What the “Book People” Won’t Tell You: Print is Dead

From The Digital Reader:

I have been writing about industry trends in bits and pieces in each news story, but it has been a long while since I last pulled everything together, took a step back, and told you what I see.

I can sum it up in a single sentence: The major publishers are dead because they bet against digital, which is the future.

The thing about the major publishers is that they thought they could make the market go where they wanted.

They didn’t want ebooks to cannibalize print sales, so they conspired with Apple in early 2010 to bring about the Agency model. Then they doubled down on their bet with Agency 2.0, and hedged that bet by sabotaging subscription ebook services like Scribd and Oyster by saddling them with nonviable business models.

It is now 2017, and book publishing is in the later stages of a transition to digital.

. . . .

The major publishers bet against digital, and they continue to do so, and it is going to kill them in the long run. In fact, we can see them die bit by bit. First they dropped mid-list authors, then they started dropping best-selling authors.

Link to the rest at The Digital Reader

PG thinks the illegal collusion between the big publishers to force Amazon to set higher prices for ebooks was an important milestone on their path to suicide. They got together in various New York restaurants to engage in face-to-face groupthink.

Here’s a summary from Wikipedia:

The Publisher Defendants sold over 48% of all e-books in the U.S. in the first quarter of 2010. The Publisher Defendants along with Random House Publishing are the six largest publishers in the United States (collectively the Publishers) and are often referred to as the “Big Six” in the publishing industry. In 2009 Amazon.com Inc. had nearly 90% of the e-books industry. Amazon charged $9.99 for certain new releases and bestselling e-books which helped make it the market leader in the sale of e-books and e-readers with its Kindle.

Amazon’s price point caused discontent among the Publishers. The Publishers believed that the low price point was a problem for their sales of more profitable hardcover books. Approximately every three months, the CEOs of the Big Six would meet in private dining rooms in New York restaurants “without counsel or assistant present, in order to discuss the common challenges they faced, including most prominently Amazon’s pricing policies.” The Publishers used several different strategies to fight against Amazon’s pricing point, including selling e-books for the same price as their printed version through a continued wholesale model and “windowing” new releases. Windowing is a tactic that would delay the release of books to their e-book form for a certain window of time.

. . . .

Amazon sent a letter to the Federal Trade Commission complaining about the simultaneous nature of the demands for agency model agreements from the Publishers who had signed with Apple. By March, Amazon had completed agency agreements with four of the five publishers. During the negotiations over the agreements, the publishers would talk with each other and share information about what Amazon would concede with each. Apple was closely following all of this progress and Cue was in contact with the publishers. Following Amazon’s move to agency amounted to “an average per unit e-book retail price increase of 14.2% for their new releases, 42.7% for their NYT Bestsellers, and 18.6% across all of the Publisher Defendants’ e-books.”[2] The Publishers also raised the price of some of their New Release hardcover books so as to move the e-book versions into a correspondingly higher price tier. Amazon saw Random House (who for the moment had not joined Apple) e-book sales having an increase of 41%. Two studies showed that the Publishers who moved to agency model sold over 10% fewer units at major retailers. In contrast, other publishers’ sales increased 5.4% in the same period. In January 2011 Random House also moved to the agency model and raised the prices of its e-books, and then experienced a decline in its e-book sales. This allowed Random House to join the iBookstore.

. . . .

Beginning on December 8, 2009, Apple’s senior VP of Internet Software and Services, Eddy Cue, contacted the Publishers to set up meetings for the following week. During the meetings Cue suggested that Apple would sell the majority of e-books between $9.99 and $14.99, with new releases being $12.99 to $14.99. Apple also adopted the agency model which it used in its App Store for distribution of e-books. This let Publishers control the price of the e-books with Apple receiving a 30% commission. Apple also set up price tiers for different books. Apple also included a MFN clause in their contract with the Publishers which allowed for Apple to sell e-book at its competitors’ lowest price.

. . . .

On the day of the launch, Jobs was asked by a reporter why people would pay $14.99 for a book in the iBookstore when they could purchase it for $9.99 from Amazon. In response Jobs stated that “The price will be the same… Publishers are actually withholding their books from Amazon because they are not happy.”[2] By stating this, Jobs acknowledged his understanding that the Publishers would raise e-book prices and that Apple would not have to face any competition from Amazon on price.

This collusion between the top executives of five out of the (then) six major US publishers to destroy Amazon’s pricing model for ebooks helped accelerate the development of anti-Amazon/anti-ebooks groupthink throughout Big Publishing.

Later, when the Justice Department charged these publishers with illegal anti-competitive behavior and publicly humiliated their management by requiring an admission of guilt and forcing monetary settlements, the anti-Amazon/anti-ebook sentiment blossomed into something of an industry-wide psychosis.

Publishing couldn’t live without Amazon and hated the company even more for their dependence upon it.

When Borders, the second largest bookstore chain in the US, went bankrupt in 2011, that shocking event should have set alarm bells ringing in CEO offices of every publisher.

The second-largest bricks-and-mortar customer for every major US publisher had just imploded. Perhaps it was time for some new thinking? Would the future be a lot different than the past? What a silly thought.

Borders would have been happy to sell its assets to virtually any willing purchaser, but smart money was not interested. Neither was dumb money and about 650 retail bookstores in the US just disappeared.

At the time of the Borders bankruptcy, reporters and business writers (often relying on traditional publishing sources) concluded that Borders had made a big mistake by working with Amazon to sell ebooks. On the other hand, Barnes & Noble was brilliant because it had spent lots of money to build up its Nook business as a viable competitor to Amazon’s Kindle.

Amazon Derangement Syndrome was running rampant through the publishing business and that, combined with widespread ignorance of technology among management, blinded them to a simple fact that was evident to anyone with an ounce of internet savvy: Amazon was much, much better at selling books (and a lot of other things) online than Barnes & Noble and the gap between the two organizations was growing at a rapid pace.

The traditional book industry and its convoy of pet pundits have not gotten any part of selling online right for well over ten years and show no indication that anything is going to change in the next ten years (to be clear, PG is not predicting that Big Publishing has ten more years ahead of it).

Barnes & Noble is running on fumes. Whether it continues to sink into the sunset or suddenly implodes won’t impact the overall trajectory of the retail book business. It’s dying. At this point, even if Barnes & Noble were able to hire talented management, PG thinks it’s too late for that to make a difference.

When Barnes & Noble is gone, what’s left for legacy publishing? A bunch of mom and pop bookstores. There may be some fancier moms and pops in Manhattan and Washington DC, but they’re all small businesses with tiny profit margins.

PG ran out of time before he could bloviate about traditionally-published authors heading for the exits and hedge funds taking over management of the gazillion legacy publishing contracts which represent the only value of Big Publishing.

Building our new house

From Medium:

I was struck by Jeff Jarvis’s recent polemic, ‘If I ran a newspaper…’ published on Medium.

In it, he quoted an unnamed editor’s description of the predicament he — and many of us — find ourselves in:

“We have two houses. One is on fire and the other isn’t built yet. So our problem is that we have to fight the flames in the old house at the same time we’re trying to figure out how to build the new one.”

He was, of course, describing the rock-and-a-hard place dilemma that’s beset legacy media brands for more than a decade now: We know print is declining fast, and the future’s digital, but the problem is most of our revenues are still in the former, and the latter will never generate the money we made back in the day.

I’ve lived in this cleft stick for most of my career. The legendary ‘tipping point’ is still talked about hypothetically years after it should have become a reality for more of this country’s legacy media — particularly in the regions. The tipping point comes when your digital revenue growth offsets your print revenue decline. Rather than waiting reluctantly for it to happen — or indeed trying to postpone it — we should have been doing everything to make it happen on our terms. Unfortunately, I think the industry dragged its feet for too long.

. . . .

We announced this week that we are creating a new, standalone and sustainable digital business that could be a model for similar enterprises across the UK and beyond.

At the heart of the new operation is a digital-only newsroom forged from the team that has made BirminghamMail.co.uk the fastest-growing regional news website in the UK for much of the past year. Thanks to my team’s efforts, we reach more than 50% of Brummies every week, and now we want to reach even more with our new approach.

At the same time, we want the new model to be completely self-sustainable, achieving a profit driven by programmatic and solus digital advertising, and not over-dependent on print upsell from legacy clients. There’ll be whole new revenue streams, too.

The new newsroom will be more than digital-first; it will be digital only.

. . . .

When you lose pounds in print, you only ever get pennies back online / we’ll never make enough money to have a newsroom as big as it was ten years ago.

True(ish), and true. Sadly, we know the future requires the business to be leaner and more flexible than we are now, and despite years of seemingly endless restructures and job losses, we will have to make further reductions. We are building the new model by asking the question: “What size newsroom can we afford, given what we know about our current and future digital scale, how much programmatic revenue we get, and how much new digital revenue we think is out there in the market?”.

