“Lately, two recent trends are taking place in e-book publishing. First, several articles in the past few months indicate that e-book returns have grown among readers. Some readers are abusing Amazon’s generous Kindle book return policy in order to get their money back after purchasing a book.
“While it’s important for Amazon and other online retailers to have a mechanism in place to allow readers to return books — due to publishing errors or technical problems — the idea of reading a book then returning it is a big problem. It hampers self-published author sales and minimizes the purpose of a return policy.”
“Have you ever returned a Kindle ebook? That option might soon be going away, thanks to a petition over at Change.org.
“The petition calls on Amazon to change their customer-friendly Kindle ebook return policy. Even though this petition is only 4 days old it has over 2 thousand signatures from authors and publishers, all of whom want Amazon to now block some types of returns.
“The petitioners don’t see the return policy as reassurance to readers that we can return a poorly written or poorly formatted ebook. Instead they view it as a loophole that is being gamed by serial returnees.
“There is some truth to this idea, but would it surprise you to know that Amazon is a step ahead of serial returnees?”
Amazon’s Kindle Publishing programs are not (despite the name) publishing platforms — ebooks are a format, not a publishing platform — blogging software running on a domain you own is a publishing platform, a working knowledge of CSS, HTML, and FTP along with a text editor is a publishing platform. In fact, ebooks are just web pages (right down to the CSS, XHTML, and XML.)
Amazon makes things easier to publish (hey, just like Wordpress) and goes to great lengths to hide the fact that text delivered over an internet connection isn’t a html document, but the real secret sauce is money.
It’s not that Amazon makes it easier to publish: they make it much easier to get paid. …well, until you don’t get paid, at any rate (see the foofaraw over ebook returns, cited above).
Authors using KDP are trading control for convenience. (In a way, authors have always made this devil’s bargain with publishers, but in the past there seemed to be more work done on the publisher side to justify giving up control) (you know, plus money) — Amazon makes money off the transaction, and doesn’t know or care which books are “transacted”, so long as there are plenty of transactions in aggregate. Amazon has the system all set up: manuscripts in one end, downloads out the other, and the rest is accounting. No quality control, no editorial voice, no plagiarism filters, just the bookkeeping.
And yes I know it’s stupid to publish an ebook and ignore Amazon: Amazon is a big damn user base, and right now a lot of ebook affectionados exclusively buy from Amazon (because they’re lazy, perhaps, or more likely because they don’t know better, don’t care, and no one else is offering anything compelling that might persuade them to switch).
Amazon makes payment easy: taking payments from readers, making payments to authors. But processing credit card transactions is a far cry from running a publishing business and the real ‘digital disruption’ in publishing is not Amazon. Digital Disruption in Publishing is Facebook. Twitter. Blogs. Buzzfeed and Huffpo. Napster and Limewire. Torrents, Tor, Pirate Bays and Pirate Parties.
What we have here is a stalemate: On the one side, we have ebooks. Apparently everyone, even my Mom [true fact], is buying ebooks — and I, the Lone (old-school, physical bookshop) Bookseller Left on the Internet… I’m just a plaintive, fading voice in the e-wilderness, unable to see the e-forest for the e-trees.
I’ve been assured that the digital revolution has already taken place and we’re just taking a decade or two to sort through digital winners and losers, and well: nothing I’ve said or can say will shake your convictions.
“To me, it seems like the revolution already occurred back in 1993 and you all missed it. Every argument made for ebooks is also an argument that could be made about web pages: text served up via html and http actually has numerous advantages over .mobi, epub, and pdf (the current ‘e book’ formats available to us).”
The digital revolution already happened. I’m defending one payment structure: distribution and sales of books through bookstores. Ebook partisans are merely defending a different payment structure, Amazon et al. and the “electronic book” — but both models are susceptible to digital disruption.
“Modern” publishing (I’m going to pick 1836) had a good run, 1836-2007 — 172 years. Over the course of that run, corporations lived and died, business models rose and fell, new and cheaper book formats were born, and at the tail-end of that era: the internet came to prominence. We are now 5 years into the “new” publishing model…
Or, we are 5 years into a dead cat bounce. Are “Kindle ebooks” the future, or merely that last gasp of 200 years of publishing business?
I think the current environment has much more in common with the post-Gutenberg early era of newspapers (1605-1700): we are still figuring out what the platform can be used for, what we want to use it for, and how we can use internet publishing to make money. (I’ll remind you again here: Dickens’ first book was serialized in an 1836 magazine.) Straight, non-DRM web distribution is still the disrupting factor that has yet to be felt in Amazon’s KDPbiodome, and however enamored one is of Amazon’s ebook payment structure — the payments have nothing to do with books or publishing.
And before you come at me as obviously wrong [I am, as always, obviously wrong], ask yourself: “Am I about to defend books, digital distribution, or merely the new payment models that have been laid over the old publishing model?”
and with that parting shot: I open the floor for discussion.
[…some new emphasis added by me, but since I also wrote the original do I really need to make a note?]
There was a time when movie studios were charging $99 to sell a VHS tape:
“There would typically be a two- to three-month delay between the time a movie was available for rental, and when the movie could be purchased by the consumer. In reality, the video was available, but priced for rental shops and film enthusiasts who wanted to own a copy of the film at the earliest opportunity. The pricing was between $70 and $130” [wikipedia]
The era under discussion would be 1985-1995 – after rental became big business, but prior to the introduction of DVD in 1996. So that “$70” in 1995 would be equal to $105 in 2012; “$70” in 1985 is closer to $145. “$130” for the rental-only version would be $200 or more in today’s dollars.
