Notable Posts 2008

2008 Articles: Personanondata 1

A Year in PersonaNonData. By Michael Cairns, Information Media Partners michael.cairns@infomediapartners.com personanondata.blogspot.com 908 938 4889 The Best Posts of the Year...but then I'm Biased As I close out the year and wish everyone best wishes for the New Year, I have compiled a summary of what I think were my more interesting posts at Personanondata. As always, thanks for your support and tell your friends to come visit and subscribe. In Death of The Big Box (December) I thought about how long-term macro changes that emanate out of the current economic crisis will impact the retail channel. I speculate how these changes will impact the sale and merchandising of books. Late in December, I read an article about the near bankruptcy of the second largest mall operator in the US and an article about how shoppers are flocking to online discount coupon sites. The web is easier and there is no going back. On the theme of print to web transformations and migrations, I had several posts - most recently the questionably titled Pimp My Print (December and my favorite for title of the year) and Generational Chasm (June). If I were to write a book the idea of the generational chasm really interests me. It's not a unique idea I have to say. As always Amazon was in the news - Amazon The Monopoly (March)- and I noted concern expressed in the market place about their increasing dominance. Amazon was brutal in their exertion of market power in their argument with Hachette UK. Mike Shatzkin picked up the theme in this guest submission Amazon and Book Pricing (April) (He also tackled the question Border's Stickers Books - Why?) Earlier in the year, I had speculated on the budding competition between Amazon and Apple: Amazon Versus Apple: Is this a Cage Fight (January). Apple may have the last laugh with the numbers of iStanza e-Book downloads to the iPhone. We await the next version of the Kindle in 2009. In keeping with the e-Book theme, I posted thoughts on a possible development of an e-Book mass market channel. Rackjobbing the E-Book (July) The post that generated the most comment during the year was on Brand Presence (July) where I noted the continued attempt by publishers to organize around branding concepts that remain largely irrelevant to consumers. In a similar vein I thought about the implications of big-name author's defecting from one publisher to another in Defections (February) and a possible Google play. My post on Massive Data sets (June) suggested that publishers may think differently about all the data collected during the preparation of published research articles, dissertations and other types of data intensive publishing. Lastly, the post office launched a Frank Sinatra stamp which gave me an opportunity to tell my Frank Sinatra story (May). I am waiting for the Clint Eastwood stamp so I can tell that one. I missed the John Wayne stamp but maybe I'll tell that story one day anyway. 2

***** Death of the Big Box Travel up Route 17 in northern New Jersey and you traverse the spectrum of big box retailing. These stores - from Ikea to K-mart - represent the shop windows on late 20th century retailing but, in contrast to their apparent ubiquity, the days of the stand-alone big box retailer may be numbered. A number of years ago, I saw some old photos of Route 17 and was shocked to learn it used to be a four lane (two each side) parkway with a wide grass median strip bisecting its length. Today, it is a clogged eight-lane shopping aisle and is just one of similar examples across the US from Rockville Pike in MD to Beach Boulevard in Orange County, CA. Barnes and Noble, on their call a week ago, noted that many of their leases are coming due and these will be renegotiated at lower rates. While this sounds like good news to shareholders, the current dire economic situation coupled with the Border's situation will result in a significant reduction in superstore locations. Projecting current physical retailing trends will make many current locations simply unprofitable even at significantly lower rents. We may be witnessing the demise of the suburban book superstore and suburban consumers may be indifferent. Online retailing is going to be the huge winner across all retail segments, but particularly in book retailing. There are We have a perfect storm: An excess of media options reducing the time traditionally spent reading books, the only so many economic slow down reducing all spending, the ice rinks or increasing acceptance and comfort of online retailing to virtually all consumers and the advent of the online roller rinks superstore which encourages a cost-conscious basket approach to consumption. Increasingly all of us - not just you can have those of us who have been checking our bank account and buying airline tickets online for years - will be buying in any one everything online, at the best combination of pricing and free delivery, and all without dealing with the expense community and hassle of traveling. Multi-store malls will continue to live on for many years. In contrast, we will see many large, empty retailing boxes punctuating the sides of our traditional highway shopping aisles. Already this year, the big-box retailing environment is dire with a range of store liquidations and bankruptcies from Linen & Things to Circuit City. In years past, other retailers would fill these spaces with their new formats or new concepts, but those days are gone never to return. Retailing innovation - to the extent that it exists - is emerging on the web but not in physical retailing. The big losers will be the real estate owners who won't be able to find tenants (there are only so many ice rinks or roller rinks you can have in any one community). Superstore physical book retailing, particularly its suburban version, may be a casualty. For a strong retailer like Barnes & Noble there will be plenty of time to adapt but others will fail. The current recession is going to change many things and some business segments just won't recover as consumers transfer all their shopping online. The economic crisis will push retailing over an imaginary Rubicon: More physical stores are unprofitable so they close, which reduces consumer access and pushes the consumer online. The cycle repeats itself and big-box book retailing will 3

be no different. Ironically, big-box retailing made shopping convenient for suburbanites and retailers chased the consumer diaspora with vigor. The convenience that suburbanites sought is now the demise of the same retailers that promoted convenience. Physical can't compete with virtual. Tant pis. But perhaps it's not all bad news. Mitigation may be driven by a population migration back into city centers which is most apparent in big cities like NYC, Washington and even Los Angeles. Couple this urban population growth with the daily office crowd and we have the re-genesis of an old phenomena: Main street shopping, which doesn't attempt to compete with the webstores abundance but serves deeper consumer needs. Retailing on a small scale operating with smaller inventories that turn rapidly, defined as 'scarcity' merchandising. The notion that if you don't buy it now it will be gone - which is the philosophy of The Gap, The Limited and some others. Books are sold exceptionally well online but their merchandising could adapt to smaller format retailing. Urban book retailing will continue to be dominated by chains; costs will simply be prohibitive for independents to support sophisticated merchandising and supply chains that will be needed in the type of retail environment foreseen. Regardless, store size will shrink as the inventory mix skews to movie style 'openings' and 'events' designed to bring in a volume of buyers in a short time frame. A publisher once told me that if he owned a store he would only stock 40 best sellers. That concept (or a variation) will become the next phase in physical book retailing. Will it be the last hurrah? Comments: Mike Shatzkin said... This is a very useful and prescient piece. I have been thinking for some time that we're bound to see a rollback in retail space in America because of online purchasing. I hadn't tied it together with B&N's news about where their rents would be going. Since B&N really has the only sophisticated supply chain in book retailing, one would expect that the difficult environment might favor them competitively. That is, they might pick up more from the demise of others than they lose through the overall attrition. At least for a while. But shelf space available for books (and for a lot of other things) is about to start declining. Inexorably. And for a very long time. Michael Hickins said... Michael, could independent booksellers, with a financial assist from publishers, invest in technology allowing them to print and bind on-demand books in the back of their stores? Could this be a way for them to serve both the quot;deeper needsquot; you mention as well as more casual shoppers? I think many customers would prefer to patronize a locally-owned business, enough things being equal. Michael Herrmann said... This site certainly is the one to go to for apocalyptic predictions! Did Borders succumb to the inevitable, or was it mismanaged? If it's more the latter, then your case isn't as strong. 4

