All Aboard The Next Amtrak!

Remember WH Auden’s ‘This is the Night Mail’ written in 1936 about that expectant train journey set to the rhyme of the train,(the video is well worth a listen if you are unfamiliar). Or those wonderful and informative 1960s broadcasts of the  long lost British railways told by the poet John Betjeman, in the way he only could and of which some can still be enjoyed today on YouTube?

Writers have long been drawn to the railways and today we read that US operator Amtrak has started to offer "writers’ residencies" to authors on its long round-trip rides.

It all started when New York based writer Jessica Gross tweeted that she wished for an Amtrak-sponsored writing experience and received a response from Amtrak that they liked the idea. Next thing the round trip to Chicago was arranged and Gross started to write. Gross travelled for free with Amtrak with them only asking that she tweeted occasionally while she was travelling and do an interview for the company's blog at the end of her journey. Since the news broke Amtrak has been seen an "overwhelming demand" from writers interested in the program and now is intent on turning this into a regular operation.

Let us leave the many questions of cost, who is a writer and how the process will work, for Amtrak to solve and today just applaud them for thinking outside their box and helping writers. Perhaps an adventurous publisher may join with Amtrak to help their writers.

Trains more than any other form of transport lend themselves to creativity. It may not be possible on those crowded commuter journeys but is possible on longer quieter ones. Poets and writers have long been drawn to the rails and initiatives such as this can leads to another ‘Night Train’ to rival Auden, then it will be a small price to pay and a journey worth taking.

Another Day at The Races

This weekend my wife read a friend’s self-published book on Kindle. Yes, there were a couple of typos and a couple of other mistakes one would expect a proof-reader to have picked up, but she enjoyed it and found it well constructed. Coming from a lady who selects, buys firm and then reviews and sells hundreds of titles and thousands of units every month, this is a compliment. And she suitably gave the work a review on Amazon.

When we read about the debate about self-published versus traditional published works we often hear the continued posturing over who makes the most money and also who is just destined to remain in the ‘long tail’ of books and who can make something happen just by their adoption, process and marketing clout that can go automatically into the bestseller ‘short head’ of books. It starts to beg the question, so what and are we looking at the situation and opportunity the right way? 

Today the blogs and industry continues to debate the new breed of self-publishing alternatives. The establishment viewpoint often remains the same as it ever was. It’s undeniable that money can buy a hit and that the trade also can select their winners. Some say it’s like a day at the racers and placing bets in a crowded field. Like all gambles the bets don’t always come home or deliver the odds expected of them. But there again, you wouldn’t expect to see a donkey in the Grand National, or a thoroughbred steeplechaser on the beach at Blackpool. It’s about picking the right horses for the right courses.

Too many times today we hear consultants and industry watchers who have grown up in the old world, supporting it, even when it would appear to contradict what they say about the new world. Maybe it’s more a case of saying what the client wants to hear and like many pundits on the course they keep their hands in their pockets.

Perhaps we should stop thinking and talking corporate and start thinking and talking author. The author profile is already being raised with literary festivals, writer’s conferences and even though some of the higher profile events are being corporatized, many are not. Self-publishing is just getting more authors to question whether corporate suits them best, or whether it’s the right way every time.

Much of traditional publishing is outsourced with often only the money and control remaining in-house. 

Amazon, Wattpad, Sourcebooks and many more are now starting to offer both the author services and the channel to market and publishing has to take note. 

Some publishing houses have started ‘collection boxes’ for the great unpublished. Some have bought up smaller operations who already do it. But have these forays into the unknown been token gestures, or are they genuine initiatives to harness the growing masses? Can the traditional publishers truly accommodate more, or is it inevitable that they cut to the chase and limit themselves to only backing their favourites.

Perhaps we should not be focusing on the end delivery, the published book, but on the total author relationship, development, communication and reward system. Is it good enough to pay royalties after months when others pay after weeks? Is it good enough to give someone one liners on a royalty statement and expect it not to be questioned? Is it good enough to have only one development process and approach and not offer multiple options? Is it good enough to buy and retain a wide berth of rights and only use the minimal? Are non-compete and first nation contract clauses the way to go? 

There are many more questions and some are applicable to some and not to others, but the questions are increasingly more about the needs of the author and consumer and less about the maintenance of the corporate machine.    

