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Penguin Random House

11.09.2012, No Comments, Uncategorized, by .

A few weeks ago, Random House parent Bertlesmann announced it was purchasing a controlling interest in Pearson’s Penguin Books.

If approved, this will merge the two largest US publishers.

There has been endless discussion about this and the impact on the industry. But this merger is nothing new. For decades, publishers have consolidated and gotten bigger.

Random House is made up of at least 100 different formally independent publishers. The last big leap was when Bertlesmann (who at the time owned Bantam-Double-Dell) bought Random House from billionaire Sy Newhouse. Random House was about 2x the size of BDD at the time. Both were big.

Penguin purchased Putnam a few years ago. I remember the merger and the years of integration well.

Looking at the other corporate publishers.

HarperCollins was Harper & Row. They were bought by Rupert Murdoch and the name changed. They also absorbed Morrow-Avon plus basically every big Christian publishing house in the nation.

Macmillan owns formally independent FSG, St. Martins Press, Holt and a variety of others.

These are just a few examples of the constant consolidation of publishers. It is only going to continue.

I speak with a lot of independent publishers. Many receive queries from the corporate publishers re: being bought. These are not the billion dollar deals but are still very significant. Many independent publishers were founded in the 60s and 70s. They are still owned by the founders. As the industry continues to dramatically evolve, many of these owners will sell. More consolidation.

Expect more and more consolidation. I read a lot that there will be a “Big 3” soon. But that not only considers the corporate publishers. Expect many independent and less than the biggest to merge too.

But…. just to end this on a contradictory note, even though there is this consolidation, it is also a great time to start a publisher. The barriers to entry have never been lower and the reading public never bigger. It just won’t be traditional. It will need to have as big a play for digital as physical. It will happen.

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MAGA controls publishing

10.23.2012, No Comments, Uncategorized, by .

MAGA is four corporations that will control the future of publishing in America. Sure the big publishers still control the bulk of the content. But that is changing. These corporations control the access to the consumer. These corporations also have deep, deep, deep pockets.

Control of the delivery system is crucial. Amazon has shown how powerful this is by shutting off the valve when issues with publishers arise. None of them can survive without strong content…. but they control the roads.

Who is MAGA?

  • Microsoft
  • Apple
  • Google
  • Amazon

Microsoft invested $300-million in Barnes and Noble and now is a 17% owner in the new company Nook Media. Their device is the Nook HD. B&N and MSFT also are partners in the college bookstore division. Although Microsoft does not own the B&N trade bookstores, the Nook will continue to have a ‘special relationship.’ B&N superstores are the only national bookstore chain in America.

Apple just announced the iPad mini. It is aimed directly at the Nook HD, Kindle File and Google Nexis 7. Finally an Apple product that is close in price and size to these other smaller tablets. Apple has spent less time developing their iBookstore, but they do have 1.5-million titles. They also have a focus on education and text-books that the others do not.

Google has not been a player in the eBook retail world. Their partnership with the ABA and independent bookstores was a colossal failure. They aborted it in a year. Where Google is a player is the millions of orphaned books they digitized years ago. Finally all the lawsuits are settled (or appear to be) and soon they will be able to start to use in search and monetize. Google will continue to be important as they have millions of books the others may not.

Amazon is the big dog. They dominate eBooks and continue to create new models to sell books. Amazon is in first place but continues to pursue innovation. They have thousands of self-published authors that are selling books on their site. Millions of site that have books on them refer customers to Amazon via the affiliate program. Amazon is the undisputed leader.

So MAGA is in charge now.

Will there be room for another? Maybe. But there is definitely room for someone to carve out a niche where these giants have not seen. There is always hope and competition will come from places that will surprise the industry.

It’s a good time to be in publishing — even if the biggest companies in the Universe are fighting over the future.

 

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Samsung Galaxy S III & Apple iPhone 5

10.17.2012, No Comments, Uncategorized, by .

Samsung appears to have bought every commercial on the MLB playoffs. So much that I am really tired of the “parents waiting in line for the iPhone” ad. I have seem each at least 50 times and it gets wearing.

But, maybe it is fatigue or maybe it is my disappointment in Apple, but I am actually considering a Samsung for my next smart-phone.

I have been an Apple phone user for three generations of smart-phones and as long as smart phones have been around. I love having access to all that data and rely on my phone for dozens of things. I need it and can never turn back to the days of my phone for “making calls.”

