Alibaba Starts Drone Delivery Trails in China

Maybe the optimum size of a printed book in the near future will not be determined by the print economics, but instead will be governed by its weight and dimensions. Delivery of small parcels such as books by drones may be science fiction to many, but it is clearly on the agenda of some today.

Last November, Amazon's Prime Air was seeking UK Drone experts in Cambridge to help them test drones to deliver packages on up to 2.3kg (5lb) in weight to customers within 30 minutes of an order being placed. Prime Air adverts for engineers, software developers and scientists were posted on Amazon's jobs site.

When Prime Air was announced in December 2013, Amazon said it might take five years for the service to actually start and they already have started work in their R&D labs in Seattle. Amazon is not alone in pursuing this technology, with others such as Google, UPS and DHL all trailing services. As one would expect, safety is a major issue and tight restrictions on the use of drones in the US have led Google to carry out its tests in Australia.

Now Alibaba, China's biggest internet retailer has gone one step further and says it has begun actual testing of drone-based deliveries to hundreds of customers. The three day trial will be limited to one-hour flight destinations from its distribution centres in Beijing, Shanghai and Guangzhou and also to orders of a specific type of ginger tea which conforms to helping limit the weight. 

Looking out of the window today at the wind, snow and low cloud, we wonder how many Prime Air flight cancellations will not be due to heavy traffic over London, but down to British bad weather.

To watch a Alibaba promotional video. 

Google Without Glasses and Going to Bits

All technology has a life cycle which starts with creation, through; prototyping, adoption, adaption, development and finally obsolescence. Some make the full cycle others stumble at first base.

Today we read that the much publicised Google Glass eyewear technology is to be effectively pulled by Google in its present form. Future versions will be pursued, but by a different division and those who shelled out $1,500 (£990) will now be owners of the latest ‘Delorean’ technology, which obviously will now become a collectible novelty.

The Glass initiative was launched in the US in 2013 and UK last year, but was plagued with a number of issues. The cost was viewed by many as too high, the battery life was poor and getting consumers to adopt it and drop those features they already had on their smartphones was proving hard. Maybe the look was just wrong and screamed ‘Nerd and Geek’ at everyone brave enough to don a pair.

The other challenge was privacy and although they gave the user visual access to information in a ‘hands free environment’ they also recorded stuff ‘hands free’ which gave those running public places and those concerned with privacy, many concerns.

So will the mass take up of wearable technology happen based on peripheral devices, or will a Pranev Mistry ‘sixth sense’ approach be based on smartphone hubs prevail? Why wear a smartwatch when you can project the time onto anything or see it on the smartphone? How will wearable glasses take a selfie? Voice and audio are already here today on every smartphone so that only leaves smell and touch.

Google has dismantled the smartphone and are to introduced a modular phone which allows consumers to buy functionality in a firmware ‘pick and mix’ fashion.

You want a camera you can select potentially one of a number of specifications and literally plug it onto the smartphone. You want different speakers, batteries, displays, application processor, wireless connectivity, blood-sugar monitors, laser pointers, pico projectors, they all just plug onto the phone and will be held into the shell by magnets. Its like selecting your firmware options and is aimed both at giving the consumer choice but also at making upgrading potentially very different.

Google claim that the objective is to make a smartphone more attractive to the five billion people that currently don’t own one. It would also prolong the life of many phones and potentially that has a big market challenge when the current life of a phone model  is two years. However, by changing the emphasis from model to module it may differentiate Google from their rivals

Google has chosen Puerto Rico to launch its modular offer. Puerto Rico was "mobile-first" with some 75% of its internet access being via mobile devices. There are also more than three million mobile phones in use in the country. Google also benefits as the country is under US Federal Communications Commission jurisdiction and this obviates any later issues getting a solution into the US market.

So the role of the smartphone is strengthened and ways to offer choice are now being developed. We can’t help wonder how much some would pay to have their own module for Prime users?

Google to Redefine Music with 'Music Key'?

Today more and more kids watch music than listen to it. YouTube has turned music from being a one dimensional experience into a multi-dimensional one. What was once only available as audio produced in a studio now can have many renditions with video and stills from live concerts. The depth and range of music on YouTube is staggering as is the hits many renditions receive and have given for free.

Google is starting a YouTube ‘Music Key’ subscription service enabling users to stream ad-free music videos for offline use and for a £9.99 it also provides membership to their sister music download service Google Play All Access. This gives Google a significant advantage over its audio only rivals.

The way that the music industry is currently structured around just three labels gives Google equal terms to that of its audio only rivals and now enables them to move at speed to offer depth and breadth on as ‘much as you can eat’ basis. Taylor Swift and The Beatles may be able to act independently of the big three and cut their own deals but it’s still about range and Google have just redefined range and offer.

When you bought records you owned them and they often sat proudly on your shelves saying who you were. Today we don’t own music but listen and watch it on demand and it’s the social networks who help to define our tastes. The likes of Spotify will have to think hard as today all we have to switch is a monthly subscription and we still have access to discover and play everything. Would you buy yesterday’s offer when for the same outlay you can take it to another level? 