Brave Bookselling

On one side of the pond the ABA (American Booksellers Association) proudly proclaimed that some 44 new independent bookstores opened for business in 2013 and that 10 of these were in the technology state of California. In addition they also announce that 14 stores were bought by new owners. On the other side of the pond the BA (Booksellers Association of UK and Ireland) announced that the number of independent bookstore had dropped below 1000 to 987 and that in less than 10 years they had dropped by around a third from 1,535 in 2005 to today’s figure.

Both markets have lost major bookchains and now only one recognised national bookchain, but both face the same threat from technology, the internet and price discounting. Is the US showing signs of recovery or learning to adapt and change? So is it a case of the glass half full in the US versus the glass half empty in the UK?

The UK has some challenges from the subsidised charity shops and in particular Oxfam’s Bookstore, but these don’t sell new books, they sell used books, but they do enjoy rent and business rates advantage over the bookstores. The bookshops also face growing and targeted competition from supermarkets who stock a narrow range of highly attractive titles at deep discount. They face going competition from newspapers and others who sell off page reviews and have them distributed by the same wholesalers who support the bookshops. The High Streets continue to show signs of slow decline and have lost out to out of town stores and destination malls.

There are however many bookshop success stories and many who have embraced a wider remit than just books and coffee. There are some like Richard Booth’s Bookshop in Hay on Wye whose owner Elizabeth Haycox also has a café, a cinema and even facilitates weddings, but it is a unique location and an unusual lady.

However, in the main the independent bookshops we read about are sellers of only limited front list titles, which are displayed on the sale or return ‘safe’ model. The offer still has to compete with those that they will always find it hard to compete with in a price conscious and virtual internet shelf marketplace. Few have ventured into the bargain market, let alone the used and antiquarian ones and in essence they remain one trick ponies and increasingly vulnerable. Many sell on Amazon, eBay and other marketplaces but this is hardly a sustainable model and one where they have control over the margin.

Earlier this year we wrote about the sales boom that the Strand bookstore in New York run by Fred Bass has experienced over the festive period. Fred sells new, old, used, rare and even review copies. He does distinguish between any and sees only books and customers who want books, but he too has a vibrant and highly profitable merchandising offer selling his branded products and accommodates many filming shoots in the store. To top that the Strand building he owns is prime Manhattan real estate.

Government, local councils can make life easier for bookshops, but so can the industry. Do the publishers really do enough to help make this channel viable, or are they now too preoccupied chasing the high volume, low margin business or even in giving books away to promote reading. Have they forgotten the shop window that the bookshops give them, or has their view and disposal towards the traditional book retail channel been tainted by the demands made by the chains?

If Bookstores are to survive they must change and adapt. They must embrace all books and in doing so take some risks. They must widen their appeal and offer complimentary services and goods and they must start to see the glass half full and not half empty.

Who Would You Buy; Readers Digest, B&N, Nook, Whatsapp?

This last week has seen three company potentially changing hands and although they are all very different in the price offered they are also very different in what they offer their new owners. So which would you buy and how much are they really worth?

Barnes & Noble

G Asset Management LLC has offered to acquire 51% of Barnes & Noble at $22 a share, valuing the bookseller at $1.32 billion. They also proposed to acquire 51% of the Nook e-book division at $5 a share.

The big question is whether the business is worth the valuation and also exactly what they will do with it in order to get their return.

Nook is clearly on the ropes, losing executives in a continual game of musical chairs and only this month declared it will shed engineers on Nook as they continue to haemorrhage business and try to dump their hardware development. Competition from Apple's iPad and Amazon's Kindle continue to dominate the market and with Kobo picking up the international new business and aligning with Kobo what does Nook really have to offer? Barnes and Noble made two fatal ebook errors in not expanding its International reach until it was too late and not creating an attractive and easy to use self-publishing and digital content business.

The retail business remains but is like a giant ship that has built on yesterday’s economic model and is increasingly challenged to tack and change course in what are choppy and dangerous waters.

The news of G Asset Management offer has increased the demand and trading in Barnes & Noble shares which closed still short of the $22 offer price, which would indicate that the market may be sceptical that the deal will go through. Analysts are expecting Barnes and Noble to announce a per-share profit of $0.61 on $2.03 billion in revenue, an 8.8% drop from a year ago. So even splitting the book and Nook businesses may not look that attractive and maybe Microsoft may wish to counter the Nook offer.

