Disruptive Innovation

Amazon Hastens Retail Pharma’s Last Stand

15 July 2018

From Seeking Alpha:

Amazon’s interest in the $450 billion US pharmaceutical market is long-standing. The company already sells over-the-counter medicines like aspirin and antihistamines, to go along with its copious offerings of supplements and vitamins on its worldwide platform. It already has licensing to sell pharmaceuticals in 12 states (Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon, Tennessee, with an application pending in Maine). And now with the purchase of the closely held, online, Manchester New Hampshire-based PillPack that will clear in the latter part of the year, Amazon with the stroke of a pen has the necessary licensing to sell pharmaceuticals in 49-states. Investors were certainly quick to notice and the reaction hit markets with tsunami force. With the 28th of June announcement, brick and mortar stalwarts of the pharmaceutical retail world like Walgreens Boots Alliance, CVS Health  and Rite Aid  collectively shed about $11 billion in market value.

Amazon’s renown logistical efficiencies and willingness to sacrifice short-term margins for long-term market share were at the fore of the market move. Most prescriptions in the US are still filled in person and the delivery of scripts remains highly fragmented. If Amazon did nothing else but centralize the distribution of pharmaceuticals, this alone could likely apply enough downward price pressure on the cost of drugs to deliver real savings to US consumers. Centralizing and organizing existing data is the most likely front of significant cost savings and returns for both the end user and company alike. It could provide augmented negotiating clout to force better pricing deals on drug manufacturers. Even if mere convenience becomes the watchword of the makeover, laying the groundwork for cost reductions in the delivery of pharmaceuticals to those in medical need is a worthy endeavor for a country that spends almost 18% of its total annual output on healthcare. While the ordering, dispensing and delivery of pharmaceuticals to consumers is heavily regulated by myriad agencies at almost every level of government, the logistics of the operation plays to Amazon’s well-honed strengths.

Link to the rest at Seeking Alpha

Target Threatens to Pay Labels for CDs Only When Customers Buy Them

3 July 2018

From Billboard:

If the majors don’t play ball and give in to Target’s new sale terms, it could considerably hasten the phase down of the CD format.

Even though digital is on the upswing, physical is still performing relatively well on a global basis — if not in the U.S. market, where CD sales were down 18.5 percent last year. But things are about to get worse here, if some of the noise coming out of the big-box retailers comes to fruition.

Best Buy has just told music suppliers that it will pull CDs from its stores come July 1. At one point, Best Buy was the most powerful music merchandiser in the U.S., but nowadays it’s a shadow of its former self, with a reduced and shoddy offering of CDs. Sources suggest that the company’s CD business is nowadays only generating about $40 million annually. While it says it’s planning to pull out CDs, Best Buy will continue to carry vinyl for the next two years, keeping a commitment it made to vendors. The vinyl will now be merchandised with the turntables, sources suggest.

Meanwhile, sources say that Target has demanded to music suppliers that it wants to be sold on what amounts to a consignment basis. Currently, Target takes the inventory risk by agreeing to pay for any goods it is shipped within 60 days, and must pay to ship back unsold CDs for credit. With consignment, the inventory risk shifts back to the labels.

Link to the rest at Billboard and thanks to Dave for the tip.

A $10 million wish list?

28 June 2018

From today’s letters to the editor of the Adirondack Daily Enterprise:

This is in reply to the May 22 article titled “$10 million wish list.” As a business owner, here are my thoughts.

We’re going after grant money to revitalize our village and particularly the business district. But has anyone bothered to ask themselves how we got this way in the first place?

Over the years we’ve lost a fair amount of mom-and-pop stores. Anybody know why? Do you suppose the business climate as a whole has changed drastically over the years? And if it has, what can we do about it?

In my industry, Christian bookstores that have been in business for over 30 years are closing. Cedar Springs Christian Bookstore in Knoxville, Tennessee, a bookstore larger than the old Newberry’s store we used to have in town, is now closed. Why? Because of competition from the internet. Unfortunately, they didn’t have enough loyal customers anymore, and competition from the internet was killing them. So these good folks just threw in the towel after more than 30 years.

Christian bookstores everywhere are blaming internet competition for hurting their business. Some are finding their own ways of fighting back, but others are just tired of fighting and they’re closing their doors. It seems that Amazon, eBay and various other websites have found that there’s money to be made in selling Christian product.

