Sips from the Firehose
A blog that seeks to filter the internet into a refreshing, easily-gulped beverage


Apr 11

eBooks Pricing and Antitrust: Pricing Collusion or Draining a Fetid Swamp?

Posted: under E-ink devices.
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Today’s news of the antitrust suit filed by the DOJ against Apple and a consortium of large book publishers raises some interesting questions. First, here’s what the government alleges (h/t Wall St. Journal)

In a civil antitrust lawsuit, the Justice Department alleged that CEOs of the publishing companies met regularly in private dining rooms of upscale Manhattan restaurants to discuss how to respond to steep discounting of their e-books by Amazon.com Inc., a practice they disliked. The executives also called and emailed each other to craft a solution to what one of them called “the wretched $9.99 price point,” the suit said.

The five publishers and Apple hatched an arrangement that lifted the price of many best-selling e-books to $12.99 or $14.99, according to the suit. The publishers then banded together to impose that model on Amazon, the government alleged.

the amazon kindle bookstore as seen on an iPad3

Note the diversity in prices for the books on this page; contrast that with the uniformity of pricing for songs on iTunes (i.e. 99 cents, no matter what).

Now, this can be read two ways:

1. The book publishers and Apple got together to put the vise on Amazon to fix the prices of books at a level that benefitted the publishers (and Apple) by allowing them to jack up the prices of ebooks to be more in line with the print versions (thus protecting what the publishers see as still their core business, dead-tree editions).

Problem: Apple is being a total hypocrite here. One of the biggest gripes that the music industry has had about Apple over the years has been the 99 cent price point for songs. Labels fought to adjust that pricing – to make great hit songs cost more, while cutting the price of up-and-coming bands to give them a chance to get traction in the market. Apple relented enough to go for .69, .99, and $1.29 … which was rather too late to really do much good. 

2. Amazon successfully lobbied to be allowed to reinstitute its price-cutting schemes that allow Amazon to consistently have lower prices on the stuff they sell.

Problem: They can do this for the same reason that Wal-Mart has lower pricesAmazon is pretty much the only game in town. And if you don’t like it, tough. Go find somewhere else to peddle your stuff (good luck with that one, pally).

What does this mean for indie authors, and larger startup publishers, such as small-to-midsize newspapers that want to bundle up special editions and monetize their content by selling it via as an eBook (as enthusiastically proposed by the estimable Robert Niles)? Nothing good, I’m afraid.

Here’s what author Jim Hines found out when Amazon started cutting the prices on his books: 

A certain champion of self-publishing recently decried all of the “whiny bitches” complaining about Amazon, and argued how Amazon treats authors so much better than commercial publishers.

While there are certainly advantages to Amazon’s program, anyone who thinks Amazon is in this to help authors is a fool. Amazon, like pretty much any other business, is in this to make money. As for how they treat authors, let me share what I’ve experienced over the past week and a half.

Amazon can and will adjust your price as they see fit.

(snip)

So what’s the big deal? Don’t retailers put things on sale all the time? Well, sure … which leads me to my second lesson.

Amazon can calculate royalties based on the sale price, not your list price.

With my DAW books, if a bookstore offers a sale, I still get my royalties based on the cover price. Amazon is selling Libriomancer for pre-order at almost half-off, but I’ll get paid my full amount for every copy sold. Not so with self-published titles. Looking at my reports for last week, my royalties were slashed by 2/3 for every copy sold, because Amazon paid me 70% of the $.99 sale price, not my list price.

The lesson here is that when you’re looking to get paid for the creative work that you do, and when the opportunities for you to sell said work are increasingly running through only two channels (Amazon or Apple), then you are going to get paid what they feel like paying you. And they are going to take just as big a cut out of your earnings as they feel like taking.

Yeah, sure, they built up the stores. But those stores would have nothing to sell without the efforts of millions of creative people. Amazon and Apple are benefiting from being classic middlemen. They are the bottleneck between the consumers and the content that audience wants to consume. And they are starting to throw some very, very sharp elbows.

Read more detailed analysis about this dirty deal at The Verge:  

  • The DOJ says Apple “knowingly served as a critical conspiracy participant” by promising all the publishers the exact same deal and keeping everyone informed about the status of negotiations. When Penguin explicitly said that it wouldn’t sign unless at least three other companies signed, Apple “supplied the needed assurances.”
  • To persuade other publishers, Steve Jobs himself had to get involved. He wrote an email to one publishing CEO saying that the only existing choices were to “keep going with Amazon at $9.99” or “hold back your books.” He then offered a third choice: “Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.”

