For the benefit of those that might not have been watching. Amazon and Macmillan got into a pricing dispute over eBook sales. Part of the trigger being that Macmillan cut an agency deal with Apple for the iPad platform that has a variable rate that is higher than Amazon’s pricing. It got so heated that at one point Amazon disabled purchasing of the entire suite of that publishers books.

Why do we care?

Well primarily because it might change the landscape for eBooks. But my gut says this will not play out like either party thinks.

Whose right?

Well neither. Remember this is at its core a contract dispute. So you have two parties haggling over price and terms. But one author did have an interest viewpoint –

If Amazon were a smaller retailer, this probably wouldn’t be a big deal. But Amazon pretty much, right now, has a monopoly on online bookselling. They’re huge. As a result, this becomes nearly a form of de facto price fixing.

source.

Which if not in word, at least in deed is probably the case at this point and time.

Is one price for a book wrong?

Well no. But if you think of a free market, single cost pricing may be efficient for the offerer but it forces a self selection from the buyer to only consider catalog items that have an intrinsic value more than the offer price. So ‘Gone with the Wind’ would sell well, but ‘Attack of the NanoAtomic Vampire’ from an unknown author would not.

So what’s the moral here?

Its all theatre. Here is why. There is no determined pricing for ePub books. Its all new. The book publishers want to set an expectation in the ~ $20 range, right below a mid-successful hard cover release. They want to protect their legacy infrastructure when for all purposes it is toast. To me that is as bad as Amazon trying to fix a one price strategy.

The reality is the following — ePub pricing will be determined on authorship, topic and audience. It will no longer have a printing component determining the floor price of the publication. That is what both parties are trying to avoid and they don’t want you to think that it might be possible to buy ‘Linear Algebra II’ from Knopf, Knuth and Rupert for $4.99. But that is entirely possible even with today’s technology.

ePub platforms are crude compared to what they will be like in say 5 years. Authors will be able to set their pricing, eliminate the Macmillan’s of the world, and sell pulp copies if need be through a supplier like Lulu.

That ladies and gentlemen is what the dust up is about. They don’t want you to know that very shortly there could be a door number 3 to choose from for all your reading.

We here at ThirdPipe have long held the conviction that paywalls for content on small value product really are wrong unless you are providing the service as part of a larger offering. A good example would be the Apple Store iTunes as a conjunction with the Nano MP3 player. Or the paywall is a convenience factor to an already high value information source. Say Dunn and Bradstreet where all you have to do is register if you already subscribe to the service.

But to view a paywall as a new income stream? Bonkers man. Ain’t gonna fly. NYT found that out two years ago. Now NewsDay has found out the same thing –

So, three months later, how many people have signed up to pay $5 a week, or $260 a year, to get unfettered access to newsday.com?

The answer: 35 people. As in fewer than three dozen. As in a decent-sized elementary-school class.

That astoundingly low figure was revealed in a newsroom-wide meeting last week by publisher Terry Jimenez when a reporter asked how many people had signed up for the site. Mr. Jimenez didn’t know the number off the top of his head, so he asked a deputy sitting near him. He replied 35.

Now to be fair one has to consider the context of that number. NewsDay also owns the local cable franchise as well. Plus anybody who subscribes for the pulp get the online subscription free as well. So a large swath of the potentials already have access for free. But what it does show is that a paywall is a barrier unless one is linking it to something larger. There is too much free content out there to justify paying for it. Fact one concept that none of the papers yet fathomed is that they are third person before the reader gets to it. Customers are cutting out the middleman and reading the press releases directly now, removing the filter and hence the need for the paper itself!

We have said this before. If a paper wants to make a go of digital news content they need to follow an old Telco prescription. Offer the handset for ‘free’ and pay for it and your talk time as a bundle. In the papers case, you offer the Kindle II for free bundled with a 2 year subscription to the paper at $9.95 a month. Then you make sure the digital daily is on the machine everyday. Don’t require the reader to futz with a download, it has to be a push.

Its a multimillion dollar idea offered free.

Linky.

FastCompany has the latest developments on BB’s effort to make itself relevant. Personally I think they miss the mark. –

Perhaps conceived as a one-up response to the unexpectedly popular RedBox movie kiosks, the SD-card rental stations are meant to address some of the age-old problems with DVD rentals–namely that they’re easily damaged, and must be returned. With an SD rental, the user keeps the SD card, though the content contains DRM which sets a date of expiration. (Above, the taxonomy of SD cards; below, a Blockbuster SD kiosk.)

