Rocket Bomber - commentary

A Once-in-a-Century Opportunity to Re-invent Publishing, and Books

filed under , 28 May 2014, 20:11 by

The working title for this article was, “These Days, Monopoly is Just a Board Game.”

I started to argue that Amazon wasn’t and isn’t a monopoly, but then I also managed to argue myself out of becoming an Amazon Cheerleader. Since I was looking into anti-trust statues and case law (spoiler: it’s dry) we’re going to wade into that half of the post first. But stick with me; I hope by the end I’ve also convinced you of the promise of that over-ambitious title up there.

I’ve set up a shortcut for those that want to skip Supreme Court Case precedents (no blame attached) and get to the second part: click this link

Also, I’m not a lawyer: just throwing that out there before we get started.

##

“Proponents of Amazon’s lower pricing strategies argue that Amazon is the underdog in the publishing monopoly, not the other way around. But the fact remains that Amazon is a company that singlehandedly controls 30% of the market share of the entire publishing industry. And unlike its competitors, it has a publishing arm, a distribution arm, and a retail arm.”
Amazon strongarms publisher, won’t allow pre-order of new J.K. Rowling book : 24 May 2014, The Daily Dot

“Amazon’s strategy against Hachette is that of a bullying combine the size of WalMart leaning on a much smaller supplier. And the smaller supplier in turn relies on really small suppliers like me. It’s anti-author, and in the long term it will deprive you of the books you want to read.
“Final note: some time in the 1980s the US Department of Justice’s anti-trust lawyers changed their focus from preventing monopolies from forming to preventing companies from colluding to preserve their margins (‘price fixing cartels’). As a result, Amazon very nearly gained a monopoly of ebook sales; they’re still around the 85-90% mark in the UK, and peaked at over 80% in the USA. (The irony of the DoJ-Apple iBook store settlement is that the DoJ went after the market incomer with the higher prices and 10% market share, rather than the near-monopolist who was using predatory pricing to drive their competition out of business.)”
Amazon: malignant monopoly, or just plain evil? : 26 May 2014, Charlie Stoss

“People have a choice on where to buy books. Amazon being the biggest bookseller on the planet doesn’t make them a monopoly or monopsony. If readers demand Hachette books, Amazon has not prevented them from being sold. There are thousands of other retailers who sell Hachette titles.
“I have five books published through Amazon’s Thomas & Mercer imprint, and more than a dozen self-pubbed through Createspace. Guess what? Indie bookstores and B&N don’t stock my paper books. And they are allowed to make that choice. And I don’t publicly whine about it.” …
“And there is a big difference between sales and profits. But no matter how you slice it, Hachette isn’t a helpless neophyte. They have power and capital and lawyers and have been around for almost 200 years. Amazon has the power advantage here, because they have customers Hachette wants access to. If Hachette wants to reach those customers, it will either accept Amazon’s terms or withdraw its catalog. And if Amazon can’t stand the idea of losing Hachette’s sales, it will back down.”
Fisking Charlie Stross: More on Hachette/Amazon : 27 May 2014, Joe Konrath

##

“The Rule of Reason is a doctrine developed by the United States Supreme Court in its interpretation of the Sherman Antitrust Act. The rule, stated and applied in the case of Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911), is that only combinations and contracts unreasonably restraining trade are subject to actions under the anti-trust laws. Possession of monopoly power is not in itself illegal.
“The Rule of Reason can be therefore considered a complement to per se illegality. Under the latter, the action, without consideration for circumstances, is illegal. Under the rule of reason, the circumstances in which the action was committed must be considered.” …
“On the same day, the Supreme Court also announced United States v. American Tobacco Co., 221 U.S. 106 (1911). That decision held that Section 2 of the Sherman Act, which bans monopolization, did not ban the mere possession of a monopoly but banned only the unreasonable acquisition and/or maintenance of monopoly.”
— Wikipedia: Rule of Reason – see also the entries for Standard Oil Company of New Jersey v. United States and United States antitrust law

I also like the finding (in other cases) that ‘geographical market division’ is straight up illegal, and I wonder how that could be applied to, say, cable companies in an argument. Do the cable companies collectively form a price fixing cartel more pernicious than, oh, I don’t know, Apple and 5/6ths of the Big Six publishers?

The phrase used is “illegal per se“ — in and of itself illegal, ‘inherently illegal’ —
“The United States Supreme Court has, in the past, determined activities such as price fixing, geographic market division, and group boycott to be illegal per se regardless of the reasonableness of such actions. Traditionally, illegal per se anti-trust acts describe horizontal market arrangements among competitors.The illegal per se category can trace its origins in the 1898 Supreme Court case Addyston Pipe & Steel Co. v. U.S., 175 U.S. 211 (1898).” – wikipedia

Cartels are illegal, a monopoly in-and-of-itself isn’t (in 1911).

Modern day Justice Department lawyers (in my opinion, burned in 1999-2001 when the Microsoft monopoly case amounted to a whole-lotta-nothing) have been skittish, loath to prosecute, and have also taken a very narrow view of antitrust laws: Monopoly power when exercised to deprive consumers of “the benefits of competition” is illegal — and the US Dept. of Justice sees the price charged to end-consumers as the only yardstick to measure that by. (The final price is only one benefit of competition and healthy markets, but whatever.)

It would also seem that players in an industry can collude all they want, too — so long as they do so in the open, in public view, and have excellent lobbyists. This is the reason the cable companies can all charge $90 a month, and raise rates every year, while offering neither better service nor more programming options. The mistake that Apple and the publishers made was attempting the old fashioned back-room deal: They should have hired more lobbyists, set up a think-tank or two, and then debated the ‘issue’ in back-and-forth newspaper editorials and NPR interviews; heck, the CEOs could legitimately spell out the whole deal, in the context of a cable news appearance. After six months of that, they could legitimately claim Agency Pricing was just ‘natural’ and the way ‘everyone’ was doing business.

Or at least, that seems to be the MO of the Cable Cartel — in my opinion.

##

Coke isn’t a monopoly, because Pepsi.

Visa isn’t a monopoly, because Mastercard.

McDonalds is big and profitable and ugly, but isn’t a monopoly.

Walmart is pernicious and certainly isn’t playing fair in several ways, but they do not have a monopoly.

We, as individual consumers, may not like some very successful firms because we dislike how they do business — or object to the business entirely — and so we don’t eat at McDonalds or shop at Walmart or drink either brand of fizzy diluted corn syrup.

De Beers is a straight-up monopoly — (not that this will ever be an issue, but) if I ever find myself needing a diamond ring, you can bet your ass I’m shopping vintage, or even going to a pawn shop, and if need be having the stone reset, rather than giving them any money.

Even when consumers exercise choice (free market, etc.) there are always times-and-places where some non-Monopoly with plenty of competition still ends up being the only choice. Cable TV and Broadband Internet are two lovely examples — as I can all but guarantee you have only one choice for each, and it’s the same company. For rural US customers, away from the coasts, Walmart may not just be the only discount department store, but the only grocery store for miles.

Walmart is a monopoly to the folks out in Podunk and West Bumble, though those folks are often glad to have them there. The options that existed before were both limited and more expensive. I still don’t think Walmart is ‘doing good’ but they’re serving markets, and if all we consider are outcomes and prices (and not awful practices) then Walmart deserves (some, slight) praise.

Amazon isn’t a monopoly… right?

Amazon has ‘competitors’ in the book market, and the small electronics market (that’s their real retail bread and butter), and online streaming video, and music downloads, and cloud computing services, and small goods (anything that fits in a box). Amazon has barely started in the grocery delivery market — a market which doesn’t even exist yet, honestly* — and in a number of other fields-of-competition, Amazon is in 2nd place, 3rd place, or worse. There is no way** to call Amazon a monopoly

* natural monopolies in markets where no active market previously existed have also been addressed by the courts; we’ll get to that eventually.

Amazon is much more than a bookstore these days anyway. No matter how small a percentage of the business, though, Amazon is always going to sell books — because books are the key to everything else:

“[B]ook markdowns are extremely visible. Sellers can tout their low prices compared to what’s on the back of book covers, the price publishers want to sell it for. And that can be a convenient psychological device — especially if you’re a big retailer with lots of other stuff to sell. ‘When the customer sees a book at 40, 50 percent off,’ Teicher says, ‘the presumption is that everything else that that retailer is selling is also equally inexpensive.’ And books bring in some pretty attractive consumers. ‘Book buyers are good customers,’ Teicher adds. ‘They tend to be slightly more affluent, they tend to be consumers who shop and therefore are always in the marketplace for other products.’”
Why books always seem to have a discounted price : 8 May 2014, Marketplace

Amazon can and should price books however they want. They do the same for MP3 players, hard drives, digital cameras, headphones, blenders, kitchen wares, blu-ray players, electric razors, board games, golf clubs, auto parts, and industrial shop equipment.

