Apple and Online Pricing Tactics
February 13, 2010
I found the Techwatch story “Apple Wants Cheaper TV in Time for iPad Launch” useful because it showed the tactical mismatch between Amazon and Apple. Amazon is a digital discount store, moving closer and closer to eBay. Apple blindsided Amazon with its pitch to publishers for eBook pricing that left Amazon twisting in the wind, to use a Nixon era phrase. Amazon countered with a misstep and then capitulation. To make Amazon’s management disarray more evident to me, Amazon announced the Kindle software development kit. Good luck with that. I own a Kindle first generation and a Kindle second generation. Neither has enough power to get me to use the clunky on board search system. Most system functions such as moving media from the Kindle One memory to the SD card I installed is so painful I don’t fool with the function. Amazon is going to have to add some serious horsepower to the Kindle to get the basics to work in way to find acceptable before I think of letting one of the goslings code up an Amazon app.
The Techwatch story underscored how Apple’s book play was the equivalent of sacrificing a pawn in chess. Books are just not going to be where the money is in the future. Check out your own kids. How many of them are going to buy books when there are other ways to obtain information. The Apple push for cheaper TV shows, reported in the Techwatch story, makes clear that Apple knows exactly what sells and what price points are needed to generate big bucks. I think the publishers may be in for a surprise when the iPad finally comes to market. Save the magazine and newspaper industry? Great idea. The gizmo is for TV. Book readers will pay whatever the going rate is. The problem is that there are more non book, newspaper, and magazine readers. Price accordingly.
Apple knows pricing.
Amazon wants to be Google, eBay, Apple, and Wal*Mart. I think Amazon is skating on thin ice. Some hints can be found in studies about commoditization. The difference is that plumbing and marketing are going to be needed to cope with Apple and Google.
To round out my comments, what about eBay, Microsoft, and Yahoo? Are these the first team? Here’s how I view the players. Remember, this is my opinion. eBay seems to have an identity crisis. Microsoft is more like IBM or a baby Ling Temco Vought. Yahoo is—well, I think—a 1998 portal.
In this list of four, which are the players whom you would choose first for your digital softball team:
[a] Yahoo
[b] Google
[c] eBay
[d] Apple
[e] Amazon
[f] Microsoft.
Post your answers and the one compelling reason to the comments section of this Web log. I know which I would choose. I will go with the companies that make things happen, not companies that are reactive and tactically weak.
Stephen E Arnold, February 13, 2010
No one paid me to write this. I will report non compensation for tactical metaphors to the commandant of the Army War College. Those folks are into tactical superiority.
Facebook Scores Another Gain
February 9, 2010
This Facebook site continues to surprise me. Addled geese do not have too many friends. Our SSN Blog has a Facebook presence, but the addled goose leaves that to a couple of talented goslings; namely, Lauren and Sam. When I read “Facebook Overtakes Google News as Media Site Traffic Driver”, I made a note to myself to ask Lauren and Sam, “What’s with this Facebook craziness?” Publishers have been chasing Google, and now it seems that the Web ecosystem has spawned a more problematic recycling of “real journalism”. Humans. The Google is anchored in numerical recipes. Facebook is anchored in humans. Big difference. In my view, it might prove more challenging to corral people than humans, but I could be wrong.
The most interesting comment in the article in my opinion was:
Facebook was the #4 source of visits to News and Media sites last week, after Google, Yahoo! and msn, according to Hitwise. Google News accounted for 1.39% of visits to News and Media websites, and Facebook accounted for 3.52%. That’s a big shift since last April, when they were about equal.
The article includes a nifty chart and it embeds in its white space this question, “How will publishers deal with a threat from people?” Some of these folks may be the progeny of publishers and real journalists. An issue of interest is this.
Stephen E Arnold, February 9, 2010
No one paid me to write this article. Sigh. I will report non payment to the Department of Commerce which is eager to jump start struggling businesses. Maybe there will be a government subsidy for addled geese.
Google and the Lazarus Myth for Books
February 8, 2010
I read “Google: We Will Bring Books Back to Life” by Google’s legal eagle, David Drummond. The title of the article suggested to me that books are dead. I tried to visualize an information Lazarus, but I just received a royalty check from one of my half dozen publishers. The numbers looked fine, so that book of mine was not dead. On life support maybe. Definitely not dead.
Google saith, “Get up and read.” Van Gogh sees “yellow” as in journalism. Source: http://cruciality.files.wordpress.com/2009/09/van-gogh-the-raising-of-lazarus-1890.jpg
The argument in the Googler’s write up was well honed. I can see in my mind’s eye several Googlers laboring away in their cubes over the rough draft. This passage struck me as interesting:
First, this passage: “Yet doubts remain, and there is particular concern among authors that they are in danger of handing control of their work to Google.”
