Thursday, November 13, 2014
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?
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?
Wednesday, October 08, 2014
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 naïve to the fact that the controls are not only enforced locally but that the information about them is sent back to Adobe to harvest.
‘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………
EFF: Adobe Spyware reveals (Again) the price of DRM: Your privacy and security
EFF: Adobe Spyware reveals (Again) the price of DRM: Your privacy and security
Digital Reader: Adobe Responds to Reports of Their Spying, Offers Half Truths and Misleading Statements
Go To Hellman : Correcting Information on the Adobe Privacy Gusher
Copyright and Technology: Adobe’s Latest E-Book Misstep: This Time, It’s Not the DRM
ALA News: Adobe responds to ALA on Egregious Data Breach
Copyright and Technology: Adobe’s Latest E-Book Misstep: This Time, It’s Not the DRM
ALA News: Adobe responds to ALA on Egregious Data Breach
Tuesday, October 07, 2014
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.
Digital Reader : Adobe is Spying on Users, Collecting Data on Their eBook Libraries
6th Oct 2014
Wednesday, September 24, 2014
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.
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
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
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
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
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
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.
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
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?
Tuesday, July 22, 2014
Battle lines are being drawn in the digital book arena and these are changing both in terms of goals and measures of success. The changes taking place may appear relatively small and tactical today, but their impact could be significant over time. How long they will take to deliver change is questionable, but that they will, is inevitable.
Although there is much noise in the market and many are merely shouting about what they are doing and it’s often hard to determine noise from substance and authority. It is also has to be recognised that different sectors have different issues and drivers and nowhere are there any silver bullets.
We would suggest that are five shifts taking place with the Trade environment. These are all at different stages of evolution and moving at different speeds, but will spawn more change.
Interestingly, as the overall digital market will be shaped by all of them, it may not be wise to simply cherry pick the ones you think apply to you and ignore the others.
We are now starting to see the emergence of serious players and offers. Interesting, they have all pitched the consumer reading demand at the high end and made ‘one price fits all’ offer.
Subscription offers need to be geared to individual needs and yet encourage members to read more. Just having the biggest library to choose from and expecting readers to consume 3 books a month is not the answer and niche genre offers are essential as well as recognising variable reading demand patterns which will keep members hooked. Today the churn rate is unknown and we suspect it will be quite high in the initial period and therefore these services need to develop secondary community draws to compliment and add subscription value and not merely appear as one trick pony’s. We would expect them to follow other media subscription services and align themselves to larger and complimentary subscription lists and this is essential as long term as subscription offers continue to consolidate their customer facing propositions.
The old and somewhat irrelevant buy to own model that prevailed in the physical market is fast becoming exposed. Although we have yet to see the ebook used market happen, with only the Dutch service Tom Kabinet is challenging the courts, it is inevitable in a highly restricted market.
However as used books, DRM, watermarking and on demand streaming services all overlap, maybe the emergence of on demand means that we no longer have to test the first sale doctrine and the used ebook market never happens. But unless on demand occurs, the used sale market potential for ebook is bound to be tested and found wanting and it is inevitable that the courts will eventually fall on the side of the consumer.
One of the challenges is about proving ownership, which with DRM should be easy, but with the current DRM walled gardens is almost impossible. Again with watermarking it should be also possible, but without a registry and standards conformity, is again almost impossible. With no DRM, no watermarking and no registry some would suggest that this is like closing the stable doors after the horse has bolted.
We are firm believers in the democratisation of writing which is currently exploding in the digital market and will continue to grow for the foreseeable future.
Self publishing is no longer about the slushpile of aspiring writers all wanting to be the next EL James, but about the ability of anyone to bypass the intermediaries and express themselves and publish their works. It facilitates small publishing ventures as well as new and established writers. They may select to use outsourced services to polish and refine their work, or simply publish themselves.
It challenges the ability of the intermediary to control what is being bought and read and can level the marketing playing field. The bestseller will still be a bestseller, but increasingly the backlist and midlist authors will now have to do more themselves to promote their works and in doing so find themselves head to head with others who have self published and earn a greater percentage of the revenue they have generated.
