Business

Go Read This | The Guardian on Scientific Publishing & Robert Maxwell

Absolutely smashing read from a few weeks ago on Scientific Publishing, Robert Maxwell and the implications for Science itself:

And no one was more transformative and ingenious than Robert Maxwell, who turned scientific journals into a spectacular money-making machine that bankrolled his rise in British society. Maxwell would go on to become an MP, a press baron who challenged Rupert Murdoch, and one of the most notorious figures in British life. But his true importance was far larger than most of us realise. Improbable as it might sound, few people in the last century have done more to shape the way science is conducted today than Maxwell.

Is the staggeringly profitable business of scientific publishing bad for science? | The Guardian

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Some Thoughts On B&N’s Nook problem

The news from B&N’s Nook division is bad:

The NOOK segment (including digital content, devices and accessories), had revenues of $125 million for the nine-week holiday period, decreasing 60.5% as compared to a year ago.  Device and accessories sales were $88.7 million for the holiday period, a decrease of 66.7% from a year ago, due to lower unit selling volume and lower average selling prices.  Digital content sales were $36.5 million for the holiday period, a decline of 27.3% compared to a year ago due to lower device unit sales and lower average selling prices.

via Barnes & Noble Booksellers.

I’ve got more sympathy for B&N than some, indeed I think we should be thanking it for spending so much of its investors money to discover some important things for us.

For a time it seemed to me that Nook was a success. Perhaps that was naive of me, but it seemed like a good match, dedicated book people selling digital content to dedicated book readers. The lurch towards tablets was probably not a good one, prompted as it was by the iPad and the Kindle Fire, it might have seemed like a fabulous strategy, but in truth (but sadly in retrospect) it was too expensive and too long a game for B&N to ever win against its much better funded and positions rivals.

The big question for B&N is whether there is a profitable ebook and digital content business to be pulled from the mess of Nook. The shocking drop in digital content sells in the holiday period is blamed on two things, lower device sales and lower average selling prices.

Taking those one by one the device sales driving content sales suggests two things which would be clear to anyone looking in on Nook. For too long, the digital content side of the business has been a slave to the device side. Too little effort has been made to open content sales to those without devices, too little effort on gaining ground on smartphones and tablets other than Nooks.

If the digital content side is to thrive then B&N will have to encourage readers to buy Nook content everywhere and anywhere they can connect to the web regardless of device and to do so more easily than they currently can (which probably means rethinking the company’s current DRM strategy). In some ways the failure of the tablets (and note, I laud even what might be termed a failure here. B&N has still sold a LOT of devices) probably makes this a likely development anyway. Hopefully it will be a rapid one too.

The second issue is a bigger one in many ways. Average selling price is falling across the ebook space (or, at least, it would appear to be). Only increased unit sales will make up for that. However, if B&N is suffering more from this problem than others, not even unit sales will suffice to push it along.

What’s more, if unit sales don’t increase in line with the market, B&N will begin losing market share (if it hasn’t already). It’ll have to either increase its stock of exclusive content (which sounds like an impossible task given Amazon’s attractiveness in this area) or get market share back through converting customers of one platform to Nook readers, or grow quicker than the market as a whole, or by slowing down the flood of exclusive titles that Amazon is building somehow enabling them to capture some of that value.

I’ve written several times about the value of the KDP platform for Amazon and how valuable such a platform could be to the other ebook retailers yet how each of them in their own way has relatively closed policies with regard to them. Since I first wrote about this back in 2011, only Kobo has opened up in a real way. We are seeing the power of Amazon’s foresight in this space now. The giant added 200,000 exclusive ebooks through KDP in 2013, a perfectly avoidable situation.

B&N succeeded in selling nearly $4,000,000 worth of digital content a week in the holiday season, which is nothing to sniff at. I just hope it can push harder and increase they sales in 2014 opening up to wider audiences and starting to challenge Amazon’s exclusivity advantage with self published authors, that would be good for the wider industry as well as for itself.

Go Read This | The money in Angry Birds is no longer in “Angry Birds” – Quartz

This is fascinating stuff. It’s all about getting the right model (and of course having monster success in terms of usage and recognition). As film companies have learnt over the decades, sometimes the initial product is just the doorway to the licensing revenues (see <a href=”http://www.hollywoodreporter.com/news/disney-cars-has-crossed-8-99438“>Disney’s Cars franchise</a>):

Rovio seems to have calculated that it can make more money from people buying bird- and pig-decorated paraphernalia than off games themselves, which is why it no longer charges to play. “We look at this from the audience-reach point of view,” executive vice president for games at Rovio Jami Laes told the Wall Street Journal.

via The money in Angry Birds is no longer in “Angry Birds” – Quartz.