Readers Digest

Next comes a relative little publicised sale of Readers Digest for just £1 by Better Capital to a venture capitalist. Readers Digest was once a force to be reckoned with and dominated its marketplace. Better Capital bought the business out of administration for £14m in 2010 adding a further £9m of investment, but despite the title’s administration freeing a £125m black hole in Readers Digest’s pension fund they failed to stave off its collapse into a company voluntary arrangement last January. Now Mike Luckwell who made millions from the TV company behind Bob the Builder has snapped up Reader's Digest UK for £1.

Mr Luckwell wants to take on Saga and focus on the over-50s market and exploiting financial services opportunities who he states are increasingly active and under-served by other media groups.

“Over-50s have a very different life than they did 20 years ago,” Mr Luckwell said. “People over 65 are jumping out of aeroplanes now, it’s a younger type of audience with a ridiculously high proportion of the wealth and only 10pc of advertising.”

He plans to restart the Reader’s Digest product sales business and invest in its online services, even potentially charging for access to its website and couple this with an expansion into financial services. So is the brand recoverable and importantly is the mailing list that is key to its reestablishment sufficiently active to support it? The mail list may be huge but like all lists it ages quickly and becomes harder to mine effectively when the vast majority is postal and you wish to convert them to a digital business. However, managing the list and renting it could be attractive and the brand alone is a steal for £1.

The purchase raises the question why no publisher who had any intentions to offer a direct to consumer offer did not stump up the cash to buy Readers Digest for a £1?

Whatsapp

Facebook announced last Thursday that it would pay $4bn (£2.4bn) in cash and $15bn (£9bn) in Facebook shares as part of the deal to buy the Whatsapp real-time messaging service. The app's founders and employees will get $3bn (£1.8bn) of the shares as four year restricted stock. Facebook previously bought Instagram for $1bn and has a strategy of extending its community offer buy acquistion.

Since the likes of Skype first showed that connecting people for free over the internet could build and deliver huge communities others have taken up the mantle. So does being able to offer even further growth as well as extending the offer make Watsapp a perfect Facebook fit?

It is not that the service is ad free, or has stringent privacy rules, or that it has relatively small in overheads in only having some 50 staff, as all these could change with the wind. What is important is that it has the community, the quality of the service and is easy and free to use. When you plug this into Facebook you have a rich community with multiple ways to effectively communicate and this starts to protect Facebook from others who merely copy and refine their current offer. The younger Facebook generation who may be becoming disillusioned with the site that is now being used by their parents and even grandparents, may be retained by the lure of comprehensive connection by any means under one roof and advertisers just value more connections and a larger community.

We may question the price paid but it is relatively chump change for Facebook to stump up and offers them a quick growth and increased valuation options. There are few who have the cash or the benefits case to compete with such a purchase but it is worth noting that Skype has gone somewhat corporate and dry since it was itself acquired by Microsoft and this has fuelled the likes of Whatsapp. However Facebook doesn’t yet have the same corporate treacle of Microsoft so can probably ingest Whatsapp a lot better.

So which is the best buy and which buyer offers the best investment strategy? All three are very different but all 

Digital Warming and Self-Publishing

Today there is much debate over the value and size of the self-publishing channel. Yesterday this channel was restricted by the physical supply chain, which effectively remains owned by the traditional publishing channel. This is no longer the case with the digital channel and works are only restricted by all the other works that they compete with on their virtual shelf and the money spent in promoting and marketing a title.

Self-publishing was once seen by the market as vanity publishing and being the books that publishers didn’t want and therefore unworthy of the attention of consumers. The digital market has changed that and now self-publishing is growing in respectability. There are still poorly written and edited books, but some would suggest that also applies albeit to a lot lower extent to the traditional channel. Both now sit side by side on the same virtual shelf.

Platforms such as Kindle Digital Publishing (KDP) have made it possible for anyone to publish at relatively little cost and receive a large proportion of any revenues generated. Some will argue that there still are costs which are largely forgotten by the author. Others will claim that these tasks can be outsourced at a very low rate to professionals who don’t carry the corporate baggage. Some would suggest that publishers have the ability to generate more sales which even at a lower royalty will generate more money for the author. Others that self-publishing is more transparent, pays quicker and puts the author in charge of the price.

