Wednesday, September 26, 2012

Nook , Nook, Please Let Me In

We have already asked the question about Barnes and Noble’s international grand venture and whether it will even hit the consciousness of the UK consumer, let alone pass the ‘so what’ test?

As Frankfurt and the Christmas season nears we seen some more of their approach top the UK which is as far as we know still the limit of their ‘international’ programme today. They have announced two further stores Dixons, which is the High Street little brother of yes, PC World, which is out of town shed outlet of the same group Dixons Retail. So some would suggest they have not two but one additional retailer. The deal will not be exclusive so as with their other deals they will find themselves in a beauty contest with all the other wannabees but today with as much consumer awareness of their brand as the best Korean model.

Barnes and Noble have also announced their video offer of blockbuster movies, classic films and original TV shows from major studios including HBO, Sony Pictures Home Entertainment, STARZ, Viacom and Warner Bros. Entertainment, plus favourite movies from The Walt Disney Studios.  They also will integrate a customers physical DVD and Blu-ray Disc content and digital video collection through UltraViolet™. This will enable customers to link their UltraViolet accounts to the NOOK Cloud allowing them to view their content  across NOOK devices and platform. This again in true Barnes and Noble fashion is behind their competitors integration and although competes well with the likes of Kobo does little against Amazon. Would you put your video library in the hands of someone who is not really in that business, is not the market driver or leader in any digital media sector? This may carry more clout if they were still going to launch NEWCO with Microsoft, but this appears to be very quiet today and it is somewhat illogical to launch Barnes and Noble Nook ventures without a big partner at your side.

On a positive note Barnes and Noble did name Patrick Rouvillois vice president and managing director of its international business. Rouvillois was previously chief marketing officer and head of e-commerce for Carrefour , the No. 2 global retailer with 15,000 stores in 30 countries. Prior to that , he was Executive Vice President of Consumer Marketing for Orange Group, one of the world’s leading telecommunications operators, responsible for consumer propositions, product marketing, pricing and commercial investment optimization. Before joining Orange, Mr. Rouvillois has held positions at Vivendi Universal Net, where he managed a content aggregation portal for Vodafone and SFR and also spent six years at The Boston Consulting Group in Europe and Oceania. He will report to Jamie Iannone, President of Barnes and Noble digital products.

Rouvillois certainly has the background to make a difference but some would suggest on paper he may be a bigger hitter than the person he reports to and if Barnes and Noble are serious about international he should be standing in his own right.

The big question today is, how Barnes and Noble will define international success and the timelines they have identified to achieve this? It is often easy to get others to carry your devices, even relatively easy to sell them at a low price point, but it is far more difficult to break into an established market where you offer nothing different other than US reputation as number two.

Related articles:
Apr 11: Nook Stops Short

Tuesday, September 25, 2012

Open Access Gets A 'Big Bang'

The STM Market has always been a rich seam for publishing, but it is very different from other sectors in many aspects. The old joke was that publishers got the material for free, got it peer reviewed for free and then sold it back to the University for significant amounts of money. Obliviously, there is always a slither of truth in all such stories, but the reality is that publishers have greatly assisted the spread of knowledge and ensured the quality, accuracy and currency of material. However, digital and communications is forcing everyone to rethink the value chain and the STM sector is not immune.

In July, UK government announced that it would require the country’s taxpayer-funded research to be open-access from April 2013. In Europe, the European Commission also adopted a similar approach aimed at opening up all the work funded under its Horizon 2020 research programme, which is set to run from 2014 to 2020. The aim is to making all EU-funded research open to all and deliver some 60% of all European publicly funded research articles to be open access by 2016.

Now it appears that the particle physics world has created its own ‘Big Bang’  and is about to make its research papers freely available through open access. This is unique, in that the initiative is across the specialist field and is helped by the relative smaller number of journals involved (12 journals cover 90% of high-energy-physics papers published). Particle physics already posts most papers on the preprint server arXiv but peer-reviewed versions are still published in subscription journals.

The Sponsoring Consortium for Open Access Publishing in Particle Physics (SCOAP) aims to ensure that all particle-physics articles (some 7,000 last year) are free on journal websites with payments from libraries funding the access. Under the deal, the journals will receive agreed payments per paper. The transition to open access is hoped to be transparent with researchers not noticing any effect on their grant funding or on the way they publish papers. The consortium will pay the contracts from an annual budget of €10 million, which is funded not by authors or research grants, but by ledged from over a thousand libraries, funding agencies and research consortia.

