Thursday, August 30, 2012

Nook, Nook Who's There?

Both the Harris Interactive report on ‘Screenlife’ (July 2012) and OFCOM ‘Communications Report’ (July 2012) noted that the 35 to 55 group has already become switched on to mobile technology and the rise of digital ebook readers, smartphones and tablets. Smartphone penetration is now up to 39% with 80% of all UK households having internet access and tablet ownership increasing over the last twelve months from 2% to 11%, with 17% expressing the intent to purchase in next twelve months. Some 16% of the tablet ownership is within the 45 – 54 year old market and some 19% are A and B social grouping.

Interestingly,  10% of the UK population now owns an ereader device and this increases to 15% within the 35 to 44 age group. There is a clear indication that both tablet and ereader usage is home and family based with 67% of ereader usage being at home and 66% of tablet usage being shared with the family. This group have also been heavy adopters of digital ebooks (see OFCOM report)  with genre  such as romance, historic romance, and erotic fantasy, crime and thriller being in high demand.

Today Barnes and Noble announced their initial retail partners in the UK and the question is whether this will make any difference.

John Lewis is their ‘premier retail’ partner but they already sell Kobo, Kindle and were one of the first to sell Sony readers. The question is why they are seen as the premier retailer? They literally will sell the tin and the Nook will line up in a ‘beauty contest’ with the rest. Unless hard money is spent on brand building, one fears they may not even pass the ‘so what?’ test and the winner here maybe not down to who has the best bikini but who is known and is a trusted investment.

Argos is pitched at being well placed with 700 store to ‘touch the UK population’, but again is already selling Kindles and Sony readers and a host of other devices. It is questionable whether their demographic matches John Lewis and ebook reading and therefore Barnes and Noble may have challenges in building the brand awareness they clearly don’t have today in the UK.

Blackwell’s also sell Sony readers so have the same ACS4 DRM allowing the ebooks should play also on the Nook . However, Blackwell’s 18 months ago gave poor customer service and offered no in store experience, so it will be interesting how staff are to be trained and rise to the challenge. The other question is why they couldn’t do it for Sony who had a stronger brand awareness in the UK than Barnes and Noble have today.

Foyles already have a relationship with TXTR, so are they to ditch that to sell the Nook and Barnes and Noble inventory?

By entering the UK market when the device battles have been largely fought and the competition is installed, are Barnes and Noble going to make a difference? At best they may equal their US second place, but unless serious money is put on the table to promote their brand, build a credible in store experience and convince the public they are a real player in the UK, it is questionable whether they will achieve that.

It isn’t about devices any more, its about platforms. Its about branding and experience and with Amazon its about loyalty, price and service. Amazon has a UK base understands the UK market and can position its offer and content accordingly. This is the first time Barnes and Noble have attempted to come past the Eastern seaboard. Will they tailor their offer to the UK or merely rebadged it with a UK sticker? 

Related previous articles:

Wednesday, August 29, 2012

Are ABA's Members Ready For Another eRelationship?

The American Booksellers Association (ABA), has already walked away from one ebook marriage it said would solve all its members wishes and no sooner has the divorce papers been filed , it now appears to be teaming up for a new marriage based on Kobo. Is it a shotgun wedding , a marriage of convenience, or simply a marriage on the rebound?

The last relationship engaged with close to 400 stores but failed to work out. Now the same stores have another ‘arranged marriage’ with yet another suitor, but will this fair any better?. Maybe the Google relationship was destined to fail once the honeymoon was over and the reality sunk in. Just as the BA may have discovered in the UK, Google may have had different ideas about what they wanted, or expected from their partnership.

So stores are expected to simply flip from Google to Kobo , start to sell not just ebooks but Kobo devices and become overnight Kobo disciples. The ABA may be excited, Kobo may be excited , but are the stores really geared up to support it? 

