Just as print publishing’s decline has hit mid-list authors particularly hard, so too is Barnes and Noble suffering. Why do I equate the two? I think the same factors are at work in both cases. Both provided an o.k. experience—reading, in the former case, browsing and buying, in the latter—when other options weren’t available. You’d buy and read any old novel you were on vacation in a seaside town with one tiny bookstore, and it was the only novel you could find that you hadn’t read. Now you can download a movie or play an online game, or download an e-book, from almost anywhere, so that book doesn’t compel you to buy it, unless you’re fairly sure that reading it will afford you a great experience. Going to a Barnes and Noble is o.k., but only if there’s no local bookstore with more character—and apparently those bookstores, against all expectations are doing just fine. And if it’s variety and price you’re after, everything’s online. I’ll miss Barnes and Noble, if it disappears, if only because when I was in school in New York, I always loved browsing the stacks at its flagship 5th Avenue store, which wasn’t much on charm, but had a hell of a lot of books. That Union Store megastore is pretty cool too. But I see that like the mid-list author, B+N, as a chain, doesn’t offer anything you can’t get elsewhere.
That’s one possible takeaway from this story, reporting that the Times company’s market cap is down so much, it’s now the smallest corporation in the S+P 500. And certainly, as I’ve noted, the Times is having a lot of problem, like every other big media company, adapting to the ongoing electronicization of publishing. But I think that this might not be the best takeaway. Rather, we should see this development as evidence that media is becoming so fragmented that even the best, traditionally most influential media organizations can no longer dominate the field – either as a business, or as an opinion-shaper. And whatever we think of the Times, that can’t possibly be bad.
I’ve speculated before that the NYT will, sooner rather than later, have to radically restructure its organization – that is, fire a lot of people, and cut a lot of other costs too – in order to survive as a news-gathering and -dissemination operation. I didn’t expect that the Times’s leadership would come so quickly to the realization that one good way to do this would be to go all-digital. But now Arthur Sulzberger has broached the idea. If he’s saying this in public, and deliberately so, how much longer can it be, before this happens? Soon, I hope – the Times will be in much better shape, the quicker it goes this route, perhaps preserving, say, the Sunday Magazine and a few other sections, as regular, though not daily, printed products, for a boutique audience.
I’ve written a number of times that the New York Times can succeed as a business only if it radically cuts costs, to the point where it can survive on online ad revenue. I haven’t written about how it can get more such revenue, because I don’t know anything about advertising. Pascal-Emmanuel Gobry does, and he has an interesting idea for how the Times could pull this off. He argues that because the Times brand is so strong, advertisers will pay a premium to have their products associated with it – that is, they’ll pay much more than they do now, for ads on the Times site.
Gobry is talking about so-called brand ads, those aimed not at getting users to click through to a page where they can buy something, but at establishing the personality of a product or product line, and getting consumers to feel an emotional connection to it. Once this connection’s in place, they’ll spend freely on the product or products later – note in this context Apple’s enormously effective print, outdoor, and online ads. Gobry suggests that the Times should raise its online ad rates significantly, on the theory that no one will pass up advertising on the Times site, if this means giving up the chance to associate their brand with that of the Times. Would it work? Who can say? But as Gobry points out, given the financial state of the Times, it doesn’t have much to lose by trying.
That’s my takeaway from Joe Wikert’s review of iPad apps that deliver content from newspaper and magazine publishers. These apps are designed to evoke those publishers’ print products, in the hope that readers share the publishing industry’s nostalgia for an age when physical newspapers and magazines were the primary source of news and related feature content. But readers, Wikert included, understand that they can now get the same content, or its equivalent, for free, on the Web – and so see no reason iPad apps shouldn’t be more like websites. And be free, natch.
Which begs the question, which publishers will develop innovative – and free – websites, optimized for iPad, making maximum use of, say, its multitouch capabilities? Whoever does this may not make a mint off the ad revenue – but they’ll make way more than Time and the New York Times will ever make from selling their iPad apps.
The “Apple tax” is the price premium on computers with basically the same power and functionality as less-expensive PCs. Most consumers don’t want to pay it. But Apple’s made plenty of money on those who will, catering to the five to ten percent of computer buyers who either need a Mac for some specific reason, have become too attached to switch to a Dell, or like to tote their white laptops to Starbuck’s, to let everyone know they “think different.”
Will ebook buyers fall into any of these categories? Apple seems to think so. At Silicon Alley Insider, Dan Frommer reports that in a series of “iPad tour” videos, major bestsellers are shown priced a few dollars higher than what Amazon charges for Kindle versions.