The self-publishing channel is now not restricted to new works, but is increasingly available to those published authors who have been able to revert their works when the publisher didn’t want them anymore, or digitally publish works that never had the digital rights licenced in the first place. The author are now able to republish these themselves digitally via the likes of KDP and others.

We now have a virtual shelf brimming over with old and new, self and published works and the challenge for all is now coined as ‘discoverability’. Marketing spend can still by the bestseller, but those without that backing now have to increasingly compete head to head with the self-published.

In his Report on self-publishing Hugh Howey draws his conclusion that the self-publishing channel is far greater than many think and he makes some claims which others dispute. The reality is that no one really knows the answer and the data today is incomplete and the analysis often more subjective than factual. Amazon, do not disclose and make the detail public and as a result there are many who make assumptions based on their opinion and bad data.

Counting the volume of total works published becomes a futile exercise as many self-publishing ones don’t have ISBNs, let alone bother to register them. So how many ‘new’ titles were published last year becomes an guessing exercise for some and largely irrelevant to many. The slice of market share achieved by some is as only as good as the data collated and what is often outside of that is ignored. Even the definition of a work and the number of renditions starts to be questionable.

Like global warming it would be somewhat naïve to not accept digital warming is happening and one aspect of this is that self-publishing is not only growing but that some authors are making a return off this route. Self-publishing will not cannibalise the traditional channel and as we have said, it can’t compete with others marketing and promotional spend, but it can be a viable first step to many, provide a longevity of a work for others and if dismissed by the traditional players may well come home to haunt some.

Kobo Takes Over Sony's North American eBook Business

Today, two days after Takahito Aiki, took over the reins as CEO of Kobo, he has announced the effective consolidation of the Sony ebook business under Kobo in North America. It is almost certain that this is the final and long overdue retreat of Sony from a market that they expected to win and sadly lost from beginning. It also sends a strong signal to the market that the dominance of Amazon in this sector is real and is giving even those with potential credentials and market presence a hard time.

Sony entered the market some 8 years ago with huge fanfare, fancy ebook readers based on eink and were the early adopter and major driver and influencer on Adobe’s ACS4 DRM service. I remember meeting their senior players once in San Deigo and listening to how they were going to dominate the academic and educational markets. But their offer and market understanding was always someway behind their words. It’s also somewhat ironic that this death knell has occurred at the same time that Adobe has also gone through the PR mangle and has had to retract so publicly on their ACS5 statements.

So we have Sony ready to preinstall Kobo on its smartphones , laptops and other devices and to hand over their customers and business to Rakuten  and its Canadian ebook subsidiary Kobo. It’s also interesting as it comes at a time when devices matter little and the platform is what counts. How smooth the takeover will be for those who backed Sony and bought their devices and ebooks remains to be seen, but transferring encrypted DRM licences is not always as easy as you would expect. All this is without considering how they are going to deal with those Sony BBeb licences.

Some accept that Sony has been facing many challenges across its business and they may still come back, but with many bases to cover this seems highly unlikely.

So we read the usual hype and words on what this means, and how it is going to make the difference, but the reality is that another door is shutting and real consolidation is happening. The obvious next candidate is Nook, which on the face of it would be destined for Microsoft, the discussion on this are already in play as Barnes and Noble grapple with the same issues and facts of life. Now if we just look at the North American market at a potential combination of Nook, Kobo and Sony that would certainly give Apple a challenge and wake them up from their apparent complacency. This sort of consolidation works best in the established and dominant North American market where it can be honed before it goes global.

So what’s the betting on Nook going somewhere soon?

Adobe Climb Down Over ACS5 Deadline

After the storms comes the calm and time to reflect.

Adobe have now climbed down from their ACS5 stance and have left the migration timetable in the hands of their customers. A statement posted on the Datalogics blog says:

As stated during our January 29th Datalogics and Adobe webinar announcing the release of the new hardened Digital Rights Management (DRM) for Reader Mobile SDK (RMSDK) 10 and Adobe Content Server (ACS) 5, Adobe revealed a July 2014 time table for migrating to RMSDK 10 and ACS 5.

