Disruptive Innovation

Print’s dead — but so is digital

15 February 2016

From USA Today:

The Financial Times, in a considered piece the other day, has, if there was any doubt, pronounced the newspaper business deader than a doornail. But its more advanced point was pronouncing the digital news business at the point of death, too.

In the past six years the print newspaper business in the U.S. has shrunk by more than half, in the U.K., according to the FT, by one-third, precipitating the announcement last week of the closing after 30 years of the print edition of Fleet Street upstart the Independent. But the effort to reinvent the business online — in the mantra of publishing, “digital is the future” — presents, if possible, an even bleaker picture. Despite the online world’s crowing about advertising growth, and the belief of many publishers that online ad revenue would surely replace offline, the per-view price of a digital ad continues to drop, and ever-more ad dollars are concentrated with Google and Facebook. Now, to boot, there are ad blockers: nobody ever has to see a digital ad.

. . . .

The passing enthusiasm for paywalls as an alternative revenue stream has, other than for a few must-have titles, produced scant revenue as well as falling readership and a collapsing brand awareness for many newspapers.

. . . .

In other words, while neither consumers nor advertisers will pay enough for news to cover its costs in print form, they won’t cover the costs in digital either. Immediacy and efficiency and searchability and connectedness have not proved to be any more valuable than the slow delivery of yesterday’s news.

. . . .

At present, the FT concludes, there is no viable economic model for a written news product.

Link to the rest at USA Today and thanks to Shelly for the tip.

Technology disruption tends to squeeze costs out of products and services that experts regarded as low-cost already.

While PG grew up loving to read printed newspapers and still receives a couple of physical papers each morning, he’s an outlier and, on many days, doesn’t read them. Sometime soon, he’s likely to look at a renewal notice and decide to spend his money elsewhere. PG’s internet provider is set up on autopay so he’s never so much as a day late with his payment.

But, of course, newspapers aren’t special snowflakes like printed books.

Book It, Baby

18 January 2016

From TechCrunch:

Remember e-books? Those were the days, weren’t they? Those crazy few years when the fad of reading on a Kindle swept the nation. Now, of course, that fit of mass hysteria is behind us. E-book sales are falling, down more than 10% in 2015 — YA down 44%! — while used bookstores are coming back. Yes, that’s right; print is regaining its regal primacy; e-books are dead. Right?

You look suspicious. How strange. It’s almost as if you think that because those numbers come from the Association of American Publishers, they might indicate something rather different from the death of the e-book; they might be a signifier of the rise of smaller publishers not tracked by the AAP, and/or, the growth of online reading via eg Wattpad or Amazon’s Kindle Unlimited. Author Earnings argues that what we’re really seeing is that AAP publishers “have seen their collective share of the US ebook market collapse.” Mathew Ingram in Fortune adds, rhetorically, “Isn’t a drop in sales just a natural outcome of the publishers’ move to keep e-book prices high?”

Somehow I don’t think Amazon is running particularly scared. They added three million new Prime members this Christmas season, who can use Amazon’s Kindle Owners Lending Library to check out free books. Those don’t count as e-book sales. Neither does Kindle Unlimited, Amazon’s subscription service. I’m only one data point, but I’ve published eight books . . . and I can tell you that, for me at least, the ratio of “books read through Kindle Unlimited” to “Kindle copies sold” is about 8:1.

. . . .

I understand that publishers mostly want e-books to fail, largely because Amazon controls even more of the e-book market than the dead-tree market.

. . . .

So why doesn’t this status quo feel great? Because it provokes intense anxiety in everyone: publishers, authors, and readers.

Well, publishers, obviously, have to deal with the Amazon devil, whether they like it or not; and they have to worry about the cannibalization of their industry by micropublishers, online publishers, etc. Their share of the pie is shrinking (although it’s not going away.)

For authors, there used to be a well-known and well-understood path to success. A winding mountain path full of cliffs and high winds and deadly monsters, but a path nonetheless. Now publishing is more like a trackless jungle. You have to somehow find your way through it with no map, no compass, a really crappy knife, and a vague sense that the moss might grow on the north side of the trees, while hoping that you don’t walk under any leopards.