Amazon is just doing what every retailer does, though: sell at a discount. Nearly every manufacturer or supplier has a MSRP — notably the “sticker price” on the window of a new car; publishers aren’t the only ones who print the price on the ‘cover’ — and nearly every retailer ignores it.

Sometimes the items are discounted right out of the gate — especially on the fourth Friday in November. Those of us who shop for clothes know that the retail ticket price is only there to make the eventual clearance/close-out discount seem that much more attractive. If you’re shopping for a TV set, I’m willing to bet that the MSRP is also the in-store list price on 90% of the new models on display; there will be one “flyer” item on sale, to get you in the store, and of course last year’s models are discounted (to 15% margin instead of 50%).

There was one notable retailer exception: book stores. Book stores charged the price on the book. Books as a commodity are different, though — the exact same book will be available in at least two formats, with a price differential between ‘prestige’ hardcovers and the soft cover. Having two paperback versions (‘trade’ and ‘mass-market’) further clouds the picture, as do remaindered hardcover books. It is technically possible to walk into a bookstore and find a $6.98 hardcover, a $8.99 mass market paperback, a $18.00 trade paperback, and a $28 ‘new’ hardcover all of the same book, same words on the inside and everything, with only a matter of size and paper quality (or the detail of a remainders auction) to differentiate them.

So books were being discounted; the publisher just found a very convoluted way of doing it, and the booksellers were more than willing to play into it. Customers know the score, and they buy — or wait, and wait — depending on the current format and asking price, and their enthusiasm for the book.

Book stores used to be an exception in that they “always” charged the cover price — but only up until the chain booksellers began to routinely and without exception discount their bestsellers, not because of online prices (not at first) but rather to compete with the likes of Costco and Sam’s Club — which were selling the headline, bestselling authors’ books at discounts of 30% or more. That was in the early 90s, before Bezos had turned his bookstore into a behemoth. Amazon didn’t invent the discounted hardcover, they just had lower overhead, and so they could do it even better.

Amazon entered into the book market, where pricing and formats were already a muddled mess, and then further complicated things: by organizing a network of 3rd-party resellers of used books, by lowering their own margins on all books including the backlist, and (the clincher) by choosing to list all editions—new, used, remaindered, 3rd party sellers, paperback, hardcover, and collectible signed first editions—on a single product page. “Oh look, this book is only $2!” exclaimed thousands of customers simultaneously, even if they then went on to buy the book for $5.99 or $18.79 or $65.

Customers’ perception of [physical] book prices had already changed by the time the Kindle launched in Nov. of 2007 — and immediately sold out. Others had tried to sell ebooks online, and ebook readers pre-date the kindle by 10 years but Amazon had an edge: their customer base consisted of early adopters, avid readers, folks comfortable with or at least willing to try new technology if it meant they could save money, and folks affluent enough to drop $300+ on a gadget — no, those last two points aren’t a contradiction: I think the mindset is that books are a commodity good so of course you buy for the cheapest wherever you can find ‘em, but a gadget, especially the best-in-class gadget, is a one-of-a-kind (and potentially, a must-have) so price is no object. (‘Best in class’ and a price insensitive fan base is Apple’s whole business in a nutshell.)

The major selling point of the kindle was $9.99 brand new bestsellers; the initial price on the Kindle was $399. Enough people did the math and figured it was still cheap at that price. It shouldn’t be surprising — Amazon didn’t launch Kindle without knowing their market. When you have a database of the customers who buy at least two New-York-Times-Bestselling books a month, and can send them an email, you’ve already done that math.

[more on ‘$9.99’: NYTWashington PostAmazon itself]

Amazon launched into a market that didn’t really exist, and so quickly became the only major player worth talking about. Barnes and Noble (fatally?) took two years to enter that market, and Apple now famously only entered the market in 2010 as an ‘add-on’ and initial hook for their new iPad — and when they could stack the deck in their favor. So it should be no surprise that Amazon is the major player, with 60-75% of the ebook market (or more, and growing).

** And at what point could we say Amazon is a monopoly?

Of note is the 2nd Circuit Court decision United States v. Alcoa, 1945 —
“Judge Learned Hand held that he could consider only the percentage of the market in ‘virgin aluminum’ for which Alcoa accounted. Alcoa had argued that it was in the position of having to compete with scrap. Even if the scrap was aluminum that Alcoa had manufactured in the first instance, it no longer controlled its marketing. But Hand defined the relevant market narrowly in accord with the prosecution’s theory. Hand applied a rule concerning practices that are illegal per se. It did not matter how Alcoa became a monopoly, since its offense was simply to become one. In Hand’s words,
[blockquote]‘It was not inevitable that it should always anticipate increases in the demand for ingot and be prepared to supply them. Nothing compelled it to keep doubling and redoubling its capacity before others entered the field. It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel.’[/blockquote]
“Hand acknowledged the possibility that a monopoly might just happen, without anyone’s having planned for it. If it did, then there would be no wrong, no liability, and no need to remedy the result. But that acknowledgement has generally been seen as an empty one in the context of the rest of the opinion, because of course rivals in a market routinely plan to outdo one another, at the least by increasing efficiency and appealing more effectively to actual and potential customers. If one competitor succeeds through such plans to the extent of 90% of the market, that planning can be described given Hand’s reasoning as the successful and illegal monopolization of the market.” – wikipedia

In the end, the 1945 decision was mooted by changing markets —very much like the Microsoft/Internet Explorer decision in 2000 quickly became irrelevant as other browsers ate away at IE’s market share — but Alcoa and Microsoft were both subject to court oversight after being found guilty, and oversight continued until the market caught up. Apple and the courts are still arguing over what “court oversight” might mean in the ebook-pricing case.

[The publishers already submitted to court restrictions when they settled the case before trial. They have to renegotiate their contracts, though the court allowed that these negotiations should be staggered. Hachette is the first of the five on the schedule; say, how is that going?]

Let’s take a second look at “the possibility that a monopoly might just happen, without anyone’s having planned for it. If it did, then there would be no wrong, no liability, and no need to remedy the result.”

See: the 1st Circuit Court decision, Fraser v. Major League Soccer, 2002 —
“The Court of Appeals upheld the jury’s finding that the plaintiffs did not prove that Major League Soccer illegally monopolized the market for player services, and failed to prove the product market and geographic market, because MLS competed with other soccer leagues in the U.S. for players, and MLS competed with soccer leagues in other countries.
“On the charge of a reduction in competition under the Clayton Act, the Court of Appeals held that ‘the creation of MLS did not reduce competition in an existing market’ because no active market for Division 1 soccer previously existed in the United States” – wikipedia

I don’t know what soccer player salaries have to do with author royalties, but I think we all can agree that MLS—which owns every individual team, not just the league—is a de-facto monopoly on US Soccer and that likely does affect 98% of player salaries, no matter what the court found at trial.

However: “the creation of MLS did not reduce competition in an existing market because no active market for Division 1 soccer previously existed”

The same could be said for ebooks in 2007.

On the other side of the coin, the Alcoa decision — where control of part of a market (ebooks for example; just throwing that out there) can be considered as separate from the overall market (all books) — might just be a precedent if someone chose to apply it. Of course, any and all actions taken by Amazon in pursuit of book market share is just “good business”. For Amazon to act differently would be stupid. Bezos is not stupid.

In fact, I’m sure that Bezos knows the distribution centers he’s built in the last decade, combined with the ease of one-click shopping, an engaged and enthusiastic customer base (of readers!), integrated hardware/software that includes dedicated e-readers, andoid-ish tablets, and apps on everything, along with razor-thin margins and customer retention programs like Amazon Prime, all represent very high barriers to entry. The ability to drop a few or a hundred million to buy out a nascent competitor certainly doesn’t hurt. It seems obvious to buy an online bookseller like Abe Books — but more vitally, Amazon is being proactive in acquiring any developing network of readers, including both Shelfari and Goodreads. The business is being won not just in market share but in mind share, and having a lock on enthusiastic readers is apparently worth at least $150 Million (for Goodreads, the purchase price of Shelfari wasn’t disclosed).