Doubts is a bit of an understatement. The love Google enjoyed when it was a wee tot of two or three is long gone. The Google is does more than engender doubt.
Second, this passage: “Some have questioned the impact of the agreement on competition, suggesting it will limit consumer choice and hand Google a monopoly. In reality, nothing in this agreement precludes any other organization from pursuing its own digitization efforts.”
Okay, let’s be clear. National libraries should be digitizing their holdings. National libraries did not take this duty, leaving it to others. Now the “others” are a set of one, the Google. No one other than Google is going to scan books, Period. I accepted this years ago when I worked briefly at UMI in 1986. I thought scanning books was a great idea. The idea got reduced to scanning specific sets of books and then providing a set of microfilm for related information. When I looked into sets, it became clear that one could scan a single book like Pollard & Redgrave and then provide microfilm of the referenced content objects. But UMI’s financial set up precluded much more than a very small, undernourished effort. If money was not available in the mid 1980s, I don’t think money will be available in the post crash, pre depression 2010s.
Third, this passage: “Imagine if that information could be made available to everyone, everywhere, at the click of a mouse. Imagine if long-forgotten books could be enjoyed again and could earn new revenues for their authors. Without a settlement it can’t happen.”
I can imagine it. I can also imagine the data available to Google’s internal knowledgebases, its advertising revenue, and its potential to generate new content objects from the information in these processed documents.
Apple is working at books from its iTunes angle. Amazon is working at books from the digital Wal*Mart angle.
Where are the national libraries? Where are the consortia of government entities responsible for archives? Where are the UN members’ pooling resources to tackle must have collections such as health and medicine? Where are the publishers’ associations?
Answer nowhere, silent, or hoping for the hobbling of Google.
Google is doing the government’s job. If the Google is stopped, the information in books is going to be handled like so many important tasks in today’s world. Poorly or not at all.
I am on the side of Googzilla. But the Google does not know I exist and does not care about an addled goose in Kentucky. I do hear, “Get up and read” in my mind.
Stephen E Arnold, February 8, 2010
No one paid me to write this. I will report this sad state of affairs to the manager of the US government document repository near my goose pond.
Online Information: The View of a Real Author
February 8, 2010
The addled goose publishes monographs. These are expensive and sell in dribs and drabs. The addled goose has no real publishing experience so I gobbled up the information in the TechCrunch article “Hey, 1997 – Macmillan Called, They Want the Net Book Agreement Back.” If the information in this write up is on the money, real publishers have been making life difficult for authors and booksellers for a long time. I recall reading that Charles Dickens was a slippery dude with whom to deal. Now I am wondering if the dust up between the world’s smartest man (Jeff Bezos) and a bunch of publishers is an information apocalypse, a business negotiation, or a new era in information access. I am working on a really dull monograph with zero interest to anyone except a few attorneys and possibly an investment banker or two. I may even give the monograph away because with the speed with which my stuff published by my publishers is selling, I will be in the big duck oven in the sky before I can pay for a meal at McDuck’ down the road.
In the TechCrunch write up, I noted these items:
First this passage:
Of course, publishers still choose their wholesale price, but there’s nothing to stop, say, Borders from heavily discounting bestsellers to get people through the door. Publishers didn’t necessarily like this as it led to booksellers demanding more aggressive discounting (sometimes more than 60% off the cover price), but they didn’t have much of a choice but to accept. The fact is that publishers couldn’t justify opening up their own stores, so if they wanted readers to be able to actually read their books, they had to keep bookstores happy.
Ah, control is not complete. I did not know that publishers were at the mercy of their retail partners.
Second, this passage:
It took until the late 90s [in the United Kingdom] 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.
Yikes, price manipulation and then pricing actions that further reduced what was paid to real authors. Geese like me are even further down the food chain. Yikes again.
Finally, this passage:
For the first time in the UK since 1997, and ever in the US, publishers are able to set – and enforce- their own prices on ebooks. And they will; not to make a fair return on ebooks but rather to cripple their sales in order to protect early hardback book sales. They’ve admitted as much themselves, saying that prices will start high on hardback release, before dropping steadily over time. The idea that this benefits anyone, least of all authors, is laughable.
So what are the consequences?
You can read the TechCrunch original for its view. Mine is that a disintermediation option is open. I argued that Google could move in this space with the flip of a bit. So far Google is dragging its giant Googzilla feet. But for how long? Have publishers read The Strategy Paradox by Michael E. Raynor. It might be available on Amazon or in your local bookstore. Worthwhile reading for understanding in my opinion.