This certainly is what recessions are for--to punish companies that have expanded too aggressively or too unintelligently--but that does not mean that they will not spring back like kudzu when the economy revives. In the specific case of the book industry, I believe that Borders's place will be taken by a resurgence in independent stores. Of course I am biased. But independents have weathered a lot of recessions and have proved impossible to kill, unlike Borders. For a good model of what the future might hold, check out the Northshire Bookshop in Vermont. They are large enough at 10,000 square feet to house a good number of titles--they have a state of the art cafe--and, most importantly for readers of this site, they are beta testing a POD machine which makes all the quot;long tailquot; kinds of titles available immediately. The future may be in the past, in smartly run, technologically sophisticated local operations. Dianawudavid said... Actually HP aggregates and allows you to print RSS feeds from a variety of media and HSBC in Heathrow is sponsoring a quot;book barquot; where you can buy pieces to go in to a travel book they bind while you wait. Michael Hickins is not far off. ***** Pimp My Print Many pundits pontificate on the demise of publishing (me included and some others I could mention) and while many of these versions of the future are well intentioned they often lack substance. Today in ‘Pimping’ ComputerWorld1 - an obvious organ of reasoned strategic your discussion about book publishing - is a perspective 'from technology' that decries the effort by Penguin and some others content to launch their content on mobile platforms as 'painful'. The author's wider point seems to be that publishers need to place will only their full content - not just snippets - in as many places as possible so that readers/consumers can access it with as little ever have difficulty as possible. Music publishers did not do that and became the victims of rampant piracy, and some have argued limited that because electronic access to music content was limited success. this drove piracy. Had there been easy access and easy payment options perhaps the music industry would be in a different place now. But that is 20/20 hindsight and at the time, you would have to have been a certified genius to have seen that future. Publishers have a different issue. Reading is immersive: We are active readers and passive (music) listeners. 'Pimping' the content so that it appears on a smart phone or a web browser or a flat panel will only ever have limited success. It is tactically important to do this with the current inventory of content that a typical publisher will own, but that's not going to sustain the future of the business. Any publisher whose digital policies and activities are focused entirely on retro-active conversions and the migration of their historic product packaging to an electronic environment will see 5

their market whither. It is possible that some publishers may make a choice to cash- cow the existing content and sell it on every available electronic platform they can. That makes some sense but not if in doing so they believe that model will sustain their future publishing programs built on delivering readers a 250 page novel or a 12 chapter business book with an index limited by the number of blank pages left in the last folio. Pimping the print compounds an issue publishers have faced for a long time (forever?). They don't really know what consumers want. To paraphrase Wannamaker 'I know only 50% of what I publish sells, I just don't know which 50%' (He said it about advertising). The publisher of the future is going to spend more time understanding the consumer and fulfilling their needs (marketing 101: a need is filled not created) than transferring the current model to phones, screens and digits. If I were heading a publishing house, I would hire a band of 25-30 year old editors/writers, give them a budget to acquire content and have them build a new 'publishing' operation unfettered by print runs, business models and pub dates. Their responsibility would be to create content a target market valued enough to use, to experiment in how to monetize the content and to be able to replicate the model. With guidance - not oversight - provided by the many experienced managers that exist in a typical publishing house the team won't fail. And yes, I would do this TODAY. So forget pimping existing print and think about delivering content consumers need. Comments: Anonymous said While I don't disagree that comparisons between music and publishing are often facile or wrong, you didn't need to be a certified genius to have seen what would happen to record companies who procrastinated in the face of digital media. They were repeatedly warned from as far back as the mid-90s. Yes, it's crucial that publishers understand their customers better - but they've been told that for years too. Where they may easily repeat the mistakes of music is falling into the arms of a powerful intermediary. For Apple in music, read the recent deal with Google in publishing. PersonaNonData said... I think we agree but I believe the context is now completely different from the early days of Napster. Publishers have so many examples where music exec's did not, so in the case of the music producer they would have to extrapolate with very little guidance as to what the future held. I think we agree that is not the case in publishing. To your point on magazines/books and Google here is fellow traveler Adam Hodgkin: (exacteditions.blogspot.com) Google is mainly (entirely?) working from scans (yes I know that there were no PDFs in the 50's, 60's and 70's). I am not sure that there are any current issues in the archive I couldn’t see anything yet from the noughties (correction Popular Science is there up to Feb 2008). In this respect the magazine service is rather like the historic newspaper archive that Google has also been working on. It is building up a large 'long tail' whilst the magazine and newspaper publishers dither about what to do with the short head (hint: think about selling subscriptions -- that is what Google is soon going to be doing for new books). Isn't this the strongest possible wake-up call for 6

magazine publishers? Hey folks, time to get your current issues up and running on the web. Make your magazines searchable through Google and sell subscriptions to them through Exact Editions! ***** Generational Chasm Publishing used to be predictable across generations. Parents read the same books in the same manner as their children and grandchildren. Not so today. Today's publishers for the first time in their history have no confidence that their child's generation will be (or are) interested in their published output. It is not that publishers aren't making an effort. I have a disturbing belief that publishers are forcing existing content into a format and delivery mechanism (e-books and e- readers) that is not ideal in the first place only to have that e-book content, in the second place, used by a market - my and my parents’ generation - that is in long term decline. In other words, migrating content so that it is available on an e-book may provide a false sense of security for publishers who believe this is enough to 're-launch' their content to the newest generations. Every publisher should have an e-book strategy just like they should have an Ingram or POD strategy but today's one dimensional content is no longer enough to engage younger consumers. This is why experiments like the recently announced agreement between HarperCollins and 4thStory are so interesting. From the press release: 4th Story Media and HarperCollins Publishers today announced their partnership in The Amanda Project, the first multi-platform series to be written in part by its audience, girls ages 12-14. 4th Story Media, which owns all rights for the property, will produce the content for The Amanda Project with a creative team including web design agency Happy Cog, young adult authors, artists and graphic designers. HarperCollins Publishers, which is a strategic partner in the venture and an investor, has acquired the rights to publish an eight-book The Amanda Project series worldwide.” It feels like the art and craft of publishing great stories for children is on the brink of revolutionary change,quot; said Lisa Holton, founder and CEO, 4th Story Media. quot;We are exploring new ways of using the web to tell stories, while also leading kids back to the joys of reading. By combining talented authors with creative web designers we are fusing traditional storytelling with the interactive world of social networking, online games, and user-generated content. We are thrilled to introduce 4th Story Media with the launch of The Amanda Project and are delighted to be partnering with the exceptional team at HarperCollins to bring this series to life.quot; More of this 'web first' publishing will be seen as the normal way to launch a new product or title. HarperCollins is one example but the methodology is appearing across the publishing spectrum. For example, the publisher of Bass Fisherman (no I don't subscribe) creates targeted web sites that combine social networking, a minimum of editorial content and rely on users to power the content build with their own youtube videos and podcasts. Having built an interest group, the publisher is now planning a print product targeted at this group. Doing it the other (traditional) way would have been expensive and speculative; moreover, it wouldn't have engaged the market in the manner that the web-first approach does. 7

