Is Amazon Poised to Steal Print On Demand?

Many saw Print On Demand (POD) as the ultimate ‘just in time’ production solution to book publishing, which would wipe out all the inefficiencies of the ‘just in case’ approach that plagues the book supply chain. So why didn’t it happen, or did it happen for some and not for others? Is there a new dawn, or just a new set of people who have been sold a pup and not looked hard at the facts?

Today we read that Barnes and Noble are installing Espresso Book Machines in three of their store, including their New York flagship in Union Square. Books-a-Million also has installed two in its stores last year and Powells has one in Portland. But are all these genuine investment cases or mere subsidised trails? 

   

We are all aware of the huge success Ingram have made with Lightning Source both in the US and UK and the substantial side benefit this has given them with Ingram Digital and in acquiring digital content. Some would suggest that other more single focused operations such as Rowe’s in the UK have been less successful and in general, the main production presses have continued to plough their own furrows. Amazon acquired Booksurge which has now morphed into CreateSpace and has been aligned closely with their Kindle KDP and Audible self-publishing offers. In 2012 Kodak entered into the space with a strategic alliance with Espresso to site POD machine in non book outlets to also service their picture kiosk offer and although two machines were installed in Bartell Drug Stores near Seattle, this apparently has failed to impress Kodak.

In the UK Blackwells installed an Espresso POD machine in their Charring Cross store. There were many mistakes made, with the machine not only taking up valuable retail space, but often being unmanned, as staff wanted to sell books and didn’t want that ‘monitor’ position. The customer also had to often wait, either for someone to operate it, or just for a book to be spat out. Best of all, they had so much faith in its ability to drive sales, they tried to hide the machine around a corner. They didn’t know its audience and it was poorly marketed both within the store and to a wider audience.

The challenge is not the technology, it’s with its adaption and adoption, subsequent return on investment for all and perceived added consumer value. It’s also like eInk technology, in that it looks great and is capable of delivering, but if it takes too long, or the wrong strategy is adopted, it can be overtaken and merely becomes transient technology.

Many suggested that POD would solve many environmental issues but we would suggest that they first may wish to also look closer at the technology and paper stock used in the current machines.

The challenge is that POD means many things to many people.

To some it is a substitute for short print runs. One academic publisher very successfully could predict sales of its back list, so it set thresholds at which POD kicked in and replenished inventory according to forecasted demand and in doing so kept high priced books in stock. It even only had one location worldwide to service distributed hubs and they could afford to fly it around the world once sold. POD can work on predicable sale patterns and high ticket books.

Others waited until the backlist book inventory hit the bottom and operated on sell one make one basis, again ensuring the book remained in stock and obviated the ‘reprint under consideration’ lost orders and print gambles.

Some printed more POD stock than was healthy and used POD to simply reduce their print run exposure and inflated the price to pay for this higher ticket item. Interestingly, ask those POD operators if the print singles or bulk orders first? Also like any machine they return the best investment if they operate flat out and not intermittently between the hours of 9 till 5. 

However, the big challenge for many was the basic model. All tended to stick with the print and distribute model and this was personified by Ingram who printed and then distributed, either on a pick, pack and dispatch direct to order, or more frequently indirect to stock. The real opportunity was to flip from ‘print and distribute’ to ‘distribute and print’ and bring the manufacture closer to the consumer. But to do so one now has to ask what is ‘local’ in a world were delivery is shrinking to same day?

So why do we think that the Barnes and Noble ‘test’ is irrelevant? Firstly, unless the service is perceived as universal then it has questionable marketing advantage and real cost and service issues as there will be more ‘only available at limited stores’ and less ‘available here.’ We don’t envisage a return to the 17 and 18th printer within the shop and the machines are not going to shrink to a desktop today. We do however see it working within institutions and public libraries who often have different needs, service offers and return on investment critique.  

So who could be a winner apart from Ingram? Well this is yet another lesson being taught by Amazon, who, by reducing their delivery times to even same day, have potentially removed the ‘local’ issue. If the can buy online and have it turned around in the same timescale as a traditionally printed book, will the customer care if it’s POD or traditional? Amazon has also gone for the classic sell one make one model that aligns to self publishing and positioned it alongside KDP and their Audible self publishing offers. Tomorrow they are in a great position to now offer the same service to publishers and retailers who wish to reduce stock but increase availability. Maybe Booksurge was a very canny buy and under CreateSpace can become another part of an increasingly well thought through and formidable holistic offer.

Retaining Author Relationships In A Transparent World

Technology and communications are changing not only our culture but also our relationships with others. It is not just about how and what we communicate but also about the transparency and openness of the communication. Where once we could not see, we now can and this can start to question and even undermine the trust and inter-dependency in relationships we once took for granted.  