Link to the rest at Medium

PG says the OP describes a constructive way to deal with disruptive innovation. “What would my business look like if I was starting it from scratch today?” It’s a much better management strategy than, “How can I preserve my existing business when the economics of the market it serves have completely changed?”

The more common strategy of downsizing, then downsizing some more, then further downsizing is self-defeating in the extreme.

  1. Employee morale tanks and stays tanked with deleterious effects on the enterprise.
  2. Talented new people who might like the idea of working in a particular business stay away because of justified skepticism about the long-term future of the business and a rational desire to avoid a sinking ship.
  3. The talent level of new hires is lower than that of veteran employees.
  4. Existing employees who can leave do leave, taking their experience and abilities with them.
  5. The percentage of staff who stay with the business because they can’t get a job elsewhere skyrockets.

PG considers himself typical of many traditional readers of printed newspapers.

Growing up, he pretty much read every newspaper that arrived in his home cover to cover every day. When he commuted to work by train, he bought and read one newspaper in the morning and another in the evening.

(Yes, my young friends, in large cities, some newspapers published every morning and others published every afternoon. Chicago had four major daily papers, two morning and two afternoon, plus at least a half-dozen other dailys devoted to particular audiences, African-Americans, for one example.)

When he didn’t commute via mass transit, PG had at least one daily newspaper delivered to his home, usually two.

A couple of years ago, PG observed many issues of the two daily papers he received were piling up, largely or completely unread. He stopped The Wall Street Journal, but still pays for access to the entire digital edition.

At first, he kept his subscription to the local daily paper because he has always wanted to support local news organizations. However, when a week or two would pass without him reading any physical papers, he quit renewing that subscription as well.

Perhaps based upon years of habit, PG’s delivery person has continued to drop the local daily on his driveway, despite PG not having paid for a subscription for several months. PG has wondered if the paper’s management is trying to artificially pump up its subscription numbers.

Why you’ll wear a body camera

A number of years ago, PG remembers reading a science fiction story about a future in which a large percentage of the population wore body cameras.

From TechConnect:

InfoTrends says people will take 1.2 trillion digital photos this year. That’s 100 billion more than last year and nearly double the number taken as recently as 2013.

The rate at which photo taking grows is currently clocked at a whopping 100 billion per year – that means each year humanity takes 100 billion more photos that it did last year.

I think that rate is about to accelerate. And the reason is wearable cameras.

As the cost goes down, quality goes up and ease of use improves (through miniaturization, better software and better batteries), wearable cameras will become more compelling.

These will arrive in the form of clip-on cameras, smartwatch cameras and cameras attached permanently or temporarily to glasses, including smart glasses.

. . . .

Just a few years ago, nobody could have predicted or imagined what’s now acceptable public behavior with a smartphone camera. People shamelessly pose and posture in public for selfies without embarrassment. They take pictures of their food and drinks in restaurants. They take selfies in the bathroom mirror.

. . . .

It turns out that the location of a wearable camera makes all the difference for how it’s used.

Badge-style clip-on cameras are acceptable for “lifelogging” applications – jogging your personal memory about places you go and people you meet. But they’re horrible for “photography.” Because the physical cameras move around, sit at odd angles and aren’t directly controlled by the user (they tend to shoot photos at intervals, or take video), the pictures are universally bad, save that one odd lucky shot.

Wrist-worn cameras are best used as expedient replacements for smartphone cameras – group shots, vacation snapshots and selfies.

As Google Glass wearers learned, eyeglasses-based cameras can take amazing photos. They point the camera where the user is looking, and show a first-person, this-is-what-I-saw picture, which can be photographically compelling.

. . . .

Smartglasses will use camera electronics and lenses as much for data gathering as photography. Images and video will be processed for object and face recognition and this data will be fed back into the AR application. Looking at a table with a goldfish bowl on it, an AR app will know that a virtual kitten can stand on the table but not the bowl, and a virtual shark can swim in the bowl but not the table. In AR, cameras aren’t for photography.

Other applications will capture photos or video all day, and process it through artificial intelligence systems to provide extremely good data on activity, behavior and environment.

Best of all, photography can be retroactive, either as photography or as data.

For example, instead of taking pictures of their food while they’re eating it, consumers can just tell their virtual assistant at the end of the day: “Post a picture of that pie I ate.” A.I. will reach into the recorded video, grab the best still shot of the pie and post it online. From a data perspective, we’ll ask that same assistant: “How many slices of pie did I eat last year?”

. . . .

The co-founder and CEO of Shonin, Sameer Hasan, told me wearable cameras will be initially focused on quality control and documentation, medical applications and security. They’ll be immediately usable for “instruction and demonstration, live entertainment and news reporting.”

Wearable cameras will enable AR to “process video information in real time and instantly provide the wearer with analysis and recommendations based on what the camera is seeing,” according to Hasan.

Link to the rest at TechConnect

As PG remembers the scifi story, the ubiquity of video recording devices were a great assistance to the totalitarian government that collected all the video.

A Neural Network Wrote the Next ‘Game of Thrones’ Book Because George R.R. Martin Hasn’t

From Motherboard:

Minutes after the epic finale of the seventh season of Game of Thrones, fans of the show were already dismayed to hear that the final, six-episode season of the series isn’t set to air until spring 2019.

For readers of the A Song of Ice and Fire novel series on which the TV show is based, disappointment stemming from that estimated wait time is laughable. The fifth novel in seven-novel series, A Dance with Dragons, was published in 2011 and author George R.R. Martin has been laboring over the The Winds of Winter since, with no release date in sight. With no new source material, producers of the TV series have been forced to move the story forward themselves since late season 6.

Tired of the wait and armed with technology far beyond the grand maesters of Oldtown, full-stack software engineer Zack Thoutt is training a recurrent neural network (RNN) to predict the events of the unfinished sixth novel. Read the first chapter of the book here.

“I’m a huge fan of Game of Thrones, the books and the show,” said Thoutt, who had just completed a Udacity course on artificial intelligence and deep learning and used what he learned to do the project. “I had worked with RNNs a bit in that class and thought I’d give working with the books a shot.”

. . . .

“It is trying to write a new book. A perfect model would take everything that has happened in the books into account and not write about characters being alive when they died two books ago,” Thoutt said. “The reality, though, is that the model isn’t good enough to do that. If the model were that good authors might be in trouble. The model is striving to be a new book and to take everything into account, but it makes a lot of mistakes because the technology to train a perfect text generator that can remember complex plots over millions of words doesn’t exist yet.”

. . . .

“I start each chapter by giving it a prime word, which I always used as a character name, and tell it how many words after that to generate,” Thoutt said. ” I wanted to do chapters for specific characters like in the books, so I always used one of the character names as the prime word … there is no editing other than supplying the network that first prime word.”

George R.R. Martin isn’t going to be calling for writing tips anytime soon, but Thoutt’s network is able to write mostly readable sentences and is packed with some serious twists.

Link to the rest at Motherboard

PG predicts AI-written books will be common within two years.

He doesn’t know if they will be very good, but it will be interesting to watch the technology develop.

PG also predicts that AI-written books won’t put good human authors out of business.

Never say never’ to Alexa on Kindle

From iNews:

The Kindle was Amazon’s first standalone product, marking a departure from its online bookstore strategy and into the world of consumer electronics. While the company has never officially announced sales figures, its success paved the way for the release of the Fire tablet, Fire TV Stick, ill-fated Fire Phone, and wildly successful series of smart speakers: the Dot, Echo, Tap and Show, and smart camera Look, all of which Limp watches over as senior vice president of Amazon devices and services.

. . . .

As the Kindle become the go-to term for an e-reader, the Echo, according to Limp, who is in London to visit Amazon’s vast new Shoreditch offices, “kind of invented a new category”. The voice-powered smart speaker, controlled by artificially intelligent digital assistant Alexa, went on sale in the UK last year and is capable of setting timers, browsing the internet and even telling jokes through the cloud, meaning it gets smarter over time. Such is Alexa’s ubiquity, people have started calling Echos ‘Alexas’.

. . . .

What sets Amazon apart from other consumer electronics companies is its desire to “do more than just make a gadget, and by gadget, I mean things you would buy and most likely put in a drawer a few months later,” Limp says, explaining that for people to keep using an Echo, it must constantly evolve to stay relevant and useful.

. . . .

“Our view is that these AIs need to work together. If we get to a world where there’s just one of them, that’s not good for customers,” Limp says. “You want to have the ability for AIs to collaborate, and certain AIs will be good at some things, and others will be better at others. When you use Alexa to order a pizza from Dominos, that’s invoking another AI that [is] an expert in pizza.”

. . . .

AI is “foundational” across all of Amazon’s departments, not just consumer electronics, he says, adding that children born today “will never remember a world when they weren’t able to talk to their house and the things around them – and that’s the way it should be.”

Link to the rest at iNews and thanks to Suzie for the tip.