The question is as to whether this model can be replicated by others or remains unique due to the small number of journals and publishers involved?

Open Access and Open Research are happening and the transition for many will not be as smooth or painless as the Big Bang of high-energy-physics.

Fred Newman 1960

We were reviewing a book and found this interesting picture from 1960 of a 27 year old Fred Newman, then gossip editor of the Daily Sketch. He is with Rosemary McLellan their Scottish 'stunt-girl'.

The picture was part of a book ' Scandal: a scurrilous history of gossip' by Roger Wilkes. It appears that Fred's early editor days stood him in good stead for his later life running Publishing News. He is quoted 'Our policy is to entertain.' No change there then!

Still miss the man and his wit.

Saturday, September 22, 2012

A 100,000 Picture Kiosks Don't Make a Digital Summer

The recent news that Espresso Book Machine suppliers, On Demand Books, were to partner with Eastman Kodak and ReaderLink Distribution Services to distribute book production to potentially 105,000 locations was greeted by many smaller presses and self publishing houses with great enthusiasm.  Kodak is reportedly working with On Demand to integrate the Espresso Book Machine with the widely available KODAK Picture Kiosk and potentially provide 7 million titles on the long awaited ‘distribute and print’. ReaderLink open this opportunity further to include some 24,000 retail outlets (drugstores, groceries, etc).

However, since it conception the On Demand model has failed to take off at the direct to consumer end. POD (Print on Demand) has made it mark on the traditional production cycle, helping some to reduce risk with smaller and more frequent print runs and to keep titles effectively in print and negate rights being reverted.  Smaller presses and self publishing ventures have clearly benefited but at has been at a higher unit cost, environmental impact and mainly restricted to monochrome. In essence the market remains one of 'print and distribute' and not 'distribute and print.' The POD market is now dominated by the likes of Ingram and not On Demand who have failed to sell but a small number of machines and make any real market penetration.

Since the Espresso first appeared the digital market has exploded and the impact of this must reduce the opportunity both in terms of genre and consumer appeal. It also assumes consumers will want to go to Kodak locations and not bookstores, which may be achievable but at what cost to the already ailing bookstore.

We don’t know the economic model, pricing and what the turnaround and service offer will be today. but these will greatly determine its appeal and success. The trick will still be to get the machines into bookstores, libraries, schools etc and apart from content what do On Demand offer that others could not do more effectively?

We can’t help thinking this is somewhat of a marriage of convenience between two potential digital 'losers' and just having Picture kiosks in many locations is nothing if it’s the wrong location, wrong price, wrong service offer and its an inferior offer. 

Sumo Wrestling: WalMart Vs Amazon

This week, Reuters broke the news that the world’s largest store, Walmart, had taken the decision to no longer carry the world’s largest etailor’s Kindle tablets and eReaders once the existing inventory and purchase commitments had been honoured. It was reported as being a merchandising strategy and a recognition that Amazon is a real competitor across all media content. Is more about who owns the customer, who is providing the service and whose brand is actually being built than dropping some devices?

In the physical world it was all about filling the shelf and if you didn’t have the product on the shelf everything else could simply fail. The likes of Amazon then created the virtual shelf with vitual inventory and online service and many failed to match the offer. Some even effectively gave their digital business, be it for physical or digital product, to these new virtual traders. Amazon built a significant marketplace which few have been able to emulate, where even when they didn’t get the sale themselves, it was done effectively in their name and they earned a commission on it. Amazon is no longer about books, or digital media, it is a retail virtual market. The Apple store then took this commission approach to a new level and established that doing business through their appstore , on their iPads, be it for purchases or subscriptions, warranted a hefty 30% commission payment. They even tried to force the whole digital market back into fixed pricing with them being the ‘most favoured nation.’

We have gone from digital device and format/DRM lock-ins and transaction charges to platform commission and portal charges and now have to ask what next and how many slices can the pie take?
It is somewhat pleasing to see the emergence of HTML5 as the potential great leveller, but equally interesting to see the browser positions adopted by Amazon Kindle with their Silk browser  and Apple with own browser.  Are these to become the new toll booths and open market restrictions?