[inflation calculator at westegg.com]
How dare the movie studios charge a rental place $100 or $200 for a movie that has already had a theatrical release when we all know the video tape only costs $1.80 to manufacture! The gall!
Of course the consumer didn’t see that price: the investment was borne by the rental place. They did calculations that over the lifetime of the tape, they would be able to rent it out 100 times or more before the tape died; and obviously not every tape was purchased at a premium. And Eventually: the number of customers grew, the market matured, consumers became more informed and more discerning, and actual demand for titles began to set the price.
…Which is why DVD sets for Game of Thrones cost [approximately] two arms, a leg, and the still warm corpse of a Stark. DVDs changed the game anyway: By 1996, Blockbuster was in a position to dictate terms to the studios, rather than the other way around. Additionally, by the late 1990s the movie and TV studios had already figured out that the home market was in many ways more valuable than the first-run showings, and release delays and exclusivity windows shrank alongside the prices. And that was fine, too, for a while [I look back on it as a golden age of sorts for DVD] until online streaming and blu-ray further clouded the picture and led to the current situation (i.e. “a mess”).
There are series that are only streaming digitally where I’d actually prefer to have a DVD set. There are a couple (anime licensed expired) where there used to be a DVD but it’s no longer being manufactured and isn’t online anywhere* and so good luck with ebay, mate.
For those who aren’t anime fans, and who have no sympathy — indeed, no context — I have two words for you: Disney Vault.
Pricing nonsense is not new, and if folks didn’t raise a royal fit in 1988 over $100 VHS tapes I don’t see why a library (that is to say: rental-only) copy of an ebook at $89 is a deal breaker. Additionally, if a publisher wants to charge $24.99 for an ebook — as many note, all but free to manufacture, just like those $1.80 cassettes and 17¢ plastic discs with a bit of foil in ‘em — if that particular ebook is brand new and hasn’t earned back it’s advance, editorial overhead, marketing budget, with a pinch of profit besides than there should be no more complaint than the $11.50 we have to pay for a one-time showing of a movie that is eventually going to be in the $4.99 bin.
It’s all business. Movies have costs past the $2,000 or so it takes to make a print and ship it to your local cineplex. We all know this, and happily pay the $11.50 plus $6 for a popcorn to see a ‘first run’ movie in theaters.
Books have costs, too. Sure, a book doesn’t have a $200 million production budget, but a book is much more likely to just sell 5000 copies – not 11 million tickets. And just like movie studios have hits and flops, publishers have bestsellers and… everything else. Just because the scale is smaller doesn’t make the business easier, or even substantially different.
And just like the home video rental business has changed—radically—over the past 25 years, the ebook business will eventually become relatively sane (more or less) given time as well.
This post is technically a link, that (under the old program) I would have tweeted without commentary:
“For years we’ve discussed the ridiculousness of ebook pricing, where some publishers seem to think that sky high prices for ebooks (often higher than physical copies) makes sense, despite the lack of printing, packaging, shipping and inventory costs. And, of course, we won’t even get into the question of the price fixing debacle”
The PC is Dead? We all have tablets now, or phones, and no one needs an actual box that sits on a desk that you attach things to? No one needs a 1995-era PC?
I think it would be fair to say a vast majority of people didn’t need a PC to begin with:
web browsing, including
To this short list, add in “social” for whatever that means for you: skype, reddit, facebook, flickr, instagram, twitter, telnet to ‘dial in’ to your fav BBS.
You need a big fancy box with the fastest processor and graphics processing workhorses and big honkin’ monitors (monitors, multiple, natch) and the associated desk, chair, et al.?
The answer was always No. But for a time, the only way to get to the web, play games, and send drunken IMs to xGFs was on a computer, the old fashioned PC box-on-a-desk type.
Wouldn’t you rather play games lounging on your couch, rather than hunched over in a stiff-backed chair? Of course you would, which is why game systems from Nintendo, Sega, Sony, and later Microsoft all proved to be popular. Game systems are of course computers as well, it’s just no one usually thinks of them that way.
Email? “Sent from my iPhone” — same for facebook, twitter, and all the quick-message-type interactions that take place these days. The best computer is the one in your pocket.
Tablets? Did we need tablets? It’s basically a smart phone with a bigger screen that doesn’t make phone calls — so apparently yes, not only did we need tablets, they started selling like hotcakes. (At least, the iPads did, and later, the Nexus line from Google, and some poor fools are still buying Amazon’s Fire, so there’s that market, too)
Many of us need a computer for a little bit more than casual connectivity and recreation. We write, or code, so we need a keyboard. We manipulate numbers, or pictures, or both. We create. So there is a cohort that needs the old-school-PC-form-factor.
…Yes, of course, there’s an app for that: you can do anything and everything from a tablet apparently. But who wrote the app? and what does her rig at home look like?
I’m not going to argue that the “PC” as it was defined in 1990 will somehow make a resurgence and come back to prominence. It’ll likely disappear — or PCs will be built into your living room TV set at some point and you’ll use a wireless keyboard and mouse (or, ha!, a virtual keyboard on a tablet) to access your home PC.
You won’t have a dedicated appliance: the computing you need will be available from whatever screens you already own.
