Apple v Samsung

The Apple v. Samsung patent lawsuits worldwide have captured Silicon Valley mindshare. The latest issue is secrecy: how can  U.S. District Judge Lucy Koh balance the rights of the companies to maintain trade secrets with the need for court hearings to be open so that the public understands and consents to the courts' findings.

The really big issue, though, is the patent system. In a recent talk, John Naughton, Professor of the Public Understanding of Technology at the Open University, develops ideas on how technologies evolve, the increased proliferation of new technologies, and factors that dictate the success of a new technology.

Listening to Naughton, my first reaction was to ask whether today's patent system is proper.

Naughton argues that new technology mostly evolves from combining existing technology in new ways. With each new technology, the combinational possibilites increase. Thus, especially in fields like software and electronics, the rate of new technology proliferation skyrockets. This creates two important intellectual property quesitons:

1. What incremental combination of technology deserves a patent? Every new combination of technology, or combinations that are "significantly" novel (whatever significantly means)?
2. If the increment of combinational difference required to qualify for a patent is small, then the number of patent applications and, presumably, patents will proliferate exponentially.

In theory, patent applications require more than just a novel technology for approval. They also require a novel application. So, combining technology randomly isn't enough to thwart the current patent system. The new technology combination has to do something useful. Which leads to ...

My second reaction was to wonder whether generating valuable patents is a reproducible process that doesn't require invention, that ah-hah! moment of insight.

In his talk, Naughton also argues that consumer acceptance drives the success of a new technology more than the intrinsic value of the new technology. The classic VHS versus Betamax example is a good example. Betamax was measurably the superior technology, but consumer adoption favored VHS, and then VHS economies of scale killed Betamax technology innovation.

With this in mind, it becomes feasible to develop a patent strategy that has nothing to do with the intent of patents (to protect inventors against copies of their novel ideas) and everything to do with speculation. Assuming that consumers are technology kingmakers, a reasonably astute technologist could guess at 10 or 20 possible directions consumer demand could lead. For example,

• Take basic human desires like eating, listening to music, or playing games.
• Think of 10-20 different ways today's products could evolve for each of those desires.
• From a catalog of existing technologies, combine technologies to create new products that do things like eating, listening to music, or playing games in novel ways.
• Apply for patents on the all these "inventions." If money is a constraint, rank by factors such as market size and estimated product price. The cost of a patent applications could be lowered through repetition, and the time for patent approvals is increasing so that the costs of final patent arguments and issuance are further out when there is more certainty about the value of pursuing a particular patent.

It's not hard to imagine software that could replicate this algorithm someday. What if someone patented this algorithm? What if the algorithm worked and generated valuable patents that forced companies to license or buy the intellectual property? It's possible this system would miss some ah-hahs!, but it's also possible that it would extract a lot of money from the current patent system because it focuses on what consumers are likely to want in the future incrementally rather than non-linearly.

But then, what is an incremental versus a non-linear innovation? In market terms, incremental innovations may cause a non-linear response before a truly non-linear innovation can. For instance, in the case of silicon versus gallium arsenide and other integrated circuit substrate candidates, silicon keeps winning in the market with incremental innovations on top of a huge silicon infrastructure investments. The non-linear advantages of gallium arsenide should have won (like Betamax should have won), but can't beat silicon's infrastructure advantages.

Is the current patent system working? No, and it's creating ancillary problems like too many sealed filings in Apple v Samsung that undermine the courts' legitimacy. It's also likely that both Apple and Samsung have innovated in the smartphone and tablet markets in ways that both unwittingly benefit from. A new intellectual property system has to reconsider what inventions deserves protection (ownership), and what an individual or corporate inventor is being protected against (ownership rights).

Switching to Blogger Dynamic Views

I switched two of my blogs to Blogger's new HTML5.0-based "Dynamic Views" template over the weekend. You can see the results on The Best of Youtube and Gay Movie Blog. Overall I'm quite pleased, but there are several issues you should know about before you switch.

First, Dynamic Views is a work in progress, so you'll have to check in frequently as Google updates the system.

Second, a lot of formatting and functionality you may have built into your blog disappears. Things like a sidebar of widgets are probably history unless Blogger figures out a clever way to make those fly around the screen. Here's a list of things that I miss (my requests for enhancement):

1. Post formatting. While it looks like some of this is changing quickly, all the special formatting control over the words that show up in a given Post have gone away.
1. No ability, for instance, to suppress author or post time, or change the words used to preface those fields.
2. The social network links under a post are fixed as: Google plus one, Twitter tweet, and Facebook like. There is no way to add a Facebook share or a StumbledUpon button.
2. No Google Analytics support. I can't find a place to insert my Analytics code, so Analytics is not picking up site activity. Both Adsensee and Blogger continue to generate statistics.
3. JavaScript suport in Posts or Pages? It also looks like this is changing, but all the nice widgets from Facebook, Twitter, etc were not supported as I was converting over the weekend.
4. Little control over formatting.
1. Background colors and font colors & styles are not configurable for Blog Titles, Page Link, Post Titles, and Page Titles. There are some beautiful backgrounds to choose from (and you can upload your own background image), but most of the backgrounds obscure the Blog Title and Page links, and there is no way to configure the color of these to work with a dark background.
2. Page links on the top bar are not in the order they appear in Blogger's Page editing tab. It took me a while to figure out they appear in the order of most recently edited. So, if you edit a Page, you have to open and save other Pages to make them show up in the order you want. Also, Page links to a URL only (as opposed to Page links to a page) do not appear.
3. The dark Page link bar across the top disappears as you scroll down a page. I thought you had to scroll back up to the top to access the Page link bar, but the Page link bar reappears when you hover over it. It's a nice, but obscure feature. Probably better if the Page link bar worked the same as the top bar on Google Plus, where it's always visibile and, if you click on it, the page scrolls up to the top.
4. Users can change the Dynamic Views style from, say, "Magazine" mode to any other mode. It would be nice to be able to suppress that option. I believe (but haven't confirmed this) the style reverts to the style the blogger has specified (or preferred?) when a new page is rendered. That might be confusing to a user who has reset the style.
5. Default Image & Text. In most of the Dynamic Views modes, Blogger makes choices for you about what image and text will appear. For instance, in Flipcard mode, hovering over a graphic will reveal the title and date of your blog post. I would prefer the title and as many opening words of the blog post as possible because the date is not important to my readers. There is no way for bloggers to set that now. Luckily, the default choices are reasonable. Just not the best choices.
6. Mobile support. In Dynamic Views, when the blog is opened on a browser that doesn't support HTML5.0, an option comes up to try Dynamic Views at your own risk or go to classic non-HTML5.0 view. For a mobile device, it would make more sense not to offer this option if the browser doesn't support Dynamic Views. Instead, the blog should default to the mobile format specified in the blog settings.
7. Ad placement. Bad news: to the best of my knowledge, no control over where ads appear. Good news: they do appear!
8. Favicons. Favicon support disappears, which means that if you set the small icon that appears in the browser tab to a custom graphic, it will now appear as the Blogger favicon. This feature looks dead for the time being.
9. Default Label. It would be great to be able to specify a default label that is displayed when a reader goes to a blog's home URL. Right now, all labels are displayed. But I can imagine blogs for event producers, for instance, where it would be valuable to have only the events (with a label like "2011 Events") show up when a user goes to www.events-blog.com. Other labels would be discoverable later on. Likewise, it might be useful to be able to specify given posts that appear when the reader first lands on the home URL.
10. Authors. Since my blogs (and I suspect most blogs) only have one author, it would be useful to be able to suppress the option for users to sort posts by author.
11. XML Feed. Users who subscribe to a blog feed via the atom link may lose some information in their feeds. Specifically, it appears that images no longer appear in feeds.

