Disruptive Innovation

Reading in the Age of Amazon

18 December 2014

From The Verge:

Chris Green holds an envelope. At least, it looks like an envelope. In reality, it’s a piece of office copy paper that’s been cut and folded into the shape of a Kindle Voyage, the latest in Amazon’s bestselling line of e-readers. Green, the head industrial designer at Lab126, the secret lab where Kindles are designed, unfolds the paper to show it has been stuffed with everything that makes a Kindle: a CPU, a modem, a battery.

Green is a boyish sort, and he hands me his fragile bundle of electronics with a certain glee, but the most important thing in his hands is actually the paper itself. For Amazon, paper is more than a material for making prototypes. It’s the inspiration for the Kindle of the future: a weightless object that lasts more or less forever and is readable in any light. “Paper is the gold standard,” Green says. “We’re striving to hit that. And we’re taking legitimate steps year over year to get there.”

. . . .

Hundreds of millions of tablets and e-readers have been sold, but today we’re still inclined to think of a book as words on a page. Amazon’s success with Kindle has hinged on recognizing how much more they can be. So where does the company go from here? In a series of rare, on-the-record interviews for Kindle’s 7th anniversary, Amazon executives sketched out their evolving vision for the future of reading. It’s wild — and it’s coming into focus faster than you might have guessed.

. . . .

It’s been a decade since “Fiona” was first imagined, the codename Amazon gave to the first iteration of the Kindle. As recounted in The Everything Store, Brad Stone’s rollicking 2013 history of Amazon, Jeff Bezos commanded his deputies in 2004 to build the world’s best e-reader lest Apple or Google beat them to it. To Steve Kessel, who was put in charge of running the company’s digital business, Bezos reportedly said: “I want you to proceed as if your goal is to put everyone selling physical books out of a job.”

It took three years for Kindle to come to market. The first model wasn’t particularly beautiful: a $400, off-white chunk of plastic with a full QWERTY keyboard. But before the world had ever heard of an app store, Amazon had integrated its bookstore directly into the device. For the first time, you could summon almost any book you could think of within seconds, no matter where you were.

The initial, never-quantified run of devices sold out in five and a half hours, and soon Kindle became synonymous with e-reading. Amazon has never released sales figures for the Kindle, but analysts believe the company has sold more than 80 million of them, and Morgan Stanley estimated the devices would generate revenues of $5 billion this year. (Amazon declined to comment on sales figures.)

. . . .

“When you’re reading, you want to fall down the rabbit hole,” says Green, a native of northern England who came to Amazon after eight years with Bay Area creative consultancy Frog Design. Amazon has actually built a rabbit hole, of sorts: a reading room somewhere at Lab126, stuffed with comfortable chairs, where pinhole cameras study the way people really read. (Because test subjects are in there using prototype devices, I am not allowed inside.)

It’s in this room that Amazon learned people switch hands on a book roughly every two minutes, even though in surveys they claimed not to. (This is why the Voyage has identical page-turn buttons on both left and right.) The Voyage’s page-forward button is much bigger than page-back, because Amazon’s data showed 80 percent of all page flips are forward. As Green describes research like this, it seems likely that Amazon has spent more time studying the physical act of reading than any company before it.

. . . .

From the start, Amazon has defined its hardware mission narrowly: to build devices that disappear in the hand, with uniquely useful features, for a low price. “We would never make a gold thing, because that’s too distracting,” Green says. “There are many companies that create pieces of jewelry. We’re not going to do that, because that’s an added cost that takes away from the actual content.”

. . . .

There’s another dimension to the future of reading, beyond how we read. It’s what we read: who writes it, who publishes it, how it gets distributed. Nowhere are more important decisions being made about those issues than at Amazon’s Seattle headquarters. With physical bookstores in a state of seemingly perpetual decline, Amazon has achieved a dominant position: the company sells 40 percent of all new books in the United States, and two-thirds of ebooks.

On one hand, that represents less than 10 percent of Amazon’s overall sales. But even as the company has pursued its dream of becoming a place to buy anything, books have retained an outsized place in the corporate imagination. “Books are home for us,” says Russ Grandinetti, senior vice president of Kindle content. “It’s where we started. Not only is it a great business that we like, and many customers know us for, but it’s something about which we have a passion. A lot of us on the team are personally passionate about books. Books changed our lives.”

. . . .

The rise of self-publishing, which Amazon has heavily promoted, has led to an explosion of genre fiction. Kindle Singles, which allow authors to sell work of medium lengths, has become a home for projects no traditional publisher would consider. Cable TV, YouTube, and Netflix created avenues for new kinds of visual storytelling, and new ways to make money; the elimination of gatekeepers in the world of books is doing the same for text.