The Computer in Your Pocket
“The mobile phone is today’s PC, but not necessarily in the way you think. Fifteen years ago, the PC was the central hub in one’s interactions with the wider world. This was largely because of the state of miniaturization; our electronics simply weren’t small or efficient enough to make mobile phones and laptops nearly as powerful as desktops.” The Right Tool For The Job : Devin Coldewey, 25 March 2013, TechCrunch
also, can I share with you one of my recent obsessions? Man, but I luv the Idea Channel:
Mike makes many points better than I can, so even though the topic of the video is a bit tangential to the points I’m trying to make, I had to include it. However one basic starting premise is the same: Your mobile phone is the computer you keep in your pocket. Your phone is not only your primary screen (even over a TV screen) — increasingly, it is also your primary computer.
In addition to the ‘traditional’ mobile space (can we call a 5-year-old smart phone market traditional?) there is also the current proliferation of tablets and the tendency for everything new these days to sport a touch screen and a wireless connection. Tablets are adding keyboards, and laptops are going ‘detachable’ with their screens. It’s a mess.
“As the Transformer’s name suggests, it also transforms into another device: Pull up on the PC screen to separate it from its stand and it becomes a tablet you can move around the house. It has a handle and a kickstand for propping up on flat surfaces. Like the desktop version, the tablet runs two systems: Windows 8 Remote and Jelly Bean 4.1. Though this concept sounds smart, it’s laughable in practice. The screen measures a whopping 18.4 inches diagonally and weighs an arm-straining 5.3 pounds.” A PC and Tablet “Brick” for the Price of One : Katherine Boehret, 19 March 2013, All Things D
“It’s official. A study released by Google yesterday shows that mobile devices, and smart phones in particular, are now the dominant means of Internet connectivity in five key global markets. Google conducted the study of smart phone versus feature phone ownership rates throughout last year, pulling data from the USA, the UK, France, Germany, and Japan. It found that, while smart phones were were quickly pushing out older feature phones… together, a full 10-percent more people own these connected mobile devices than PC’s or laptops (78-percent vs 68-percent).” You’re Now More Likely to Find a Computer in Your Pocket Than on Your Lap : Andrew Tarantola, 26 January 2012, Gizmodo
“The iPhone remains the flagship of Apple’s entire product line. It exhibits not merely the highest degree of fit and finish of any smartphone, but the highest degree of fit and finish for anything Apple has ever made. When first you hold it — where by you I mean ‘you, who, like me, is intimately familiar with the feel and heft of an iPhone 4 or 4S’ — you will be struck by how light it feels, yet in a premium, not chintzy way. Within a week, it will feel normal, and your old iPhone 4/4S will feel like a brick. …
“Using the iPhone 5 on LTE is nearly indistinguishable from using it on Wi-Fi. Web pages load in a snap, Siri parses input and responds promptly. It’s as big a difference from 3G (and whatever bullshit AT&T calls “4G”) as 3G was from EDGE. …
“So, as of this week, we have computing performance in our pants pockets that nine years ago required a professional desktop workstation. …
“Think about this: eight or nine years from now, we should have phones that are computationally equivalent to today’s Mac Pro. (Maybe even sooner, given the sorry state of the Mac Pro at the moment.)” [/blockquote] The iPhone 5 : John Gruber, 18 September 2012, Daring Fireball [blog], daringfireball.net
Are we talking about the death of the Personal Computer, or the declining popularity of one particular user interface, the keyboard-and-mouse? Because it sure looks like we’re making and buying a whole lot of computers these days.
Oh, and what happened to the ‘must-have’ gadget of 2009? The dedicated e-reader?
“Not coincidentally, the rapid decline in e-reader sales comes only two years after Apple (NASDAQ: AAPL) introduced the iPad. Even at considerably higher price points, the capabilities of tablets like the iPad offer consumers much more than merely cool, electronic paper turning, making the additional cost well worth it. The dramatic rise in tablet sales is as quick as the decline of the e-reader: IHS forecasts 120 million tablets will be sold this year, rising to 340 million by 2016.” Amazon, Barnes & Noble, and the Death of the E-Reader : Tim Brugger, 13 December 2012, Motley Fool
“Multi-use tablet sales are dominating single-use ebook readers. IHS estimates that ebook sales will decrease 36% this year from 23.2 million to 14.9 million and continue to fall to 7.1 million in 2016.” Tablet’s Dominating Ebook Readers : Chuck Jones, 14 December 2012, Forbes
aside: Has anyone heard more about the “Steam Box” or other dedicated hardware from Valve recently? Was January the last time we saw any rumors or announcements?
I think it’s interesting that we’ve had two big product announcements in this space (PS4 and XBox One) but no word yet from Valve. Of course, you can already play Steam PC games on your living room TV, but without a plug-and-play box Valve is kind of restricting themselves to just the nerdcore demographic. (On second thought, maybe the entirety of their client base, so I guess no loss?)
Even your Blu-ray player is a small computer — and again, perhaps this was always true, though that old VCR has a lot of mechanical pieces in it too — and with the latest generation of video playback we’re seeing quite a bit of computer-functionality brought to the forefront. I don’t know if it is possible anymore to buy a player that doesn’t connect to the internet for Netflix and YouTube playback, and a growing list of devices only do streaming video, up to and including the new $35 Chrome stick from Google.
With the prevalence of Bluetooth and Wifi enabled peripherals, just how far away are we from a Blu-ray player that accepts wireless input from an actual keyboard? (I think anyone who has attempted to type in a search using the arrow buttons on a remote feels my pain on this one.) And will we be able to use the keyboard before or after we’re all managing our queues with the smart phone anyway? Will a future device even have a remote control, or will we just use our mini-tablet or smart phone to begin with?