How Do We Compete With Amazon?

The questions over what the industry can do, or not do about Amazon’s dominance, were raised yet again last week. It was first sparked first by Barnes and Noble's declining interest and funding of its Nook venture, then we had Sony shutting up it US store and handing the keys to Kobo as it battles with many greater corporate issues, then came Kobo itself filing objections to a Competition Bureau agreement impelling four of the biggest publishers operating in Canada to renegotiate their contracts with ebook retailers and finally by an article by Jane Friedman in which she raises the new Amazon policy to drop its escalating royalty rate of 50%-90% on ACX titles sold exclusively to a non-escalating 40% and audiobooks distributed non-exclusively to a non-escalating rate of 25%.

The Kobo filing claims that prior to the Canadian adoption of the agency model it had been ‘losing millions of dollars per year” under wholesale terms and also that when, ‘In the U.S., when Agency Lite was brought into existence, Kobo saw its net revenues steadily decline. Kobo has since stopped investing in marketing in the U.S., closed its office in Chicago and is focusing on other markets. Its market share and revenues are now negligible there.’

The result of these announcements was to further fuel the debate on Amazon and its dominance of the marketplace in both ebooks, audio and the huge US market. It would be wrong to believe that they can be beaten on discounts, as the only winner in a discount war is the consumer and the one with the strongest nerve and deepest pockets. Wishing for a white knight may have been feasible ten years ago, but today it isn’t going to happen and no start-up is going to suddenly change that. Apple is tied to its own Appleworld and will never venture out into Android land, Google, well they may have scanned everything that has been printed, but please be careful what you wish for. Amazon has effectively woven itself into the publishing DNA and is not just at the consumer end but right across the value chain.

We have harped on about books being different till the cows have come home, been milked and gone back to pasture. Yes, books are different, but interestingly ebooks aren’t that different and maybe that’s where we often loose the thread. We have now to accept that we don’t live in a book centric world and that the larger media and home entertainment umbrella has several component strands. Books is the baby among several stronger digital sectors and the networks today are the gorillas. 

We are fast becoming the one sector that still is DRM obsessed, sell through orientated and like King Cunute think we can stop the digital tide sweeping over us. Only last week it was widely reported that the majority of books on our shelves are unread and a recent US poll suggests that some 25% of US citizens didn't read a book in 2013. We continue to think ebooks are just books in a digital container and in doing so we kid ourselves, confuse many and potentially miss the opportunities.

Amazon watches, learns, then acts and changes consumer behaviour in ways that many in the book industry have failed to grasp. At a basic level they offer, used books, marketplace, KDP, Goodreads, Book Depository, publishing, audiobooks, self publishing, on-demand and that is without its other media and technology arms. Just think it was just a little old internet shop in 1995, which right up to the turn of the century many predicted it would not survive. This last week they started to roll out their fresh food delivery service in the US and it is widely predicted it will soon come to Europe and some are already trying to protect the giant supermarkets, who ironically, have been often demonised for their destruction of the High Street. 

The Amazon is a huge river that is fed by many large tributaries and supports many ecosystems and is very important to the ecology of the world. Amazon the business is now no different.  

We have to analyse and think differently just punching the biggest kid in the schoolyard is futile and you just get hurt. Amazon’s weakness and its strength maybe is that it acts as a lone wolf. Some would suggest that It often buys to take out the competitive threat, or like with its audio market purchases, sets out to quietly corner the market.

Yes publishers need to develop their own direct business,but apart from the few this isn’t going to be a major channel to market, is only aimed at the consumer end  and some would suggest is too little too late.  Niche players may carve out a healthy living but the minute they get on the radar they are themselves vulnerable.

So where is the answer? It is almost certainly not within the book market by itself. Amazon crosses other media sectors and is competing for a strong position in many but it is a lone wolf. It rarely hunts in packs. It may have a federal approach to those it owns, but it retains a tight strategy grip over them. Perhaps its strength is its weakness? Perhaps a joint ventures that cut across current boundaries and create something that is not easily replicated is the answer. Last week we wrote about Nubico and although that is not necessarily the answer it starts to point in the right direction. People belong to very large subscription bases who all face threats and an everchanging power struggle. Lining up the ducks may appear hard today but if they create something of real value then maybe, just maybe there is an alternative.

Dumbing Down of Textbook Publishing?

The textbook market has always offered high reward and with it high risk. Many have tried to corner the market including the big technology giants, chains, publishing joint ventures and new start-ups, but it remains, like its students and their courses - diverse.

Now Google has joined Amazon, Apple, Microsoft in its intent to go after what they all regard as ’low hanging fruit’, but what often turns out to be not Golden Delicious apples but high hanging and sour crab apples.

Of course Google believe that its new Nexus 7 Tablet is 'perfect for students', and therefore intends to stuff a special educational section of its Google Play store with textbooks. Its "comprehensive" selection of titles will be available for purchase and for rental over six-months periods and cover works from the five major textbook publishing houses. Just to add some spice Google is promising that they'll be at discounts of up to 80%. Google’s partners are Pearson, Wiley, Macmillian Higher Education, McGraw-Hill and Cengage Learning.