In early 2011 we wrote two articles on the UK’s bookshops approach to selling ereaders and ebooks, we have since seen WHS dump Kobo POS displays and await the Waterstones  Amazon in store experience. We accept that Barnes and Noble offered a good in store experience but they were committed and it was their own show.

We must remember that the ABA stores will be basically selling other’s devices and the files will be sold by the service provider. They will not control prices, nor the overall experience and they will receive a commission for what some suggest is potentially handing over their customers to others to exploit. Some would say that it’s like inviting the fox into the chicken hut.

We would ask many questions, some obvious others not so and presume everyone signing up will have the answers:
·         Tax who owns the problem/issue and are equipment sales separated from file sales?
·         Are equipment sales based on sale or return or firm?
·         Who trains the in store staff?
·         Who provides the customer service first and second lines and is it online, offline or by retailer
·         Do stores train all staff or selectively will there by an expert on stand at all times?
·         Will stores sell proactively or passively?
·         If pricing is set by provider how do stores handle competitive questions?
·         DRM is a challenge, but can the customer play a kobo file on kindle, Nook, Sony or must they have a Kobo device?
·         How will staff handle questions about Google?
·         Must customers buy all their files for same store and if not, where else can I buy them and will they then appear as disparate accounts within the Kobo platform?
·         Who owns the customer data?

The important question is, how do stores handle questions about Kindle, Nook, Apple, Sony etc?

These and other questions can be thought through and can be negated, but we must remember this is not within one organisation, but across many different ones and the consumer is likely to be exposed to multiple experiences.

However, the experience maybe tested further with another ebookstore , Zola, setting its eyes on the same market opportunity and claims to be already in discussion with the ABA and have 50 stores signed up. Others such as Copia also can’t afford to be left outside. 

So is the KOBO agreement exclusive, or open to all? If it is open to others and how do the ABA plan to level the experience?

We wrote the Brave new World report some 6 years ago and at the time we strongly believed that there was an opportunity for book retailers to join the ebook marketplace. However, apart from exceptions such as Barnes and Noble, few rose to the challenge and those that did often stumbled and instead of collaborating to jointly develop and hone the opportunity, they choose to compete. Some would suggest that its somewhat ironic that they now find themselves at the same place, but without the same control. Instead of rising to develop their own offer, under their associations, they chose to ‘white label’ others with all the implications that strategy delivers. 

The Power Of The Amazon Prime 'Club'

In 2002 Amazon launched its Free Super Saver Shipping program Amazon offering free shipping on orders over $25. In 2005 Amazon launched Amazon Prime, which for an annual fee of $79 gave its’members’ free two day shipping on all you can eat. Initially, many may have questioned the value of the service but Amazon has continued to add value its its club and now has built a very substantial membership which obviously keeps coming back to Amazon for more.
Amazon Prime now offers over 15 million items that are eligible for the service, Prime Instant Video, which is free to members offering over 22,000 films and tv programmes on demand and adding the Kindle Owners’ Lending Library, which has now grown from some 5,000 books to over 180,000 that can be borrowed for free with no due dates. Prime remains just $79.
Amazon now has announce that it ships more items with Prime Free Two-Day Shipping than with Free Super Saver Shipping and they have built a club and member loyalty which will become increasingly self fuelling. Amazon Prime is a marketing work of genius that its competitors will struggle to compete with. They may offer free shipping but in doing so stand to the total cost, they may offer free on demand film downloads but only have a film service and not a media service. They may only offer digital and have a limited range compared to Amazon’s.  more and – the program Amazon launched in 2002 that offers free shipping on orders over $25.
Amazon is building a significant ‘club’ and differentiator which not only is hard for others to follow but potentially protects Amazon from sudden attack by building a ‘first choice’ or preferred port for its customers. Importantly they can now build new services which can be offered to Prime members and the Kindle lending is a clear example of this. Effectively what started out as a postal offer has morphed into a subscription club, on line library for film and ebooks and could be easily plugged into other services.
As others improve their offer Amazon may well loose some share in individual markets but they are growing a bigger market share across several markets. This in turn will become more appealing to many and offer value and a one stop shop.  
Amazon has displayed and continues to deliver first class value and customer service and it is these qualities that others such as Barnes and Noble, Kobo and Apple must grapple with