After receiving feedback from customers and webinar attendees, Adobe has revised the migration timetable for customers.  “Adobe does not plan to stop support for ACS 4 or RMSDK 9.  ACS 5 books will be delivered to the older RMSDK 9 based readers”, according to Shameer Ayyappan, Senior Product Manager at Adobe.  “We will let our resellers and publishers decide when they wish to set the DRM flag on ACS 5, thus enforcing the need for RMSDK 10 based readers.”

In other words, ACS and RMSDK customers can migrate to the new hardened DRM that provides a higher degree of security to EPUB & PDF content and prevents unauthorized viewing of content now and in the future in a timeframe that makes sense for them.

As stated during our January 29th Datalogics and Adobe webinar announcing the release of the new hardened Digital Rights Management (DRM) for Reader Mobile SDK (RMSDK) 10 and Adobe Content Server (ACS) 5, Adobe revealed a July 2014 time table for migrating to RMSDK 10 and ACS 5.

After receiving feedback from customers and webinar attendees, Adobe has revised the migration timetable for customers.  “Adobe does not plan to stop support for ACS 4 or RMSDK 9.  ACS 5 books will be delivered to the older RMSDK 9 based readers”, according to Shameer Ayyappan, Senior Product Manager at Adobe.  “We will let our resellers and publishers decide when they wish to set the DRM flag on ACS 5, thus enforcing the need for RMSDK 10 based readers.”

In other words, ACS and RMSDK customers can migrate to the new hardened DRM that provides a higher degree of security to EPUB & PDF content and prevents unauthorized viewing of content now and in the future in a timeframe that makes sense for them.

We welcome the change of softening of the Adobe position but now question what really drove them to do it in the first place?

Does the ebook world really need a hardened DRM that will be broken before it’s widely adopted? Does this PR slip give us all a wake up call to seriously question the benefits of hard DRM, its costs and the fact that it actually can restrict business and as demonstrated by this PR slip put many’s business in the hands of someone who merely operates a toll booth and adds cost. 

Rakuten Replaces Serbinis at Kobo

All companies and teams only change their leader when they are forced to do so or when the current one isn’t delivering what the owners seek. Only a fool changes a wheel when it isn't broken.

Two years after Kobo was acquired by Japan’s Rakuten they have announced that Kobo CEO Michael Serbinis is stepping down as chief executive of the ebook company. Serbinis will be replaced by Takahito “Taka” Aiki, with immediate effect and Aiki is to relocate to Canada. It is reported that Serbinis will remain with Kobo as the company’s founder and vice chairman.

Until recently Aiki was CEO of the Japanese telecom company and subsidiary of Rakuten, He is reported as bringing, ‘a wealth of experience in building and growing successful projects and companies, and has built his career on achieving ambitious goals and forging strong teams.’ So the obvious question is whether that is what Rakuten did not see in Serbinis? Or is it a planned handover which just happens to happen immediately?

Kobo have been making good progress and have thrust themselves into international markets and sought first mover benefits, but they remain at best number three and a long way behind number one. They claim 18 million users in 190 countries with a digital book library of more than 4 million titles in 68 languages but is that enough? They still have hardware that worked initially but is now subject to fire sale pricing and is looking like a duck out of water. Like Nook they have developed the platform approach but they remain focused on a single media, ebooks, in a multi media world. They have been quietly developing and taking control of their DRM walled garden and moving away from the transaction cost model of Adobe. But you have to ask is it enough for a player the size of Rakuten?

Ladybird: A True Publishing Brand is 100

Today Penguin celebrates the centenary of the registration of the Ladybird logo in 1915. It was very interesting to watch the recent televised documentary on the remarkable story of this format and its history. 

The real Ladybird success, came with the introduction in 1940, of a pocket-sized mini-hardback book measuring four-and-a-half by seven inches and based on a standard 56 page folded format, which was cut to size with no waste. On one side of the spread were high quality full-colour illustrations by the likes A. J. Macgregor, Charles Tunnicliffe, Allen Seaby, Harry Wingfield and Martin Aitchison, whilst on the other side the text was simple clean and engaging with verse initially by W. Perring.

The characters created by Ladybird captivated the children of the time and the books were sold in not just bookshops but newsagent and the grocers. Most children in the late 50s, 60s and early 70s were avid readers and collectors of the cheap, simple and distinctive books, which often depicted the post war model British way of life and the innocence of the children Peter and Jane at play, the housewife Mum and breadwinner Dad.

