Sunday, December 14, 2014

Yodel Ripples Will Continue



In the UK we have just seen the impact of an air traffic technology blimp of less than 60 minutes on the control of international traffic airspace, flight schedules and travel over a great area. Distribution logistics is no different and can often appear very simple and straightforward when it flows correctly, but can become complex and spiral out of control when things go wrong. This week’s news that Yodel, one of the UK’s largest package carriers, had suspended supplier collections due to an unforeseen spike in traffic, is somewhat alarming and also begs the question on how the smooth this out before Christmas.

Yodel’s official statement to clients, claims that Black Friday and Cyber Monday had exceeded all analysts' expectations and in many cases orders for UK retailers were double the previous record level set last year and that parcel volumes then had continued to be high.

However, Amazon, which uses Yodel and is a shareholder in the business, said orders would continue to be processed and delivered in "the normal time frame".

Catalogue retailer Argos said their deliveries to customers were unaffected, whilst Marks and Spencer was forced to extend delivery dates for online orders as a new distribution centre struggled to cope with heavy Christmas demand.

Others would question why some carriers aren’t in the same position and whether the true facts are being presented?

What is clear is that Yodel gave suppliers less than 24 hours’ notice that they were effectively suspending collections for the Thursday and Friday of last week and with Saturday and Sunday being collection free they were hoping to be back on an even keel at the start of this week. It is obvious from some statements by their larger customers that some retailers may be getting a fast track service and are being impact less by the spike.

The challenge to any logistics spike is that it has to filter through the whole supply chain and the resulting ripples that queue up behind it, also have to run their own course. We can guarantee that the majority of suppliers put in an extra effort into maximising the Wednesday pick up quantity and so ensure that these were in the pipeline. We know of one supplier who doubled their outbound quantity that day and if this were repeated across just a fraction of Yodel base the next spike is not only predictable but inevitable.

Do they expect that Monday will be a normal day or do they expect to be collecting three days’ worth of dispatch plus all weekend traffic? Will this then force another ripple in the chain? They will obviously will have an excess volume of stuff to deliver. They may engage extra third party delivery services to help with this spike, but will these maintain the required service quality, or be more concerned in getting stuff delivered at any price and condition?

We then come to some other factors which some suggest actually caused the spike to be a problem. During November Yodel took major contract action to streamline their contracts, not only standardising rates, but forcing some to change their distribution profiles. This could not have helped the situation and maybe introduced a change timed at maximising their earnings. This standardisation of contracts may have also actually backfired, as some had to make system changes to realign their work and others parcel package profiles changed which in turn changed Yodel’s profile. Some also suggest that Yodel has maybe been too eager to pick up new business from others and not fully factored these into their forecasts.

Finally we have a market space that is going under major change. We don’t mean the retail and online market but the carriage market that services it. Amazon’s impact in this market can’t be underestimated as they have used not one but many services, have learnt the business and now are designing many out as they start to take greater control of their own chain. The impact of next day, or same day delivery has had a major impact on everyone’s expectations and service infrastructure and the reason Amazon forced this issue, was not just to higher the customer expectations, but also to increase the pain and costs of its competitors, who have to respond to something outside of their control. We may laugh at the prospect of drone delivery but it will happen, but perhaps not quite as we expect it.

Supply Chain Management is not just about the consumer but about streamlining the whole chain from start to finish and when we look at the booktrade we only see one player doing this.


As for Yodel, it is reasonable to predict that there will be a further moratorium on collections before the end of the year and that some deliveries will not be on Santa’s sleigh in time.

Sunday, December 07, 2014

Nook: The Bride Stuck on the Shelf?



It must be the season when dreamers and some journalists cast their thoughts to opening their presents, sitting around open fires, drinking egg nog, watching sentimental films and potentially losing sight of reality.

Last week the long overdue divorce between Barnes & Noble and Microsoft was made absolute and the ill matched pair were finally put out of their misery. As we looked back over the couple’s short history, it is clear that the marriage was somewhat ill-conceived, and one more of convenience and hope than business logic. On one hand it was reliant on Barnes & Noble stretching itself past the Eastern seaboard and venturing where it had failed to tread before. Although they finally did this, it was too little, too late and done without real conviction and probably more down to the terms of the Microsoft deal than a burning desire to open up business outside the US. On the other hand Microsoft were pitched to be some sort of white knight to take on Amazon and deliver not just the much needed cash but the technology element of the proposition. Unfortunately the technology was not built on their Windows platform but on Android. There wasn’t cracks in the plan but chasms.

So Nook have apparently found yet another suitor in Samsung. Is this third time lucky or just another blind date and on the rebound? They appear to be still quietly beavering away to offload its Nook platform and this time to the media wanttobe. Samsung may have smarter technology and be in a good position to help Barnes & Noble, but does Barnes & Noble offer Samsung anything they can’t or shouldn’t be able do by themselves? Many will point to Barnes & Noble’s huge understanding and knowledge of the trade, others will say that they once claimed to be able to take on Amazon, but that they lost this battle even in their own back yard. Some will say that Barnes & Noble physical business is on the mend and Nook is a brand and service which has much to offer. Nook may be more stable now than those recent times when executives appeared to be leaping off buildings faster than the best trained lemmings.