Saturday, August 25, 2012

Apple 1 Samsung 0

Trademarks are trademarks, patents are patents and copyright is copyright and all should and need to be protected but one has to question the findings of a US jury in San Jose. They have delivered a massive blow to Samsung and awarded Apple $1.05bn (£665m) in damages in an intellectual property lawsuit.
The ironic thing is that Samsung are one of Apple’s largest suppliers of chips and other technology which underpin its own iOS technology. It also begs the question as to whether the result would have been the same if Samsung was US and Apple from South Korea?
Now follows lengthy and costly appeals and Apple pressing for import bans against Samsung’s devices and probably others.
Is this a good result for consumers? In the short run probably not as it will certainly slow down the Android market and restrict some devices. Apple will continue to dominate the tablet market and prices will remain at a premium. The one party that may be rubbing their hands today are also American and being late to the party now have a chance to shine through being different – Microsoft.

Thursday, August 23, 2012

Digitise Your Books For Chump Change

Sometimes we all miss the launch of something and its only when someone discovers it do some of the ramifications come home and the service become ‘news’. We were alerted to a piece in Publishers Weekly ‘1DollarScan Takes Service to Cloud, Authors Guild Worried’
So who and what is 1DollarScan?
The company is based in San Jose and operates under a Japanese company Bookscan. The object of its service is to offer consumers the ability to digitise their books for a 'cent a page' making a 200 page book digital for just 2 dollars, or less than the cost of the postage to 1DollarScan. The book is destroyed in the process, which first cuts the spine, then using high-speed Canon scanners, with optical-character recognition, scans and OCRs the content turning it into a PDF file, which can be read on literally a host of devices.
So what’s the difference with scanning your own books using standard off the shelf equipment and software and creating digital copies using1DollarScan? What’s the difference between copying a CD to create a MP3 file or taping a TV programme to create a digital copy? The reality is that the day is fast approaching when everyone will be able to do it themselves effectively at home and this service is just offering the economies of scale and scope. If the consumer only uses the files for their own use it is ‘fair use.’
The service may be taken up by many people wanting to clear their shelves, or it may fail just as other smart ideas, which no one really wanted. However, the challenge is how we would regulate such a service? 1DollarScan claim that they will ensure consumer self validate their usage and that they will also provide an opt in/out service for the owner of the copyright. From the outside and without the detail it is hard to say how this will work, but given that they will know nothing about the copyright against the titles they are scanning, it would appear half baked and some would suggest 'aiding and abetting' potential infringement.
Do 1DollarScan retain an archive of the files and if so, are these fair use or an infringement?
If 100 requests for the same title are scanned, they will distributed the 100 PDF files to 100 people with little or no control over their future use. They will be effectively 'open files' which would be relatively easy to covert to other formats and trade. The files will once again fall under DMCA Safe habour protection for any trading services that  unwittingly got involved and the owner of the copyright will have to search, and issue take down notices.
When Google scanned books the process was restricted to one body. With this service there could be literally hundreds of the same files in circulation and onus is on the owner to ensure that they are not being traded and infringing copyright.
The challenge is that 1DollarScan will not be the first nor will they be the last service offer and the digitisation cost is going only one way. Without a rights registry we remain a rights industry that some would say is walking backwards into a digital world.
Related :
Publishers Weekly ‘1DollarScan Takes Service to Cloud, Authors Guild Worried’

Is The Online, OnDemand, Subscription Model The Way Forward For All?