From the list above, you might think that I don't like the new Blogger Dynamic Views. To the contrary, I love Dynamic Views.

If you've done a good job with your labels, Dynamic Views provides an engaging way for your readers to filter your posts visually. I'm already seeing an increase in page views. Part of that is because now reader have to click on a post to view it entirely. Since ad impressions don't increase (there are no ads on the opening page), it's not a meaningful increase in page views from a revenue standpoint. But I hypothesize that viewers will click on more posts on each visit because it's much, much faster to scoot around and sample the content.

You can use the Blogger template editing tab to see how Dynamic Views work with your blog without updating your blog template. Then you can decide whether Dynamic Views work for your content.

It looks like Blogger has made it possible to roll back to your current blog template configuration after you change to Dynamic Views, but be safe and put a copy of your entire blog template somewhere safe before you switch.

Please leave comments with your Dynamic Views experiences!


UPDATE October 26, 2011:

I continue to be quite happy with the move to Dynamic Views on the blogs that are using it. Many more things working now.

2. Google Analytics support is working. Here's the how-to.
4. & 5. Blogger has started to make certain formatting possible.
8. Favicons working again.
11. Images appear in feeds, but Youtube embedded videos are no longer converted to images.

eBook Sales

Just how important are sales of eBooks?

In order to sell its digital graphic novels and comic books exclusively on the new Amazon Kindle Fire for four months, DC Comics is willing to forgo sales of paper versions of its products in Barnes and Noble stores for the same four months.

According the the Los Angeles Times:

Barnes & Noble said Friday it will not stock physical copies of 100 of DC's graphic novels that the Warner Bros.-owned unit is making available exclusively on competitor Amazon.com's Kindle platform, including the upcoming Kindle Fire tablet.

DC Comics prefers to ride Amazon's Kindle marketing wave leading up to Christmas than to put paper versions on bookshelves. DC Comics probably has looked at pre-orders for the hot Kindle Fire and decided that 300,000 to 400,000 people will be searching for content for their new tablets, especially in the days after Christmas.

That's how important eBooks sales are.

eBook Writing Tools

If you want to write digital books, you'll need digital book-making tools. O'Reilly lists software for writing and designing digital books:

• Demibooks Composer. For release later this summer, designs iPad books.
• My Story Book. Another iPad design tool (see video below) due soon.
• Aquafadas. A plug-in for Quark and InDesign to create eBooks rich in images.
• Active Reader. A plug-in for Unity game developers to create graphic novels from games.
• Periodic Technology. In beta, a tool from Atavist for iOS, Kindle, Nook, and Android (soon) that enables rich links that can be controlled from a CMS.
• Moglue. Software (Mac or Windows) to create kids books for iPad or Android. Open beta soon.
• InteractBuilder. Software (Mac or Windows) to create kids books for iPad.
• App Press. Online site to build an iOS / iPad app for a book.

Some of these tools are for programmers, while other are simpler to use.

For instance, the My Story Book folks have made a how-to video that gives an overview of the entire process to create an eBook you can sell online at the Apple Store.



App Press provides a similar how-to video:




Scrivener is an authoring tool not included on O'Reilly's list that will create ePub- and Kindle-format files that work on iPad, Kindle, Nook, Sony Reader, and Android devices. I've described in-depth experiences using Scrivener here. Scrivener also outputs to file formats like Word that are useful for creating printed books.

In an entirely different approach, consider HTML5 authoring tools to create cross-platform digital books. Here is a look at Aside Magazine. Aside is similar to Flipboard for the iPad, but it's based on HTML5 code rather than iOS proprietary code. The preview below gives an idea of the richness of HTML5.

I haven't listed any HTML5 tools in this post. HTML5 is rolling out in browsers over the next few months (you can use it in Chrome and Safari now). Full HTML5 market penetration only takes place when everyone upgrades their browsers. Expect to see traditional HTML tools upgrade for HTML5 support as well as new authoring tools tailored to eBook production.

From Amazon to Buy.com

When California adopted its budget last month, it required sales tax on Internet sales. The next day Amazon notified me by email that our marketing affiliate relationship was over.

How I wept! I'd just set up a gay film blog and a gay book blog with nice links to Amazon so readers could purchase a DVD or book they'd read about on the blog. Perfect product placement. It worked, too. I'd already sold a book on Amazon. The blogs sat idle while I figured out a way to monetize future traffic.

The answer: Replace the Amazon Associates program with Linkshare and Buy.com. I read that it was possible, but it took me a few hours to figure out how to make it work. Buy.com does not have its own affiliate program. It does affiliate marketing through Linkshare. If you want an alternative to Amazon to provide products, here's how to do it.