As for readers — they no longer know where to go to read the next book that transforms how they see the world. Buy a book on Amazon? Physical or e-? Or go to Smashwords, because you’ve heard they’re better for authors? Trek out to a physical bookstore? Check out something from Kindle Unlimited and/or the Kindle Lending Library, for free, before you commit your money? Surf through Wattpad or Feedbooks? It’s the anxiety of choice.

Link to the rest at TechCrunch and thanks to Elaine for the tip.

With his reader hat on, PG thinks this is a great time to be alive and reading. He finds lots of great ebooks at attractive prices and discovers new authors (and new sub-genres) all the time.

And he can do this on his computer, his tablet or his phone at a time of his choosing. What’s not to like?

Legacy publishers are catching up

11 January 2016

From Digiday:

Digital-native publishers like to crow about how being born on the Web gives them an advantage over their slower legacy counterparts. But when it comes to audience growth, many of those older brands have adopted the dark arts of audience development, which they’re using to speed up their own growth.

Several legacy publishers have seen big traffic gains over the past year. In November, the most recently available comScore rankings, Wall Street Journal Online was up 47 percent compared to a year ago. Forbes grew 38 percent. Hearst Digital Media was up 45 percent. Condé Nast Digital added 37 percent. CNN was up 22 percent. The Washington Post’s traffic was up 56 percent. This growth comes as some digital publishers have seen their own traffic growth slow down or stop altogether over the last year. Over the same period, BuzzFeed’s traffic was flat, according to comScore. Gawker Media’s was down 16 percent.

“There was a period where the traditional publishers let the new digital entities make a lot of progress by serving readers in ways the incumbents couldn’t,” said Hearst digital president Troy Young.  “But at this point, there is no functional difference between us and a Vox or Refinery 29 or any other next-gen player when it comes to tech, ad sales or how we create content everyday.”

. . . .


. . . .

“There’s been a mindset change, both toward having higher metabolism and a more digital DNA,” said Washington Post publisher Fred Ryan. “Our strategy has been to present content to as many readers as possible on every device and platform, never to any specific one.”

Link to the rest at Digiday

The E-Publishing Revolution is Definitely Not Over (Regardless of What You’ve Heard)

11 January 2016

From agent Laurie McLean via Anne R. Allen’s Blog:

We’re honored this week to host literary agent Laurie McLean of the Fuse Literary Agency.

. . . .

Thanks, Anne, for once again sharing your audience with me for my annual predictions of the year ahead in publishing.

. . . .

 1) Ebook sales are NOT stagnating.

I’ve always been a firm believer that you can make numbers and statistics dance to any beat you play and I believe the Big Five are skewing these numbers with their newly won agency pricing models.

Last year I saw several of my clients’ debut novels come out with an ebook price that was higher than the print book price. Check it out on Amazon. I’m not kidding. That’s part of the “decline” scenario, because honestly who would not buy a hardcover print book if it was cheaper than a digital book. Most people would make that choice.

And because of this, ebook sales from traditional publishers large and small seem to be declining.

Once you add Amazon ebook sales into the calculation, however, it all falls apart. Unfortunately that is not what most reports have done. They only concentrated on traditional retail sales numbers from their usual cast of publishers. So you’re getting fed false numbers. Ebooks are healthy and should continue to be healthy throughout 2016 and beyond. They are here to stay.

Once ebook pricing stabilizes, because while I’m sure the traditional booksellers and publishers are trying to help their physical retail partners (aka bookstores) by increasing print sales, they will see that they went too far and the smart ones will adjust. At least that is my opinion.

. . . .

 3) Kindle Unlimited will continue to become a larger part of KDP Select author revenues.

Amazon is always fine-tuning the customer experience. It’s their obsession. And with KDP, authors are their customers too. When Kindle Unlimited disproportionately rewarded short-story-size books, causing a proliferation of 14 page erotic fiction and episodic novels where 14 books should really be counted as one, Amazon adjusted things.

Now they pay per page read and this upset a lot of writers who were trying to game the system. But my hybrid client-authors have seen a steady increase over time in their Kindle Unlimited subscription revenue and I believe this is going to keep growing.

