Thursday, March 22, 2018

PND - the magazine on Flipboard. New Articles.

Recent updates to my flipboard magazine include articles on Amazon's physical retail experiments, the WSJ's paywall development and from McKinsey the Executives Guide to Artificial Intelligence.

Click on the image above and subscribe at Flipboard.

Friday, March 16, 2018

Open Education Resources Gain

AttributionShare Alike Some rights reserved by opensourceway

What price knowledge?  Ask any college student what was the biggest surprise when they first got to school and their answer may well be the cost of a full complement of required textbooks.  So they don't buy them.  And while rental has become a significant revenue stream for publishers, cost still remains a problem for students and many choose to go without - or they borrow or buy an old version.  Over the past 10 years, several institutions and grant-backed organizations have worked to lower the cost of textbooks for students.  Now, this "Open Education Resource" (OER) initiative may finally be on the cusp of radically changing the way higher education course materials are created, distributed and sold.

The findings of a recent report from Babson College (Babson Report) point to a steadily expanding market place for OER textbooks with growing title selection and increases in faculty willing to assign these titles.  That said, the report cautions that awareness of OER course materials is a significant limiting factor, which should encourage all big textbook providers with their large sales forces and embedded relationships. Lack of awareness has always stood in the way of the expansion of OER, as I pointed out in a post in 2016.  According to the Babson report, only 30% of respondents reported that they were "aware" or "very aware" of the availability of OER materials.  While this is not great news, there has been slow, steady improvement in awareness over the past few years.

The other significant limitation is inertia - my characterization.  Fifty percent of faculty report that
'it's too hard to find what I need' so they don't bother.  The higher education system is held together by a large number of low-paid, time-stretched adjuncts, so it is not all that surprising that they don't have time to research new teaching solutions.  Perhaps as older faculty age out of the market this will result in the adoption of new solutions.  The continuing expansion in titles should fuel OER as well. 

In the future, I see OER materials being adopted more readily due to the following trends:
  • Expansion in available titles from a growing list of providers such as OpenStax, Saylor and others
  • Student activists challenging high college costs in general and textbook pricing specifically
  • Government-led initiatives to enforce review and adoption of lower-cost textbook options
  • New education market entrants using OER as foundation products for services and subscription solutions geared to intervention, remediation and improved outcomes.
State governments via state colleges, investment funds and/or dictate have become very instrumental in the development of OER materials.  California freed up funding for 50 new digital open textbooks; New York state recently announced a $8 million investment in open textbooks; and Ohio State has long been one of the leaders in a university-led open textbook initiative.  These are all powerful forces which continue to drive the creation and acceptance of OER materials on a broad scale.

The potential and the opportunity for OER materials can be seen in the results for OpenStax, which is described in the Babson report:
The rate of adoption of OpenStax textbooks among faculty teaching large enrollment courses is now at 16.5%, a rate which rivals that of most commercial textbooks. This is a substantial increase over the rate observed last year (10.8%). Users of OpenStax textbooks also had levels of satisfaction equal to their peers teaching introductory level courses who had selected commercial textbooks. These adoptions address concerns about cost as well: faculty who did not select an OpenStax textbook reported an average cost of $125 for the required textbook, while those who did select an OpenStax text reported an average cost of $31.

The OpenStax results among large enrollment introductory-level courses shows that OER can be successful.  OpenStax has been able to reach penetration levels equal to most of their commercial competitors, with equal levels of faculty satisfaction, in a very short time.  This comes amid continuing concerns on the part of faculty about the limited nature of OER materials, particularly the lack of associated materials like tests, quizzes, and homework assignments, that are typically provided by commercial alternatives.
(The entire report is here)

Over the past 15 years, a tremendous sum of money flowed to new education companies with new ideas and approaches.  One of those companies was Knewton, which took in over $150 million in investment but saw only modest success with their assessment-based tools.  Now under new management, the company recently announced a pivot which takes them aggressively into the OER market.  Knewton will make use of OER content but will sell other services and solutions around the content to students. (Knewton Pivot).  Knewton's experience may show for both traditional publishers and other content providers how to use OER materials effectively to help redefine their product suite and their relationship with students.

