Category: business model

Free Kindles and no newspapers

If [T]he [T]imes killed its paper print-run and followed the Kindle-only model, that would leave the newspaper with $346 million in its pocket. Okay, distributing the newspaper electronically in a secure way needs some electronic infrastructure…let’s stick a figure of $10 million on that. That still leaves $336 million to spare–a figure not to be sniffed at.

While it’s true that printing and delivering a newspaper is a huge cost that makes less and less sense by the day, this analysis still misses the point.  Replacing one ridiculous expense with a more ridiculous but smaller expense is not the way to succeed.  Newspapers must accept that the only way forward is to focus on the the scarce things they have to sell, and give the rest away.

And no, I don’t mean selling the printing presses and the buildings that house them.  While these things are scarce, and might bring in some extra cash, they won’t solve the problem.

But what do newspapers have that they could sell?  They have experienced reporters who will do more than scan Google and Technorati for the latest news.  They will actually investigate, research, and report.  These are all valuable things that take time and effort.  Businesses would pay for extensive, accurate, and timely information about their respective industries.  They already do pay for information like this.  Collecting this sort of information, weeding out what’s not important, presenting it in a readable way, these things are all hard.  These things are all valuable.  These are things you can sell.

But how does everyone else get their news?  For free.  Delivered via blogs and RSS feeds and however else people find it convenient.  Some will still pay for paper copies, at least for a while longer.

The difference is that, instead of trying to figure out ways to restrict your content, to keep people from getting at it, to inflate the price with artificial scarcity, you get it out there.  You use your content to build your reputation as a great place to come for good information.  And when people want to pay for your reporting and researching skills, you keep giving the content away.  Those who are paying you can have it first, maybe, but after that it goes out onto the internet where others can use it and build on it and consume it and keep building your reputation and naturally inflating the prices, sustainably inflating the prices (provided you continue the high level of service).

Saving the newspaper industry won’t really be about the newspaper at all.  It will be about transitioning an old industry that focused on putting things on paper into a new industry that focuses on collecting information and putting it together to be consumed.

Article: Fast Company – Should The New York Times Ditch Paper, Distribute Kindle E-readers?

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Fiction isn’t just going to disappear

If electronic publishing—and that includes the reality that it’s very easy to “pirate” electronic text—is a form of publishing that some authors and publishers have a hard time adapting to, then that’s just too damn bad for them. As my father liked to say whenever I’d whine about something as a boy, “things are tough all over.” If they can’t cut the mustard, then it’s just a fact that over time they will fade away.

A comment I left at Teleread prompted a contributor there to send me to an interesting article on the future of novels.  My first thought was, “that’s the biggest and most obnoxious tip jar I’ve ever seen on a website”.  That led me to think, “There’s no way the person who wrote this article has any concept of infinitely copyable digital content”.

But I was very wrong.  And the article comes from an author, someone who has experienced some of the changes in the world of publishing fiction, which puts him in a much more qualified position than many to speak about the industry.

He makes the point that some will be harmed by changes – the electronic revolution will mean that some won’t be able to make a living by writing any more.  That’s unfortunate – no one wants anyone to lose their livelihood.  Certainly when I say that you can’t charge for an ebook, I don’t mean that I think authors should work for nothing just so I don’t have to spend $9.99 at Amazon.

I do think that authors need to find new ways to make money, and it’s nice to see some authors agreeing with me.  People are thinking about new ways to publish fiction.  It’s not going to be the end of fiction, but it might be the beginning of the end of the way the publishing industry does business today.

Luckily, many authors will adapt, and many publishing companies will adapt, and people will still get to consume fiction.  But the way it gets paid for will probably be very different.  Not scary, but different.

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All signs point to a new Kindle

Amazon press conference on 2/9: I can haz kindle too?.

Interesting article at CrunchGear about the upcoming Amazon press conference.  It seems very likely that the second generation Kindle will be announced.

More interesting, though, since it’s been widely assumed that the new Kindle is coming out early this year, is the wish in one of the comments for the ability to resell an ebook purchased for the Kindle.  This is not going to happen, and it’s a big reason why ebooks are going to have to wait to become a real part of the mainstream.