Tomorrow’s version of the monograph is unknown but it is not the e-book version of today's book. The hype around Bezos' appearance at BookExpo was troubling to me because of the manner in which we hang on his every utterance. Certainly Amazon is important, but we are the content providers and I hope we are all looking forward to the day when a panel of publishers gets up and serially announces game shifting developments in content and content delivery. Will it be next BookExpo? Comments: bowerbird said... “we are the content providers and I hope we are all looking forward to the day when a panel of publishers gets up and serially announces game shifting developments in content and content delivery”. - you funny. -bowerbird p.s. don't hold your breath... PersonaNonData said... Hope can always spring eternal... ***** Amazon The Monopoly Trouble at Mill. Manufacturing of old had it that the mill owner owned the means of production and the mill workers toiled within an inch of their lives, lived in company barracks, spent scrip at the company store and if they had anything left they banked at the company bank. Amazon is a latter day mill owner. The company is attempting to tie their client/POD publishers to them to the exclusion of other relationships the client publishers may have through Amazon's web of You need administrative, financial, distribution and content tools. As a practical matter, it is becoming harder (and may be financially to be on impossible for many small POD publishers) to maintain separate relationships with Amazon and all the rest of the our publishing community. platform The blog world is enraged2 at the moment over Amazon's new policy on POD. The company is effectively telling POD using our customers that if you want to sell your POD products via the tools. Amazon store you need to be on our platform using our tools. If that means all your titles need to be converted then that's your problem. This is not a situation where these POD publishers can say 'I'll just go some place else'. Amazon has sucked them in because of all the wonderful tools they offer the publishers and of course the sales penetration. In announcing the Booksurge/ CreateSpace merge in August 2007, Amazon's senior v-p, North American retail, Jeff Wilke said, quot;The new CreateSpace Books on Demand service removes substantial economic barriers and makes it really easy for authors who want to self-publish their books and distribute them on Amazon.com.quot; As it turns out this is true, but there are some significant caveats. The Wall Street Journal3 was kind (and misleading) in its assessment of this Amazon initiative: 8

Amazon.com Inc., flexing its muscles as a major book retailer, notified publishers who print books on demand that they will have to use its on- demand printing facilities if they want their books directly sold on Amazon's Web site. The move signals that Amazon is intent on using its position as the premier online bookseller to strengthen its presence in other phases of bookselling and manufacturing. Amazon hasn't been merely a book retailer for some time. While many in the industry - PND included - can't help but have admiration for this company they have amassed a level of market influence across the publishing value chain that should concern everyone. Today, the issue is focused on a small (ardent and vocal) minority of POD publishers whose entire livelihood in many cases is dependent on the Amazon retail expanse. The WSJ should know better. Without being too dramatic, the release of Windows 3.1 heralded a period of intense exclusion at Microsoft: If you didn't play ball with them you essentially had no marketplace. Perhaps at first blush the publishing industry doesn't appear to have any correlation to the software world but with the migration to 'platform' based publishing (a publishing version of iTunes for example) we are seeing the germination of a world where there are only one or two legitimate channels to the consumer. If their actions in the POD world over these past two months are anything to go by then Amazon definitely has monopolistic tendencies. Comments: Eugene G. Schwartz: Good points. Amazon may be the purest play to date (beyond even Microsoft)of how to lock in a market by horizontal as well as vertical consolidation by simply exploiting economic and distributive power without forcing or defrauding anyone. Pure laissaiz faire Capitalism says that monopolies arrived at without force or fraud will be self-correcting if they fail to offer competitive value. Competition will arise and customers will shift to the better choice. Anti-trust legislation came about because lassaiz faire advocates could not show any such self-correcting mechanism at work that might change things in any one's lifetime. So, we have built up in the last century both legal constraints and trade customs that balance the right of a manufacturer or vendor to decide who they will do business with on the one hand, but having made that choice, requiring that they provide a level playing field among their customers. Bundling service features for competitive advantage is a fair and valuable strategy, since in a competitive environment everyone benefits who chooses to do business with a particular vendor or use a particular product. The problem that Microsoft raised with its browser bundling strategy, more sharply demonstrated by the Amazon play, is that it also served to block equal access to the distribution channel controlled by Microsoft. Amazon is trying to have it both ways. BookSurge is a printer that serves the wider market with a variety of services. So is Lightning Source, ColorCentric, IBT and a few other substantial one-off printers. 9

Until now, Amazon was favoring Lightning Source - but because they were a third party vendor and there wasn't really anyone prepared to commit to Amazon the same level of service, it became an acceptable benefit. Now Amazon is choosing to favor the customers of one printer over another -- and the favored printer is the one it owns. Foul play, it seems to me. I'm waiting to hear what further Amazon has to say by this Monday, after which I may do a little blogging blast on the subject myself. Gene Schwartz, Editor at Large ForeWord Magazine ***** Amazon.com and Book Pricing By Mike Shatzkin of The Idea Logical Company. Amazon stirred two controversies in the past couple of weeks. A lot of attention was paid to the one concerning print-on-demand, where they did an arm-twist to get publishers who use the capability to set their books up at BookSurge, even if they were already set up someplace else, most likely Lightning. I have expressed my concern on behalf of publishers about that policy which, although characterized as a mere attempt to be customer-friendly, should be a matter of great concern to Amazon's suppliers. The second controversy, however, is a bit more complicated and, to my way of thinking, Amazon's position is considerably more justifiable. That was Amazon's suggestion that they will interpret the price at which a publisher sells directly as the quot;realquot; retail price, on which discounts to them should be based. This recalled for me a 10-year old industry conversation and, in doing so, showed me the sense in Amazon's position. In the 1990s, the suggestion that retail prices should come off the books became pretty vociferous. Bernie Rath, then the pioneering (and publishers and big retailers would say, quot;troublemakingquot;) Executive Director of the American Booksellers Association was among those making the case. In a nutshell, Rath and some very sophisticated and successful booksellers made the argument that it was a mistake to quot;capquot; the retailer's margin with a printed price, above which they then obviously could not charge. The argument was that retailers in every other field adjusted their prices to the neighborhood, reflecting both the cost of real estate and the local community's ability to pay. By limiting booksellers' margins, publishers were, in effect, limiting the number of outlets that could sell their books. At that time, there were two quot;most popularquot; arguments against the idea. One was that booksellers, by and large, benefited from the prices being on the books. It saved them the effort and cost of stickering prices themselves; it relieved them of the responsibility for prices in the eyes of their customers, who could clearly see the price was printed before the bookseller got the book; and it dramatized any discounting the bookseller cared to do. Because book clubs were a more important component of a publisher's sales at that time, they represented another constituency 10

that supported the printed price because it emphasized their own cut-price offers. And booksellers could live with that discounting because book club membership was constricting; it was not about buying what you want when you wanted it. At the time, I often made a third argument, which I believed was the most important even if it wasn't the most ubiquitous. Publishers have always been willing to sell any book they publish to any consumer who asks for it. At the time, it was absolutely routine that those sales would be made at the full publisher's retail price, plus some charge for postage and handling. In that way, publishers respected the reality that some of their books might not be widely available (remember, even after there was an Amazon, there was a period before most people had regular internet access and a comfort level about using it), but avoided quot;competingquot; with their retailers. I pointed out that this practice meant there really IS a publisher's price, so the question narrowed to whether it would be revealed to the consumer on the book, or not. And the retailer who decided to sell the book at a price higher than the publisher's price -- which, even at the time seemed more of an imaginary than real opportunity -- would be taking the risk that his/her customers would soon know they had been gouged because either they or somebody else might let them know what the publisher's price actually was. How times have changed. And two aspects of this equation have really changed with it. First of all, no bookseller today would anticipate being able to sell a book at higher than the publisher's retail price. There are already consumers walking around bookstores with handheld computers checking prices online while they shop in the store. And, as we all know, prices online are never going to be higher than publisher's suggested retail, whether printed on the book or not. But, secondly, many publishers now sell to consumers aggressively through their web sites, and price offers are part of the effort. So while the old bookseller arguments for taking the prices off the books are no longer valid, neither is my rejoinder. Time has passed both arguments by. But Amazon is making a good argument here, and it is one that B&N and other retailers, and, by extension, all wholesalers, will likely join them in pressing on publishers. The price printed on the book really means nothing if the publisher doesn't sell at that price. All it becomes, then, is a basis on which to establish prices to intermediary customers; it is no longer a meaningful price to the consumer, quot;suggestedquot; or otherwise. And if the longtime industry convention that prices to intermediary customers is pegged to the price charged (presumably by the publisher) to the consumer, then the discounts should be calculated from the publisher's consumer selling price. We have not heard the last of this argument. Publishers selling direct to consumers better be thinking this through very carefully. Mike can be reached at mike (at) idealog.com. Comments: Brian said... 11