Now let’s look at our little village. What have we lost over the last few years? Has anybody bothered to ask why these stores closed? Granted, some of the owners either wanted to retire or do something else. But what about those who faced stiff competition from the internet and elsewhere, and decided they’d had enough?

Let’s take a look at the empty storefronts in town. First, most of them are too small. Many are under 1,000 square feet. How much inventory can you sell in that small a space? Not much. And as a small business owner, you have to pay top wholesale prices to get that inventory. You can’t purchase in large lots to get better prices. So your business ends up with a small selection and at what some folks would consider high prices. And since most people shop by price these days, you’re at a huge disadvantage compared to shopping for those same things online.

Secondly, most of those storefronts need work. Who pays for the needed renovations? Paint, paneling, flooring and whatever else that space needs isn’t cheap. And that’s just the stores’ renovations. You haven’t purchased store shelving, fixtures, displays or inventory! Fixtures and displays aren’t cheap. I have a two-sided lockable jewelry display. That display alone cost $900, and that’s just the display. I also have to pay for shipping to get it here. And remember this is just the display and not the product that goes inside. A four-sided display will run me over $1,000, and that doesn’t include the shipping. So anyone who thinks that they can throw a store together for a few bucks knows nothing of the real costs.

Thirdly, most who want to go into business have no idea how much money it’ll take. It’s been recommended that you have enough money to live off of for one to two years in the bank. Why? Because you won’t be able to write yourself a paycheck for at least that long, if not longer. The money people spend in your store will go for expenses, inventory and advertising. As one business owner said to a customer, “First you pay your rent. Then you pay your utilities. Then you pay your suppliers, and if there’s anything left over, you get it.”

There were other goals in this article like diversity shopping opportunities and providing low-cost retail space to encourage new businesses. But how do we diversify our shopping opportunities when we have small storefronts that cannot hold a lot of product? What kind of variety can a business offer in less than 1,000 square feet? And who provides low-cost retail space to encourage new businesses? Building owners have expenses to pay, too. And how long do those low costs last?

Think business hasn’t changed? When was the last time you went to the Plattsburgh mall? Today’s mall in Plattsburgh is a shell of what it used to be. In the food court we had a Philly steak place, Taco Bell, Subway, a pizza place, a Chinese eatery, a Mediterranean eatery, a chicken place and a Burger King. Today the steak place, Chinese and Mediterranean eatery, pizza place, chicken place and Burger King are gone. You had to look hard to find a place to sit and eat, but not anymore. On a Saturday afternoon the food court is empty. And you can almost drive a car down the main walkway and not hit anyone. It’s sad, but a reminder of how things have changed.

. . . .

Long gone are the days when customers would break your doors down if you just opened your store. If today’s retailers can’t get creative and find ways to bring in customers, they’re dead. When I was growing up, a 10 percent off storewide sale got everyone’s attention. Today 10 percent off gets nobody’s attention. Folks can find all the bargains they want in the comfort of their own home, and many do. I’ve also heard stories of folks who split up when they go shopping, and talk back and forth comparing prices on their phones.

So if we think that by putting in street trees, decorative light poles and sidewalks, we’ll somehow fill our empty storefronts, think again. If we’re not careful, we’ll be grasping at straws in order to fix a problem that we can’t fix. The internet has taken business away from every retailer in town, and if they tell you that’s not true, they’re probably lying.

And if you think that by hopefully getting a $10 million grant, we can fix things, I don’t think we’re being realistic. Perhaps instead of a grant, today’s retailers or would-be retailers need lessons on how to deal with competition, particularly on the internet. That’s more realistic.

Link to the rest at the Adirondack Daily Enterprise and thanks to DM for the tip.

As BookExpo and New York Rights Fair Open: Warnings for Publishers

30 May 2018

From Publishing Perspectives:

‘Your competitors like Netflix, Amazon Prime and Audible,’ publishers will hear this year at BookExpo and the rival rights fair, ‘are more than willing to fill the gap.’

. . . .

The reality, he says, is that “big data” is not really the stuff of most publishers’ future traction in a digital world. Something that may well seem like “little data” is, because it’s more available, readable, and actionable than the “big data” operations of major tech forces in the marketplace.