The Village Voice Is Ending Its Weekly Print Edition

From The Vulture:

After more than 60 years, the Village Voice is shutting down its weekly print edition. Founded in 1955 and converted into a free weekly in 1996, the Voice built its name as one of the country’s first alt-weeklies by covering and critiquing New York politics, culture, and more with its distinctive downtown sensibility. The progressive alt-weekly plans to continue on in digital form, according to an announcement from Peter Barbey, who purchased it in October 2015 amid financial struggles, and will also continue to sponsor events like the Obie Awards and Pride Awards. “[The Voice] has been a beacon for progress and a literal voice for thousands of people whose identities, opinions, and ideas might otherwise have been unheard. I expect it to continue to be that and much, much more,” Barbey said. “The business has moved online — and so has the Voice’s audience, which expects to do what we do not just once a week, but every day.”

. . . .

The no-longer-weekly alt-weekly has a hallowed history of defining and exemplifying New York counterculture, having been founded by Norman Mailer, Ed Fancher, Dan Wolf, and John Wilcock. It launched the careers of numerous authors and journalists.

Link to the rest at The Vulture

A question popped into PG’s mind as he read this item. Because there was not much else popping in his mind, he noticed this question.

Is there any traditional print publication that has transitioned to a pure digital form (and binned the print side) that has prospered?

By prospering, PG doesn’t mean surviving or claiming a zillion website visits. Rather, he means the publication demonstrates at least some of the traditional outward manifestations of prosperity – hiring more people on a consistent basis without laying them off later, moving to larger offices, etc.

Does any such transitioned publication make more money than it did before the digital deluge?

According to Statista, The New York Times had 5,363 employees in 2012 and 3,710 employees in 2016.

In June of this year, hundreds of staff members of the New York Times staged a walkout to protest more firings. The laid-off copy editors wrote a letter:

“We only ask that you not treat us like a diseased population that must be rounded up en masse, inspected and expelled,” they wrote. “After all, we are, as one senior reporter put it, the immune system of this newspaper, the group that protects the institution from profoundly embarrassing errors, not to mention potentially actionable ones.”

Globe and Mail ends print edition in Maritimes

From CBC News:

The Globe and Mail will stop delivering its print edition to the Maritimes, the newspaper said Monday.

Phillip Crawley, the publisher and CEO, said it followed the decision made in 2013 to stop printing in Newfoundland and Labrador.

“In keeping with the same policy, we have watched print subscriber numbers declining in the Maritimes over the last few years as we’ve seen digital subscriptions increase,” he told CBC News in a phone interview.

“It gets to the point where it makes no sense to keep on subsidizing print delivery to that degree, where it’s costing us $1 million a year to do that, and that’s where it’s now at with the Maritimes.”

. . . .

The newspaper recently hired a new Atlantic Canada correspondent, filling a post that had been vacant for more than a year. Crawley said Halifax-based Jessica Leeder will start reporting in September.

“We’re very much interested in the stories coming out of the Maritime provinces. We have a national audience that would expect us to do that.”

People anywhere can still get the digital version of the newspaper.

Subscribers were informed of the change via email this week. “Our core mission is to invest in journalism that matters, so the money now being spent on subsidizing uneconomic delivery routes will be redirected to creating content for all of our customers across the country,” the email reads in part.

Crawley said the Globe and Mail will still provide national coverage.

“We never said we’d deliver to every town, village, hamlet or whatever. We haven’t done that. We make a decision on where it makes sense based on the number of people who want to read it,” Crawley said.

Link to the rest at CBC News and tip-thanks to Tudor, who says this would be like a major American newspaper cutting off delivery of its print edition to New England.

PG hopes people who live in the Maritime provinces have good internet connections but suspects they may not.

B&N Needs to Get Over Its Fear

From The Digital Reader:

I live in Vancouver, WA, with Powell’s Bookstore in Portland about 40 miles away. I was thrilled when the B&N stores opened in the area, they were a lot smaller than Powell’s, but were closer, and had the coffee bar.

B&N has since operated like they are run by people with 2 years before retirement, they want to keep everything static to maximize their retirement. They for the most part fight the Internet, not embrace it.

. . . .

My memory says that B&N had the first cheap Android tablet, but it was locked down to work only as a book reader, until hackers made it useful. Then, as a hacked, useable tablet, its sales exploded. Then, instead of giving away the razor and making money on the blades (this is exactly what Amazon does with tablets), B&N made it a profit center and failed to compete with Amazon.

B&N has operated from fear, where Amazon grabs the bull by the horns and goes, understanding that they will make errors.

For example, Amazon works with Overdrive to provide ebooks for libraries. A lot of people don’t like library ebooks because they expire in 1-3 weeks, and people like me will read library ebooks all the time. I don’t think Amazon loses much if any sales servicing library customers, but they do get them to their web site.

Link to the rest at The Digital Reader

PG says Barnes & Noble was perfectly situated to dominate the ebook market, but management didn’t understand digital and wanted to protect its legacy business instead of following its customers.

‘Raining clicks’: why we need better thinking on technology, data and journalism

From Medium:

I’ve spent the last eight years building the case for using audience data in newsrooms and the tools and culture required to make it a force for good. So reading Franklin Foer’s piece When Silicon Valley Took Over Journalism was a deeply bizarre experience. Over the first four years of my work at the Guardian, I encountered almost every possible objection to what I was doing and I thought long and hard about each one. At that point a great deal of my job was about making sure that my instincts, processes and arguments were genuinely robust. Foer’s piece is a collection of the most ill-considered objections I saw, blended into one long, unappealing cocktail.

To be clear, there’s the odd thing here that I agree with. It’s obviously true, for example, that publishers need to be more robust in dealing with technology companies (although ironically one of the things we should be asking of them is more data). It’s also true that homogeneity can be dangerous. But the intelligent application of data can also help us spot where this is doing damage.

But most of these arguments, prejudices masquerading as arguments, childish hopes that everything can just go back to ‘normal’ and windy emotional appeals are zombies. They’re dangerous, stupid and they have no business climbing out of their grave and causing damage in 2017.

Technology isn’t an amorphous lump of stuff

The single biggest problem with the piece is the tendency to take anything that went wrong around the New Republic and the wider industry, gather it up and shove it in a big bucket labelled Silicon Valley or Technology. At various points Foer covers the use of data, data itself, platforms, algorithms, selling advertising, advertising itself, revenue, virality and search engine optimisation. Considering the experience he went through, the absolute conviction dripping from each line and his expressed commitment to good journalism, it’s surprising that he seems to have given so little thought to any of these specific issues.

. . . .

Audience data isn’t just page views…

We would resist the impulse to chase traffic, to clutter our home page with an endless stream of clicky content. Our digital pages would prize beauty and finitude; they would brashly announce the import of our project — which he described as nothing less than the preservation of long-form journalism and cultural seriousness.

Considering this stated aim, why the hell is the only metric mentioned in this epic piece page views?

. . . .

Growing audience doesn’t have to be a con trick

People clicked so quickly, they didn’t always fully understand why. These decisions were made in a semiconscious state, influenced by cognitive biases. Enticing a reader entailed a little manipulation, a little hidden persuasion.

Here’s another failure of imagination and thought (not to mention a pretty contemptuous view of the capabilities of readers in the 21st century). Buzzfeed’s viral strategy is basically inapplicable to serious journalism, as partly evidenced by Buzzfeed News’s difficulties in replicating the audience of the broader company despite great journalism. Equally, Upworthy’s aggregation and headline testing approach just doesn’t relate. In both cases the nature of the content is as important as the method of delivery. But using audience data to spot when a story you care about isn’t connecting with readers is a hugely positive thing. There’s a world of difference between writing misleading headlines and making a headline work well in a digital environment. Part of resisting that first impulse is to do with monitoring time spent on page, a metric Foer never mentions.

Link to the rest at Medium 

When PG read the initial piece referenced in The Atlantic, he dismissed it as a rant written by someone who didn’t understand modern communications technology (who was also the former editor of The New Republic who was fired from his job because he didn’t adapt well to new technology).

This Medium article does a good job (in PG’s disruptive opinion) of disassembling the original Atlantic essay to more fully demonstrate that author’s lack of understanding of modern communications technology.

PG also suggests that Big Publishing is dominated by people who don’t understand modern communications technology.

When PG wrote the preceding paragraph, he had a sudden vision of the executive offices of a major New York publisher with little orange Amazon warehouse robots scooting around the hallways.

On eBooks Being a Dead Format

From The Digital Reader:

Have you ever had one of those moments where you kinda sorta agree with someone’s conclusion and yet still disagree with many of the assumptions that lead to the conclusion?

That’s how I feel towards a piece published in The Bookseller earlier today.

Simon Rowberry argues that ebooks aren’t dead, but his arguments betray legacy industry biases. For example, he cavalierly tosses off the assumption that $10 ebook prices are unsustainable.