The market opportunity for OER content is clear though title breadth and awareness have been limiting factors in market expansion.  But these constraints are already easing and are likely to be less of a factor in the coming years. The large established textbook publishers are going to find their businesses significantly challenged by the movement to OER and it will be interesting to see how these publishers address this strategic threat: do they embrace OER or try to compete with free?  Over the next three to five years the business model for college textbooks - especially at the intro course level - will be radically different.  How traditional publishers navigate that change will define whether they survive into the next decade.

Thursday, March 08, 2018

Chatting with a Chat Bot. BBC Labs Experiments

An interesting article from Nieman Labs which takes a look at how the BBC are experimenting with Chatbots.  Not just how they an enage but also how to integrate the tool into the journalists workflow:
The BBC News Labs and the BBC Visual Journalism team are trying to solve both issues with a single solution: a custom bot-builder application designed to make it as easy as possible for reporters to build chatbots and insert them into their stories. In a few minutes, a BBC reporter can input the text of an article, define the questions users can click, and publish the bot, which can then be reused and added to any other relevant article. BBC reporters can even repurpose existing Q&A explainers into bot-based conversations.
So, on this story about a typo on State of the “Uniom” tickets, a “Catch me up” module says: “Donald Trump came into office promising to change the face of American politics and transfer power ‘back to the people.’ This BBC chatbot lets you ask: what has President Trump achieved in his first year?” Three potential questions are offered. (How are the President’s approval ratings? How is the economy faring under President Trump? And has the President changed immigration numbers?) Pick one and a chat interface expands with answers. (“He’s one of the most unpopular presidents in the modern era.”) With each answer, one or more new questions pop up as options; the Trump chatbot contains more than a dozen in all.)

Wednesday, March 07, 2018

My recently updated Flipboard magazine of media and publishing articles of interest: View my Flipboard Magazine.

Tuesday, February 27, 2018

SpringerNature Readying €7Billion IPO

German publisher SpringerNature indicated they plan an initial public offering later in 2018 but according to Reuters the company is planning to bring this market offer forward in the year.   The Reuters report has the company announcing the IPO in May with a listing about a month later.  The company fears that market volatility will compromise the offering and to mitigate this they are shortening the timing between the announcement and sale.

SpringNature is a joint venture between German publisher Holtzbrinck and BC partners which were the primary owners of Springer+Business.  The JV was created in 2015.

Somewhat predictably, Reuters speculates that Holtzbrinck may increase their ownership of the group by buying some of the shares on offer.  They currently retain 57% of the joint venture and according to Reuters sources would like to keep ownership post-IPO to more than 40%.

From the report:
While BC Partners will sell some shares in the IPO, Holtzbrinck may even buy some and is aiming to keep a stake of more than 40 percent in the company. The targeted free float is at least 20 percent.  The bulk of the proceeds would be used to cut net debt, which currently stands at roughly 3 billion euros, with a view to bringing indebtedness down to 3.75 times earnings before interest, tax, depreciation and amortization (EBITDA) after the IPO, the source said.  Peer RELX trades at about 11 times its expected core earnings.
SpringerNature posted 1.62 billion euros in sales in 2016 and employs 13,000 staff. It publishes roughly 3,000 scientific magazines as well as 12,000 new books every year. Last year, its earnings before interest, tax, depreciation and amortization stood at roughly 600 million euros.

Thursday, February 15, 2018

Is Barnes & Noble the New Borders Books + More?

B&N Union Square building before conversion 1970  Michael Cairns
There has been some distressing news over the past two weeks concerning the bookseller Barnes & Noble.  Admittedly, this news comes on the heels of a cycle of less than encouraging news from the bookseller over the past year.  As noted in Publishers Lunch, Abrams Capital, a large investor in the company, has thrown in the towel and sold up.  And across the business, both at the executive and store level, staff are being culled in what can only be viewed as a broad effort to decrease operating expenses.  Regrettably, the company appears to be trading long-term staff knowledge and expertise for the short term benefit of variable hour workers.