And the “invitation to a wild ride” he’s talking about is one that some will not accept gladly. It requires studying and analyzing many available “tracks” and trends at once, right down to what’s in a publisher’s “own backyard,” as we might say. “Who on your staff and around your own house reports back, in some structured way,” he asks, “on what they read, or how their kids operate their smartphones?”

What Wischenbart says he’s seeing is that even in the largest houses, such as Penguin Random House with its armada of imprints “acting like little companies,” the corporation can certainly engage in larger data activities, “but they don’t have the tool set,” he says, “to listen to what their employees are doing.”

. . . .

“[E]ven traditional readers—a majority of them urban, well-educated and older than 40—have seen their ‘mobile time’ rising from a modest 26 minutes in 2012 to more than one hour in 2017.”

Among Millennials, he says, “mobile time” may be expanding to as much as three hours per day.

But look at corresponding numbers in publishing markets that Wischenbart cites in his new article.

In Germany, data in Wischenbart’s report shows more than 6 million book buyers disappearing in the past five years . . . . Today, publishers there, he says, see a maximum audience of some 30 million in a total population of 80 million.

. . . .

Wischenbart has his fictitious publisher say to herself, “We need to stick to our bread and butter, to the rare books that hit the top of the charts, the well-established authors. Well, we even need the copy-cat income, or other cheap thrills, to simply secure a continuous income.”

But is that true? Wischenbart agrees in an interview with Publishing Perspectives that the blockbuster isn’t where publishers can afford to focus today, and not only because we’re in a largely blockbuster-less drought in the US market.

Wischenbart agrees that the buyer of the biggest blockbuster may do no more for the industry and for reading than pay for her or his one copy: these are generally not habitual readers. They’re novelty readers, readers drawn to the occasional breakthrough phenomenon, entertainment patrons who drop in on the world of books to catch a peak moment, then sail off to cinema, video, games, and music.

“I would phrase it this way,” Wischenbart says from his office in Austria. “First, the transformation that has been predicted now is here. It has arrived. We’re not talking about the future.

“And the transformation is much deeper” than many who became fixated on ebooks and perhaps today are transfixed by audiobooks’ uptake might think. “It’s a transformation of consumer behavior and habits.

“Second, such rough waters of transformation are creating higher risk” than publishers may have realized, not least because they’ve thought of “digital” as being about formats and largely now accomplished.”

. . . .

“I do see a difference in the US and UK markets and the rest of the world,” he says, in terms of how in the big US and UK markets, publishing has an upbeat sense that it knows where it’s going. “Hardly anyone in the industry in continental Europe or elsewhere feels so comfortable.”

The sense of greater comfort, command, and solidity in the UK and American markets, he agrees, may come from a plethora of self-congratulatory awards programs and morale-boosting coverage. “They’re always winning,” he says about such trends, which can lead a market to believe that all is going better than may be the reality.

. . . .

“Right now, my inkling is that a lot of truly critical information sits in drawers and on hard disks, underused, if noticed at all.

“We see, day by day, how publishing is getting ever more segmented. From formerly three distinct sectors, trade or consumer versus educational versus professional or academic, we have moved into an ever-thinner slicing of the cake that used to be served in the business of books.”

Link to the rest at Publishing Perspectives

PG has long noted that the traditional book business lacks even rudimentary data skills.

Its reliance on Neilson and other data sources that do not include data from Amazon, by far the world’s largest bookstore, is Exhibit A.

Exhibit B is Big Publishing’s schizoid frienemies attitude toward Amazon, its largest customer.

For those who are newcomers to the recent history of Big Publishing’s strategies for dealing with ebooks and Amazon, in 2012, the United States Department of Justice charged Hachette, HarperCollins, Penguin, Simon & Schuster and Macmillan with illegally conspiring with Apple to fix ebook prices in the United States.

This group was conspiring to keep ebook prices high to prop up sales of printed books. Amazon, which was selling ebooks at low prices to help sell Kindle devices and expand the ebook market, was the target of this conspiracy.

In 2013, after each of these large publishers had admitted to acting in violation of antitrust laws, a trial judge found Apple guilty of participating in this same illegal price-fixing conspiracy. Apple appealed and the trial court’s decision was affirmed in 2015.

Exhibit C is Author Earnings, a small organization that does have people with good data skills.

Beginning in 2014, Author Earnings began to release a series of reports that detailed ebook sales on Amazon by both traditional publishers and by individual self-publishers working through the Kindle Direct Publishing program. This series of reports demonstrated that ebook sales indie authors were a large and growing segment of the overall ebook market.