Netflix launch in the UK at the beginning of 2012 and we thought that they would have a tough time establishing themselves, their brand and competing head to head with Amazon’s Love Film rival. We were wrong! Netflix in its first seven months has acquired 1 million subscribers in the UK. They have created a new business territory that is now worth £72 million and growing in just 7 months! Netflix took 10 months to achieve 1 million subscribers in Latin America and the Caribbean, and 10 months again in Canada. The catchment and infrastructure is different in the UK and Ireland with some 67 million consumers with good access to high-speed Internet services, whereas Canada is smaller population 34 million and Latin America and the Caribbean have 98 million but inferior infrastructure.

Some may say so what and point to LoveFilm’s 2 million customer base is wider and is across not just the UK, but also Germany, Sweden, Denmark and Norway and Sky. However, Netflix plan to launch in Norway, Denmark, Sweden and Finland by the end of the year. But the fact is that Netflix can to the UK and gave a simple message video on demand and as much as you can view for one price. The recent Harris Interactive ‘Screenlife’ report (July 2012) asked smartphone and tablet users to rate the appeal of an online music service on any connected device, with access to  practically any track available today even if you don’t own them, where you pay a monthly subscription of around £5 – 10? They also asked the same about watching as many films or TV programmes from a large library using any connected device, where you pay a monthly subscription of around £5 – 10? The response was significant

Not Very
Not at all
Not sure





Netflix claim that the top UK and Ireland genres are comedy and drama and users’ favourite time to stream is on a Sunday night, according to the service.
So will the same shift to an on demand subscription based service model impact other media markets? It is clear that the the  way we all consume and pay for media is changing radically and moving from, pay to own, to subscribe for on demand. This is no longer about music, film, games, TV,information and books , but about all digital media and how we find it, access it and pay for it.

Today’s book market is tearing itself apart with discounting, ebook pricing tactical games and a lowering of consumer price perception. Will now lead to a Spotify or Netflix for books or a continuation of the devaluation of the content? 

Related articles:

Tuesday, August 21, 2012

UK Going For Technology Golds

The UK Government appear to be determined to raise the internet bar to win gold medals for the UK. Culture minister, Jeremy Hunt, claimed that the UK will have the "fastest broadband of any major European country by 2015. Like the Olympics the government is obsessed with speed and records and have released a further £300 million of funding. He claims some golden Olympic moments:
·         700GB/s were delivered from the BBC website delivered 700GB/s when Bradley Wiggins won gold.
·         On a peak day, 2.8PB (petabytes, over 2.9 million gigabytes) were downloaded.
·         Nearly a million people watched Andy Murray win gold online, with nine million following coverage on their mobiles.
· received over 20 billion views.
Mr Hunt has also stated intent to break the one gigabit speed barrier by supporting private firms in delivering fibre-to-the-home (FTTH) from 2016.
The mobile market is also to get faster. From October Orange and T-Mobile, which is the UK’s biggest mobile operator, with some 27% market share, will rebrand under the name Everything Everywhere (EE) in October. From the end of the first quarter 2013 the Orange and T-Mobile brands will be dropped and all existing customers will be migrated to EE. More importantly it will also launch 4G superfast mobile internet this year ahead of its rival UK operators.
4G is seen by many as vital for the further development of video, gaming and downloading and EE has been allowed to use its existing 1800 MHz spectrum to enable them to deliver first to the market. Its rivals have to enter into a 4G at the end of this year, which will then enable virtually everyone with the appropriate devices to be able to access to the faster network.

Monday, August 20, 2012

Barnes and Noble, Nook and NEWCO Come to UK

How many consumers know of Barnes and Noble in the UK? True those who have been to the US may be familiar with the stores, but in the main the ‘world’s largest bookstore’ has until now operated within the US and is relatively unknown in Europe. Neither is the Nook any better known outside of the US.

So it was interesting to read that they are finally venturing outside of the US and launching their digital Nook platform and devices in the UK next month.

