Tuesday, September 15, 2020

Is GoodReads A Good or Bad Thing For Books?

It's been a very long tome since Amazon bought up all the viable book recommendation sites - GoodReads included - but over in The New Statesman Sara Manavis suggests that Goodreads is not all good for books. Bad actually.

Apparently the one thing which unifies Goodreads users is that they all agree that the user experience sucks. I always believed Amazon buying these book recommendation and social networking sites was  cynical in the first place: Nothing should stop the Amazon juggernaut from dominating your book discovery and reading experience. Amazon were never really interested in the functionality or site 'experience' of these sites, they just wanted the enthusiasts and they were not going to let a potential competitor grow nor allow a real competitor buy up these companies.  In 2008, Amazon purchased Shelfari and in 2013 completed the Goodreads deal.  There was shock demonstrated at the time and commentators and users felt the sellers had sold out to the bad actor. Many felt betrayed.  But, according to the Manavis article there are still more than 90million users which is considerably more than the 16mm members back in 2008.

Since 2008, web design has changed considerably. No surprise there. However, to confirm the thesis that Amazon wasn't really interested in this product per se, the Goodreads website is virtually unchanged since 2008.  Manavis notes the frustration of users,

Goodreads today looks and works much as it did when it was launched. The design is like a teenager’s 2005 Myspace page: cluttered, random and unintuitive. Books fail to appear when searched for, messages fail to send, and users are flooded with updates in their timelines that have nothing to do with the books they want to read or have read. Many now use it purely to track their reading, rather than get recommendations or build a community. “It should be my favourite platform,” one user told me, “but it’s completely useless.”

Minavis suggests that the negative feedback has reached some type of breaking point, and I believe there is room in the market for other online booksellers of scale.

When I became CEO of Ingenta, the company was planning a commercial B2C book retail store. We had conversations with publishers, built some wire frames and developed a product concept. We planned to use existing technology (subsequently proven unstable). I had to squelch this initiative to concentrate on saving the company and delivering to current customers. It was actually a very crazy idea given our circumstances stoked by the high (and bizarre) interest of our board. Ingenta had a closet full of ill-conceived poorly executed projects and this would have been a spectacular example.

Looking around for other book recommendation sites, I still use LibraryThing but even they have some corporate overlords. LibraryThing is majority owned by the founder Tim Spalding but he counts both Amazon and Proquest as partial owners. LibraryThing hasn't changed much over the years either but I don't have anything like the frustration some of the Goodreaders seem to have.  Maybe they should come over.

Wednesday, September 09, 2020

Apple Daily and Jimmy Lai: Trying to save democracy in Hong Kong

In most countries Jimmy Lai would be considered a business hero. That's definitely the case in Hong Kong where he lives as the CEO of Next Media. As you may also know, Jimmy Lai is also the highest profile defender of democracy in Hong Kong and was recently arrested - together with some of his family members and staff, by Chinese authorities under the new 'anti-terrorism' laws which are designed specifically by the authorities (read Beijing) to enforce communist party rule in Hong Kong.
In 1998, I was engaged on a consulting assignment for Next Media in Hong Kong and spent two months working on a technology strategy for the newspaper business which published Apple Daily.  Lai had just sold his retail clothing business and was focusing all his attention on his new newspaper.  He had established Apple Daily three or four years years before I arrived in Hong Kong and he built the business from the ground up including building his own state of the art printing plant. The newspaper was seeing very rapid growth fueled by sensationalist lead stories including one which lead to a suicide. While I was there, the paper was following the rags to riches story of a local gangster who was on trial for murder with other lurid details the paper threw in every day. Apparently, this gangster spread the money around and was nick named "Big Spender" by Apple Daily and became a bit of a cult hero. Perfect material for a newspaper like Apple Daily. Over a three week period, I learned all about Big Spender from my Chinese colleagues and three days after he was convicted Big Spender was hanged. Justice is swift in China.
My interaction with Lai was infrequent but I definitely had the sense his vision far exceeded the awareness of the executives (and consultants) who worked for him. I've seen this trait in other interactions with executives (such as Jeff Bezos) where coming away from the conversation you are left thinking that they are almost bored with the discussion because they are thinking so far ahead or far more strategically. At Next Media, Lai was thinking not only about how technology could help support his newspaper but also the many new businesses he wanted to experiment with such as online retail, home deliveries and membership programs. In one exchange he described "UberEats" and wanted his team to investigate establishing a van fleet and supporting logistics. This was 1998 and we hadn't even had the first internet bubble yet. We thought he was a little nuts.
Jimmy Lai's Next Media is now the last independent voice in Hong Kong media. Since their start as a sensationalist newspaper, and as other newspapers folded, Apple Daily became a political voice for the democracy movement in Hong Kong. Sadly, the options for Jimmy Lai, his family and employees are stark: either give up criticism of the ruling party or lose everything including their freedom. Leaving Hong Kong would be the only other option. Jimmy Lai doesn't want to do that. Jimmy Lai is a hero. (Listen to The Daily interview with him).
My consulting work at Next Media involved a review of the IT environment and internal workflow procedures in the Apple Daily editorial and production functions. I lead the team which conducted interviews and work groups and developed a thorough understanding of the IT environment, internal processes and procedures. Based on our analysis, six key projects designed to support management’s goals and objectives were identified. The toughest challenge in this work was language since most of the workers did not have a good understanding of English. This was also an issue for technology. 
We found that software typically found in news operations the US and Europe simply wasn't available. Standard editorial solutions from Atex and Unisys Hermes had not been translated due to the complicated nature of the double byte translation problem. We did locate a local vendor that had 'translated' an older version of Atex into Mandarin which was exactly what we were looking for except for the theft issue. Next Media was producing 300,000 copies a day using a cobbled together set of home grown software.
My teams recommendations were fairly rudimentary: The development of a formal IT organizational structure, definition of an IT strategy, stabilization of the network
and a more structured approach to processes, personnel roles and responsibilities. We also provided best practices relative to newspaper publishing and profiled
a number of the major workflow package providers for newspapers.
This was one of my most interesting projects and to spend that much time in Hong Kong was also a bonus. At the time (1998), the transfer of power from the UK to China was still in its early days and there was hope and expectation that 'one country, two systems' was doable. Just over 20 years later and that hope is gone.

