Wise Investment: Kieron Smith or Blinkbox ?

So would you invest in a service that still has to prove itself or someone who has done it more than once and brings ability to the table?

The troubled UK supermarket Tesco was forced recently to refocused on its core business and as a result dropped its potential universal media service offer Blinkbox. The film/video service was acquired by TalkTalk for a reported £5million and Australian company Guvera entered talks to buy the music service. This left the ebook business Mobcast, which it bought for £4.5m from author Andy McNab and business partner Tony Lynch in September 2012. The Blinkbox ebook service only went live last March.

So would you buy Blinkbox ebooks or look at alternative ways to invest less for more?

Waterstones went for the acquisition to buy the ebook business from Tesco, but they failed to agree and parted. We now have reports that Kobo are after their customer list which is a good option provided they are active, the sales generated are worth the investment, the data itself is in good order and of course the price is right. However, customer lists are not exactly million dollar purchases and list brokers could probably offer a cheaper and equally attractive demographic.  

So the clock continues to tick and the question must be whether Tesco will let it go in a fire sale and write off the debt or will continue to strive to find a home for either the debt or the service?

It hard to see how BlinkBox ebooks making the return Tesco sought and decoupling the three media streams dilutes further any value it had. Some would question how they had grown to 60 core staff, what on earth they were all doing, the price they paid in 2012 and the level of effort and cost they threw at it to rebranded it, repackaged it and re-staffed it. Some would suggest a classic case of buying a pup and certainly something that they could have achieved quicker and for less money.

The markets often don’t follow logic and when someone wants to participate they often lunge for a quick fix and buy what they perceive is a good buy. Due diligence is often hard when its about perception, interpretation and gut feel and none of the major UK supermarkets have been able to bring to market an effective digital media service and with their current refocusing its hard to see them trying too hard moving forward. Waterstones is likewise refocusing and continue to show little appetite, or ability, to take on digital. Some would suggest that buying Blinkbox was never going to fit Waterstones whatever the deal.

So today we hear Kieron Smith is joining Blackwells. Now that’s a smart move by Blackwells and considerably cheaper and wiser than buying a service that you would only spend a fortune on, to take apart, to fight a battle you aren’t going to win.

Blackwells has always had a good history of digital investment and although they have had their own challenges and very difficult markets they continue to press forward. By acquiring the man and not the service, they bring in someone with very strong digital credentials who has done it before in the trade and someone who has proven his ability to adapt and could well add another dimension to their existing market segments.

As pointed out on Dragon’s Den it is often the person that investors should focus on and the service or product may be a bonus.

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.

Would You Buy an eBook Reader From This Man? Part 2

Today we have the news that Dixons' stores are to join John Lewis in selling Amazon's Kindle e-book reader in the UK. Dixons will sell Kindles through PC World and Currys outlets and not online. The price will be the same whoever you buy a Kindle from with the Wi-Fi model being £111 and the 3G-equipped version £152. To us this sounds a very logical step by Amazon in selling through trusted and experienced outlets trained to sell technology and spreads the Amazon offer onto the High Street.

So we found ourselves in central London and thought we would check out what the three major book chains were doing in-store in their premier outlets with ebooks and ereaders.

Foyles, Charring Cross Road


There was no reference to ebooks, digital or ereaders on the store directory, but given the placement of their information desk, we went straight there to enquire if they sold ereaders. A very pleasant lady explained, ‘We don’t have any in store but sell them online through our web site.’ When we then asked why and said we thought they sold them in store, she disclosed, ‘We used to sell them but they just didn’t pay their way and where a security problem.’

We left wondering why they didn’t take our name for someone to call us, or offered us some flyer explaining why we should go to their web site and if they were serious about ebooks. The lady was helpful but the store was clearly saying ‘Not sold here!’

Blackwell’s, Charring Cross Road


We crossed the road in search of the elusive ereader. Blackwells again were without any signage or reference to ebooks or readers. So we went passed the stationary, the umbrellas and book cradles, to the information desk. Yes they sold ereaders in store, but not the Sony and did not have a display area. ‘Did we want to see one?’ The assistant went off to a staff area and returned with two boxes containing Elonex readers which were still wrapped in their covers. The lack of knowledge on what they did, or didn’t do, was embarrassing and misleading. He pointed out they played epub files ‘which can be bought from anywhere’ and when pressed this even included Amazon! We pointed out that these were LCD and not eInk screens and it was if we were talking a foreign language. They did have some POS material on a stand on the desk, which he read out loud as if we were a child.

Again he didn’t take or even ask for our details so an expert could help us and allowed a potential £100 sale to just walk away.

Waterstones, Picadilly


We entered the flagship store expecting so much, but soon understood that our previous experience was clearly not an exception, but probably the norm. Again no signage or reference on the extensive directory, but we knew where to go and headed straight to the bank of checkouts, past the information desk that was busy and sure enough we found the same bolted down display and POS we had seen on Bath. This had just four units and two dictionary type gadgets.

We hovered, we started to play with the devices, but two of which appeared to be frozen. We looked around for help, but not an assistant in sight and the two on the checkouts were busy serving customers. We decided to go back and ask for help at the information desk and the lady suggested we ask the checkout operators. We pointed out that they were busy, so she offered to come and help, but explained she knew little about the devices. Bless her, she did try to read out the limited POS and clearly was out of her depth. When we asked about the POS pricing over the shelf which offered a ‘get VAT back’ price and quoted the net price and the VAT back, she had to ask the checkout operator. They said that the offer was an old one that finished at Christmas and the VAT back was done by Sony. We hid our amazement that they openly had misleading and out of date pricing on display and clarified that we had to add the two elements together to get the price! The two Sony readers were stickered as ‘out of stock,’and when we asked about the apparent stock in boxes under the shelf, were told those were all empty and should have been removed. Their admission, not ours!