1. Set up an account at LinkShare today! (Of course, I make some money if you press that link and sign up, thank you).
2. Linkshare has a notion of Marketing Channels (look under the My Accounts tab after you've successfully logged in). You probably want to set up a marketing channel for each site or blog you will populate with Buy.com links.
3. Once you have Marketing Channels set up, select one. You select one of your Marketing Channels with a pulldown at the top right, next to your Site ID. If you only have one Marketing Channel, its already set to that Channel.
4. Select the Programs tab on the Linkshare page. You can find advertisers by category here. To request an affiliate relationship with Buy.com, enter "Buy.com" into the Advertiser Search in the top right, then click through the approval process.
5. Repeat steps 3. and 4. for each Marketing Channel. After you've set up a relationship with Buy.com for each Marketing Channel, you're ready to add products from Buy.com.
6. To create an advertising link for a product available on Buy.com, go to the Individual Product Link Builder page on Buy.com.
7. In the Buy.com Product Link Builder, enter your 11 Digit Publisher Code from Linkshare. Unfortunately, Linkshare doesn't provide a simple way to find this Code. Go to the Links tab on the Linkshare site. Generate a Link Code by selecting an advertiser (e.g. "LinkShare Referral Program" or "Buy.com"), selecting a link type (e.g., "Banners / Images"), selecting any link and pressing the "Get Link" button. A pop-up will display the link code at the bottom. Look for the 11 characters following "?id=". That's the Linkshare 11 Digit Publisher Code you place in the Buy.com Product Link Builder page. Whew! A couple of hints. Make sure you've selected the proper Marketing Channel on the Linkshare page (see Step 3 above – ­­­each Marketing Channel has a different 11 Digit Publisher Code). Also, copy the Publisher Code somewhere where you can find it quickly so  you don't have to go through this excruciating process again.
8. Next, in a new browser tab, search for the Buy.com product you want to advertise. Copy the URL of the product, and paste the URL into the Buy.com Product Link Builder.
9. If you just need a URL and not HTML code, you don't need to enter anything else. Press the Create Link button at the bottom.
10. If you want the HTML code for a text link, fill in the text you want, and press the Create Link button at the bottom. You don't need to enter the Buy.com Sku.
11. If you want the HTML for a picture link rather than a text link, skip the "text you want displayed" and enter the Buy.com Sku number from the Buy.com product page you found in Step 8. Then press the Create Link button at the bottom. Hint, if the product you found doesn't have a graphic or photo, you  can use the Buy.com Sku from another product that looks similar.

And that's all there is to it!

As a Blogger user who was used to the simplicity of the Amazon Associate interface, this is a let down. The interactions between Linkshare and Buy.com are clunky, to be polite.

If you follow these directions, though, you should be able to get your Linkshare account set up and create your first Buy.com product link in under a half hour.

Working Around Apple

Earlier this year, Apple announced it would take 30% of sales generated from eBooks sold through its stores. That is, if your eBook sells through Apple's distribution, you pay Apple its cut for the sale of your eBook plus, if your eBook provides an in-app link to buy anything else, Apple wants a cut of that sale, too. In February, Steve Jobs said:

Our philosophy is simple -- when Apple brings a new subscriber to the app, Apple earns a 30% share. When the publisher brings an existing or new subscriber to the app, the publisher keeps 100% and Apple earns nothing.

Whether or not you like Apple's distribution tax, Apple is in a strong position to demand it.

Or maybe not.

Kobo is using HTML5 to work around Apple's distribution tax. So is The Financial Times:

The way browser-based HTML5 apps work is you simply go to a specific Web address on your iPad or iPhone (in the case of the Financial Times it's app.ft.com) and follow the directions to add the app to your home screen. The Financial Times app is optimized for iPad and iPhone but there's no reason it couldn't be optimized for other mobile devices (supposedly, that's in the works).

Other companies are avoiding Apple's tax altogether.

Rhapsody has removed the buy button from its iOS app, calling the 30% fee "economically untenable." Notably, Amazon also has removed the buy button from its Kindle application.

iPhone and iPad users who update their Amazon Kindle apps to today's version 2.8 can still purchase books from their devices, but must open Safari and manually steer to Amazon.com to do so.

Rhapsody and Amazon are betting that Apple will give up its in-app tax. Why? First, Apple users will have a more cumbersome shopping experience, navigating to a website to purchase products rather than clicking on a single button. Second, as market share of competitive tablets (read: Android) increases, so will in-app sales on those tablets. That, in turn, will pressure Apple to lower or end its in-app tax in order to keep 3rd party publishers interested in promoting the Apple platform.

Consumerization: The Crowdsourced Version of COTS

RIM, the company that makes the Blackberry smartphone, announced more bad financial results last week. The company is in a downward spiral. How did the leader in smartphones lose its lead to Apple iOS and Android? There are important lessons about consumerization.

RIM marketed the Blackberry through corporate IT departments, mostly by providing security and easy integration with corporate infrastructure like email. If you wanted to use a smartphone at your company, your choice was Blackberry. The Blackberry got some consumer traction, but its high price limited consumer appeal.

Along came competition from the iPhone, Android phones, and even the iPad before RIM seriously upgraded its product line with the PlayBook tablet. RIM's slow response gave iOS and Android plenty of time to gain market share in the consumer space RIM had ignored. Consumers flocked to iOS and Android devices that put in the consumer's pocket PC functionality like surfing the web, playing music and videos, and communicating with integrated voice, email, chat, and SMS. Blackberry's security and ease of integration with corporate infrastructure held little value in consumer space.

Now consider what happened decades ago in the military. The U.S. Government asset acquisition acronym COTS stands for Commercial Off-The-Shelf. COTS became a FAR, or Federal Acquisition Regulation, in the 1980s as the Department of Defense realized that the costs of custom specified parts and products were unsustainable. The classic example was paying $640 for a toilet seat. In order to reduce acquisition costs, the government found ways to deploy COTS parts and products rather than custom.

Today, IT departments are re-learning the lessons of COTS acquisition. Take email. Corporations and governments are outsourcing email because they don't derive significant benefit or differentiation from the extra costs of providing email in-house. Email was once a service that corporations had to provide. Now consumer email systems that have been made available to corporations, like gmail, are cheaper and fuller-featured. IT departments are following COTS economics. Corporations that learn how to deploy high-volume consumer products and services save money.

