Disruptive Innovation

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.

AR is the Future of Bookselling

9 February 2018

From Good EReader:

Augmented reality is the hot new trend and many developers are focusing on the gaming aspect. I think with the advent of the new Intel Vaunt and similar products, AR will not only be the future of shopping, but bookselling.

. . . .

They’re just regular old prescription or non-prescription glasses you would wear during the day and charge at night. There’s not a computer attached to your head or some weird bulky attachment to your existing glasses. They pair with your smartphone, which will keep costs low. Intel has stated that they are not going to market the glasses directly to consumers, but will partner with a firm to bring them to market, likely Amazon.

. . . .

I think the future of shopping in bookstores will be with AR glasses. When you walk into your average bookshop such as Amazon Books, Barnes and Noble or Indigo Books and Music there are precious few books that are front facing and the rest are stacked side by side. How do you know if a book is new, old, or highly rated?  I can imagine a day when your glasses will customized features for bookstore shopping, such as reviews that float over a book with the GoodReads API framework and clicking on a virtual review will give you everything you need to know.

Link to the rest at Good EReader

PG wonders whether anyone will be physically walking in to a structure at a fixed location with AR glasses. He bets Amazon (or a future Amazon competitor) will have incredible virtual bookstores you can walk through wherever you are with your AR glasses (or AR helmet or AR bodysuit). Alexa will probably be walking around Amazon’s AR bookstore, too, reminding people that their timers have expired.

Snowboarding in a New Media System

7 February 2018

From the Sierra Nevada College Eagle’s Eye:

Nick Visconti reminisces about his first two-page spread in Transworld Snowboarding. Months after the trick was shot, he held a physical copy of his scrapes, bruises, and triumph. The photo of him, upside down, one hand holding him against the wall and the other grabbing his board, 20 feet above the ground lives in print. Now, Visconti, a former pro, X Games medalist and social media influencer, navigates an industry where progression and style is measured through the immediacy of likes and followers.

“In one viral video or photo, anyone or any brand can far surpass traditional publications’ ability to connect to active buyers, potential customers or interested audiences,” Visconti said.

The media system and the way we gather information is in a drastic state of change, and in snowboarding the culture has moved from the pages of print magazines to the less tangible virtual world of digital media. The evolution of trends, tricks, and brand marketing strategies that were once tracked in the pages of Transworld, SNOW BOARDER, and Snowboard are a relic of snowboarding’s nascent past. Now, Snowboard Magazine exists only digitally, and other mainstream publications have slashed their print runs to as infrequently as once a year.

. . . .

“The majority of content consumed is in a digital platform, be it on a computer or a phone,” Tom Monterosso, senior editor and photographer at SNOWBOARDER Magazine, said. “Fewer kids are buying magazines and more kids have access to a phone or a computer than ever, so the content that comes out is consumed, digested and passed through much more quickly.”

Content is also conforming to readers’ dwindling attention. Marketing specialists for Boreal mountain resort and Woodward Tahoe who track analytics have discovered the average watch time for any video or photo across all social networks is 22-23 seconds.

“For web, it’s short, sweet and digestible,” Monterosso said. “Read it and keep browsing. For social, it’s ‘viral,’ which I personally believe is a terrible term.”

. . . .

As a brand that deals with marketing in this new world, Boreal has pulled out of most billboards, newspapers, and magazines and shifted its advertising to social media.

“I see much more value in getting 10 Instagram posts on SNOWBOARDER Magazine’s Instagram, than running a full-page ad,” Tucker Norred, Boreal marketing and communications manager, said. SNOWBOARDER Magazine has a following of more than 1 million on Instagram. Brands want access to that far-reaching platform.

Link to the rest at Eagle’s Eye

A changing book business: it all seems to be flowing downhill to Amazon

23 January 2018

From veteran publishing consultant Mike Shatzkin:

Amazon showed a willingness to sell ebooks for Kindle at prices below the costs publishers charged them, the big legacy publishers became alarmed. They could see no end to the switch to ebooks and it seemed logical to figure out a way to encourage competition across ebook ecosystems.