Here be the problem. Do I need to go to a BB store to get the SD of the movie? If I do then that is not an improvement over DVD’s in the convenience factor. I still have to get in my car. The other is, deploy in retail sites? That’s fine but at the rate the RedBox is deploying, BB may not have any opportunities left by the time they get the program rolling. All in all a very slow response to a serious threat to their long term prospects.

My take? BB is toast. Pass the butter and jam.

Linky.

Imagine the reaction of a Sony pictures suit receiving news that one of the company’s new releases had rocketed to the top of the most shared bit torrent list. We’d hear plenty of complaining, demands for tougher laws and blaming the internet for losses.

The reaction of some indie producers is exactly the opposite. If one of their products rockets to the top of the shared files list, it’s cause for celebration. Why? Viral distribution creates buzz and puts them on the map. That much buzz pushes the indie past the big Hollywood distribution wall and actually helps make sales.

Alan Gerow was the first of a few folks to send in the news that some independent filmmakers not only discovered that their film, Ink, had ended up being widely available via Bittorrent, but that they were quite happy about the exposure. Alan sends over the email that the filmmakers sent out:

Dear Fans and Friends,

Over the weekend something pretty extraordinary happened. Ink got ripped off. Someone bit torrented the movie (we knew this would happen) and they posted it on every pirate site out there. What we didn’t expect was that within 24 hours Ink would blow up. Ink became the number 1 most downloaded movie on several sites having been downloaded somewhere between 150,000 to 200,000 times as far as we can tell. Knowing there’s absolutely nothing we can do about it, we’ve embraced the piracy and are just happy Ink is getting unprecedented exposure.

As a result, Ink is now ranked #16 on IMDb’s movie meter and is currently one of the top 20 most popular movies in the world. (Tech Dirt)

One Vignette says it all —

“You wouldn’t believe how badly they treated her,” an insider friend told me of Sarah Palin not too long ago. I assumed this person meant the Republican establishment. One can only imagine what they’ve been up to.

So Thursday night the former Alaska governor posted the following on her Facebook page ^[1]:

The votes of every member of Congress affect every American, so it’s important for all of us to pay attention to this important Congressional campaign in upstate New York. I am very pleased to announce my support for Doug Hoffman in his fight to be the next Representative from New York’s 23rd Congressional district. It’s my honor to endorse Doug and to do what I can to help him win, including having my political action committee, SarahPAC, donate to his campaign the maximum contribution allowed by law.

Our nation is at a crossroads, and this is once again a “time for choosing.”

Palin has been sending a couple messages recently. First, she has, since stepping down as governor, started to communicate with the people not through the press but around the press. In other words, she’s speaking directly to the people through social media. She has had a couple well-timed and well-placed op-eds that have helped define policy arguments. However, most of the time she’s talked to the people via social media. (It should be noted that she’s been silent on Twiiter for some time — something I hope she’ll change soon.) This has had the benefit of letting the press know that she does not need them. Rather than go the Obama route and deny what is perceived as the one “enemy” to her aims, Sarah denies nearly everyone. And why not? The press trashed her with risible lies. Why give a dying breed ratings when she can reach the people herself?

Set aside whether you love of hate Palin. She does not seem to affect people any other way. The key is the delivery vehicle. Total news cycle bypass. It has also permitted the former governor to tap into a huge funding base. Long term –

• If you have the presence, a politican does not have to toe the news cycle. Fact they won’t even have to have their positions filtered. They just blast it out in a Twitter link to the relevant page on a data source on the Internet.
• It forces the news organizations to play catch up. Not once in a while but every time something is sent out. The politician’s base is receiving those Twitter and RSS feeds in real time the same time that a E.J. Dione or Krauthammer are. The reader can now make their own minds up on the position. The Press gatekeeper function is gone.

Whither then do things go? Well we are already seeing it. The news weeklies are almost gone. The cycle is too long to be relevant. We are also seeing the effect in the major dailies as well. Any winners? I can think of one class — think tanks. Organizations like Cato and Brookings. The voter might have received the latest missive from the politician. But…. the internet has fostered the idea of fact checking in much of the public. However most do not have the time to do the data mining to validate the concepts. Hence the think tanks have an opportunity if the democratize^ their content relevant to current events.

Its the classic story of supply chain collapse. Most of America is already used to the idea of not reading a pulp paper. So do us all a favor there MSM — die.

Linky.

^ As is typical, much of the content provided by think tanks are couched in the language of the Washington Beltway. To make such content palpable to rank and file Americans a serious scrubbing effort needs to occur.