The fall in revenue from ebooks is a direct consequence of legacy publishers’ prioritization of print sales at the expense of digital books. The Kindle’s North American launch in 2007 marketed new ebook titles at $9.99, a discount of at least $10 on the hardback equivalent. This approach was unsustainable, but it set readers’ expectations for the cost of ebooks.

What’s funny about this assumption are the many indie authors who would disagree, or the publishers like Baen Books that price all of their ebooks under $10.

Baen Books has been selling its ebooks at what Rowberry would describe as an unsustainable price for close to twenty years, and yet they have somehow managed to pull it off.

And that’s not the only data that Rowberry  didn’t include. A little earlier in the piece he cites stats from the UK PA and then vaguely hand waves at reasons why the data is incomplete:

But despite the early promise of the ebook, many are questioning whether it has lived up to these expectations. In recent years, the ebook has faced significant backlash amid reports of declining sales in trade publishing. The Publishing Association Yearbook 2016 noted a 17% slump in the sale of consumer ebooks while physical book revenue increased by 8%. Over the last couple of years, audiobooks have replaced ebooks as digital publishing’s critical darling on the back of a rapid increase in revenue. In this climate, several commentators have asked “how ebooks lost their shine.”

The ‘ebook plateau’ argument also ignores emergent sectors of digital-only sales, including self-publishing, where new genres drive a vibrant and divergent market. Amazon facilitates most self-publishing sales, and the company steadfastly refuses to provide sales data for books published exclusively on the Kindle. So a potential increase in sales for emergent digital-only genres is hidden by the headlines about traditional publishers.

Yeah, the data is only obscured if you refuse to go looking for it.

I am referring of course the Author Earnings Report and the pseudonymous Data Guy (who does answer press queries about the latest data).

We know exactly the limits of the stats from the PA (it misses 38% of the UK ebook market), and that is the point that Rowberry should have made.

. . . .

He actually think the legacy industry could kill off ebooks:

For the moment, reports of the ebook’s death are exaggerated. If the disinterest of Amazon and resistance from the book trade continue, however, there is a chance that the ebook is killed off – in my view, prematurely.

While an industry can refuse to supply the market with what the market wants, that industry cannot kill that want.

And in the case of digital goods, it cannot prevent consumers from adopting the digital goods – they’ll just turn to someone else to supply the content.

Link to the rest at The Digital Reader 

For a thought experiment, consider an alternative history in which printed books did not exist and ebooks are the only way books have been distributed/sold/read. As with today’s conditions, tablets, ereaders and computers are in wide use.

In that history, if someone invented the printed book and was promoting it as an alternative to ebooks, what would the reaction of the publishing industry be?

Printed books are far too expensive to produce, distribute and sell. Readers will never accept the size and weight of a printed book compared to their ereading devices.

Where will printed books be stored? Thousands of ebooks take up a bit of disk space while the same number of printed books will consume vast physical spaces that could otherwise be used for far more productive purposes.

And the forests! Think of the devastating impact on thousands of acres of beautiful trees!

Next Leap for Robots: Picking Out and Boxing Your Online Order

From The Wall Street Journal:

Robot developers say they are close to a breakthrough—getting a machine to pick up a toy and put it in a box.

It is a simple task for a child, but for retailers it has been a big hurdle to automating one of the most labor-intensive aspects of e-commerce: grabbing items off shelves and packing them for shipping.

Several companies, including Saks Fifth Avenue owner Hudson’s BayCo. and Chinese online-retail giant JD.com Inc. have recently begun testing robotic “pickers” in their distribution centers. Some robotics companies say their machines can move gadgets, toys and consumer products 50% faster than human workers.

Retailers and logistics companies are counting on the new advances to help them keep pace with explosive growth in online sales and pressure to ship faster. U.S. e-commerce revenues hit $390 billion last year, nearly twice as much as in 2011, according to the U.S. Census Bureau. Sales are rising even faster in China, India and other developing countries.

That is propelling a global hiring spree to find people to process those orders. U.S. warehouses added 262,000 jobs over the past five years, with nearly 950,000 people working in the sector, according to the Labor Department. Labor shortages are becoming more common, particularly during the holiday rush, and wages are climbing.

. . . .

Picking is the biggest labor cost in most e-commerce distribution centers, and among the least automated. Swapping in robots could cut the labor cost of fulfilling online orders by a fifth, said Marc Wulfraat, president of consulting firm MWPVL International Inc.

“When you’re talking about hundreds of millions of units, those numbers can be very significant,” he said. “It’s going to be a significant edge for whoever gets there first.”

. . . .

In RightHand Robotics’ Somerville, Mass., test facility, mechanical arms hunt around the clock through bins containing packages of baby wipes, jars of peanut butter and other products. Each attempt—successful or not—feeds into a database. The bigger that data set, the faster and more reliably the machines can pick, said Yaro Tenzer, the startup’s co-founder.

Hudson’s Bay is testing RightHand’s robots in a distribution center in Scarborough, Ontario.

“This thing could run 24 hours a day,” said Erik Caldwell, the retailer’s senior vice president of supply chain and digital operations, at a conference in May. “They don’t get sick; they don’t smoke.”

Link to the rest at The Wall Street Journal (Link may expire)

In a world of peak attention, how can books survive?

From the Bookseller:

What happens when we run out of time?

This might sound like a philosophical question, but with the explosion in content and entertainment offerings such as social media and freemium games, we are rapidly approaching a state of peak attention. I define peak attention as the moment where the competition for our attention reaches a saturated point – when there is no more time to spare and something else must miss out.

As the old saying goes; time is the ultimate finite resource. Increasingly, ours is being spent online.

Herbert Simon first coined the term ‘attention economy’ way back in 1971. His simple conclusion was that an explosion of information must lead to a scarcity of what it consumes, our attention. From his office, it’s like he foresaw the entire rise of social media with its endless content feeds. We now collectively spend more than 10bn hours a week on the main social platforms, and it is rising fast. The total attention equation is different still. Between online and offline media platforms, the average American spends one more hour per day than they did just two years ago – almost 11 hours a day in total.

Simultaneously, from 2005 to 2015, the average amount of time Americans spent reading for personal interest on weekend days and holidays fell by six minutes to 21 minutes per day and 17 minutes on normal work days – a 22% decrease in a decade.

. . . .

I believe the advent of the data feedback loop from users, now a reality with all digital media, will prove the game changer. Software can now learn on its own, powered by unprecedented computational power and vast data sets of real human behaviour. Imagine a book that gets better and better suited to its audience every time it is read, gradually personalising to fit each person’s preferred narrative direction.

These new self-learning systems will inevitably get very good at hooking us in – and keeping us there.

. . . .

Rather than simply living side by side in harmony, there is a compounding effect on the competition for attention across all the media we consume. Every new entertainment offering and attention-consuming activity essentially raises the bar for all the incumbent things people used to spend time on. We have entered a state of hyper-competition. If everyone increasingly fights for the same attention pool, something must inevitably lose out. And that’s going to be books, if Facebook, Instagram, YouTube and Netflix keep winning.

The true structural issue here is that all services and products compete for the same 24 hours.

Link to the rest at the Bookseller

A Case for Multimedia Storytelling

From Publishers Weekly:

Interactive multimedia storytelling is probably older than recorded human history itself. The famous cave paintings of Lascaux, for example, date from about 17,000 years ago. While we do not know their exact purpose, one can easily imagine a narrator or shaman using them to describe a successful hunt or enact a ritual. Holding a torch, the narrator walks along the walls, recounting a sequence of events, in a kind of early form of cinema.

. . . .

Today, we have interactive digital narratives, also known as video games. This relatively new form of interactive media has evolved into a mature form for the presentation of narrative, and may well represent a possible future for storytelling.

Why should this be interesting or relevant to book publishers? Because it is worth knowing what readers are into these days. According to a 2015 Pew internet study, about half of all American adults play video games: 50% of men and 48% of women play them, and about 10% consider themselves to be gamers. Mary Meeker’s highly regarded “Internet Trends 2017” report describes video games as more engaging than popular forms of social media such as Facebook and Instagram, driving an increase in deep engagement in “an era of perceived disengagement.”

. . . .

The first thing to know is that digital interactive storytelling has matured in recent years. The depth and quality of the writing and emotional experience in some games rivals the best literary narratives—and some are even drawn from them. The international hit Witcher 3: Wild Hunt, for example, is based on a series of novels by Polish novelist Adrzej Sapkowski, adapted for the game medium by developer CD Projekt Red’s Jakub Szamalek.

Second, despite book publishers’ fears that mobile apps are a form of digital distraction, taking readers away from books, interactive digital media can actually drive readers toward text-based storytelling. Twine, for example, bridges the gap between interactive fiction and gaming; it’s an open-source software tool that allows users without programming expertise to create and publish interactive stories. Twine has become so popular that it has begun to be noticed by book publishers. In many ways, it is the digital offspring of the popular Choose Your Own Adventure book series.

