Thursday, July 31, 2014
The problem with any open confrontation is that often things that were really said in public have a habit of rising to the surface and becoming public. Public Relations people then try to put them back into the box, or rationalise the issues, but often the damage is done, or the public’s perception has changed. Propaganda is a powerful tool when communicated effectively.
Today’s standoff between Amazon and Hachette is becoming increasingly visible to the public. Some would say that the majority of book buyers are more concerned about getting the right price and service for themselves than they are about the trading terms between publishers and retailers. This makes sense and for many it is as if this battle is taking place on another planet. But then we introduce the emotive strings and issues that attempt to sway opinion. Not many care about the plight of the main protagonists, but introduce the authors and that changes things a bit. One side infers that authors are being exploited, and the other also says that they are being exploited or harmed by the action. Some would suggest that the author is are mere pawns in this battle.
We now have Amazon making a public statement ‘Update re:Amazon/Hachette Business Interruption’.
The statement is logical from Amazon’s perspective and makes arguments for lower ebook prices, which reflect the reduced usage rights, plant and distribution costs. They suggest a price point of 9.99, but also recognise some books will cost more. They put forward their revenue model split between themselves, publishers and authors and then say we’ll give you 70% and you guys can sort it out the division between yourselves. They argue that lower prices increase volume sales which in turn create greater revenues for all.
What Amazon have subtly done is drop a PR bomb into the publisher lap. They have questioned the royalty paid to authors, knowing that their suggestion is higher than what publishers gives. They have started to make the public more aware of the differences between the usage rights costs and pricing of ebooks, and in doing so promote themselves as consumer champions. This interestingly moves the debate into the public arena and starts to set the public argument and seize the public initiative.
Can the publisher respond effectively and seize back the propaganda war, or will they aim to muddy the waters and strike back with a fresh angle of attack?
What we are seeing can only benefit two people in the end, the author who will demand more and whose case is being strengthened by the day, and the public who will get cheaper books as the ebook RRP comes under pressure. Will it benefit Amazon over others, or will others benefit from the stance taken by Amazon? Will others step in and try to broker a deal or will Amazon simply and suddenly capitulate knowing that they have already scored their points and leave the fight for another day?
Tuesday, July 22, 2014
Battle lines are being drawn in the digital book arena and these are changing both in terms of goals and measures of success. The changes taking place may appear relatively small and tactical today, but their impact could be significant over time. How long they will take to deliver change is questionable, but that they will, is inevitable.
Although there is much noise in the market and many are merely shouting about what they are doing and it’s often hard to determine noise from substance and authority. It is also has to be recognised that different sectors have different issues and drivers and nowhere are there any silver bullets.
We would suggest that are five shifts taking place with the Trade environment. These are all at different stages of evolution and moving at different speeds, but will spawn more change.
Interestingly, as the overall digital market will be shaped by all of them, it may not be wise to simply cherry pick the ones you think apply to you and ignore the others.
We are now starting to see the emergence of serious players and offers. Interesting, they have all pitched the consumer reading demand at the high end and made ‘one price fits all’ offer.
Subscription offers need to be geared to individual needs and yet encourage members to read more. Just having the biggest library to choose from and expecting readers to consume 3 books a month is not the answer and niche genre offers are essential as well as recognising variable reading demand patterns which will keep members hooked. Today the churn rate is unknown and we suspect it will be quite high in the initial period and therefore these services need to develop secondary community draws to compliment and add subscription value and not merely appear as one trick pony’s. We would expect them to follow other media subscription services and align themselves to larger and complimentary subscription lists and this is essential as long term as subscription offers continue to consolidate their customer facing propositions.
The old and somewhat irrelevant buy to own model that prevailed in the physical market is fast becoming exposed. Although we have yet to see the ebook used market happen, with only the Dutch service Tom Kabinet is challenging the courts, it is inevitable in a highly restricted market.
However as used books, DRM, watermarking and on demand streaming services all overlap, maybe the emergence of on demand means that we no longer have to test the first sale doctrine and the used ebook market never happens. But unless on demand occurs, the used sale market potential for ebook is bound to be tested and found wanting and it is inevitable that the courts will eventually fall on the side of the consumer.
One of the challenges is about proving ownership, which with DRM should be easy, but with the current DRM walled gardens is almost impossible. Again with watermarking it should be also possible, but without a registry and standards conformity, is again almost impossible. With no DRM, no watermarking and no registry some would suggest that this is like closing the stable doors after the horse has bolted.