“It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel”

##

Following the precedents, the Apple ebook case makes sense in its own way — price fixing and cartels are definitely illegal. Monopolies in and of themselves are not.

Any theoretical Amazon case would also be a huge mess because you’d have to argue about who Amazon’s customers are: sure, on the surface, Amazon’s only book customer is the end reader — but if Amazon [eventually] controls 90% of the ebook market, wouldn’t an author’s only way to reach those readers be through Amazon? Isn’t the author—attempting to use Amazon’s services to reach Amazon’s reader base—a customer too? Amazon buys books from publishers — but if you’re a [dead tree] genre fiction publisher and Amazon accounts for 50% or more of your overall sales, online or off, who has the power in that relationship? What are your options outside of Amazon?

By placing itself across the whole book industry — and playing different roles in retail, distribution, and publishing but not controlling any of the three — Amazon in a way insulates itself from accusations of monopoly while also becoming a much bigger and more formidable adversary than it might have been otherwise.

In November of 1998, Barnes and Noble (with about 15% of the book retail business) proposed buying Ingram Book Group, which at that point had 11 distribution centers and shipped books, audio books, and magazines to stores nationwide — including to Amazon. While each was the number one competitor in their field, both Barnes & Noble and Ingram still faced strong second-placed competitors, and both parties promised that the merger wouldn’t affect Ingram’s existing distribution deals or customer relationships. The buy-out was dropped in 1999, about six months later, over fears the FTC would axe the deal; the respective companies felt dragging the process out any further would only damage their image, and potentially, their business [and certainly: B&N’s stock price].

[Additional reading on that: AP, NYT, CNet]

Would the union of book retail with book distribution have destroyed competition? — Apparently it didn’t; after 1999 both B&N and Amazon brought distribution in-house (spending hundreds of millions in the process), handling the majority themselves and buying direct from publishers instead of middlemen. But in 1999 the “major” player in book retail (with 15% of the market) was effectively blocked from consolidating its position by anti-trust fears.

And Amazon has 30% of the book market, but isn’t considered an anti-trust candidate by anyone except those suffering from ‘Amazon Derangement Syndrome’.

##

[Enough droning on about Amazon.]

Could the publishers be making major changes to the way they do business? Aw Hells Yes. Amazon is devouring the business like a pack of cheetahs because the old school, New-York based publishing business was and is very inefficient, a half-broken system that was in no way improved by the consolidation of imprints, and the consumption of New York publishers by Big Media conglomerates.

If I were to launch a publisher today, it would not be in Manhattan — well, Manhattan, Kansas, maybe, but not New York. The ghosts of Max Perkins, Book Row, and the Algonquin Round Table seemingly haunt the business —or perhaps, it is the publishers who cling and won’t let go, not the ghosts who are refusing to leave. We’re constantly lamenting either the demise of literacy, of literature, or just of good taste. (that link is a 1959 article in Harper’s on the decline of book reviewing)

So lets rethink this a bit and reframe our mental image of publishing:

By the 1930s, rotary presses, offset printing, and hot metal typesetting had industrialized the manufacture of books, to the point where a paperback could be sold for just 25¢ (in 1939, inflation adjusted $4.15) — while simultaneously, the market for fiction in magazines (high-brow and low) fostered at least three generations of writers, the end result of which we see in Pulitzer Prizes, Noble Laureates, and (even better) the glorious era of Pulp. The modern day publishers were all born in this era (as previously, there was no way to profitably make the books—copies of books, in the manufacturing sense) and in a way, they are all still stuck in it.

Now, the word processor, digital publishing, and social media have again revolutionized the manufacture of books — In publishing, It’s 1879 All Over Again, and every blogger is a newspaper onto themselves, every online author their own very small magazine or press, and every existing, accepted business model should be assumed to be wrong until proven otherwise.

But instead of seeing the revolution take off (like it has in other areas of tech), enterprising small publishers and aspiring authors still have to contend with the weight of the Book Establishment: the media conglomerates, their gatekeepers, and a self-appointed literary police force that values laurels and prizes over fun and pulp. The Established Book People control every approach to the market: breaking free from the slush pile and into publication to begin with; access to shelves in bookstores, or even better, front-of-store placement; getting your book reviewed by nationally-distributed newspapers and magazines, or even better …Oprah.

How does one crack into this market? Do you have to, anymore, to ‘make’ it as an author? If you go online, is Amazon your only way, or just the only way to reach Amazon’s (numerous and book-hungry) customers? To date, only Pottermore has begun to explore (and exploit) what is possible — though of course we could argue that Rowling is in a unique position to do so. In time (5 years? 10?) others will definitely follow. The next G.R.R.M. will not be a greybeard with an existing publishing contract, but will instead use Facebook, Twitter, Tumblr, and [The Next Great Social Media Thing that Hasn’t Been Invented Yet] to pull readers into a totally independent website, to read appendices and argue minutia on forums and to buy, buy, buy digital copies of the books.

Rowling and G.R.R.M. had a lot of help though: movies and cable TV gave a boost to properties already pretty famous and selling themselves out in the bookstores. 99.999999% of new authors won’t be able to take the same path (or sit on Oprah’s couch, let alone Conan’s) but the idea of doing it all yourself shouldn’t be discarded just because we can’t all win the lottery. Maybe the next G.R.R.M. will get his start writing fan fiction — maybe she has already done so, and just needs a push to go from posting on others’ web sites to building and hosting her own. Sure, reader-outreach and fan interaction might ‘live’ elsewhere (twitter&tumblr, perhaps) but you’ll need more than a few @handles and an Amazon landing page if you want to control your own destiny.

For authors that don’t do it themselves? To go back six paragraphs, “If I were to launch a publisher today” it would be a website, not just an imprint — and the small editorial staff would include writers to maintain the blog, programmers to build the platform, and some social media savvists (yes I just made up that word and invented the job) to find and capture fans — and the staff would be given a mission to curate a small niche of publishing — or a large niche, or a whole genre, but whatever: our target is a target, and we’re aiming for both the authors and the readers. IF I could buy the Analog or Asimov brand names: we’d be off and running, yesterday.

So long as I’m wishing: Give me the modern-day John W. Campbell or Lester Del Rey and let’s do this already. Pitch it as a tech startup to con the VCs acquire some startup capital to pay the bills the first two years and *do it*.

If Vox, Whalerock, Ziff Davis, Conde Nast, or First Look Media want to get in touch with me about starting this new hybrid website-magazine-imprint, I can be on a plane and at your office on Monday. Have the contract ready for me to sign; no takebacks.

##

Publishing is ripe for disruption. Amazon found a couple of cracks and are working the wedges to split off their chunk of the market. Amazon is very successful at what they do; they are the first of a new kind of book company — currently more retailer than publisher, but doing just fine with their house imprints and also, more than willing to share parts of the infrastructure with others (authors; but authors direct and not their publishers) (at least: so far).

Amazon is monopoly-ish but the Justice Department has given them a pass (and will continue to) so long as Amazon isn’t “abusing” their position to raise consumer prices. Anything else that Amazon does, including making publishers squeal, making B&N obsolete, and stomping (or buying) any upstart that even looks like it might be eyeing Amazon’s business: that’s all fine.

HOWEVER,

And this is aimed at the Amazon Cheerleader Squad,

Amazon’s dominant market position isn’t a good thing, in my opinion. It’d be great (and I’d certainly be less apprehensive) if there were a strong, and growing, and decently-popular alternative to Kindle Direct Publishing to threaten Amazon and keep them honest. A Pepsi to their Coke, or a Discover Card (or even a Square) to their Visa/Mastercard hegemony.

I think it’s fine to use Amazon, but one shouldn’t be enamored by it. In the current publishing landscape, Amazon has every potential to become a de-facto book monopoly — a utility like AT&T, maybe, something you don’t notice and with flat rates that everyone gets accustomed to using — but being a comfortable and familiar monopoly doesn’t make it less of one. If you think of Kindle Direct Publishing as a book utility service (which is more of a poetic analogy than a direct one, but I find it fits) and recall the abuses of pre-breakup AT&T, or perhaps that other de-facto monopoly, your local cable company — maybe you’ll pause for just a moment before encouraging everyone to jump on board.

Additionally, there is nothing Amazon does for you that you, as an author, can’t do for yourself. Sure, one can buy into Amazon’s Kindle Ecosystem and that’s great — it’s easy and seductive.