B&N has been a very well run company and benefits from a strong balance sheet.  Oddly, this specific strength means the company can maintain a long glide path to the negative in terms of decreased revenues, locations, profit and pretty much everything else.  They don't have to service any significant debt and can still pay a dividend without any problem.  That's not near good enough for investors like Abrams Capital.  Their exit can only be interpreted as a recognition that they don't see any significant changes in the way the business will be operated strategically nor do they see any ability for them - as a large investor - to influence the operations of the business.  On this basis, why would anyone invest in B&N as a shareholder?  Over the past year, the S&P retail price index hasn't been that awesome (up 4.5%) but that's a lot better than this:

It's all very sad.  The leadership of the business under the Riggio's may not have been universally liked but they were very good, respected retailers through the early 2000s.  It now appears the same family isn't that bothered about the circumstances that Barnes & Noble finds itself.

I was reminded of this situation in the slow (and then rapid) demise of Borders.  During one iteration of new management there I "rewrote" a letter to shareholders which the then CEO George Jones had penned (See "What Borders could have said".  I thought his effort pretty dire.  At its essence Jones seemed to be doing everything possible to avoid addressing their primary threats.  My summary read in part:
These are not issues that Borders faces exclusively, but over the past three years, the company has failed to proactively address these marketplace changes. While our in-store experience has grown confused and directionless, miss-steps in our internal operations now limit our ability to support an effective platform for growth. We have to admit that continued investment in our store management and merchandising technology will not produce or enable the rapid changes in operating efficiency that is required to effectively implement our strategic goals.

Now, similarities abound.

In contrast, there is innovation going on in retail.  B&N with their brand, reputation, store locations and infrastructure retain significant power and advantage against competitors but these diminish at the hands of mediocre and disinterested management.

This is how the recent National Retail Foundation meeting was described in Forbes:
Retailers are not simply retailers anymore. In fact, they are becoming innovators and the think tanks behind new products. 2017 was a huge year for retailers like Amazon and Wal-Mart. Both made huge strides in automation, virtual reality, robotics, and using the IoT. They've clearly embrace the digital transformation and NRF showed that other retailers are ready to embrace it too.

Amazon finally opened the much anticipated AmazonGo in January, where customers just walk in and get what they want and walk out without having to stop and pay a cashier. I, for one, can't wait till this technology reaches other retailers. Imagine how much faster a trip to the grocery store would be.
Wal-Mart is expanding their e-commerce footprint and continually using their “Store No 8” or their technology incubation center to test out new tech that could be scalable in the next five years. With their recent acquisition of e-commerce store, Wal-Mart is innovating day and night to change the customer experience for the better. “Whether it’s using VR and AR for associate training, automating the supply chain or using robotics in-store, Walmart and continually work to save customers time and money.”
Do you see B&N taking on these opportunities in the same way?  Like I said, SAD.

Friday, February 09, 2018

The Value of Local Independent Bookstores

From Harvard Business School (Nov 2017);

Professor Ryan Raffaelli teams up with Porter Square Books in Cambridge, MA – one of the hundreds of bookstores he’s studied – to explore industries facing shifts in their business models and how they adapt. Independent bookstores provide a story of hope by focusing on core values that include community, curation, and convening.

Wednesday, February 07, 2018

Predictions Coming True: Media Services Group Acquired by Newscycle

Among the trends noted in the predictions post this week, I touched on the expectation of some consolidation in the applications software market.  Earlier this week, Media Services Group (MSG) announced that they were being acquired by NewsCycle.

Media Services Group was established in 1972 and their application software (elan) is used by book publishers, magazines and newsletter publishers and events and conference providers.  By their count they have hundreds of customers located in North America and Europe.  These customers include AARP, Hearst Business Media, Penton and other similar companies.  Increasingly, their solutions are provided to their customers as cloud based services.  Their customer base has been large enough for them to hold a well attended annual user conference in Florida each year.

Press release here.