We are firm believers in the democratisation of writing which is currently exploding in the digital market and will continue to grow for the foreseeable future.
Self publishing is no longer about the slushpile of aspiring writers all wanting to be the next EL James, but about the ability of anyone to bypass the intermediaries and express themselves and publish their works. It facilitates small publishing ventures as well as new and established writers. They may select to use outsourced services to polish and refine their work, or simply publish themselves.
It challenges the ability of the intermediary to control what is being bought and read and can level the marketing playing field. The bestseller will still be a bestseller, but increasingly the backlist and midlist authors will now have to do more themselves to promote their works and in doing so find themselves head to head with others who have self published and earn a greater percentage of the revenue they have generated.
Can traditional publishers use the self publishing services to feed their lists, or have they now lost that opportunity? Maybe it’s down to the value they will offer the writers and that may have to be more than just a ‘safe home’ and a brand.
As author earnings continue to be squeezed by net receipts, reduced advances and more competition, the publisher profits from digital have been seen to grow. Maybe the widening gap is down to bad PR and communication, but the writers are increasingly aware and continue to be the ones who create the initial value.
One area that is very visible to authors under the KDP and other self publishing services is their sales reporting and revenue payments. As the authors will demand greater transparency on earnings, speedier payments and an increased revenue share, there becomes less hiding place for publishers.
Publishers do add significant value, but now have to increasingly demonstrate this and one potential knock on effect will be a revision of digital rights to term based and separation of these from print.
Content, Context and Community
In the main, the market continues, to merely pour the physical content into a digital container.
Some would suggest that this is short slighted and ignores that it is just a transient step and some would even argue is the equivalent to performing self-harm. We don’t say that all ebooks must go down the multi media experience route, far from it, but that we should be thinking about the user experience and making the digital rendition complimentary and not just substitutional.
Digital also offers significant opportunities to grow author, genre, reading and writing communities. These may be devolved to others better suited or motivated to organise and curate. Digital also expands the ways in which works can be discovered, validated and valued which applies to both digital and physical renditions. It is no longer about describing books to place them on dry one dimensional shelves, but about enabling them to be found in many ways within a virtual environment. Standard bodies think library and bookshop shelving, but today’s buyers don’t.
Too many what we have said, is not relevant to their business today. They may wish to sit on the fence and wait for it to happen and expect that they can respond quickly. To others they see these changes happening, new opportunities and the ability to position themselves for tomorrow and not run the risk of being too late to the party.
Thursday, July 17, 2014
Today, the market is talking about the Amazon offer, Kindle Unlimited, which certainly is a smart name as it aims to do exactly what it says on the tin. It should come as no surprise and it was only a matter of time until Amazon entered the ‘all you can read’ ebook subscription arena that services such as Oyster and Scribd have started to open up.
We have long argued that the subscription model is coming and that it starts to change how we relate to books that now can be effectively ‘borrowed on demand’, without having to worry about collecting them on virtual shelves, kidding yourself that you own them when all you own is a limited licence, and also trying to work out how to pass them on to others, share them, or divide the family collection when a relationship splits up.
The greatest challenge to the subscription market is matching the economic model to the reading habits of the members. The book clubs of old used to force feed ‘book of the month’ and expect a regular purchase, but they were dealing with relatively more expensive books and accepted that many people didn’t read on a regular rate. Importantly publishers often had Book Club royalties written into their author contracts. We now have ‘all you can read ‘models which are based on a flat monthly rate with an open to read offer against a digital library. Book s only earn when they are read and ensuing the definition of ‘read’ is a relatively minor but interesting issue.
Unlike other media subscription offers in music and film and even audio the demand and usage patterns of ebooks are very different. An ‘all you can read’ model may appeal to high volume readers who actually don’t need an incentive to read, or buy books and probably read a high volume of what they buy. It doesn’t necessarily appeal to readers who have a more erratic habit, or who collect ebooks today and don’t get round to reading them. So churn rates will be very important both in the early days and within the subscription cycles and will be probably very high compared to other subscription services.
Amazon launched Free Time in the US some 18 months ago. The service was aligned to their Prime subscription model and offered access to several media forms and importantly was aimed at parents for their children. It is not clear how successful this offer is today, but it did have all the right ingredients and if it were extended to align with Unlimited would make commercial sense. Amazon will have learned a lot from this exercise and obviously have a huge volume of customer information and reading habit data to mine and exploit. Unlimited would potentially give ‘family’ offers which cross media, align with Amazon’s core Prime service and effectively lock in customers. Importantly they will be very difficult to compete with as others would appear one dimensional and limited in their potential. However the economics of such an unlimited cross sector offer would be complex and maybe a bridge too far with suppliers today, but Amazon will have learnt much from Free Time that others have yet to discover.