Can traditional publishers use the self publishing services to feed their lists, or have they now lost that opportunity? Maybe it’s down to the value they will offer the writers and that may have to be more than just a ‘safe home’ and a brand.
As author earnings continue to be squeezed by net receipts, reduced advances and more competition, the publisher profits from digital have been seen to grow. Maybe the widening gap is down to bad PR and communication, but the writers are increasingly aware and continue to be the ones who create the initial value.
One area that is very visible to authors under the KDP and other self publishing services is their sales reporting and revenue payments. As the authors will demand greater transparency on earnings, speedier payments and an increased revenue share, there becomes less hiding place for publishers.
Publishers do add significant value, but now have to increasingly demonstrate this and one potential knock on effect will be a revision of digital rights to term based and separation of these from print.
Content, Context and Community
In the main, the market continues, to merely pour the physical content into a digital container.
Some would suggest that this is short slighted and ignores that it is just a transient step and some would even argue is the equivalent to performing self-harm. We don’t say that all ebooks must go down the multi media experience route, far from it, but that we should be thinking about the user experience and making the digital rendition complimentary and not just substitutional.
Digital also offers significant opportunities to grow author, genre, reading and writing communities. These may be devolved to others better suited or motivated to organise and curate. Digital also expands the ways in which works can be discovered, validated and valued which applies to both digital and physical renditions. It is no longer about describing books to place them on dry one dimensional shelves, but about enabling them to be found in many ways within a virtual environment. Standard bodies think library and bookshop shelving, but today’s buyers don’t.
Too many what we have said, is not relevant to their business today. They may wish to sit on the fence and wait for it to happen and expect that they can respond quickly. To others they see these changes happening, new opportunities and the ability to position themselves for tomorrow and not run the risk of being too late to the party.
Thursday, July 17, 2014
Today, the market is talking about the Amazon offer, Kindle Unlimited, which certainly is a smart name as it aims to do exactly what it says on the tin. It should come as no surprise and it was only a matter of time until Amazon entered the ‘all you can read’ ebook subscription arena that services such as Oyster and Scribd have started to open up.
We have long argued that the subscription model is coming and that it starts to change how we relate to books that now can be effectively ‘borrowed on demand’, without having to worry about collecting them on virtual shelves, kidding yourself that you own them when all you own is a limited licence, and also trying to work out how to pass them on to others, share them, or divide the family collection when a relationship splits up.
The greatest challenge to the subscription market is matching the economic model to the reading habits of the members. The book clubs of old used to force feed ‘book of the month’ and expect a regular purchase, but they were dealing with relatively more expensive books and accepted that many people didn’t read on a regular rate. Importantly publishers often had Book Club royalties written into their author contracts. We now have ‘all you can read ‘models which are based on a flat monthly rate with an open to read offer against a digital library. Book s only earn when they are read and ensuing the definition of ‘read’ is a relatively minor but interesting issue.
Unlike other media subscription offers in music and film and even audio the demand and usage patterns of ebooks are very different. An ‘all you can read’ model may appeal to high volume readers who actually don’t need an incentive to read, or buy books and probably read a high volume of what they buy. It doesn’t necessarily appeal to readers who have a more erratic habit, or who collect ebooks today and don’t get round to reading them. So churn rates will be very important both in the early days and within the subscription cycles and will be probably very high compared to other subscription services.
Amazon launched Free Time in the US some 18 months ago. The service was aligned to their Prime subscription model and offered access to several media forms and importantly was aimed at parents for their children. It is not clear how successful this offer is today, but it did have all the right ingredients and if it were extended to align with Unlimited would make commercial sense. Amazon will have learned a lot from this exercise and obviously have a huge volume of customer information and reading habit data to mine and exploit. Unlimited would potentially give ‘family’ offers which cross media, align with Amazon’s core Prime service and effectively lock in customers. Importantly they will be very difficult to compete with as others would appear one dimensional and limited in their potential. However the economics of such an unlimited cross sector offer would be complex and maybe a bridge too far with suppliers today, but Amazon will have learnt much from Free Time that others have yet to discover.
Amazon has aligned Unlimited to their Lending Library and those publishers and authors who opted for this service channel now are automatically lifted into Unlimited. A smart move by Amazon and one that gives them instant traction with both content and users.