Their solution, aided and abetted by the new Apple iBooks ecosystem that debuted in April of 2010, was to move from “wholesale” pricing, where the retailer controlled the ultimate price to the consumer, to “agency”, where the publisher was the seller to the consumer and controlled the price. The intermediary — the retailer — was just an “agent” without pricing power.

This led to anti-trust action by the US government by which agency pricing was allowed, but only by newly negotiated agreements between each of the major publishers and their vendors, including Amazon. And the DOJ made sure that those agreements entitled the retail “agent” to discount from the publisher’s agency price, as long as the aggregated discounts to consumers didn’t exceed the retailers’ aggregate margin on those ebooks.

They needn’t have bothered. Amazon was essentially done with the strategy of discounting big publishers’ ebooks. And big publishers are left wondering whether they should be glad they got what they wished for. Let’s remember that those discounts from Amazon came from their share of the price; now with agency protocols, publishers can only discount ebooks by reducing their own take!

. . . .

Author-driven publishing just continued to grow as Kindle and the other ebook installed base grew faster and faster when smartphones and tablets both spread like wildfire and removed the need for a dedicated ebook device. With Amazon establishing a royalty rate for its own self-published authors of 70 percent of the selling price, equivalent to what agency publishers collected, successful self-publishers could make substantial money with very low-priced ebooks and zero or near-zero revenues from print.

. . . .

[E]ach week now, a handful of those genre Amazon Publishing ebook titles are handily selling more units than most of the titles on the NYT and USA Today’s best seller lists. Amazon found it relatively easy to grow market share in those areas where the bookstore sale, and even the online print sale, was diminishing in favor of the ebook.

. . . .

That has produced the world where big publishers with their agency-priced ebooks tell us that ebook sales have flattened or declined and that print book sales are holding their own, but Amazon says ebook sales are continuing to grow. And it is also a world where the big publishers are working feverishly, and largely futilely, to make their non-Amazon sales grow.

. . . .

Data Guy, first encouraged by indie author star Hugh Howey (one of the early beneficiaries of the changed marketplace), is now one of the principals behind Bookstat.com, an online-sales database built by scraping Amazon and other major online retailers. Bookstats’s realtime dashboard presents a consolidated, title-level view of the online US market, current through yesterday. It includes Amazon sales. It separates out Amazon Publishing from the indie authors Amazon enables. And, when used alongside data from Bookscan, Bookstat now lets us back out how brick-and-mortar sales alone are faring in relation to online.

. . . .

1. Amazon continues to grow its share of print and digital sales. It appear to be approaching half of all print sales and more than 90% of ebook sales.

Data Guy says:

On the print front, Amazon is indeed very close to half the US market: Our own Bookstat-derived total of 312 million print units sold by Amazon in 2017 is 45.5% of Bookscan’s total reported 2017 print sales of 687 million, which means Amazon sales now comprise the majority of Bookscan’s “Club & Retail” share. Even allowing for the other 15%-20% of US print sales that remain untracked by Bookscan, that puts Amazon’s US print share is at least 40%. And that’s ignoring another 10-15 million unreported Amazon print sales a year from CreateSpace titles that aren’t trackable through Ingram “expanded distribution.”

Amazon’s share of of US print sales is still growing rapidly. In the prior year, 2016, the 280 million Amazon online print sales Bookstat reports were only 41.7% of 674 million total units and in 2015 Bookstall’s 246 million print unit total for Amazon was only 37.7% of Bookscan’s 653 million reported units. So Amazon’s online print sales continue to grow by a double digit percentage each year.

Barnes & Noble — the next largest retailer of print books, from their public financial reporting, was by our math contributing 23% of Bookscan’s total in 2017 — which means that B&N has shrunk to where it now moves only half as many print books a year as Amazon, and B&N’s own financials show those remaining B&N sales are shrinking by 4% a year.

. . . .

2. The overall market is growing, but Amazon Publishing and indies are the growing segments. All legacy publishing, including the Big Five, are sharing from a diminishing pool of “what’s left” after that growth.

. . . .