We can all now see our financial transactions and business is now viewable in real time 24x7. Even our location, what we are doing, what we like and dislike can be tracked and visible to many. There is often no hiding place unless you are switched off. As recently witnesses in the news, even governments are exposed and they need to maintain their trusted relationships within an increasingly hostile environment.

When we look at the book business and it value and supply chains, this increased openness and transparency is opening up both new opportunities and also starting to question relationships and process we once took as given.  Increasingly, we are all questioning the value that others add and are now looking to technology and information to support these. These changes are changing relationships and what we expect from them and potentially exposing that thorny issue of trust.

We can no longer deny the rise in self-publishing. What was once seen as the slush pie and vanity publishing is fast becoming respectable and a vibrant publishing market in its own right. As this door widens it could impact on the traditional publishing chain and question what rights are traded, the terms and even the commercial relationships themselves. The process between rights and royalties may have been to many authors something that just happened, but as the likes of Amazon’s KDP and Kobo’s publishing and other services start to show live sales being accrued along with earnings, what once was a mystery to many authors is starting to become transparent. This shift is significant as it starts to force new rules on all and merely sticking to the old ways may in fact end up driving more to the new ones.

We have long argued that physical and digital rights should be separated. We accept that the two go hand in hand and that they are different to other rights such as Film and subsidiary rights. However, the terms under which they are licenced should be separated. Right reversals have a defined physical trigger in most contracts and this works today. However in a digital content world this can easily become perpetual licence as the inventory never goes out of print. If the two are joined under the same revert clause then the physical work can be locked in perpetuity irrespective of its performance. Term time licencing of digital would make sense, but these leads us to consider the information needed by the author on which to base their relationship and trust. We now have to accept a greater transparency, openness, availability of detailed information and timeliness of payments.

Of course some may say the wheel isn’t broken so it doesn’t need fixing, others may say they have a contract and that is that, but it is not about today but tomorrow and maybe it’s time for a change and one that reinforces the relationships and trust and negates the need to go for a more transparent and open deal.

What we can’t deny is that the world around us is changing and with it our approach to what we expect out of those we do business with and there is no reason to believe that should be any different for authors. 

Big 6 Consolidation is a Given

The planned merger of Penguin and Random House comes as no surprise and if anything we expected to see a consolidation in the trade houses earlier than this. The changing landscape of the market is such that only giants tend to survive in markets that operate under cut throat discounting and radical digital change. The question is how will the new giant reorganise itself to leverage the economies of scale and scope on offer?

It matters little who owns what percentage, or even who sits behind what desk, the challenge is to maximise those areas that add value and consolidate those that do the same and incur waste. Much of the front office should remain as it is today, but again there are areas of scope to remove duplication and given their combined market share there is even more pressure to ensure that they don’t try to outsmart each other. The back office would appear to offer much more scope for reducing costs and streamlining global operations.

The fact that Rupert Murdoch's News Corporation were reported ready to crash the party and bid £1bn for Penguin this week, shows that all the big six are cognisant of the need for consolidation and that one move such as that taken by Random House and Penguin, could now lead to others very quickly. HarperCollins and Macmillan would make obvious bedfellows, but would the merger be merely restricted to trade or across both diverse businesses and could it also benefit sectors such as education were some would suggest both lag behind the pack. The music industry has show that, other than being niche and independent, consolidation of the major players may be the only way to survive. But are we really ready to go from six to three to two? Some may eye those just behind the top tier but sometimes its as easy to swallow a big pill than a smaller one and it often down to which gives the biggest payback.

If we step back and look at the other relationships affected, we can envisage some mixed reactions. A top author in either house should expect the prospect of more sales supported by larger marketing and promotion. Even the smaller authors will probably be relieved if they are inside the new tent. Those outside the new giant will have to fight even harder to be seen and read. After all, market shares of 27% UK and 25% US, are not to be sniffed at. It relates to 1 in 4 sales, which means 1 in 4 units and a quarter of shelf space.

The new organisation should be able to also commercially hit harder against the likes of Amazon, Barnes and Noble, Apple etc. They could even start to effectively market direct and try to compete head to head. This is especially relevant in the digital market, where their ability to innovate and make changes happen has now doubled and will now be watched closely and followed by others.

So on balance, it would appear to be a sound move and a potential sea changer that others will have to follow. Now the betting starts on who will follow?

All Change!