If we were to  ask the consumer who is their first choice gateway for music, film, games, TV, radio, news, books, will they select one umbrella service or many separate ones? Are they now looking for a simplified access and a one stop shop and is this driven by a marketplace or merely a platform. We don’t know the answer but unless we ask we will merely assume we know the answer.  The important thing is that what once was the brand everyone thought they bought from may now be changing and the power shifting through technology to others who simple attract consumers and facilitate access.

Walmart may so no to selling Kindles but if all they devices they sell still access Amazon and they don’t have the comparable offer are they exposed to the same risk? By not stocking Kindles are they also just driving their consumers who want one to another store full stop? 

Thursday, September 13, 2012

Are Consumers Now in the Digital Driving Seat?

Yesterday’s Apple announcements on the iPhone 5 were greeted with the usually hoops and wows but also with a few more yawns and so what’s. Its not so much that Steve Jobs is missing as much as the marketplace is shifting and moving on and more of the same isn’t that stimulating. Wired described it as being ‘mostly it is the Toyota Prius of phone updates’.

Sometime you just sense a change in the air. It’s like when winter changes to spring, the days start to lengthen, blossom and colour burst forth, and the sun’s rays become warmer and we start to think about summer. Business and technology is not different, just less marked and has many individual but intertwined seasons. The cycle can be seen as moving from innovation, to adaption to the market, to wide adoption within the market, to commodity and commodity upgrades and then, back to innovation. Because technology alone is not enough the subsequent innovation may be more commercially and market driven.

We are clearly seeing the emergence of the market demand for the technology to be device agnostic. This is because the technology itself is now becoming commoditised. Consumers are looking beyond the ‘wow’ factors and more at their own needs. Android has been the driver of much change and has clipped the wings of Apple. It may ‘borrowed’ some things on its journey and Samsung may have lost one battle on Apple’s home soil, but the change has happened and Apple now has to respond, is no longer in a market of one and that is good for everyone, including Apple. The Nexus 7 and Samsung Note are becoming serious tablet contenders and who would have thought the Kindle Fire, a basic tablet with a lower cut of Android, no camera and few Apps would secure a reported 22% of the US tablet market?

However, we are now also seeing some real convergence between mobile devices as smartphones get smarter, faster and with bigger screens, whilst tablets shrink to meet them. Just as eInk was always going to be and was clearly a significant catalyst of change, it now looks a casualty of the process it succeeded in kick starting. Amazon retain their loyalty with it some may say more as an insurance policy than a strategic bet. It is easy to see the same fate for the early smartphones and tablets. As many early ereader producers will testify, technology without the platform is now a waste of time.

It’s no longer about formats, DRM, standards and more about online, anytime, anywhere, any device. This itself changes both the package and its delivery in ways we are only just starting to see today.

The market is now focused on ‘platforms’ and less on devices, on online on-demand services and less on offline, accepting the consumer merely licences and doesn’t own files, and changing business models that continually engage with the consumer. These changes are fundamental and start to open up new business models which in turn fuel new technology. Remember Blockbuster and how we used to rent videos from the store, then came Netflix and Lovefilm with their postal offers and now everything is going on-demand and streamed importantly to aany device anywhere, anytime. Remember record stores and megastores, then came iTunes with DRM, then came MP3 now we have Spotify. The basic content didn’t change radically, what changed was how we found it, acquired it and consumed it.  

So where does this leave book publishing and its alliances to the new technology and the changing consumer market? Unlike music and video, books have to compete head to head with the physical product and existing model. Merely driving down the digital price to a silly point like 20p will itself force change but are we ready or even thought through the implications or are we like many today spreading our bets and hoping one will come in?

Somewhat related:

A funny cartoon that brought a smile to our faces over upgrade announcements.

Sunday, September 09, 2012

French and German News Publishers Want More

Sometimes it’s as if someone has only seen one side of the argument and proceeds to go half cock into resolving only what they see withoutout stepping back and taking in the wider picture and implications. How many times have we witnessed knee jerk reactions and in-trenched positions that have unravelled once people have taken a more measured viewpoint?

The French publishers originally launched their hostility at Google claiming that they and other search engines were republishing headlines and the first paragraph of articles without compensating them - the provider of the content. It is easy to see the delima as one service wants to be seen as the source and to get the hits that they can potentially monetarise, whilst the other wishes to index a broad range on content in order to provide a single portal and get the hits, that they can monotorise.  