This is the lesson RIM missed. RIM discounted the possibility that high-volume competitors would drive innovations like application stores that, in turn, provided inexpensive capabilities that corporations wanted, capabilities that were more valuable than RIM's security or ease of integration with corporate infrastructure.

RIM isn't alone. Other companies that sell to IT have to re-think their strategy versus consumer products and services. IT departments themselves have to re-evaluate their complex acquisition processes much the way the DoD did 25 years ago. In the IT ecosystems, Systems Integrators are playing a similar role to Defense Contractors in the military ecosystem. Like a military contractor, an SI may prefer the solution that optimizes its own profits rather than its customers' profits.

The looming phenomenon that will change all this is consumerization, the trend in which employees bring to work the devices they own and prefer to use. An employee who has purchased a device and learned to use it has made a significant financial investment that IT departments will learn to leverage. Consumerization is the crowdsourced version of COTS. It is an acquisition system that relies on employees rather than IT to identify, procure, and deploy new technology.

The end-game for IT is to provide a low-overhead corporate framework for COTS assets and manage only the non-COTS assets that provide significant differentiation. RIM has provided another lesson that COTS is a winning strategy for both manufacturers and corporate customers. Consumerization will accelerate the deployment of new COTS technology into the corporate space.

Online Book Marketing

It's instructive to look at ways that authors are promoting their books online. Let's consider a couple of video promotions

Previously, I posted about a video promo for Backbite, a video trailer that uses a sequence of stills and spooky music to pique the potential buyer's interest.

First up in this post, Erik Qualman explains his book about "Socialnomics" in a youtube video.

Qualman uses two elements in this promo. First, he uses a zippy video that explains the importance of social media economics. Then he switches to man-in-the-street interviews where he explains his book during book promotion events. The first part of this video gives the potential buyer the impetus to learn more about social media, the second the reason to buy this particular book.

The next example comes from William Barry Leslie, the author of Psychotic Pleasures.

Leslie takes a different approach from Qualman. Rather than tell the potential customer the reasons to buy the book, Leslie reads from his book to give the potential customer a sample. There are two important lessons from this video. One is to start reading earlier. Youtube statistics tell us that most viewers watch one minute of video, then move on. Second is to provide links to a bookstore everywhere you promote your book (those links are missing on Leslie's youtube post as of this writing).

You can be the judge of which type of promotion works for your book. Non-fiction books generally have easier promotion hooks than fiction works since non-fiction can leverage an existing well-edited news story or short video piece to explain the book's topic. In any case, consider finding existing video whose owner will allow you to excerpt it for use in your own promotion.

Another approach that writers can use to promote their stories is the story-behind-the-story. It is easy to blog about writing your book. If you're writing, say, a travel adventure, you can blog about all the locations in your book, why you chose them, what a visitor might explore when traveling there. You also can make a video that tells the story behind the story, but that probably will cost a few thousand dollars per minute for a well-conceived and executed video.

Also, don't forget giving away sample sections or chapters in text format (rather than video or audio format). This can be done simply by providing a link to a blog post, as Leslie has done, or to a scribd listing.

Lady Gaga's Online Pricing Lessons

The entertainment industry is making the transition from a scarcity model (a few copies of a work at a high price) to a ubiquity model (copies everywhere for cheap or free).

The music industry is leading the way.

In case you missed the news, Amazon ran a $0.99 special on Lady Gaga's most recent album, Born This Way. Amazon ran the promo as a way to increase users of its new cloud music service. Indeed, the album sold 440,000 copies, and Amazon probably paid about $5 to Lady Gaga for each new cloud music user they signed up.

Many more people were willing to pay full price after the Amazon promotion:

Gaga's massive first-week sales, however, suggest there is still room for album sales--if the artist is popular enough. While offering the album for only 99 cents on Amazon might've boosted her sales, it's clear that consumers were willing to pay more: About 700,000 copies of Born This Way were sold at full price.

What does this say about $0.99 pricing? For one thing, buyers may perceive value in bundling songs inot an album. For another, artists need to consider bundled and unbundled products as tools in their marketing plan.

Consider unit sales of various music formats. Here's a chart that shows sales of CDs, downloaded singles and downloaded albums.

 boost


Clearly, downloaded singles are where the unit volume action is.

Similarly in books, the online market has boosted sales of short stories and novelas, two forms that had lost their way in the paper distribution model. Short stories sold well only when bundled with other writing, either in a magazine or in an anthology. Novelas were hit and miss. But ebook sales are mimicking aspects of online music sales: low-priced short-form has a larger unit market in the online world than in the physical world.

The Lady Gaga experiment suggests that writers can still sell long-form works at a higher price than individual short stories. Short story writers should consider using bundling as a way to increase sales of less popular short stories. Bundling options include collections from individual writers and theme-based collections from multiple writers. Likewise, novel writers should consider serialization, excerpts, and other ways to break up larger works into less expensive units. This will generate higher unit volume sales and attract a larger pool of potential buyers to the entire novel.

Google Wallet and Commerce

Google announced the Google Wallet today and expects to roll out the service this summer. Google Wallet comes on the heels of the Square mobile credit card system and anticipates a wallet service Apple will announce this year.

While the Square service enables small merchants to swipe credit cards, Google has a vision based on existing point-of-sale terminals. The Google Wallet enables merchants to deploy coupon and loyalty programs either online or via in-store. Also, the checkout process can be streamlined so that coupons are presented automatically by an Android device and receipts transmitted back.

As one presenter at the Wallet announcement pointed out, the check-out process is the least exciting part of the retail experience. Presumably the entire check-out process with Wallet and similar technology could be reduced to a visual validation that the shopper had scanned everything going out the door.

Expect retailers to experiment with this technology first as they deploy it in their stores. Product companies will follow quickly with promotions heretofore unimaginable.

Like what?

Since I've been thinking about ebook marketing for my new book Delux, I realized there are great ebook marketing opportunities with this technology. For instance, suppose you write a book about pop music. With Wallet technology, you could place posters that concert-goers scan to buy your book. If it's an ebook, it would download automatically to their preferred eReader. If it's a physical book, you can direct them to the closest bookstore with a copy in stock.

Clearly the Google Wallet technology enables new marketing programs for ebooks, and everything else.

Replacing an Auto-Pay Credit Card

With the ongoing hacks into Sony and the recent employee security breach at Bank of America, you are more and more likely to have to replace a credit card.