Why am I thinking of the Samsung?

  • I trust the brand. A few years ago I switched my TVs to Samsung from Sony. The quality is strong.
  • Bigger screen.
  • Assume it is more reliable for making calls and getting data than my iPhone. There are spots in NYC that the service is horrible.
  • Still mad at Apple for the Maps mishap and taking away the YouTube App. I don’t want to get caught in the battle between Google and Apple. Seems like the consumer loses during these battles.
  • Break away from Apple’s stranglehold on my tech tools. I have an iPhone, iPad and MacBook Air.

But I do like the ease of linking my iPad, Air and iPhone. I am very satisfied with Apple’s laptops and doubt I will ever change. The product is too damn good. But the phone is much weaker.

What to do? My upgrade is set for January. So I have a few months to ponder.

 

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‘txtr to release under €10 eReader

10.10.2012, No Comments, Uncategorized, by .

German digital distributor ‘txtr just announced an eReader for less than $14. The ‘txtrbeagle’ will be released later this year.  This is significant because prior to this the cheapest eReader was around $69.

Amazon Kindle, MS-BNNook and Kobo have all been bringing out new readers and dropping the prices of their older ones.

From almost $500 for the least expensive one a few years ago, to almost free today, we have come a long way.

What impact will this have?

Amazon will start to give away Kindle’s with Prime membership. It will have ads and be stripped down. Amazon has always countered competition with price. Their strategy has been to grab and protect market share with lower prices on the books, the devices and the shipping (in digital this is the free wifi).

MS-BN will lower their prices although they just did so. But they will not go to zero.

Kobo will keep the same course. They have been successful by not trying to undercut on price.

What about Apple? They are releasing a mini-ipad soon. But the price will still be higher than anyone.

More readers. This is good for the consumer.

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iOS 6 is not working for me…

09.28.2012, No Comments, Uncategorized, by .

As a devoted Apple device owner and a serf to their commands, I dutifully uploaded the new iOS6 system to my phone.

I am not happy.

  • Google Maps are gone. Replaced with a ‘not-ready-for-prime-time” Apple Maps. I can’t even get Google Maps because there is no App for it.
  • Wifi connections are sketchy. I use my phone a lot and without wifi would always go over my data plan. Besides it being slower, I may end up getting hit with extra data fees. This is wrong, dead wrong.
  • YouTube being knocked out of the Apps — the new App is not nearly as good. This may be a Google issue, but I feel if Apple had not eliminated the authomatic App, all would be fine. This is a problem.
  • It’s just slower overall.

So what benefit am I receiving from this upgrade?

Apple please tell me.

Maybe it is time to cut the Apple cord — although we own four iPhones; two iPads; two MacBook Airs and a MacBook Pro.

 

 

 

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Telegraph Avenue – Chabon – eBook pricing

09.12.2012, No Comments, Uncategorized, by .

HarperCollins, the publisher of TELEGRAPH AVENUE from Michael Chabon, recently settled with the government. Now all HarperCollins eBook consumer prices will be set by the retailer (Amazon, Apple, MS-BN Nook, Kobo, Google). The price at which these retailers buy the eBooks at is still set by publishers. The discounts are negotiated.

The discounts are generally between 40-60% for the Wholesale model and 70% under Agency.

Under Agency (publisher-set), the publisher’s revenue went up and down as the retail price.

Under Wholesale (retailer-set), the publisher’s revenue is the same regardless of the retail price.

So, taking TELEGRAPH AVENUE…

  • HarperCollins has it priced at $17.99.
  • Amazon, MS-BN Nook and Apple iBookstore are selling for $9.99.
  • HarperCollins receives 40-60% of the publisher price (not the end-users price) – or $7.20; $8.10 or $9.00 per sale.
  • Retailers make approximately $2.00 per book (assuming 50%).

Under the old Agency pricing method:

  • HarperCollins sets the retail price at $14.99 but it would have gone down to $12.99 when it hits the NYT list.
  • Amazon, MS-BN Nook and Apple must sell at $12.99 (or $14.99).
  • HarperCollins gets 70% under Agency – $9.10 per sale (or $10.49).
  • Retailers make $3.89 per sale.

Publishers make less per sale.

Retailers make less per sale but not at a loss as long as the eBook retail is $17.99. When the publisher price starts to go up, it comes out of the retailer because they will still probably sell the bestselling books at $9.99.