Monday, August 17, 2020

Pirated Broadcast Content Worth $1Billion or More - Report

In a new report undertaken by Digital Citizens Alliance suggests that the value of stolen digital content broadcast which is 'resold' as pirated subscriptions to consumers exceeds $1Billion.  This report looks at the infrastructure that supports this 'business' and the revenues and profit margins that can be generated.  Here are some of the primary conclusions:
  • Conservatively, pirate subscription IPTV services generate subscription revenues of $1 billion annually in the U.S. alone, even excluding the sale of pirate streaming devices used to receive the content; 
  • Because the providers of these services pay nothing for the programming that makes up their core product, they operate with estimated profit margins that range from 56 percent (retailers) to 85 percent (wholesalers). 
  • An estimated 9 million fixed broadband subscribers in the U.S. use a pirate subscription IPTV service; 
  • At least 3,500 storefront websites, social media pages, and stores within online marketplaces sell pirate subscription IPTV services to the U.S. market; 
  • An ecosystem has emerged around such services, including wholesalers that provide turnkey technology, and retailers that offer the stolen content to the public; and 
  • The ecosystem also depends upon legitimate players, including hosting services, payment processors, and social media. The extent to which these legitimate players are aware of their role is a subject of debate

Wednesday, August 12, 2020

Pew Research into Digital Innovation 2030

A really interesting set of predictions expressing how digital innovation with change over the next ten years to 2030.  Pew interview/surveyed a set of digital experts and found,
A majority expect significant reforms aimed at correcting problems in democratic institutions and representation will take place in the next decade. Many say this will result in positive outcomes for the public good; others are less convinced.

The full article is worth a read but here are two snips of interest:

Monday, August 10, 2020

Digitial First Textbooks - My Interview with CCC's Beyond the Book

As print textbooks eventually do give way to courseware, industry analyst Michael Cairns says, college professors, administrators and students will appreciate an education delivered in 21st century models.  Listen to the Audio here

While it has long been foretold that the print textbook would disappear, the revolution has actually taken quite a bit longer than people anticipated.

As print textbooks eventually do give way to courseware, industry analyst Michael Cairns says, college professors, administrators and students will appreciate an education delivered in 21st century models.

“Textbooks served a tremendous benefit and purpose for the last 200 years or more and were quite useful in the marketplace,” he tells CCC’s Chris Kenneally.

“But when you see some of the ability to build in and make use of technology in the delivery of the content and the delivery of subjects, [you see that] students can have the opportunity to benefit from better products and more effective outcomes from the materials that they have access to through the classroom.”

The discussion was presented by the Textbook & Academic Authors Association as part of its special summer webinar series.

Alternatively, read the transcript of the interview here.

Wednesday, July 29, 2020

Barnes & Noble Education Reports Full Year. Standstill Agreement with Key Investor

Two important news stories related to the performance and future of Barnes & Noble Education this week.