But if you argue that Publishers don’t deserve 95%, or 85%, or 75% for formatting, editing, production, and distribution when one can easily contract that out (for an upfront, one-time fee – not ongoing chunks of the revenue) and the parts that can’t be contracted out have been made obsolete by ebooks…

…then maybe you can also see my argument that Amazon doesn’t deserve even 30% if you’re the one marketing the book, finding fans on facebook, slowly building up your backlist and ‘brand’ — and you only direct them to Amazon because you haven’t set up your own website yet. (for an author, yes, 70% is way better than 5-17% — even the 35% Amazon offers for books outside the KDP Select program is better — but 100% and 100% control should be the goal, right? …right? )

Genre authors who are at the forefront of the Kindle Revolution might want to start reading web comics, and learning about how comickers are monetizing. Some of them even print and sell hardcover books, direct, at a profit, …without Amazon — and that’s after they give away the comics for free. There is a lot to think about here.

##

Like I said, it’s 1879 all over again and we’ve been given a once-in-a-century opportunity to re-invent publishing and books. A whole world of options is out there and a possibly brilliant future awaits.

But we can also learn from the past: let me tell you, no one in 1914 was arguing that Sears & Roebuck was the future of publishing just because they had revolutionized retail with direct-to-customer shipping, were leveraging the possibilities of the network (rail network) to ship faster and cheaper all the time, used massive volume to keep margins and prices low, and their ability to reach and inform millions of customers (through their catalog) was unprecedented, nation-wide, and ubiquitous.

Have it shipped direct and save 70 percent off new fiction!

Publishing was re-invented by the packagers and the pulps, not the establishment players. The revolution was led by the people serializing fiction to sell magazines, and the 25¢ paperbacks sold outside of bookstores — dozens, and then hundreds, and then thousands of independent players, of which only a handful were successful (those became today’s imprints, handed around like poker chips by media conglomerates) but all of which were making and selling books. The first editors and publishers learned on the job, and often were the authors themselves; we are being given the same opportunity.



As certain as Death, Taxes, and 2-day prime shipping

filed under , 23 April 2014, 11:13 by

A recent Bloomberg article revives the old Amazon sales tax debate (if we’re still debating this) so I thought I’d dig up the appropriate links and Wikipedia articles for everyone to reference again:

http://www.ilsr.org/rule/internet-sales-tax-fairness/

[blockquote]

In 1992, the U.S. Supreme Court ruled that there was nothing inherently unconstitutional about requiring out-of-state retailers (such as mail order companies and internet retailers) to collect state and local sales taxes on orders shipped to in-state residents. The only question was whether imposing such a requirement would cross the line from an acceptable burden on interstate commerce to an unreasonable one. Technology had greatly eased the burden of collecting taxes for multiple jurisdictions, the Court noted, but concluded that Congress should make the call.

The Court’s ruling left existing policy, under which remote retailers must collect sales taxes only in states where they have a physical presence or other tangible “nexus,” unchanged. But the Court explicitly invited Congress to revisit the policy. “The underlying issue is not only one that Congress may be better qualified to resolve, but also one that Congress has the ultimate power to resolve” the Court wrote.

Today, software and related tax services have largely eliminated any remaining difficulty in calculating and remitting sales taxes for the country’s many state and local jurisdictions. Yet Congress has so far failed to extend sales tax collection to online retailers.

[/blockquote]

So, first: the argument presented by mail-order retailers against their obligation to collect the tax [22 years ago, pre-Internet, pre-online-retail, pre-Amazon] 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 supposed to keep track of these purchases and pay an amount equivalent to the sales tax as a “use” tax on their state tax returns. Less than 1 percent of people do, however, and the use tax is almost impossible to enforce, which effectively exempts these purchases” [emphasis mine]

And again, from another source: http://www.nolo.com/legal-encyclopedia/sales-tax-internet-29919.html

[blockquote]

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. But because collecting use tax on smaller purchases is so much trouble, states have traditionally attempted to collect a use tax only on big-ticket items that require licenses, such as cars and boats.

[/blockquote]

And from Wikipedia: http://en.wikipedia.org/wiki/Use_tax

“A use tax is a type of excise tax levied in the United States by numerous state governments. It is assessed upon tangible personal property purchased by a resident of the assessing state for use, storage, or consumption in that state (not for resale), regardless of where the purchase took place. If a resident of a state makes a purchase within his home state, full sales tax is paid at the time of the transaction. The use tax applies when a resident of the assessing state purchases an item that is not subject to his home state’s sales tax. Usually, this is due to out-of-state purchases, as well as ordering items through the mail, by phone, or over the Internet from other states. 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.” [emphasis in original]

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.)

also: http://en.wikipedia.org/wiki/Sales_tax#Enforcement_of_tax_on_remote_sales

“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 (at that time, while suffering either 1967 or later 1992 technology). The tax due is not a matter of where the company headquarters is located, or which warehouse it ships from, of if there is a ‘nexus’ in your state: it’s a matter of where you, the purchaser, live.

When you buy a book from a bookstore, or buy your groceries, or liquor, or a new couch, or a car: sales taxes get collected at the register (as listed on your receipt). Retailers 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. Even if everyone dutifully paid the Use Tax on internet purchases (a big if) without sales tax revenues trickling in over the course of the year, your city or county would have to borrow the money to make payroll, and then wait until April (or later) to pay those loans back, incurring interest and fees that eat into already small budgets.

“In states that have the tax, households reduced their spending on Amazon by about 10 percent compared to those in states that don’t have the levy. For online purchases of more than $300, sales fell by 24 percent” – Bloomberg, citing a recent study by researchers at Ohio State University

…Well, I think that’s all we need to know about why Amazon spends millions to fight State governments attempting to collect the tax.

Eventually, Amazon *will* collect sales taxes — even if it takes an Act of Congress and a Supreme Court decision, it’s coming. But it’s also certainly to Amazon’s advantage to put off that date for as long as they possibly can.



I wonder if the historical model I should be researching is RCA, not Pocket Books?

filed under , 20 April 2014, 14:40 by

“Thinking of ebooks and printed books as comparable is like assuming that anything conveyed by means of the written word is a poem; plays, novels, stories, film scripts, letters, shopping lists and text messages exist too. Publishers have got to stop thinking of their digital products as ‘books’, and start imagining more expansive ways of communicating information. Until then, the digital revolution hasn’t even begun.”

‘The ebook revolution hasn’t even begun’ : Gaby Wood, 30 March 2014, The Telegraph

##

I wonder if the historical model I should be researching is RCA, not Pocket Books? The argument could be made that the Consolidated Amazon Book Cheetah™ currently thinning the fat, slow publisher herd have more in common with General Electric of the 1910s and 1920s than with cheap pocket paperbacks that appeared in 1939. GE built the devices (RCA radios) while simultaneously developing the content and networks (NBC Red and Blue) that drove demand. The later success of television rode piggyback on the real revolution that had taken place decades earlier.



Google Ngram "American Dream"

filed under , 12 January 2014, 18:35 by

Interesting: the “American Dream” wasn’t really a thing until after mass immigration — and the 1929 crash. Have we always been nostalgic for an America that never really existed?

[Google Ngram]

The first generation’s dream was America. Only the subsequent generations start talking about “the American Dream”.

This won’t change anyone’s mind; that assumes rational discourse where long-held beliefs can be challenged by evidence. But it’s so damn interesting



E- versus Print? Burgers and Steak.

filed under , 11 November 2013, 06:09 by

where’s the beef? actually, I suppose that should be “what’s the beef?”

beef /bēf/ noun secondary, informal use: a complaint or grievance. synonyms: complaint, criticism, objection, cavil, quibble, grievance, grumble, gripe, grouse [thank you, Google.]

##

This is not the first time I’ve used a ‘steak’ analogy; something about media consumption generally lends itself to the inevitable comparison. (DVDs have menus, social media and rss both have feeds, we even talk about information diets)

  • Cheaper, faster, available from more outlets? Call that a ‘burger’.
  • More expensive, often considered a prestige item at many vendors, and with a so-called-best expression found at decades-old establishments dedicated to it? Call that a ‘steak’

A steak can cost $25 or more, you make the purchase of it a special event, or part of a ritual. Oh, sure: a steak can be had for $15 from some neighborhood “bar and grill” but somehow the identical cut (often prepared the same) isn’t given the same regard: If you want a decent steak you go to where the chef and the cooks and the staff are all on board with the experience. You go to a steakhouse. If you happen to be at some other restaurant and take a flyer and order the steak, you’ll be pleasantly surprised if it’s any good and honestly, not really disappointed if it’s not. (Unless you’re the asshole who sends back plates at a Tuesdays/Fridays/ApplePepper… dude, …you had that option before walking in the door, don’t torture the staff)

In contrast: Burgers are fast and cheap; not $25 but to be had in under 5 minutes and for as little as 99¢ — and if the 99¢ burger is a little small and not as satisfying, you don’t complain.