Because Twine is free and does not require coding skills, it has become a platform for writers who want to try their hands at interactive fiction. Many Twine games are composed entirely of text. Some are also visual, but in many cases, a branching narrative composed of text is the final published product. As this shows, gamers are open to and interested in text stories.

Link to the rest at Publishers Weekly

Spotify’s Plan To Win Over Anxious Artists–And Win The Streaming War

From Fast Company:

Like a lot of musicians now, Scott Hansen was pretty skeptical of Spotify. To Hansen, the mastermind of chilled-out electronic music outfit Tycho, the streaming service and the new era it seemed to herald posed troubling questions: Am I getting paid enough to support myself? Is my craft doomed? Is this whole streaming model even sustainable to begin with?

Anxious questions like these remain unresolved for many artists as the music industry reshapes itself and streaming becomes its biggest source of income. Thanks to streaming, record labels are finally seeing their revenue grow after years of decline, but the gains don’t always trickle down to musicians and songwriters. Spotify recently settled a $43 million class action lawsuit over royalty payments that went unpaid to certain artists, likely due to a metadata error. In other cases, the royalties flow, but not always in large sums. One of Spotify’s own executives recently conceded publicly that streaming doesn’t pay artists “enough.”

But for an increasing number of artists, including Tycho’s Hansen, the advantages of the streaming era are beginning to come into sharper focus.

“I definitely think we’re in a better place than we were three years ago, that’s for sure,” says Hansen, by phone from somewhere outside Cologne, a stop on the group’s recent European tour. The tour’s been a big success, he says, something he attributes, in part, to an experimental marketing project at Spotify. (The group’s recent Grammy nomination likely didn’t hurt either.) By aiming email and web ads at listeners who seemed likely to care the most about their music, the program helped the group sell about 1,600 tickets in Europe, Hansen says, and a total of more than 4,000 tickets this year. “I see it getting better as more people adopt that way of consuming music,” says Hansen.

. . . .

As Spotify seeks to build better relationships with record companies and music publishers—and as artists seek new sources of cash—the company’s executives and artists say the efforts are already helping, providing precise data to help artists make smarter career decisions, and leading to bigger ticket and merchandise sales. Collectively, the company says, the relatively young effort has generated millions in additional revenue for musicians–results that, after years of industry upheaval, are hard to ignore.

. . . .

Of course, not every artist can realistically expect this kind of free marketing push from Spotify. In an attempt to build stronger personal ties to the recording industry, promote and develop artists on Spotify, and bolster the company’s artist-facing tools, Spotify hired investor and former Lady Gaga manager Troy Carter last year as its global head of creator services. Carter’s job, interfacing with artists, managers, and labels, is about being “better partners,” he says “whether it’s helping you co-market a product on our platform, helping you understand how the international market works, or how our playlisting works.”

Link to the rest at Fast Company

A guide to developing bot personalities

From Prototypr.io:

Conversational interfaces have reduced user experience down to a few lines of text. With bots, UX becomes conversational, products talk back, and personas now go both ways. Every bot has a voice — which means every bot needs a personality.

If conversational computing means personality is the new user experience, how do we approach the design of these nuanced digital entities?

. . . .

Chatbots and voice assistants are for humans. Conversational interfaces exist for better interactions between humans and computers. So then, how can we personalise these conversations to be more life-like, intimate, and representative of human interaction? Through personality. Building a rich and detailed personality makes your chatbot more relatable, believable, and relevant to your users.

Investing in personality informs every touch point of a chatbot. Personality creates a deeper understanding of the bot’s end goal, and how it will communicate through choice of language, mood, tone, and style. Seeing a bot as a lifeless piece of technology is a mistake. People project human traits onto everything — but now these objects talk back. Whether you like it or not, your users will still assign a personality to your bot if one hasn’t been explicitly designed.

Link to the rest at Prototypr.io

PG says Alexa definitely has a personality. However, he’s not certain whether she has moods or not.

Japan e-book distributor Media Do to build ‘AI translator’

From Nikkei Asian Review:

Japanese electronic book distributor Media Do will develop an artificial intelligence-based automatic translation system to make its e-books available for English-speaking readers.

The company hopes to reach a broader market and promote digitization at a time when Japan’s book market is shrinking.

Media Do has teamed up with two Tokyo-based AI startups for the project — Internet Research Institute and A.I. Squared. Media Do will invest about 1.1 billion yen ($9.82 million) to acquire about 20% of each company through a third-party share allotment at the end of this month.

Both startups have developed unique technology for summarizing and translating text. The summarization technology analyzes the relationships between words and sentences in a given piece of text and extracts key sentences to create a summary.

The translation technology “learns” set phrases in both Japanese and English — on top of vocabulary and grammar — to enhance the quality of its translations, a process known as deep learning.

Link to the rest at Nikkei Asian Review

Newspaper circulation at 77-year low

From The Washington Examiner:

Circulation of daily newspapers has dropped to a 77-year low, signaling an end to print and a shift to all-digital delivery, according to a new industry review.

The Pew Research Center said that circulation has reached a new low of 34.6 million, six million less than papers sold in 1940.

. . . .

The estimated total U.S. daily newspaper circulation (print and digital combined) in 2016 was 35 million for weekday and 38 million for Sunday, both of which fell 8% over the previous year. Declines were highest in print circulation: Weekday print circulation decreased 10% and Sunday circulation decreased 9%.

Link to the rest at The Washington Examiner

But readers will always prefer their books on paper.

J.Crew’s Mickey Drexler Confesses: I Underestimated How Tech Would Upend Retail

From The Wall Street Journal:

 Millard “Mickey” Drexler, the fashion genius whose ability to spot trends reshaped how Americans dress, has a humbling admission. He missed what might be the biggest trend of all—how quickly technology would change the retail industry.

“I’ve never seen the speed of change as it is today,” the 72-year-old chairman and chief executive of J.Crew Group Inc. said in an interview at his New York office. “If I could go back 10 years, I might have done some things earlier.”

The retail veteran, who redefined Gap Inc. in the 1990s and then transformed J.Crew into a household name, is now scrambling to keep the company he took private in a leveraged buyout from ending up in bankruptcy.

Sales at J.Crew Group stores open at least a year have fallen for the past 10 quarters—the kind of slump that got Mr. Drexler ousted from the Gap in 2002. This time he owns 10% of the company, and it is lenders, not the founding family, that are putting on the pressure.

For decades, fashion was essentially a hit or miss business. Merchants like Mr. Drexler would make bets on what people would be wearing a year in advance, since that’s how long it took to design and produce items. Hits guaranteed handsome returns until the next season.

Now, competitors with high-tech, data-driven supply chains can copy styles faster and move them into stores in a matter of weeks. Online marketplaces drive down prices, and design details such as nicer buttons and richer colors are less apparent on the internet. Social media adds fuel to the style churn—consumers want a new outfit for every Instagram post.

“The rules of the game have changed,” said Janet Kloppenburg, president of JJK Research, a retail-focused research firm. “It’s not just about product anymore. It’s also about speed and pricing.”

Mr. Drexler’s plan is to emphasize lower prices, pivot toward more digital marketing and adopt a more accessible image. “We became a little too elitist in our attitude,” he said.

Many visionaries focus on doing what they do best, even when the ground shifts beneath them. From newspapers to television, successful companies have been upended by disruptive technologies. Facebook Inc. is now the world’s largest publisher; Netflix Inc. is worth twice as much as CBS Corp.

“The incumbent leaders never see it coming,” said Clayton Christensen, the Harvard Business School professor who introduced the theory of disruptive innovation 20 years ago. “They focus on their best customers and try to provide what they need, but the customers who first defect [to new technology] are usually the least profitable.”

. . . .

The New York City native, who doesn’t have his own Instagram, Facebook or Twitter account, was sharing thoughts with employees on a loudspeaker—hooked up through his phone—before Twitter was launched. He paid attention to firsthand shopper feedback on frequent visits to stores long before Amazon.com Inc. was collecting user data. He was also selling clothes online before many other specialty retailers. Nearly half of J.Crew’s sales now come from the web.

But Mr. Drexler didn’t appreciate how the quality of garments could easily get lost in a sea of options online, where prices drive decisions, or how social media would give rise to disposable fashion. Online, price has more impact than the sensory qualities of clothing. “You go into a store—I love this, I love this, I love this,” he said. “You go online and you just don’t get the same sense and feel of the goods because you’re looking at a picture.”

. . . .

“The days of people wearing head-to-toe J.Crew are over,” said Carla Casella, an analyst at J.P. Morgan Chase & Co.

Zinniah Munoz, a 20-year-old makeup artist in New York City, said she would rather buy a style at a lower price than pay extra money for a brand name. “I’m always vigilant of not posting the same style twice” on Instagram or Facebook, she added.