The checkout assistant took over our enquiry and the information assistant went back to her station. The second assistant knew a little more but it was a little. She recommended the top of the range Sony because 'it does more than just reading and can play MP3 files'. When we asked what the difference between the iRiver and the Sony was she quoted number of files and battery life as two major differentiators. We said why the number of files matters as we don’t expect to buy and read 1.000 let alone 2,000 ebooks! We asked about the battery life which she said was based on page turns and we had to point out that the limited POS next to the device said that the iRiver could in fact do 1,000 more page turns than the Sony. She pointed out the Sony reader had 12 dictionaries included, which nearly prompted us to ask if she always carried a dictionary around when she read a book?

She did try very hard to sell us a Sony top of range ereader. However when we asked why it was in landscape and could we see it displayed in portrait like the cheaper reader she was unable to change the setting and even navigate the basic features.

We asked when the Sony devices would be back in stock and she went off to check. She quickly returned to say that didn’t have any on order, but there appeared to be stock in another store if we were interested and she could ring them. We suggested we needed to think about it and despite spending time with us and obviously keen to sell us the top of range Sony she failed once again to even ask let alone capture even the basic customer details.

As we were leaving she offered a small flyer stating it would tell us more about the devices. The flyer was in our opinion a waste of paper except it did give a 0845 telephone number where we could get help. Now why didn’t she at least tell us that?

The eQuestion we ask

When Amazon is selling its devices through technology and trusted retailers, why are these booksellers not making the effort to train staff, provide informative and accessible literature, capture interest and at least appear serious about digital? Would we buy any ereader from these stores today - no. How are they going to build a digital business when they clearly are sending out at times misleading and disinteresting vibes in-store? Books are books be they digital physical, audio, print on demand, front list, back list used etc.

Ironically, we wrote this piece on the very day the BA (Booksellers Association) emailed a newsletter to all their members provide them with sound advice on a retail strategy to sell ebooks.

We also suggest that bookshops watch Mary Portas's 'Secret Shopper' that was broadcast tonight channel 4 and take on-board some of the sound advice she gave mobile phone sellers .

Retailers Are Stepping Up to the Digital World

The news that Barnes & Noble is back in the digital ebook business is no great shock, nor one that is likely to be a repeat of its last entry and exit. Our ‘Brave New World’ report clearly put down the case for retailers to play a major roll in ebooks and digital sales and today, 3 years on, the shoots of our findings are starting to be seen. In the UK Waterstones went with an exclusive Sony deal and have now been joined by more open offers from Borders UK and Blackwell and will soon be joined by many others. In Australia Dymocks have long championed their offer. So the return of B&N is both welcome and a sensible move.

We can ignore the public posturing of ‘my repository is bigger than yours’ this is just mere schoolyard bragging that when stripped down soon becomes irrelevant. However, we can’t ignore the acquisition of Fictionwise, nor the market strength and brand that Barnes and Noble now reintroduces to the market. Will the offer dethrone Amazon – unlikely? Will it increase the battles over ebook pricing – almost certainly? Will it make more publishers create ebooks – almost certainly? Will the impact be restricted to the US – no?

What is certain is that consumers will want choice of what the buy and where they buy it. With offers from Barnes and Noble, Borders and Amazon will US consumers seriously select a device that restricts choice and one which shot itself in the foot last week with its Orwellian actions? Do publishers really believe that they can make the step change from producer to retailer and offer both range and depth? Some will succeed but many will realise what their core strengths are and that retail may not be one of them.

What is clear is that ebooks will go global and geographic restrictions on devices, their support or exclusive deals are not the way forward. It is perfectly feasible today for all retailers to participate and to sell physical alongside digital. The more retailers that take up the challenge, the healthier and more diverse the market and the offer will be. Retailers do not need a reader device or to buy a Fictionwise, or to strike up an exclusive deal, or even to set up a complex technical infrastructure, they just need to offer the consumer what they want , at the right time and at the right price – no different than today. They need to have one that offers physical and digital side by side in a single basket, one that is technologically inclusive not exclusive, one that fully exploits digital marketing and promotion and many will be surprise to find a more level playing field than they think.

Blackwell's Espresso on Sky News

This is Sky News piece on the Blackwell POD Espresso Book Machine. Its a pity the book just drops (literally) out!

Distribute the Files and Print the Book Locally at Last

The Bookseller reveal that the UK Academic bookseller Blackwell has reaffirmed its commitment to launch the instore Espresso Book Machine on 17th April.

The first machine will be installed as a pilot in its flagship Charing Cross branch on a pilot basis, producing books on demand for customers while they browse the shelves or enjoy a coffee. Blackwell had announced the move last year and many feared that the organisation departures and current climate would have impacted the decision but it clearly hasn’t and it will certainly by one to watch.

The placement within store and the promotion around its launch will be interesting to watch. We would have it in the shop window and in the face of the public but again we probably wouldn’t have chosen Charing Cross as the first store and probably picked Oxford.

The important things are that it is the first real move to a distribute and print model as opposed to print and distribute one and the other is to see the reaction of the public to POD books on the point of access and quality. Some would say that it’s a return to the days when a bookstore always had a press in the back!.