Stephen E Arnold,
No one paid me to write this. I will report non payment to the US Department of Treasury, which prints money, unlike publishers and authors.
Online Pricing: Disruption Is the Game
February 8, 2010
It’s Monday morning. The Super Bowl is over, but the world football ecosystem is unfazed. The same cannot be said of for-fee content. I want to point out two seemingly unrelated developments and link them to one of the keystones of doing business in an online, Web-centric world. I am working on a couple of oh-so-secret write ups, and I will make oblique references to research findings by the goslings here in Harrod’s Creek that will be more widely known in the spring.
When world’s collide. The boundary is the exciting spot in my opinion. Image source: http://www.sciencedaily.com/images/2008/01/080112152249-large.jpg
First, consider the plight of Google Books. Suddenly the Department of Justice is showing some moxie. That’s a good thing, but I think the reality of derailing Google Books is like to have some interesting repercussions going forward. For now, the big story is that Google Books has become the poster child of Google being Google. You can get the received wisdom in the UK newspaper The Telegraph and its write up “Justice Department Cr5iticises Google Books Settlement.” The glee is evident to me in this write up, but perhaps I am jaded and worn down by the approach certain publications take to Google. The company is essentially the first examples of what will be a growing line up of firms that use technology to alter business processes. I will be talking about this in my NFAIS speech on March 1, 2010. I am the luncheon speaker, and I think some of those in the room will get indigestion. The reason is that Google comes from a domain that people within 20 years of my age of 65 don’t fully understand. The Telegraph doesn’t get it either, and I think this passage highlights that generational divide:
The ruling is a blow to Google and authors’ groups who had supported the search giant’s ambitious plan to create a vast online library of digitised books. The controversial Google Book Search project attracted fierce criticism from authors, who believed their rights were being eroded, while winning praise from other quarters for helping to widen access to classic, rare or useful works of literature.
Too bad the writer, a real journalist, omitted the word “goodie”. My hunch is that since national libraries have not shown any interest in creating digital collections, students and researchers will be doing their work the way John Milton and Andrew Marvell did. Great for those who have the time, money, and cursive writing skills. Not so great for those who need to sift through lots of content quickly. With library budgets shrinking and librarians forced to decide which books to keep, which to store, and which to trash, I think the failure of national libraries is evident. Google made a Googley and somewhat immature attempt to step into the breach and look what has resulted? A bureaucratic, legal eagle snarl. Books are an intellectual resource and I keep asking, “If not Google who?” Reed Elsevier? The British government? The National Library of China? A consortium of publishers? The answer is, in my opinion, now clear, “No one.” Maybe Google will keep going with this project. Hard to tell. Life might be easier to shift gears, go directly to authors, and cut specific deals for their future work. In a decade or so, end of problem. Also, end of traditional publishing. If Google actually talked to me, I would offer this advice, “Go for it, dudes.”
Ad Revenue Gets Exciting
February 7, 2010
ZDNet’s “Classified Ads Plunge to $6bn from $19.6bn in 2000.” I am not sure there is a particular passage from this write up for me to cite. What’s clear is that the iPad, the Googlet, the better Kindle, the Nook (Nook?), and the dozens of other handheld reading devices are going to have to sell one heck of a lot of magazines, books, and other for fee content. In my opinion, the gizmos won’t be used for reading by most folks. I wonder if anyone has checked the lists of the top selling apps on some of the smartphones. I did. Pretty depressing for me but probably even more depressing for vendors of for fee content who may expect some ad revenue in their digital content. I suppose you could convert Scientific American into a game.
Stephen E Arnold, February 5, 2010
No one paid me to write this. I don’t know to whom to report this sad situation. Federal Bankruptcy Court? Sounds good.
Google Content Engine Adds Functions
February 3, 2010
The technical gizmos within Google are less exciting that Android tablets, China, and dust ups in Europe. I want to document that the Google received a patent for its invention of a system and method for “Automatic completion of Fragments of Text.” You can read US7657423 at the USPTO’s fine Web site. The inventors are a couple of real wizards. If you have read my Google Version 2.0, you will recognize the names of Simon Tong and Georges Harik. Here’s the abstract for the patent filed in January 2007 and awarded on February 2, 2010:
A system offers potential completions for fragments of text. The system may obtain a text fragment and identify documents that include the text fragment. The system may locate sentences within the documents that include at least a portion of the text fragment, identify sentence endings associated with the located sentences, and present the sentence endings as potential completions for the text fragment.