3. Legacy publishing below the Big Five is suffering more, seeing their market share increase at Amazon even faster than the major houses are.

. . . .

In ebook sales, both Big Five and non-Big Five legacy publishers have ceded a huge chunk of market share to non-traditional players over the last several years; roughly half of the ebook market in unit terms, and nearly a third of it in dollar terms.

Link to the rest at The Shatzkin Files

PG has witnessed disruptive change driven by new technologies in several different industries (and participated in more than one of those changes).

From that viewpoint (admittedly personal), PG suggests that no industry has reacted to a disruptive innovation – ecommerce and ebooks – in a more pathetic and self-defeating manner than Big Publishing and its bricks-and-mortar sales and distribution infrastructure.

At every major juncture, when faced with a decision, Big Publishing has chosen the wrong path.

Antitrust violations, understanding ebooks in the marketplace, allying itself with Apple and against Amazon, failing to hire people who might have had a chance to revive a moribund industry (It’s too late now.), engaging in the sleaziest tactics with authors (Hello Harlequin!) etc., etc., etc.

PR spinmeisters (“digital fatigue” “back to print), trying to get the Justice Department to bring an antitrust case against Amazon for selling ebooks at low prices, looking at opportunity and seeing dystopia and so forth.

The 1968 Book That Tried to Predict the World of 2018

2 January 2018

From The New Yorker:

If you wanted to hear the future in late May, 1968, you might have gone to Abbey Road to hear the Beatles record a new song of John Lennon’s—something called “Revolution.” Or you could have gone to the decidedly less fab midtown Hilton in Manhattan, where a thousand “leaders and future leaders,” ranging from the economist John Kenneth Galbraith to the peace activist Arthur Waskow, were invited to a conference by the Foreign Policy Association. For its fiftieth anniversary, the F.P.A. scheduled a three-day gathering of experts, asking them to gaze fifty years ahead. An accompanying book shared the conference’s far-off title: “Toward the Year 2018.”

The timing was not auspicious. In America, cities were still cleaning up from riots after Martin Luther King, Jr.,’s assassination, in April, and protests were brewing for that summer’s Democratic National Convention. But perhaps the future was the only place left to escape from the present: more than eight hundred attendees arrived at the Hilton.

. . . .

Invitees were carefully split by the F.P.A. between over-thirty-fives and under-thirty-fives—but, less carefully, they didn’t pick any principal speakers from the under-thirty-fives. As their elders mused on a future of plastics and plasma jets, without mention of Vietnam and violence in the streets, there was muttering among the younger attendees. Representatives from Students for a Democratic Society demanded time at the mike and circulated a letter questioning whether the conference was for “discussion or brain washing.”

. . . .

If participants on either side emerged from the Hilton ballroom confident of what 2018 would look like, they soon found themselves disabused about predicting 1968. A week later, Bobby Kennedy was shot dead, and the prospect of grasping the present, let alone the future, seemed further away than ever. And that was about when “Toward the Year 2018” arrived in bookstores.

more amazing than science fiction,” proclaims the cover, with jacket copy envisioning how “on a summer day in the year 2018, the three-dimensional television screen in your living room” flashes news of “anti-gravity belts,” “a man-made hurricane, launched at an enemy fleet, [that] devastates a neutral country,” and a “citizen’s pocket computer” that averts an air crash. “Will our children in 2018 still be wrestling,” it asks, “with racial problems, economic depressions, other Vietnams?”

. . . .

The Stanford wonk Charles Scarlott predicts, exactly incorrectly, that nuclear breeder reactors will move to the fore of U.S. energy production while natural gas fades. (He concedes that natural gas might make a comeback—through atom-bomb-powered fracking.) The M.I.T. professor Ithiel de Sola Pool foresees an era of outright control of economies by nations—“They will select their levels of employment, of industrialization, of increase in GNP”—and then, for good measure, predicts “a massive loosening of inhibitions on all human impulses save that toward violence.” From the influential meteorologist Thomas F. Malone, we get the intriguing forecast of “the suppression of lightning”—most likely, he figures, “by the late 1980s.”

. . . .