Nook continues to haemorrhage and in its second quarter, ending November 1st,  it's revenue fell 41% to $63.9 million, while digital content sales fell 21% to $45.2 million. This contrasted with Barnes & Noble’s retail sales, which fell marginally by 3.6% in the same quarter, which was partly down to store closures, but offset by the 1.9% rise in their college unit.

When we visited the flagship Union Square bookstore a few months ago, we were somewhat taken aback by the real estate given over not to more books but to non book product. It would be very interesting to discover the product revenues and profit by category and one would suspect that books are doing worse than it may appear.

We then read the Street’s article, ‘Wal-Mart Should Buy Barnes & Noble's Struggling NookDivision.’ No we didn’t miss the question mark off the end, they obviously thought that this was a serious proposition. The logic was that WalMart was building up its digital offer so Nook would offer them a quick and cheap leg up. They even believed that Nook had built up a serious and ‘robust’self-publishing digital business.

We also found ourselves in somewhat weird discussions with others who also proposed Barnes & Noble should go further and even consider subletting space within Walmart stores.

The reality often hits home after the Christmas. The merry festive season is replaced with the cold and often dark reality of January. Even the sales can’t often lift that morning after the party feeling. Perhaps it’s time the accountants allowed the Nook to be put out of its misery. Nook has been to the alter more times than many and unfortunately time, even this short time, has not made it any more attractive and the dowry has dropped significantly.


 Related Articles:


Thursday, December 04, 2014

Amazon Retail Stays Online


It had been predicted that when Amazon acquired a 17 year lease at 7 West 34th Street opposite the Empire State Building and that it was going to finally come over to the other side and open up a retail store.

It was also mooted that it could be a 'call and collect' base for Manhattan customers, offering them same day collection of purchases. We have seen Amazon open up collection points within stores and with partners such as The Post Office in the UK, but to date they have not opened a dedicated one in their own name on the High Street. Frankly, why would they when they have plenty of others queuing up to service their needs.

Well Black Friday has come and gone followed by Black Monday and although the festive season is in full swing there is little sign of an Amazon retail operation in Manhattan. It is now widely reported that the 470,000-square-foot building has been designated as “primarily” corporate office space, and the ground floor retail shops will be subleased.

With the likes of Amazon it is fair to say that nothing is set in concrete and things will change, but for now the only thing Amazon apparently want on this High Street is an office and more free advertising.

Wednesday, December 03, 2014

Steve Jobs Words To Feature in Apple Antitrust Case



Apple’s Dominance of the digital music market has declined as the market shifts to streaming on demand. As Apple attempts to win back lost ground with its recently acquired Beats music streaming services and embed the enabling app in its latest update to the iOS operating system used on iPhones and iPads, it once again faces many questions in court over its previous iTunes software practices within the digital music market.
The current Californian case, brought by Melanie Wilson and Marianna Rosen, is seeking $350 million and under its class action status, it is estimated that the lawsuit could award damages to as many as 8 million people who purchased an iPod between September 12, 2006, and March 31, 2009. The case has evolved significantly since the original 2005 filing and now alleges  Apple made a series of software updates to iTunes which were specifically designed to shut out competing music stores' ability to load their songs onto iPods.
The case centres around Apple’s use of its Fair Play DRM (Digital Rights Management) software and claims that by restricting ITunes tracks to iPods and others’ tracks from iPods, Apple forced buyers to use iPods instead of rival devices between 2006 and 2009. It is claimed that this in turn artificially inflated the price of iPods and resulted in harming consumers in the process.
Now a video of and emails by the late Steve Jobs are even being used in court as evidence against Apple.
Bonny Sweeney, the lead plaintiffs' lawyer stated that, "Apple made those changes to its software after top executives at Apple learned that competitors had figured out a way to have their songs played on the iPod." He also claims that the updates, "did not make the iPod faster, improve sound quality, did not make the iPod sleeker or smaller or cooler," but "prevented customers who had legally purchased songs from Apple's competitors from playing those songs on their iPod."
Apple counter stating that iPod prices were not set with reference to its rivals and that in 2006, rivals such as RealPlayer had less than 3% of the online music market and had little influence on their pricing. 
Apple's iTunes store sold DRM encoded music track which not only prevented unauthorised copying but also could not be played on competing devices such as Microsoft's Zune and that songs from rival online stores could not be played on Apple’s iPods. The code that would go so far as to force users to reset their iPods if they were loaded with unauthorized MP3 files, wiping the devices clean. The code was removed from iTunes in 2009 and now music and other licensed media purchased from other companies can now be played on Apple devices.
It’s interesting to note that there are many who would suggest that the DRM ‘walled gardens’ within the ebook market have many similarities and in some cases also support hardware offers and although they are subtly different defining what is right and wrong may be hard.