When that credit card happens to be the credit card you use for auto-pay accounts (or automatic payments), it's a hassle. Prepare for a few hours of contacting merchants whom you auto-pay. If you're systematic in updating your auto-pay accounts with your new credit card information, you'll save time.

Here's a checklist for updating all your automatic payment accounts:

• First, replace the compromised or lost credit card. Ask the credit card company to expedite a new card.
• You can wait for your auto-pay accounts to fail and contact you, but it's better to contact your auto-pay accounts and provide your new credit card information.
• Make a list of your auto-pays. Auto-pay accounts fall into three categories: 1) automatic monthly payments or automatic annual payments like rent, insurance, or memberships, 2) auto-pay accounts on websites like Amazon or Google that keep your credit card information to speed transactions, and 3) auto-pay for smartcard replenishment for services like transit and toll cards.
• For your regular automatic monthly payments, scan recent credit card statements and you'll find those merchants quickly. Note website or phone information on your statement.
• For other auto-pay accounts, check your email. If you keep online receipts, you can search for terms like "payment" or "credit card" and skim through the results.
• Look through your wallet. If you have insurance cards or transit cards, those accounts may be tied to an auto-pay.
• Once you have a list of all your auto-pay accounts, find any missing contact information. Again, email records are your friend. If you search for the merchant name, email from the merchant usually contains URL links and contact phone numbers.
• Last, contact every merchant on your list and provide your new credit card information.

I made this list recently, and now I maintain it in a spreadsheet. I assume the frequency of credit card replacement is more likely to increase, so I'm ready the next time I have to replace my auto-pay credit card. Also, you can count on contacting your automatic payment accounts when your credit cards expires. Plan ahead!

The ePaperback

The new e-paperback is here. Barnes and Noble announced their new $139 Nook.

The new Nook is more compact than rivals and predecessors, with a 6-inch Pearl screen and no keyboard. The display's contrast is 50 percent better than the original Nook, the company said.

While the technology media focuses on the tablet market (some analysts had expected the new Nook to be a tablet product), book distributors like Amazon, Barnes & Noble and Borders Group have sold large unit volumes of eReaders by keeping prices low. In the end, eReader devices are designed to suck up ebooks from online stores, not to run supercomputer calculations.

Here's what is similar between the eReader and tablet markets: differentiation through online services. The same way that tablet buyers need to evaluate Apple's and Google's respective app markets and online applications before buying an iPad or a Android tablet, eReader buyers should look at how Amazon, B&N and Borders sell you ebooks. The book distributors host their own online ebook stores with different DRM (Digital Rights Management) systems, pricing and selection.

The new Nook is slim on features, except the features you'd want while reading a book: great contrast, seven font sizes, six font types, and long (2 month!) battery life.

As book distributors learned from the success of the paperback book format: it's the price, stupid.





Last chance to buy the old Nook (prices reduced):

Backbite Book Promo

Adrienne Jones promoting a new book title on youtube. Expect many more online book promos as authors and publishers move to online sales.

Even the New York Times

Even the New York Times Sunday Book Review section has an article about self-publishing.

Today, though, self-publication crackles with possibility as never before. Witness the March news that the thriller author Barry Eisler had backed out of a half-million-dollar deal with St. Martin’s Press, his new publisher. He’d decided that he could, over time, make more money publishing without their help.

Of course there are counter examples, but the economics of ebooks are pushing more authors, new and established, to the self-publishing route.

Blogger Labels

I set up a few blogs today.

• The Best of Youtube
• Gay Book Blog
• Gay Movie Blog

I also learned about setting up blogs.

The main thing is, use "labels" in Blogger judiciously. There is a nice "Label" gadget that Blogger provides to help your viewers see a list of content organized around a particular label. On this blog, I've used something like 400 labels. Mistake. If you use Blogger, try limiting yourself to 20 or so.

I set up advertising and Amazon link on these blogs, too. That has got much easier since the last time I set up a blog on Blogger. The only problem I've run into is with Amazon contextual ads. They don't fit correctly in the Blogger gadgets. It appears to be a problem with Amazon's javascript code understanding the dynamic sizing of the Blogger gadget. I'm hoping that someone will fix that and make the ugly scroll bars disappear.

Each of these new blogs has a specific audience and is easy for me to maintain. Building web traffic is part of my one man media empire strategy.

eBook Store Rankings

eBook authors are playing catch-up with game makers and musicians when it comes to online marketing. In bookstores, endcap placement drives book sales. In online stores, it's a rankings game.

CNET describes the games game publishers play to increase product rankings in Apple's App Store:

[T]he real heartbeat of it all, and where things still feel like the Wild West, is the realm of the top charts--the home, at any given time, of the hottest 300 free applications and the hottest 300 paid. Once on one of these lists, a good app can continue to make its way up, because a new--and large--group of users is now seeing it. That kind of power also makes these lists a big business target for those with the top in mind.

To increase rankings, some game publishers give away a game, then use Tapjoy or Flurry technology to promote downloads and convert free games download into sales. In response, Apple recently modified its rankings system. So the rankings game is played.

Rankings will be an important aspect of eBook marketing, too. Authors need to consider rankings in their marketing mix.

The best way to get high rankings? Write a good book.

Online stores are the best place to have high rankings. This review of top online eBook stores lists good target stores. High rankings at a few of these stores will yield great unit volume sales.

Besides writing a great book, here are other strategies to increase rankings:

• Authors can spike a book's rankings by coordinating friends through social media to buy the book on the same day or same hour through a specific online store.
• Advertising campaigns that focus traffic on a specific online store will increase rankings and, while campaign-related sales may not pay for the campaign itself, the residual increase in sales from higher rankings could pay off the campaign if high rankings persist.
• Find rankings lists outside of stores, especially top-10 or top-100 lists for genres related to the book, and figure out how to increase the book's rankings on these lists.
• To increase download rankings, authors can give away a few chapters of a book, and then provide a link to buy the rest of the book.
• Adjust pricing down to move a book up a sales rankings list.

As the eBook market expands, more companies will provide these services, either for a fee or as part of an online publishing service. For now, authors have their emarketing homework cut out for them.

eBook Publishing

The only thing to say for sure about eBook publishing: it's changing rapidly.