Oettinger is now the sole surviving “Toward the Year 2018” essayist to witness the era he predicted so well fifty years ago. For some attending the accompanying conference, the changes didn’t need nearly that long to unfold: Edwin Yoder saw the news profession digitize with a speed that rendered the most ambitious predictions quaint. “The huge press room at the G.O.P. convention in Kansas City in 1976 was a noisy din of typewriters,” he recalls now. “Four years later, it was eerily quiet, as if cushioned.”

Just as conspicuous, though, is what was missing altogether from the book. Not a single writer predicts the end of the Soviet Union—who in their right mind would have?

. . . .

 “We can see it now,” one newspaper mused. “Sane people in the year 2018 will be yearning for a return to simpler times and the ‘good old days’ of the 1970s.”

Link to the rest at The New Yorker

PG suggests that items like the OP should be a source of humility for those living in today’s world.

In every era, large numbers of people believe that, unlike people of previous generations, their day’s consensus has finally understood what’s important and not important, true and untrue, what will work and not work.

Fifty years ago, in 1968 (part of the era included in the good old days of the 1970s), one of the driving forces for craziness on college campuses was the Vietnam War. It was certainly not the only craziness, but the war and the likelihood of students having to serve in the military amplified the intensity of the craziness.

For male college students, the military draft could be avoided so long as they were full-time students. Those who graduated from or dropped out of college in 1968 lost their student deferments shortly after graduation. More than a few, regardless of their opinion about the war, were required to become soldiers and obey the orders they received to shoot other people, accept the likelihood they would be shot at in return, blow up other people, burn other people, etc., etc.

About 10% of those who served in the military in Vietnam became casualties, either killed or (more likely) wounded so severely they could no longer perform military duties. In part because of the nature of the war, mental illness, either short-term or long-term, was also common. For these and other reasons, avoiding the draft was a frequent topic of male student conversations as graduation neared.

In 1968, PG suspects most men who would be subject to military service knew someone who had been severely wounded, permanently disabled or killed in Vietnam.

Some college students would enter the military voluntarily to have some control over what branch of the service they would be a part of and how they would serve – a man who joined in the enlisted ranks was at the bottom of military hierarchy but could be finished with his mandatory military service sooner than an officer who enlisted would be. However, serving as a draftee generally involved a shorter period of service than enlisting into the military.

The Army and Marines included most foot soldiers directly involved in ground combat. Most draftees served in the Army, almost always as enlisted men. Junior officers in the Army and Marines were more likely than others to be shot at by enemy soldiers because they were directly involved in leading soldiers in battle.

The Navy was a mixture of enlisted personnel serving on ships or in shore installations generally isolated from the fighting and pilot officers who could describe exactly what a surface-to-air or air-to-air missile looked like when it was fired at them and how they tried to avoid being killed by the missile. Plus, the “Brown-Water Navy” consisted of officers and seamen who were assigned to small boats that patrolled marshy areas with heavy vegetation. The men of the Brown-Water Navy were subject to frequent ambushes and intense firefights with enemy soldiers who were hiding only a few yards away.

The Air Force was generally regarded as the safest service in which to serve. Anyone but a pilot could be pretty certain that he would not come under direct enemy first. The Air Force was also the most difficult service in which to serve.

Returning from service was also very strange. In prior wars, a group of men would train together, serve together for the duration of the war and return together when the war was over. During the Vietnam war, when a draftee or enlistee finished his term of service, unless he elected to continue his military duties, he would often go home by himself. A few days earlier, he might have been on a dangerous patrol in the jungle and today, he was walking through the airport in San Francisco, trying to resolve the contradictions, still jumpy with his battle reflexes warning him of danger lurking around every corner.

After the Vietnam War was over, the military draft was eliminated and all members of the military, male and female, are volunteers today. The Afghan and other middle eastern wars have been fought solely by volunteer soldiers and, unlike earlier eras, the demographics of members of the military and those who are not not are no longer similar.

Male Privilege would not be a thing on college campuses until many years after 1968. Male students during that era would have found rich irony in the concept.