Newscycle was not one of the companies I covered in my technology report because they primarily serve the global newspaper marketplace.  With the acquisition of MSG that profile changes but most importantly the heft and scale of Newscycle will provide MGS with more capability to expand and compete.

In their words, Newscycle systems power more than 8,000 media sites and publications around world, including 92 of the top 100 U.S. newspaper publishers. More than 70 percent of the world’s largest news media companies use Newscycle software.  For Newscycle, the addition of MSG market knowledge and software capability will allow the company to broaden the marketplace in which they compete.

Trend implications:

In the mid-market segment of the publishing solutions market there exists 10-12 software providers which are all in the $10mm to $20 in revenue range.  At that level, it can be difficult to achieve business scale, maintain consistent software development and support even modest ROI.  This is why consolidation and/or recapitalization in this space is likely since that is more likely to enable a succeeding business to expand, take market share from others and (importantly) compete more aggressively to gain customers.  Additionally, the ability to accelerate development will widen the technology gap between themselves and others in the space and allow the software company to add features and solutions that will appeal to ancillary media markets (like newspapers for example) to broaden their competitive market.

This Newscycle acquisition may change the dynamic in the mid-market for publishing technology.

Monday, February 05, 2018

Predictions 2018: Somewhere Else

Somewhere Else, Michael Cairns

Publishing gets more focused, builds community and seeks new technology experiments.  These are some of the themes I contemplate in this year’s predictions post.


More and more publishers will narrow their focus both in terms of their product lines and their operations.  In education, publishers with broad-based publishing programs will be at a disadvantage to those who go deep within select disciplines.   Look for more consolidation which ties product directed at particular subject areas and disciplines.   This concentration will create the scale publishers need in order to invest in and deliver additional services, content and other products to particularly interested communities.  For example, a company’s corporate strategy will be directed at becoming the only provider of business management, accounting and financial management textbooks and materials for the higher-ed market.  To a large degree, the health education market is already structured this way.

In back-office operations, publishers will seek to farm out non-core operations to third-party providers.  Likely candidates for outsourcing will be IT infrastructure, accounting and finance, and warehouse operations.  Core activities remaining in house will include editorial, production and content management.   These functions will become increasingly dominated by a “product management” philosophy similar to the way packaged software products are managed.  As a result, the definition of ‘product’ will be expanded beyond the delivery of a single textbook title to one which encompasses community development, gaming, life-long learning and other potential new products and services. 


LinkedIn is the ultimate business community.  Or is it?   For the development of expert communities and market places of interest, LinkedIn is a very poor solutions.  Increasingly content owners, educational and academic publishers and corporations are recognizing that the development and nurturing of communities of interest facilitates deep relationships with the content owner and the promulgation of new membership-driven revenue models.   Interestingly, some membership associations which historically relied on revenue from journal sales are facing declines in that source of revenue.  As a result, they have been forced to reevaluate the way they engage with membership in order to boost and/or expand their revenue base.  Zapnito is one solution which enables the establishment of expert communities centered around a core set of interests or subject areas.  Similar solutions enable and facilitate new models for engagement and revenue growth.

“Legacy” publishers with strong branded content “franchises” will also seek to build services, credentialing, community engagement and other similar products defined by their deep content inventories.  Think about the For Dummies Expert Knowledge Market where the platform enables credentialed practitioners to offer services and expertise across the spectrum of Dummies content.  For Dummies becomes a marketplace of products and services. The same model may apply for more ‘traditional’ educational content such as test prep (Kaplan) and business and accounting management.

Just do it myself:

We’ve all been aware of the maker culture where people use new technology to expand their DIY capabilities.  Within the science and academic communities, we are starting to see the publication of not only data and result sets associated with experiments but also the research models themselves, which encourages scientists and lay people to conduct their own experimentation(s).  How this trend will impact publishers is difficult to discern at this point; but publishers which encourage and facilitate this deeper interaction with the method behind and results of research content will have an advantage in building relationships with their target markets.