Then in steps a government, who probably has been heavily lobbied by one side and we start to slide into a 'hotch potch' of unworkable or counter productive legislation. Last week the German cabinet gave its support to a draft law aimed to extend copyright protection to snippets of news articles republished by search engines. It would allow publishers charge search engines such as Google for the republishing of headlines and first paragraphs of articles. In essence the French and German publishers want to share in the revenue that Google earns from advertising displayed alongside their news snippets. They also believe that a headline and summary of an article that is published on Google News is often sufficient to satisfy the reader. The result they claim, is that the reader then doesn't click through to the publishers website, who then loses potential advertising revenue.

So one could first question why the publishers haven’t created their own collective news service? Is the Google service sufficient, or do people actually click through? What would be the equitable revenue share the publishers seek? Do the publishers want the share revenue or be paid per article hit? The questions go on and soon become as irrelevant as asking any TV news or radio channel for a share of news related revenues that they earn alongside the news. Google aren’t pretending the news is theirs, nor are they divulging the whole story. They are merely serving up a snippet. If that snippet didn’t exist how much traffic would even find its way to half the publishers who are demanding payment for being 'ignored' and bypassed today?

What would be the implications of extending this Franco German logic past news and magazines to other media such as books. If Amazon hadn’t pulled the industry through the metadata hedge, we still would have limited jackets on display and ‘search inside’ would be a bridge too far for many. Would book publishers now demand a fee from Amazon for creating a jacket, or search inside library that sells their content? The question of book reviews and fair use of what is basically marketing material by third parties is a very interesting point.

Sometimes we all have to recognise that the Internet is about connectivity and linking information to add value. It is about creating a ‘quid pro quo’ environment where different parties, that may have different business models and drivers, help each other for mutual benefit. Google makes money from advertising, publishers make money from publishing. Google merely uses snippets and gives full linkage and accreditation to them. They do not plagiarise the work, pass it off as theirs, or publish the full work, and they provide the publisher in effect with ' a free advert' and the more the publisher is indexed and seen, the more their brand and reputation is enhanced.

It would be perfectly responsible for publishers who don’t want to be indexed to opt out, but how many really would?  

Friday, September 07, 2012

It was a Good Week For Amazon and a Bad Week For The Rest

Well it was a good week for Amazon and a disappointing one for the rest. That may sound a bit harsh but what is becoming clear is that even the strong players and pretenders often lack Amazon’s vision, customer focus, market understanding and delivery and in some cases many of these.

So what was so good for Amazon?

First they raised the device bar and ‘Fired’ everyone up for Christmas. New fire tablets, better Kindle ereader and Fire devices coming to UK. The announcements weren’t earth shattering, but well communicated and sufficient to nullify the opposition. It was if they were being innovative, as the reality was that they were just doing the same as their main competitors in the ereader device market and raising their tablet bar in order to compete better with their real competitors in the tablet arena; Apple, Samsung and Google. They also claimed that the original fire had captured 22% of the US tablet market which should be a significant wake up call for all given its basic features.  

The interesting twist was their media focus. They own: Audible, the leading audiobook player, Lovefilm, a leading European on demand film service, ABE the largest rare and second hand book marketplace, Book Depository a significant global book retailer, are a growing publishing force both for established and new authors and of course are the largest global ebook and physical bookseller buy any measure. They now are clearly starting to intertwine these offers, using ‘Prime’ to generate loyalty and with yesterday’s announcements starting to build a differentiator that will be hard for others to follow let alone compete with. Their new announcements on X Ray and their new serial programme are clear indicators of them pushing the boundaries.

Then we have Judge Cote approving the DOJ settlement with three publishers which some would suggest leaves Apple, who can afford to play hardball and the other two publishers who perhaps can’t afford too, looking exposed.

They also announce that they will be taking on 600 more staff in a new depot at Hemel Hempstead, 3,000 temporary staff over Christmas and creating 2,000 new jobs in the UK. All of which was not lost on David Cameron who welcomed the announcement. How to influence people in high places!

To top it all the share rose 2%.

Nokia never seem to learn. Just when some said that their new Lumia 920 smartphone running the new Windows platform may be one to watch they scored a stupid own goal. It appears that the video which was claimed to have been shot using the new phone was fake and created using a higher quality camera. The result, their share dropped a further 6%.