The OP does not include any mention of the likelihood of large-scale wars in the future in 2018, 50 years after 1968. PG suggests this is unrealistic.

Here is a timeline of wars that have involved a significant percentage of the US population in the fighting.

American Civil War – 1861-1865 – More US casualties than any other war – 646,000 US casualties (2.385% of US population)

World War One – 1914-1918 – WWI began 49 years after the end of the Civil War – 320,518 US casualties

World War Two – 1939-1945 – WWII began 25 years after the end of the WWI – 416,800 US casualties

Korean War – 1950-1953 – Korean War began 5 years after the end of WWII – 128,650 US casualties

Vietnam War – 1964-1975 – (11 year duration) Vietnam War began 11 years after the end of the Korean War – 211,454 US casualties

War in Afghanistan – 2001-present – (17 years and counting) Afghan war began 26 years after the end of the Vietnam War – 20,904 US casualties (to date)

Iraq War – 2003-present – (15 years and counting) Began two years after the beginning of the Afghan war – 36,710 US casualties (to date)

PG suggests the history of wars in which the US has been and is involved does not suggest a future in which all major problems will be solved and the world can focus its efforts and resources on the improvement of humanity.

While PG is generally optimistic about the future of the human race, he finds it interesting that most major predictions for the future of the type exemplified in the OP do not mention anything about the armed conflicts of the future as if such conflicts will not have any impact on future society.

New Robot Laws Passed in San Francisco

18 December 2017

In the category of 21st century headlines.

From Euro Cheddar:

The number of delivery robots in San Francisco has just been decreased as lawmakers passed strict regulations pertaining to what’s now become known as ‘disruptive innovations’.

. . . .

Over the past year delivery robots started appearing on the sidewalks of San Francisco as companies like Starship and Marble developed business model robots as a service. The idea behind this is that robot companies would be contracted to food delivery apps to make deliveries. While many residents have welcomed this level of innovation as part of the future, not everyone is as positive about it. Norman Yee, the supervisor of San Francisco is not at all keen on robots roaming around the city’s streets. Yee claims that innovation is not always good for society and was the person who wrote the legislation.

. . . .

Only nine permits in total will be allowed at any given time and only three permits per company will be allowed. Robots are now only allowed to operate within the confines of certain neighbourhoods and on streets with sidewalks of a minimum width of 6 feet. Robots are also to be accompanied by a human at all times.

Link to the rest at Euro Cheddar

PG is a member of the State Bar of California, but he did not realize there were any old robot laws in San Francisco.

Stability in the book marketplace does not mean commercial publishers continue to maintain their share

14 December 2017

From veteran publishing consultant Mike Shatzkin:

Publishing reporters doing wrap up stories occasionally call me for impressions. From those conversations I have gleaned that the prevailing impression of where the book business is now is of “stability”. The consensus about adult trade is that ebook sales have stalled or perhaps even receded, that print is strong, and that the big publishers have beaten back the threat of disruption from indies that a few short years ago seemed like a massive threat.

But while that picture has accurate aspects, it is really incomplete. The world of commercial publishing — even factoring in the growth in juvie books and audio — is shrinking more slowly than it was a few years ago, but it is still shrinking. One “tell” is that Amazon doesn’t believe ebook sales are reducing, they see them growing. Part of that is that Kindle is taking market share from all the other ebook platforms (except possibly Apple iBooks, at the moment). Part of that is that Kindle has titles nobody else has, as some self-publishing entities just use the dominant platform and skip the rest. Part of that is that Kindle doesn’t just sell ebooks; it provides subscription access through Kindle Unlimited that in the aggregate logs a lot of eyeball hours. And almost no big publisher commercial content is included in Kindle Unlimited.

. . . .

The impression that big publishing is shrinking has anecdotal support. S&S CEO Carolyn Reidy . . . recently acknowledged that romance fiction had become very challenging for conventional publishers. Of course, genre fiction is precisely the area where indie authors and Kindle Unlimited have made the biggest inroads.

. . . .

But while maintaining ebook prices well north of ten dollars may be what Barnes & Noble and indie bookstores need to keep selling printed books, those prices cut publishers off from growing chunks of the market that prefer to choose from the wealth of much cheaper books on offer from indie authors and smaller, often digital-first, publishers.