Given that textbooks are expensive an 80% discount would look attractive. The high cost is regarded as the reason why used textbooks and textbook rentals have been booming of recent years and this together with the entry of all the major technology giants has been heavily impacting the major textbook publishers. On one hand the used and alternative marketplace is stealing sales and on the other they are often have high discount terms being dictate to them.

One way the likes of Pearson and McGraw-Hill Education are trying to address this is to create a new model aimed at developing online versions of their texts that often have interactive features, and then selling the students access codes which expire at the end of the semester. However, persuading students to go digital isn't straightforward and according to research firm Outsell, only 27% of the textbook spend in US secondary schools and colleges was digital.

Pearson is undeterred and are restructuring to emphasize online content. Cengage Learning, has stated its intent to emerge from its recent bankruptcy filing more focused on digital. McGraw-Hill Education, has acquired an equity stake in one software company focused on digital learning and acquired another.

Just to confuse the issue further, the major publishers have created a joint venture called Coursesmart which was set up to offer a joint direct market service to promote and sell digital textbooks. However when one’s parents are spreading their bets it’s not surprising that it has become somewhat of an ‘also ran’.  

Some would say that the publishers are pursuing a multi-channel strategy others would suggest that it is less of a strategy and more of, ‘every which way but win’ and that to compete against yourself and your investment is at best questionable and not wise dot com.

But is digital a forgone conclusion?

In a survey last year by the National Association of College Stores, some 77% of college students said they preferred print to e-books. Another survey, by the research firm Student Monitor, found only 14% of students had classes that required online texts and only 2% bought the majority of their books in digital format.

So is it down to cost and availability through alternative markets or does physical textbook still serve the students’ needs better? One thing that is certain is that both the publishers and technology companies are betting on digital and are trying every which way to win the market. The alternative is seen by them as more used and second-hand Textbooks and stolen sales. Some may argue it’s a choice between a rock and a hard place.

Subscription Is Coming

Subscription business often make good business sense to both the service provider and the consumer. For the service provider it enables them to build a sustainable and predictable revenue stream where the peaks and troughs of fads and the unpredictability of demand is cushioned by the width and depth of offer. They still have to manage down the exposure to churn, but have the opportunity to build customer loyalty and relationship. For the consumer it offers the obvious one stop shop and protection from change in what today is often dynamically changing markets.

Media, technology, software, communications are some of the sectors now either moving towards or heavily entrenched in subscription business models.

Today we have the new battles between BskyB and BT, where the latter threw a new gauntlet down with their ‘free’ new sport channel. BskyB have now responded with unlimited broadband for anyone signing up to its Sky Sports channels. This means that a new Sky customer can now pick up broadband for as little as £5 a month on top of their line rental. It is clear that this cross selling and subsidy offer is just starting and will not just effect these two but everyone else who offers any competing service.

We now have some clear adversaries in the various markets. In music we have Spotify locked with Pandora with Apple and Google trying to muscle in. In films we have Lovefilm vying with Netflix with the battle now spilling over into production and competing with Sky. The world of software which was built on selling perpetual licences is now rapidly repositioning itself to annual licences and is being driven by the likes of Microsoft’s Office 365 and Adobe’s Creative suite. 

But what about books, newsprint and magazines?

Learned and Academic journals have long successfully worked within an institutional subscription model, which is now under a different threat from the open access movement. Newsprint and magazines have had mixed success with subscriptions. Where the material can be sourced from an alternative free feed it has struggled, but where the material is highly valued, authoritative and is a 'must have' subscriptions have had success. 

Some have tried book subscriptions and the many failed book clubs are a warning to many, whilst others such as Oyster believe that subscriptions will work for ebooks. The challenge is that apart from heavy book readers, consumers don’t read enough books to justify subscriptions and those heavy book buyers aren’t the problem. We believe that our new Read Petite venture is different and that short form work is perfectly suited to a subscription model.

It’s interesting that some of the largest technology players are looking hard at subscription businesses. Intel is reported to be looking to create a US cable service that would sell a bundle of television channels to subscribers over the Internet. However the existing players are not for rolling over led by Time Warner Cable and other cable and satellite distributors. The distributors are pressuring the cable channels, with whom they have lucrative long-term contracts, not to sign new contracts, which in turn is threatening to bring in the DOJ antitrust investigators. It is certain that the likes of Apple, Microsoft and Sony are watching from the wings.

What is certain is that cross media consolidation will happen. You will be able to subscribe to a service and receive; broadband, tv, film, music, games, software, mobile and digital reading. Devices won’t matter as everything has to be device agnostic. It is not a case of if, but when and who will dominate the market with offers you can’t refuse. To prepare for this opportunity we have to understand how ‘stuff’ gets licenced and how creators get rewarded. 

We should not simply say ‘no’: we have to instead engage and make it work.