This is one of Google’s fill in the blanks methods. These are quite important when assembling meaningful chunks of content or locating missing pieces of information when a source has a gap. The method can be applied to other operations as well. Considered in conjunction with Google’s disambiguation and dataspace methods, the invention is an important one in my opinion.
Stephen E Arnold, February 3, 2010
A freebie. No one paid me to point out that this open source document contains useful information about Google’s plumbing. I will report this lack of payment to the subcontractor who handles janitorial duties at the New Executive Office Building. “Janitors” are really an important Google innovation as well. Just think about Dilbert’s janitor.
Google Has a Facebook Problem
February 2, 2010
I read “Facebook Could Become World’s Leading News Reader (Sorry Google)” and was surprised. I knew that Facebook had a truckload of rich media, millions of users, and the love of older women. But I did not think about Facebook as a news reader. Here’s the passage that caught my attention:
Last week, Facebook’s Malorie Lucich posted to the company blog encouraging users set up their Facebook accounts for news reading. Lucich suggested becoming a “fan” of news organizations that publish to Facebook, then adding those connections to a dedicated “list” that only displays updates from news sources. You can subscribe that way to ReadWriteWeb here for example, to the New York Times, to the Environmental Justice Foundation or to thousands upon thousands of other organizations that publish regularly, usually with RSS under the hood.
I am not going to speculate on what Facebook could do. What’s clear to me is that Google has a Facebook problem. Google’s agility has not been sufficiently nimble to deal with the explosion of interest in social centric systems. Period.
Until Google begins acting like the pre-2006 Google, Facebook.com has a chance to become the new Google. This makes Google the “old” Microsoft. Microsoft and IBM become part of the original Burroughs-GE computer and software world. Fighting world battles on many fronts did not work for Rome, and it won’t work for Google.
Facebook is fighting in a way that reminds me of Google of yore. Just my opinion.
Stephen E Arnold, February 2, 2010
No one paid me to write about history. I suppose I should report this to someone at the National Archives, which is in the arms of XML love as Facebook is with its admirers.
Google Doubts Competence of Outsell Survey Team
February 2, 2010
I don’t know much about newspaper news click through rates or azure chip consultants, but I know when a Googler awards a failing grade for research. First, read the story “Google Exec: We’re Here to Help Newspapers.” Then read this passage:
And last week, digital marketing firm Outsell released a report claiming that 44% of Google News users don’t click through to the original sites. Mr. Varian dismissed Outsells’s report, claiming the survey design is “not very impressive,” and a Google spokesperson said Google sends more than 4 billion clicks to publishers worldwide each month. “It’s a symbiotic relationship,” Mr. Varian said. “As a search engine, we want rich content out there for our users to find.”
When I read these words, I understood Google’s economics whiz to be underwhelmed by the work of Bay Area consulting firm “Outsell”. (I am not sure what this word means I must confess. I know “up sell” but not “outsell”.) Now don’t get me wrong, I think some of the Googler economist’s ideas were likely to be less than helpful to the troubled newspaper industry. Traditional publishing and Google come from different domains, well, maybe different planets. Technology means one thing to publishers and in my opinion quite another to Googlers. My hunch is that “Outsell” won’t displace Gartner’s super consultant as the Google’s go-to azure chip consultant. Maybe that is “moonbeam azure” consultant?
Stephen E Arnold, February 2, 2010
No one paid me to write about the color of consultants. I am not sure which agency in Washington is responsible for blogs that write without pay about color. Maybe HUD. I think there is a Porter Paint color called “moonbeam azure” and I know there is a “fail red.”
SSN Launched
February 1, 2010
Strategic Social Networking is now live. You can visit the site by pointing your browser to http://ssnblog.com. The Beyond Search team developed SSN to cover the management implications and strategic applications of social networking to business and professionals. The blog will provide commentary, brief original videos, links, lists, news, and information.
SSN will include original articles and opinions from social experts like Craig James (CatStrat) and experienced executives like Jerry Constantino, author of the popular ItsNutsOutThere blog. Jerry is a deeply experienced publishing executive, author, and entrepreneur. We will also feature original research which will bring you new insights into the strategic implications of social media.
The SSN blog wants to give you a way to see the strategic angles social media use introduces to business. We want to write for a business professional who needs to generate sales leads, build a brand, and jump start a consulting opportunity. And we want to provide examples, tips, and useful sources for the individual working in an organization embracing the social networking revolution. We offer an RSS feed, and we will have a Facebook and Twitter presence. The comments section of the blog is available to you. Editor Jessica Bratcher and her team want to hear from you.
Stephen E Arnold
February 1, 2010
This is a sponsored post paid for by Stephen E. Arnold
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