. . . .

The under-reported media story of the 21st century is how well book publishers have adapted to their new world, better than their counterparts in any other print content business. Top line revenue for the majors is flat or shrinking slightly, but profits have been maintained. One big reason for that is that returns go down as sales move online, and print sales are now in the neighborhood of half online. Profitability in these circumstances underscores the point that Amazon is the most profitable account for just about every publisher. It moves half or more of the books, requires minimal staffing to cover, and has, by normal standards, very low returns.

The challenge, of course, is that Amazon has no interest in being publishers’ most profitable account. Amazon does everything they can to claw back margin from publishers and always has a looming threat with their own publishing program, which at any time could reconsider the idea it abandoned a few years ago of going after big trade books outside the genres.

Link to the rest at The Shatzkin Files

PG was a little hard on Mike Shatzkin in his last TPV comments that referenced one of Mike’s posts.

The process of a particular style of creative destruction, described as disruptive innovation by now-famous Harvard Business School professor Clayton Christensen in his 1997 book, The Innovator’s Dilemma, is something PG has observed over and over, primarily among technology companies, but not limited to that business sphere.

PG is not alone in his appreciation for Professor Christensen. The Innovator’s Dilemma has been included on countless lists of the best business books of all time. See, for example, herehere, here, and here.

A few of the victims of disruptive innovation in the technology world, a space with which PG is quite familiar, include names that were once dominant in their industries: Kodak, Nokia, Blackberry, Wang, Sun, Lotus, WordPerfect, Borland, and Novell, to name just a few.

Disruptive innovation has impacts far beyond traditional technology companies, however.

Apropos of the bookstore world, major retail companies and industries based upon people coming into physical spaces to purchase products have either disappeared or are disappearing in the face of technology innovations including, but not limited to Amazon’s. See, for example:  Sears, Montgomery Ward, Macy’s, KMart, Blockbuster and Borders.

More than 300 retailers have filed for bankruptcy this year, including Gymboree, The Limited, Radio Shack (again) and discount shoestore chain, Payless ShoeSource.

According to Time, 1,500 shopping malls were built in the U.S. between 1956 and 2005, but, today, these great retail inventions of the latter part of the 20th century, are closing down at an increasingly rapid pace. Between 2010 and 2013, mall visits during the holiday season, the busiest shopping time of the year, dropped by 50%.

There are still about 1,100 malls in the U.S. today, but a quarter of them are at risk of closing over the next five years, according to estimates from Credit Suisse. Other analysts predict the number of malls closing be even higher.

Again, in Time:

A growing number of Americans, however, don’t see the need to go to any Macy’s at all. Our digital lives are frictionless and ruthlessly efficient, with retail and romance available at a click. Malls were designed for leisure, abundance, ambling. You parked and planned to spend some time. Today, much of that time has been given over to busier lives and second jobs and apps that let you swipe right instead of haunt the food court. Malls, says Harvard business professor Leonard Schlesinger, “were built for patterns of social interaction that increasingly don’t exist.”

PG says bookstores aren’t special retail snowflakes. The forces impacting malls are no different in their effect on physical bookstores. The only remaining major US physical retail outlet for list-price hardcover/paperback books is, of course, Barnes & Noble. Borders has already disappeared as have B. Dalton, Coles, Crown Books, Hastings, Krochs & Brentanos, Mediaplay and Waldenbooks.

PG suggests that three categories of disruptive change are impacting the traditional book business:

  1. Ecommerce
  2. Ebooks
  3. Profitable self-publishing via Kindle Direct

If ecommerce alone is enough to radically change the world for many physical retailers, imagine what two additional disruptive developments will do to traditional publishers and retail outlets for books.

Mike notes a fourth major development in the OP: Amazon is the most profitable place for major publishers to sell books.

Viewed properly, ebooks are a gift from heaven for traditional publishing profits:

  1. Create and upload a digital file to Amazon and other ebook outlets.
  2. Periodically check to see how much money arrived via bank transfers.