Tuesday, December 02, 2014

Kate Pullinger Releases a New Episode of 'Inanimate Alice'



In March 2008 we interviewed Kate Pullinger, who was then creating stories that were innovative and which exploited multimedia and technology. She had embarked on a digital fiction project, ‘Inanimate Alice.’ and after a break of six years has just published a new episode. The project hasn’t stood still, has been taken up by many children around the world and has been translated into Spanish, French, Italian, German, Indonesian, and Japanese. It also remains a multimedia story which is free for all to experience.

We obviously had to remind ourselves of the early episodes before we looked at the new one.

We will all have our own views on the presentation, uses of multimedia and story itself. 

What is interesting is that what appeared just a few years ago as ground breaking and exciting, now appears to lack that same excitement and sparkle it once had. It is often said that a year is often a long time in technology and simply bombarding every sense and incorporating every technology trick isn't perhaps enough today. What once appeared as a ‘chevron clicker’ (a digital page turner) of a story and a fresh multi media experience is now looks somewhat lost. There are still frames when the story and the graphics come together but there are others when you feel it could have been more subtle and better. 

We have huge respect for Kate's previous ground breaking work on ‘Inanimate Alice’ but perhaps, it also shows that sometimes you have to know when to put things to bed and move on and that a six year break is a huge chasm to transverse in today’s technology.


Monday, December 01, 2014

The Rare Treasures Of Eton College




How many times do you stand inches away from an original Guttenberg Bible?

Yesterday we were privileged to in a very small party of Royal Warrant Holders at Eton College. After an uplifting service in the Chapel, visiting the oldest classroom in the UK with names of former pupils carved into ever pew and over every wall, visiting the old school kitchens and the refectory we went to the college library.

The library itself wasn’t huge, some two generous rooms with a mezzanine floor but with walls shelved from top to bottom with rare books. The librarian, Michael Meredith led us straight to the original Guttenberg Bible, a volume of which was sitting open and proud on its stand waiting for us. The first thing that struck you was that it wasn’t behind glass, nor was Michael wearing white gloves when he handled it. It had been brought out especially for us and was in as near perfect condition any 600 year book can be.

Michael told us the story of how it had been donated to the college and that it is one of only a few complete works remaining. The neat two columns of text on each page vary in the numbers of lines between 40 and 42 and make it one of the first to come off the press or presses.

Looking at the pages you were struck by the quality and clarity of the print on this the paper rendition showed no damage or foxing. Each page had been rubicated by hand, but this was minimal and compared to the illuminated manuscripts of the time, must have been viewed as very plain. You immediately thought that this had the look of the first mass produced book. On one page rubication error had been made and instead of neatly covering the rubication, or erasing it, they had simply colour blocked it out with their red ink. Did this reflect what they thought of the book’s value at the time?

Micheal then showed us some other books from their collection that he thought we would be interested in.

There was a Qu'ran which dated back to the times of Saladin’s in Spain and was scripted in gold! Michael told us of a group of school children who visited the library and of a young thirteen year old girl, who read the Arabic out loud and then translated them to English. We wondered how many could read and translate the western works and Latin of that time?

There was the banned work of Copernicus, in which he stated that the planets revolved around the sun, an exquisite Dutch illuminated Book of Hours, the first book on the Art of Anatomy with skeletons and muscles, Microscopia with a gate fold of a flea depicted from the first microscope in the 1600s.

The library boasts some 400 books from before Guttenberg and among its many scrolls was one depicting the history of the world from God Adam and Eve to 1600s and another signed by Elizabeth I, which listed all her Christmas gifts. There was a triple column timeline illustrated volume with first known book illustration of the head splitting of Thomas Becket and depiction of St Francis of Assissi. Sitting proud in full colour was an Edward Lear’s ‘Parrots’ which thankfully had not been broken up like many of its contemporises.

We were shown the first edition of the Complete Works of Shakespeare sitting next to two original first folios from the Globe. Michael noted that there were often variations between the two, as the complete works was taken from his original manuscripts and the folios often contained amendments made by the prompters at the theatre.  Which one is now right?

Finally, Michael introduced us to the college’s new ‘Record of Remembrance’ exhibition of the First World War with its MacNaghten War Memorial Library, which was donated to the college and just as we were leaving we noticed sitting on the wall was a painting and ornate frame which looked somewhat out of place, it was a Rossetti!


Some may say that Eton is for the privileged and we certainly felt privileged on the day.

Thursday, November 13, 2014

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? 