Then we have that very interesting developing partnership with Microsoft and the new venture currently under the wraps of the name NEWCO. This venture should take over the NOOK and campus store business from Barnes and Noble and enable that other perennial latecomer, Microsoft, to get into the ebook business – again.

The challenge is not finding UK retail partners, and money can always be spent to promote the launch but who is the consumer dealing with? Barnes and Noble, Nook or NEWCO and will they have to rebrand if NEWCO happens?

The press release was brief gave nothing but we can’t help quoting from it on the statements on the NEWCO situation and what must be the longest sentence ever written,

Such statements reflect the current views of Barnes & Noble with respect to future events, the outcome of which is subject to certain risks, including, among others, the general economic environment and consumer spending patterns, decreased consumer demand for Barnes & Noble's products, low growth or declining sales and net income due to various factors, risk that international expansion will not be successfully achieved or may be achieved later than expected, possible disruptions in Barnes & Noble's computer systems, telephone systems or supply chain, possible risks associated with data privacy, information security and intellectual property, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible risks that inventory in channels of distribution may be larger than able to be sold, possible risk that returns from consumers or channels of distribution may be greater than estimated, the risk that the expected sales lift from Borders’ store closures is not achieved in whole or part, the risk that digital sales growth is less than expectations and the risk that it does not exceed the rate of investment spend, higher-than-anticipated store closing or relocation costs, higher interest rates, the performance of Barnes & Noble's online, digital and other initiatives, the performance and successful integration of acquired businesses, the success of Barnes & Noble's strategic investments, unanticipated increases in merchandise, component or occupancy costs, unanticipated adverse litigation results or effects, product and component shortages, the potential adverse impact on the business resulting from the review of a potential separation of the NOOK digital business, the risk that the transactions contemplated by the partnership with Microsoft to form Newco, including with respect to any spin-off, split-off or other disposition by Barnes & Noble of its interest in Newco, are not able to be implemented on the terms contemplated or at all, the risk that the transactions do not achieve the expected benefits for the parties. 

An interesting piece in bloomberg on the relationship and Barnes and Noble -  Barnes & Noble Investor Elation With Microsoft Deal Fades

Thursday, August 16, 2012

Video Killed the Radio Star?

We were recently introduced to music such as Devo’s ‘Whip it’, The Who’s 1970 live Isle of Wight appearance, Aretha Franklin’s ‘Precious lord’ and we also regularly get alerts via Facebook to watch videos of musicians, some famous and some less famous, and songs we have often not heard before. They are all streamed via Facebook and we have also used Facebook to share videos of artists with our friends.

Today we learn that we are not alone in enjoying this multi media musical experience and a new survey by Nielson now claims that teenagers today prefer to watch their music. YouTube has surpassed radio and CDs to become the most popular way young Americans listen to music. Some 60% of the 3,000 polled now use YouTube to listen to music.

Who would have thought in the early days of MTV that video would become the preferred way to listen to music and why isn't MTV at the centre of the market today?

YouTube’s vast library of music clips contains some licenced videos and some uploaded by users and  is making it a FREE and effective source of music. But the numbers in the survey also show that its not all one way traffic and that consumers now use many ways to get to what they want to hear. Radio, iTunes, physical CDs all still command attention whilst only 17% said they use file-sharing software and some 72% had purchased music in the last year. The message is clearly that music is available from many sources and many are free but they still will buy music.

Perhaps the obsession some in the music business have over filesharing needs to be given a reality check. Perhaps the change in business models and licencing has more to do with artists lower revenues than piracy?

Although Google has many music licensing deals there remains disputes with others over rights and in Germany one group has demanded that YouTube to pay at some €0.006 per video stream. The challenge is somewhat like bolting the stable door after the horse has bolted and like many cultural shifts, revisiting licensing arrangements doesn’t always work out retrospectively.  