“Technologies change, and then what people make with them changes,” Grandinetti says. He points to the way cable allowed for both Breaking Bad, which told a single story over 62 episodes; and True Detective, a multi-season series that tells a complete story each year. “Nobody would take a chance on those TV shows 10 years ago, because the model didn’t exist. So even though the evolution of these media may taketh away in some places, it giveth in some others. And I think the same may be true in books.”

Link to the rest at The Verge and thanks to Nirmala for the tip.

President Pranab Mukherjee’s book triggers online-offline war

4 December 2014

From The Times of India:

It’s one of the most anticipated books of the year. But you won’t find it displayed in bookstores. President Pranab Mukherjee’s The Dramatic Decade: The Indira Gandhi Years goes on sale on December 11, his birthday next Thursday. But the sale will be exclusively online, that too on one website, for a window of 21 days. Only after that, you may be able to stroll over to your local bookstore to pick up a copy.

The exclusive deal between the publisher, Rupa and the seller, Amazon.in, has caused outrage and heartburn among brick-and-mortar bookstores, who are terming it as unfair and monopolistic. Some are planning to boycott the Indian publisher, while others have shot off emails registering their protest.

. . . .

E-commerce has seen a dramatic growth in India in the recent past. A recent study by Google estimates India’s e-commerce market to be worth $15 billion by 2016. Against the 8 million Indian online shoppers from 2012, this year saw the number rise to 35 million, according to the study, which projects the number to reach 100 million by 2016. Consumers have been seduced by easy accessibility and heavy discounts.

“It is an ongoing battle, and it will continue. It will tilt on the side with more muscle. It makes logistical sense for the publisher in terms of distribution. In such deals, the website typically assures the publishers of a minimum number of sales, which reduces risk for them. As for vendors, it brings them new customers,” explains Mayank Dhingra, who formerly ran an online and phone book-delivery service Dial-a-Book.

Bookstore owners, however, have a different view. Anuj Bahri of Bahrisons Bookstore is in favour of boycotting Rupa. “It is the biggest book of the year. Their policies cut out our trade. People come to us to browse, and say, ‘Oh it’s a damn good book, I’ll buy it online’. We can’t give the 40% discounts that online retailers give. And a bookstore is a bookstore. What does it matter if its online or offline?” says Bahri.

Link to the rest at The Times of India and thanks to Gargi for the tip.

To Gain the Upper Hand, Amazon Disrupts Itself

2 December 2014

From The New York Times:

Sometime last summer, a quarter-billion dollars went missing at Amazon.

Analysts were expecting the usual gangbusters third quarter. But it was about $250 million short of forecasts.

Here is one way to look at the disappointing results: Amazon, for all its heft, is starting to lose momentum. It was rejected by some customers who were put off by its acrimonious dispute with the publisher Hachette over e-books, while others found its prices less compelling than they once were.

But few things about the retailer are ever clear-cut, so here is another interpretation: Amazon is intentionally cannibalizing some major product lines — offering free or nearly free music, video and e-books — to draw tens of millions of people into its ecosystem.

Far from being weak, Amazon in this view is so strong that it is disrupting not only other retailers but also itself, knowingly and eagerly, as it seeks to leverage its powerful e-commerce operation to become a retail and entertainment colossus. It wants to sell devices, entertainment and services as well as basics like milk and toilet paper.

“Everything you buy, starting with your weekly groceries, will be flowing through one pipe called Amazon,” said Scott Galloway, a professor of marketing at New York University’s Stern School of Business. “They’ll have your credit card purchase history, be able to do data-mining on your needs, offer massive selection with a reputation for low prices.”

. . . .

 “I don’t think they want to own a piece of retail,” Mr. Galloway said. “They want to own all of it.”

. . . .

If Amazon means that prices are now higher than they were, that is something Brian A. Rosenwald knows all about.

A doctoral candidate in American history at the University of Virginia who needs to stretch his entertainment dollars, Mr. Rosenwald likes to buy hardcover mysteries so he can pass them on to his father. He has noticed his Amazon discount shrinking. Two years ago he paid $14.01 for the new volume by John Sandford in his Prey series. This year’s volume was released in the spring with a publisher’s list price of $1 more than the earlier volume. It never got lower than $17.32.

So Mr. Rosenwald is cutting back. Last year, he bought 17 printed novels from Amazon. So far this year he has bought three. “I’m shifting to buying more very lower-dollar digital items instead of more expensive physical items,” he said. “Even then, I’m almost entirely buying during sales.”

Link to the rest at The New York Times and thanks to Tom for the tip.

When the Forces of Disruption Hit Home

1 December 2014

From The New York Times:

I’ve been around long enough to have once marveled at the improbability of the fax machine — that can’t be real! — but I like to think of myself as modern. Which should mean that I’m a big fan of disruption, but that depends on who is being disrupted, doesn’t it?

I read on Friday that the price of taxi medallions in New York City had fallen about 17 percent, a drop created by competition from ride-sharing services like Uber and Lyft. The impact is remarkable because neither company possesses big capital assets, or a huge number of employees. Instead, they put a new user interface over cars and drivers already on the road. In the same way, Airbnb has remade the rental markets, not by buying properties, but simply by surfacing available units on the web to people in need.