Increasingly, lay researchers have access to powerful tools and techniques for building their own models and conducting their own research.  As a result, non-academic researchers have discovered new planets and conducted their own local environmental research projects thanks to technology and tools formally available only to better-funded ‘experts’.  It is possible there will arise from this an explosion of new and well-conducted research, the distribution of which could be facilitated by publisher platforms.  Obviously, the idea of research conducted by lay practitioners will alarm many but, perhaps, we are on the cusp of a revolution in academic research which could mirror the demise of Encyclopedia Britannica vis-à-vis Wikipedia. 

I hear voices:

Siri scares me and my Echo is usually turned off.  Sometimes Alexa will say something apropos of nothing.   Who’s listening?   It’s not for me (yet), but voice-activated applications and products are the fastest growing segment of the consumer technology market.  They were all the rage at CES this year; so much so that a voice-activated toilet gained Kanye-like PR exposure.  At $5,000, flushing was never so expensive.

Voice activation is the front-end of an artificial intelligence revolution and these smart voice-activated devices will increasingly dominate our homes and work environments.   Serving up our favorite content may become one of the primary functions of these devices and any publishing company lacking an Alexa development team building ‘skills’ into their products may be missing the boat.  (See the above section on Dummies ‘how to’ guides).

Audio delivery of content must be optimized within editorial production workflows.  Think how much fun it’s been to do this for eBook formats!  Not only that, we can only guess at the manner in which users will seek material when they do it verbally versus ‘manually’.  This is going to require some amount of experimentation and research.  For example, when we search for things currently we often receive visual clues during the process.  Think about searching the TV listings on your television or scanning a list of search results on Google.  In a verbal-oriented world, we will miss these clues so what will replace them?

An AI bot could have written this:

Several high-profile content producers are using artificial intelligence to create content at a sophisticated level.  For example, Sports Illustrated has a tool named Arkadium which can create infographics from scratch and the Associated Press has used “Automated Insights” to create stories from the results of games.  As these types of tools are fine-tuned and improved, they will also mimic the editorial ‘voice’ of the publications in question.

It is only a matter of time before publishers implement AI bots and tools to create content typically produced by authors and editors (if they aren’t already).

However, across all industries, AI is likely to have a material impact on back-office, repetitive and non-value-added tasks.  Tasks like file formatting, data clean-up, document mark-ups and accounting functions like cash application and royalties audits will be taken over by AI bots in the short term.  These bots mimic employees’ activities and execute tasks more quickly and with more accuracy.  Staff are freed up to conduct more value-added activities.  AI is already being built into many application software products.   For example, publishers are looking for CMS products to offer/enable intelligent content optimization and repackaging which uses user analytics to make recommendations on content selection and delivery.

Some other thoughts on trends for the coming year:
  • Wired magazine profiled an augmented reality app developed by IKEA. (Ikea’s AR kit)  Their objective is to sell more furniture and what better way to do that than to be able to see the furniture in your own home? And the NY Times is experimenting. There should be many similar AR experiments going on in publishing.
  • Podcasting is still growing and growing.  Pod listeners have doubled over the last two years and publishers are getting into the act.   Macmillan is launching its “Case Closed” mystery Podcast.  And, of note, this format has successfully thrown up a whole new range of Pod casting personalities and stars looking for book deals.
  •  I think quiz books will be the next coloring book craze.
  •  Mergers & Acquisitions:  We’ve already started to see M&A activity heat up in the past 3-4 months and I see that continuing.   There will be further consolidation in educational publishing, a shake out in EdTech and perhaps some consolidation in the publisher software market.
  • Germany will win the World Cup (again).
Enjoy that?  Here are my predictions from past years:

2017: Predictions 2017: Subscribe To Me
2016: Predictions 2016: Education, China, Platforms and Blockchain.
2013: Predictions 2013: The Death of the Middle Man
2012: Predictions 2012: The Search for Attention
2011: Predictions 2011: The Growth of Intimacy
2010: Predictions 2010: Cloudy With A Chance of Alarm
2009: Predictions 2009: Death and Resurrection:
2008: Predictions 2008
2007: Predictions 2007

2007-2013: My Big Book of Posts & Predictions on Slideshare