Land Rover Publish William Boyd Advert



Today we read that Land Rover has become a digital publisher and the obvious question is, why? The answer is that it can ensure that their product is in the reader’s eyes and is aligned with the work, or to put it another way it cheap advertising.
Laptop manufactures love to see the backs of their devices in a film or on TV with their logo sometimes glowing for all to see. Sometimes product placement can be more subtle and may just be a packet of a brand of Corn Fakes sitting perfectly positioned on a shelf and in shot. We wrote many years ago about 'Cathy’s Book' which was altered to remove a specific lipstick and colour and changed to promote Proctor and Gamble’s ‘Cover Girl’ range. Years earlier Fay Weldon was paid by Bulgari to write  Bulgari into ‘The Bulgari Collection.’ Product placement is a real way to get your product infront of an audience in a subliminal way.
So when is naming a specific product in a book now innocent and when does it involve money and is product placement?
Land Rover have taken it a stage further with William Boyd’s “The Vanishing Game,” with key words that can launch video of Land Rover vehicles in action. Having been in a Land Rover on a constructed track and being driven up and down 45% rises with horizontal as well as vertical slopes the cars are amazing. Now by clicking on words such as ‘river,’ or ‘mountain,’ the reader will see footage of the car crossing a rugged waterway or traversing a mountain slope. Readers’ comments on their driving experience are also embedded.
All Boyd had to do to get the money was to write one of their vehicles into the storyline. Land Rover believe that by respecting the artist’s freedom this is more of a commission, than product placement or sponsorship. Well forget the reader, who pays for it and their views, it’s all obviously alright then!
So as author advances continue to be under pressure and net receipts continue to bite, will authors and their agents start to redefine some rights and will we see advertising, product placement rights being withheld? Will publishers now be knocking on the doors of every FMCG company offering lucrative deals to get their products placed in bestsellers or even to get the marketing expense fully covered? Will other car manufactures follow and will Jeremy Clarkson’s next book be published by Porche, or Bill Bryson’s next journey be by Tripadvisor, or Bob the builder be by JCB, or the Good Cook Book be by MacDonalds?   

Related Articles:
Brave New World October 2008 ; Product Placement or Product Search?
Original article from Digiday : 

Land Rover commissions novelist William Boyd’s latest

Wednesday, October 08, 2014

ADOBE Says Read The Small Print



Details about the extent of the Adobe security snoop into individual’s reading habits and harvesting of data is becoming clearer and the arrogance adopted by them over what is personal data would appear to many to raise the question as to whether they are fit to manage many services digital content.

There explanation of what they monitor conveys no remiss and some would say carries the usual ‘read the small print’ caveat and even more interestingly appears to blame publishers and others for asking for those controls even though many appear to be na├»ve to the fact that the controls are not only enforced locally but that the information about them is sent back to Adobe to harvest.

The information has been confirmed by a number of sources to be unencrypted and therefore open to potentially many parties to read or intercept which in this day and age beggars belief and is clearly any responsibility or care. Their privacy statement can be found at Adobe Privacy Policy  and interestingly under ‘Is my Personal Information Secure?’ states:

‘We understand that the security of your personal information is important. We provide reasonable administrative, technical, and physical security controls to protect your personal information. However, despite our efforts, no security controls are 100% effective and Adobe cannot ensure or warrant the security of your personal information’.  

We all understand that many services such as Kindle, Overdrive, etc synchronise our reading such to assist our being able to continue to start where we left off. We respect that there is a wealth of information that goes with that. But these transfers are secured and not open and remain within their walled gardens. Anything that resides in Adobe’s Digital Editions 4 library appears fair game to Adobe snooping and data harvesting, even documents and non DRM ebooks!

Adobe may now find itself under pressure from large library services and others to explain their approach and given their ACS4/5 history, the solid umbilical cord to ADE and their apparent approach to ‘act first think later’, some may now be prompted to look at alternative options. However that in itself is not an easy route. It is also clear that this is not an old data harvesting feature but only applicable to ADE4 and probably tied to the ACS5 features they are desperate to get adopted by all.
It is sobering to think that they know and send via an open stream;  
·         Unique User ID which aligns to registration
·         Device ID to restrict number of devices re DRM
·         Certified App ID to ensure only certified apps (licenced sales and rentals)
·         Device IP to determine geo-block
·         Duration of reading to meter reading against certain licences
·         Percentage of the Book Read to enable publishers to align to subscription models and determine if the book has been ‘read’
·         Date of Purchase/Download
·         Distributor ID and Adobe Content Server Operator URL
·         Metadata provided by Publisher (title, author, publisher list price, ISBN number etc)

It is also reasonable to ask why the new controls aren’t performed at a local level by ADE4 and why the data has to go back to the mothership at all. Surely if the publisher states x, y and z rules these can be enforced locally and the only validation required is at the offset to stamp the file as genuine? Perhaps that’s too simple and perhaps Abobe feel that would loosen their tight control and not give them that rich seam of data that they could………



Tuesday, October 07, 2014

Are Adobe Secretly Watching You Read Via DRM?



The question of privacy on the internet has once again raised its head with the posting by Digital Reader on Adobe’s ACS DRM system and what is claimed to be excessive data gathering of personal information from consumer’s elibraries.

We can’t comment on whether the facts as presented are true or false, but we are able to say that if true, they are a significant shift from where Adobe started from and seriously question the role of DRM and whether consumer privacy rights have been breeched.