In both cases, inefficiency was reduced by using software and smarts to create a new market of underused assets — and consumers have benefited.

. . . .

I work in an industry that has also been profoundly disrupted. The shift of news and information to the Internet meant that the heavy investment in trucks and presses that once served as a barrier to entry disappeared. Insurgents flooded in with new approaches that eliminated much of the inefficiency and created whole new streams of content. Again, great for consumers, not so great for the traditional news industry, because those inefficiencies were also profits by another name.

Right now, The New York Times is in the middle of a round of buyouts in an effort to cut 100 positions, to stretch existing revenue over a smaller cost base. The packages are generous — three weeks of salary for every year worked for union employees — and those who have been at the newspaper for at least 20 years are eligible for an additional payout of 35 percent of the total severance.

. . . .

At The Orange County Register, which has struggled through layoffs and misguided expansions, the delivery of the newspaper was interrupted after the company failed to pay The Los Angeles Times for the service. In November, reporters and other employees at The Register were asked to field phone calls from irate customers who didn’t receive their papers, as part of a “We Care” initiative. And, as my colleague Christine Haughney pointed out, employees who made 20 calls over two days became eligible to win “four Maine lobsters, fresh steamers and New England clam chowder.”

Now that’s some mighty disruptive thinking: Instead of hiring people to take care of customers, why not entice other employees to do it, and pay them in crustacean instead of cold cash?

It gets even more difficult to believe. Reporters are also among those now being asked to, um, deliver the newspaper.

People willing to rise early and deliver the paper on critical days would receive not cash, but gift cards.

“A full route — which averages about 500-600 newspapers — earns $150 in Visa gift cards,” a company memo read, adding, “as a novice, sorting papers and delivering a route typically requires between 3-6 hours to complete.” The memo then suggested that employees bring “a companion to help toss papers and navigate the route.”

Link to the rest at New York Times and thanks to Hugh for the tip.

PG says disruptive innovation can change any industry profoundly.

 

 

Narrative Science Raises $10 Million More for Its Automated Writing Software

29 November 2014

From re/code:

Most funding stories are more or less the same, which is why Re/code tries to avoid most of them: Company raises X amount of money, from Y companies, to do Z thing. Repeat.

And that’s precisely the kind of thing that Narrative Science can now do without any humans at all: The Chicago-based company’s software can sift through big piles of data and automatically create stories on its own.

Some of them you might encounter on the Web: Forbes, for instance, uses Narrative Science to create earnings previews and reports.

But while Narrative Science originally got a lot of attention from journalists (like me) who wondered if it might replace journalists (like me), the bulk of the company’s work now comes from corporate customers, who use it to create internal reports for employees and customers.

Link to the rest at re/code and thanks to Joshua for the tip.

Steve Albini on the surprisingly sturdy state of the music industry

18 November 2014

PG received a tip from Evan for an article about the evolution of the music industry. Evan suggests there are a lot of similarities between the development of the market for indie musicians and indie authors.

From The Guardian:

I’m going to first explain a few things about myself. I’m 52 years old, I have been in bands continuously, and active in the music scene in one way or another since about 1978. At the moment I’m in a band, I also work as a recording engineer and I own a recording studio in Chicago. In the past I have also been a fanzine writer, radio club DJ, concert promoter and I ran a small record label. I was not terribly successful at any of those things, but I have done them, so they qualify as part of my CV.

I work every day with music and with bands and I have for more than 30 years. I’ve made a couple thousand records for independent bands and rock stars, for big labels and small ones. I made a record two days ago and I’ll be making one on Monday when I get off the plane. So I believe this puts me in a pretty good position to evaluate the state of the music scene today, as it relates to how it used to be and how it has been.

. . . .

I hear from some of my colleagues that these are rough times: that the internet has cut the legs off the music scene and that pretty soon nobody will be making music anymore because there’s no money in it. Virtually every place where music is written about, there is some version of this troubling perspective. People who used to make a nice income from royalties, they’ve seen the royalties dry up. And people who used to make a living selling records are having trouble selling downloads as substitute for records, and they no longer make records.

So there is a tacit assumption that this money, lost money, needs to be replaced and a lot of energy has been spent arguing from where that money will come. Bitchiness about this abounds, with everybody insisting that somebody else should be paying him, but that he shouldn’t have to pay for anybody else. I would like to see an end to this dissatisfaction.

It’s worthwhile to remember from where we’ve come. From where this bitchiness originates. In the 1970s through the 1990s, the period in which I was most active in bands in the music scene – let’s call this the pre-internet era. The music industry was essentially the record industry, in that records and radio were the venues through which people learned of music and principally experienced it. They were joined by MTV and videos in the 80s and 90s, but the principle relationship people had with music was as sound recordings. There was a booming band scene and all bands aspired to getting recorded, as a mark of legitimacy.