. . . .

5) Midlist authors will be pushed to self-publish.

This is not really a prediction since it’s been going on for years now. But if you’re a debut author it’s worth noting that if your debut trilogy or series or even a stand-alone book does not reach a high altitude in sales within the first 6 months (and I’m being generous), you’re probably going to see your advances dwindle, your future contracted books put out in digital only, or canceled altogether, and you had better be building your author platform with social media and some self-published material to be ready for the inevitable slide.

I’m not being an alarmist. I’m just trying to get you prepared in case it happens, as it is happening more often these days and I believe that trend will continue.

. . . .

7) Apple’s iBookstore will make a run for market share against Amazon.

I’m not sure about this one, but if anyone can take aim at reducing Amazon’s market share in books, it would be either Apple or Google.

Google Play is not getting any traction, so I don’t see Google busting through. But Apple got serious with its operating system finally and included iBooks as a stand alone app instead of making the reader jump through hoops on iTunes (where half of them probably bought the new Adele song instead!)

If Apple could just swallow their ginormous pride for one second and make an Android app for iBooks, imagine what could happen. Apple…are you listening?

. . . .

10) There will be a breakout novel created specifically for the mobile environment.

I have long believed that a shorter, episodic story, filled with cliffhangers, is perfect for the millennial generation of readers. You can read a quick bit while waiting in line for your latte or Frappuccino at Starbucks. Or when you’re on the light rail to work. Or if you’re bored with your lunch companions.

I know of one company, Tapas Media, that will launch this spring, that is combining a sexy gaming interface with what they’re calling “bite-size” content. For authors this might mean you want to start imagining what a story could look like if it were optimized for this new environment. Charles Dickens would be pleased!

. . . .

13) Indie authors will continue to take market share from traditionally published authors.

If you’re a fan of Hugh Howey and Data Guy and their Author Earnings report (and I am!), you already know that the statistics being handed to us by publishers and traditional organizations like Pew, BookScan, and BISG are way skewed towards the old publishing paradigms.

Indie authors ARE grabbing market share from traditionally published authors and I believe that trend will continue. In fact I think there is a schism in the reading marketplace developing between those readers who will not blink an eye spending $35 for a hardcover first edition book from their favorite author and those who regularly balk at paying more than 99 cents for an indie author ebook—or even a multi-author anthology!

This is especially true in genres like romance, science fiction, mysteries, fantasy, thrillers and graphic novels/comics. The traditional book market is shrinking while the indie market is growing. It’s not difficult to see where the growth is coming from Indie books are eating away at big book publishers. This should become indisputably obvious this year.

But also remember…books and reading are only one facet of the multi-billion dollar entertainment industry. It will be interesting to see how the publishing industry continues to evolve as it not only fights for profitability against books published outside of its purview, but also against movies, videogames, network television, streaming shows, and all the other entertainment items literally at consumer fingertips.

Link to the rest at Anne R. Allen’s Blog and thanks to Deb for the tip.

Adele Talks Decision To Reject Streaming Her New Album

22 December 2015

From Time:

When Adele released 25 on Nov. 18, her new album shattered sales records, earning the biggest first-week sales on record by selling 3.38 million copies in the United States. One place you couldn’t find Adele’s album? On streaming services like Spotify and Apple Music.

“I believe music should be an event,” she said in one of a series of recent interviews with TIME, speaking for the first time about the decision. “For me, all albums that come out, I’m excited about leading up to release day. I don’t use streaming. I buy my music. I download it, and I buy a physical [copy] just to make up for the fact that someone else somewhere isn’t. It’s a bit disposable, streaming.”

“I know that streaming music is the future, but it’s not the only way to consume music,” she said. “I can’t pledge allegiance to something that I don’t know how I feel about yet.”

. . . .

Adele’s decision follows Taylor Swift’s move in 2014 to remove her own music from Spotify; later, she sent an open letter to Apple asking that the world’s biggest music retailer change its policies on how artists are compensated. “It was amazing,” she says of Swift’s stand. “I love her—how powerful she is. We’ll get lumped together now because of it, but I think we would both feel the ability to say yes or no to things even if we weren’t successful.”