Yet Amazon is traditional publishing’s Great Satan because (with no malice that PG has observed) Amazon is changing power dynamics in publishing.

For one thing, Amazon likes to sell things at low prices, lower than prices charged anywhere else, including other places where books are sold.

For a second thing, one of Amazon’s earliest decisions was to make it easy for authors to self-publish both ebooks and POD paperbacks. Amazon also made it profitable for a great many authors to self publish through royalty structures that are vastly more beneficial to authors than those in traditional publishing contracts.

Easy and profitable. What’s not to like?

In the OP, Mike quotes the S&S CEO as admitting that romance books “had become very challenging for conventional publishers.”

Well, of course.

Why? (besides easy and profitable)

Romance authors have traditionally been treated in a disrespectful and condescending manner by a great many mainstream publishers. Since romance has always (or at least for a long time) sold large numbers of books to loyal readers, PG has wondered why. Perhaps it’s a perceived social or class thing. Publishers may regard romance as a necessary evil of their business, not deserving of the star treatment they provide for authors writing about more respectable characters and subjects, the kind of people who would have attended Wellesley.

Perhaps as a result of past disrespect which has toughened them up, a lot of smart women who write romance were happy to give KDP and other epublishing platforms a try. The computers didn’t care if you attended Wellesley or not, plus ebooks paid a lot better, you were in control and could write as many books as you wanted to. Plus, your readers had no problems locating and purchasing your books without dealing with sometimes-arrogant book store employees.

Amazon hearts romance authors. What’s not to like about that?

(No offence is intended toward Wellesley graduates, whether they write romance or not. PG’s grandmother graduated from Wellesley a very long time ago. She was a very nice person with a college friend she called Bunny.)

In PG’s surpassingly humble opinion, a variety of poor business decisions extending over many years have made it likely that an increasing number of traditional publishers will cease to be profitable in the foreseeable future. Poor profitability has been masked in recent years through a large number of mergers and acquisitions, but eventually that solution will dry up.

When a traditional publisher runs into financial trouble and is acquired by an investment bank or some other entity with a modicum of financial acumen, guess what’s going to happen.

  1. Costs of the newly-acquired publishing business will be examined in detail with particular attention being paid to potential cost savings.
  2. Sources of income will be examined with their fully-loaded costs, including personnel costs associated with each stream of income, to determine their true profitability.
  3. The new owners will determine that ebooks are by far the most profitable part of the publishing business.
  4. The new owners will determine that a huge number of expenses are tied to printed book operations, including a large portion of the firm’s overall personnel expenses and costs of third-party service providers that enable printed book operations.
  5. The new owners will attempt to outsource tasks performed in-house such as editing and as much of the content acquisition labor as possible.
  6. Layoffs, including elimination of layers of management no longer needed in the leaner publishing organization, will be a rational step for new owners who want to harvest income from the publisher.
  7. If the real costs of print books cannot be reduced enough to reach target profitability, print prices will be increased.
  8. If print can’t be made profitable, print rights will be sold to the highest bidder and further layoffs will follow.

Needless to say, all the changes in traditional publishing directed by the new owners will result in substantial anxiety for a great many traditionally-published authors. At a minimum, after selling off remaining stocks of an author’s print books, future print runs will either be substantially reduced or eliminated, depending upon the profitability of the individual author’s print titles when considering all associated costs.

If financial analysis causes a traditionally-published author to fall into the harvesting profits bin, he/she will be a line on a computer ledger and all expenses associated with the author’s books will be cut to bare minimums.

Circling back to Barnes & Noble, PG’s assessment is that the company is coasting along, riding modest waves of print customers who are coming to Barnes & Noble as more and more meatspace retail outlets for physical books disappear. PG reads some of the transcripts of quarterly earnings calls for BN and has observed the quality of top management decline under the revolving-door CEO direction of Mr. Riggio. PG suggests that it is unlikely for any salvational innovation to appear from this group of employees.

In PG’s earnestly humble opinion, Barnes & Noble will either collapse a la Borders or transition into the hands of financial types who deal in distressed businesses a la Sears.

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