CNET's article on eBook publishing from late 2010 is a good starting point. It covers both formatting and distribution of eBooks.

On the formatting front, Wikipedia has an exhaustive comparison of eBook formats. An author usually starts with a .txt, .doc or .pdf file which must be converted to a format an eBook reader understands. Those are:

• Kindle: .mobi, .txt, .azw, and models after the first Kindle, .pdf
• iPad: .epub (EPUB) and .pdf
• Nook: .epub, .pdb, and .pdf
• Sony eReader: .pdb, .pdf, and .lrx, and .lrf

Two important notes about format. First, format is tied to software reader, not hardware platform. For instance, the Kindle reader runs on iPads and Androids as well as the Kindle.

Second, just because a format is supported, doesn't mean it's easy reading. PDF files are supported on most readers, but the display isn't great on small screens and reader functionality like page turning may not integrate well with PDF files. For the best reader experience, convert to the software reader's preferred format.

An author has three basic options:

1. Find conversion software that converts to each of the target file types.
2. Hire a professional to perform the conversion (rates currently seem to run about $150 for a book under 400 pages with no graphics or footnotes to convert).
3. Find a publishing firm that manages the entire eBook publishing process.

Economically speaking, the more DIY, the larger the author royalty per sale.

A self-publishing author probably shouldn't use the same cover art for an eBook as a printed book. Since eBooks are listed as thumbnails in online catalogs, the graphics have to work on a different scale. Browse a few online stores to get a sense for what kinds of graphics work. Most DIY format conversion programs and services will require the author to provide the eBook cover art.

Besides formatting, the other decision for authors is distribution. Authors again have three basic choices:

1. Submit the proper file format to each online store. Not all stores accept files from individual authors. Stores that accept files are Amazon Digital Text Platform (DTP), Barnes & Noble pubit, and Scribd. Scribd is a special case, most useful today for publishing free excerpts, but also a bone fide store.
2. Find an aggregator that submits eBooks to online bookstores and keeps a part of the royalty. Popular aggregators today are lulu, smashwords, and fastpencil.
3. Find a publisher that manages the entire eBook publishing process.

Aggregators offer many services a traditional publisher offers (formatting, cover art, proof-reading), but for a fee. Aggregators pay larger royalties than traditional publishers and, for the most part, allow the author to set the price. This last point is very important as the eBook market evolves.

Authors who want print-on-demand (POD) versions of their books probably want to work with an aggregator since most aggregators provide this. Aggregators also sell eBooks in their own online stores, of course, but those stores don't appear to produce high unit volume sales yet.

The aggregator side of publishing is the hardest to decipher for an author. The CNET article does a good job of explaining both the upfront fees and the downstream splits between the online stores, the aggregators, and the author. But rates are changing, and throwing POD books in the mix complicates the decision process further. Since the rates today are reasonably competitive, a good rule-of-thumb is to use an aggregator that has easy-to-use online services.

More successful self-publishing authors should consider higher-end services like Ingram Digital that target publishers rather than authors.

Less Than Free

In Bill Gurley post about Google's castle-and-moat strategy with Android and Chrome, he writes that Google is:

... not trying to make a profit on Android or Chrome. They want to take any layer that lives between themselves and the consumer and make it free (or even less than free). Because these layers are basically software products with no variable costs, this is a very viable defensive strategy. In essence, they are not just building a moat; Google is also scorching the earth for 250 miles around the outside of the castle to ensure no one can approach it.

The "less than free" economic model got me to thinking about the history of technology-induced economic shifts.

When I worked at Sun in the 1980s, we watched one industry after another make the uncomfortable transition from hardware to software sales. CAD, medical imaging, Artificial Intelligence (LISP), and other vertical-focused vendors sold special purpose processors to speed specific calculations their customers made over and over using their software. As general purpose processor prices dropped and performance increased, inevitably the special purpose processors lost to general purpose processors in the market. Vendors ported their software to Sun and other general purpose platforms and jettisoned their costly hardware engineering and manufacturing.

Since the emergence of the Internet, two important shifts are taking place.

First, large Internet companies are supplying what is now called "Cloud Computing." In much the way that vertical-focused vendors in the 1980s built special purpose processors, Internet companies build large clouds, or computing infrastructures, that specialize in particular tasks. Google has built a search infrastructure, Amazon an online commerce infrastructure, eBay an auction infrastructure, SalesForce a CRM infrastructure, and so on. Some infrastructures are more "tuned" than others, more focused on a particular calculation. It's safe to say that you wouldn't want to use eBay's infrastructure to search the Internet, or Google's infrastructure to auction your collection of crock pots. Unlike vertical-focused vendors in the 1980s, cloud infrastructures won't be replaced by a general purpose cloud.

Second, the rapid proliferation of low-cost networked (usually mobile) devices (think iPad or Galaxy Tab) coupled with increased fluidity in employment and contract practices in the workplace (think frequent layoffs and organizational engineering) are changing asset ownership and use policies within organizations. A contractor, for instance, prefers to interface with a large firm's networked infrastructure using his or her own laptop rather than with a firm-issued laptop. The Bring-Your-Own (BYO) trend is now called "consumerization." This phenomenon is pushing IT departments to act like specialized Internet companies. More and more, a firm's IT infrastructure will work like a cloud service provider, a provider whose infrastructure is tuned for that firm's business processes rather than, say, for search or auctions.

This first trend (specialized consumer Internet infrastructures) has enabled and encouraged the second trend (consumerization). Consumer Internet companies leverage the consumer's device to provide service and generate revenue. Declining consumer device prices translate into more available consumers. As Google is showing, less-than-free software can not only drive device prices even lower, but also create stickier revenue channels.

The different objectives of consumer Internet companies and Corporate IT departments are coming into conflict, and Corporate IT departments are in a bind. Consumer Internet companies want as many customers as possible, and most IT departments don't. Falling consumer devices prices coupled with end-user familiarity with and preference for new mobile devices mean the firm will be more efficient by leveraging BYO devices. Opening up the private infrastructure to public consumer devices, on the other hand, creates many problems for IT departments used to controlling all the end-user devices. Application portability is one significant problem. If an IT department has deployed all its applications to run on specific browsers or operating systems, portability is a large cost of opening up the infrastructure. Security is another. Who has access to what data on which devices? Who knows what malware is running on all those consumer devices?