I didn’t discuss Author cuts in this piece for that worthy of it’s own post. But there are also many excellent articles on the author issues already written.

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Competing with Amazon

09.08.2012, No Comments, Sports, by .

How do you compete with the New York Yankees?

They have all the money; attract the best talent; owners that are relentless at winning; buy out their competition.

How do you compete with Amazon?

Don’t take them head-on. Play small-ball; Billy-ball; money-ball.

Amazon has and continues to invest millions on systems; readers; selling books at the cheapest price; biggest selection etc. Don’t try to outspend them. Don’t get into a bidding and building war with someone who has vast resources. That strategy is one to fail. The latest decision in the DOJ suit, shows that Amazon even has political clout. Big companies change the laws. It happens in every industry.

Amazon is a great retailer. I use them. But I also shop as much as I can from my local stores. But Amazon can do a lot that others can not.

How to compete? Some thoughts:

  • Specialty retailer – Don’t try to out-Amazon Amazon. Go after a niche. Build that community and be the experts. Some publishers have tried to do this, but it isn’t that effective. Why?  To be effective, one must be publisher-agnostic and sell all within the subject. Plus, it is a full-time division that needs to do this. Not just a committee that meets once a week. There must be a commitment throughout the organization.
  • Trustworthy reviews and opinion – Recently the NYTimes reported that many Amazon reviews are bought and paid for. That the reliability of these reviews is questionable. Amazon also takes their eBook metadata from the publishers. Sure there is some additional info added by the author and users, but it is all marketing, bought and commercialized. Building a site that provides honest reviews would go a long way to building trust.
  • Subscription sales – Many publishers have resisted selling their eBooks this way. They prefer to sell the entire book and not allow people to taste bits. But this attitude is evolving. The business models are changing. Publishers have to grapple with which ones to follow. It is a lot of movement. But with the volume of books now available, moving to subscription would help some get discovered. Books get lost on Amazon. Subscription allows those books that are completely invisible a shot at being read.
  • Consumable sales – this is a “pay as you read” model. It isn’t Subscription and it isn’t straight up sales. It is based on micro-payments and the consumer having a balance (like their Starbucks gold card). The more you read, the more you are charged. I still this model working. There are specifics genres that will work better. This is an alternative method, but one that has value. I currently consult with TOTAL BOOX, who are delivering in this area.
  • Hybrid – take all the existing models and pick and choose.

One of the most difficult things about competing with any giant is if you are fortunate enough to beat them, they will either buy you out or copy. So the game is never over. It goes on and on.

Today, Amazon looks invincible. They announced newer, faster, sleeker devices. The government is on their side. Their stock is at al all-time high. But things change. For a competitor to be successful, they just need a small slice of Amazon’s pie. A very small piece of this enormous pie is enough to make a lot.

The Yankees are in a battle now with small market, low revenue Baltimore Orioles; Tampa Bay Rays and Oakland As.

It can work.

It does work.

It will work.

 

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Amazon is the Winner

08.24.2012, No Comments, Uncategorized, by .

The Department of Justice slammed Apple, MacMillan and Penguin in their efforts to fight the anti-trust case.

Earlier this year. Simon & Schuster, Hachette and HarperCollins settled the suit.

B&N just announced that their NOOK results were disappointing.

Sony, Kobo, Google – all after a few years of trying, still have less than 1% market share each.

But, Amazon continues to roll along.

What the DOJ suit basically does is allow the retailer to set the consumer price of an eBook. The DOJ claims that Apple worked with five corporate publishers to establish a fixed set of prices. These prices were then the only level at which all retailers could sell their eBooks. The DOJ eliminates this and allows the retailer to price eBooks anywhere.

What will happen is Amazon will start to sell eBooks below cost.

This will push an already fragile MS-BN NOOK over the cliff. When Amazon lowers the price of eBooks, B&N will either match the prices and lose money or keep their prices $2-$3 higher than Amazon, and lose market share. Either way, MS-BN future looks bleak.

It won’t matter to Apple. They have 10% of the market and have not been aggressive. They care more about selling iPads anyway and digital textbooks. Apple will continue to maintain a 10% market-share just because there are so many iPads in the marketplace. Some people prefer all Apple, all the time.

So, what will happen from the DOJ settlement? Amazon’s share (which had fallen to mid-60% from over 90% four years ago), will rise again. My estimate is it will be in the mid-80% range.