I wonder if this will work, for ebooks with no value-added content – books that are essentially the same as their paper counterparts. There will, after all, be a Kindle app for iPad. Will the iBooks reading interface, or buying experience, really be that much better, to justify paying twenty-plus percent more for high-demand titles? I can’t imagine so. My bet is that these videos show these prices to keep publishers thinking that Apple will cave to their demands to charge more for such titles – all the better to convince them to sign sweetheart ebook distribution deals, in order to get a leg up on Amazon, and then, sooner rather than later, drive ebook prices lower than Amazon would dare.
Yes, says Joe Wikert, discussing how much iPad content will sell for. His model is iPhone apps that give users content they could easily get in a browser, but format this content in a way that’s particularly iPhone friendly, and allow them to access it by clicking on a dedicated button, rather than having to load a browser bookmark. He also cites Pop-up Videos, saying that successful iPad apps could feature existing content tarted up and re-sold as something new.
Will this stuff really sell to iPad users? Perhaps. But I wonder, for how long, and how much. The web’s rise has shown us that there is a huge number of content providers and repackagers who’ll give the stuff away, for fun, or in exchange for a pittance in ad revenue. Often this content is not as high-quality, according to traditional standards, as for-pay versions – but most users don’t care. The iPad includes a browser, and I’d bet that if there is an initial boom, in content-as-app sales, web publishers will quickly move in, to undercut content-as-app providers, with free or nearly free websites that give iPad users comparable content, wrapped in a comparable experience.
Motoko Rich is very sharp, but in this article, on how the move to ebooks will change publishers’ revenue streams, misses the most important questions – the ones in the title of this post. She shows that publishers can indeed sell ebooks for less than print versions of the same title, but takes them at their word that they can’t drop those prices much below the low two digits – i.e. the $12.99 to $14.99 that iPad versions of new titles will (supposedly) cost.
Yet the accompanying graph belies this, or at least shows that she needs to provide more detail. “Overhead costs [would] decrease final profit,” the caption notes, and boy is this an understatement. (Let’s not even talk about other factors impacting profits, such as good or poor choice of titles, leading to better- or worse-than-expected sales; returns of large numbers of physical books, on all but the best-selling titles, necessitating refunds to retailers; and so forth.)
What are book publishers paying in overhead? If you were an investor, looking to buy shares in a publicly traded book publisher, wouldn’t you want to know, are its top execs crying about losing money, while renting large amounts of office space in one of the most expensive rental areas in the world – midtown/downtown Manhattan? Is it overstaffed? After moving offices and cutting staff, how else could overhead be cut, while maintaining necessary capacity? And would making these changes, and otherwise cutting overhead, be enough to enable book publishers to compete?
Interesting piece this morning at TechCrunch, by Paul Carr, on the book industry’s repeated attempts to force retailers to charge the full sticker price, on every copy sold. Carr’s reacting to Macmillan’s Pyrrhic victory over Amazon, but his piece focuses less on that than on the history of such battles – and points out that at least in the UK, that history stretches back to at least 1900, and the Net Book Agreement:
In the UK, way back in 1900, publishers corralled retailers into the Net Book Agreement (NBA); an agreement between British publishers and booksellers that books would be sold at the price specified on the cover. If a bookseller offered so much as a penny discount, then the publisher would simply withdraw all of their books from that bookseller and encourage other publishers to do the same. The arrangement suited everyone; book shops were the only place to buy new books and the NBA meant they didn’t have to worry about rivals undercutting them; this particularly benefited independent bookshops. For their part, publishers knew exactly how much they’d be getting for each title and authors knew how much of that would form their royalty.
It took until the late 90s for the Restrictive Practices Court to declare that the Net Book Agreement was anti-competitive and should be scrapped. Shortly afterwards, Borders entered the UK market, hundreds of UK independent bookshops went bankrupt and publishers decided to change their contracts with authors. Now, instead of being based on the cover price of a book, the author’s royalty would be based on ‘net receipts’, which is to say the price that publishers actually received from bookshops.
Carr points out that this sort of arrangement simply can’t work any longer, because publishers can’t possibly reach such agreements with every single retailer – meaning there will always be some who can undercut others on price. Also key, of course, is that today, readers don’t have to buy books to do serious reading – and indeed, often, choose not to read at all, if there are other, cheaper, equally interesting ways to spend their time, or get the info they need for their work or what have you. We’ve come a long way from 1900 – and at some point, the Macmillans of the publishing world will have to recognize this.