So is there room for Amazon, Scribd, Oyster and will Kobo, Apple and the ailing Nook follow? What will Wattpad do now? Can Amazon extend the Unlimited offer to make it even more compelling with premium offers on audio, film, music and even cloud services?
We just can’t see sufficient market for all players as they are position today and it will be interesting to watch the strategy adopted by others. Amazon’s Achilles heel has often been their loner approach and there are many huge subscription services that could be seen as complimentary for others to align with and thereby protecting themselves from being seen a ‘trick pony’.
What’s in it for publishers? What’s in it for Authors? How do digital distributors such as Ingram respond? How does this impact the public library debate and services such as Overdrive? There are many unanswered questions and we are only at the start of a journey which will have many barriers to negotiate, but we now are starting to see a divide between physical and digital which may prove to be healthy. The books may unfortunately remain the same but the divide between ownership and licence, between buying to maybe read or as a gift and subscribing to consume, an incentive to read more as opposed to decorating physical and digital shelves is now potentially up for change.
This is a good thing for consumers who read. It could be a good thing for digital media users. It may get more people reading. But there are others within the value chain for which this move has many uncertainties.
Amazon Free Time: Give me a child…. Dec 2012
Subscription Is Coming June 2013
Monday, July 14, 2014
This weekend in a quiet small local market in Bath we came across two stalls which caught our eye. One was selling lampshades at £75 each and the other origami objects. The thing that was interesting was that both were using printed books as their base material and draw.
The lampshades used a pile of books as their base which had a hole drilled through them in order to support the shade and fitment. The stallholder commented that several people had objected to her wares and that she was finding it difficult to get the books as charity shops wanted to sell them or they were destined for landfill. She roughly had desecrated some 100 plus books just to create the lampshades she had on display. We quite like the look of the leather bound set of short story books but they were now holed.
The Orinoko origami stall obviously had no problems getting hold of stock to cut up and fold as they proudly worked in partnership with BookBarn International who were advertising themselves with flyers claiming, ‘Invest in the future of books!’ Orinoko proudly state, ‘choose the book you want from any Bookbarn International stock and get a 20% discount off the book.’ No doubt they buyer then brings their book along to Orinoko to be cut and folded into art. Some would suggest that this is not investing in the future of the book.
Last week we wrote about the British Museum’s ‘wheel of books’ and questioned the subliminal message it was sending out about printed books and art. Now we have further examples of books being used to create art in the best possible taste. But is the real future of the printed book?
Individual libraries and book collections used to define the owner’s taste, likes and reading but tomorrow will these be desecrated to reflect their art taste and regard for the printed book? Unlike landfill and pulping these new fashion and art objects are for display. Once out of fashion they are of no use and become yet more rubbish. But until then they will sit proudly on display no doubt alongside the stuffed heads of shot animals and caught fish and other trophies which define the taste of their owners.
Thursday, July 10, 2014
Some will say we are party poopers and that we should applaud and celebration the British Museum’s novel use of the book to create art, but is the ‘wheel of books’ just a cheap gimmick or we should we be mindful of what could be easily copied?
The British Museum’s newly refurbished bookshop got Lumsden Design, who are based in East London, to create their space and engage customers. At is centre is a two metre ‘wheel of books’ which sits proud in the shop’s window. It has caught people’s imagination and has engaged, but is it about promoting books for reading, or promoting them as objects of decoration? Is it simply reusing them to create a decoration and a one off piece of eye candy which is in fact in conflict with the objective of reading, or is it a subtle way to promote the book? After all we often love to see shelves of books face out, or stood to attention with their spines outs and is this any different?
What will be the legacy of the ‘wheel of books’? Will people now buys books to glue them together or to drill holes through them in the search of expressing themselves through art? Will schools now collect old books so their kids can create art and forget to read them? Will this decoration promote books as a tool for learning and an escape to fantasy or simply turn them into objects to be twisted, broken, and stuck together in the search of art? Will second-hand books now be snapped up by the yard to be experimented on in art classes and colleges?