Amazon has aligned Unlimited to their Lending Library and those publishers and authors who opted for this service channel now are automatically lifted into Unlimited. A smart move by Amazon and one that gives them instant traction with both content and users.
So is there room for Amazon, Scribd, Oyster and will Kobo, Apple and the ailing Nook follow? What will Wattpad do now? Can Amazon extend the Unlimited offer to make it even more compelling with premium offers on audio, film, music and even cloud services?
We just can’t see sufficient market for all players as they are position today and it will be interesting to watch the strategy adopted by others. Amazon’s Achilles heel has often been their loner approach and there are many huge subscription services that could be seen as complimentary for others to align with and thereby protecting themselves from being seen a ‘trick pony’.
What’s in it for publishers? What’s in it for Authors? How do digital distributors such as Ingram respond? How does this impact the public library debate and services such as Overdrive? There are many unanswered questions and we are only at the start of a journey which will have many barriers to negotiate, but we now are starting to see a divide between physical and digital which may prove to be healthy. The books may unfortunately remain the same but the divide between ownership and licence, between buying to maybe read or as a gift and subscribing to consume, an incentive to read more as opposed to decorating physical and digital shelves is now potentially up for change.
This is a good thing for consumers who read. It could be a good thing for digital media users. It may get more people reading. But there are others within the value chain for which this move has many uncertainties.
Amazon Free Time: Give me a child…. Dec 2012
Subscription Is Coming June 2013
Monday, July 14, 2014
This weekend in a quiet small local market in Bath we came across two stalls which caught our eye. One was selling lampshades at £75 each and the other origami objects. The thing that was interesting was that both were using printed books as their base material and draw.
The lampshades used a pile of books as their base which had a hole drilled through them in order to support the shade and fitment. The stallholder commented that several people had objected to her wares and that she was finding it difficult to get the books as charity shops wanted to sell them or they were destined for landfill. She roughly had desecrated some 100 plus books just to create the lampshades she had on display. We quite like the look of the leather bound set of short story books but they were now holed.
The Orinoko origami stall obviously had no problems getting hold of stock to cut up and fold as they proudly worked in partnership with BookBarn International who were advertising themselves with flyers claiming, ‘Invest in the future of books!’ Orinoko proudly state, ‘choose the book you want from any Bookbarn International stock and get a 20% discount off the book.’ No doubt they buyer then brings their book along to Orinoko to be cut and folded into art. Some would suggest that this is not investing in the future of the book.
Last week we wrote about the British Museum’s ‘wheel of books’ and questioned the subliminal message it was sending out about printed books and art. Now we have further examples of books being used to create art in the best possible taste. But is the real future of the printed book?
Individual libraries and book collections used to define the owner’s taste, likes and reading but tomorrow will these be desecrated to reflect their art taste and regard for the printed book? Unlike landfill and pulping these new fashion and art objects are for display. Once out of fashion they are of no use and become yet more rubbish. But until then they will sit proudly on display no doubt alongside the stuffed heads of shot animals and caught fish and other trophies which define the taste of their owners.
Thursday, July 10, 2014
Some will say we are party poopers and that we should applaud and celebration the British Museum’s novel use of the book to create art, but is the ‘wheel of books’ just a cheap gimmick or we should we be mindful of what could be easily copied?
The British Museum’s newly refurbished bookshop got Lumsden Design, who are based in East London, to create their space and engage customers. At is centre is a two metre ‘wheel of books’ which sits proud in the shop’s window. It has caught people’s imagination and has engaged, but is it about promoting books for reading, or promoting them as objects of decoration? Is it simply reusing them to create a decoration and a one off piece of eye candy which is in fact in conflict with the objective of reading, or is it a subtle way to promote the book? After all we often love to see shelves of books face out, or stood to attention with their spines outs and is this any different?
What will be the legacy of the ‘wheel of books’? Will people now buys books to glue them together or to drill holes through them in the search of expressing themselves through art? Will schools now collect old books so their kids can create art and forget to read them? Will this decoration promote books as a tool for learning and an escape to fantasy or simply turn them into objects to be twisted, broken, and stuck together in the search of art? Will second-hand books now be snapped up by the yard to be experimented on in art classes and colleges?