For a decent lunch — grabbed on the go — you expect to pay $2.99 or $3.99 (or maybe a little more, if you’ve ordered from this joint before and you happen to really like their burgers — value for the money)

Do the price points I’m citing (or the title of this blog post) give you an idea of where I’m going with this?

##

You go to the bookstore: you get recommendations, some guidance, some free samples [open a book, fool, that’s what they’re there for], they have a comprehensive ‘menu’ and even a comfy seat.

This costs more at the steakhouse; it costs more at the bookstore.

‘Steak’, right? Oh, but steak doesn’t cost $25, you say? You can get a decent rib-eye (about a half pound or so) for $4.99.

Sure you can. If you’re lucky you went to the butcher, but more likely it’s just the cut in a styrofoam tray at your supermarket. And then you’re on your own: how to season it, how to cook it, cast iron or grill? Is either of those even an option?

A cheap steak requires a certain amount of expertise. (AND I glossed over the choice of cut: sirloin, rib-eye, new york or kansas city strip, t-bone, porterhouse, london broil, flank, skirt, flatiron, top and bottom round — and those are the US cuts; a British or Brazilian butcher will take the same cow and divide it differently.) Hell, finding a cheap steak and figuring out what to do with it is work.

Any wonder why some would rather just get it from a steakhouse, inflated price be damned?

##

YES, OF COURSE if one believes in anecdotal evidence, we can all easily relate:

  • that really awesome steak we had for like $12 at some hole-in-the-wall, mom-and-pop restaurant
  • that $8 burger which was literally the best thing ever, transcendent really
  • the diner with an awesome $4 burger — honestly I order like 4 without sides and that’s all I eat there
  • the highfalutin’ hoity-toity place that made me put on a jacket, charged me $50, and the steak sucked.

Here I will note again: yes. That’s fine. Your experience is valid,
but this whole post is just an extended metaphor.

There are what, one hundred thousand restaurants across the US? More? A million? I don’t actually think it’s a million but hell, call it a million restaurants.

There are at least 129 Million Books and another million get added each year.

Relying on only anecdotal evidence: I could pick any one book and it would either prove or disprove any generalization. I could pick whole genres.

##

Let’s go back to customer experience and expectations:

If your budget is smaller, and you tend to “eat out” often, you’ll naturally gravitate to the Burger-end of the beef spectrum: give us this day our daily burger (and fries) and lead us not unto heart disease.

Expectations are smaller, price points are lower, we need something that satisfies but are not looking for transcendent experiences. You go through the drive-thru. Convenience matters more than quality. Sometimes you celebrate the quick-cheap-and-easy aspects, and might even be caught out saying A Good Burger Trumps a Mediocre Steak in my book, any day of the week and twice on Sundays.

(If you plan ahead and make a reservation, are bringing a date, plus fronting $30 bucks a plate just for the entrées: your expectations are higher.)

Let’s say you’re some kind of a douchenozzle and you demand home delivery from a steakhouse — your expectations haven’t changed (and the prices haven’t either) but the beef you end up eating is not what you ordered. (By taking the dining experience out of the dining room you’ve necessarily changed it — not just your time waiting but also the time entrées spend hanging out and cooling: time, distance, reality, etc.)

…so of course the first thing you do is spring to Yelp and write a scathing take down and denounce the steakhouse for not being a drive-thru or delivery joint and for serving you a steak that had already been off the grill for whole minutes by the time you saw it.

##

So. [putting my metaphors in a blender and hitting ‘frappe’]

By taking the ‘bookstore experience’ out of the bookstore: you’ve necessarily changed it.

Ebook consumers with a burger budget and burger diet complaining about the cost of steak kind of piss me off.

Ebook consumers with a burger budget and burger diet complaining that the Bookstore (our Steakhouse stand-in) doesn’t serve burger — or sell the burgers at a whole dollar mark up — kind of miss the point of bookstores.

Ebook consumers with a burger budget and burger diet complaining about the Cost of Steak also kind of miss the point: A good burger, prepared well and plated with exceptional skill, is a meal that often exceeds the customer expectations and also quite often is even more satisfying than a steak. This is attributable to the skill of the staff, and the chef/author, and should be considered only on a plate-by-plate (book-by-book) basis.

One-off experiences are not how we price burgers *or* steak. You had an exceptional meal; great, go you.

A single reaction to a single experience is not how pricing works.

Authors have been turning dog food into Delmonico’s for decades, and the list of genres that started out as pulp that have been rehabilitated into literature starts with mystery and is rapidly gaining on erotica. Science fiction and romance gained on the first rehabilitation, and in the current climate, are still gaining in comparison.

##

So, why is the quality/price dynamic — even with the many context-specific nuances — easy to understand when we talk about Hamburgers vs Steak (with the implied associations provably false as we have all been served transcendent Burgers and Inedible steaks) but in an Ebook vs Hardcover/Paperback debate it always comes back down to price?

No consideration of the discovery process, or the venues that enable the discovery process?
No consideration of the differences between products, and between markets?
No consideration of quality as a differentiator, or something that might—in a completely free and open market—be a factor that demands a higher price?

There is no steakhouse in the hybrid-bookstore-and-ebook model, just varying degrees of fast-food joints?

Since it’s all just beef (just books), it should all be available from just one source and all at a single price point?

This is the position you’re staking out as a starting point?



A Little Silicon in Every City

filed under , 10 November 2013, 15:37 by




The New Urban Campus

filed under , 3 November 2013, 16:39 by

I think the primary factor currently stifling innovation and start-ups is the crippling student loan debt we’re asking young people to take on as a matter of course.

There are other factors, too, of course and that’s what the rest of this post is about. But the scale and scope of the student debt burden needs to be addressed, because as an economy we might choke on it.

##

This is a longer post, so here are some waypoints:

Cities as incubators of great ideas
Is Innovation Cemented to ‘Place’? A different way to phrase this question is: Why Silicon Valley?
Cabridge, Palo Alto, and Brooklyn are already on the map — where do we look next?
Looking Downtown, Again
The New Urban Campus

##

Cities as incubators of great ideas


[image source: Wikimedia Commons]

Whether one is a single twenty-something with no cash but a lot of ideas, or the old archetype of the engineer in a garage, to succeed as a business (let alone a tech business) you need access to bright people: staff, skilled subcontractors, and specialty services. Everything that a big company might have “in house” you’ll need too, but not at the same scale or all of the time. If you’re thinking of physical products, you’ll need access to rapid prototyping, maybe even custom PCBs and software. For a company selling software or services, you’ll need computer infrastructure and maybe a web designer or five. And no matter what you do, you need design.

This needs to be a course at business schools, actually: “Why You, Yes You Future MBA Graduate, Need Design”.

Some will say that — of course — in the age of the internet you can source your staff and your services from anywhere in the world and of course — of course — you can and many do. Your back-end DBS was set up by a programmer in Estonia, your web design was done by an outfit in Israel, your end-user UI was designed in Finland, and before launch you outsourced both the user docs and press releases to a housewife/freelance writer in Dayton, OH.

Nothing wrong with that. But imagine if your programmers, designers, writers, and Idea Guys could all meet in a single room? How much more productive would that be? I’m not saying you need all of this “in house” because you don’t. But there are synergies when even your subcontractors and freelancers all live in the same city — only a phone call and thirty minute cab drive away — and though I hate to use the word ‘synergy’ it fits.

“All this running around for face time is part of the tech culture, said Stephen Ciesinski, who teaches entrepreneurship at Stanford’s Graduate School of Business. ‘When you do start-ups, you’re not investing in a company, it doesn’t exist,’ he said. ‘You’re investing in people who’re going to make this company happen.’”
The part of Silicon Valley that can’t happen online : Queena Kim, 31 October 2013, Marketplace

There are also other ‘halo effects’ [getting deep into the BS-biz-speak now] that you can’t even anticipate — if a number of innovative business are already in the same neighborhood, what happens when all these creative people are at the same pub on a Saturday afternoon after an intramural softball game? Networking and talking shop (and yes, hooking up) leads to seredipitous discovery and chocolate-and-peanut-butter-type combinations.