We do applaud the other creations within the shop, which includes tabletops wrapped in black leather to recreate the original writing desks in the Reading Room where Karl Marx, George Bernard Shaw, Thomas Hardy, George Eliot and Rudyard Kipling all studied. It has also embraced the Rosetta Stone right down to the sales of merchandise such as umbrellas and cufflinks. But it is the ‘Wheel of Books’ that causes us to ponder, with its metal ring piercing through all the copies on the wheel, in order to keep them all in place just to create window art.
A few years ago some industry bright sparks thought that instead of pulping books, or sending them to landfill, prisoners in Her Majesties prisons should drill holes through them and in doing so stop them being resold, reread and shared. Thankfully the move was questioned and shunned, but today have we now discovered the acceptable alternative? Same result, holes drilled through the books rendering them unusable, but this time it is all done in the best possible taste.
Monday, July 07, 2014
We have all read about the decline of the independent bookstores in the UK and US. However, we have also seen the relaunch of Foyles in Charing Cross, the expansion of the Hatchards brand by Waterstones to St Pancras, the growth online of the bargain bookseller, The Works. So what is the future of the Bookstore and does it have a vision of itself in 2020, or is its vision somewhat out of focus and requiring both short and long sighted correction?
Stanley Unwin once said that, ‘To write books is easy, it requires only pen and ink and the ever-patient paper. To print books is a little more difficult, because genius so often rejoices in illegible handwriting. To read books is more difficult still, because of a tendency to go to sleep. But the most difficult task of all that a mortal man can embark on is to sell a book.’
Today more than ever before that quote reflects the significant changes and challenges facing booksellers. Some would say that the question of what is sold, is as important as that of how it is sold.
Today many continue to sell not just a narrow range dictated by their physical square footage, but a range focused purely on the new or only available through the publisher. It’s as if they haven’t read what it says above the door and have ignored the word ‘bookseller’ and replace it with ‘new books only seller’. Books are books and the consumer doesn’t grab a book and turn immediately to the copyright page and look as to when the book was published, so why do so many bookstore restrict themselves? In a market that over produces both in titles and quantity, there are many mint condition ‘bargains’ to be stocked from outside the traditional publisher channel. They may not have the ‘sale or return’ safety net, but they also can be often acquired at a fraction of the price. One of the salient lessons we should have learnt by now from the likes of Amazon, is that consumers want to buy new, old, rare, bargain and used books and to do so from one place where they can seen the full range.
A recent article in The Economist looked to the future design of the bookshop and asked four firms of architects and designers to create the bookshop of their dreams and in doing so reinvent it for tomorrow. The designers looked at many aspects and even covered the sale of used and digital books and using the space to sell lifestyle, create theatre and host events. It is worth a read.
However, they started from the premise that the hub was the bookshop and everything revolved around the book. Is that how we should look at it, or is the book merely part of a larger proposition based around a wider lifestyle offer? This obviously raises the question of range both in terms of width and depth. We have seen many acclaimed bookshops which have narrowed their offer to appeal to a segment of the market, but how many of these have actually complimented their book offer with a full range of products that appeal to that same segment? Does the cookery shop sell cookery product and books, or books and cookery product? Does the children’s bookshop sell toys, children’s clothes, prams etc. alongside books, or books alongside childrens’ product? Ex Borders UK head, Phil Downer has made his Calliope gift shop one that sells gifts which include books and in doing so he is able to cross sell and merchandise and adjust his offer to suit the market. Will books be a major or a minor element in years to come will depend on many factors, but ultimately it should reflect consumer demand.
The coffee shop within the bookstore is often a very good earner per square foot and creates lifestyle and greater selling opportunities. It is claimed that our obsession with coffee houses is going to grow by a further 20% by 2020. So would you open a coffee shop that sells books or a bookshop that sells coffee?
A further example of how market trends have changed well established markets is in the off licence sector, where the supermarkets have come in and not only wiped out much of the previous retail space, but also have actually expanded and grown the market. When supermarkets first started selling petrol it looked obvious and was restricted to their out of town supermarket locations, but now some have taken their supermarket offer to the garage forecourt and taken over independent stations which are convenience stores that sell petrol and this has enabled them to grow their convenience business and opened new locations miles from their supermarkets.
Just focusing on books is obviously a very limited consumer offer. Just selling new books could be terminal.