But recording was a rare and expensive enterprise, so it wasn’t common. Even your demo tape required considerable investment. So when I started playing in bands in the 70s and 80s most bands went through their entire lifecycle without so much as a note of their music ever being recorded.

. . . .

As a yardstick for the economics of the day or for the era, in 1979 you could buy a 45rpm single for a buck, a new album for $5, go see a club gig for $1 or a stadium gig for $7. I know these things because I still have some old ticket stubs and price stickers on my records. Note the relative parity between the live show costs and the recorded music costs. A gradual inflation of prices remained under way through the 90s, making recorded music more expensive, though it remained the principal means of experience.

The whole industry depended on these sales, and sales depended on exposure. Bands on big labels toured, essentially to promote their recordings. And the labels provided promotional and logistical support to keep the bands on the road. This supported a network of agents and managers and roadies and promotional staff, so the expense was considerable.

Retail outlets also offered special placements and promotion: displays, posters, mentions in print ads, giveaways, trinkets and what were called end cap displays. Record labels paid handsomely for these promotions and the stores used the sale of these promotions as additional income. Chain stores especially relied on corporate chain-wide promotions, regardless what the stores might think their local clientele might like. It wasn’t uncommon to see big displays of hair metal bands in urban outlets where they couldn’t sell a single stick but the labels had paid for their utility, so up they went.

. . . .

So it was a leaky system, riddled with inefficiencies, but a lot of people made a living through it. Record store owners, buyers, employees, ad agencies, designers, club owners, label reps, A&R, producers, recording studios, publicists, lawyers, journalists, program directors, distributors, tour managers, booking agents, band managers, and all the ancillary services they required: banking, shipping, printing, photography, travel agencies, limos, spandex wardrobe, cocaine dealers, prostitutes. Because of this great bulk of the industry needed to sustain itself. Every facet of the industry was tailored to this need.

The most significant bit of tailoring was an accounting trick called recouping costs. The costs of making a record wasn’t borne by the record label, except initially. Those costs were recouped or taken out of the income the band might otherwise run as royalties. The same was true of all those promo copies, posters, radio pluggers and payola men, producers, publicists, tour support, 8×10 glossies, shipping, freight – basically anything that could be associated with a specific band or record was ultimately paid for by the band, not by the record label.

. . . .

In the end the bands operating under this system earned very little from their record sales, unless they were monumental stars. Often enough bands would conduct their entire careers with a label and never reach the point where they had sufficiently recouped to get paid anything at all. Now the label made its per-piece profit on every record sold. And could recoup the cost of any records unsold. And all those other people got paid using the money that would have otherwise gone to the bands as royalties. Unsurprisingly, those other people also got paid pretty well. It stands to reason that if the label is paying you with someone else’s money, the label doesn’t need to care how much you charge.

. . . .

Now bands existed outside that label spectrum. The working bands of the type I’ve always been in, and for those bands everything was always smaller and simpler. Promotion was usually down to flyers posted on poles, occasional mentions on college radio and fanzines. If you had booked a gig at a venue that didn’t advertise, then you faced a very real prospect of playing to an empty room. Local media didn’t take bands seriously until there was a national headline about them so you could basically forget about press coverage. And commercial radio was absolutely locked up by the payola-driven system of the pluggers and program directors.

. . . .

So these independent bands had to be resourceful. They’d built their own infrastructure of independent clubs, promoters, fanzines and DJs. They had their own channels of promotion, including the beginnings of the internet culture that is so prevalent today – that being bulletin boards, and newsgroups. These independent bands even made their own record label. Some were collectives and those that weren’t were likely to operate on a profit-sharing basis that encouraged efficiency, rather than a recoupable patronage system that encouraged indulgence.

That’s where I cut my teeth, in that independent scene full of punks and noise freaks and drag queens and experimental composers and jabbering street poets. You can thank punk rock for all of that. That’s where most of us learned that it was possible to make your own records, to conduct your own business and keep control of your own career. If a bunch of pimply glue sniffers could do it, we reasoned, then anybody could.

The number of records released this way was incredible. Thousands of small releases made their way into the “mom and pop” independent speciality stores, which then provided a market for independent distribution. It was the beginnings of an alternative to the label paradigm. It was cumbersome and slow but it was more efficient than a shotgun approach with the big labels, whose answer to every problem was to spend more of the band’s money on it.

. . . .

It was the beginning of what we would call the peer network. By mid-90s there were independent labels and distributors moving millions of dollars of records and CDs. And there was a healthy underground economy of bands making a reasonable income owing to the superior efficiencies of the independent methods. My band, as an example, was returned 50% of the net profit on every title that we released through our record label. I worked it out and that earned us a better per-piece royalty than Michael Jackson, Bruce Springsteen, Prince, Madonna or any other superstar operating concurrently. And we were only one of thousands of such bands.