“[I]nvestors need ideas perhaps more than ideas need investors, particularly in an age when starting a web business is amazingly cheap. So the real question is: how did New York find itself generating so many interesting ideas?

“The physical density of the city also encourages innovation. Many start-ups, both now and during the first, late-1990s internet boom, share offices. This creates informal networks of influence, where ideas can pass from one company to the other over casual conversation at the espresso machine or water cooler.

“Economists have a telling phrase for the kind of sharing that happens in these densely populated environments: “information spillover.” When you share a civic culture with millions of people, good ideas have a tendency to flow from mind to mind, even when their creators try to keep them secret.

“All of these spaces – the graduate schools, the co-working offices, the media environments – exhibit the final trait that has been key to New York’s technological success: its diversity.”

Lightning in a bottle : Stephen Johnson, 30 October 2010, The Financial Times : excerpted from Johnson’s Book Where Good Ideas Come From: The Natural History of Innovation, isbn 9781594485381 [IndieBound,Amazon]


[image source: http://www.flickr.com/photos/tonythemisfit/2532039277/, flickr user Tony Fischer]

##

Is Innovation Cemented to ‘Place’? A different way to phrase this question is: Why Silicon Valley?

In the case of Silicon Valley, we could perhaps point to the late 1960s and the trinity of Stanford University, Hewlett-Packard, and Fairchild Semiconductor. Similarly, in Cambridge, MA, there is of course MIT, Harvard, and a lot of old manufacturing roots (and money); in New York the mix of talent, money, and comfortable density is leading to a tech renaissance in Brooklyn (and other boroughs).

Here’s another fact to wrap your brain around: In the 60s, tech was manufacturing. The pioneers in Silicon Valley were making chips, semiconductors — and putting those chips into calculators and business machines. You know, the boring stuff used by accountants, and university eggheads. Think Bell Labs, not PARC — at least, not yet. But the manufacturing base was at least as important to Silicon Valley as its proximity to San Francisco. We could also easily cite military contracts and the California aerospace industry in this context. It wasn’t just that Steve Jobs got up one morning and had his friend Steve Wozniak build a PC: Silicon Valley existed for 20 years (or more) before that. It’s in the name: the silicon chips came first.

You need at least the tradition of manufacturing even if the plants are no longer churning out widgets — if nothing else, it gives you great big (cheap) buildings to renovate into open-floorplan loft office space. Snark aside: while it is possible, now, to launch a software-only tech surge, and the biggest success stories are all about internet services, when Google and Amazon had to grow, and compete, they turned to hardware — as did Microsoft (the Xbox predates the Surface by 12 years). Apple has been a hardware company since the beginning. Industrial Design isn’t something you ‘pick up’ as a sideline, or leave to the end of a project. Industrial Design can matter more than the software.

This is another case where it’s in the name: Industrial Design came from industry and manufacturing.*

You need density because you need people bumping around and bumping into each other. You need a lot of people trying a lot of things and failing, and getting up, and trying again. You need cross-discipline interaction: designers meeting coders, ideas meeting implementation, hardware meeting use-cases. To launch a new tech hub, it is not enough to teach kids code — Though That Is An Excellent Place To Start — you need to nurture a whole ecosystem.

The real answer to the “Why Silicon Valley” question, though, is a matter of critical mass:

“This helps mitigate the risk of joining a company that might fail, as most startups do. None of the developers will be out of work more than a few weeks full of interviews surviving on their ‘bonus’ of all the vacation time nobody ever takes. This means companies can take bigger risks, that the culture doesn’t bat an eye at spending a few million doing something crazy, cause after it all falls apart everyone is going to land on their feet and have another year of cutting edge work stacked onto their resume.”
The San Francisco Safety Net : Mikeal Rogers, 6 April 2013, Future Aloof

(I might also point out that the venture capital market in the San Francisco area is, collectively, nuts. And that, unfortunately, can’t be duplicated. To make a case for a start-up anywhere else means clearing a higher bar.) (…or finding more crazy rich people.)

##

One more before moving on — while the interview wasn’t on the topic, this was the money quote that made it into the headline: Marc Andreessen: The World Would Be Much Better If We Had 50 More Silicon Valleys : Billy Gallagher, 20 April 2013, TechCrunch

##

Alongside a growing awareness of the importance of place in tech, what usually follows are some rather stumbling efforts to just “copy” the Valley…
—or worse, to just talk and talk about “becoming a tech hub”, as if Press Releases alone are some kind of magic spell that will conjure start-ups into existence.

Many efforts miss the point. The place existed first.

Cabridge, Palo Alto, and Brooklyn are already on the map — where do we look next?

I think the Research Triangle only needs a ‘celebrity’ home-grown startup company to break out and really make a mark on the map. I don’t think North Carolina has a venture capital ecosystem—yet—but I’ll remind everyone that outside of New York, there are more US banks in Charlotte than anywhere else.

Innovative business needs a mix of hungry young professionals, other talent (including the older, wizened vets of past bubbles to provide mentorship, and in some cases – also money), supporting services, and ideas — but mostly ‘the kids’, either fresh graduates or talented folks still in grad school, mostly in their 20s.

Silicon Valley is not just the brainchild of Stanford — it’d be more accurate to call it the intersection of Stanford and Berkeley (and a half dozen other schools). MIT has the luxury of Boston, where one person in five is a student, a professor, a researcher, or otherwise affiliated with higher education. [New York is an outlier; it’s fair to say they already have everything, the trick is finding space for it at a rent you can afford.]

Colleges are the most obvious way to begin to collect a “young urban base” – but the more complicated part is retention: it does us little good to train programmers and engineers, only to watch them move out after graduation to take jobs in Boston and San Jose. Tech in isolation is also bad; Georgia Tech is a very fine school (I say, as someone who went there) but the reason Atlanta is not a tech mecca like Cambridge or Palo Alto is because “there is no there, there”. Atlanta, poster child of sprawl, lacked ‘comfortable density’; there is some Old Money but Coca-Cola heirs do not invest in startups; and perhaps most vitally: GT Engineers graduated into a desert. Even if you stayed in-town, eschewing the suburbs, there wasn't* the opportunity to mix with designers, film-makers, graphic artists, social scientists, young MBAs with an entrepreneurial bent, older engineers with the skills but getting bored at 70s-vintage corps, and yes, English majors.

In the 90s, Atlanta sucked. Even the Olympics in 1996 couldn’t fix that, and in many ways it actually stunted the development of Atlanta’s start-up ecosystem for a decade. Believe me on that one. I live here.

[* this is changing.]

Atlanta is changing. I feel the most important change is the Savannah College of Art and Design, which opened an Atlanta Campus in 2005. Georgia Tech is, of course, still Georgia Tech, and Georgia State is undergoing a 30-year shift from a commuter-only college to a vibrant downtown residential campus (I’d say they’re about 10 years in on that one). Atlanta has a film industry now (I’m shocked too), Turner continues to thrive as a mostly-ignored outpost of the Warner empire, young professionals have places to live and work in-town, and yes, Atlanta is also home to some pretty hardened veterans of the past two tech bubbles. Like the Research Triangle, Atlanta is going to be a place to watch. Atlanta in 2030 will be amazing, if we can afford the global-warming-inflated air conditioning bills.

##

If I had to do this tommorow, I’d be in Oakland. You don’t reinvent the wheel if you don’t have to, and Oakland combines crumbling 50s era manufacturing neighborhoods with close proximity to Silicon Valley plus mass transit; call it a slam dunk, and someone is going to do this, maybe even accidentally, because honestly in the Bay Area there just isn’t any more room. Renewal Ahoy. (the same goes for Richmond, CA by 2020, and watch the North Bay SMART corridor right after that.)

If I had to do this in my own hometown, I’d be stuck, because property values on Marietta Street may already be too high, and too many of Atlanta’s other neighborhoods are way-too-residential (almost suburban in character, actually). [There is one excellent in-town industrial strip that I’m keeping tabs on though, just in case I win the lottery; sadly it’s also mostly active, and not nearly as ‘run-down’ as I might like]

If I had an opportunity to pick anywhere: New Orleans has the most potential — and also the most risk. Also NOLA lacks even a fossilized industrial base, and while I’m sure Tulane, Layola, and Xavier are excellent schools we’re missing a marquee Tech school here. Austin, Portland, Charleston, and a number of other Very Fine And Liveable Places™ present the same challenges: either a lack of comfortable density, graduate schools, tech and manufacturing base, or all three. Not saying you can’t launch a company out of Austin; many have – just that we’re missing at least one vital piece before “Silicon Hills” becomes something you have to google to even get the reference.