Amazon is the winner. The DOJ suit effectively is a death sentence for B&N.

But then, that is the free market – I guess.

But, having said that Amazon has won, does not mean the match is over. There will always be competition from somewhere.

The competition will come from niche players – specialty stores. Those that can create a better experience in a specific subject can out-sell Amazon, Don’t take the giant on head-on. Amazon will always fight to maintain biggest selection, the most efficient customer service and the lowest prices. But they can not be the experts in every subject. Develop the verticals, build it and the customers will come.

It can be done. It will be done.

More next time.

 

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Sony

08.20.2012, No Comments, Uncategorized, by .

Yesterday, Sony announced a new eReader.  Most are wondering why they are even trying. Their reader is more expensive than the MS-BN NOOK and Amazon Kindle. The added features are not that interesting. The Sony mind-share in the eBook space is low. I know a lot of people who read eBooks, I don’t know anyone who uses Sony.

Four years ago when Amazon launched the Kindle, Sony was the market leader. Granted it was a very small market but the Sony Reader was the device. I had one. I used it. But Sony never followed up with a string eBookstore. They never seemed to understand that the market is not selling devices for the sake of the machine – but selling devices to capture customers to one’s store to sell the books.

The same thing happened to Sony in music. They were first in with the MP3 and portable music devices. But never were able to corner the market. Apple came along with the iPod and the iTunes store. Before Sony would wake up, Apple owned digital music.

So what is the reason for Sony’s new eReader? They don’t have the retail space at all. They need to invest in their store if that is what they want.

Maybe it is the partnership with Overdrive and the libraries? Overdrive has over 90% marketshare in library eBook sales. But, 3M and B&T have entered the market and are taking aware market share. 3M provides eReaders for their libraries (the system is also compatible with Sony and MS-BN NOOK). This has been received very well by the libraries. Maybe that is what Sony is aiming for with these new readers?

One never knows, but not much changed yesterday when Sony made their announcement. People still are waiting for the 7″ Apple tablet; the new Kindle Fire, Google’s Nexus 7 and even the Kobo Touch upgrade or MS-BN NOOK upgrade. Sony is very seldom mentioned.

But it is the eBook world — things change every day.

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NBC, Twitter and the London Olympic Games

08.08.2012, No Comments, Uncategorized, by .

NBC has come under a lot of criticism for their coverage of the XXX Olympics in London.

Because of the five hour delay and NBC wanting to put together the best prime time show, everything was tape delayed. But NBC presented it as if it was happening in real time. The results of the events were known, but NBC acted like they were not. It was like some 1950s movie about controlling the message and reporting the news in an edited manner hours after it happened.

People on Twitter (myself included) were not happy with being treated this way. We knew the results (although it was not that easy to find at first) and felt a bit insulted that NBC acted like the news was not out there.

Then many people started to reply that they wanted to remain in the dark and actually enjoyed the spoon-fed NBC prime time show. That threw me a bit. I thought we all wanted news as fast as we could, when we could get it. But not everyone. After all, NBC has always treated the Olympics like an extension of the Today Show. Not trying to break news, but package it to make people taste a bit of this and that — and to be happy.

The NBC prime time Olympics is treated like the Today Show. It is meant to be valium and chill people and not really tax their brains. Relax.

Whereas Twitter is rapid fire, cocaine-fueled, hit me with more and more. Bring it on. Now. Immediately. Uncensored.

I get it now.

NBC did the right thing by devoting basically an entire night to Michael Phelps. This is how the Today Show would have done it. This gets the ratings. Although not feeding the sports fix for many of us.

I wish NBC would have used it’s cable channels for more. The full-time basketball and soccer channels are a waste. The erratic MSNBC and CNBC schedules are confusing. I wish one of the channels was a “SportsCenter-like” up-to-date Olympic News channel. Give me hourly shows that cover all the highlights and news. It would have served sports fans and Twitter fans.

I also think NBC failed by not embracing the web-site and actually using Twitter to help promote. Don’t ignore the results, but use Twitter and promote them. Show more of the gymnastics and swimming live. Sure it would be showing the key events before the Prime-Time show, but that is fine. People will still turn in for the Today Show Olympics at night. But some of us would watch during the day too.

NBC is trying to control this too much.

In a world of social media and instant information, NBC should relax a bit and embrace it — and not try to fight it so much.

Cheers.

 

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