The Untouchables

Globalisation and Technology has introduced a new breed of corporation who ‘see no evil, hear no evil and speak no evil, do no evil’, but sail very close to the wind in their approach to many moral aspects of business.

We have all heard the lengths that they go to avoid tax and ensure that they operate at maximum profit. The list of companies that play the game and operate within the tax laws but with questionable moral,s is not just restricted to the big technology companies we read about. The hall of abdication includes; Google, who have  a preferred lower rate in Ireland than the Irish companies, Amazon, who have the weird situation where they earn more out of government subsidies than they pay in taxes in the UK, Apple whose tax regime is ‘complex’. There are many others, such as the ticket company, The Trailine and UK rail operator, First Great Western, which are hardly international companies, but find it good to be based in Luxemburg.

Then we have the VAT games which apply to those who operate in lower EU tax countries and sell into higher rate countries and gain the obvious windfall VAT as a result. Of course the EU are going to fix this in 2015 but that doesn’t stop 'hay being made while the sun shines' today and traditional businesses suffering a governmental penalty for paying their appropriate tax. Most of the major digital media operators look to use the Luxemburg VAT haven; Amazon, Kobo, Nook. There should be a simple windfall tax levied against this organisations and they should be made to realise that there is a moral conduct of practice even if they can skirt around the legal one. 

All this is without the social network and technology services that are constantly pushing the privacy boundaries and being challenged by authorities and social rights groups when they make changes. Here we often see the old, 'act first and think later’ approach being adopted.

We also have CEOs who sit in front of being questioning and merely state they operate within the law. Its like listening to a suspect being questioned and them merely saying, ‘No Comment’ to every question. Some such as Google’s Schmidt have the bare faced arrogance to claim, that as they employ workers in a country and the workers’ pay tax then that should taken into consideration.

One of the biggest commercial challenges we face is the global corporate's ability to become untouchable. They want to reap the benefits of doing business in one country whilst paying their reduced dues in another. They want to have an unfair advantage over traditional and indigenous business who pay their taxes in the country they do business. They want to offset huge revenues to Intellectual Property companies sitting in some far off tax haven.  

If politicians are to earn the consumer respect they need to tackle this plague of locust before they truly become untouchable. 

Music For Nothing - Well Almost

The expected new music streaming service from Apple appears to have been delayed, not due to technology, but due to the commercial terms demanded by them. The service is expected to be very similar to Pandora.

The music labels want to ensure that they get a respectable return from this new revenue stream and already it appears that the rates companies pay varies significantly.  Spotify, who are often cited as the bad boys, are paying some 35 cents per 100 songs, whilst iHeart pays around 22 cents and Pandora only 12 cents. So is it any surprise the talks hit stale mate when Apple wanted to only pay an initial royalty rate of 6 cents per 100 songs streamed. To confuse the situation even further the rate set by the Copyright Royalty Board, is around about 21 cents per 100 songs streamed. Again three times the rate proposed by Apple.

So we have a significant variance in the rates paid and a move to lower the bar even further by Apple. The result would be obviously less income for the artists and the Apple service would have to generate six times the volume of Spotify for it to generate the same return to the labels and artists. Any service that was paying more than Pandora today should seriously be comparing the streaming volumes and seeking a leveller playing field which in turn could reduce rates others are paying today and the net receipts of the labels.

Apple propose an iRadio services supported by its iAds advertising platform. This could bring in additional revenues to offset the low streaming rate but he music labels want a standard fee and a percentage of ad revenues and are cautious about a greater emphasis on somewhat variable and highly volatile advertising revenues which could evaporate as easily as it appears.

Although all the technology giants are looking at streamed music and no doubt global services, we have to be somewhat cautious, as the likes of Pandora with its 67 million regular listeners isn't exactly generating huge profits today. The service like its competitors is delivering significant growth with 4th quarter revenue up some 54% to $125 million and with mobile revenues accounting for almost 50% on the year and nearly double at $255.9 million. However, whilst the revenue results beat Wall Street forecasts, they remain unprofitable, reporting a net loss of $38.1 million, which is almost double the previous year’s loss.

Despite this uncertain backdrop and with their CEO, Joe Kennedy standing down, Pandora’s share rose some 20%. It is clear that the markets believe in the long term sustainability of streamed subscription and ad based music services and it is also rumoured that Google is now in discussion on its own planned service. 

Tomorrow's World, Today

When we look at the big technology spend on R&D in the last financial year we see Samsung spent $10.5bn, Microsoft $9.8bn, Google's $6.8bn, Sony's $4.6bn  and Apple's $3.4bn. A staggering total of some $35.1bn. So the obvious question is what is coming out of the spend and will it change our lives in the near future or is it still some way off making it to the market?

If we look at the current projected innovation we see two potential systemic changes, one that still appears unclear and one that is clearly some way off.