We often assume the future is a linear path and change is never going to be that disruptive and even if it is we have time to adapt. There have been many ‘black swan’ changes introduced by a completely new entrant, the shift to a new model, new technology and even a widespread change in consumer attitude and culture. What drives what may be clear in some cases and in others it appears to just happen.

Last night I spent time with an ex senior executive of Kodak and found it fascinating to hear how they failed to read the signs and even attempt to adapt. They basically didn’t believe that the film processing model would change. They had many smart innovators and even introduced much of the digital technology, they certainly had a swath of patents, they experimented with social web libraries. Unfortunately, the core business thought that change would be slower than it was and they just didn’t have the change culture and couldn’t adapt fast enough. Some five years ago they were even investing and developing a huge processing plant in China and my friend was out there helping establish it. Would they have been wiser spending that money in setting up an Instagram photo sharing  service?

Today we can see many industrial giants who are stumbling. We assume that they will always be there but they often will not. Some may be relatively new such as RIM Blackberry, others older and more diverse such as Sony and others such as the Royal Mail just hanging in there. Rarely does disruptive change right itself without a reactive action and even sometimes the reaction taken can itself can bring down the house of cards.

The question within the publishing trade is not so much about the digital change that is now sweeping through the market,  but on who the winners and survivours  will be. In some cases that is about companies , in others it is about removing, or significantly changing, established links in the value chain.

We have seen a significant consolidation in the distribution and consumer facing digital market space with new entrants dominating over traditional players. Will this and the inevitable shrinking of the traditional channel lead to large casualties or will they merely all shrink in a uniform manner? Some would suggest casualties are inevitable as survivours via for economies of scale and scope and the further investment that is required just to remain in the race.

We are seeing everybody trying to take on other roles as an extension of their own. Authors are increasingly looking to become self sufficient and that movement itself may not mean that everyone has to self publish, but it does lead to a questioning of  that the relationship authors have with others. Do authors still need the same agent relationship when the prize may be not so much in securing the best advance and publishing deal as much as establishing and managing the brand. After all musicians now need a different style of management than they did say 30 years ago.

We see printers having to offer more service than a bound book. Some would suggest  that  they should have been the people who grabbed the digital conversion and composition business by the throat, but like Kodak they all too often thought that there would always be the same demand for their traditional services. They al too often saw themselves in the production and not the content business.

Booksellers are wakening up to the reality that it says ‘books’ over the door and not ‘new books only’ and this means a change to what they buy, where they by , how they merchandise their consumer offer and relationship. Sale or return may become a weight around the necks of those who cling to it instead of adapting.

Finally, we have the role or roles of the publisher which will differ by sector but will change. We have seen the move from an editorial to a sales driven business, from mass marketing towards direct marketing and much more. The challenge here maybe, in how we introduce uniform practice and processes and tighter control to gain greater cost efficiency, whilst continuing to harness  that creativity and individual focus that adds real value.

Richard Charkin recently said that publishers need to work and think as start-ups. This may be a hairy prospect for some and will not suit all. What is certain is that everyone needs to get the basics right, constantly understand what is happening, not just around them, but across the total market space and be prepared to experiment and react swiftly to change.

The only thing that is certain is that there is no groundhog day and tomorrow will be different from today.

Livres Ancients Livres Modernes

There used to be a category of retail for books at UK Companies House. There is however one for, newspapers, stationary, magazine and other, but no longer books. We also read that the UK’s Bookseller Association claim today that some 25% of independent bookshops have gone out of business in the last 5 years and we find ourselves reminded about the sign over the door of that old bookstore of Emile Raoust & Co. in Lillie that now sells mobiles.

Every action has a consequence and impact and the book market is no different. What would you think is the consequence of:

• Supermarkets being incentivised to shift volume and the likes of Asda selling shelves of books for a £1 each and cheaper than they sell greeting cards
• Chains demanding tiered incentives to merely place titles in windows and catalogues on sale or return terms
• The suicidal discounting of best sellers and new titles where consumer demand is a given
• The ‘safe’ and cosy sale or return safety net, were there is no or low risk buying and shelf space is effectively rented on consignment
• The spread of ‘white label’ and catalogue internet offers, where everyone has everything, only the brand label and template changes and the seller is actually someone else.
• The breakdown in the difference between bargain and full price titles, where all to often even the best sellers are skimmed or offered to other channels before the ink has dried.

When we first stepped into the book publishing marketplace, we found it crowed, overly complex and some would suggest very adversarial compared to other markets. There was not so much a blame culture, as much as a lack of communication and understanding of others. It was as if everyone thought the other’s job was simple and the book world revolved around them. Even today, some fail to realise that there are only two people that matter, the creator/author and the consumer, and that everyone else has to earn their place in between by adding real value.