. . . .

You may have noticed that in my description of the mass market music scene and the industry as it was pre-internet I made little mention of the audience or the bands. Those two ends of the spectrum were hardly considered by the rest of the business. Fans were expected to listen to the radio and buy records and bands were expected to make records and tour to promote them. And that was about all the thought either were given. But the audience was where all the money came from and the bands were where all the music came from.

. . . .

This audience-driven music distribution has other benefits. Long-forgotten music has been given a second life. And bands whose music that was ahead of its time has been allowed to reach a niche audience that the old mass distribution failed to find for them, as one enthusiast turns on the next and this forgotten music finally gets it due. There’s a terrific documentary about one such case, the Detroit band Death whose sole album was released in a perfunctory edition in, I believe, 1975 and disappeared until a copy of it was digitised and made public on the internet. Gradually the band found an audience, their music got lovingly reissued, and the band has resurrected, complete with tours playing to packed houses. And the band are now being allowed the career that the old star system had denied them. There are hundreds of such stories and there are speciality labels that do nothing but reissue lost classics like that once they surface.

Now look at the conditions from a band’s perspective, the conditions faced by a band. In contrast to back in the day, recording equipment and technology has simplified and become readily available. Computers now come pre-loaded with enough software to make a decent demo recording and guitar stores sell microphones and other equipment inexpensively that previously was only available at a premium from arcane speciality sources. Essentially every band now has the opportunity to make recordings.

And they can do things with those recordings. They can post them online in any number of places: Bandcamp, YouTube, SoundCloud, their own websites. They can link to them on message boards, Reddit, Instagram, Twitter and even in the comment streams of other music. “LOL,” “this sucks,” “much better,” “death to false metal,” “LOL”. Instead of spending a fortune on international phone calls trying to find someone in each territory to listen to your music, every band on the planet now has free, instant access to the world at its fingertips.

I cannot overstate how important a development that is. Previously, in the top-down paradigm allowed local industry to dictate what music was available in isolated or remote markets, markets isolated by location or language. It was inconceivable that a smaller or independent band could have market penetration into, say, Greece or Turkey, Japan or China, South America, Africa or the Balkans.

. . . .

In short, the internet has made it much easier to conduct the day-to-day business of being in a band and has increased the efficiency. Everything from scheduling rehearsals using online calendars, to booking tours by email, to selling merchandise and records from online stores, down to raising the funds to make a record is a new simplicity that bands of the pre-internet era would salivate over. The old system was built by the industry to serve the players inside the industry. The new system where music is shared informally and the bands have a direct relationship to the fans was built by the bands and the fans in the manner of the old underground. It skips all the intermediary steps.

Link to the rest at The Guardian and thanks to Evan for the tip.

A digital consensus?

11 November 2014

From FutureBook:

What does the industry think of its digital future? Are we more or less confident? How do we read? Who do we buy from? When will sales of digital books overtake sales of print books? Who wins?

The Bookseller’s Digital Census is the annual tracker of how the book business is managing the shift to a digital future.

. . . .

So how are we doing? The big news is that there is increased confidence that publishing has a role in this digital future, with the slowdown in growth of (and expectations for) e-book sales allowing everyone to take a breather.

. . . .

Most worrying, only one in seven of our respondents think publishing is ready for whatever is around that virtual corner, and when asked if publishers are investing enough in finding out “what comes next” few were confident. “Not enough,” appears to have been a typical response, alongside its opposite: “The new business models are not at all clear—we don’t want to throw good money after bad.”

. . . .

Moreover, in a constantly shifting world one thing does remain unchallenged: the dominance of Amazon. Most of us buy our e-books from the Seattle giant, and it is the platform most used by self-published writers. While the shift to tablets and smartphones suggests that other booksellers may soon start nipping at its heels, this is only slowly happening. For the first time in five years, the iPad has usurped the Kindle as the favoured reading device for the digital literati—and yet Amazon is where we buy the content.

. . . .

As one respondent noted, publishers ought to worry less about becoming distributors and worry more about the books, and their authors. As the Digital Census’ author Tom Holman writes, “authors are rarely entirely satisfied with their publishers’ efforts to sell books—and the digital revolution seems to have cooled their enthusiasm further”. In short, self-published authors are more satisfied with their own self-publishing efforts—despite the comparatively low sales many of them have achieved to date—than traditionally published writers are with their own publishers’ efforts.

Despite their largely successful transition, publishers will feel that they cannot win—and it is sign of how much the ground has shifted that authors feel they have the options and knowledge to speak out. “I appreciate they’re in a difficult position, but I don’t think they’re nearly responsive or strategic enough,” said one writer. Of traditional publishing, another wrote that it was “exciting, enjoyable, frustrating and ultimately disappointing”. Ouch!

