Supply Chain Thoughts 3 Digital Reality

Digital logistics presents opportunities that enable the book trade to remove the physical logistics constraints that caused so much waste. In principle a digital title should only be stored once, full stop, and rendered many times. Obviously there is often more than one format of the titles but again, store once applies to each format and render to many still applies.

Does this mean there is only one winner, one store and we simply adopt the flawed iTunes model – No. It means that we create an inclusive not exclusive framework that supports and distributed files on demand. Why should a publisher not retain their assets within their own repository and only let files out on an on demand basis? This is not a theory and is being adopted by the likes of Taylor and Francis and Elsevier today. The alternative is to hand assets over to an increasing number of digital aggregators, who end up effectively controlling the channel to market and restricting it to their reach and relationships. Ask any publisher today who has to deal with many aggregators; how they control or even know what is being sold, how they ensure that their total catalogue is available through all aggregators and how they reconcile sales with different reports, schedules and terms? Often they have little control on what are their assets. With physical goods the next person down the chain buys them at a discount off RRP and sells them again at an increased margin. With digital, the money doesn’t move until the sale happens, its effectively distributed consignment stock.

Drop ship logistics can provide the mechanism which if adapted for digital distribution can go one further removing the need to build huge repositories and the current bragging rites about ‘mine being bigger than yours’. All that matters is the ability to fulfil the demand for online or download, rental or purchase. For many this may be a central aggregation service, but for those who want control of their assets it can remain effectively in their own warehouse and and leave when its sold or rented. The model may be complex to grasp on first hearing, but it is what is being rolled out by Gardners Books in the UK, Danish library service eBog and adopted by publishers such as Taylor and Francis and Elsevier.

Ironically you will find this model described in concept on page 75 of the 2006 Brave New World report.

The digital offer should be fully integrated with the physical one enabling the consumer to have a ‘one stop shop’ transaction experience and not be handed over to a separate aggregator in order to buy digital books . Separating out the transaction and the customer relationship from the instructions and communication flows from the actual pick pack and dispatch of physical and digital or whatever makes consumer sense, publisher sense and supply chain sense.

Newsprint and Magazines Under Threat

So we read this week of major shifts in the world of Newsprint and magazines which by themselves may not mean much but collectively show a potential big problem for those reliant on advertising spend. Today all sectors that are reliant on a shrinking and fickle spend which is being spread across an increasing number of media. Television is already reeling from decreasing spend which effects production and investment, which in turn impacts viewing figures, which results in reduced advertising revenues. A cruel and clear circle.

The big news was obviously the filing of bankruptcy of the Tribune Group which includes those iconic brands Chicago Tribune and Los Angeles Tribune. US advertising revenues are expected to fall by some 5.7% and the tribune group are not the only newsprint group feeling the pinch. The New York Times is considering potential asset sales and is in discussions with lenders. Its New England newspapers – including the Boston Globe and its 17 per cent stake in the Boston Red Sox baseball team are potential sales.

Newsquest, the UK regional news group and UK arm of US publisher Gannett plans to close 11 newspapers in the north-west of England in the face of declining revenues.
The magazine market is also in deep trouble as they not only depend on advertising but its recent growth has been fueled by a greater percentage of ‘non-renewable circulation’ than previous and this now combined with reduced reader demand has impacted circulation profitability. The advertising decline and increase in paper and postal costs exposes the whole magazine model.

Reed Elsevier can’t sell its business magazines division which includes Publishers Weekly and Variety. Such is the scale of the issue Newsweek is considering cutting 1.6 million copies from it’s current 2.6 million rate base. The newsstand sales of Newsweek and Time have fallen some 40% in the last four years.

American Media, the publisher of Star magazine and the National Enquirer moved a step closer to filing for bankruptcy when it failed to meet it deadline on interest payments. Cutbacks at Condé Nast Publications have been announced.

But against all this doom and gloom comes the New York Times ‘ TimesWidgets’ , a new service that lets you make embeddable widgets for your iGoogle homepage, blog, etc., of New York Times homepage headlines, blog posts, movie reviews, and more than 10,000 topics. We doubt it will stave off the debt knocking on their door but it keeps the technicians busy and doesn’t even carry advertising today!
Just when you thought that should cover it we read that Google Book Search now archives millions of pages of magazines from the likes of New York Magazine and Ebony to Popular Mechanics.

You can browse different covers of a magazine, select a specific issue search it or turn the pages complete with the original adverts, zooming in and out and even subscribing to the magazine. Google Map has been integrated to show all the places mentioned in various issues, with links to the pages where those places are mentioned.

So we are seeing the demise of newsprint and magazines as we knew them and the changing spend in advertising. We are also seeing the rise of the omnivore across all media sucking in content in its attempt to dominate all. The big question all the archival quest leaves us to raise is one of who will create the future articles, features, pictures, books when they have the destroyed the ecosystem that creates them today, or do they want that as well?