. . . .

TPG co-founder David Bonderman recently acknowledged J.Crew and its peers are struggling with declining mall traffic and the shift to online shopping. “The internet has proven much more resilient and much more important than most of us thought a decade ago,” he said at a conference earlier this month.

Link to the rest at The Wall Street Journal (Link may expire)

Coke Is Hurting From the Switch to Online Shopping, Too

From Bloomberg Technology:

As Coca-Cola Co. Chief Executive Officer James Quincey settles into his new job, he’s facing a challenge that most of his predecessors never worried about: digital disruption.

Consumers are increasingly shopping online, spending more time on mobile apps, and getting groceries delivered to their homes. And that’s hitting Coca-Cola in ways you might not expect, Quincey said in an interview from his office in Atlanta.

When shoppers skip trips to the local mall and get their clothes at Amazon, they also forgo buying Coke at a vending machine or food court. So while the decline of retailers has mostly focused on bankrupt apparel chains and shuttered storefronts, a brand like Coca-Cola is suffering as well.

“Digital is changing the way you behave,” he said. “It affects other categories that are not the primary reason you thought about making the shopping trip.”

Turning Coke into a winner of the digital age — rather than another brick-and-mortar victim — is a key priority for Quincey.

. . . .

The disruptive power of tech has been especially pronounced in some overseas markets, including China. When Quincey was chief operating officer in early 2016, he saw sales in that country slump — hurt by a decline in sales to noodle shops and other restaurants.

The shops themselves weren’t the problem — they were still selling large quantities of food — but more customers were ordering online and having their meals delivered. The problem for Coca-Cola: The restaurants offered glass bottles and sizes that weren’t suited to being transported via scooter.

Link to the rest at Bloomberg Technology

Brick-and-Mortar Stores Are Shuttering at a Record Pace

From The Wall Street Journal:

American retailers are closing stores at a record pace this year as they feel the fallout from decades of overbuilding and the rise of online shopping.

Just this past week, women’s apparel chain Bebe Stores Inc. said it would close its remaining 170 shops and sell only online, while teen retailer Rue21 Inc. announced plans to close about 400 of its 1,100 locations.

“There is no reason to believe that this will abate at any point in the foreseeable future,” said Mark Cohen, the director of retail studies for Columbia Business School and a former executive at Sears Canada Inc. and other department stores.
Through April 6, closings have been announced for 2,880 retail locations this year, including hundreds of locations being shut by national chains such as Payless ShoeSource Inc. and RadioShack Corp. That is more than twice as many closings as announced during the same period last year, according to Credit Suisse.

Based on the pace so far, the brokerage estimates retailers will close more than 8,600 locations this year, which would eclipse the number of closings during the 2008 recession.

. . . .

The seeds of the industry’s current turmoil date back nearly three decades, when retailers, in the throes of a consumer-buying spree and flush with easy money, rushed to open new stores. The land grab wasn’t unlike the housing boom that was also under way at that time.

“Thousands of new doors opened and rents soared,” Richard Hayne, chief executive ofUrban Outfitters Inc., told analysts last month. “This created a bubble, and like housing, that bubble has now burst.”

. . . .

As retailers rushed to expand their physical footprint, the internet was gearing up to do to apparel companies what it had already done to booksellers: sap profits and eliminate what little pricing power these chains commanded.

Despite the view that shoppers prefer to try on clothing in physical stores, apparel and accessories are expected this year to overtake computers and consumer electronics as the largest e-commerce category as a percentage of total online sales, according to research firm eMarketer.

Helena Cawley, 37 years old, said she used to be a “die-hard” department-store shopper. But with two small children, the Manhattan entrepreneur doesn’t have time to visit physical stores the way she once did. “I buy much more online now,” she said. “With free returns and free shipping, it’s so easy.”

Link to the rest at The Wall Street Journal (Link may expire)

As PG has mentioned before, he takes no joy in bookstore employees or anyone else losing their jobs. However the rapid and continuing reduction in the number of bookstores is part of a very large trend throughout physical retail.

By reason of its high density, mass transit options and (for many) high incomes, Manhattan should be almost the ideal location for physical retail to survive. In many parts of the island, billions of dollars in personal wealth are within a ten-minute walk of a store.

If online shopping is becoming more attractive than physical stores in Manhattan, traditional retail will have an even more difficult time in less densely populated urban areas.

Where Have All the Shop Clerks Gone?

From Strategy+Business:

We often talk about software and robots taking over jobs and eliminating the need for human labor. It’s common to hear these concerns center around jobs in factories, or in the trucking and taxi industries. Some of these changes may be far in the distance, or may not come about at all due to social and cultural resistance (and the fact that sometimes sci-fi-tinged ideas just don’t come to fruition). In fact, there are lots of jobs open in areas that you would think would be negatively affected by automation. For example, 364,000 manufacturing jobs were open in the U.S.  at the end of February 2017, up 58,000, or 18.9 percent, from a year earlier.

But the reality is that machines — in the form of software, e-commerce platforms, and payment systems — are already destroying jobs in one massive sector: retail.

Retail sales are rising in the United States — up 5.3 percent in February 2017 from the year before. And overall, the U.S. labor market is in very good shape, with unemployment at 4.5 percent and 78 straight months of job growth. The monthly JOLTS report shows there were an impressive 5.74 million jobs open in the U.S. at the end of February.

. . . .

However, the job market in the retail sector is behaving as it would only in times of recession, when retail sales are falling, or when the labor market is weak. In March, when the economy at large added 98,000 payroll jobs, the vast retail trade sector lost 29,000 positions. In February, 30,900 retail jobs were cut. In fact, retail employment is off in four of the past six months, and the sector employed fewer people in March 2017 than in it did in August 2016. According to the JOLTS report, the number of open jobs in retail has fallen significantly over the past year, from 612,000 in February 2016 to 542,000 in February 2017 — a decline of 70,000, or 11 percent.

What’s going on here? In a word, technology. But not in the way you’d think. Algorithms are not yet replacing salesclerks at the mall, and software is not stocking shelves in grocery stores. What is happening is that technology-enabled retail platforms, recommendation engines, and payment systems continue to grow and improve. And as they do, they are making it more convenient and more compelling for more people to do more of their shopping online. Non-store retail sales, which is mostly e-commerce, were up nearly 13 percent in February from the year before. In short, technology and automation are pushing a great chunk of retail sales through channels that are not physical stores. It still requires plenty of human work to fulfill all the orders. But the jobs will increasingly be in warehouses, in logistics and delivery — not in strip malls.

Link to the rest at Strategy+Business

Writers’ Strike II and Digital Ad Growth

From The Wall Street Journal:

 Hollywood is bracing for a sequel that no one in the industry wants to make: a writers’ strike.

Almost 10 years after a four-month writers’ strike over DVD residuals and digital-platform compensation nearly split the entertainment industry, a new battle is brewing between the Writers Guild of America and the Alliance of Motion Picture and Television Producers, or AMPTP.

The key issues dividing show business this time around include exclusive contracts between writers and television shows, and the guild’s health-care plan, which the television and movie studios feel is too exorbitant.

The current contract is set to expire May 1 and talks have broken off until next week. The WGA membership is expected this week to vote for a strike authorization, which allows its negotiators to call a strike.

The labor tensions are exacerbated by the so-called peak TV era. There is more scripted television in production than ever before thanks to the growth of streaming services and more original programming by cable networks. There will be nearly 500 scripted shows produced this year, according to research by 21st Century Fox ’s FX Networks unit. WGA members say they aren’t benefiting from that growth.

Writers must “participate in the windfall we have created in the last five years,” said “Mad Men” creator Matthew Weiner in a WGA-released video urging members to vote “yes” for the strike authorization.

Executives who were at the helm of the networks 10 years ago warn that a prolonged strike would drive viewers away from television as well as do great harm to the business.

. . . .

A strike would come at a very precarious time for the television and movie industries. Most television networks are struggling to hold on to viewers and adapt to new technologies. Ratings are down for most cable and broadcast networks this season in viewers and the key 18-49 age demographic.

. . . .

While there are more shows than ever, the guild, which represents around 12,000 members, said the average salary of TV writers fell by 23% over the past two seasons.

. . . .

Another WGA bone of contention: Some programs force writers to remain exclusive to a show, making it impossible to compensate fewer episodes with other gigs throughout the year—a requirement also on the negotiating table.

Link to the rest at The Wall Street Journal (Link may expire)

And, for a different view of video consumption, here’s a story from Barrons:

Watch for two key milestones for advertising this year. Digital venues will overtake television as the top draw for ad spending. And mobile, for the first time, will make up more than half of digital.

That bodes well for companies that pull in massive audiences online, especially over smartphones. In the U.S., two stand above all others: Facebook and Google parent Alphabet. Together, they control 54% of digital advertising, up from 44% a year ago. We recommended shares of Facebook five months ago, a few bucks below where they recently traded. Now it’s time for a fresh look at Alphabet, whose shares look likely to top $1,000 in a year, for a gain of over 20%.