Given the size of the Roku, AppleTV, and Chromecast — and in parallel, considering the size of the Mini-ATX or even the engineering of the Raspberry Pi — how long before both the streaming box and a small PC are incorporated into a thin flush-mount LCD TV? Both the Chrome stick and the ‘better’ version of the Raspberry Pi retail for $35 each — when a decent TV costs $700 what’s another $70?
I think it’s just a matter of ‘installing’ a bigger monitor, and sitting on the couch. Why is there a hedgerow between PC and TV manufacturers? And wouldn’t a company like Samsung or Sony (which do both anyway) already have one of these in the market?
Maybe we just need a new word for the new computing device, like ‘smart phone’ or ‘tablet’.
ScreenPC. There you go. You’re welcome. This is a generic term, by the way, as I just introduced it as such and anyone who attempts to copyright or trademark it will have to come up with a fairly good reason why they’re entitled to it, given that people have been using the term generically to discuss wall-mounted or free standing television replacement PCs since 14 August 2013.
The ScreenPC is a handy seque to my next point:
Is the PC Defined by the Form Factor, or the User Interface?
…or does either matter? If it’s my personal computer, the computing device I use daily, why isn’t it also my “PC”?
Here’s another question for you: Is my “personal computer” the hardware, or the combination of software-and-data that I define as mine?
“Now, a clever piece of software lets you carry your own personal PC which you can carry inside your pocket – and once you have finished using it, no-one will ever know. Technically, what you are carrying is not a whole computer – instead it is a simple USB memory stick. But within it is a full operating system (like Windows), and when you plug it into a PC, that computer will restart into your own personal set-up, called Tails. When you have finished, shut down the computer, put the USB stick back in your pocket, and the PC will never know it has been used.” Not just for spies: The PC on a memory stick that doesn’t leave a trace of your browsing history or documents : Daily Mail Online : Eddie Wren : 12 June 2012
It has been said that the difference between the “old” PCs and the “new” devices is in how people use the hardware: Lean Forward (into a desk) vs Lean Back (on a couch)
“When people started using the iPad, it was speculated that the iPad seemed to be a ‘lean back’ medium, like print, as opposed to the ‘lean forward’ medium of the web on a personal computer.
“The distinction between a ‘lean forward’ and ‘lean back’ medium apparently began with interactive television. The terms have commonly been used by hand-wavers such as marketing people, media theorists, and futurists. The distinction has very little real scientific basis. There isn’t any clear idea what these terms really mean.
“Still, there’s something going on here. Jakob Nielsen, in studies of reading via print versus the web, found major differences between the two. To the question of ‘How readers read on the web,’ Nielsen answers: ‘They don’t.’” [/blockquote] Engagement Styles: Beyond ‘Lean Forward’ and ‘Lean Back’ : Craig Will, johnnyholland.org, 15 March 2012
“The idea behind lean-forward mediums is that people are engaged when they use the Web. They are in scanning mode, actively looking for content – and their attention span is much shorter. People use the Internet with purpose. Articles should be shorter and get to the point sooner, videos should be snippets or separated into clips of only a few minutes long.
“Lean-back mediums on the other hand are the times we sit down and veg out watching TV, read a book or flip through a magazine. Our attention span is much longer because these are passive mediums and we are in a consumption mode. This is why most long-form doesn’t work on the Web.”[/blockquote] Lean-forward vs. lean-back media : Jeremy Rue : 4 May 2010
“One of the old debates about the emergence of the personal computer as a media device centred on the lean-back (think television) versus lean-forward (think PC) distinction. The meme was that computers would never replace television because of that difference in engagement. In some ways the tablet (think iPad) has shattered that as it has very clearly become the couch computer.” Lean Back versus Lean Forward : Sherman Young, The Book is Dead [shermanfyoung.wordpress.com], 15 December 2011
“While cellphones have become ubiquitous as mobile devices, it’s been a much longer road to popularity for tablet computers – portable electronic devices that try to fill a void between tiny screen cellphones and more cumbersome laptops.
“Roger Fidler was one of the original proponents of these portable “electronic tablets” when he ran the Knight Ridder Information Design Lab in the early 1990s. See this story and this 1994 video showing Fidler’s vision (Fidler is now at the Reynolds Journalism Institute as Program Director for Digital Publishing).
“Many companies subsequently produced various forms of tablet computers as reading devices, such as the SoftBook and the Rocket eBook in the late 1990s and Sony’s e-book readers in the mid to late 2000s. But most of the devices failed to gain much traction with consumers.
“Other companies in the 1990s also worked on developing “electronic paper” or “e-ink” technology that would be used in wafer-thin flexible displays that theoretically could be rolled up and put in a briefcase, backpack or purse. But years passed with no consumer product hitting store shelves.
“Then with Amazon’s release of the popular Kindle e-book reader in late 2007, buzz about portable tablet computers heated up again. By 2010 and 2011 a number of sophisticated tablet computers were being produced, usually with color displays and/or wireless Internet connections for downloading up-to-date news and information.” [/blockquote] the transition to digital journalism : Kinght Digital Media Center, UC Berkeley Graduate School of Journalism : Paul Grabowicz, 4 December 2012
The link above is:
…just in case you missed it. There are a number of great resources linked at the bottom of the KDMC post, and they keep updating them. Just today, in testing the link (I usually do, before posting) I noticed the page had been updated just yesterday.