Firstly, the company reported their full year results and, no surprise, the business performance was much below 2019.  From their press release:

Financial results for the fourth quarter and fiscal year 2020:
  • Consolidated fourth quarter sales of $256.9 million decreased 23.2% as compared to the prior year period; fiscal year 2020 consolidated sales of $1,851.1 million decreased 9.0% as compared to the prior year.
  • Consolidated fourth quarter GAAP net loss was $(40.3) million, compared to a net loss of $(46.2) million in the prior year period. Consolidated fiscal year 2020 GAAP net loss was $(38.3) million, compared to a net loss of $(24.4) million in the prior year.
  • Consolidated fourth quarter non-GAAP Adjusted EBITDA loss was $(20.7) million, compared to non-GAAP Adjusted EBITDA of $19.7 million in the prior year; fiscal year 2020 consolidated non-GAAP Adjusted EBITDA was $42.2 million, compared to non-GAAP Adjusted EBITDA of $104.9 million in the prior year.
  • Consolidated fourth quarter non-GAAP Adjusted Earnings was $(28.1) million, compared to non-GAAP Adjusted Earnings of $0.5 million in the prior year period; fiscal year 2020 consolidated non-GAAP Adjusted Earnings was $(21.1) million, compared to non-GAAP Adjusted Earnings of $25.4 million in the prior year.

Operational highlights for the fiscal year 2020:
  • Progressed on the execution of a number of strategic initiatives; all of which remained on target prior to the onset of the COVID-19 pandemic, which has accelerated the demand and need to scale such key initiatives.
  • Continued to drive subscriptions for the Company’s bartleby® suite of solutions, gaining more than 170,000 subscribers in fiscal year 2020, representing over 200% growth over fiscal year 2019 new subscribers.
  • Achieved a six-fold increase in fiscal year 2020 bartleby revenue versus prior year; bartleby peak Spring traffic increased over 10x year-over-year and almost 3x versus peak Fall traffic.
  • Completed initial build of the Company’s next generation eCommerce platform; recently executed selective launch with expected further roll-out throughout fiscal year 2021 to grow increased high-margin general merchandise sales.
  • Continued to grow the BNC First Day® inclusive access programs, with revenue increasing 91% year-over-year.
  • Increased adoption of BNC First Day Complete, with eleven campus partners utilizing the complete access model in the upcoming Fall Term 2020, increasing from four in fiscal year 2020.
  • Continued to win new business for both physical and virtual bookstores, including the University of Nevada, Reno, Western Kentucky University, Front Range Community College and The City Colleges of Chicago.
  • Provided valuable solutions to schools to help mitigate the COVID-19 on-campus learning disruption utilizing BNED’s virtual store offerings and course material fulfillment capabilities, its BNC First Day offering, and its digital bartleby offerings to help students continue to perform while studying remotely.
COVID-19 impacts on bookstore sales were particularly acute in the final quarter with same store sales of $238.5 million for the quarter, declining $81.4 million, or 25.4%, as compared to the prior year period, with comparable store sales decreasing 34.7%. Retail non-GAAP Adjusted EBITDA was $(13.0) million for the quarter, compared to $29.1 million in the prior year period.

While the company is excited about their online subscription study tools and products, the revenue base is still low versus the overall company. 2020 full year DSS revenues of $24mm were 10% higher versus 2019 but saw a 21% increase in the 4th quarter which could bode well for future growth during the COVID period.  However, any suggestion this line item compensates for the decline in retail sales in the short to medium term would be misguided.

Later in the week, the company also announced they have reached a cooperation agreement with Outerbridge Investment LLC a key investor which will result in Outerbridge placing board members on the B&N Education board.  From the press release:
Pursuant to the cooperation agreement, Outerbridge will vote all of its shares in favor of all the persons nominated by the Board to serve as directors of the Company at the 2020 Annual Meeting, which will include Mr. Robinson. Additionally, pursuant to the agreement, the Company has agreed to nominate Zachary Levenick as a director candidate for election at the 2020 Annual Meeting. Outerbridge has also agreed to abide by certain customary standstill provisions. The full agreement between BNED and Outerbridge will be filed in a Form 8-K with the U.S. Securities and Exchange Commission.

“We have engaged in a constructive dialogue with BNED over the past year and are pleased to have reached this agreement in support of BNED’s future,” said Rory Wallace, Chief Investment Officer of Outerbridge. “With its unique set of offerings that serve digital, virtual and in-person education, and its highly differentiated retail business, BNED has a special opportunity not only to deliver value to its shareholders and to all stakeholders in the higher education system, but to help shape the future of the industry by stepping forward in this time of disruption. The Company has demonstrated its ability to manage expenses and liquidity while simultaneously growing bartleby® and its inclusive access offerings, First Day® and First Day Complete at an impressive, and accelerating, rate. We remain deeply committed to BNED, which we believe to be an investment opportunity with tremendous standalone and strategic value, and are excited to continue our engagement with management and the Board as we pursue our common goal of enhancing shareholder value.”

Morgan Stanley & Co. is acting as financial advisor to the Company and Gibson, Dunn & Crutcher LLP is acting as legal counsel to the Company. Olshan Frome Wolosky LLP is acting as legal counsel to Outerbridge.
Earlier in 2020, the company enacted a short term shareholder rights plan otherwise known as a poison pill defence to ward off unwanted suitors.  (Press Release)

BNED is trending higher over the past six months but remains significantly below its 52 week high.