##

Innovative business needs a mix of hungry young professionals — but what do those hungry young professionals need?

Cheap places to live and eat. Things to do on a Friday Night and on Weekends. Engaging, challenging work. Opportunities to meet like-minded folks for all kinds of things — yes, dating, sure: but also those multitudes of social interactions that fall short of a hook-up but are even more important. It’s not enough to have a decent job and a nice apartment if you’re stuck out in the suburbs and have to drive 40 minutes to get to anything interesting. Believe me: Sprawl kills innovation just as surely as student debt does. (To date, I have not heard of any world-changing businesses that got their start because some innovator was stuck in traffic.)


[image source: http://www.flickr.com/photos/duncanh1/5991477252/, flickr user [Duncan]]

It doesn’t have to be Manhattan, or Hong Kong — when I talk about density, it’s more about being able to walk to a dozen places for lunch from your office (and cheap delivery from another dozen). Density is about knowing the copy shop is 15 minutes away, and the offset printer no more than twice that. Density is beers after work because you and your co-workers all walk, or take transit, and there’s only one or two who would have to call a cab. The problem has always been that once you build up a great, walkable neighborhood — with dining and entertainment options, plus a mix of small office and apartments — hell, everybody wants to live there. The rents go up. It’s a catch-22; after enough gentrification the artists, shops, and restaurants that made it such a nice neighborhood can’t afford the rent either.

Silicon Valley is beginning to suffer from this as well; despite all the advantages they currently enjoy as both a community and a tech hub, no one can afford the rent. (This is one reason I cited Oakland, above. The tech center in the Bay area is going to shift to where the young people can afford the rent.) “Rent” is just an indicator for larger costs-of-living, not to mention the costs of doing business. Even if you wanted to start a company “out of your garage” in the grand American tradition, a house with a garage will run you at least a half million out there.

“Comfortable Density” doesn’t have to be downtown — in fact, most downtown areas are too dense. After a few decades it’s all big business and big towers and maybe a conference center or stadium or three. Getting downtown is a chore. I personally like ‘rescued’ urban neighborhoods, either converted industrial or renovated historic. I would insist on mixed-use: it does no good to build a commercial-only district, because after 5pm they roll up the sidewalks and your neighborhood becomes a ghost town. The same goes for shopping malls, and commuter college campuses: these can be great social spaces, but everyone goes home before the sun sets.


[image source: http://www.flickr.com/photos/johnnyenglish/73875044/, flickr user David aka JohnnyEnglish]

A lot of small college towns have a great character — they can be really fun places to live, punching well above their weight class because of the mix of interesting people, fun and funky stuff to appeal to students, plenty of cheap places to eat, and a lower cost of living that attracts artists as well as the students. My ideal “urban campus” might try to capture a lot of small-college-town-downtown, just in a place where we have a mass-transit rail station to tie us into a much larger metropolitan area.

If we take several of these threads — renovating neighborhoods, mixed use, live-work-play, walkability, and access to a larger community — we can see the outline forming. And also, we have a test case:

Cleveland!


Want To Make A Creative City? Build Out, Not Up : 31 July 2012, NPR Talk of the Nation


[yes, that’s Cleveland: East Fourth Street Downtown. image source: Wikimedia Commons]

The place comes first, before you can make it “The Place” for… whatever. In the case of Cleveland, a project to redevelop old commercial and warehouse space into viable apartments had to be accompanied by a parallel development of restaurant and entertainment space: Not just a place to live downtown, but places to eat and meet, things to do, and stuff that’s open evenings and weekends.

That was well underway by 2009, and then in 2012 (at least according to the NPR Story) the tech firms were following.

Cleveland has a new downtown that is drawing new residents (and given the usual demographics, these residents are young and educated). Cleveland also has Case Western Reserve University and the Cleveland Clinic. Add on University Circle, plus a number of distressed urban properties ripe for renovation and Cleveland looks like a great place to build a tech incubator campus.

— except maybe we’re ten years too late. I’m not saying it can’t be done, I’m just saying that it’s going to be more expensive. (And if the added expense means corporate partners to finance the deal: the final result may be a little too ‘corporate’ for innovation.)

So it’s not just a matter of finding the next Silicon Valley, we need to find the next Cleveland.

##

There is a new vocabulary developing — Coworking, Hacker Space, Maker Culture, Fab Lab, Incubators, and Silicon everywheres

Many people have seen the need for bits and pieces, building a coworking space or a single project in isolation. These work, on their own, but if there were a concerted effort to build a “campus” then I strongly suspect the whole would end up as much more than just the sum of its parts.

The New Urban Campus

…3000 words in and finally getting to the topic. Fantastic.

“So What In The Hell Is Your New Urban Campus, Prof. Blind?”

I’m so glad you asked!

Like a college campus, it is more than just a couple of classroom buildings and an administrative office. To be a Campus, in addition to the “work” space, we need places to live, places to eat, open&green space, flex space for impromptu meetings and other ‘nonoffice’ office space. Campuses are comfortably dense, and walkable. Campuses are multidisciplinary and inherently multi-use. When I went to college, I had access to a wood shop and welding equipment in addition to the library and computer labs — and the college had a print shop, a newspaper, a bowling alley, even a small grocery store.

Some campuses have walls and gates and parking lots, but the best of them are certainly much more like neighborhoods: the campus empties out onto the city streets. Uses and cases blend into each other — a single sidewalk linking labs to classrooms to greens to dorms to offices to restaurants and bars and shopping.

So now follow me:

Let’s say we’ve identified a site — as stated, my preference is for urban re-use, so either converted industrial or renovated historic — and as the property is “distressed”, we’ve picked up the land and some bare-bones buildings on the cheap. Ideally we’d be looking at 5-6 story, low-rise architecture; not so tall that residents feel apart from the new neighborhood, but enough to give a sense of privacy to the upper floors, and also enough to pack the residents in. Ground floor, everywhere, is retail and restaurants, the upper floors can be a mix of office and appartments on a building by building basis.


[image source: http://www.flickr.com/photos/exothermic/3637093415/, flickr user Exothermic]

And this would be fine for a commercial venture: renovate, market, lease, and then cash out.

Let’s go one step further: imagine a “block”, a stretch of street a quarter mile long. (A quarter mile, for those of you who no longer walk city streets, is 400 meters: 4 football fields, or perhaps it might be easier to visualize if you imagine walking at a leisurely pace of 1.5 miles an hour; you could traverse it in 10 minutes. If you were window shopping, you’d walk down one sidewalk, then cross over and walk back in less than half an hour. If you were in a hurry, you could make an appointment one block away in five minutes.

As far as scale goes, I might want to develop both sides of a given street for two blocks, a half mile. If we can close this off to cars and restrict it to pedestrian and bike traffic only, so much the better. The ground floor everywhere along these blocks is retail: shops, restaurants, maybe a theater, certainly some bars and other entertainment venues. The next floor up (the 1st floor in Europe, the 2nd floor here in the States) would be additional office and retail: maybe an upscale shop, or 2nd-floor seating for a larger restaurant, or a dentist, a hair salon — or an agent to help you find and rent a local apartment. Above those two storeys would be the rest of the mix, offices and apartments, or even condos.

At one end of the strip, we’d have an Incubator: Shared loft office space above a copy shop, with a machine shop/3d printer/fab lab in the back somewhere for prototyping. Designate additional shop space for Artists in Residence – know a woman with a deft hand, a knowledge of welding, and some sculptural experience? I’d like to offer her a 6 month paid residency. If we have the space, heck, we might even have a full-scale offset printer on site, but with that said:

At the other end of the strip, we’d have a Big Ass Bookstore — no, not just a corporate big box, but something more of a scale with Portland’s Powell’s and keeping the spirit of Gaiman’s quote, “What I say is, a town isn’t a town without a bookstore. It may call itself a town, but unless it’s got a bookstore it knows it’s not fooling a soul.”