And of course, because I can as it is on YouTube, here’s that 1994 video linked above:
(It’s another tangential discussion, given my article above, but once again worth watching. The archived viewpoint of 1994 is fascinating)
Is it the interface that makes a PC?
A brand name? Marketing, market penetration, install bases and number of users?
The operating system?
The form factor?
Use cases, software, and intended design?
…or is a PC defined by how we actually use any and all of these devices?
The PC isn’t dead — in the late 1970s the “Personal Computer” came upon a virgin landscape and started to proliferate. Like any organism, it first exploited the easily-grasped resources (markets, in this case) but with increasing numbers also comes increased competition. To survive and prosper, computers had to differentiate and exploit new markets. Not just the computer but the whole ecosystem evolves, and revolutionary new forms (laptops, tablets) might dint the progress of older models, but don’t necessarily kill off their predecessors.
Computers are adapting. As we select the best type for each need, we’re guiding their evolution, but the whole ecosystem isn’t a zero-sum game. The whole digital world is still growing. A computer will fill every conceivable, supportable niche — and even some that aren’t sustainable so long as there is a dedicated and invested small fan base.
Full Disclosure: Barnes & Noble signs my paychecks, and I own trivial amounts of BKS through a company sponsored 401(k). But I am field management, in stores, and so not privy to corporate secrets past what both you and I can both read in press releases.
So, B&N: in Thursday’s press release they said
“In order to capitalize on the rapid growth of the NOOK digital business, and its favorable leadership position in the expanding market for digital content, the Company has decided to pursue strategic exploratory work to separate the NOOK business.”
and two ‘graphs later
“There can be no assurance that the review of a potential separation of the NOOK digital business will result in a separation. There is no timetable for the review, and the Company does not intend to comment further regarding the review, unless and until a decision is made.”
I think the main thing that prompted the announcement was 1st: full legal disclosure. They are legitimately looking into this, & I’m sure there is an SEC rule that requires them to say so.
But, a decision to “separate” the Nook business could include operating the digital division as a wholly owned subsidiary, spinning off the business [issuing stock in a new Nook company to all current B&N shareholders], selling it outright, or something less revolutionary, like doing some basic math/accounting to list nook as a separate line item in B&N annual reports.
Or nothing. Nothing is an option.
I think the main thing that B&N wanted to accomplish with this announcement was proper consideration. Some props for what they’ve done in 2 short years – A wholescale reevaluation by both pundits and investors in the business. It could be a thinly veiled message direct to Liberty Media, asking them to invest another half billion to buy the whole company outright (or to buy the nook business, unbundled)
At any rate, much like the announcement made that B&N was considering “strategic alternatives” up to and including a sale, which made the news last year.
If you were to ask my opinion, I must demure: that would be too much like investment advice. But I’m not quitting my job as a bookstore manager, or cashing out my 401(k).
I’ve been working quite a while on a bookstore business plan; not only because I think it’d be a nice feature for this blog, BUTALSO because, hell – I want to run my own damn bookstore. I’d be most pleased to entertain investors in such an endeavour.
But as per usual, I’m making a simple thing more complicated.
Instead of just posting my business plan, I’m going to post a guide — with many, many references and large blocks of previous research — so you [or anyone] can write your own bookstore business plan.
[with the appropriate caveats, not only to protect myself, legally, but also to make sure *your* efforts to fund a bookstore don’t repeat the obvious mistakes, or run into the obvious obstacles]
So I’m looking at 6 case studies: from non-profit book collectives through small storefronts, to landmark bookstores, to regional name-brand booksellers with a strong web presence.
[like I said: making a simple thing more complicated]
I’ll have to work out which chunks of my own business plan are bookstore-slash-retail universal, and such can be reliably copied/referenced by others, and then also outline specific plans for each case study. I also need to write up the appropriate introduction, educating and specifically directing the readers to do their own research and due diligence: even if you use my knowledge base as your own starting point [and constant reference] there is no replacement for getting into the numbers, getting dirty, and coming to your own conclustions.
SO: I’ve a lot of work ahead of me — Work for free, at that, because I’m weird that way.
Alas, there are no work-in-progress posts – or ‘thinking/talking aloud’ in a blog post [unless you count the past 33 months of rethinking the box.]
The final project can be parsed into chunks, but must post all at once – or in very short succession.
So the blog ‘radio silence’ is not a reflection of me giving up, but rather, an unfortunate consequence of my doubling-down. More to come, soon.
Tax breaks to millionaires do not create jobs. Tax breaks to millionaires do not create new companies, whole new industries, whole new product categories, and whole new ways of life.
If one were serious about creating jobs and not just scoring points with one’s political donors, instead of making sure the top marginal tax rates are now and always will be below 25% — one would invest in the brains that create jobs.
Gates dropped out of Harvard but had an excellent education up to that point — Yahoo and Google both were founded by graduate students — Steve Jobs and Steve Wozniak had the advantage of being in right place at the right time, sure [hard to replicate 1976 Silicon Valley] but they also happened to be students in the Silicon Valley, Berkeley for Woz, Homestead High School in Cupertino itself for Jobs.
Instead of tax cuts for the rich that some claim are the job creators, how about we extend a helping hand to those that actually have a proven track record of inventing whole new American industries?
How about we invest in education, and provide a college education to *all* without the massive debt currently required.