Go Read This | U.S. settles with publisher Macmillan in e-books case | Reuters

I think it’s fair to say this is more of a whimper than a bang!

Under the proposed settlement agreement, Macmillan must lift restrictions on discounting by e-book retailers and must report to the Justice Department its communication with other publishers.

Justice Department lawyers “expect the prices of Macmillans e-books will also decline,” as happened after settlements with the other publishers, Jamillia Ferris, chief of staff of the departments Antitrust Division, said in the news release.

via U.S. settles with publisher Macmillan in e-books case | Reuters.

The Extent Of B&N’s Weakness In The Tablet Space

Pretty much everyone knows that Barnes & Noble had a bad holiday season in terms of selling tablets, even the company acknowledged it.

I was inclined to let it lie, I did wonder why B&N had under-performed, after all the  company seemed to have perfectly fine tablet devices on offer, but perhaps it was just one of those quirks that sometimes happens. But then I saw the IDC figures for tablet shipments in quarter four, 2012 and, even if we take those figures as close to accurate, the news  is really quite bad news for B&N:

Worldwide tablet shipments outpaced predictions reaching a record total of 52.5 million units worldwide in the fourth quarter of 2012 (4Q12), according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Tablet Tracker. The tablet market grew 75.3% year over year in 4Q12 (up from 29.9 million units in 4Q11) and increased 74.3% from the previous quarter’s total of 30.1 million units. Lower average selling prices (ASPs), a wide range of new product offerings, and increased holiday spending all acted as catalysts to push the already climbing tablet market to record levels.

via Tablet Shipments Soar to Record Levels During Strong Holiday Quarter, According to IDC – prUS23926713.

B&N went from shipping 1.4 million tablets in 2011, to shipping only 1 million in 2012 (an almost 28% drop in units shipped). That would be bad enough in a stable or falling market, but the market GREW by some 75% over the same period.

B&N was crushed by its closest competitor, ASUS who went from shipping 0.6 million units to shipping 3.1 million units! Or from less less than half of what B&N sold to shipping three times more.

Amazon moved decisively away from B&N, shipping six times as many units. Samsung, who only sold 600,000 more tablets than B&N in 2011, shipped 6.9 million more tablets than B&N in 2012.

Even Microsoft, whose tablets were new entries to the market (and who have partnered with B&N in the Nook/Newco venture) is said to have shipped 900,000 units.

The only sensible analysis of these figures is that B&N is losing ground and facing vibrant, effective and tough competitors. Unless the deal with Microsoft yields fruit soon and enables the Nook/Newco venture to grow shipments and sales aggressively, we have seen the peak of the Nook tablet business.

 

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Story title edited from Failure to Weakness. I felt using failure was unfairly harsh on the company, given the success they had in selling 1 million units, no mean feat for a bookseller!

Go read This | Whats the right price for ebooks? updated : CJR

Interesting piece on price I found via: Book2Book earlier today

The marginal-cost-is-all argument also fails to take into account copyright law, which essentially grants each new work a sort of miniature monopoly. If I write a book about something, you can’t republish it unless I give the okay, or unless it’s 70 years after I kick the bucket and the copyright expires. You can argue about whether copyrights are too long or too restrictive, but we grant them so creators and investors do the creating and investing they otherwise would do much less of if anyone could profit off their work. Just because a product is digital doesn’t mean it’s infinitely abundant—as long as the law is enforced.

via Whats the right price for ebooks? updated : CJR.

Go Read This | Why Amazon Is The Best Strategic Player In Tech – Forbes

Great piece this and one worth reading and pondering for some time. Think how you might respond too:

When unexpected things happen, Amazon, unlike most companies, does not immediately respond with knee-jerk PR damage control. As Bezos said during an interview a while back, the company is willing to be misunderstood and endure temporary PR blowback. The larger gameplan is too important.

Which is why the current furor over the price comparison app, and the related #OccupyAmazon reaction, is unlikely to elicit any dramatic responses from Amazon. Where other companies might respond with overwrought displays of contrition and dramatic conciliatory gestures, Amazon will likely do the minimum necessary, wait out the storm, and move on.  Amazon dealing with its market is the corporate equivalent of a patient, low-reactor parent dealing with a child throwing a tantrum.

More than any other corporation of the Internet age, Amazon embodies the emerging culture of business strategy. It is the General Electric of our times, and Bezos is the Jack Welch. When the definitive book on corporate strategy for the early Internet era is written, Amazon will be the main example, not Google, Apple, Microsoft or Facebook. Those are great companies too, but their greatness lies in other departments. As far as corporate strategy goes, they are mediocre players, not grandmasters.

via Why Amazon Is The Best Strategic Player In Tech – Forbes.