As additional Author Earnings reports were released periodically, they reflected the continuing growth in the market for indie-published ebooks. Indie authors came to dominate ebook sales in the romance, fantasy and science fiction genres.

Had Big Publishing been willing to hire employees with any sort of data skills, it could have duplicated the work of Author Earnings and developed even more sophisticated analyses because of access to its own ebook sales data (which was not made available to Author Earnings).

Big Publishing has consistently elected to base its business decisions on hunches generated by a small group of former English majors running its businesses in Manhattan. The “golden gut” school of publishing management has resulted in Big Publishing missing the ebook train and failing to treat Amazon as a potential window into the rapidly-changing and ever-growing ebook market.

Another disadvantage Big Publishing has is that, by New York City standards, it doesn’t pay very well. A twenty-something with data skills can receive a much larger salary from any number of other employers who are not in the publishing business.

PG will restrain himself from commenting on the blinkered view of the world common in the large European holding companies that own all but one of the largest US publishers. Suffice to say, New York publishing executives are not receiving a lot of phone calls and emails from Europe urging them to invest more in technologies and people that will position the publisher favorably for a new and different future.

Artificial Intelligence in Publishing

23 April 2018

From Personanondata:

Those of us who may be short on time and haven’t been able to get to that autobiography we’ve been meaning to write need worry no longer:  Artillect Publishing will do the work for you by scanning your online presence, merging some ancillary information and producing your sure-to-be best-selling biography.  Using artificial intelligence in its production process, Artillect is just one example of the increasing number of applications of artificial intelligence (AI) replacing inefficient processes, creating new products and adding insight to publishing.

News organizations including the Washington Post and Associated Press have been using artificial intelligence tools to create news reports for weather, sports and financial reporting where interpretation of the day’s (or game’s) activity can be fairly straightforward.   As these uses have grown in acceptance and utility, the use of AI to deliver more complex products is also growing.  AI tools can analyze text, images and data and deliver to a journalist sufficiently structured content around which they can build articles and stories.  AI tools can do this faster, more comprehensively and with greater accuracy than traditional research methods.  In analyzing text or images, AI tools can characterize the content: Positive/negative, liberal/conservative, for example.   Journalists have even used this capability to change editorial content to match specific political viewpoints, creating liberal, center and/or conservative versions of the same article.

. . . .

[J]ournal publisher Taylor & Francis (T&F) announced two partnerships with AI companies to add AI tools to their editorial processes.   In the first of these, T&F are working with Katalyst Technologies to create “contextual copyediting” using AI and natural language processing to assess and score the language quality of articles accepted into their journal’s workflow.  This use of AI is designed to make their editorial process more efficient by identifying and classifying journal submissions.

. . . .

StoryFit: Uses machine learning and data analysis to predict content marketability, improve discovery and drive sales for publishers and movie studios.

. . . .

Ross Intelligence: Using a combination of IBM Watson and proprietary algorithms, ROSS is the AI-driven successor to tools like LexisNexis and supports both legal discovery and legal research findings.

Link to the rest at Personanondata

The Father Of The Internet Sees His Invention Reflected Back Through A ‘Black Mirror’

25 February 2018

From National Public Radio:

In 1984, two men were thinking a lot about the Internet. One of them invented it. The other is an artist who would see its impact on society with uncanny prescience.

First is the man often called “the father of the Internet,” Vint Cerf. Between the early 1970s and early ’80s, he led a team of scientists supported by research from the Defense Department.

Initially, Cerf was trying to create an Internet through which scientists and academics from all over the world could share data and research.

Then, one day in 1988, Cerf says he went to a conference for commercial vendors where they were selling products for the Internet.

“I just stood there thinking, ‘My God! Somebody thinks they’re going to make money out of the Internet.’ ” Cerf was surprised and happy. “I was a big proponent of that. My friends in the community thought I was nuts. ‘Why would you let the unwashed masses get access to the Internet?’ And I said, ‘Because I want everybody to take advantage of its capability.’ ”

. . . .

Cerf admits all that dark stuff never crossed his mind. “And we have to cope with that — I mean, welcome to the real world,” he says.

. . . .