How many Apples, Googles, Facebooks, and Dells would have been established if a smart college kid could borrow $100,000 to start up a new company right after she graduates, instead of being forced to borrow that $100K up front just to get through school?
So many missed opportunities. Sure, some companies founded by the smart young kids would fail — this is different how? — but it would be up to them whether or not they could make it work.
For such a small amount of money, we could make sure the kids get into university, and through grad school if they have the talent and the drive. ANDTHEN these best-and-brightest could assume hundreds of thousands in debt, *not* to pay for school but to create new companies, new industries, and new jobs.
I might suppose that the only reason we don’t provide a free college [and post graduate] education for worthy, qualifying students is because that would make us socialists — dirty, dirty socialists with more free-enterprise startups than we could manage, with more good-paying jobs for college graduates, and a way to enable a whole generation to create, invent, and prosper rather than loading them down with debt that forces them to make compromises and just make do for at least two decades — long enough to burn out their hopes, dreams, and entrepreneurial spirit.
And of course, we’d be able to do that not just for this generation, but the next and the next and the next one, you know, the one that cures cancer, colonizes Mars, and does fabulous things we haven’t even dreamed of yet. All that and a bag of chips, for the in-context-minimal cost of 4-to-6 years for a kid at a university.
It would be like the economic benefit of the 1950s GI Bill but available for all generations and snowballing into perpetuity.
Of course I’m bitter because I worked through school (and asked WAY too much of my parents) and didn’t have the benefit of this myself — but, economically speaking, why are college costs disproportionately borne by students when it costs so little for the government to provide this, and when it means so much to both our culture and our economy?
Remember, at RocketBomber.com, We Read Boring Corporate SEC Filings so you don’t have to! [sm]
In addition to this morning’s press release where all these lovely, lovely numbers were glossed, spun, and (barely) referenced, B&N also released the actual numbers. Because they have to. It’s an SEC regulation or something.
Big numbers. Actually, it only adds up to $6,998,565,000, not quite the $7 billion in the press release, but we’ll give them a pass on that. Rounding, and all.
CEO William Lynch had additional comments in a conference call following the press release.
Our data indicates that for the sixth consecutive quarter we continued to gain significant market share in the fast emerging eBook and digital newsstand market — faster, in fact, than any other company over that period. Our internal figures corroborated by analyst estimates, indicate we grew our market share of eBooks another 1 to 2 points in Q4. It now represents approximately 26% to 27% of the overall US market for eBooks. … Our overall NOOK business across devices, accessories, and additional content grew to over $250 million in comparable sales across retail at BN.com in Q4. That delivered close to 300% growth versus last year. As mentioned, BN.com’s gross margin gross profit expanded quarter-to-quarter from 9.5% to 13.2%, illustrating the quickly scaling digital content business model. We now sell 3 times as many digital books as all formats of physical books combined on BN.com. [emphasis everyone’s – that last bit is the one quoted & tweeted all over the place, I just put the tags on it to post it in bold]
So, .com reported gross sales of $858 Million — and not all of that is books, but if it were, that is $214 Million for actual, physical books sold online, and $643 Millions-worth of e-books.
Woot. E-books FTW.
Except the retail stores scored $4.3 BILLION — and the college div. $1.7 BILLION — and not all of that is books, but if it were:
Barnes and Noble sells 9 books — actually, lovely physical books — for every e-book.
Yay! Go Team Books!
That’s just dollars, though, and I might as well be casting bones or reading goat entrails — there’s no way to go from these reported numbers to actual unit sales [esp. as some e-books ‘sell’ for nothing!] — but throw enough BILLIONS around and it all seems very impressive.
Some details shine through, though: look at the other statistic Lynch dropped: B&N has more than 25% of the e-book market, and e-book sales [for the year just past, & let’s do the math: $643 (?) Million / $6.999 Billion] is now (up to?) 9% of their business. From zero to hundreds of millions and perhaps 10% of the store, in just under 2 years.
And growing. Actually, as a bookseller this trend should worry me.
B&N reported a loss, attributed to the .com division (expenses of $280 Million offset by merely $75 Million in gross .com profits) (brand new digital devices don’t get pulled out of a hat) and that $205 million dollar shortfall in digital was enough to drag the whole balance sheet down, to the tune of $73 million for the year.
But I personally would call that a good loss, you know, investing in the business and all.
This is just from the Q4 Earnings Report, which included year-end numbers; I can’t wait for the actual Annual Report to see if B&N provides any more context or analysis.
I’m a book lover, a believer in the intrinsic value of a good editor as it relates to the quality of the finished book products, a proponent of printing as both an art and a craft, and a collector of bound-paper-artefacts — and more-or-less neutral on ebooks, though my other positions make me (by default) a part time anti-e-book activist…
…who also happens to be employed as a retail wage slave by Barnes & Noble. This does not make me predisposed to parrot the company line or even be particularly kind to my employer [as is proven by at least one recent post] but they do sign my paychecks so I have to disclose that fact for the FCC or SEC or both.