Today we now have publishers becoming retailers, retailers becoming publishers, agents becoming publishers, authors doing it themselves, wholesalers and aggregators borrowing brands to sell through white label stores and libraries being scanned.

Bookselling is about what it says on the tin – selling books. Bookselling is not easy nor is it about being a super franchise shop for publishers of new books, it’s about selling books; new, old, used, remaindered, back list, specialist whatever. Despite what Companies House may think book retailing will survive but will be different and will continue to be heavily impacted by others and its own actions.

There is no divine right to bookselling and we must ask if today’s news is really surprising, or whether it’s only alarming in that it didn’t happened sooner. Perhaps Companies House spotted something before the trade.

Becareful What You Wish For - NelsonFree

The film business has a staggered release strategy, which over time becomes shorter and often a little confusing as the stagger varies often with success, or lack of it. The principle is to release in the cinema, followed by the DVD followed by TV. Although it works it also means that the pirates have a window of opportunity. In the music industry they still try to first release the album then peel of the singles, but as we are aware, it’s now is the track that rules not the album.

In the booktrade we had the hardback which then morphed into a paperback. We now even have many sizes of paperbacks and as long as it finishes .99 or .95 we every price imaginable. What the booktrade has in the main missed with digital, is why the other media sectors discovered, often painfully. The public want choice, value and when you want to drive migration, clear value add. The only difference between the hardback, paperbacks, large print and now ebook, is the ISBN, packaging and of course price.

Some would state that if the DVD hadn’t offered those extra edits and price we still would be watching VHS. Yet we expect customers to flood to ebooks to read the same content, for often the same price and shell out for whatever technology is required!
We had to take a step back to consider last week’s news that Thomas Nelson announced to launch NelsonFree, a program enabling readers to receive content in all multiple formats physical book, audiobook and e-book at one price and without making multiple purchases. It would have been easy to raise a glass in its support or lambast it as naïve but we felt that we had to give it some extra thought.

The NelsonFree price is based on the hardback, so it’s a sort of bundled price; buy the hardback and ‘get as much as you can read’ and that includes both the audio download and the e-book in multiple formats. At first glace this looks a great consumer offer, three formats for the price of one. It obviously will alert readers to the alternative formats and also may prompt the to try them out. It obviously also gets publicity and gives attention to titles that may not have received it. So is it a winner all round?

Unlike music the majority of readers only buy one copy of the book, so why would you they actually need three? They may play the audio in the car and read the book at lesure but does this flip floppin actually engage or does it distract and break the experience? Flipping between the physical and ebook may make more sense as the experience is basically the same but would NelsonFree get the publicity for a bundle that has been done before in many ways?

The audio and the ebook are likely to have DRM encryption applied so you can’t share them with friends or give them away as presents. Conversely the hardback could be given away as a present and the ebook and digital copy retained. Perhaps it should be buy the ebook and get the hardback free?

The author royalties are whatever has been agreed but if the Guild of Authors objected to text to speech on the Kindle we wonder what they think to speech and ebook for free under NelsonFree?

Finally in some countries there will be tax implications as the audio and ebook would be taxable renditions and the physical book exempt. The result here would be that there would be a taxable element applied and tax due on the sale. Some would suggest that bundling may raise again the question of tax on digital renditions and that this may not always give result expected.

Its often hard to say whether an experiment is good or bad. It is just an experiment and sometimes the outcome will surprise us all. However we need to be wary that if will position this and similar offers such as the recent Faber, as the ebook or digital free or based on the physical being bought the we may start to undervalue the digital copy before it has even got of the ground. Also if we continue to flip flop between formats with no added value other than the weight convenience and DRM inconvenience we may fail to ignite the market and accept low digital take up as a given.

Barnes and Noble Acquire Fictionwise

The ebook reseller Fictionwise has acquired by Barnes and Noble for $15.7 million.
The news and an exclusive interview with Fictionwise’s Scott Pendergrast was covered by TeleRead. Fictionwise will continue as current, be managed by its current team and operate as an independent entity under Barnes & Noble. Barnes & Noble state in the general press release that it plans to use Fictionwise as part of its overall digital strategy, which includes the launch of an e-Bookstore later this year.

Apparently the business was shopped around to a number of buyers with the understanding that the ‘current philosophy toward e-books would survive’. So DRM free, the ereader format and many other features remain. Some will jump up and down and believe that this will offer a competitive position to Amazon, others may ask the question if this is what prompted the recent Overdrive spat and its impact on its exclusive DRM agreements with Ingram.

Whatever ,the important outcome is that B&N now are firmly in the ebooks business, albeit at arms length for now.