In 2017, digital ads will bring in $202 billion—40% of all ad spending, according to industry forecaster Magna. That compares with 36% for television. It’s just a start. Digital spending will continue soaring and will capture a 50% share by 2021, while TV spending will barely expand and its share will shrink to 33%.

. . . .

Nearly all of the recent growth in digital ads has come from search and social media, especially social videos, and small screens are playing a big role. Mobile will reach 52% of digital ad spending this year, according to Magna. By 2021, mobile’s share will balloon to 72%.

Link to the rest at Barron’s

PG says traditional publishers aren’t the only ones being disrupted by developments in the digital world.

Retailers look past apps to the next frontier of digital shopping: Chatbots

From The Washington Post:

Artificial intelligence is being touted as a tool for addressing some of humanity’s most pressing problems, including climate change and cancer.

But starting this week, you can put it to work for something a little more prosaic: ordering a hoagie.

On Tuesday, Mastercard announced it has partnered with Subway and two other major merchants to launch “chatbots,” which are robots that simulate human conversation. The Subway iteration allows you to order a custom sandwich for pickup, something of a digital version of walking down the chain’s sandwich assembly line. There’s another from Cheesecake Factory that allows shoppers to purchase and send out gift cards, and a third from online grocer FreshDirect in which customers can place orders for groceries and meal kits. The bots will be found within Facebook’s popular Messenger app, and will be powered by Masterpass, the credit card giant’s digital wallet.

These big-name brands join a growing group of retailers that are experimenting with how chatbot technology can be leveraged for digital shopping. The debut of the bots will provide a fresh test of shoppers’ appetite for what the industry has dubbed “conversational commerce,” the idea of making a purchase or other customer service transaction through A.I.-powered messaging.

. . . .

Consumers are spending more time online, and yet they are concentrating those minutes in a very limited number of apps. Retailers — along with hotels, rental car services, and other businesses — are realizing that the best way to snare your interest online might not be with a killer app of their own, but by creating bots that live in the apps that you already use.

. . . .

Subway, for example, essentially tried to re-create its in-store experience on the small screen. In a demonstration of how the technology works, the bot asks what kind of cheese you prefer, how thick a coat of mayonnaise you want, and so on — all in a very chatty voice. (When it wants you to indicate whether you want your sandwich toasted, it asks, “Wanna get toasty?”)

Link to the rest at The Washington Post

When Amazon starts doing this for books, please send PG a note through the Contact page.

Why e-readers succeeded as a disruptive innovation in the US, but not in Japan

From The London School of Economics Business Review:

The concept of disruptive innovation has captured the attention of executives around the world. As explained by Clayton Christensen, a disruptive innovation is initially seen as unattractive by mainstream customers and by the leading firms who serve those customers. Eventually, however, those firms lose their leadership positions to new entrants who are willing to develop and improve the innovation in ways that make it more attractive to mainstream customers.

. . . .

One intriguing example of a bundled disruptive innovation is the e-reader. Many American consumers responded enthusiastically to Amazon’s introduction of the Kindle reader in 2007, in part because, in a relatively short amount of time Kindle customers were able to choose from hundreds of thousands of titles. In contrast, Japanese e-readers introduced both before and after the U.S. Kindle launch received a lukewarm response from Japanese consumers.

One obvious explanation was the relative lack (compared to the US) of best-selling novels and other popular books in e-book form. To try and understand the reasons for the disparity in e-book availability between the U.S. and Japan, we interviewed key figures from both the American and Japanese book industry. Our research revealed a number of interesting insights, which we organise into three categories: organisational, environmental and technological factors.

. . . .

In part, the limited availability of e-books in Japan reflected industry perceptions of Amazon’s critical role in the success of the Kindle. Our informants did not believe any single Japanese company could play an Amazon-like role in Japan, in the sense of developing a Japanese e-reader and securing a supply of hundreds of thousands of e-books for that reader. For this reason, publishers and retailers were unwilling to invest large amounts of money developing e-book editions of popular Japanese books.

The availability of Japanese e-books has also been influenced by the interdependence among book retailers, wholesalers, and publishers in Japan. Japanese wholesalers were most likely to be hurt by the introduction of e-books. Publishers and retailers were heavily dependent on the two major wholesalers for sales of paper books. These concerns were amplified by pricing concerns. In Japan, publishers had the legal right to set the prices of paper books, which eliminated price competition for new books. Although the resale price law does not affect the pricing of e-books, Japanese publishers worried about the potential impact of e-book discounting on the performance of wholesalers and other industry players. For this reason, many publishers were reluctant to offer discounts on e-books, despite the success of Amazon’s aggressive discounting in the US.

. . . .

Another factor that emerged in our research involved differences in the perceptions of Japanese and American consumers. Amazon marketed the Kindle as a “library in one’s pocket.” A number of our informants believed that Japanese readers place less value on this benefit because Japanese publishers already sell paperback books in a size that fit easily in a jacket pocket, and book stores are conveniently located within or near major train stations.

Link to the rest at The London School of Economics

Target’s Painful Lesson: Low Prices Beat Hip Products

From The Wall Street Journal:

Target Corp.’s chief vowed to invest billions to lower prices and remodel hundreds of stores, an admission that the retailer’s focus on trendy merchandise wasn’t enough to attract shoppers.

Chief Executive Brian Cornell defended his brick-and-mortar-centric strategy Tuesday after Target reported sales and profit declines for the holiday quarter, and gave an even gloomier outlook. The company said its 2017 profits would fall as much as 25% below what Wall Street had forecast.

The warning sent Target shares skidding 12% to $58.87 in Tuesday afternoon trading. The shares have now erased nearly all the gains since Mr. Cornell took the reins in August 2014 in the wake of a massive customer-data breach.

. . . .

The changes come more than a year after rival Wal-Mart Stores Inc. began pouring money into revamping its stores, lowering prices and expanding its e-commerce operations—changes that reversed a sales slump. Target has also been squeezed by the expansion of Amazon.com Inc., which shares many customers and products with Target.

. . . .

Analysts at Credit Suisse said the retailer essentially admitted it has pursued a flawed strategy to avoid competing on price. “The announcement represents confirmation of the company’s difficult position and it’s unclear if there is a winning strategy at this point given how far behind it is from competitors like [Amazon] and even [Wal-Mart] now.”

. . . .

Analysts predict that Target will continue to lose market share to Amazon and other online sellers if it doesn’t do more to adapt to the digital age. In a recent study, Goldman Sachs found that Target customers are more likely to have an Amazon Prime membership than those of Wal-Mart and other discount retailers.

Link to the rest at The Wall Street Journal (Link may expire)

Brave New Booksellers: The Rise of E-reading

From CKGSB Knowledge:

On November 18, 2007, the book business looked more or less the way it had for decades: an industry dominated by a handful of conglomerates that produced a set of products that hadn’t changed much since the 1940s and distributed those products through a familiar set of sales channels.

The next day, Amazon introduced its Kindle e-reader and everything changed. Not all at once, of course – the Seattle company’s first e-reader retailed for $399, and after selling out in 5.5 hours, remained out of stock until April 2008 – but over the next few years, the numbers grew at the same pace with which many digital innovations, from the Internet to social media, have taken off: by 2014, half of all Americans owned either an e-reader or a computer tablet, and 28% had read an e-book in the prior 12 months, according to a survey by the Pew Research Center.

All over the world, a similar shift has been underway – slower in markets where bookstores and book sales are regulated, such as France and Germany; faster in more open markets, such as China, where more than 2 million digital book titles are now available and nearly half (44%) of all books sold are sold online, according to a report by German Book Office Beijing.

. . . .

So was publishing’s digital revolution just a successful format change, like the invention of the paperback in the 1940s? Not entirely. Digitalization has also driven a much more profound story about how books are made and sold. From production to distribution, virtually every aspect of the publishing business has changed over the past decade.

To begin with, thanks to e-books and print-on-demand technology, the actual process of printing a book has changed. David Kudler, a small publisher in the San Francisco Bay Area, says that e-books and print-on-demand technology have been transformative. “When I first got into publishing, printing was real simple. You got the book ready about six months before you wanted it to go to press, and you sent it off to China – that’s where the good presses were and that’s where the people who knew how to really put together the book were. And whether you were in Europe or in North America you waited the six months that it took for that book to show up in the stores again.”

The growth of e-books and publishing on demand also helped drive changes in how books are sold. In the US, physical bookstores now represent roughly a quarter of all book sales. Since 2007, US brick-and-mortar bookstore sales have fallen from $17 billion to $11.17 billion in 2015, according to US Census figures. All told, 69% of US books are sold online, according to AuthorEarnings.com.

Link to the rest at CKGSB Knowledge and thanks to Dave for the tip.