Abobe DRM history goes back many years. ACS3 was widely used by retailers but effectively broken and open. The start of the latest ebook revolution was initiated with the introduction of the eInk readers and when Sony entered the fray they wanted a DRM system which would effectively give them a march on the rest. Adobe also wanted to regain control of a space they had clearly lost. Overdrive had also built a ACS4 beta that they were using to control their market. We remember Adobe’s introduction of ACS4 and their lack of market awareness and often rigid mind-set and coupled with Sony’s desire to rule the world, we had many often fraught conversations with the two of them but the rest of the market wasn’t ready and so they won the initial battle. Years later it’s a different story and many have either migrated to their own DRM. Amazon and Apple never did join and Kobo and Nook grew alternative offers and Overdrive stuck with their own variant.

Adobe then went into what can best described as the Dark Ages where they still championed interoperability, but where leaderless and gave up trying to manage micropayments and gave this up to a small handful of agents who managed the retail facing activity and collected the money. They then came up with ACS5 or a tighter model which was part born out of the fact that ACS4 could easily be broken by anyone who asked the right questions on the Internet and part by the fact that they were clearly being squeezed out by the big channels. Unfortunately ACS5 has some basic issues which forced Adobe to retract their initially statements and backtrack on their timelines to force full migration to the new platform.

So today we have the news that Abode appear to be data gathering consumer usage information at title level and also at library level. What was read when, what wasn’t read, and probably much more? Is this right or wrong?

Well Adobe provide a DRM locking service aimed at validating ownership and stamping this such that they can ensure rights are managed with respect to devices, etc. Why on earth do they want to gather data on usage other than to sell back to publishers, retailers and libraries. Did they offer and opt in, or opt out to consumers is a mute question and we would suggest that they had to in order to snoop.

They apparently doing this not through the standard interface with hosting sites but through a mole application in Digital Editions that they plant into the consumer library or device. We would like to see the snooper application flagged as unauthorised by the security systems and users being given at least the choice of allowing it in. Whether the Adobe service will work without the mole is an interesting question.

We have to accept that Amazon, Apple, Nook, Kobo and Overdrive all can gather information on their consumers and their walled gardens allow this, but they are walled gardens. Adobe promotes itself as open and interoperable and importantly does not have consumer customer relationships to build in the same way. Again it begs the question what do they intend to do with this information and is it being resold and if so to whom?

However, all this a new news and we await more information about Abode’s intent and what is behind the intrusion into consumer’s private libraries and reading habits.

Personally, if the facts bear up to what has been reported, then Adobe has single handily done more harm to DRM than all the articles every written about it. Consumers if made aware of it will probably shun and question the violation of their privacy.


Finally, we hope that the wider media picks this story up and fully investigates it and if collaborated exposes it to the consumer.  

6th Oct 2014

Wednesday, September 24, 2014

Amazon Creates New 'X Factor' or Crowdsourcing Offer


This week Amazon added another layer to their offer, a new ‘crowdsourcing’ book submission one, which as with all things Amazon today, immediately polarised many. The lure is to attract would be authors into what some would call a digital slush pile 'X factor’ competition, where readers vote and those works that get the votes, win and potentially get selected for stardom and the recognition their authors want. Under the new service Authors will be asked to submit never before published works. Amazon will then make available a preview of the work and enable readers to review and nominate their favourite and the books with the most nominations will then be reviewed by the Amazon team for potential publication. It is unclear when and if an author can flip a non-selected submission into KDP, but we suspect that will be on offer and provide an added author bonus.
So does the following have an impact on readers, an author, an agent, a publisher and Publishing?
  • Guaranteed advance & competitive royalties: You will receive a guaranteed $1,500 advance and 50% royalties on net eBook revenue.
  • Focused formats: We acquire worldwide publication rights for eBook and audio formats in all languages. You retain all other rights, including print.
  • 5-year renewable terms, $5,000 in royalties: If your book doesn’t earn $5,000 in royalties during your initial 5-year contract term, and any 5-year renewal term after that, you can choose to stop publishing with us.
  • Easy reversions: After two years, your rights in any format or language that remains unpublished, or all rights for any book that earns less than $500 in total royalties in the preceding 12-month period, can be reverted upon request – no questions asked.
  • Early downloads & reviews: One week prior to release date, everyone who nominated your book will receive a free, early copy to help build momentum and customer reviews.
  • Featured Amazon marketing: Your book will be enrolled into the Kindle Owners’ Lending Library, Kindle Unlimited as well as be eligible for targeted email campaigns and promotions.

What is different about this new offer to those offered in the past by some publishers and 3rd parties? Is it any different to say Author Solutions? What does Amazon offer that others don’t?

We may need to step back and stop seeing these offers from Amazon as individual offers and start to see them as part of an overall offer which may even go further than just books.

They already have the market share of physical and digital books and in doing also have the largest known customer base and information on their buying, browsing and taste.  They have the largest digital self-publishing share with not only KDP but also Create Space and Audible. They make money on KDP and have probably done more for self-publishing than all the exploiting services that went before and can even boast some significant successes. Authors love it because it is transparent, rewards are high and they have a huge potential audience they can reach.