Simultaneously, IT departments are faced with a completely different set of challenges employing clouds to increase efficiency of their own infrastructures.

I suspect that smart IT departments will learn from consumer Internet companies and markets. The future may lie in strategies to extend their infrastructure to as many users as possible. Financial institutions and other service firms have started this trend because they share the same goal as consumer Internet companies of extending the reach of their infrastructure to as many consumers as possible. To various degrees, firms also share infrastructure with their supply chain partners. Will the IT organization end-game include "less-than-free" somewhere? Don't be surprised.

Brief Timeline of Written Word Media

The Daily Ticker picked up today's story on eBook sales.

E-book sales topped sales of paperbacks for the first time ever in February, according to the Association of American Publishers. In fact, e-book sales tripled -- soaring 202 percent -- to $90.3 million when compared with February 2010. Adult trade paperback sales trailed at $82.1 million.

The trend lines have crossed!

The full report from the American Association of Publishers gives more details. The "Adult Trade" category is broad, including: Adult Hardcover, Adult Paperback, Adult Mass Market, Children’s/Young Adult Hardcover, and Children’s/Young Adult Paperback. Categories like Religion, Education, and Professional books are not included in this number.

The prevalent medium for the written word has changed slowly over history. Changes in media are crucial to higher volumes and increased distribution of written words. Here's a brief timeline of Western civilization's media for the written word:

– circa 1200 B.C.: The Phoenician alphabet increases demand for an inexpensive writing medium. Papyrus replaces clay for recording agreements and laws.

– circa 700 A.D.: With the advantage of being locally produced and more durable, velum and parchment begin to replace papyrus in Europe.

– 1282 A.D.: According to Wikipedia, the first "water-powered paper mills [enable] a massive expansion of production and [begin to replace] the laborious handcraft characteristic of both Chinese and Muslim papermaking." High-volume paper manufacturing was an important pre-cursor to the printing press.

– 1844 A.D.: Charles Fenerty and Friedrich Gottlob Keller simultaneously invent machines to extract pulp from wood. By 1900, most paper is produced from wood pulp instead of rag pulp.

– 1897 A.D.: Ferdinand Braun builds the first Cathode Ray Tube.

– World War II: Albatross Books and Penguin books assemble paperback books with glue instead of stitching as the war-related travel market creates an opportunity for cheap, light-weight books.

– 1969 A.D.: Datapoint 3300 ships, the first computer display.

– 1970s to present: Several electronic paper technologies invented, including Grycon, Electrophoretic, and Electrowetting. Other technologies like Liquid Crystal Display (LCD) and Organic Light Emitting Diode (OLED) are used in specific applications. Many manufacturers working on a flexible lightweight display to replace paper.

– November 19, 2007: Amazon releases the Kindle, the first high-volume eBook appliance.

– February, 2011: unit sales of eBooks outnumber sales of paperbacks.

Historic changes in media have created gigantic shifts in economic and distribution models. With the introduction of the Kindle eBook and iPad tablet product categories, written words once again are finding more and more ways to readers.

Blogging About Delux

I started a new blog today. It's a separate place to blog about the processes of writing and publishing Delux. Enjoy!

Time Value of Books

Dan Ariely, a behavioral economists, asks why we are so fixated on the price of a book.

Think about it this way — if you were going to spend 10 hours with a book, do you really care if it costs $3 more? Shouldn’t you happily pay $0.30 more per hour of reading if the quality of the book was slightly higher or the experience was slightly better? Personally my more pressing problem is time, and if someone could assure me a better, even slightly better experience, I would pay a substantial amount more

Books pricing is likely to mimic music pricing. Consumers don't consider utility of music when they pay $0.99 at iTunes, even though that $0.99 may create hours of listening pleasure. That's because they don't know in advance how much they'll listen to one song or another. Even if they've heard a song before their purchase, they don't know the durability of the tune or if another more popular tune will dominate their personal "air time."

The same holds true with books. Consumers don't know whether they'll read an entire book, or put it down because it's boring or because a better book comes along. Since new bound books have been priced within a tight range, consumers don't feel they're taking a larger risk on one book or another based on price. With eBooks, though, pricing is unsettled. Risk-averse consumers may prefer buying a lot of $0.99 books that are "best sellers" because a few will be good and the cost of the losers is not significant.

DRM systems can ask consumers to pay more as they use a digital product more. Try-and-buy is a simple example of that idea. In music, advertising-based radio has been the traditional "try" part of try-and-buy. In story telling, the author can hook the consumer at a cliffhanger, then ask for the money. However, the complexity of different DRM and payment systems works against initial uptake.

Publishers who want to charge high eBook prices need to think about more than gross margins. As Ariely points out, time is a valuable commodity for the consumers. If consumers are viewed as risk-averse, and time and money are scarce, fairly priced products with consistent quality will sell. But don't expect eBook prices to mimic bound book prices just the margins are nice.

Does the Google Amended Settlement Agreement Matter?

The New York Times and paidContent have weighed in on Daniel Chin's recent ruling rejecting the Amended Settlement Agreement between Google and a number of publishers and authors. Does an agreement really matter?

Legal agreements help aggrieved parties recover damages when a law has been broken. In this case, copyright law. Justice Chin threw out the agreement because it was too broad, which points out the first problem with the case: copyright law may have been broken, but the law itself is broken.

Chin doesn't want to do congress's job re-writing copyright law. He wants congress to fix copyright laws written before digital information was a twinkle in any lawyer's eye, to update the law so that authors, publishers, distributors and retailers know how to play with each other in today's world of cheap memory, OCR, and digital reading devices.

After Chin's ruling, the parties have signaled they will attempt to reach a less far-reaching agreement. This points out the second problem with the case: at this point, the aggrieved parties aren't so aggrieved.

Google has an economic advantage that increases over time. Books that haven't seen the light of day practically since their publication are now both searchable and purchasable. Publishers have no incentive to dig out all the out-of-print books to sell a few incremental copies. Google, on the other hand, has the incentive of increasing the value of its search results by including off-line information its competitors lack. The by-product of Google's industrious book scanning is found money for the publishers, incremental sales of out-of-print books. The only thing to negotiate, really, are prices and percentages.