Turning Pages

The Samsung Galaxy S IV is scheduled to be unveiled this month and there are very strong rumours that it will extend the ‘Smart Stay’ feature which detects whether the users is looking at the screen to a new feature that will allow the phone to track the movement of your eyes down the screen and effectively scroll or turn pages without any fingers! This is a significant step when it comes to reading and starts to change the way we read. Imagine no more turning pages and the previous page turner really does become automatic.

This along with the other Samsung technology could start to differentiate it from the pack and given their cross Galaxy approach would make their Note and tablet offers very appealing.

I watch, I record

The Apple Glass project has seen considerable coverage and as it gets closer to the expected launch later this year the noise about it is only going to increase. The glasses are designed, futuristic and comprise a number of parts. They are even reported to come in different colours and there may well be deals pending with major glass designers to make them even ‘cooler’ tp wear.

They aim to lift the users heads from constant distraction of starring at a display to one where the display is closer to the senses and is shared with other activity. The main body of Glass is a soft-touch plastic that houses the processor, battery, and counterweight and then there is a thin metal strip that creates the arc of the glasses, with a set of rather typical pad arms and nose pads which allow the device to rest on your face.

Although it can be controlled by a touch sensor at the side or via defined head movements the Glass responds to and is aimed to be driven by voice commands. It gets its data via either its own Wifi or via a tethered device such as a smartphone and has a GPS chip.

We immediately think of the information benefit of seeing maps, getting directions whilst on the move but probably the most interesting feature will be the ability to take still or moving images as you see them by a single voice command. This obviously raises the question of privacy but also the ability to effectively upload them in real time to services such as Google’s own YouTube or Facebook, Twitter etc.  

Apple on the Wrist

We are less sure of the forthcoming watch with full iOS planned for later this year from Apple.

When we look at Pranav Mistry’s technology and ability to display on any surface we have to ask whether Apple are moving us forward in our interaction with technology or merely giving us designer blig?

We have to await more information but this would appear to be far behind both Samsung and Google in delivering us the future.

Microsoft’s Interactive Whiteboard

Whilst the other focus on the mobile world and making things smaller Microsoft continue to look at the larger canvas.

They are working on ‘SketchInsight’, which aims to redesign who we interact with data and access and present it. They are working on a more intuitive approach, which instead of forcing you to build a presentation in advance correlating the data and prettifying its presentation lets you call up pre loaded data to create interactive charts, maps and diagrams via a touch screen.

Whichever technology changes our interaction with and ability to exploit communications and technology is hard to call today but what is clear is that huge sums are being spent today in trying to invent the future and some will almost certainly succeed.

Can The Public Library Deliver That Golden Egg?

Why do we allow the goose that could lay a golden egg to decline? If you could envisage one service , one hub, one recognised body from today that could do battle with the internet’s digital  omnivores and add real value, it would not be the big chains, nor the media chains, not the independent bookstores and not even the supermarkets, but could be the public library.

The public library has the real ability to add real value and to be a real community hub in social network community world. But does it understand this, or as in the UK, is it obsessed with its statutory obligations and keeping everything ‘as is’ at all costs? Are the ‘Shhh, no noise’ signs actually hiding a sleeping environment that is simply not listening to the market and its customers?

We are witnessing harsh funding cuts, a worrying migration to voluntary services, the wholesale dumping of every customer facing civic service into the library’s ‘underused space’ and a general lack of leadership and digital direction within the public library community.

This last week we read about further potential cuts to library services in Newcastle, Sheffield and Islington, but today’s  budget cuts of today are not so much a result of the current financial climate but the years of lack of leadership, coherent strategy which have lead them to be seen as ‘soft targets’ for decline and cuts today. Joining up the service dots now is proving a challenge in an environment full of different agendas and too many experts. Many ‘talk the talk’, but few ‘walk the walk’ and innovation is often viewed as ‘not invented here’. There are as with any diverse group, exceptions which will get quoted to rebuke this view, but the majority remain wedded to the past, or find them selves struggling to treat the patient that is now past plasters and bandages.

Has the media and publishing community really helped? Where they there when the market started to turn digital, or sitting on the side looking after their own interests? Why is the only real substantial offer in the UK libraries from the US Overdrive? Why are some publishers still undecided on how to licence ebooks to libraries and some more concerned about reorders for no worn out digital copies than promoting open lending? We will give books away to promote reading. We will support 15 million unit promotions with junk food giants, but we still fail to resolve the digital economics of ebooks in a library world. There is no national incentive to build a UK digital library to serve all but several initiatives to outsource the core business to others such as Overdrive.

Perhaps we are dreamers, but replicating digital programmes in every community and ‘cut and pasting’ Overdrive’s API onto the back of the library system is not a viable long term solution and is not a sustainable model.

Some have suggested that libraries should only be able to lend digital books from the physical library. We wish they had used the same logic on the High Street, but again we all know how ludicrous that argument would have been. Libraries now have to be available 365 x 24 x 7 and the internet offer today in many is woefully short of offering that service. It’s not just about digital its about community service and that should not stop when the librarian shuts the door. 