Labybird went further than the Famous Five, Just William and other fictional series of the day. They covered not just stories based on family life, but introduced many to the wonders of nature and history and even covered science and engineering subjects. The series were colour banded, uniform and filled both the shelves and minds of many children in a way that has yet to be surpassed. In addition, all the books were priced the same and were aimed at being affordable and accessible for children to buy themselves.

Would the format and style have adapted to the changing marketplace or was the changes introduced under Pearson inevitable and the death of the design form inevitable? Was DK the closest to matching their audience? Are today’s collectors merely remembering their lost childhoods, or paying respect to what was once a winning format, a clean price point and distinctive brand?

Can we learn today from the Ladybird pre Pearson? Today’s children’s books come in all sizes, have no price point and often the character is the brand. Will tomorrow’s books continue the same, or will someone revisit what once worked and adapt it to today’s growing digital and physical book markets? 

Adobe to 'Harden' their Broken DRM

Last week we asked questions about the state of Adobe’s widely adopted ACS4 DRM service and the implications of their announced migration to ACS5. Then we knew little of their plans and only of their intent, but today more has come to light on how they plan to achieve the move and the potential implications for those who sell the service and the consumer who has the files.

Below is Youtube link to a webinar that Datalogics did alongside Adobe last week. It is not recommended that you watch it all as it is not user friendly and aimed at technicians. However some of the salient points can be obtained by cutting to this shortened clip http://www.youtube.com/watch?v=9qb-sXVlK_o&t=24m48s . Adobe confirms that it will ‘harden’ their DRM in July and force migration and that this will effectively kill compatibility with older RMSDK9 (reader) based apps and devices. The move is understandable from Adobe’s perspective and very reminiscent to the language that came out in 2006 when the introduced ACS4 to strict deadlines.

What Adobe have failed to grasp is that many devices (readers) that have supported ACS4 will have significant software and maybe firmware upgrades to achieve in what is a relatively short period and inevitably there will be disconnects. It is not possible to comment on the myriad of old eink readers out there but…

Many pundits have taken aim at Amazon, Apple, Kobo, Nook and their proprietary DRM systems. However, all of these effectively can control their own environment and evolve seamlessly. Adobe’s DRM may be usable by others, but as demonstrated by this announcement, it puts your business and commercial transactions charges in Adobe’s hands. Short term this may be fine, but long term is it wise.com?

The Adobe use of the term ‘hardened DRM’ is quite apt and we have to question whether we are being taken done a road which is technology applied for technology sake? ACS4 was easily hacked and broken so one option is to ‘harden’ it and make it more difficult to hack. The other is to migrate away from encryption and find ways to make business easier for all and grow the market.

DRM is not about encrypted hard DRM. It is about digital rights management, be it hard, soft or none and we have to ask what we are trying to achieve and what works best for the market? Adobe by moving part of the individual licence that was previously on the rendering server back to the issuing server and in doing so have tightened their grip on the file, but they have increased the cost of doing business and offered little in return. Adobe is increasingly creating its own walled garden and it begs the question – is it all necessary, or is it a simple case of the Emperor having no clothes and nobody strong enough to say so?

This migration to ACS5 in fact could do more damage to the reputation of DRM that all the stones thrown at Amazon’s system.

We were around pre ACS4 and were involved in the initial services. We also sat down with others trying to seek an alternative option to ACS4 but had little time and much pressure to roll over. Trying to change Adobe’s corporate mind-set is all but impossible. Today there are many alternative options and cloud based services all but render the existing ebook model redundant. As we move towards subscription based online and ‘as much as you can eat services’, many now seek a way to escape the Adobe locked in transaction charges.

However, as we have suggested before we should not rush headlong into no DRM as that could be equally as short sighted. We must look at softer watermarking DRM which can be individually hacked, but if tied to a central licencing registry would provide provenance of legitimate ownership, which in turn could enable that often feared resell market some creditability.

It is also interesting to note the only now some 8 years after ACS4 came to market are some of the business models and issues, which were raised at the beginning are starting to be addressed. Shared devices, bulk downloads, subscriptions, educational loans etc where raised at the time but not seen by Adobe and Overdrive as important then. It drives home the point that hard DRM may not just lock up the files but may also lock up the business from doing business their way.