The details read like some kind of overheated Mafia book by a cut-rate author – secret meetings at restaurants, high-level collusion, contemptuous disregard for the customers, and finally – yes – DOJ wiretaps on the guilty parties. Christ. It’s like they were dealing with garbage-hauling contracts in New Jersey.

It’s hard to know who to root for in this situation. Both sides seem to have rapaciously eyed the book-buying consumers the way velociraptors eyed up the poor heifer being lowered into their pen.

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Jan 23

Bookworms love the new Nook e-reader

Posted: under E-ink devices, new media.
Tags: , , , , , , , , ,

Setting a couple of bookworms loose to play with the next generation e-readers is like setting Augustus Gloop loose in the Wonka Chocolate factory.

The first thing that strikes you about the Nook is how much *faster* it is than the Kindle. And Janine loved the touchscreen. More video to come on Digital Family.

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Jan 29

E-Ink Chatter Getting Louder: Dying Newspapers May Jump to E-Paper Devices

Posted: under Digital Migration, E-ink devices, Newspapers.
Tags: , , ,

I still think that obsessing on the platform that the news comes across on is symptomatic of a severe case of Missing The Point.  Let me say it again: viewing the newspaper crisis as being caused just because people don’t like buying paper anymore is akin to a 19th-century horse breeder thinking that people not liking ponies is the reason they’re using the telegraph rather than Pony Express.

It ain’t about the pony! Stop trying to attach wires & batteries to the pony & hope that will make some kind of a difference.

It’s about a real change in the nature of the whole business. Read “Cluetrain.” People still want the news and information – in fact, recent stats show that more people than ever are tuning in to “hard news” because of the dire economic, political and military situations.

But they don’t want to just be talked at.  We want to talk to each other, connect to each other, and share things amongst ourselves without Big Media jamming their irrelevant messages in our faces. If that can take place in an old-school print product – as it does, among weekly newspapers, which are the one segment of the newspaper industry that is maintaining its numbers – then fine.  Online, mobile, whatever – as long as it does the job that we want it to do, the People Formerly Known As The Audience will use it (and it might even attract some of that New Marketing money to support it). 

Looking at the problem as something that can be solved by employing a magic doohickey is the worst kind of thinking.  Like the cynical network president in “Scrooged” insisting on featuring mice on television, because the numbers are coming back that more people are leaving the TV for their pets to watch, and “we don’t want to miss out on this audience demographic.”

Anyway, up in Seattle, the P-I is apparently under consideration by Hearst to be a pilot project for the new Plastic Logic e-reader distribution system.

Hearst had been looking at flexible screens for its new e-paper, but
Plastic Logic spokeswoman Betty Taylor told Crosscut that while her
company’s wireless e-reader can operate on flexible material like
plastic film or foil, Plastic Logic’s consumer testing shows readers
prefer a more rigid display. Plastic Logic’s reader will be about a
quarter inch thick and have a considerably larger screen than Amazon’s
wireless e-reader, the Kindle. Both devices are wireless and use the
same low-power, high-resolution E Ink display technology, which is
partly owned by Hearst. While the Kindle shifts screens when users
press the sides of the device, Plastic Logic’s screen will be touch
sensitive, turning pages with a finger swipe across the screen.

I think that experimenting with e-delivery of a newspaper is certainly a good thing – insofar as the experiments also extend to making it possible for the users to have two-way conversations and to be able to share things amongst themselves that they find interesting and/or useful. Trying to maintain the top-down informational control systems of the traditional media on a new electronic platform will certainly be interesting, but ultimately doomed.

Meanwhile, the next-gen iPhone aka iPhone 2.1 is being spotted around the Bay Area.   Supposedly, what this next-gen phone will do is allow users to perform multiple tasks simultaneously – i.e. loading up a large web page or sending a info-dense video file via email while also checking Facebook friend status updates.  Right now, the best I can do is insofar as multi-tasking on my iPhone is listening to a podcast while scrolling through contacts. 

And, finally, it appears that Kindle 2.0 will come out at the O’Reilly conference on Feb. 9, while I’m in Kiev (probably demonstrating Kindle 1.0).

 

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Oct 31

Time Restructuring Follow-Up: “Economic Tsunami”

Posted: under Digital Migration, Newspaper Deathwatch.
Tags: ,

Just as a follow-up to my earlier post on the Time, Inc. restructuring — CEO Ann Moore spoke in front of the Audit Bureau of Circulation about the generally dismal state of the magazine publishing industry, which she reckoned is being hit by “an economic tsunami.”