Some have struggled to define what staffing resources should be in the front line. Its not about staff but resources and access to them. Educators are realising that all teachers are not equal and that the ‘best of class’ resources can be brought in by services like TED Ed. We can’t expect staff to be experts in everything and have knowledge of all things, they should be great with people, know where to find the best help, engage  are developing why do we believe that every librarian is perfect? The key is to adopt a uniform approach that engage in many ways and levels and that owns the interface until the customer is satisfied. Libraries don’t need an Information Managers but a Customer Mangers with access to information. 

We have to recognise that Amazon is just one step away from being a universal library today! Look at FreeTime, LoveFilm, Audible, or their own ebook lending programme and ask what is different to a library. Google and Wikipedia are accepted as the sources of information that is good enough for the majority and available in a click. Google is scanning in the world’s top libraries and amassing a significant body of work. They will only hold it once and they can serve it to answer any search , or as a feed, or to sell and of course to growth advertising revenues. If Amazon has the media and Google the information what does the library have except the legacy and cost? The key is collective vision and co-operation, something often foreign to ‘information managers’.

Why do we believe that libraries have a place tomorrow and can lay that golden egg? How do we think that they can offer real value to the community? Why do we think that they can fare any better than the doomed chains when pitted against the Internet omnivores?

They are community hubs, funded by the community for the community and not merely to satisfy the letter of a law. They are meeting places and social hubs. They are sources of and access to information. If they focus on these aspects they can justify there future. However co-operation and a dramatic reduction of duplication and resources are the keys and the question should be how the communities can be structured to enable this and deliver that golden egg. 

Some of the many related blogs:

Public Libraries: Back to the Future Nov 2010

Digitally Wallpaper Library Shelves Sep 2011

Can You Define Tomorrow's Public Library Nov 2011

Digital Library Fallout Continues Feb 2012

51 Million Take Down Notices and Counting

2012 appears to be the year when the surge in copyright take-down notices may have tipped search engine sites into considering proactive downgrading the results of repeat offenders or self policing by de-listing them. This action if taken will be significant step, but the sheer rise in number of take-down requests may now necessitate it being taken.

Google and other hosting services, have an obligation to remove infringing content upon receiving a valid DMCA request from copyright holders. Google publish weekly stats on the number of take-down notices they receive and process. In 2012, copyright holders requested Google to remove a staggering 51.3 million links, which is a significant increase compared to previous years. Google is currently processing half a million take-down requests per day and the number is not stable, but increasing week by week. The last week saw a record 3.5 million requests, which itself is 15 times greater than that receive in the whole of last January.

As expected the RIAA is the most active sender of requests with 7.8 million over the year. Surprisingly, the Pirate Bay were only cited in around half a million requests this year, whereas the file sharing site FilesTube topped the rankings with 2.2 million requests.

The increasing trend in requests and take-downs highlights the problem of their management and the challenges of dealing with and resolving take-down notices against legitimate content. It is therefore more likely that companies such as Google will increasingly downgrade the search results of repeat offenders and maybe even take the ultimate step and de-list them.

The current system is more of a case of ‘sticky tape and plaster’ than a resolution and as bodies such as the RIAA continue to automate their detection and servicing of notices, we appear to be climbing onto a treadmill that is just getter faster and bigger. The ideal solution for much of the copyright infringement is a open copyright register, but we have seen that the associations appear to be devoid of funds and the commitment to take that bold step and instead are happy to continue to add more sticky tape to the issue and pass the blame down the chain to the likes of Google who ironically offered one to the book industry, albeit with many unacceptable strings..

Mr Osborne Stand Up Against Tax Abusers

This week, George Osborne stands in front of the UK parliament and delivers his Autumn Report. As the UK economy continues to ‘flat line’ some will say this is his most important report. It is his opportunity to make a tremendous bold moral statement on tax avoidance that will do much more for UK moral and business than tweeking the odd penny on personal taxes and duty. It will also send a clear message to those who avoid UK tax and play EU registration games, that enough is enough. We may be split over Leverson and the press solution but we are as one on the morals of some of the tax avoidance moves currently in play. We are all going through hard times and tax avoidance is fast becoming immoral and tax abuse.

When Banks and Oil companies have made massive profits in the past, they were subject to potential windfall taxes. These were often one off excess tax demands to level the playing field. So why not apply the same logic to those that have benefited significantly by raising huge revenues in the UK, but  then scurried off to hide behind the skirt of some other EU country in order to avoid paying their fair contribution to the people and country that made their wealth possible.

Luxemburg is now the ebook and digital media capital of Europe. It probably makes very little sales there but also pays relatively little in VAT there. So the larger economies of UK , Germany and France where they actually do business suffer as they have higher VAT rates and no VAT revenues. VAT is applied across the supply chain at the appropriate rate for the goods and services, but in this case it nose dives in Luxemburg. The EU promises to address the issue, but the EU is often full of promises and delayed timelines and also tax standardisation is a minefield within a Federal Europe.