I think there is a link between the opening example (Amazon's expectation that POD publishers use BookSurge) and the emerging problem with retail pricing on publishers' web sites. In both cases, tools that provide consumers with improved awareness and discovery have prompted companies at various points along the publishing value chain to test ways to capture more of the overall value. Whether with BookSurge or direct selling, the quot;traditionalquot; roles have blurred. In both cases, it also feels as if Amazon is using its position to increase its share of the overall pie. Understandable, and as Mike points out, valid in the argument against direct selling, but worrisome when your retailer is making moves to become your printer, as well. E-Reads said... Mike Shatzkin's discussion about book pricing is right on the mark. But lest anyone think this is all theory, a recent skirmish in England brings the matter into sharp focus. When Penguin UK sold books directly from its website at a price lower than Amazon's, there was speculation on just how Amazon might retaliate. Here's what the correspondent said: quot;There are fears that Amazon may retaliate by regarding a publisher’s online price as the recommended retail price and applying its trading terms to that. If a publisher discounts a £20 book to £15 online and Amazon has a contract for a 50 per cent discount on the full price, Amazon would pay the company £7.50 instead of £10. Publishers say that this would be unfair and could ultimately drive up prices.quot; As publishers begin to focus on direct sales as a possible profit source, we're going to see more elbows thrown, just as Mike Shatzkin's piece suggests. Richard Curtis ***** Borders Stickers Books - Why? By Mike Shatzkin of The Idea Logical Company. I don't buy a lot of books in bookstores anymore -- I'm an ebook man -- and when I do, I generally patronize Barnes & Noble or an independent. So when a colleague a couple of days ago walked in with a couple of books he'd bought at Borders and pointed to the stickers on each book and said quot;hnh?quot;, it recalled a bit of book retail history and some considerable irony. It is obvious, or should be, that for a bookstore to be stickering every book is evidence of a pretty dumb supply chain. Every book has a bar code with a price extension. This is extra work that should just not have to be done. It was the early 1970s when the B. Dalton chain introduced point-of-sale capture at the cash register. This was only a few moments after the invention of the ISBN and before there was any cash register technology for quot;readingquot; by scanning. So it was complicated to do this. The way it worked is that each title Dalton bought was assigned an SKU number. When the buyer in Minneapolis made a purchase decision, stickers were generated for the books and sent to the store. When the books came in, they were stickered before they went to the sales floor. There were quot;holesquot; in the system, of course: 12

when a store bought a book from a local wholesaler, they often would put a quot;dummyquot; sticker on that got them past the cash register but didn't record the specific book being sold. But the system delivered information that was light years ahead of what any chain retailer had ever had before and rapidly pushed B. Dalton ahead of their competition at the time, Waldenbooks, and particularly so in the sale of steady-but-slow backlist. It was a revelation at the time to learn that the sale of six copies a week across all stores (in a multi-hundred store chain) was a quot;hotquot; title got you on the quot;warmquot; list. That and that sales of six titles a month introduced some real perspective to how books move. Or don't. For a few years, Dalton operated with knowledge of what was selling and Walden didn't. Then, in the later 1970s, quot;machine-readablequot; typefaces were invented, which I think were called OCR-A and OCR-B. Harry Hoffman had taken over as head of Walden by then -- he who had introduced the microfiche reader at Ingram a few years before -- and he told publishers that, as of a certain date (I think this was about 1980), Walden would require that the ISBN be printed on the books in a readable font. And suddenly, Walden leapfrogged Dalton. Dalton had invested in a system that required a unique number (their SKU) and stickering and punching those numbers into the cash register. All of that was sidestepped by Walden, which only had to scan the readable ISBN (or punch in the ISBN if it weren't readable.) No stickering. No unique numbers. The irony today is that Barnes & Noble, which owns (and is closing) B. Dalton, has a great supply chain that requires no stickering. And Borders, which owns (and is closing) Walden, has a poor supply chain which requires them to put their books into a quot;flow-throughquot; warehouse to be stickered before they can go to the stores. Comments: Adam Hodgkin said... Great post. I still don’t get why Borders do the 'flow-through' stickering. Have they not realized that they can use the ISBN or does the sticker allow them to track the individual copy? Am I right that Amazon doesn’t sticker books, but does sticker parcels/packets? There is still a business in glue. Anonymous said... Love the history: It seems to me that Borders would be well situated to set-up RFID restickering if they were so inclined. Anonymous said... Many stores sticker to indicate placement of books within the store and to track receipt dates when scanning shelves. RFID would be great if it were currently affordable. ***** 13

Amazon Versus Apple: Is This A Cage Fight? Amazon is buying Audible.com for $300mm: This changes everything. Audible is already a destination site for Audio books (and content) what more appropriate gateway exists to boost the growing (e-)book content that Amazon is selling via their Kindle? As I speculated a few weeks ago4, the Kindle will be a delivery platform for content (not just e-books), and it doesn't take too much imagination to see how Audible's content fits very nicely with the Kindle strategy. Audible has also taught their users about the benefits of subscribing to content and have proven that this model can be successful. So, not only does the Audible Amazon will acquisition have the potential to bring new customers to the Kindle platform (on the basis of a subscription do everything model for content), Amazon.com will also gain the expertise of staff at Audible who has built up this they can to program. Extending a subscription model to content presages the resurrection of the Book Club model. keep Apple Didn't we all know it would come back? (Well maybe not, but Bertelsmann were spied coming out of out of the Madame Radzwilli's House of Fortunes just the other content day). distribution/ Strategically, this acquisition makes fundamental sense at the product level alone. Coupled with an increasing platform need for Audio versions of text (what with our aging population) with the already loyal Audible customer business. base there is little to argue about. And I do believe, it will escalate a change in business model for trade (consumer) publishing content. How publishers react to the news will be interesting to watch. Most will not see the significance and many will be happy at the increased exposure that audio books will get as part of the Amazon.com empire. Where there is concern, it will orient itself around the realization that even greater market power will be exerted (either overtly or not) by Amazon. Given my comments above, this acquisition could represent an end-run of the order of I-Tunes. Look how music publishers are now tied to the $0.99 cents per song model. It just snuck up on them. Will the same happen to book content? Which brings me to my last comment: It is all out war with Apple. (In fact, I would not be surprised to see a competing offer for Audible. I know Apple are not in the content owning business but they might do it to be mischievous or to protect a budding position in the book market). There has been some speculation about whether Apple would develop an e-reader device as part of the I-Phone. Despite his comments to the contrary5, I believe Jobs was planning some development here and I speculate that Amazon thought so as well. Amazon will do everything they can to keep Apple out of the content distribution/platform business. Apple for their part don't want Amazon's movie and music distribution (or the Kindle) to challenge iTunes. How this rivalry plays out will be very interesting to watch. They both come at the issue from completely different starting points. Comments: RobertinSeattle said... 14