There are two possible ways in which it might be possible to resell ebooks, and neither of them works.

First, you could apply DRM to the ebooks.  This removes the concept of ownership – it is impossible to own something that can be revoked by the “seller” at any moment (see here, here, here, and here).  Without owning the ebook, any reselling would have to go through the original “seller”.  The DRM would have to be transferred in some way, and the new “owner” would still depend on some indifferent third party to allow access to the content.  This third party will be incurring costs for each transaction, and would be crazy not to pass these costs onto the customer.

So every time you “sold” the property you “own”, the original seller would take another cut.  And what happens when they decide to stop supporting the DRM anymore?  It’s bad enough if you’ve bought from someone and they take back what you bought.  What if you buy from someone and someone else takes back what you’ve bought? In almost every case, the reseller could make more money than the original seller.  The reseller has no costs beyond the original purchase price, and therefore can sell at a much cheaper price.  Since the copies are exactly as good as the original, only one original need ever be purchased.  This is not a sustainable business model.  Bargaining on irrational behavior on the part of all of your customers will not get you very far.

Clearly reselling DRMed content doesn’t make sense.  So what are the alternatives?

You can resell content without DRM.  But why would you?  You can copy it as many times as you want.  If it was worth $10 to you, surely you can find twenty people to buy it for $0.60 and make a profit.  Or you can give it away, since it doesn’t cost you anything, and the new friends you might make would be worth more than your initial investment.

So reselling non-DRMed content doesn’t make sense, either.  Where does that leave us?

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Well, that’s great for a band . . .

Anyone who reads Techdirt regularly will recognize many of the themes here, particularly those dealing with making money in an industry where it doesn’t make sense to charge for your content.  And every time they post about another band succeeding with a new business model, I try and imagine how that model could be applied to writers and books with any degree of consistency.

So far I’ve been frustrated.  Certianly there are opportunities for authors as we move into an age of reading digital books instead of paper ones, but I have yet to see or hear or imagine any model where authors will be compensated for their work at a level that will allow them to live while giving away electronic versions of all their work.  That is not to say that it can’t happen, or won’t, but it means that there is more work to be done, and it means that there is tremendous opportunity for someone who can solve the problem.

There is no question that people will continue to write if they aren’t being paid.  Thousands of fan-fiction sites, Nanowrimo, and any number of other groups, online and off, demonstrate that people like to write for themselves, or just for the sake of writing.

But if we can’t figure out how to pay writers enough to do it full-time, the quality of the writing will go down.  Sure, Nanowrimo has shown that one can write a substantial piece of fiction in a short time.  But to get something equal in quality to your average published novel takes more than a month.  And books like that will be hard to come by if no one can quit their day job and write full-time.

So readers and writers alike are in this boat together, in need of a new plan to compensate writers when people finally realize that it doesn’t make sense to pay for something you can copy instantly and perfectly, as many times as you want.

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How much should you charge for an ebook?

The proper price for an ebook in relation to a printed book is an increasingly common debate.  It’s very difficult to put a price on something that you can give away as many times as you want without losing anything.

Publisher Walt Shiel offered these thoughts: “. . .We publish all our e-books with a coupon for a discount (equal to the e-book purchase price) applicable to the purchase price of the print edition.”

It’s nice to see publishers realizing that ebooks can be used as promotion for print editions.  But even this is not a sustainable business model.  The day will come when printed books are merely collectors items, something to keep behind glass.  What will ebooks be used to sell then?  Some authors might give away ebooks to promote speaking tours, seminars, or some other sort of access to the author. Some could use them to promote limited print editions, such as signed copies.

And for some, this will be enough.  But there’s a limit to the number of collector editions anyone can sell, and many authors aren’t interested in public speaking or teaching.  It’s different for musicians, in the same boat in terms of distributing digital content, but much more likely to do live performances, and therefore able to give away content to promote concerts.

The search for an effective business model for ebooks and the next generation of readers will continue.  The music industry may be a good guide, but the solution may come from an entirely unexpected source.

Article:  Ongoing Reader Debate: Why Are E-Books So Expensive? – mediabistro.com: GalleyCat.