Link to the rest at FutureBook

The disruptor and the undisrupted

4 November 2014

From FutureBook:

“The biggest skill is mostly philosophical: you have to appreciate the only constant is change. You might have to fundamentally reinvent every part of your business, from its business model to production, to interaction, to design, every couple of years—or every week, depending on the scale of what you are talking about.”

. . . .

Publishing feels somewhat different from this. And yet terms that we have recently adopted in the book business such as “agile publishing” come out of this environment. As Berkowski notes: “In my business, software is a living, breathing thing; you don’t put out an app then wait for it to bring in money. You build an app and it evolves with its users. What people want today is sure as hell not what they will want in six months’ time. The companies that really flourish on the customer and business side are the ones who just accept that there will continually be new ways to do things better.”

There will be some resistance to Berkowski’s views at FutureBook14, as there already has been on Twitter. When I asked a senior publisher for his response, the publisher quipped that he would like to address a tech conference and tell them how to do their jobs. That publisher’s reasoning is simple. Despite the tech disruption this media industry has faced since the early noughties publishing continues to live well. Much has changed, of course, but at least as much hasn’t. The business model did not die, in fact it barely blinked.

The digitalists who argued that publishing was about to be run off the road were wrong. They failed to see just how adaptable ‘old money’ could be. The tech companies came and in the case of Amazon, Google, and Apple they stayed but they have so far been unable to wrest the content away from the big publishers. By holding its ground publishing cemented its control over the key levers: the authors and their works. There is a belief among some publishers that so long as the framework around the business remains strong, readers will find the content however it is published. Their view of the tech giants is almost exactly the same as I have heard expressed about the big retail chains in the past: they do a job, but at a fundamental level they are distributors, not content creators. Or in the more colourful words of agent Andrew Wylie, trucking companies.

Publishers have a more noble calling. And the part publishers play in this meta-business of what it is to be a publisher — defending copyright, or fighting piracy, is vital to this view, as is the perception that if they don’t stand up for content, no-one will. Or as Bloomsbury executive director Richard Charkin, now president of the International Publishers Association, said in Sharjah this week: “We have companies in our industry now who do not care about our industry. They are more interested in selling lumps of metal (e-readers and tablets).”

. . . .

Not everyone sees these American internet giants as bad for books, just bad for publishers. For a lot of self-published writers the platform players who “care little about content”, have actually demonstrated the opposite: that content is what draws the audience in, and it has a value to them that is clear, present, and measurable.

The concern is that the very views that have got publishing this far, now place big publishing on the wrong end of the next disruption. In his rhapsody about Clayton M. Christensen’s The Innovator’s Dilemma, the hybrid writer Hugh Howey explores the assumption that “publishing executives aren’t idiots”, and yet they still run the same risks from disruption as they did a decade ago. For Howey, one of the biggest problems publishing faces is that it is trapped in a model designed to sustain its bloated margins. “One of the suggestions I made, and one I’ve harped on over and over since, is the need for a major publisher to close shop in NYC and move to more affordable real estate. Reading Christensen’s book, I’m convinced that this is the only way one of the Big 5 can thrive in the publishing world ten or fifteen years hence.”

Neither Berkowski nor Howey are clear-eyed enough about publishing to be able to confidently predict the future. But what do well is articulate a narrative of contant change that seems to me to be indisputible. At FutureBook last year, when proposing the publishing hackathon, WMA agent Simon Trewin talked of how publishing needed to make itself more robust to change by widening its gene-pool. “The danger of a small community is that it cannot form immunities against new diseases,” he said. At FutureBook14 Berkowski will talk about how publishers can look over the hills at what might be coming next, and make themselves more change-hardy.

Link to the rest at FutureBook

Value in the media industry is moving to the edges, and publishers are in the middle

30 October 2014

From GigaOm:

There’s been a lot of discussion recently about Facebook’s increasing role in how people get their news, and whether or not that is a good thing and/or what to do about it. But one of the smartest things I’ve read on the topic comes from freelance tech analyst Ben Thompson, who writes a blog called Stratechery — and who put Facebook’s dominance into context with a post about how value in the media industry is moving to the edges, and publishers are stuck in the middle.

. . . .

Thompson explains how companies like Largan have gained power, just as chip makers and software providers like Microsoft and Intel did during the rise of the personal computer — leaving the companies who actually assembled and sold computers in the middle, their profit margins dwindling as value moved to the ends: specialized manufacturers on one side, and services on the other.

. . . .

So for example, in the analog world in which newspapers, magazines and other forms of publishing controlled the distribution platform and therefore the channels through which content flowed, they also controlled much of the value. But new platforms have emerged — such as Facebook and Twitter and LinkedIn and dozens of others — and they have accumulated much of the value and market power that used to accrue to publishers and media companies. As Thompson puts it:

When people follow a link on Facebook (or Google or Twitter or even in an email), the page view that results is not generated because the viewer has any particular affinity for the publication that is hosting the link… if anything, the reader is likely to ascribe any positive feelings to the author. Over time, as this cycle repeats itself… value moves to the ends, just like it did in the IT manufacturing industry or smartphone industry.”