Anything that ultimately benefits the consumer will turn out to be a good thing. Amazon is doing all of us a favor by offering us a viable alternative to an Apple- centric download world. Coupled with demands from music companies for a bigger cut of the margins which already leave Apple with little or no profit on the songs themselves as well as competitive pricing from other companies manufacturing players, Apple will be hard-pressed to continue their smoke-and-mirrors of a dominant download music model. I'm glad Amazon is offering us a well-backed alternative. ***** Rack Jobbing The EBook A change, equivalent to the launch of the mass market paperback just took place but did you notice? Months in advance of the expected release of the new iPhone thoughts ran wild on the potential for an Apple iBooks store as much for its potential impact on sales as for its counter point to Amazon.com. With the launch of the 3G iPhone publishers have been found wanting, sadly waiting for the market to be gifted to us rather than proactively setting out to define it. This post from Kassia Krozer6 sums it up perfectly: On a weekend when headlines were there for the grabbing and customers were searching for both toys and content, the publishing industry, perhaps practicing summer hours, was curiously silent. Not a single major initiative, announcement, horns-blaring call to check out these great offerings on iTunes. Call me crazy, but I’d expect an industry that salivates over moving 150,000 units to be all over the potential for reaching seven million “mobile is the future” customers. Are you not out there, listening to readers, gauging their interest? They want, you have, and you’re still hiding the goods. I get this isn’t the largest market you have, but is that an excuse to sit on the sidelines? Publishers are again about to have a market dictated even as they continue to complain about the market power of the online retailers. Now $9.99 may become a defacto RRP for eBooks and as volume increases via the prodigious iPhone apps store publishers won't know whether to laugh or cry. When mass market paper backs gained market acceptance at Woolworths in the 1930s publishers gained access to a market they never would have developed on their own. Books were suddenly available for a dime and as publishers stood on the sidelines it wasn’t until years later that they entered the market directly or bought up the main suppliers. Will history repeat itself with publishers buying ebook apps suppliers like Fictionwise or build their own applications? Hopefully, at least one or the other. Traditionally, we think of distribution and content development as separate disciplines within publishing companies but in the e-Publishing world they commingle. Content optimization becomes the normative state where the end-user builds their own product out of a content repository created by the publisher without limitation on how the end product is rendered. The 'distance' between publisher and end-user (where distribution as a function currently sits) is wide but becomes virtually non-existent in the future state. To bring us back to the iPhone circumstance, as long as publishers continue to think in terms of traditional functional silos and roles and responsibilities they limit 15

themselves in their ability to leverage their assets. In contrast, witness Amazon which has never considered any aspect of the publishing value chain to be off limits. More publishers need to think in this manner if they want to redress some of the advantages Amazon and others retain (or new competitors develop) in the marketplace. Comments: Mike Shatzkin said... I am surprised that none of the commentary about publishers and the iPhone mentions the role of DADs in this process. It is not for publishers to create the bridge from their content to each app; that's what they hired DADs for. Specifically. So the question is NOT: where is Macmillan? where is Random House? The question is: where is Ingram Digital? Where is codeMantra? Where is LibreDigital? THEY are the ones who should be making it easy for publishers to use each new platform that becomes available. Mike Shatzkin said... After conferring with my friends at Ingram Digital, I learn that some publishers are more prepared for iPhone than we all realized. Or than most publishers realize. Ingram Digital is the exclusive fulfillment source for eReader eBooks. eReader software is a free download and works on iPhone today (this is the reader that began life as quot;Palmquot;.) Shortly, all eReader formatted ebooks from all Ingram Digital powered retailers, will work with the iPhone. So books in eReader format from all publishers distributed by Ingram Digital are purchasable for and readable on the iPhone. ***** Brand Presence Most people in our industry recognize the irony inherent in discussing brand management in the publishing industry. Every aspiring author and agent seeks the validation that being published by a major publisher brings, yet most consumers have only a passing awareness of the publishers' brand. There are exceptions-- Harlequin, Hungry Minds, O'Reilly- but across the panoply of publishers, brand strength is only partially monetized. This recognized fact has not stopped publishers from Lacking in investing heavily in branded web sites that cocoon their authors in an experience that generally is not all publisher relevant to the consumers they are attempting to attract. That is not to say that the content and websites, applications available on the websites of most large though, is a publishers are inadequate or unsophisticated, but they are misappropriated. I especially like the strong websites of HarperCollins and Penguin, who have both taken up the challenge of community building, sense of widgets and e-Content. And it is difficult to be critical of these attempts, given the aggressive level of engagement experimentation undertaken. What seems to be lacking in all publisher websites, 16

though, is a strong sense of engagement. And engagement that is resilient. Just as consumers return to their favorite booksellers, publishers need to believe they can engage their consumer base to such an extent that they return each time they are interested in purchasing a book. And that's any book. Publishers are best placed to build author-centric and subject/theme-oriented websites--not sites oriented around a quot;brandquot; that isn't relevant, but those that focus attention on segments of the business that remain relevant to consumers. Envision the Spiritual segment at a site supported by HarperCollins which has a unique, appropriate and relevant focus far apart from the current 'corporate' approach. All segments are valid candidates for more of a silo approach to marketing publishers' products. And I would go further in recommending that publishers consider marketing within these silos all titles available, rather than just those produced by the publisher. What better way to condense a market segment and become a destination site for Self-Help, Spirituality, Mysteries, Computer and any number of other book-publishing segments. Consumers aren't dumb. Amazon's main attraction is that all the titles in any one segment are available in one place. As long as publishers continue to ignore this fact, they will under-serve the market and under- perform given the investment in their sites. So, which publisher will be the first to license a quot;Books in Printquot; database (as B&N, Google, Borders and many others have already done)? That would be an excellent start; moreover, the publisher is best placed to augment this data with more details, content and community- building applications that will draw in consumers. A quick search for Doris Lessing and George Pelecanos shows that Books.Google.com and Wikipedia are more likely to be the initial reference points for consumers. On their respective publisher's sites, these authors retain a significant presence, but that presence does not appear to be adequately monetized. Many publishers will argue that they are there to support the retail sale and as long as a book gets sold-- based on their effort-- they have done their job. There is something to this argument but the age-old paradigm on which it is based--multiple retail channels, limited retailer power--is long behind us and getting worse for the publisher. Web presence for many companies (including publishers) remains a fluid engagement. The inherent benefit of the web is that you can try and fail repeatedly, with limited downside, assuming you monitor closely. In the publishers' case, it is important they not attempt to use the web to build brand awareness around their trade-marks which continue to be removed from consumers' experience, Internet or not. What their focus should be is building a discernable alternative to the predominant web retailers by segmenting their offerings around logical categories and building their brand around those segments as they use their content knowledge, author relationships and technical expertise to build something powerful for the future. Comments: Anonymous said... It's been done. Bloomsbury licensed the books in print database in 2001 presenting a comprehensive bookselling service in the context of a site titled quot;literary lifequot;. Devaki said... You're right--it makes more sense for a publisher to create separate sites for various sections of its list, as the Penguin UK and HarperCollins UK groups have done. I wish 17