We do applaud the other creations within the shop, which includes tabletops wrapped in black leather to recreate the original writing desks in the Reading Room where Karl Marx, George Bernard Shaw, Thomas Hardy, George Eliot and Rudyard Kipling all studied. It has also embraced the Rosetta Stone right down to the sales of merchandise such as umbrellas and cufflinks. But it is the ‘Wheel of Books’ that causes us to ponder, with its metal ring piercing through all the copies on the wheel, in order to keep them all in place just to create window art.
A few years ago some industry bright sparks thought that instead of pulping books, or sending them to landfill, prisoners in Her Majesties prisons should drill holes through them and in doing so stop them being resold, reread and shared. Thankfully the move was questioned and shunned, but today have we now discovered the acceptable alternative? Same result, holes drilled through the books rendering them unusable, but this time it is all done in the best possible taste.
Monday, July 07, 2014
We have all read about the decline of the independent bookstores in the UK and US. However, we have also seen the relaunch of Foyles in Charing Cross, the expansion of the Hatchards brand by Waterstones to St Pancras, the growth online of the bargain bookseller, The Works. So what is the future of the Bookstore and does it have a vision of itself in 2020, or is its vision somewhat out of focus and requiring both short and long sighted correction?
Stanley Unwin once said that, ‘To write books is easy, it requires only pen and ink and the ever-patient paper. To print books is a little more difficult, because genius so often rejoices in illegible handwriting. To read books is more difficult still, because of a tendency to go to sleep. But the most difficult task of all that a mortal man can embark on is to sell a book.’
Today more than ever before that quote reflects the significant changes and challenges facing booksellers. Some would say that the question of what is sold, is as important as that of how it is sold.
Today many continue to sell not just a narrow range dictated by their physical square footage, but a range focused purely on the new or only available through the publisher. It’s as if they haven’t read what it says above the door and have ignored the word ‘bookseller’ and replace it with ‘new books only seller’. Books are books and the consumer doesn’t grab a book and turn immediately to the copyright page and look as to when the book was published, so why do so many bookstore restrict themselves? In a market that over produces both in titles and quantity, there are many mint condition ‘bargains’ to be stocked from outside the traditional publisher channel. They may not have the ‘sale or return’ safety net, but they also can be often acquired at a fraction of the price. One of the salient lessons we should have learnt by now from the likes of Amazon, is that consumers want to buy new, old, rare, bargain and used books and to do so from one place where they can seen the full range.
A recent article in The Economist looked to the future design of the bookshop and asked four firms of architects and designers to create the bookshop of their dreams and in doing so reinvent it for tomorrow. The designers looked at many aspects and even covered the sale of used and digital books and using the space to sell lifestyle, create theatre and host events. It is worth a read.
However, they started from the premise that the hub was the bookshop and everything revolved around the book. Is that how we should look at it, or is the book merely part of a larger proposition based around a wider lifestyle offer? This obviously raises the question of range both in terms of width and depth. We have seen many acclaimed bookshops which have narrowed their offer to appeal to a segment of the market, but how many of these have actually complimented their book offer with a full range of products that appeal to that same segment? Does the cookery shop sell cookery product and books, or books and cookery product? Does the children’s bookshop sell toys, children’s clothes, prams etc. alongside books, or books alongside childrens’ product? Ex Borders UK head, Phil Downer has made his Calliope gift shop one that sells gifts which include books and in doing so he is able to cross sell and merchandise and adjust his offer to suit the market. Will books be a major or a minor element in years to come will depend on many factors, but ultimately it should reflect consumer demand.
The coffee shop within the bookstore is often a very good earner per square foot and creates lifestyle and greater selling opportunities. It is claimed that our obsession with coffee houses is going to grow by a further 20% by 2020. So would you open a coffee shop that sells books or a bookshop that sells coffee?
A further example of how market trends have changed well established markets is in the off licence sector, where the supermarkets have come in and not only wiped out much of the previous retail space, but also have actually expanded and grown the market. When supermarkets first started selling petrol it looked obvious and was restricted to their out of town supermarket locations, but now some have taken their supermarket offer to the garage forecourt and taken over independent stations which are convenience stores that sell petrol and this has enabled them to grow their convenience business and opened new locations miles from their supermarkets.
Just focusing on books is obviously a very limited consumer offer. Just selling new books could be terminal.