Having announced three new devices you would think Kobo would have had a good week. However, when you step back, the week will belong to Amazon who clearly upstaged the a poorly timed announcement from Kobo. The one thing you don’t do is beat your chest and declare you are a winner when the opposition is about to wipe the smile off your face. Kobo’s offer is now an also ran and like their service they are seen as having a poor competitive offer. Rakuten need to step up their investment and focus on building a real differentiator if they have any hope of competing in the major markets. It is clear that Kobo now have a narrow media offer and devices are not going to make any difference whatever they price them at. They are competing on the wrong thing, but perhaps like other forgotten pretenders such as Sony, that’s all they have got.

Barnes and Noble now know that they left it too late to venture outside of their comfort blanket – the US. They now have got strong established and committed opposition in the UK and that’s before they even spend a dollar trying to build their profile.

Apple are oblivious to bad weeks but even they must be wondering if agency was wise and why they continue to fight the inevitable. They have their own announcements coming up and the iPad nano (remember they said they would never shrink the screen) and a new iPhone are bound to play to the fans delight, but unless they start to get real on pricing there will soon be a serious price gap with the rest. This was easy to defend when they stood out but as the others improve, like with smartphones, people will start to look seriously at others.

However Apple appears to have bitten the hand that feeds it in their zealous patent actions against Samsung. It is claimed that Samsung is withholding memory chips for the initial shipments of the new iPhone because of a disagreement about pricing. Apple obviously doesn’t like to be dependent on Samsung , but there is only so much volume Apple can get from elsewhere. The Korea Economic Daily reported Apple’s exclusion of some Samsung components earlier today.

It’s a sign that we only have 19 weeks to Christmas. The cards are starting to appear in the shops and despite the potential Indian summer we are starting to think about presents.

Wednesday, September 05, 2012

'False Sale' without 'First Sale'?

Some ask why ebooks are so cheap to buy today. Some will point to the fact you don’t actually buy them and therefore you are just paying a perpetual rental charge for something you can’t give away, sell and don’t actually own.

What started and looked a serious report on Bruce Willis, in the Daily Mail. The report claimed Willis was taking on Apple over ownership of his vast iTunes library of music may have exposed a few facts to a very wide audience. The story was based on the fact that digital music files can’t be passed on to others and that they in fact die with their owner, or should that be guardian. Irrespective of how much was paid and the value of the library, it all turns to dust on death.  The story was denied in the Guardian and supposedly went away, but like any plausible story, people then asked, forget Bruce what about me and is it true?
We have those who say that passing on one’s media to their relations is akin to leaving them the food in the fridge – a waste of time and they don’t want it. Leaving someone your favourite Beatles music assumes that they want it and like it. They point to passed on 78s and old vinyl that can’t be played. They suggest that it rare to find that the next generation will appreciate and value the same music as the last.

Then there are those who believe that collections of media, be they music, books, pictures, videos can help define who we are and that this alone is a reason to preserve their library and their identity.

In the physical world there is no problem – goods can be handed down, retained and even sold or given away. However, in the digital world things are not so clear cut. We stumbled into the digital age without addressing the ‘first sale doctrine’, which enabled the buyer own the physical file. Today there is no second-hand market for music files, ebooks, games, videos and software. There are a few exceptions and challenges, but in the main you buy a licence not the file. So when Jeff Bezos talks about holding thousands of files on your Kindle he forgets to clarify what the word ‘hold ‘actually means. He is not alone and the whole question of ownership is avoided today.

We have written about challenges to this ‘false sale’ without ‘first sale.’

We have argued for the sale of licences to be made clearer and the need for media markets to move to a more logical on demand rental offer, which would at least remove the current ambiguity. However, the easiest solution is to allow digital goods the same rights of resale as physical ones. There may need to be a registry, but anyone who has read this blog knows we are strong advocates of a rights registry for what is a rights business.

So what about Bruce Willis and his vast iTunes music collection? Well those without DRM should be easy to pass on, albeit against the terms of purchase. Those with DRM remain locked until the service dies, the format dies , the device dies, or the person who bought them dies. It doesn’t take a genius to work out that ebooks are in a worse shape due to our continued support of DRM and the DRM constructs that are in play today and the fact that unlike music, videos and games most of us only read a book once.

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