While Cerf and his colleagues were busy inventing, the young aspiring science fiction writer William Gibson was looking for a place to set his first novel. Gibson was living in Seattle, and he had friends who worked in the budding tech industry. They told him about computers and the Internet, “and I was sitting with a yellow legal pad trying to come up with trippy names for a new arena in which science fiction could be staged.”

The name Gibson came up with: cyberspace. And for a guy who had never seen it, he did a great job describing it in that 1984 book, Neuromancer: “A graphic representation of data abstracted from the banks of every computer in the human system. Unthinkable complexity. Lines of light ranged in the nonspace of the mind, clusters and constellations of data. Like city lights, receding.”

. . . .

But, it isn’t just the Internet that Gibson saw coming. In Neuromancer, the Internet has become dominated by huge multinational corporations fighting off hackers. The main character is a washed-up criminal hacker who goes to work for an ex-military officer to regain his glory. And get this: The ex-military guy is deeply involved in cyber-espionage between the U.S. and Russia.

Gibson says he didn’t need to try a computer or see the Internet to imagine this future. “The first people to embrace a technology are the first to lose the ability to see it objectively,” he says.

Link to the rest at National Public Radio

Now Google trains AI to write Wikipedia articles

20 February 2018

From The Register:

A team within Google Brain – the web giant’s crack machine-learning research lab – has taught software to generate Wikipedia-style articles by summarizing information on web pages… to varying degrees of success.

As we all know, the internet is a never ending pile of articles, social media posts, memes, joy, hate, and blogs. It’s impossible to read and keep up with everything. Using AI to tell pictures of dogs and cats apart is cute and all, but if such computers could condense information down into useful snippets, that would be really be handy. It’s not easy, though.

A paper, out last month and just accepted for this year’s International Conference on Learning Representations (ICLR) in April, describes just how difficult text summarization really is.

A few companies have had a crack at it. Salesforce trained a recurrent neural network with reinforcement learning to take information and retell it in a nutshell, and the results weren’t bad.

However, the computer-generated sentences are simple and short; they lacked the creative flair and rhythm of text written by humans. Google Brain’s latest effort is slightly better: the sentences are longer and seem more natural.

. . . .

The model works by taking the top ten web pages of a given subject – excluding the Wikipedia entry – or scraping information from the links in the references section of a Wikipedia article. Most of the selected pages are used for training, and a few are kept back to develop and test the system.

The paragraphs from each page are ranked and the text from all the pages are added to create one long document. The text is encoded and shortened, by splitting it into 32,000 individual words and used as input.

This is then fed into an abstractive model, where the long sentences in the input are cut shorter. It’s a clever trick used to both create and summarize text. The generated sentences are taken from the earlier extraction phase and aren’t built from scratch, which explains why the structure is pretty repetitive and stiff.

Link to the rest at The Register

PG thinks an easier job would be to create an algorithm that would produce interview quotes from European publishing executives.

He suggests seeding the algorithm with words like stupid, price, protect, booksellers, kill, enriched, Amazon, obscene, amuck, insane, predatory, greedy, la fréquencerépugnantsale américain, dégradégoulualiéné and vorace.

PG spent a few minutes re-familiarizing himself with websites that generate random words, sentences, etc., to see if he could locate one to inspire him with potential quotes from European publishing executives.

He did not find exactly the right tool for that task, but he did discover InspiroBot, a lovely site to help you create beauteous and profound social media posts. (Yes, it can be addictive.)

.....



 

New York Times CEO: Print journalism has maybe another 10 years

14 February 2018

From CNBC:

The newspaper printing presses may have another decade of life in them, New York Times CEO Mark Thompson told CNBC on Monday.

“I believe at least 10 years is what we can see in the U.S. for our print products,” Thompson said on “Power Lunch.” He said he’d like to have the print edition “survive and thrive as long as it can,” but admitted it might face an expiration date.

“We’ll decide that simply on the economics,” he said. “There may come a point when the economics of [the print paper] no longer make sense for us.”

 “The key thing for us is that we’re pivoting,” Thompson said. “Our plan is to go on serving our loyal print subscribers as long as we can. But meanwhile to build up the digital business, so that we have a successful growing company and a successful news operation long after print is gone.”

. . . .

Revenue from digital subscriptions increased more than 51 percent in the quarter compared with a year earlier. Overall subscription revenue increased 19.2 percent.

Link to the rest at CNBC and thanks to Delores for the tip.

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