In keeping with the “New Urban Tech Campus” vibe, I might start with the technical bookstore use case I spelled out three years ago, but past that: a modern bookstore needs to be more, just to compete with internet options, so maybe the bookstore becomes it’s own mixed-use model: a coffee shop, sure, but also the local civic center, default meeting place, and Heart of the neighborhood. Indeed, with the bookstore as a anchor on one end, we’d be able to easily duplicate the development for another two “blocks” – we could go for a mile long stretch or just work radially, a block north and south, perhaps with other “incubators” or maybe even an actual school [OG Campus] somewhere in the urban mix.

##

This idea is actually being tried:

“You’ve probably heard something about the Downtown Project, the $350 million initiative spearheaded by Zappos CEO Tony Hsieh that’s aiming to bring a renaissance of sorts to Downtown Las Vegas, the old city center several miles away from the touristy Strip. But unless you’ve been there and seen it with your own eyes, it’s hard to really grok what’s happening there — the scope of the project is so grand and its aims are pretty ambitious.”
A Look At The ‘Downtown Project’ That Wants To Bring A Tech Renaissance To Old Las Vegas : TechCrunch, 28 March 2013

In all of this, it is perhaps most important to remember The Lesson Of Cleveland: It’s not an ‘if you build it, they will come’ proposition. First you start with the neighborhood, the place. You make that enticing. Make it livable, and a place the young professionals want to live in. You don’t build a tech park: you open coffee shops and restaurants. You offer living options that don’t involve 50 minute commutes. You follow the indy bands: Where can I hear a great band playing good music for under $10 (not including a bar tab) — and why can’t I live there?

The Lesson of Cleveland is that Yes, given a 10 to 15 year time frame and a patient developer: you can get out ahead of the trend and actually build a neighborhood that people want to live in.

So where can we find plenty of distressed real estate, a strong design community, a manufacturing base, and (in the suburbs, at least) some capital that might be tapped to build a New Urban Campus?

Detroit.

[It’s a shame about the state government up there though; otherwise This Might Already Be Happening.]



Focus, Passion, Knowledge, Application - and local applications

filed under , 17 October 2013, 22:55 by

As I personally experience epic changes, the blog will of course reflect that.

For the past five years and more, I’ve been focused (more or less) on bookstores, and bookselling, and books.

I love books. Books are my personal friends. That will not change, and will not ever change.

My passion for books—and bookstores—will not change no matter what my employment.

My willingness to provide free advice to corporate booksellers: things they might be doing, or trying, or changing? Well, that ends today. No More Freebies. However, as I explore the expanded issues of urban renewal, repurposing old spaces for new uses, gentrification, building both walkable retail districts and walkable multi-use neighborhoods, making cities Work:

Well,

I think that’s a rich vein of blog topics for me to mine.

Even if I am no longer directly employed as a bookseller I don’t see much else changing here at RocketBomber.

[*sniff*] “so I got that goin’ for me, which is nice”



Rate of Change

filed under , 8 October 2013, 14:44 by

There have been just 4 transitions in ‘publication’ in recorded history:

Oral to written word: http://en.wikipedia.org/wiki/Writing#The_beginning_of_writing

Note here: the invention and widespread adoption of writing in general is why we have a recorded history to begin with. So from 200,000 BCE or thereabouts until 3000 BCE – The ancient Atlanteans could have met and defeated both the Giants from Space and the Lizard People from the Center of the Earth, but since they didn’t write anything down, we just don’t know. Could an advanced society exist without literacy? I don’t know; the internet seems to do OK [*rimshot*]

— a strong master/apprentice system would work, and if one can get hands-on with any mechanical technology while an expert simultaneously explains it to you, then you can likely get by; European medieval tech reached some pretty awesome heights (clockworks, windmills, agriculture, architecture, small-shop manufacturing) while being 99.9% illiterate.

Aside: Atlantean High School Shop Class was probably awesome

Hand-written copies to movable-type/printing press: http://en.wikipedia.org/wiki/Printing_press

Movable type is great stuff, but the addition of the “press” made such an impression [heh.] that “press” is still a short-hand for much of the publication industry.

Note here: the basic tech behind Gutenberg (woodcarving unto blocks, or casting metal to make type; a vertically operated press to apply uniformly distributed force unto a flat plane) existed as early as the Roman Empire, 1st Century CE: the term “press” derives from the operationally-identical wine presses that had been in use for over 1000 years by the time Gutenberg sets up shop (records are sparse, understandably, but Wikipedia cites 1436.)

It might be best to compare Gutenberg to Henry Ford – neither was the sole inventor or innovator of the technologies they combined, but each engendered a revolution after that combination of several ideas birthed a single new production method that could be adopted and adapted by others.

I just handed someone a graduate thesis. [again.]

Vertical to Rotary:

Most of you were following along just fine right up to this point.

{sigh.} I’m striving to do this without puns (without additional puns) but I can’t: Rotary Printing was revolutionary. http://en.wikipedia.org/wiki/Rotary_printing_press

There are a number of ways to translate linear motion into rotary motion (the internal combustion engine springs to mind) but on an industrial scale, whether we consider wind- and waterwheels, steam turbines, or electrical motors — the ‘native’ form of many (if not most) power options is rotary. If one were looking to build an industrial-scale ‘press’, eventually you have to abandon the ‘press’ part, technologically if not linguistically.

The advantage of rotary is speed. The progress continues despite any obstacle (so long as we can still talk to each other) but the acceleration of knowledge is an integral function dependent on speed.

From an artistic standpoint, quality physical 4-color offset printing is amazing. Not an ultimate evolved form, but certainly an Optimal Expression, like marble and bronze from the Classical eras, or oil painting of the 1700s, or progressive rock from the 1970s.

I just handed someone a graduate thesis. [again.]

Rotary printing technology fueled the publishing boom from 1904 until 1992: faster was better, cheaper cost structures meant expansion into riskier (that is to say: more interesting) genres, empires of print were built and prospered until they got bought out by conglomerates, and it was all fun and games and profits until Internet.

Physical to Digital:

Until 1904, change took centuries. — oh, I suppose change has always been ‘rapid’, but scales of both time and geography were much more of an obstacle to Gutenberg in the 1450s than they are to the author-publisher or blogger of today.

In 1904, a major technological change was all-but-handed-to established publishing houses (and newspapers) who could use the innovations on the ‘back end’, unseen production to rapidly accelerate their other, primary function: namely, sales of the printed word to the public. The technology was quickly adopted before it could become disruptive. In fact, it’d be another 6 decades or so before an ‘indy’ press could evolve, though the pulps of the 40s and 50s were certainly a precursor.

[and the indy press of the 1960s counter-culture relied not on industrial scale but now-inexpensive ‘antique’ hand-operated printing tech — one more graduate thesis, you’re welcome.]

Digital is not just an innovation in the back-end production, though. Distribution and customer demand are also directly impacted; our modern internet is much more like the free-for-all book market of 17th century Europe combined with the proto-newspapers of the late 18th century.

[Graduate theses, two of ‘em in fact: pick distribution or demand. No more freebies, though — from here you’re on your own.]

##

Given that the ‘digital’ book revolution is only 42 years old at this point [Sorry, Amazon – you didn’t invent this market; you’re 36 years late to the party] I’d say, from a historical perspective—if not a business one—it is still way too early to call.

What we can expect from the new technology is that nothing is going to be the same again —

while also: there are certain aspects of writing that have been true since 1021 CE and the industry that has arisen since is just one more tool we, as authors, can use to be known — to get published.

From Atlantis to Homer to Horace to Gutenberg to Random Penguin.

  • From the origin of speech until 3000 BCE: hundreds of thousands of years.
  • From cuneiform to papyrus, from papyrus to vellum, from vellum to paper; millennia of technological progress: but the transition that matters is from scribes to print, 3000 BCE to 1450 CE.
  • Print fosters scientific discussion, and engineering, and math; and eventually patents, and corporations, and corporate competition. In 1904, industry returns the favor with industrial scale printing technologies.
  • And then, suddenly, digital and internet.

Hundreds of thousands of years, To thousands of years, To a single century, To a handful of decades, To Now.

Unless the whole of technology and civilization suddenly slows down: having everything change ‘overnight’ (once a year or so) is going to be expected. The hard part now is that technology is advancing faster than humans can accept and adopt it. The natural pace of change, on a human scale, is a single human lifetime.

How many changes can you accept in your lifetime? You and I will likely be more adaptable than some (who can’t program a VCR and don’t “do” computers) but even so: Our grandkids will come up with solutions to these technological ‘problems’ that seem alien to us.



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