So why not accept the status quo and let Luxemburg keep their 3%,  but introduce an additional annual tax on the difference as a windfall tax? This would apply to all sales and services sold into the UK from companies registered for VAT in other EU countries. In the case of ebooks it would raise excise on 17% of Amazon, Kobo and Barnes and Noble’s UK sales. There may be some countries where the their rate is higher than the UK and the company is based here, but in those cases the UK economy will still raise 20% and it will be up to others what they do.

The message this would send out to Europe may be a difficult one for some to swallow, but it would be good for the UK, UK businesses and may even help apply a brake to some of the crazy ebook discounting that some can afford to do more than others. It will certainly send a message to the EU commission that VAT is a mess.

Corporation tax is more taxing and today we have the likes of Google and Apple hiding in Ireland where they pay some 50% less than they would in the UK. We also have one coffee company flying below the radar in the Isle of Man, but making all their revenues in the UK. We have others such as Starbucks with such complex trading accounts and cross country movements that they appear to make no money and are serving coffee in the UK for nothing!

A straight forward windfall tax should be applied to corporation tax avoiders on the same basis as the VAT top up.

Some will say the UK can’t do it and the EU would block any such taxes. However, the alternative is everyone registering for business elsewhere in exploiting tax differences within a common trading community, which surely goes against the essence of the EU.

Mr Osborne, we must not just sit back and tax the tax payers but step forward and tackle the causes of tax abuse.

Tax Avoidance Can Be Morally Taxing

What started off as questions about individual’s offshore investments has swiftly moved onto corporate use of global tax bolt holes in order to avoid tax. Tax-friendly countries aren't new and international companies have been exploiting them for many years. Even the use of Luxemburg by the likes of Google, Yahoo and Amazon has been know for a long time. We wrote about the variance in VAT rates and Luxemburg loophole in late 2011 and its not as if any MP didn't know about it, as it is heavily embroiled in the whole question of VAT and EU tax standardisation. The US Sales tax debate has also been ongoing and has been well documented for years. So why has it been raised now and where is it going?

Following the appearance of Google, Starbucks and Amazon executives before a committee of UK MPs last week, UK BUSINESS Secretary Vince Cable,has now urged authorities to clamp down on the “completely unacceptable” corporate tax avoidance and called for international cooperation over any reforms. To some that is like him suddenly having a revelation when caught with his pants down and it is somewhat ironic that he calls for others to reform when he himself is in fact the ‘UK Business Secretary’.

If we look at the companies under the current spotlight we see Starbucks, which is thought to have paid just £8.6m in corporation tax since 1999, despite last year sales of £400m. Their movement of liabilities across their total business is what most would expect, but the result is now morally unacceptable to others who may not share the same ability and believe that they are being unduly penalised. The coffee cup is no better for Caffe Nero, whose parent company is based in that heavily populated and coffee shop haven, the Isle of Man. Last year they made a profit of nearly £40 million, but paid no corporation tax in the UK. Caffe Nero is not breaking the law, but are “taking advantage of the rules in place in relation to ‘capital allowances, deferred losses and interest payments’.

Another tax avoidance which has now been addressed allowed broadcaster BSkyB to mix VAT and non VAT services within the same subscription. They had been saving an estimated £30 to £40 million a year in VAT by charging satellite customers £2.20 a month for the Sky magazine, which was zero-rated for VAT. This allowed them to avoid VAT of around £3 to £4 per subscriber, which given Sky's 10 million subscribers provides revenues not to be ignored. In 2005 UK courts had ruled that cable companies were allowed to deduct VAT on "cable guide" magazines, if the customers received a product from a separate company and at a fair price. However in 2005 Sky relaunched BSkyB Publications and took production of Sky magazine in-house and also began distributing Sky Sports and Movies magazines. BSkyB Publications' accounts claimed that the majority of the income from the magazine was recycled back to Sky TV. They described it as payments for "customer data" and "support services". In 2010, the Treasury announced among a number of anti-tax avoidance measures, legislation against VAT "supply-splitting" and in 2011 BSkyB announced it would be ceasing publication of Sky Movies and Sports magazines and downsizing Sky magazine.

The question is whether the authorities will go back to BSkyB and reclaim the monies apparently due?

Apple and Google are based in Ireland and enjoy their low corporation tax benefit. Google uses Ireland for revenues that end up being costed to Bermuda where its intellectual property is registered. We then come to Amazon who like its smaller rival Kobo, have their European headquarters in Luxembourg. It begs the question if any big multinational has their European financial base in the UK? 

The Guardian claims that Amazon generated sales of more than £3.3bn via its UK website last year but paid no corporation tax on any of the profits from that income and the Security and Exchange Commission show that in the past three years, although Amazon generated sales of over £7.6bn in the UK, they paid no corporation tax on these.

However the Amazon issue is not just about the corporation tax but also about is the uneven playing field and market advantage that the 3% VAT rate of Luxemburg gives it against the 20% rate of the UK. The challenge does not just effect the UK , but any country in the EU that has a VAT rate higher than Luxemburg. Amazon effectively does not pass on this windfall benefit to the publishers, who have to cover the whole 20% VAT in their pricing negotiations with Amazon and effectively pockets 17%. This obviously gives them a clear margin benefit over their UK domestic rivals who have to pay the 20%. The EU is moving, albeit slowly, to close down this loophole but it is more than just a tax loophole but how Amazon buys and sells and makes 17% without getting out of bed!