What this new move potentially does is move Amazon into a strong position to exclusively capture new talent and win their publishing rights, provides a feed to KDP as well as Publishing and adjusts the reward and rights benchmark both in terms of reward and importantly term time rights. The later can’t be overlooked as it is a major move away from the exclusive and some would suggest ‘in perpetuity’ aspects of the traditional model. Couple this with Amazon’s ability to make all activity transparent and remove those old Chinese royalty walls and there is a certain appeal for all.

Can others follow? We doubt that anyone today has the market vision and offer, reach, breadth and ability to leverage money on top of existing money in this way.


SWETS Go Bust



We remember well the lucrative STM journals market and the value added role the subscription agents had carved out consolidating subscriptions across thousands of institutions and publishers. It was a classic one stop shop and rewarding for all parties. The likes of Swets and Ebsco dominated and their position looked increasingly secure. Then came the shift to digital and new players who also offered digital consolidation, publishers who wanted to increasingly deal direct and institutions who discovered the power of buying consortia. The market shifted and that was without the ever growing debate on open access and the commercial model that underpinned the market.

This week Swets filed for bankrupcy with its parent company, Swets & Zeitlinger Group B V, being granted preliminary bankruptcy protection by an Amsterdam court and its payment obligations to creditors frozen and JLM Groenewegen appointed as liquidator. The reason for the fall from grace has much to do with the decline in revenues, squeeze on margin and their inability to service their financial covenants. In good times many borrow and to expand, but in bad times the cost of servicing that debt can cause issues and their 2013 Annual report clearly shows many of the warning signs of a company that was still earning, but not at the rate it needed to. Most companies at that stage would take measures to ensure covenants were not breached, or refinance to change their terms. We don’t know what was undertaken, but today that is immaterial as they are bankrupt.

Swets were founded by Adriaan Swets & Heinrich Zeitlinger in 1901. In 2007 Swets acquired by a Dutch investment firm, Gilde and went to open offices in India, New Zealand, Finland, Austria & Switzerland, China and acquire Boekhandel E. Frencken BV. In 2010 they broadened their offer with an e-book catalog and buying options, supplying over 1 million e-books in 2011. In 2011 they acquired the publisher communication services company Accucoms, They had some 572 employees has offices in 20 countries handling subscription services for some 8,000 customers and 800,000 subscriptions in some 160 countries. (see swets.com

How much publishers have lost is not clear, neither is the position of digital services to institutions, but Swets demise will have a big impact on those who relied on that consolidation and alternatives may be around, but as they say. ‘once bite, twice shy.’ Some major publishers have already issued notices some stating that they have not received any 2015 subscription payments for 2015 from Swets and inferring that there may well be money in the pipeline.


The STM Journal market is essential for the dissemination of research and information and has long been a moral and commercial battleground, but it is changing and being challenged not just by academics and institutions who want a better deal, but also by what are often the primary funders – governments. 

Update from The Bookseller 10th Oct 2014: Publishers will soak up the costs...

Swets UK go into Administration : The Bookseller 14/10/14 

Thursday, September 04, 2014

History, Trends and Digital Changes in Media


Digital Music News have taken RIAA data and produced an interesting animated graphic of the changes in music purchases over the last 30 years. We strongly recommend that you view this as it shows how transient some technologies are and how it’s not just the technology that changes but how people buy and relate to media.

It would be great to be able to step forward and predict what will happen in the next twenty years but many of us would be struggling to see further than the next five years.

What is interesting is that the base content hasn’t radically changed, a song is a song and a recording is a recording and music made decades ago now lives comfortable alongside that made yesterday. In some cases the technology actually impeded the quality of the recording and forced the extremes to be toned down to fit.
The other interesting thing is that emerging music format technologies cannibalised their predecessors. 

Cassettes replaced vinyl, CD replaced cassettes, downloads replaced CDs and now streaming is replacing even downloads. We are moving to music on demand which is either paid for through other means, or is on subscription. This changes the question of ownership, collections, sharing and of course the reward earned by musicians, writers and producers. It also can change how we protect or identify usage rights and copyright ownership and some would suggest that the new technologies are more secure than all the belts and whistles of the early music DRM days.

If we produced a similar graphic for books, newsprint, film, tv they all would be different and we need to understand why and what similarities there are. Film and TV are probably the closest to music in the technology step changes, but differ in many other upstream ways. Interestingly the original formats of books and to a degree newsprint aren’t going away and it is easy to see books as the most resistant to technology.

However, all bar newsprint, show very similar patterns to the consumer trend from ‘buying to own’ to ‘subscribing to access’. Yes, the sectors are often moving at different speeds and even different directions but the trend is clear. DRM as we know it today is transient and past its sell by date and will become increasingly irrelevant in a streamed world where it happens albeit less obtrusively.

Therefore some would suggest that the challenge for book publishing is not the latest tablet, ereader, smartphone, app, enhanced ebook, but how we accommodate subscribing to access alongside the traditional buy to own, enabling both to flourish and appeal and importantly reward creators.
   