I own a very small amount of B&N stock via an outdated 401(k) matching plan that was discontinued, like, 5 years ago; I get the proxy cards but honestly I couldn’t tell you how many shares I own. [I need to transfer whatever-the-amount-is to the same mutual funds as the rest of my 401(k) – thanks for reminding me]
Additionally – the previously-posted boilerplate disclaimer: “No statements made on this blog are meant to constitute, or even masquerade as, legitimate investment advice; any information is provided for entertainment and edification purposes only, and if that doesn’t cover my ass I invite you to claim whatever you like and I’ll be happy to show up in court drunk as a sailor on leave, for as many days in a row as it takes, to make a mockery of you, and your case, and the proceedings in general such that no judge or jury could even imagine that I’d be a credible source for my own name and birthday, let alone investment ‘guidance’. If pressed, I might even be able to produce receipts and character witnesses to prove I’ve been drunk more-or-less continuously since 1996. You do not want to call me on this.”
I’m a bookseller—not a lawyer—and I don’t pretend to know all the ins and outs of tax law, but a couple of Google searches can pull up most of the information you need to know why Amazon should be collecting the tax. I’ll leave you to your own conclusions on why they fight so hard against it.
“In a 1992 decision, Quill v. North Dakota, the U.S. Supreme Court ruled that retailers are exempt from collecting sales taxes in states where they have no physical presence, such as a store, office, or warehouse. (The legal term for this physical presence is ‘nexus.’) Although the case dealt with a catalog mail-order company, the ruling has subsequently been applied to all remote sellers, including online retailers. The Court said that requiring these companies to comply with the varied sales tax rules and regulations of 45 states and some 7,500 different local taxing jurisdictions would burden interstate commerce.
“In its ruling, the Court specifically noted that Congress has the authority to change this policy and could enact legislation requiring all retailers to collect sales taxes without running afoul of the Constitution. ‘Congress,’ the Court declared, ‘is … free to decide whether, when, and to what extent the States may burden interstate mail-order concerns with a duty to collect use taxes.’
“Today, software has largely eliminated the difficulty of calculating and remitting sales taxes for the country’s many state and local jurisdictions. Indeed, Amazon.com, which opposes extending sales tax to online retailers on the grounds that it would be ‘horrendously complicated,’ collects sales taxes nationwide for Target as part of its management of the chain’s online business.”
So, first: the argument presented by mail-order and online retailers against their obligation to collect the tax [19 years ago!] has been made irrelevant by technology.
Second, the Supreme Court took the time to point out Congress could reverse their decision at any time with simple legislation.
Most importantly, though,
“[W]hile remote sellers are not required to collect sales taxes, the tax is still owed by the individual who made the purchase. Individuals are suppose to keep track of these purchases and pay an amount equivalent to the sales tax as a ‘use’ tax on their state tax returns. Few people do, however, and the use tax is almost impossible to enforce, which effectively exempts these purchases.” [emphasis mine]
“Consumers who live in a state that collects sales tax are technically required to pay the tax to the state even when an Internet retailer doesn’t collect it. When consumers are required to pay tax directly to the state, it is referred to as ‘use’ tax rather than sales tax.
“The only difference between sales and use tax is which person — the seller or the buyer — pays the state. Theoretically, use taxes are just a backup plan to make sure that the state collects revenue on every taxable item that is purchased within its borders.”
“A use tax is a type of excise tax levied in the United States. It is assessed upon otherwise ‘tax free’ tangible personal property purchased by a resident of the assessing state for use, storage or consumption of goods in that state (not for resale), regardless of where the purchase took place. The use tax is typically assessed at the same rate as the sales tax that would have been owed (if any) had the same goods been purchased in the state of residence. Use tax applies when sales tax has not been charged. Purchases made over the Internet and out-of-state are the most common type of transactions subject to a use tax.” [emphasis in original]
“In the United States, every state with a sales tax law has a use tax component in that law applying to purchases from out-of-state mail order, catalog and e-commerce vendors, a category also known as ‘remote sales’. As e-commerce sales have grown in recent years, noncompliance with use tax has had a growing impact on state revenues. The Congressional Budget Office estimated that uncollected use taxes on remote sales in 2003 could be as high as $20.4 billion. Uncollected use tax on remote sales was projected to run as high as $54.8 billion for 2011.” [emphasis mine]
It is not that internet purchases are “tax free” — they’re not. It’s a matter of who collects the tax. If you want to argue that internet purchases shouldn’t be taxed, well, take that up with your elected representatives — but as noted above, this went all the way to the Supreme Court and the ruling came back that tax is still owed even if it is not collected at time of purchase — in both the 1992 case, Quill Corp. v. North Dakota and the earlier 1967 case cited as precedent, National Bellas Hess v. Illinois Department of Revenue, no one was arguing that the tax was not due, only that making out-of-state companies collect the tax constituted an unfair burden. The tax due is not a matter of where the company headquarters is located, or which warehouse it ships from: it’s a matter of where you, the purchaser, live.
When you buy a book from a bookstore, we collect the tax at the register (It’s listed on your receipt). We send a check to local and state governments monthly, and the sales tax revenue is an important part of what keeps your local municipalities running: it would be very hard to make payroll (for say, firefighters and police officers, and to be fair, also the really awful people at the DMV – but they deserve a paycheck too) without this stream of income. If these sales tax revenues weren’t available year-round, your city or county would have to borrow the money, and then wait until April (or later) to pay the loans back, incurring interest and fees that eat into already small budgets.
Amazon’s continued resistance to collecting taxes has nothing to do with the internet being tax free. [in case you missed it: the internet is not tax free]
Amazon doesn’t have to advertise the tax when they list prices — just like they do not currently list shipping costs. They can still sell a 500 page hardcover book for $11.37. They can still beat us on price, and force bookstores into bankruptcy by doing portions of our job better than we ever could. These fundamentals would not be changed if Amazon added one more little line item, between the price they charge and the shipping fees. Amazon would make no less money.