Link to the rest at Time and thanks to Julia for the tip.

As Downloads Take Over, a Turning Point for the Video Game Industry

21 December 2015

From The New York Times:

This holiday season could be remembered as a digital watershed for the games business, the moment when the old way of selling video games — on discs in boxes — finally gave way to downloads.

The industry has been pointed in this direction for years. But the signs of a sharp turning point have piled up in the last month, as new data points have painted conflicting pictures of the game industry.

On one hand, recent market research shows that physical game sales declined in November, and GameStop, a leading retailer, reported disappointing earnings that made its stock tumble.

On the other, game companies swear that things are going great. Big titles are setting sales records, and Sony, the leading maker of game consoles, says the latest PlayStation has been selling at a faster clip than any previous generation of the hardware.

Why the disparity?

A number of factors are at play, but none as significant as the industry’s march toward a future of games downloaded over the Internet rather than bought in stores, analysts said. All mobile games are delivered over the Internet, as are nearly all PC games. But the transition for console games — the biggest segment of the business — has been far slower. Large game files could take hours to download and quickly fill a console’s hard drive.

Now, faster broadband speeds and the bigger hard drives in the latest generation of consoles are reducing those obstructions.

. . . .

The bigger threat appears to be for retailers that fail to adjust to the changing market. The list of retailers that have been vaporized by the Internet is long, including Blockbuster in movies, Tower Records in music and Virgin Megastores in both.

. . . .

Eric Lempel, senior vice president for marketing at Sony’s American games division, agreed with the idea that many gamers want to talk to store staff members before making a purchase. The convenience of downloading a game directly to a console is appealing too, though.

“A lot of people are finding it easier to buy online,” Mr. Lempel said. “It’s open 24 hours a day.”

Link to the rest at The New York Times

Why There’s No Innovation in the Publishing Industry

15 December 2015

From The Digital Reader:

Joe Wikert has just inadvertently proven that the book publishing industry drowned most of its innovators at birth.

Earlier today Wikert published a post titled Whatever happened to innovation in the publishing industry?, and proceeded to unintentionally answer his question by example. At the beginning of his post, he cites the Kindle as the last major innovation in digital publishing:

Remember the excitement surrounding the launch of Amazon’s Kindle eight years ago? It was a clunky device, even by 2007 standards, but it was revolutionary. One of the original Kindle’s breakthrough features was the ability to download books via cellular network. The eInk display and extremely long battery life also led to its popularity despite the device’s hefty $399 price tag.

That was eight years ago and it’s hard to name even two or three other innovations that have had as significant an impact as the first-gen Kindle. Sure, the iPad was noteworthy but it didn’t exactly reinvent reading. And while today’s devices are faster and cheaper than yesterday’s they feature incremental improvements, not groundbreaking innovations.

The same can be said for all aspects of the digital publishing ecosystem, not just devices. The most interesting development over the past few years is probably the all-you-can-read subscription model. But any momentum there has been halted as Oyster is about to disappear and Amazon’s offering has no Big Five content. FWIW, I still believe in all-you-can-read models but only if they’re focused around a topic/genre and they avoid the unsustainable business model that crushed Oyster.

The Kindle was a disruptive innovation, that is true. It wasn’t the first ereader but it was the first truly successful one and it changed everything.

But there is a problem with citing the Kindle when talking about innovation in publishing, and that is the fact that the Kindle was developed by a retailer, and not by anyone in publishing.

. . . .

While Wikert wants to know what happened to innovation in the publishing industry, his examples show that by his standards there haven’t been any major innovation in a long, long time.

. . . .

Andrew Rhomberg, founder of the ebook startup JellyBooks, has a different take. “Publishers will tell you that they are innovating like hell – but on their terms,” he told me by email. “And there is some innovation through tech start-ups focused on publishing (as opposed to publishing start-ups using a bit of new tech), but a lot of oxygen has gone out of the room.”

Rhomberg is referring to the general level of arch-conservatism that infests book publishing, an industry that never met a new idea that it didn’t try to smother at birth.