Its interesting that the likes of Facebook and YouTube can effectively share the same users and content via their two separate services that both individually can earn on the associate advertising revenues that the music industry just missed seeing. Youtube may hold the video and render it, but increasingly they do so via other social platforms and on a global basis.

Tuesday, August 14, 2012

Olympic Legacy and Future?

What do you do once the Olympics is over? For most of us it’s a period of adjustment from wall to wall sport back to normal life, but what about the technology that was used to support the event? Does it merely return to the sponsors, or get sold off cheap, or even donated to the needy?

Acer plans dispose of some 500 "Olympic" laptops to school children in North East London and the remaining 15,900 computers they used in London 2012 will be sent to schools around the UK. The London laptops will be given out in partnership with the e-Learning Foundation charity  to eight local primary schools in the "Olympic boroughs". A number will also go to Great Ormond Street Children's hospital, which we all remember featured in Danny Boyle’s opening ceremony.

The PCs that were used for planning travel to supporting broadcaster will first be wiped and refurbed by Acer. Acer will then sell them to the schools at 17% of list with a years guarantee. Special "Used in the Olympics" stickers will remain on them for the kids to enjoy.

So the PCs will be one of the first legacy deals from the London Olympics. 

But what about Rio and 2020?

Olympic and Paralympic IT partner,  Atos have produced a report, ‘ Ascent at London 2012: A vision for sport and technology’ . This far reaching vision aims to prepare  the International Olympic Committee (IOC) and International Paralympic Committee (IPC) for the impact of technology at the 2020 Olympics and future.

It predicts that one of the greatest innovations will be the potential use of holograms at live events. This could even pitch previous Olympians against the best on the day.
Technology is already starting to impact how we watch sport such as Formula 1 and holograms of dead musicians have even appeared at music concerts. Information is also key to understanding events and performance and feeding this to the individual in a customised form offers much to engage even further with the paying audience. The audience could benefit also from being able to access behind the scenes footage, different camera shots , all fed on demand and over a local network service in the stadium.

Sport like space, medicine and warfare is now starting to push technology into areas we could have only dreamt of previously. We wondered whether the 2020 games legacy will not be a computer but a hologram teacher in the local schools!

Monday, August 13, 2012

Frommer Has Just Been Googled

Some would suggest that when the BBC Worldwide acquired the Lonely Planet publishing unit they were looking to build a travel brand that could add value to their content, create a community and create a holistic source of travel information. Merely acquiring a travel publisher didn’t make business sense. However, sometime that and makes a marriage hard work. Some would suggest that this is probably where the BBC / Lonely Plant relationship is today.

Now Google has shown it too has eyes on the global travel business, but for different reasons. Today Google has added to its 2010 acquisition of flight booking service company ITA Software and its more recent  £150 million acquisition of Zagat’s, with a raid on Wiley book publishing trade business and acquired Frommers. Earlier this year, Wiley had put its trade business on the block and were looking to disinvest and they must be both surprised and happy with the off loading of the Frommer brand. Wiley still have to find buyers for the other non core units, but given their tight vertical nature they didn’t sit easily with Frommer, or as Wiley have deduced, with themselves.

Google have now got two significant pieces to the travel lifestyle model and one that will sit easily with both their business and consumer local and international, search and advertising revenues. Will it continue to publish Frommer, or flip the brand online and into the greater Google mix? According to eMarketer the online advertising within the US travel industry is estimated to be worth over $2.5 million, with online travel booking clocking up over $100 million last year. Both markets are growing at a significant rate and price Google is paying Wiley is likely to be chump change in the exchange for the advertising revenue potential and added value the information it could offer and its obvious synergy with products such as Google maps, YouTube and their other products .

The question this raises is whether some publishers will find it hard to resist the potential cheques that could be offered by outside interests who may see the content as a means to a bigger end? The other question is whether those left behind on the shelf will be further marinalised? Its hard to see book publishers buying up outside businesses but is now easy to see outside interests buying up certain publishers.