Disruptive Innovation

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.

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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.

Tech titans want to be masters of all media we survey

23 November 2015

From The Orange County Register:

The rising tech oligarchy, having disrupted everything from hotels and taxis to banking, music and travel, is also taking over the content side of the media business. In the process, we might see the future decline of traditional media, including both news and entertainment, and a huge shift in media power away from both Hollywood and New York and toward the Bay Area and Seattle.

This shift is driven by several forces: the power of Internet-based communications, the massive amounts of money that have accumulated among the oligarchs and, perhaps most important, their growing interest in steering American politics in their preferred direction. In some cases, this is being accomplished by direct acquisition of existing media platforms, alliances with traditional firms and the subsidization of favored news outlets. But the real power of the emerging tech oligarchy lies in its control of the Internet itself, which is rapidly gaining preeminence in the flow of information.

. . . .

In recent years, like Skynet in the “Terminator” series, the oligarchs have become increasingly aware of their latent power to shape both the news media and the political future. A prospectus for a lobbying group headed up by Mark Zuckerberg’s former Harvard roommate, suggests tech will become “one of the most powerful political forces.” The new group’s “tactical assets” include not only popularity and great wealth but the fact that “we control massive distribution channels, both as companies and individuals.”

. . . .

The transformation of media to online platforms has already precipitated an enormous shift from traditional advertising – largely seen on television, in movies and print media – to Silicon Valley-based companies. By 2013, Google’s ad revenue surpassed that of either newspapers or magazines.

This shift also previews a migration of geographic power from centers such as New York and Los Angeles and to the hubs of tech influence, most notably Silicon Valley-San Francisco and the Puget Sound area. Even as the new software-based media expanded over the past decade, traditional media such as newspapers, music, book and magazine publishing – all concentrated in the New York area – have atrophied. According to an analysis of Bureau of Labor Statistics data by Mark Schill of Praxis Strategy Group, periodical and newspaper publishing have lost some 250,000 jobs. Over the same time, Internet publishing and portals generated some 70,000 new positions, many of them in the Bay Area or Seattle.

To the new oligarchs, traditional media are holdovers from what one venture capitalist derisively called “the paper economy” that is destined to be swept away by the new digital aristocracy. As relatively young people – even Bill Gates is barely 60 – they will have the money, and the time, to disseminate their views both to the masses and the influential higher echelons.

One way to consolidate such influence – as happened with Gilded Age moguls like William Randolph Hearst – has been to buy up the former bastions of old media. Chris Hughes, a Facebook billionaire and Obama tech guru, has bought the venerable New Republic. Perhaps more importantly, the purchase of the Washington Post by Amazon’s Jeff Bezos, now the country’s fourth-richest person, has placed the tech oligarchy at the center of media in the nation’s capital.

Yet, over time, acquiring existing media may prove just a sideshow.

. . . .

The oligarchs are also moving into the culture business, with Amazon, YouTube (owned by Google) and Netflix becoming increasingly influential in Hollywood. And then, there’s Apple TV. The oligarchs may need to source from more established vendors on the East Coast or Hollywood, but they increasingly will control the financial purse strings as well as the critical distribution pipelines.

Link to the rest at Orange County Register and thanks to Julia for the tip.

The Past, Present and Future of the Printed Book

10 November 2015

From The Wire:

Hear that? That’s the sound of Johannes Gutenberg rolling in his grave. Amazon, the very company that has done the most to disrupt the industry surrounding the printing press, has opened a physical bookstore.

. . . .

The all-too-familiar tale of digital disruption that we’ve seen play out in television (Netflix), transportation (Uber/Ola Cabs), accommodation (Airbnb) and music (iTunes, Spotify) hasn’t quite applied to the printed word. This isn’t to suggest, however, that Amazon is throwing in the towel and plans to open any more bookstores, or even pursue it as a serious strategy; only that the march of technological progress hasn’t followed its usual course.

. . . .

Bookstores were disintermediated in two separate stages. The first stage was the rise of ‘e-commerce websites’ (a term that seems more antiquated every day), where customers could order physical books online and have them delivered straight to their homes. Two of the most prominent groups of book buyers – gift givers and readers who wanted the hottest young adult fiction title on the date of release – shifted over quickly. The rest followed, attracted by cheaper prices.

The next stage happened when Amazon co-founder Jeff Bezos stepped up on stage in 2007 to introduce the Kindle, a device that he assured people would “project an aura of bookishness” and would be less of “whizzy gizmo than an austere vessel of culture”.

E-book sales soared from 2008 to 2010 – one estimate puts it at as high as 1,260 percent – and many players within publishing industry started fearing for their lives. Questioning its own existence, American bookstore chain Barnes & Noble decided to play at dice and come out with its own e-reader, the Nook, in 2009.

Much of the anxiety and worry surrounding the industry reached its peak when bookstore chain Borders, a rival to Barnes & Noble, declared bankruptcy in 2011; though by that time Borders was more of a merchandising store and had unwisely invested millions into music and physical CDs in the years preceding the launch of iTunes.

In 2011, it appeared as if the digital transformation of the printed book (in developed Western markets at least) was well on its way to completion. Amazon announced that in the first half of 2011, sale of Kindle e-books had, for the first time, overtaken printed book sales in the U.S.

. . . .

The number of e-books sold in the US grew only by 43% in 2011  – which was no doubt great growth, but also a slight step-down from the triple digit growth of the previous three years. In the years after 2011, discounting a slight uptick in 2013, the growth of sales of e-books in most Western markets have remained in the low two-digits.

. . . .