Ebooks anytime, anywhere

Shortcovers, Indigo Books & Music tells Internet Retailer, is a new division of the company with its own e-commerce infrastructure. Shortcovers in February will launch its web site and a mobile application for the iPhone.

Shortcovers seems to have the right idea.  They’re looking to support the iPhone first, then expand to other smartphones – Blackberry, and phones running Google Android or Symbian.

Michael Serbinis, executive vice president and chief information officer at Indigo Books & Music, says, “Shortcovers is a service for anyone who wants instant access to content with the convenience of having that access from the device they already own.

A software approach is certainly more adaptable to changing markets.  It won’t be long before everyone has some sort of device with them all the time that could be used for reading ebooks and other digital content.  Just because readers using E-Ink are popular now doesn’t mean it will continue.  As mobile phones become more and more like full computers, with larger screens and more powerful processors, and more and more people find that a data plan is just as vital as a voice plan, those same people will realize that any reading they might have done before on paper or on a computer screen can be done on the mobile screen, as well.  The companies that are positioned to take advantage of that before it becomes mainstream will be ahead of the competition.

What isn’t so clear is what exactly they mean by “shortcovers”.  They offer previews – first chapters and things like that – with the focus on mobile devices.  But it’s difficult to see what will set them apart from simply using Amazon.com on a mobile browser.

Article: InternetRetailer.com – Daily News for Tuesday, January 20, 2009.

Using digital goods to sell your other content

When the time comes to sell infinitely copyable goods, like MP3s or ebooks, some try to legislate away anything that hurts the business.  Others, like iLearningGlobal, take advantage of manufacturing costs that go to nothing and work to sell scarce things.

Sales people and sales managers can learn how to sell, stay motivated and focused when they listen to MP3 and videos from legends in the sales industry, including Brian Tracy, Harv Eker, Scott Siebold and Mark Victor Hansen. New videos, ebooks, MP3s and articles are added each week. Each member can view as much material as they like, for one low, fixed price of only $79.95 per month.

They allow unlimited downloads of the things already created, where the production costs are already sunk.  Then they use that to encourage future payments for non-scarce goods, like custom training help and materials.  $80 a month seems pretty high, but this is the business world, where these costs are tax-deductible.

“If companies cannot find the time or resources to train their personnel, iLearningGlobal can step in to help,” Snow said. “Now there is no excuse for not training your sales people so companies can beat the recession.”

Neither the press release nor the website mention the costs for the custom training, but you can be sure it will be more than $80 a month.

From:  Sales Training Doesn’t Have to Suffer During Rough Times as Affordable Distance Learning Library Features Topics from Leading Sales Trainers.

Competition for the Kindle?

Via Verizon To Support Kindle Rivals – Technology – redOrbit.

“Competitors to the Kindle are out there and ready,” [Verizon head of device certification Tony Lewis] told Reuters. “In 2009 I’d expect them to come to the market.”

A while ago, Verizon announced plans to open their network to third-party devices, and gadget-loving users began to salivate at the thought of a fully open network.  So far, Verizon hasn’t delivered.

But maybe this will be the year.  Amazon has been unable to keep the Kindle in stock.  People have suggested that sales numbers are exaggerated, but it still sells for more than the Amazon purchase price on Ebay, and that is probably a much less biased method to estimate the true demand.  People really seem to want these things, thanks in no small part to Oprah and her endorsement.

So why haven’t the competitors appeared already?  The technology in the Kindle is not groundbreaking.  The idea of a lifetime subscription to the data connection being included in the price hasn’t really been done before, but there’s nothing stopping anyone else from doing it.  Having a huge support system like Amazon certainly makes it easier for the Kindle, but Verizon is hardly a mom-and-pop outfit without any money and resources.

Perhaps it is Verizon and the other mobile carriers’ reluctance to accept a device that they have so little control over.  Verizon sells most of its phones with a proprietary operating system, which makes it easy for the less technically inclined to switch from one Verizon phone to another, but doesn’t foster innovation and growth.

Verizon must see the exclusive deals that its competitors have made on devices like the Kindle and the iPhone, and certainly someone has suggested it do the same.  It remains to be seen whether it will be before or after the next-generation Kindle, and whether or not anyone cares.