Amazon also has challenges with its highly successful third-party Marketplace, where the VAT status of its resellers can lead to misleading prices. Depending on the reseller's VAT status, products sold on Marketplace can be listed either with or without the tax added. Some resellers don't supply the VAT receipts, that prohibits these small businesses from claiming VAT. This doesn't impact small ticket items, but can heavily impact a small company buying expensive PCs and other VAT-able goods. The current situation means non-VAT registered companies can make their items look more attractive by keeping prices below larger competitors and in effect create a false market.

However, tax avoidance is now becoming a high risk activity as the media draws the spotlight on the issues and the companies involved now face damaging their public reputations. For government ministers and civil servants to act surprised at the revelations and point fingers at each other, is perhaps indicative of the often ungoverned society we often now find ourselves. We often find ourselves in a world where the likes of twitter and Facebook can draw more attention to issues and we wait until that logic and moral tipping point. The stance and comments from the likes of John Lewis’s MD, Andy Street, and the UK Booksellers Association’s tax and lobbying messages start to raise awareness to the issues. The press has certainly raised the issue of tax avoidance, but perhaps the only real moral test is if the consumer says ‘no’ to the likes of Amazon, Caffe Nero, Starbucks. Imagine a one month ‘say no’ campaign and the impact and message that would send to shareholders of the companies.

Perhaps the greatest challenge is to harness the public opinion and convert it into concerted action. A few posters isn’t going to do it. Lots of bad press can often be weathered, but stopping the cash-flow really can send the message home. Perhaps we have to wait until after Christmas and we have bought all our presents from them and drunk their coffee to keep warm!  

Google Play and Lawyers Win?

Seven years is a long time in this digital age and much has happened since Google first attempted to land grab all the content, adopt the orphans and hoodwink the industry. Seven years of litigation, seven years of fat legal expenses and seven years which on reflection were sometimes sad as positions were taken and sometimes it appeared the industry was hell bent on a programme of civil war. It was somewhat inevitable it would be settled ‘out of court’ and behind those now richer lawyers’ doors and yesterday the Association of American Publishers (AAP) and Google announced a settlement agreement and the dismissal of their lawsuit.

The Authors Guild fights on and no doubt we may hear of a similar settlement in the future.

We don’t know the details of what has been agreed other than the high level statements which say much, but as ever are open to much interpretation. What is clear is that although the simpler and less contentious case of the publishers is resolved, the core issue of orphans remains unresolved and somewhat on the table. The settlement would appear to remain an ‘opt out’ not an ‘opt in’ model which is a clear win for Google and it is somewhat unclear what the terms are.

The question remains; who owns what and whether digital rights of books digitised by Google under its programme are actually all owned by the publishers, or assumed to be owned and aligned to the print rendition?

There is no mention of the rights registry, so the one positive the old settlement would have delivered appears to have disappeared with the will to continue the fight.

Following the agency debacle, this would appear to be the second attempt to derail Amazon that has expensively gone wrong. It would lead some to question the cost of litigation incurred and what has been achieved in return?

Related articles:

AAP Press Release

The Chronicle of Higher Education (with interesting quotes from James Grimmelmann)

FT: Google ebook win little treat to Amazon

Do Sales Rise as Discoverability Cost Increase?

As the roles across the value chain of the various publishing sectors change we find ourselves asking, how much does it cost to acquire a new customer, to retain them and to do business with them in an environment where prices remain at best unstable and at worst are falling?In the old world costs are fairly well defined, but in the new world these become far more complex and all tend to add small increments to the overall cost of doing business

Who should do what, and spend what to promote what, is an interesting challenge with authors, publishers, retailers all trying to be the communications hub with their consumers? The buzz word today is 'discoverability' and how we can all channel our resources (money and effort) to making it work.

Google, Twitter, Facebook all are about advertising and maximising their opportunity for businesses to pay to be see over the crowd. If you want to be seen at the top of the search then search optimisation is a key and money is the answer. If you want your tweets to resonate then again money is the answer and now Facebook is to join the game which gives you details on how many people have viewed what has been written.

Anything that gets searches, tweets and events and posts ‘seen’ is fair game and with it obviously comes an army of helpers to enable businesses to exploit these facilities at an additional cost. Facebook now plan is to introduce their new post service in the US and has begun tests in New Zealand. The cost is thought to be $7 a post and obviously could raise significant revenues for the social giant.

What is clearly now starting to appear is a whole series of new toll boths and additional cost options to doing business on the internet, or as some would suggest – doing business. Social and Search giants are not alone in creating new additional and compelling charges , the banks, insurance and other financial institutions have done it for years. The questions are now whether the market can sustain the overall costs, who should respond and how and who should channel their resources elsewhere? 

It is after all easy to spend money but often much harder, or increasingly harder, to make it>