. . . .

In other words, Thompson believes that because of the disintermediating effect that the internet has on content, value is moving towards the individual creators of that content — writers, editors, artists, etc. — and towards the platforms that allow for discovery and/or distribution of that content (Facebook, etc.) and away from publishers and media companies of various kinds.

. . . .

So what does the future look like for those media companies in the middle of the “smiling curve?” Thompson doesn’t say, but it probably isn’t going to involve a lot of smiling — instead, it presumably involves trying to squeeze less and less revenue out of a market where they are rapidly losing control, and trying to form relationships with platforms like Facebook without losing even more.

Link to the rest at GigaOm and thanks to Matthew for the tip.

PG says this is one of the principal results of the disruption that ebooks and ecommerce have visited on traditional publishing.

In the old days, the author created the manuscript, the agent sold the manuscript to the publisher, the publisher took the manuscript and, with the help of a printer, turned it into a book, the distributor took a bunch of the books and put them in a warehouse from which smaller bunches were sent to bookstores/other retailers and the bookstores sold the book to readers.

Under this model, the manuscript was of no value to the bookstores and a lot of intermediate steps were necessary before the manuscript became salable to readers. Without the internet and in an era of mass broadcast and print media, an individual author had very few ways of affecting discovery of the book, which, for most books, happened primarily in bookstores and other B&M retailers.

Today, the author creates the manuscript and either converts it to an ebook or pays somebody to do so, Amazon takes the ebook and sells it to readers. Those are the only necessary parts of the ebook/ecommerce supply chain. Discovery of ebooks takes place online at Amazon, Facebook, Twitter, etc. The rest of the old supply chain is obsolete and an unnecessary expense.

The author and Amazon are the only places where significant value is created in the new supply chain.

The fight between Amazon and Hachette is about the dominant players in the middle of the obsolete supply chain trying to remain relevant and capture more of the value that they used to take for granted.

From Papyrus to Pixels

28 October 2014

From The Economist:

Fingers stroke vellum; the calfskin pages are smooth, like paper, but richer, almost oily. The black print is crisp, and every Latin sentence starts with a lush red letter. One of the book’s early owners has drawn a hand and index finger which points, like an arrow, to passages worth remembering.

In 44BC Cicero, the Roman Republic’s great orator, wrote a book for his son Marcus called de Officiis (“On Duties”). It told him how to live a moral life, how to balance virtue with self-interest, how to have an impact. Not all his words were new. De Officiis draws on the views of various Greek philosophers whose works Cicero could consult in his library, most of which have since been lost. Cicero’s, though, remain. De Officiis was read and studied throughout the rise of the Roman Empire and survived the subsequent fall. It shaped the thought of Renaissance thinkers like Erasmus; centuries later still it inspired Voltaire. “No one will ever write anything more wise,” he said.

The book’s words have not changed; their vessel, though, has gone through relentless reincarnation and metamorphosis. Cicero probably dictated de Officiisto his freed slave, Tiro, who copied it down on a papyrus scroll from which other copies were made in turn. Within a few centuries some versions were transferred from scrolls into bound books, or codices. A thousand years later monks meticulously made copies by hand, averaging only a few pages a day. Then, in the 15th century, de Officiis was copied by a machine. The lush edition in your correspondent’s hands—delightfully, and surprisingly, no gloves are needed to handle it—is one of the very first such copies. It was printed in Mainz, Germany, on a printing press owned by Johann Fust, an early partner of Johannes Gutenberg, the pioneer of European printing. It is dated 1466.

. . . .

Although this copy of de Officiis may be sequestered, the book itself is freer than ever. In its printed forms it has been a hardback and, more recently, a paperback, published in all sorts of editions—as a one off, a component of uniform library editions, a classic pitched at an affordable price, a scholarly, annotated text that only universities buy. And now it is available in all sorts of non-printed forms, too. You can read it free online or download it as an e-book in English, Latin and any number of other tongues.

Many are worried about what such technology means for books, with big bookshops closing, new devices spreading, novice authors flooding the market and an online behemoth known as Amazon growing ever more powerful. Their anxieties cannot simply be written off as predictable technophobia. The digital transition may well change the way books are written, sold and read more than any development in their history, and that will not be to everyone’s advantage. Veterans and revolutionaries alike may go bust; Gutenberg died almost penniless, having lost control of his press to Fust and other creditors.

But to see technology purely as a threat to books risks missing a key point. Books are not just “tree flakes encased in dead cow”, as a scholar once wryly put it. They are a technology in their own right, one developed and used for the refinement and advancement of thought. And this technology is a powerful, long-lived and adaptable one.

. . . .