Well the Net Neutrality rules have been codified by the FCC. All that is left is the wrangling about peripheral details. As a recap the prime components are —

The rules codify four old principles and introduce two new ones. Broadband providers must not block users from sending legal content on the net. They must let users run the applications and services they like and connect whatever devices they care to. And providers must not harm competition among ISPs or online services. The new principles require that broadband providers not discriminate against content services (i.e. block Skype because it competes with an ISPs voice service) and that they disclose to users and the feds how they manage their networks.

The rules would also explicitly extend beyond so-called wireline providers such as DSL and cable and apply to wireless internet services, such as 3G, satellite and WiMax. Providers would have leeway to shape or throttle traffic for network management purposes or to help police or “homeland security.”

The full rendering is here.

Couple of observations/effects now that this have been issued –

• Figure that the Telcos will now move to push congress for fiscal relief. The most likely move being a tax recapture modification for a period of years so they can accelerate the depreciation of the PSTN netowrks. 18 year depreciation rules need not apply anymore in telecom.
• Is ‘carrier of last resort’ now a dead duck? The new rules are not clear. But you can bet the Telcos will wish it so.
• This could be liberating for the Telcos as well, were they to play their cards right. Sure the PSTN will shrink. Were I Telco I would foster it. Partner with a Skype or other VoIP or their own captive and get the last of the user base on VoIP. Gut the CO of the old switch gear. Work with folks like Akami and turn the free space into network edge data centers. Lower costs, new services, lower cost per user. What’s not to like?
• Just because you can attach it does not mean the provider can’t shut you off. The new rules have ‘network manageabiltiy’ aspects attached. That folks includes bandwidth throttled or outright port closure.
• End of walled garden video channels? When the consumer can now get any device they want (within reason), the restrictions on say HBO having to be a channel line up partner with Comcast or TWC no longer exist. An example would be the Roku folks lining up HBO, FBN, NFL and other content as either free or pay ala-carte. Roku just does the cross billing to/for the consumer.

  Oddly the Comcasts of the world don’t need to be left out of this game. They could switch over what they currently carve out of their baseband to broadband and play the same game with the providers they already have.

• The handset race will heat up. With proven chipsets to support network access without concerns for interoperability the universe of devices and device types are going to skyrocket. Some old main stays like Motorola and Nokia might find themselves outclassed. The rate of change may become so fast that brand manufacturing may become a lost art.

In many ways the edges are going to be a new game. A great deal more diversity in product selection is on the horizon.

Linky.

Imagine you are a studio exec, who just flew into Bentonville, AR on the corporate Gulfstream. The product manager for Wally World tells you in private that your shelf presence in WM will be cut by half. Do you –

A) Barf up the $250 of Thailand Prawns on the PM’s desk.
B) Quickly recalculate your retirement valuation.
C) Have a stroke right there knowing your life insurance is paid up and the kids will be ok.

A recent shift in merchandising strategy by the world’s largest retailer spells more trouble for DVD sales and the entertainment industry that depends on them for profits.

As part of a larger effort to clean up its aisles and appeal to higher-end shoppers, Wal-Mart Stores Inc. is doing away with display cases to promote the latest hot movie titles.

The move comes as major film studios are reeling from declines in revenue from DVD sales as cash-strapped consumers turn to low-cost rental services and digital downloads for home movies.

“We think the new strategy implies Wal-Mart no longer sees DVDs and Blu-ray discs as traffic drivers,” J.P. Morgan analyst Imran Khan said.

Studio chiefs dispute that conclusion, noting the importance of DVDs as a sales category for Wal-Mart, but none would speak publicly for this story.

Wal-Mart, which accounts for nearly a third of DVD retail sales in the U.S., didn’t respond to inquiries for comment.

Is it really that bad for the studios? Yes. Consider that WM represents a third of DVD sales. WM is equivalent in the DVD game as Tower Records was in the world of LPs/CDs. Losing that shelf space will represent a sizable loss of revenue.

Surprisingly, DVDs and BluRay is a convenient format. You can do a million unit press run, get the best price in town for the press, ride the long tail over 5 years to burn through the stock and only eat up a small pallet in the warehouse. Presuming you keep the disks wholesale wrapped and only box set them as demand needs it.