Wednesday, September 03, 2014

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.

Wednesday, August 27, 2014

Amazon Gets All Twitchy


We have long argued about the logic of joining up the media dots. Some see this as merging the technology and using one technology architecture to deliver all services. Others see the services as remaining separate and simply offering a ‘one stop’ consumer umbrella, which collectively makes it difficult to compete with.

This week Amazon has acquired games streaming service Twitch for a cool $1 billion ($973 million). Twitch claims to be the fourth largest generator of peak load Internet traffic, which is greater than Hulu, Facebook and Amazon.  According to Twitch it has quickly become the go-to-platform for the fast growing video game-streaming market. In July they claimed some 55 million unique monthly viewers.

Amazon’s media offer now includes physical books, ebooks, singles, print on demand, rare and used books, audio books, lending and subscription services streamed music, CD music, downloaded music, film rental and streaming, games and game streaming much much more. When you recognise that these can all be offered under one subscription service, Prime, as either supplemental services or the main offer, the picture changes. Kids Free Time is the only service Amazon has collectively offered under one proposition and subscription, but it isn’t hard to see many more such offers. Prime also unlocks the world of Amazon’s marketplace, goods of all sizes and shapes and a growing digital offer and physical delivery service which has collection points, same day delivery and again much more.

So is about building a ‘one stop shop’ and owning the customer’s first point of choice and if Amazon hasn’t got it, then its marketplace probably has. This now begs the question of why we bother to search on other services and don’t just go to Amazon first every time. After all, we will be soon conditioned to believe that that’s where we will probably get the best deal on everything and anything. Amazon gets first crack at unlocking our purse and getting our money and if the sale goes elsewhere through marketplace then they still get a cut.

So what about media and content? We know Amazon wants to take out the middle man. It is also becoming a producer, publisher, commissioner and much more across many media forms and not just selling books, films, etc. Does it want to be the only one? That would not make sense and would be unrealistic, but it will go for the quick wins and importantly go to win the hearts and minds of the self-publishing and creative-direct route.

What we have is an omnivore, which in its habit is creating a compelling consumer and creator proposition which is hard to avoid. No one only reads books, watches films or plays games and fighting a beast gets harder when it’s not just about one offer. Importantly the sum of the parts is its strength and that is not just with consumers, but with its competitors. Competitors and providers who have only a slice of the offer, have just that, a slice. They have to do that not only better than Amazon, but better than the rest who are fighting for that space. Niche is fine and can be very profitable, but it is just niche and growth is limited.

If you want to grow outside of the niche you have to find others who can help replicate what Amazon is doing internally. That’s Amazon’s potential weakness in that it has brought its offer inside. The companies may well operate separately but they are owned by Amazon. To compete then someone has to collect the same, similar or others into a group that acts as one but who remain separate. There are many opportunities but often little or limited vision or appetite for co-operatives. 
  

To those who are searching for the synergy between Twitch and books and other media, forget it. The game is about creating a unique, compelling and universal offer and if it also provides some synergy then that’s a bonus.

Tuesday, August 05, 2014

Hear, See and Speak - No Used eBooks?


How do industry bodies and major players respond to new entrants who offer something different? Do they go out to squash them in order to maintain the status quo? Do they attempt to reign them in and restrict their influence and impact? Do they invest in them and work with them to create new channels, new markets and new revenues? Some believe that many stick their head in the dark and wish them to go away?

This last week we have all read the Amazon Press Release over their ongoing battles with Hachette and one of the most relevant statements came right at the beginning in their reflections of the current consumer offer.  

A key objective is lower e-book prices. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there's no printing, no over-printing, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market -- e-books cannot be resold as used books. E-books can be and should be less expensive.

The somewhat throwaway line that caught our attention was that, ‘there is no secondary market ebooks cannot be resold as used books.’ With the revelations earlier this year about Amazon’s used ebook patent, we know that it has had its eye on this opportunity, but that the first sale doctrine is maybe a battle too far today. But used ebooks are almost certainly to happen and the change will be either driven by consumer demand or other start-ups who are prepared to push the envelope. It took the likes of Waterstones, Dillons and others some three years from starting to discount in 1991, to the collapse of the Net Book Agreement in 1994. It took years of patient lobbying for the B&Q and other large UK retailers to open up Sunday trading. It took years to change UK licencing laws. Things change in time and they change in favour of public demand.

Last month a judge for the District Court of Amsterdam ruled that Dutch used ebook reseller, Tom Kabinet can continue to operate while it is being sued in court by the Dutch Trade Publishers Association. Tom Kabinet enables users to resell DRM free and digital watermarked ebooks.
The Tom Kabinet site takes a 10% commission on all ebooks sold and have offered to pay a 5% royalty on all sales to authors for each ebook sold on their marketplace.