To be fair, many of these estimates and figures are put out by the larger, more traditional publishers, and fail to take into account the boom in independent digital publishing (the space movie The Martian, which was released recently, was based on a book that was published through Kindle’s Direct Publishing initiative) that is being supported by Amazon.

. . . .

What’s holding back a complete digital transformation, a transformation of the likes that we saw in the digital music market, even in India? Here are a few possibilities:

1)  Price: This has perhaps been the most significant, and ultimately boring, factor. A number of analysts and publications are quick to point out that e-books aren’t a whole lot cheaper than their print counterparts. Even in India, for example, on Flipkart’s e-books section, the digital copy of Fifty Shades Darker is priced at Rs. 254: its physical counterpart is available for Rs.250. Customers who initially take the plunge in buying an e-reader may do so with the expectation of buying e-books for cheap and are usually left disappointed.

. . . .

On similar lines, perhaps we are starting to see that e-books are suitable for certain reading situations—for instance when travelling or when on an airplane. The advantages of e-books become less important, and in certain cases detrimental, when you look at other reading during other situations, such as curling up in bed on a cold, rainy night.

These reasons are the most interesting, simply because they indicate something inherent in the human condition and the way we interact with literature. It is for this reason that e-books may not wholly triumph; rather than being seen as a substitute for printed books, the way digital music replaced vinyl records, they may come to be seen as a complimentary reading option.

Link to the rest at The Wire and thanks to Roxanne for the tip.

Forget CDs — streaming music now makes more money for the U.S. record industry

2 October 2015

From Business Insider:

Streaming is no longer the future of the music industry. It’s the present.

According to RIAA statistics compiled here by Statista, streaming services like Spotify and Apple Music generated $1.028 billion in sales for the U.S. music industry in the first half of 2014, up 23% from last year. That’s still behind digital downloads, but that portion of the industry is shrinking — down 4% from the first half of last year, to $1.268 million.

As far as physical formats like CDs go? That segment is continuing its long plunge, with revenues dropping 17% from the first half of last year, and is now in third place behind downloads and streams.

Link to the rest at Business Insider

Of course, the music business is entirely different from the book business and it makes no sense to compare the two because snowflake.

11 Simple Reasons The Print Book Doomsayers Are Wrong

26 September 2015

From The Huffington Post:

Print book lovers have suffered long under the rise of ebooks and the smug condescension of tech idealists, happy to remind old-school readers that their beloved format is headed the way of the record or the VHS tape.

The death of books has been so completely taken for granted by many that a genre’s ebook sales have been used to argue for a genre’s relevance, or irrelevance, to younger readers.

Well, um, maybe rethink that one? According to The New York Times, print book sales are holding steady in 2015 — and ebook sales have hit a wall. “Digital books accounted last year for around 20 percent of the market, roughly the same as they did a few years ago,” writes Alexandra Alter. In fact, “E-book sales fell by 10 percent in the first five months of this year, according to the Association of American Publishers.”

As a print book lover and advocate, can I just say, with respect: I TOLD YOU SO I TOLD YOU SO I TOLD YOU SO! Ahem. Sorry about that.

. . . .

In fact, as I was writing this, I overheard a young colleague, who covers sports for HuffPost, casually remark, “I like to read a physical book, not just read on my phone.” Paper isn’t just the refuge of the old fogy. As Alter points out, studies suggest even digital natives prefer to read on paper.

. . . .

Here are just 11 simple reasons the print doomsayers have been wrong all along:

  1. Some beautifully designed books offer pleasure in themselves, as aesthetic objects. Why buy a generic ebook copy of a new novel when I could spend a few bucks more — or even, after recent ebook price hikes, the same amount — and get an aesthetically pleasing memento to fill your bookcase?
  2. While ebooks seem to encourage us to fly through a continuous stream of text, certain books just feel more real held in our hands and paged through meditatively. Personally, I will always prefer to read meaningful, thought-provoking books in print, easily able to flip back to previous passages and trace the passage of my reactions almost physically through the book, and I know I’m not alone.
  3. Many studies suggest reading on print is significantly better than reading on a screen, particularly in terms of how much we comprehend and recall.
  4. Some titles, like the latest Fifty Shades knockoff, we may prefer to enjoy privately on an ereader. But if you’re tackling Infinite Jest or the new Marilynne Robinson, you’d probably like to telegraph your accomplishment to those around you by brandishing the physical book. Petty, maybe, but we’re only human, right?

Link to the rest at The Huffington Post

From Wikipedia:

Confirmation bias, also called myside bias, is the tendency to search for, interpret, favor, and recall information in a way that confirms one’s beliefs or hypotheses while giving disproportionately less attention to information that contradicts it.

. . . .

It is a type of cognitive bias and a systematic error of inductive reasoning. People display this bias when they gather or remember information selectively, or when they interpret it in a biased way. The effect is stronger for emotionally charged issues and for deeply entrenched beliefs. People also tend to interpret ambiguous evidence as supporting their existing position. Biased search, interpretation and memory have been invoked to explain attitude polarization (when a disagreement becomes more extreme even though the different parties are exposed to the same evidence), belief perseverance (when beliefs persist after the evidence for them is shown to be false), the irrational primacy effect (a greater reliance on information encountered early in a series) and illusory correlation (when people falsely perceive an association between two events or situations).

A series of experiments in the 1960s suggested that people are biased toward confirming their existing beliefs. Later work re-interpreted these results as a tendency to test ideas in a one-sided way, focusing on one possibility and ignoring alternatives. In certain situations, this tendency can bias people’s conclusions. Explanations for the observed biases include wishful thinking and the limited human capacity to process information. Another explanation is that people show confirmation bias because they are weighing up the costs of being wrong, rather than investigating in a neutral, scientific way.

Link to the rest at Wikipedia

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