That conservatism is why the Kindle was invented by a retailer, and it’s also why Rhomberg says that “the start-ups that are thriving, like Wattpad, Lost My Name and others, do not depend publisher assets, content, or IP”.

Link to the rest at The Digital Reader

The ebook is dead, long live the ebook

9 December 2015

From The Memo:

“We all took a breather when the fantastic growth of ebooks finally slowed. But that breather is over.”

It was with those words that Nigel Roby, chief executive of The Bookseller, introduced FutureBook 15, Europe’s largest annual publishing conference, in a timely warning to industry leaders not to get complacent about the so-called ‘ebook plateau’.

Back in January, Nielsen released research showing that UK readers spent £2.2bn on physical books in 2013, compared to just £300m on ebooks. Combined with comments from Waterstones chief exec James Daunt, who declared that sales of traditional books were rising strongly while demand for ebook readers had “to all intents and purposes disappeared” – a tale echoed by rival chain Foyles – it suggested that the book trade’s digital freefall had finally levelled out.

Cue a slew of victorious op-eds, including a piece from The New York Times this September which suggested that “publishing, while not immune to technological upheaval, will weather the tidal wave of digital technology better than other forms of media, like music and television.”

But at FutureBook, the overriding message was that the ‘new normal’ is a comforting but erroneous illusion. Michael Tamblyn – the CEO of ereading company Kobo, who delivered one of the most blistering keynotes of the day – believes that there is plenty more disruption to come.

“Ebooks are alive and well,” he told The Memo. “Self-publishing has continued to grow like crazy, although that doesn’t show up on most industry reports, and our digital customers continue to buy at greater rates than ever.”

. . . .

Unfortunately, innovation can prove particularly dangerous for any company with a big stake in a specific format. Today, Kobo releases its annual Book Report, which reveals that nearly 32% of British Kobo users now choose to read on apps. With Kindle sales in steady decline since 2011 and Barnes & Noble’s Nook division losing $70m a year, is this the end for the dedicated ereader device?

“Our report does illustrate a growing British trend towards using apps, but 68% of total reading time was still spent on a Kobo ereader device, so it’s clearly still a hugely popular way to read,” Tamblyn rebuffs. “The best customers do both – read on a device and on an app. They’re using digital to fit as much reading into their lives as possible. For example, last year we created the Kobo Aura H2O, with a waterproof and sandproof design, a direct response to insights from customers looking to read in the bath or the pool.”

. . . .

In short, publishing is currently falling prey to Amara’s Law: overestimating the effect of a technology in the short run while underestimating its effect in the long run. The ebook game is turning out to be more of a marathon than a sprint, but the message to publishers remains clear: it isn’t time to rest on your laurels yet.

Link to the rest at The Memo and thanks to SFR for the tip.

PG hadn’t heard of Amara’s Law before. Here’s a bit more detail:

Amara’s Law

Amara’s Law.  Roy Amara was a futurist, who worked for the Stanford Research Institute and the Institute for the Future.  Amara is probably most famous for his statement that “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run”. I’d submit that you can easily substitute the words “change”, “management decision” and most importantly “innovation” for technology and still be correct.  Our short term focus creates bias for ideas and innovations that will “pay off” now, and tends to discount anything that may “pay off” in the long run.  This is demonstrated by the many, many organizations that want to pursue the proverbial “low hanging” fruit.  By this they mean the simple but financially profitable ideas that will magically appear when they start innovating.

Link to the rest at Innovate on Purpose

PG’s experience with technology disruption in other areas is consonant with Amara’s Law. Many now-disappeared tech companies thought they would be dead much sooner than they actually expired, then became convinced their customers would continue to demand the old product/service/experience, etc. The idea that the company/industry would continue in substantially-unchanged form fit so well with their hopes and dreams that it quickly became an article of faith.

As with so many other phenomena, Monte Python sums the hopes of disrupted companies nicely:


Clicks Defeat Bricks During U.S. Retailers’ Black Friday Weekend

30 November 2015

From Bloomberg Business:

Online shoppers outnumbered their brick-and-mortar counterparts during U.S. retailers’ pivotal Black Friday weekend, underscoring the challenges facing American malls this holiday season.