Disks also represent a decent profit margin for the studios. Much better than returns via NetFlix or Pay-per-View. A magnitude better profit than what the returns are from RedBox. So the Studios have a serious problem on their hands. Keep in mind that BlockBuster is scaling back by about 1/4th their store presence. Used to be Box Office could turn a profit for the studios. Production costs soon made that an impossibility. With the advent of VCR, then DVD/BluRay sales, Box Office paid for production and the studio lives or dies profit wise on the disk sales. Now it looks like that is becoming a problem as well.

What will they do?

WSJ article here.

The following video is longish at ~30min but worth it. –

Lessons from the Rocky Mountain News - Presentation at the UC Berkeley Media Technology Summit at Googleplex in Silicon Valley from John Temple on Vimeo.

At the end he lists the 10 takeways any business should know, let alone a newspaper organization. But of it all, he missed a few items.

• Economic Disparity. Does not even address it. But the fact is distribution in the ether is magnitudes cheaper than distribution in the physical. A strategic disrupter that blows away the older paper model.
• Strategy. Important? Sure but don’t let it blind you. Many a company ended up a success providing a service that was never in the original business plan or was consider an ancillary product or service. Yet that ‘it’ became the source of all profits.
• Know Your Competition. The speaker covered that? He did? Only in passing. Your competition is not just the guy with the other masthead in your local market. Craigslist is out to steal your classified revenue. That’s a competitor too. AP, something you are a member of, is also your competitor now. Not all your competitors have rotary presses rolling in the back room.
• Markets. Papers no longer serve a particular market. They can specialize in a particular region of local coverage, thats true. But their scope and those of their competitors is national. Given the right developments, a paper in the East could just as well cover the Berkley City Council meeting as the local Berkley paper. Such is the reach of technology and Open Source Journalism.

Even with my observations, it is a informative talk on the path to oblivion that the press is following. May some of them wake up soon.

An interesting observation from KausFiles. —

Why watch Saturday Night Live in L.A. when the twitters from back East say it’s weak? Does that mean TV shows now have a New York problem like movies have a Friday problem? Movies: If twitterers don’t like on Friday, it will die on Saturday. TV: If the East doesn’t like it, it will die in West? Just asking! Not my industry. … 1:45 A.M.

Finally, it appears that technology has eliminated the last bastion of Program Managers art, the schedule. Why schedule anything? If the time zone differences are the basis for tweets to affect viewership in later timezones that part of the tool is pretty much dead.

What takes its place? Heh hate to mention it but, OnDemand, which is what most of the populace has been doing for over a decade with VCR’s, Tivo’s and Sling boxes. For the national program manager at a major network, their life must be a royal hell most days. Especially leading up to sweeps.

Might some enterprising PM take a hint? Tap into that tweet feed, develop a rating score around it and charge advertising rates accordingly hour by hour. A show that bombs the advertisers gets a discount. Those that are on the rise the advertisers pay accordingly.

Time zone shifts are passe for broadcast TV.

You have heard us rail here more than once that the Legacy Media are in deep dodo. Whether its content, positioning, cost structure, or technology issues. Well now we can add one more — management issues –

Only 51% of pubs think pay walls will fly

A bare 51% of the newspaper publishers in the United States believe they can charge successfully for access to their interactive content, according to a survey released today. The other 49% of publishers either fear that pay walls will fail or just aren’t sure.

The survey, which was conducted for the latest in the series of industry conferences this year studyng how to monetize the valuable content most newspapers give away for free, shows that publishers who are worried about charging for content have good reason to be concerned.

While 68% of the publishers responding to the survey said they thought readers who objected to paying for content would have a difficult time replacing the information they get from newspaper websites, 52% of polled readers said it would be either “very easy” or “somewhat easy” to do so.

These findings – and the others summarized below – are contained in an exhaustive survey by industry consultants Greg Harmon and Greg Swanson. They were hired by the American Press Institute to conduct the research for an invitation-only meeting of about three dozen industry executives being held today at a hotel in suburban Washington, DC.

Well first, just to get it out of my system, the snarky comment — Well Duh! If you are pitching a crappy product, and you are their editors and publishers, then what do you expect. Of course the public won’t follow you thru a pay wall system to get their news content. Wen your print side won’t even cover the Van Jones Bus Throw or Dear God the shameless ACORN story that is now all over the ‘Net then why should they?

But the publishers are now admitting that they cannot make it over to digital content. 49% of them are saying that they will fade into oblivion no matter what. Well I’ll tell you, if I were a subscriber to a daily today I would want to know that. Why expend money today for a publication that even they know will not be around say 5-6 years from now?

Read the whole thing over at Reflections of a Newsosaur. Pay particular attention to the various schemes that those that are going digital are brewing up.