However, Tom Kabinet like the used l digital music service ReDigi are also up against EU legislators and a strong lobby. Although ReDigi is still in operation today, and have been awarded a patent earlier this year for their marketplace platform they have had to adapt their service in light of losing legal battles.

When Napster first threatened the music production business, the industry fought back through the courts and set out to shut down the new file sharers. The propaganda PR and lobby machines were wound up and the sound bites and messages broadcast. The political lobbing started as the industry  set out to shut down the new file sharers before they could establish themselves. The problem was Napster was free and consumers made it go viral.

The music industry won its battle with Napster, but then had others to deal with who had watched the Napster battle and learned new tactics. Although the music business kept winning they also kept losing and by the time they tried to get the Napster brand under their umbrella it was too late and the stable door was wide open.

The music streamers came next. First there was Spiral Frog who failed to deliver, but they were followed by Spotify and Pandora who did. The big music producers had learned some lessons and bought into the service but also tried to tame it and minimise the risk to their model. However they failed to understand that the threat wasn’t free, nor was it sharing, but it was about the whole ownership ethos that they had profited from for decades. The streaming services asked why you needed to buy when you could access on demand, from anywhere at anytime. Spotify with its 24 million users, of which 6 million are subscribers and the other services started to redefined ownership and how we paid for and listened to music.

It’s amazing how long the music industry took to include downloads into its charts and that they have only just opened the door to include streamed music. Today 228 million downloads happen across the various services every week in the UK and that is up from 142 million in 2013 and 67 million in 2012 (Official Charts Company). The maths of how many tracks on average people download a week, is not hard to calculate and is significant. Some 41.5% of singles are streamed and 12% of the current top ten are streamed. The UK alone has delivered a staggering 18.5 billion streams and in 2013 overall market revenues from streaming pasted the $1 billion mark for the first time. Interestingly, while streaming has experienced explosive growth the overall revenues of the global music market have only increased by a mere 4.3% (IFPY and Spotify).

We wonder how long it will be before they fully recognise the impact YouTube has made and that some suggest that more kids now watch their music today than listen to it. Interestingly, the success of streaming is negating the demand for used digital sales and in a market where growth is clearly in a new ownership model enabling secondary sales makes sense and will generate further income for artists.

Change will happen and denying used digital media a second life and sale will increasingly be seen as wrong and an untenable position by the people that matter the consumers. Denying a second income opportunity also impact creators at a time when their own first sale income is increasingly not meeting their expectations and the pool is being shared with even more fish.

Unlike music, ebook consumption is relatively low and prices relatively high and this will reduce some of the appeal of on demand ebook subscription services. The book market will remain a mixed economy for the foreseeable future with physical, digital, see through and subscription offers.  Perhaps it time that publishers work with new stat-ups to create and support a thought through and complimentary used ebook market and not wait for the collapse of the restrictions they have today and the chance that the result may not be favourable. 

Thursday, July 31, 2014

Amazon Deliver A PR Bomb To Hachette?


The problem with any open confrontation is that often things that were really said in public have a habit of rising to the surface and becoming public. Public Relations people then try to put them back into the box, or rationalise the issues, but often the damage is done, or the public’s perception has changed. Propaganda is a powerful tool when communicated effectively.

Today’s standoff between Amazon and Hachette is becoming increasingly visible to the public. Some would say that the majority of book buyers are more concerned about getting the right price and service for themselves than they are about the trading terms between publishers and retailers. This makes sense and for many it is as if this battle is taking place on another planet. But then we introduce the emotive strings and issues that attempt to sway opinion. Not many care about the plight of the main protagonists, but introduce the authors and that changes things a bit. One side infers that authors are being exploited, and the other also says that they are being exploited or harmed by the action. Some would suggest that the author is are mere pawns in this battle.

We now have Amazon making a public statement ‘Update re:Amazon/Hachette Business Interruption’.

The statement is logical from Amazon’s perspective and makes arguments for lower ebook prices, which reflect the reduced usage rights, plant and distribution costs. They suggest a price point of 9.99, but also recognise some books will cost more. They put forward their revenue model split between themselves, publishers and authors and then say we’ll give you 70% and you guys can sort it out the division between yourselves. They argue that lower prices increase volume sales which in turn create greater revenues for all.

What Amazon have subtly done is drop a PR bomb into the publisher lap. They have questioned the royalty paid to authors, knowing that their suggestion is higher than what publishers gives. They have started to make the public more aware of the differences between the usage rights costs and pricing of ebooks, and in doing so promote themselves as consumer champions. This interestingly moves the debate into the public arena and starts to set the public argument and seize the public initiative.

Can the publisher respond effectively and seize back the propaganda war, or will they aim to muddy the waters and strike back with a fresh angle of attack?

What we are seeing can only benefit two people in the end, the author who will demand more and whose case is being strengthened by the day, and the public who will get cheaper books as the ebook RRP comes under pressure. Will it benefit Amazon over others, or will others benefit from the stance taken by Amazon? Will others step in and try to broker a deal or will Amazon simply and suddenly capitulate knowing that they have already scored their points and leave the fight for another day?