Well, Amazon might make marginally less money. Like, one-millionth less. But it’s still cheaper to pay for lawyers than it would be to actually collect the tax and forever burst the myth that Amazon is tax free.
When I pointed out that Amazon cheats, I was referring to the near-universal [incorrect] perception among shoppers that Amazon “will always be cheaper” by whatever percentage equal to that tax. It is such a widespread belief that I encounter it at the bookstore every day, and I even get “corrected” by well-meaning people on the internet.
When retailers cry foul and ask for equal treatment under the law, we’re not asking that a ‘handicap’ be imposed upon Amazon because we just can’t compete. Almost the exact opposite is true: We’re asking Amazon to stop cheating and play by the same rules. We’re asking Amazon to stop abetting widespread tax fraud. We’re asking Amazon to disclose to their customers the actual costs of purchases, including the tax, and customers’ obligations under the law.
I’m just trying to sell you a book. *I* didn’t come up with the sales tax, I don’t “charge” tax [retailers collect it on your behalf], and Amazon will beat me in most (but not all) cases purely on price whether they also collect the tax or not.
But let’s stop perpetuating the myth that internet purchases are free of tax.
Also, allow me to correct the perception that asking Amazon to do the right thing [morally if not legally — and also the right thing for their customers] is ‘sour grapes’ from grumpy retailers over losing sales to the internet.
I can provide intangibles at the bookstore that Amazon can’t. I’ll compete on that. But I’d appreciate a level playing field without the de facto tax-subsidy that allows Amazon to advertise an additional discount that doesn’t really exist.
I work full time as a bookseller at Barnes & Noble. I’m a manager at one of their many, many stores.
I’m also an Amazon affiliate, and earn a small sum from linking from my book reviews to the Amazon site. [I’m also signed up for 3 other affilate programs I use on a regular basis, so my relationship with Amazon is not unique.]
It’s not that I hate Amazon; I shop with Amazon too, on occasion. But I do hate cheaters and it seems like AMZN has gotten a pass for far too long —
Take local sales tax, for example: as a retailer, I have to collect it. As an internet retailer, Amazon should have to collect it too — but they don’t. Please note, your local business do not charge sales tax, they collect it on your behalf to pay for local services, and the salaries of the government employees [your neighbors] who provide those services.
Amazon claims it shouldn’t have to collect these taxes [note: no one is asking Amazon to pay tax, they merely need to collect on your behalf] because it’s not a local company — Why, we’re up here in Washington State, what do you mean local sales tax? — but that’s not the issue:
Amazon’s customers are local — UPS trucks use local roads to deliver Amazon packages [roads maintained by taxes], Amazon’s customers’ kids go to local schools, Amazon’s customers’ civil disturbances are broken up by local police — heck, readers make use of local sewers when they read Amazon’s books [on certain occasions], sewer lines built using local taxes.
Local sales tax isn’t paid by the retailer, it’s paid by you, and your neighbors. Sure, you can opt not to pay tax if you order through Amazon — and Amazon is more than willing to be complicit in the act, as that translates into a 4-11% “discount” [depending on your particular locality] and that is a massive competitive advantage. The states of Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming don’t charge income tax so a majority of the state budget has to come from other sources, like sales tax. (Alaska and New Hampshire also don’t charge a state sales tax, but I’m sure local jurisdictions within those states do.)
Maybe we could move to an honor system, where no retailer has to collect the tax, and you just report your purchases for the year past every April, and you’re on your own coming up with the total tax bill. Then Amazon wouldn’t have to collect sales tax and neither would I and your yearly tax headache [and burden] would be tripled — instead of straight-forward automatic collection at point of sale you’d have to save all receipts, figure out what was bought where [as each muncipality, county, and state have different rates] and reconcile your tax burden on an individual basis for each jurisdiction. Sound like fun?
Here’s the plain, honest truth: Amazon will have to collect sales tax. Even if it takes an Act of Congress and a Supreme Court decision, it’s coming. It’s to Amazon’s advantage to prevaricate and dodge and lie and cheat for as long as they possibly can, though — and negotiate backroomdeals besides, because the alternative is competing fairly with other retailers on a level playing field — without additional discounts enabled by lies and tax evasion.
Amazon Knows This: and they have already built the website infrastructure necessary to comply with the law — so don’t listen to them if they say it would be “prohibitively expensive” to “radically change” the way they operate. Truth is, they already collect sales tax in 5 states.
A handy explanation is on their web site – and oh, yeah, you don’t want to know what they had to go through to accomodate the agency model for ebooks:
“ Kindle books, subscriptions and active content titles sold by various publishers are subject to sales tax based on the publisher’s state tax reporting obligations and the taxability of digital books in those states. As a result, sales tax for Kindle books sold by the publisher may differ from the sales tax to which you’ve been accustomed for Kindle products.”
And figuring out local sales tax based on the purchaser’s home address would be too hard to figure out. Right…
Amazon doesn’t want to get stuck paying sales tax twice — once at point of sale, and once at point of delivery. And that’s fine; it may in fact take an act of congress to work out how digital delivery of files count in terms of “point of sale” and taxable sales, and to clarify where internet sales of physical goods actually takes place (for tax purposes).
For Amazon, is the point of sale where their web server is located, or the warehouse? — or is the computer screen right in front of you? I think we all know who the customer is, and where they live, and where the sales tax should be going.