What News-Writing Bots Mean for the Future of Journalism

From Wired:

When Republican Steve King beat back Democratic challenger Kim Weaver in the race for Iowa’s 4th congressional district seat in November, The Washington Post snapped into action, covering both the win and the wider electoral trend. “Republicans retained control of the House and lost only a handful of seats from their commanding majority,” the article read, “a stunning reversal of fortune after many GOP leaders feared double-digit losses.” The dispatch came with the clarity and verve for which Post reporters are known, with one key difference: It was generated by Heliograf, a bot that made its debut on the Post’s website last year and marked the most sophisticated use of artificial intelligence in journalism to date.

When Jeff Bezos bought the Post back in 2013, AI-powered journalism was in its infancy. A handful of companies with automated content-generating systems, like Narrative Science and Automated Insights, were capable of producing the bare-bones, data-heavy news items familiar to sports fans and stock analysts. But strategists at the Post saw the potential for an AI system that could generate explanatory, insightful articles. What’s more, they wanted a system that could foster “a seamless interaction” between human and machine, says Jeremy Gilbert, who joined the Post as director of strategic initiatives in 2014. “What we were interested in doing is looking at whether we can evolve stories over time,” he says.

. . . .

It works like this: Editors create narrative templates for the stories, including key phrases that account for a variety of potential outcomes (from “Republicans retained control of the House” to “Democrats regained control of the House”), and then they hook Heliograf up to any source of structured data—in the case of the election, the data clearinghouse VoteSmart.org. The Heliograf software identifies the relevant data, matches it with the corresponding phrases in the template, merges them, and then publishes different versions across different platforms. The system can also alert reporters via Slack of any anomalies it finds in the data—for instance, wider margins than predicted—so they can investigate. “It’s just one more way to get a tip” on a potential scoop, Gilbert says.

The Post’s main goal with the project at this point is twofold. First: Grow its audience. Instead of targeting a big audience with a small number of labor-intensive human-written stories, Heliograf can target many small audiences with a huge number of automated stories about niche or local topics. There may not be a wide audience for stories about the race for the Iowa 4th, but there is some audience, and, with local news outlets floundering, the Post can tap it. “It’s the Bezos concept of the Everything Store,” says Shailesh Prakash, CIO and VP of digital product development at the Post. “But growing is where you need a machine to help you, because we can’t have that many humans. We’d go bankrupt.”

Link to the rest at Wired

The New York Times wants to save itself by becoming like Netflix

From recode:

You probably know someone who makes sniping remarks like: Old media is dying! They were too stupid to notice the internet! They’re snobs and stuck in the past!

The real story is much more complicated, journalist Gabriel Snyder said on the latest episode of Recode Media with Peter Kafka. In the latest issue of Wired, Snyder wrote about how one of the highest-profile media companies in the world, the New York Times, is “claw[ing] its way into the future.”

“The reason old media companies have so much trouble adapting is not because they don’t know what to do or even that they should do it, it’s [that] the internal politics of it are so difficult to navigate,” Snyder said. He noted that career advancement at the NYT is a “slow-moving treadmill” that rewards loyalty over fresh ideas.

And that’s not to mention the more obvious, public face of the newspaper’s struggle: Where the money comes from.

“Even today, the vast majority of the revenue comes from old streams at the New York Times,” Snyder said. “It comes from the print circulation, even their print advertising. The industry fell off a cliff last year, but it still generates a lot of money. You can’t just turn that off, and if you do, it’s at your peril.”

The NYT initially tried to convince readers to subscribe to separate products based around opinion columns, daily news, crosswords and cooking, but each of those was met with “varying levels of un-success,” Snyder said. So, instead, it’s now thinking it can emulate the Netflix, HBO or Amazon subscription model — packing more and more into one subscription product to increase its perceived value.

Link to the rest at recode and thanks to Joshua for the tip.

PG says the best way to succeed during an era of continuing disruptive innovation is to increase actual value rather than attempt to increase perceived value.

Perceived value sounds like a desperate idea from marketing.

Digital Book World Indie 2017 Wrap-Up

From author Ron Vitale:

The state of indie publishing is in flux. Is print coming back? Are indie authors losing sales? And with the rise of more competition from traditional publishers, what is an indie author to do?

Based right outside of Philadelphia, I took the train up to New York and went hoping to find answers at Digital Book World Indie 2017. Truth be told, one of the main reasons why I went was to hear Data Guy talk in the Tight Insights: The Indie Universe Quantified session. I wanted to see his data on the big screen. I could have listened to him for hours.

. . . .

How are indie authors going to compete and thrive against huge conglomerate corporations? At the end of the first session, Porter Anderson reminded all of us that when photographers needed to streamline their services, they came together to form a co-op. Professional services (developing the film, marketing, etc.) could be provided by reputable and vetted individuals while the photographers could stay out longer in the field, shooting. Anderson, in his understated way, turned to the audience and said, “Now it’s all on you.”

The biggest take home message from Digital Book World Indie is so simple that I almost missed it while preparing for the next talk. When we as indie authors unite, we have strength. We are the sum of our individual skills.

. . . .

While I sat in the conference room listening to the talks, I had my phone out, sharing information with members of a private Facebook group. And throughout the day, I kept checking in on Michael Anderle’s 20BooksTo50K Facebook group. I joined the 20BooksTo50K group back in December when there were 1,200 members. Less than a month later, there are more than 3,450 members. Fellow indie authors who are sharing their launch plans, screenshots from their sales dashboards, asking for advice on covers they are having designed and talk through the most in-the-weeds details about email lists.

. . . .

The mismatch between the experts at the conference and the brain power available from within the room itself could not have been more pronounced over the course of the day.

. . . .

The second most important lesson I learned at DBW Indie is that traditional publishers, to quote Jane Friedman, “are kicking ass in marketing.” Judith Curr’s (President & Publisher of Atria Books, a division of Simon & Schuster) talk brought that home to all the authors in the room. Not only are publishers creating apps such as Crave, but they are performing A/B tests with their advertising, targeting the appropriate readers with the ads as well as sending out thousands of ARCs in advance to build reviews online.

Judith Curr came to speak to a room full of indie authors with an olive branch, asking us to consider traditional publishing. The word “hybrid” floated throughout many of the sessions and authors were pitched not only by Curr, but by Kobo, Wattpad, Ingramspark and, if you wanted, one-on-one with iBooks. Opportunity flowed throughout the day.

The challenge that I see is that without the deep (for now) pockets of traditional publishers, indie authors will continue to struggle. Although traditional publishers have amazing teams to produce extremely high quality products, the opportunity for indie authors comes in our being able to control our own careers. We have choice. With knowledge, there is power. In today’s publishing, we could license our print book rights, but retain our ebook rights and publish as we like. We have bargaining power that did not exist a few years ago.

Link to the rest at Ron Vitale

Here’s a link to Ron Vitale’s books. If you like an author’s post, you can show your appreciation by checking out their books.

PG doesn’t know Mr. Vitale, but PG does know something about large conglomerates, including publishing conglomerates, pre-internet and internet marketing and technology in general.

Conglomerates are large collections of people and money that are not all the same. Some do reasonably well at attracting capital and running some of their businesses. Others do dumb things all the time.

If you want to rapidly accomplish something innovative, a conglomerate is not the way to go. If you want to attract and keep creative employees, a conglomerate is not the way to go.

No smart entrepreneur tries to start anything inside a conglomerate. Apple would have been killed in the crib inside a conglomerate. So would Amazon and Google.

As a group, publishing conglomerates are among the slowest and least innovative members of the conglomerate class. PG worked for one of the largest (RELX Group, previously known as Reed Elsevier) for three unhappy years and knows of what he speaks.

Specific points mentioned in the OP:

  • Apps such as Crave from big publishers. Do you know how easy it is to build an app? Ten-year-olds build apps. There are over two million apps on Apple’s App Store. PG looked at the most popular book apps on Apple’s App Store. The first page includes a large number of apps. Crave was not among them. Three out of the top five apps were from Amazon.
  • A/B tests for advertising. PG wasn’t one of the Mad Men, but his boss at a very large advertising agency would have qualified. Needless to say, PG’s adventures in advertising occurred centuries ago. A/B tests with advertising were a routine practice during Mad Men days.
  • Sending out ARCs in advance to build reviews online. Publishers have been doing this forever. Smart indie authors have email lists, social media accounts, etc., and use them to do the same thing.

PG agrees with the OP that authors should get together and share ideas, support each other, etc.

However, there’s a key difference when indie authors get together and when traditionally-published authors get together.

When an indie author hears or reads about a great idea for marketing, he/she can implement it immediately and see the results (good or bad) in a few days or weeks by watching their KDP dashboard. When a traditionally-published author hears the same idea, it’s a different experience.

To pirate a saying, an author needs a big publisher like a fish needs a bicycle.