Books read in electronic form will boast the same power and some new ones to boot. The printed book is an excellent means of channelling information from writer to reader; the e-book can send information back as well. Teachers will be able to learn of a pupil’s progress and questions; publishers will be able to see which books are gulped down, which sipped slowly. Already readers can see what other readers have thought worthy of note, and seek out like-minded people for further discussion of what they have read. The private joys of the book will remain; new public pleasures are there to be added.

What is the future of the book? It is much brighter than people think.

. . . .

Historically books were a luxury item. Having become cheap enough for the masses in the 20th century, in the 21st century digital technology and global markets have made them more accessible still. In 2013 around 1.4m International Standard Book Numbers (ISBNs) were issued, according to Bowker, a research firm, up from around 8,100 in 1960. Those figures do not capture the many e-books that are being self-published without an ISBN.

Many of those self-published books are ones in which traditional publishers would have had no interest, but which almost-free distribution makes worthwhile: do you feel like checking out some Amish fiction? The size of the text, as well as the size of the niche, becomes less of an issue, too; short stories and novellas are making a comeback. “Before there used to be too-big-to-carry and too-short-to-print,” says Michael Tamblyn, the boss of Kobo, an e-reading company. “Now all those barriers are gone.”

. . . .

[A]s Russell Grandinetti, who oversees Amazon’s Kindle business, puts it, the print book is “a really competitive technology”: it is portable, hard to break, has high-resolution pages and a “long battery life”. Technology companies that are used to consumers flocking to snazzy features and updates have found it surprisingly challenging to compete with a format of such simplicity, and consumers are uninterested in their attempts to do so. All most want is the ability to change font size, which is attractive to older eyes. Experiments with reinventing the presentation of books—by embedding sound and video inside e-books, for example—have fallen flat. Sales of e-readers, the most popular of which is the Kindle, are in decline. “In a few years’ time,” a recent report by Enders Analysis, a research firm, predicts, “we will look back at e-readers and remember them as one of the shortest-lived of all consumer media devices.”

You do not need a dedicated e-reader to read an electronic book. The multipurpose tablet devices which are replacing e-readers let you read books and—crucially—buy them whenever you like. Some forms of book benefit a lot. Heavy readers of genre fiction—romance, thrillers and science fiction—were early converts to the cheaper, more portable alternative. Other sorts of book have remained more stubbornly in print form, for various reasons. Physical books make better gifts; many people still want bookshelves in their homes. Parents who feel that their children are spending too much time with screens go for printed books as an alternative, which means a new generation is growing up in contact with print.

. . . .

“A bookstore is defending a very specific lifestyle, where you want to take time out of your day and write or think or read,” says Sarah McNally, owner of a bustling independent bookshop in Manhattan.

. . . .

Before the 19th century it was common for writers to publish themselves, a practice that carried no particular stigma, but imposed a significant burden of inconvenience on seller and buyer alike. One author in Paris had to direct buyers to his home on “Mazarine Street…above the Café de Montpellier, on the second floor using the staircase on the right, at the far end of the alley”. As publishing became a mass-market business in subsequent centuries, the self-published came to be seen as kooks or egotists, and treated as marginal in either case. Readers went to bookshops, bookshops bought from publishers and that was the way it was. Bookshops mostly refused to stock them.

Today self publishing has made a comeback. The internet enables people to sell their e-books and print books without the hassle of directing people to their homes or trying to get bookstores to display them. It also offers them success on a scale never before possible.

. . . .

Last year Amazon’s sales of self-published books were around $450m, according to one estimate; a former Amazon executive thinks the number is higher. In America about a quarter of the books that got an ISBN in 2012 were self-published, according to Bowker—almost 400,000 titles. In 2013 self-published books accounted for one out of every five e-books purchased in Britain, according to Nielsen.

. . . .

But the advantages of being “properly published”—editors, promotion, and the like—should not be oversold. “We have to be careful not to compare the reality of self publishing with the ideal of legacy publishing,” says Barry Eisler, a thriller writer. In 2011 he walked away from a publisher’s advance of $500,000 in favour of the self-publishing route; he says the decision paid off well. Susan Orlean, an author and a staff writer at the New Yorker, considered something similar for a recent book. “In a million years I would have never thought of that before,” she says. She thinks the day will come when publishers may have to start unbundling their services. “The mere fact that publishers make hardcover books won’t be a powerful enough argument. They will have to reimagine their role.” Publishers could start offering “light” versions of their services, such as print-only distribution, or editing, and not taking a cut of the whole pie.

. . . .

In 1471 [Niccoló Perotti] the humanist scholar complained to a friend, “Now that anyone is free to print whatever they wish, they often disregard that which is best and instead write, merely for the sake of entertainment, what would be best forgotten, or better still, be erased from all books.” His worries were echoed for centuries. “If everyone writes, who will read?” asked Christoph Martin Wieland, an 18th-century German writer.

Link to the rest at The Economist and thanks to Tina for the tip.

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