Google has scanned about 15 million books by now, of which 2 million are public domain. There is one real legal problem, as paidContent explains:

[Google] scans in-copyright and in-print works, and despite suing Google over the scanning, publishers are working with the company to make sure their new books show up in Book Search. Typically, searchers can peruse about 20 percent of those books for free, and then have an option to pay for a full digital copy. The problem is the middle zone—books that are in copyright but out of print. Google Book Search can only display a tiny snippet of those works, and it’s impossible to purchase full digital access.

Presumably, that is the problem Google and publishers will address in the next version of their agreement. And maybe congress is off the hook. For now.

Authors Discuss the Move to Self-Publishing

Authors Barry Eisler and Joe Konrath discussed self-publishing in a Google Doc Discussion they later blogged. It's a little long-winded, but the dialog boils down to why Konrath forsook his publishers: "My switch to self-publishing isn't personal. It's just business. I can make more money on my own."

Buried in the banter about the writing world are a few nuggets for writers weighing their publishing options:

• We figured out that the 25% royalty on ebooks [publishers] offer is actually 14.9% to the writer after everyone gets their cut. 14.9% on a price the publisher sets. As e-book prices fall, these margins incent authors to self-pubish. At a price of $3, published authors net less than $0.50 per copy. Without a publisher or agent to collect, an author would expect to collect more than $2.00 per copy. In most cases, there's no reason to expect a publisher to sell 4x as many books.
• My own sales, and the sales of other indie authors doing well, pretty much confirm that a rising tide lifts all boats. Virtual shelf space functions a lot like physical shelf space. The more buyers congregating anywhere, the more sales, and all the trends show e-books overtaking paper books. The same is also true for an individual author. The more books or stories you have to sell, the larger your section of the e-store.
• I originally self-published The List in April of 2009. It went on to sell 25,000 ebooks at $2.99. Now, two years later, I lowered the price, and it's selling 1500 copies a day. Things like that don't happen in paper. Do the math. 25,000 copies at about $2 per copy is $50,000. If the reduced price is $0.99, 1,500 copies per day is netting about $500 a day, or $180,000 per year.
• On the digital side of the ledger, publishers don’t add much at all because there’s nothing to distribute. Or, to put it a little more accurately, what publishers can add on the digital side (editing, copyediting, proofreading, cover design, jacket copy, formatting) can all be done by other players at least as well. On the paper and digital sides of the ledger, publishers also have great contacts in mainstream media. They can get an author on the Today Show, or make a connection to their film and television cousins. And they still own distribution of paper-based printed products.

Read the entire conversation for more details. These two authors have lots of fun war stories, and a real-life perspective on the trade-offs of working with publishers and self-publishing.

eBook Price Elasticity

Tech Dirt reports here on JA Konrath's eBook pricing experiments. As expected, lower prices generate higher unit sales and better net results – at the expense of much lower marginal results.

Credit cards and other payment systems have fixed transaction costs that always have made the micro-transaction market problematic. The price elasticity curve is fighting these fixed costs when prices go below $2-$3. Authors typically receive 70% of sales for products with a price above $2 today, but only 35% for products under $2.

Who knew that future authors would be working for Visa and Mastercard?

Maybe there is an opportunity for an online publisher who sells $20 of credit with an offer like buy $20 of eBooks and get one free. Reducing the transaction costs per dollar of revenue could provide authors with a higher percentage of the sales for <$2 products.

eBook gift card business, anyone?

100M e-Reading Devices By End Of Year

The analysts at IDC are saying that 2010 saw sales of 18M tablets (mostly iPads, but a smattering of Android devices) and 13M e-Readers (mostly Kindles). The same analysts expect unit sales to double in 2011.

Authors take note! By the end of this year, about 100M e-reading devices will be looking for content.

Don't think that you will get 1% of this market if you simply post versions of your book in online stores. For the first time, though, if you got 1% of the online market, you would make a tidy sum. Now is the time to put together your online marketing plans with iPad, Android, Kindle, and Nook in mind.

The $0.99 Book

If you're a new author, should you self-publish? Should you sell your books for $0.99? Give them away? The publishing market is changing so quickly, it's hard to know:

Christopher Smith, who wrote the novel "Fifth Avenue," priced his novel at $2.99 when he launched it last October. He says that with some social media outreach--he did an iPad and a Kindle giveaway for those who tweeted about the book--and little else, the book quickly reached the Amazon Top 100 and peaked at No. 4. After the initial rise, Smith then decided to drop the price of the book to 99 cents to maintain his ranking in the top 100, which is key to generating sales.

As the volume of Kindle, iPad, and other e-readers increase, authors have a powerful way to circumvent traditional publishers to reach their audience. For $0.99, many readers will download a book they'd never consider buying in print for $15 or $25.

My friend Janet Ference is trying the more radical price of $0.00. Free! She's created Blue Fern Press to distribute stories on scribd and one-tweet stories on twitter.

If you have musician friends, you've seen this before. Musicians have found ways to market and distribute online, and earn big bonuses when a studio licenses a song for television or film, or when a publisher sees a musician's success and makes a deal.

In fact, authors can expect a book ecosystem similar to music. The success of Smith's book marketing led to an agent deal:

Thanks to some controversy over gay sex scenes in the book that touched off heated discussions in Amazon's Kindle message boards, Smith says "Fifth Avenue" remained in the Top 100 for three months and also has done well on Amazon's U.K. Kindle Store. His sales, he says, are in the "six figures," and he's now represented by an "A-list" agent, Matt Bialer at Sanford J. Greenburger.

In the online world of book sales, a new combination of e-reader popularity and low prices is changing book distribution in ways that give authors more options to succeed in the market.

How iPad is Shifting Reading Times

This article looks at how new devices like the iPad are time shifting reading.

When a reader is given a choice about how to consume their content, a major shift in behavior occurs. They no longer consume the majority of their content during the day, on their computer. Instead they shift that content to prime time and onto a device better suited for consumption.

This doesn't address when readers read physical books or periodicals. Assuming that computer reading measurements don't include reading e-books or e-magazines, that leaves open the question of whether the increased late-in-the-day consumption is online reading shifted later, or a medium switch from physical to electronic text.

The publishing industry is in the same sea change that's already hit music and video, the shift from physical to electronic distribution. It may be sales numbers that tell us more about that shift in books and magazine reading than the type of measurement used in this article.