Indian publishers would do the same--they've based their sites on their catalogues, there's very little interactivity and the sites are DULL! Peter said... I was going to say that Bloomsbury did this years ago - fairly disastrously I think, given the fact they dropped it soon afterwards. I assume you're talking about the Penguin and HarperCollins US sites? The UK site of Penguin is kind of fine, if a little bland, and very short on content. But the UK site for HC is (IMNSFHO) a disaster. The big question about publisher sites being successful (for me) is simply - why will people go there? It's a web 1.0 rather than 2.0 problem at the moment - publishers just don't get the why of how people visit sites, and (in a very publisher way) assume it will be a success quot;because it's therequot;. In my experience, (I've been producing publisher sites for about 10 years, and still haven't made a perfect one) publishers don't have a compelling enough proposition for their site to mean that lots of people will visit. By this I mean either they chuck up the same content about their books that is also being syndicated to the book trade - meaning that the sites effectively compete (in search engines) with much bigger sites, like Amazon. This is not a winnable battle with those tactics. The only way to win that battle is to hand-craft unique, compelling content for all of your products, and invest in good, well-written, optimized content. Basic SEO. Or (and perhaps I mean AND) publisher sites tend to reward the loyal visitors who do go there with an insulting price proposition. This tends to be -either - buy from Amazon (which makes the visit to the publisher site - and the site itself - redundant); or pay next to full price, when the title is clearly available for significantly less from a customer of the publisher. Both of these quot;strategiesquot; can only have a negative effect on any brand in publishing. The sites that don't insult, but reward, loyalty and attention - usually those of the smaller indies - win; and furthermore they do so with guile and talent, rather than expensive (or aggressive) technologies. It is these publishers who have a tangible sense of quot;brandquot; and position, rather than just a well-recognized logo. PersonaNonData said... Peter, I am more aware of the US sites as you note. I do however see a significant difference in the HC US versus the UK site. I suspect this has to do with divided reporting structures and adds a further complication to the brand issue - for another day. I agree with your assessment of the content on publisher websites. I hope to address this in another post but perhaps publishers should be thinking of basic and premium content. Basic is available from Amazon and premium is available directly from the 18

publisher and includes more content and more opportunities to mingle and engage. How this occurs will be (should be?) different for each title. Expecting consumers to visit and interact with a publisher when the 'offer' is effectively the same as that on a retailer site (without competitive pricing and delivery) will never succeed. SEO/SEM will be critical and is clearly only sporadically implemented at the moment. Rodale, a specialty trade publisher in the US use SEO exceptionally well. Sunday night TV here had the first show of the second season of MadMen which was heavily promoted. In that episode one of the characters is reading Meditations in an Emergency which is now 159 on Amazon.com (282 yesterday but much, much further down the list before the show aired). A publisher aggressively managing keywords should be able to take advantage of these serendipitous events to draw traffic to their site and become a primary destination site. FG said... Publishers are producers not retailers. They cannot offer product directly except at full price and consequently there is no great financial return for heavy investment in their websites. A great site might drive sales with retailers, but likely the meager marketing budget is better spent on ads, in-store promotion and buying the book into lists and displays. Niche sites work well for small, niche publishers whose publications are generally sold at full price across the board, but again make very little sense for major houses. Effectively major publishers have outsourced their online strategy to Amazon by offering such extreme discounts. It's a mistake and it's exceedingly boring for the consumer. Hopefully a correction will come as Web 2.0 expands. Alain Pierrot said... Corporate sites such as Harper & Collins' might be considered in a different way than promotional sites for individual authors/genres: publishing groups in fact manage on one side portfolios of authors and need to recruit — and manage — their portfolio of contracts. It makes sense to build sites to gather future authors on the basis of the potential advantages they can offer. Once under contract, authors in fact compete against each other within the same group as well as against competitors to gain readers' attention. Therefore sites (imo different sites) should be built to manage the relationship between authors and readers, at least at the level of branded thematic collections, down to the individual brand that a successful and prolific author can represent. Obviously, brands that were attached to a technology (paperbacks) and pricing, such as Penguin, are in a more difficult position to be leveraged in the latter type of sites. Chris Hamilton-Emery said... I disagree that publishers aren't retailers. Direct sales far outweigh what the book trade achieves. But we're looking at trade publishers here. I think the argument for brands stacks up differently for independents where brand becomes synonymous with niche and the indies often drive out competition from the conglomerates. The key difference in considering publishing strategy is really rather simple. Who has the content? With customers changing their buying habits and reading groups and social networking driving consumption it's arguable that most bookstores will disappear in ten years. Can Amazon maintain their position with no content? Will the development 19

of online offers from publishers draw people to the content rather than to the aggregator. I don't think Amazon's well-earned dominance is as absolute as it may appear and in this age of disintermediation rather than looking at a publisher free future, we may well be looking at the end of retail as a separate function in the supply chain. Falicon said... A couple of my own quick thoughts: 1. It seems likely that Amazon itself will begin to offer publisher tools...perhaps the publishers themselves could work out deals with Amazon to license. such tools, and it then becomes a win/win for everyone (Amazon has the full circle of content so the consumer is happy and by extension Amazon is happy...and the publisher saves on cost/energy while still providing high-profile, powerful tools for their authors and readers). 2. As far as independent publisher sites...as a casual reader, the area I see the most potential is in book added value...for example publishers should be giving readers more direct access authors (chat live with X author via our site as one example), or extra book-related content (download rough drafts or background material used in writing this book)...basically they need to give the readers a reason to come (and come back) while at the same time providing the authors with the tools/features to help build and engage an audience...connecting these two groups in a way that pure transactional system (like Amazon) does not is the real key to making a publisher site explode onto the scene (in my opinion). PersonaNonData said... Chris, I think your comment about retail as a separate function within supply chain is perceptive. I agree and see publishers becoming focused on quot;Content Optimizationquot; which would include text mining, content assembly and presentation (to the end user/consumer). We have the concept of 'inventory turn'; increasingly we will think of 'content turn' to gauge how effectively we monetize our content. PersonaNonData said... Falicon, I had a related conversation with a publisher last week. I suggested that the publisher will provide Amazon with a book/content for sale as a basic product for $10 but on the publisher site for $13 would be a more expansive collection of material that provides a deeper experience and connection to the content. Most (say 80%) might be happy with the Amazon version but the balance could become far more valuable to the publisher in the long term. The other aspect is how dependent should publishers be on two retail outlets without developing a relevant alternative that where they can exert some control. Peter said... Lots of interesting comments here. @FG: Perhaps publishers *should* think about becoming retailers? As the retailers become more powerful, and command much higher discounts, it becomes impossible to resist. See the stand off between Hachette and Amazon. I'm amazed that the 20