Not all that much new about what Time is doing, although the analysis that “escapist” brands are going to see a short-term spike fits in with the ongoing trends in entertainment … kinda like how during Great Depression I, moviegoers flocked to see Fred Astaire & Ginger Rogers movies, so they could escape for a time from the grim reality of unemployment, poverty, Dust Bowl & bread lines.

“By this October it was looking like 1931,” she said. “[Time Inc.] has never had so many advertising clients in trouble at the same time. The declines are stunning.” Moore added that she didn’t care if it technically isn’t a recession. “It is one for us.”

She also name-checked Maghound, a kind of Netflix for magazines.  I’d like to say that I see a significant upside to this, but I really don’t.  If I like a magazine, I subscribe to it.  If I don’t, I allow the subscription to lapse.  I’m not going to be changing up the subscriptions every month the way that I re-order my Netflix queue.

The one money quote that made it to the top of AdAge’s story teaser is this:

One of Ms. Moore’s more cathartic assessments, and one which elicited the most audible response from attendees, was her defense of Time Inc.’s own shake-up, and other reorganization strategies like it, saying that “if you’re still sitting on your five-year plan, you’re delusional.”

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Oct 31

Future Newspaper: Will it Look Like Harry Potter’s “Daily Prophet”?

Posted: under Digital Migration, E-ink devices, New Marketing, Newspaper Deathwatch, Newspapers.
Tags: , , , ,

This is getting really, really close to the vision of the future that all the e-Ink dweebs have been yammering about for, oh, the last 40 years or so. The idea of an object that marries the (perceived) strengths of a newspaper with the electronic display have become something of an obsession for old-guard newspaper editors/publishers/curmudgeons.  More on that in a bit. 

For now, check out this nifty little Kindle-a-like…

I particularly like how the display can now handle much better grayscale, and especially how you can use a stylus (finger?) to control the display, write your own notes, etc.  The form factor of stuff welded to a hunk of plastic is obviously just a “placeholder,” so the ugly industrial look right now doesn’t bother me. 

We’re still missing the part where we can roll the damn thing up and stick it in a backpack or back pocket … but, given the delicate liquid crystals in the display, that vision of what the display can/will be is most likely a mirage anyway.  Also, I don’t think I’d recommend treating any of the rather toxic & corrosive battery technologies with such cavalier violence either.

With all the numbers that have come out this week about how the newspaper (and magazine) print products are convulsing in violent death throes, much faster than even the most pessimistic among us had feared, a vision of what the future of the news product might look like as shown here is somewhat heartening. 

And yeah, I know. Focusing in on a physical object that the news is delivered on is like a restaurant critic obsessing over the china pattern on the plate that the duck a l’orange is served on. 

However.  To extrapolate to the more trenchant issues in the newspaper industry – it’s more important to focus in on whether the duck is moldy, or the duck appears a day after you order it, or the other diners start pelting you with the green beans almondine while the waiter steals your wallet and screams in your ear about a real-estate opportunity… [Wow! I think I just waterboarded that metaphor! W00t! Yay me!]

While I love the idea of using one of these things to read the news, to have it in my pocket or carried around with my other junk, constantly updating me as to what’s going on … my fear is that newspapers & media companies will focus in on this as a possible magic solution to their problems.  This isn’t because the people in charge are bad, or stupid, or any of the other calumnies flung their way by the increasingly smug digerati (and mea culpa, I have been guilty of that myself on occasion).

It’s because newspapers are run by corporations these days, and corporate guys look to concrete, hard solutions to problems that they can wrap their minds around.  Problems with product distribution call for investment in shiny new trucks or routing equipment or big heavy steel cranes … things that you spend money on, that are built of metal and that have big engines in them that make the floor shake a little bit, and that make you feel like you spent your money on something substantial, something that has value.

In contrast, spending a buncha coin on a squishy, touchy-feely thing like “changing corporate culture,” or “re-imagining product possibilities,” or empowering entrepreneurial spirit” … well, a good example of this is the war in Iraq.  Or the war on drugs.

We spend massive sums on technological, physical solutions to what is basically a mental & spiritual problem.  We bomb the shit out of Fallujah, or build big radar dirigibles to patrol the border for cocaine smugglers, and wonder what it is that went wrong when the problem just morphs into some other face, and continues somewhere else, away from the heavy iron Death Machine we’ve constructed.

Thoughts?

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