much more.

Key points from the full video interview (below) include:

  • "B&N needs an 'MCI solution'" — Amazon is the clear market leader and, as #2, B&N must avoid just following Amazon's lead and come up with a completely new and different product and content model. What B&N is doing with in-store Nook merchandising is great, but they've got to go much further. [Discussed at the 1:00 mark.]
  • Can B&N do anything to disrupt Amazon Prime? — Amazon and anyone else creating a Prime-like service will start to run into the same challenges Netflix has encountered. [Discussed at 4:07.]
  • Broad content repositories vs. narrow, vertical ones — Specific genres lend themselves more to this sort of offering, and each one could have a different pricing model. Safari Books Online is a great example. [Discussed at 5:52.]
  • Pay-for-performance is the only option — Amazon has publicly stated that the Kindle Owner's Lending Library program pays most publishers a flat fee. I strongly believe that's the wrong model, and Joe talks about why the flat fee probably won't be a viable long-term option. [Discussed at 6:45.]
  • Apps vs. HTML5/EPUB — Publishers are starting to figure out that platform-specific investments often aren't wise. Development costs for a single platform, even if that's iOS, are still high, so the future leads to more open, portable solutions. [Discussed at 8:26.]
  • DRM — Joe makes an excellent point when he notes that, "the pro-DRM stance that many publishers have is not really getting them anywhere." [Discussed at 11:05.]
  • Discoverability & recommendations — Discoverability will continue to get worse before it improves, but better integration with the social graph can provide a way forward. [Discussed at 15:06.]

You can view the entire interview in the following video.

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September 12 2011

Four short links: 12 September 2011

  1. HP Emulates Next (BoingBoing) -- In mid-1993, a few months after CEO Steve Jobs had shuttered the NeXT factory, and was in the process of switching to an all-software company—a path that led to its later acquisition by Apple—the lights were turned back on in its Fremont, Calif., factory. NeXTWorld's rumor columnist, Lt. Sullivan, reported that the U.S. military and another undisclosed customer wanted more machines, and so NeXT was to fire up and spit 1,200 more devices out.
  2. FeedsAPI -- service that turns a feed of partial posts into a full feed.
  3. Cinderella -- a fully managed development environment for open source hacking on Mac OSX. It's powered by homebrew and chef. You only need Xcode to get started. (via One Thing Well)
  4. The Greenwich Time Lady (Futility Closet) -- the old and the new coexist. From 1836 to 1940, this one company sold the time to people; their pocketwatch was certified by Greenwich Observatory in the morning and for the rest of the day they charged to look at it. New technology, government standards, and plenty of competition didn't end the business instantly. Compare to Clay Shirky's That is what real revolutions are like. The old stuff gets broken faster than the new stuff is put in its place.

November 02 2010

Ebooks and the threat from "internal constituencies"

A recent New Yorker article by James Surowiecki on the problem of "internal constituencies" and how organizations respond to technology and market changes seems relevant to the ebook conundrum publishers are facing.

Surowiecki highlights how Blockbuster was unable to correctly value the assets that created the company's initial success, especially when faced with insurgents like Netflix and Redbox. He ends with a warning for Netflix, and a look at the uncertain world of digital distribution to come.

The summary of how Blockbuster overvalued their "clicks and mortar" strategy may provide a catalyst for publishers to look at the opportunities and threats from ebooks. Will internal constituencies bias how publishers value and contrast print book and ebook assets and business models?

Subjective rambling on print and ebooks

Lessons from music and movies need to be tempered by the nature of the media. Vinyl, VCR tapes, CDs, and DVDs do nothing but carry information and require a player. While some may wax nostalgic for the media of their youth (yes, the pun is intentional; note the resurgence in vinyl records sales), the media of yore are awkward and limiting, particular when compared to playing devices with enough built-in storage and connectivity to access everything users may ever want to hear or watch.

Print books and magazines --black print on white paper -- create a uniquely effective reading platform that integrates both storage and a player in a convenient package. Reading material is consumed differently than music and movies. Books generally take longer to read and aren't continually or frequently re-read, making the low storage density of books less of an issue than with music and movies. Ebooks and ebook readers are still maturing and may not be "good enough" yet to effectively replace the print book experience.

In books we may see a complementary relationship between print and electronic forms based on context, content, distribution and consumer usage. For example, students needing portable access to multiple textbooks may find the storage density of print a significant issue that pushes the adoption of ebooks (there's a funny New Yorker cover showing a young girl with a backpack leading a mule, laden with books and school supplies).

Likewise, technical folks who want random access to a broad range of reference material may find the storage density, search capability and instant distribution of ebooks an unassailable benefit. For many others, the comfort and familiarity with print, the ereader experience, slow consumption rates, etc., may all continue to create demand for print books.

The audio book market may provide guidance as an alternate media channel that complementarily coexists with print books. Audio books have the same distribution characteristics as ebooks, as they are almost entirely distributed online these days. There's also a market maker in Audible, where prices likely provide reliable information about demand and price elasticity (Audible has alternate flat subscription pricing). Audible charges more for new books, best sellers and evergreen sellers. Audio books are generally priced higher than Amazon's print and ebook prices, anecdotally 10-40 percent higher for bestsellers. (A digression: researching Amazon pricing for best sellers and evergreen books shows about a 10 percent (+/- 7 percent) discount for ebooks compared to print books on Amazon.)

Smart publishers can work to keep the price differential between print books and ebooks close, and learn how to segregate price insensitive consumers via temporal distribution strategies (e.g., early access), distribution channels (e.g., print on demand), content (e.g., colors and diagrams that don't render as clearly electronically) and form factors that can provide extra margins from the commodity, low-margin mass market.

Or, maybe I'm just showing my age and internal constituencies.


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