industry allowed this to happen: they gave the game away when they allowed Amazon to start the price-slashing war that is now killing retail - yet asked for nothing in return. What could they have asked for? Customer data, for one. @Chris H-E (hi!) Very good points. A retailer-free future is a distinct possibility. If the publishers could collectively keep quot;premiumquot; content for themselves and quot;genericquot; content for others, then they may get something over Amazon, but it takes a strong CEO to refuse to jump when a customer with 15% pf the market says so. However, it is certainly interesting to consider the idea of Amazon being disintermediated. This is one reason why (and I have heard agents openly talk to authors about this) Amazon is approaching agents about publishing authors direct, rather than via publishers. It's going to get messy. I'd like to think that publishers would fight back, but based on past history, I'm not sure they will see the elephant in the room until it is too late. Mike Shatzkin said... Michael Cairns is thinking along lines that have recently occurred to me. He is spot on calling publishers out for trying to make their 20th century b2b brands into b2c brands. For all the very smart things HarperCollins has been doing, this seems to be a blind spot in their thinking. Horizontal content just won't quot;brandquot;! Few and far between are the people who would consciously want to buy the next Harper book. And Michael's suggestion that each publisher should sell books of all publishers on their site is also absolutely right. There is actually a very simple way to do this: Ingram can set this up for any publisher; presumably Baker & Taylor can as well. One major publisher has already told me they intend to do exactly this with Ingram. So imagine this world. Each publisher puts their database on the web in a manner that automatically niches: a site visitor can pull up a quot;Craftsquot; page, or a quot;Mysteriesquot; page generated from the database. Those pages are backed and enhanced by offerings from other publishers in the niche, as serves the customer. In time, each publisher sees what niches are generating traffic. They pay more attention to those niches, adding content, features, stickiness. And BRANDING. Meanwhile, they are also selling books of all publishers under those niches. Each publisher merchandises in its own way: title selection differs, other content offerings differ, pricing policies differ. Two wonderful things happen for publishers in this world. One is that they create a path from where they are to the niche world of the 21st century. The other is that this serial individual response creates the most powerful possible collective action to combat the Amazon monopoly. If all publishers did this, there would be hundreds, possibly thousands, of places to buy any book. Each one would have different pricing offers and different content surrounding it. I think this is where things almost have to go, iteratively and one step at a time. So this is a combination of a prescription and prediction. I have always been reluctant to advocate direct selling, particularly for trade publishers who depend on retailers to reach the lion's share of their market. But the coin of the 21st century realm (as I earned a gold star from Tim O'Reilly for pointing out in a previous post) is traffic, a 21

customer base. No publisher that wants to survive can ignore that reality. And very few publishers are going to get there without niching and rebranding, almost certainly using other publishers' books as part of the process. James Long said... Great post and great comments! I agree that genre- and author-based sites would be a good idea, but I think what big house sites need is to focus on single title coherence. Too many publisher sites present duplicate flat info pages per format or edition of the title. If I, as a consumer, search for Goldfinger, I should read a page (from the publisher) that puts the book (regardless of format etc.) front and centre. That page should ideally centralize links to related information (e.g. Ian Fleming author page, more Bond books, Bond films, DVDs etc) and purchase links, and it should also draw in discussion around the book. That page should be the point for me, as consumer, to enter into and contribute to the world of the text on the web. Or in other words, the title is the brick, not the author or the genre. And the title is like an open API, sitting at the centre of whatever is going on about it on the web. This is the kind of publisher website I want to see/use/build. FG said... Peter, I completely agree. Chris, you're right of course that some publishers are booksellers. I meant that in terms of most major publishing house websites it is not how they portray themselves to the average consumer... presumably because the chains and online massives would have something to say about it (no doubt including the word 'discontinue') Personanondata... I agree about dependence by publishers on a very few retail corporations... madness! Your vanilla book from the retailer versus enhanced book with features from the publisher sounds like the DVD model (albeit where both versions are available from the retailer). Surely though the publisher would need to be confident of traffic to their site in order to drive this though. Finally, isn't the future for niche bookshops built of bricks and mortar pretty sound? Given that we already draw together great titles, vary stock regularly, form communities and add-value in specialized knowledge, author events and advance information? Certainly in my part of the art and culture pond I attract buyers that websites and chains have lost, and consumer communities that they cannot adequately serve. Sure, some of my customers jot down ISBNs to buy online... but the experience alone usually draws them back for future or additional purchases. Great post and thread btw. M Anonymous said... What has Amazon done for publishers except to cheapen ALL of their brands by making price a dominant consideration for the buying public? The book business as a whole has been stagnant for years. Amazon hasn't helped anyone, and in fact has only hurt publishers by weakening their other more traditional distribution channels. 22

Publishers should develop strategies to lessen the negative impact of this 800 pound (and growing) gorilla. ***** Defections Another big name author has followed the money and moved from his long term publisher. Richard Ford has moved from Knopf to Ecco after 17 years, and he follows Tom Wolfe who earlier in the year moved from FSG to Little Brown. Who can blame them? This is not a trend, as authors do move around periodically (and take their editors with them) and it will have little impact on traditional publishing as we know it. The mid-market and specialty author is not suddenly going to be in a better competitive position vis-à-vis the publishing houses. What strikes me as curious, though, is that we haven't seen incursions by web companies such as Google, Microsoft, Amazon and Ebay into the original content business. Yet. It seems so logical that one or a few of these companies will experiment in some way with branded authors. We all know the author brand is primary and we also know that some authors have become aggressive in expanding their brand - Patterson as the prime example. It may be inevitable that a major author(s) signs a three book deal with Google or Amazon. According to Publisher's Lunch, Wolfe received between $5mm and $7mm (these numbers from several sources) for his deal. It is a sad reflection on the publishing industry that these figures represent little more than gas money for the larger internet companies. Skills in book production, design, marketing and promotion, etc. are readily available and would not represent an impediment to success. It is really the expanded catalog of skills and expertise that an internet company could bring to bear that could be really interesting for authors and consumers. Launching Major Author X via 'GooglePub' or similar would transcend the traditional publishing model and, perhaps, return it to something more like the publishing of the late 18oos where serialization (blogging) and direct reader involvement (social networking) were Publishers fundamental elements of trade publishing. (Remember can’t Doyle trying to kill off Holmes, resulting in near riots from readers?) One of the most interesting aspects of compete the Radiohead experiment was that they finished their album only two weeks before it was available for with this download. In the world of publishing, the length of time from finished manuscript to bookstore can be years. Not model only would consumer access be much faster in a 'GooglePub' world but the engagement with the author and the authors' work could be far more intense (and positive) for both author and reader. Imagine the author maintaining an ongoing rapport with readers as the book is written. The author blogs about the process, posts excerpts, background material relevant to the story, and plot and character notes. The author publishes finished excerpts (i.e. serialization), as development continues. Perhaps derivative titles or sequels are also initiated. Audio, Podcasts and video is made available. At the launch of the title, the book will have been exposed to millions of readers - perhaps all of the title has been published in parts or not - but the excitement will be significant. During this time, site traffic will also have grown and perhaps an advertising revenue 23

share for the author will also augment their annual guarantees. As in the Radiohead example, a physical version will be produced but, even here, the model could change. Perhaps 'GooglePub' strikes separate deals with B&N, Borders or others who produce their own versions of the titles by selecting from the wealth of content available as a direct result of the content created during the process. Basically, the author and 'GooglePub' leave it up to the physical publisher to create the physical product and just take a (painless) cut of revenues. Publishers can't compete with this model. By the same token, the process could give rise to a new caste of publishing staffers who are familiar with the web-publishing model, social networking and engagement and who become required assets as authors migrate their brands to the internet. An interesting scenario: How prepared are large trade houses if their top-ten branded authors defect to 'GooglePub'? Comments: Eoin Purcell said... Michael, Talk about encompassing the worst fears of major publishers in a single post! I think you have hit on an excellent notion here. One question would be why major publishers couldn't simply enter into partnerships with google/ebay/yahoo to do this? In some ways they have the back list content to make this happen (and the back list is probably the key asset they have for established authors) and the web firms the know how. It would be a good marriage. At least you would think. From the perspective of an Irish Publisher, not large enough to retain the biggest native stars (they always get snapped up by the multinationals eventually), this is not an unfamiliar position you describe! Eoin ***** Massive Data Sets Large publishers like Elsevier, Macmillan and Kluwer spent the past 20-30 years or so consolidating journal publishing under their umbrellas and building virtually unassailable positions in numerous vertical publishing segments. The open access movement has had only minimal impact on the prospects for these businesses and there is little indication even market forces will reduce their commanding positions. Much of the consolidation has occurred but occasionally, some large concentration of journals comes on the market however, it is unlikely that a new publisher would be able to build a significant position in any meaningful segment because all the important titles already belong to one of the major players. Journals publish the outcome of the intellectual activity of the article authors. In some cases, access is provided to the data that serves to back up the investigation but invariably this data remains in the dark. Some publishers have experimented with allowing journal readers to play with the data but this does not appear to be a developing trend. Data's day may come however. Several months ago (via Brantley) I read of yet another initiative at Google7. 24