More than 103 million people shopped online over the four-day weekend, which started Thursday on Thanksgiving, according to an annual survey commissioned by the National Retail Federation. That compares with fewer than 102 million who ventured into traditional stores, the trade group said.

The growth of e-commerce — including people using their smartphones to buy gifts — helped boost the total number of U.S. shoppers to more than 151 million over the weekend. That figure, which accounts for the overlap between online and offline buyers, topped the 136 million that the trade group had predicted. Other factors, including an earlier rollout of holiday promotions, also are changing consumers’ behavior, NRF President Matthew Shay said in a statement.

. . . .

The ritual of Black Friday — the post-Thanksgiving day that has long marked the beginning of the holiday season — also has changed. Frenzied consumers still line up in front of stores to take advantage of deals on toys and televisions, but crowds were smaller at many U.S. malls Friday. The event is also seen as an opportunity for window shopping, rather than spending.

At an Apple store in Greensboro, North Carolina, David Saltzman was browsing for a new iPad. He wasn’t planning to buy the device just yet. The 62-year-old, who works in marketing and communications, was just enjoying the day.

“It’s really nice outside,” he said.

. . . .

As more shopping shifts to the Web, Wal-Mart Stores Inc., Target Corp. and other traditional retailers are doing their best to ward off the e-commerce king: Amazon.com Inc. Target plans to offer free shipping on online orders this holiday season for the second year in a row. Wal-Mart, meanwhile, is encouraging e-commerce shoppers to take advantage of in-store pickup, an attempt to leverage its more than 4,600 U.S. locations.

Link to the rest at Bloomberg Business

When the Sharing Economy Comes to Publishing

25 November 2015

From Publishers Weekly:

The idealized vision of writers toiling away at their art in solitude may not be going anywhere, but it’s also not the sole vision of how writers will produce quality work in the near-distant future. Let’s face it: we are experiencing a cultural revolution brought on by the sharing generation, and sharing-economy practices will not ignore the publishing industry. After all, why do all stories need to be a one-way exchange of ideas from writer to reader? Why can’t stories be written collaboratively by multiple authors and shared as they are written?

Sharing technologies such as Uber and Airbnb have proven that huge efficiencies are available when you take a Dickensian business model and share the resources within a network. The sharing model can actually thrive more easily in publishing than in other industries, because stories can be easily crowdsourced and consumed in real time.

Traditional print publishing is gatekeeper driven. The traditional publishing model has focused mostly on large-scale print production and relies on a small number of retained authors with a proven track record of generating commercially successful work. The relationship between publisher and author is nurtured at a high cost. Publishers control their ROI by focusing on a small number of proven writers. With the emergence of e-books, the risk of picking the wrong author is reduced, but because of print’s continued focus on big authors, large publishing organizations are still a tough nut to crack for new authors or hard to categorize material.

Digital publishing is automation driven. Digital publishers saw an opportunity to automate many of the steps of traditional publishing, including digitizing books. This created cost efficiencies and increased the size of the market but the essential process of creating content remained the same. Hundreds of Internet-based publishers emerged to sell digital books, which gave birth to self-publishing and hybrid models in which authors pay partners to be published in exchange for a higher percentage of royalties. While digital publishing has expanded the number of published authors, it has not generated the revenues of traditional publishing, or garnered much respect for its content.

The sharing model of publishing is profile driven. In the newest sharing model of publishing, bits of stories are crowdsourced, and the community defines the best writing. Whereas the other models rely on the market to determine quality after the publishing process is complete, with customers using their wallets to vote, the sharing model publishes stories that have already been embraced by the crowd, eliminating the risk of publishing unwanted material. Instead of being process driven, the sharing model is profile driven. Readers and writers sit at the heart of this ecosystem of content generation, with their profiles defining the value they bring. A good analogy for how this model has evolved is the job postings market. Monster automated the process of scanning newspaper job postings. LinkedIn then focused on the profile of job seekers and allowed the community to crowdsource their careers.

Link to the rest at Publishers Weekly and thanks to Matthew for the tip.

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