Sources at Google have disclosed that the humble domain, http:/research.google.com, will soon provide a home for terabytes of open- source scientific datasets. The storage will be free to scientists and access to the data will be free for all. The project, known as Palimpsest and first previewed to the scientific community at the Science FOO Camp at the Googleplex last August, missed its original launch date this week, but will debut soon. The article on their web site is brief and my immediate thoughts had little to do with the gist of this story. My immediate thought was that here could develop the next land grab for publishers and perhaps other parties interested in gaining access to the raw data supporting all types of research. As publishers develop platforms supporting their publishing and (now) service offers will they see maintaining these data sets as integral to that policy? I believe so, and I suspect in agreements with authors, institutions and associations that own these journals the publishers like Elsevier will also require the 'deposit' of the raw data supporting each article. In return, the offerings on the publisher's 'platform' would enable analysis, synthesis and data storage all of benefit to their authors. But the story may be more comprehensive than simply rounding out their existing titles with more data. The current power publishers in the journal segment may find themselves competing with new players including Google in their efforts to gain access to data sets that may have been historically supplemental or even not considered relevant to research. In addition, sources of massive data sets are growing with the introduction of every new consumer product and exponential web traffic growth. In the NYTimes 8 today is an article about a number of new companies that are analyzing massive amounts of data to produce market reports and business analysis. From the article: Just this month, the journal Nature published a paper that looked at cellphone data from 100,000 people in an unnamed European country over six months and found that most follow very predictable routines. Knowing those routines means that you can set probabilities for them, and track how they change. It’s hard to make sense of such data, but Sense Networks, a software analytics company in New York, earlier this month released Macrosense, a tool that aims to do just that. Macrosense applies complex statistical algorithms to sift through the growing heaps of data about location and to make predictions or recommendations on various questions — where a company should put its next store, for example. Gregory Skibiski, 34, the chief executive and a co-founder of Sense, says the company has been testing its software with a major retailer, a major financial services firm and a large hedge fund. As noted in the article, the data (growing rapidly to massive status) has been hard to manipulate but this issue is diminishing rapidly. As it diminishes we will see more and more companies, groups and even individuals note the value of their data and begin to negotiate the access to this data. All of the large information publishers will see themselves playing a significant role in this market as they gather data sets around market segments just as they did with journals. If they don't do this they could undercut the value of their journal collections if they are forced to separate the result/analysis from the data. Signing agreements for access to these data sets (cell phone data in the example above) will enable Journal publishers to concentrate research even further by making access to this information a pre-condition to 25

publication in the respective journal. Either way, the providers of these data sets are likely to be looking at a new and significant revenue source. ***** Sinatra's Stamp Frank Sinatra toured Australia in 1974 and they just wouldn’t leave him alone. Dogged by questions about his alleged connections to the mob and his decision not to give a press conference the press were merciless, and when he described them in true Ratpack fashion as “fags, whores and pimps” it was like chum in a shark tank. In Melbourne, outside The Southern Cross Hotel, he and his entourage were mobbed and one camera man was pushed, fell over and his camera damaged. On top of his comments and this “obvious” aggression by his bodyguard, an apology was demanded. Everyone got on the bandwagon and workers in the heavily unionized country threatened to call their members out if the tour went on without an apology. Everyone was excited about Sinatra. Across the country, the concerts were sold out and Sinatra was a mega-star in a time when few made the trip “down under.” My father was the manager of The Southern Cross and we lived there for five years. A day or so after the camera-man incident, I had just arrived home from school and was watching Hollywood Squares on TV when my mother shouted out that Frank Sinatra was coming by. I wasn’t sure what to think. Ten minutes later, there was a knock at the door, I opened it and in comes Frank, Barbara and a very large man. For some reason, Mom made herself scarce and I hosted Frank in our apartment living room all alone. He said I should continue to watch TV but I shut it off: Truthfully, I was slightly embarrassed about what I was watching. He wished me “happy birthday” (I was soon to turn 12) and asked me what I was up to in school. In my mind’s eye, I can still see Frank--leaning back with his legs crossed--and Barbara—covered in jewelry--sitting on the hotels’ best mid-century furniture. The furniture was upholstered in bitter-orange crushed velvet. I think the décor would have reminded Frank of Vegas in the mid-fifties. We lived on the first floor of the hotel and Frank was about to escape the hotel through my parents’ bedroom roof terrace and over the roof into a waiting car at the bottom of a fire escape. After about ten minutes, the call came and our casual conversation came to an end. I shook Frank and Barbara’s hands and off they went without a hitch to the airport and his private jet. My father got to ride in the limo with him and on the plane Frank signed an autograph for him. One of my great regrets is that I never asked Frank to sign my book (but I do have my eye on the photo he signed for my father). The tour was essentially cancelled, but an agreement was reached whereby Frank would do one show at the Sydney Opera House. He did it for charity and the show 26

was broadcast on national TV. Naturally, by this point, I was a big fan and watched the entire show. Since that encounter, I’ve convinced myself of a personal connection to Frank. Having ended up living in Hoboken-- where he was born--makes the whole thing even more surreal since he is a hero here. This, in spite of the fact Frank didn’t really care for the place and, by most accounts, the last time he visited Hoboken was in 1980 when he joined Ronald Regan on a campaign stop. There was a long gap prior to that but it doesn’t seem to worry many Hoboken old-timers, some of whom were at the unveiling of Sinatra’s postage stamp last week. ***** Copyright Note: All contents under creative commons license. Use with Attribution. If in doubt contact or call. Photo Credit: Michael Cairns Endnotes & References: 1 http://blogs.computerworld.com/clueless_book_publishers_miss_huge_opportunity 2 http://www.writersweekly.com/the_latest_from_angelahoycom/004597_03272008.html 3 http://online.wsj.com/article/SB120667525724970997.html 4 http://personanondata.blogspot.com/2007/12/kindle-e-platform-for-masses.html 5 http://personanondata.blogspot.com/2008/01/jobs-kicks-kindle.html 6 http://booksquare.com/sittin-here-watching-the-market-go-by/ 7 http://blog.wired.com/wiredscience/2008/01/google-to-provi.html 8 http://www.nytimes.com/2008/06/22/technology/22proto.html?adxnnl=1&ref=business&adxnnlx=121415 9901-+uTy74JpCmu+bYkr9sJLFg 27

Notable Posts 2008

by Michael Cairns on Jan 01, 2009

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Notable Posts 2008 — Document Transcript