What Role does Imagination play in Modern Lives?

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We have a new writer joining the blog, Meaghan Gray. This is her first article and she’s very young, so please be kind.

The Evolution of Technology and How Technology is Influencing Us

Over time, human understanding and development of technology have grown exponentially. From homo habilis and his stone tools to Steve Jobs and his iPad, technological advancements have been a key driving force behind human evolution. As a species, we are innately inclined to wonder at and attempt to improve everything around us. Our imaginations have brought us to a world where technologies previously dreamed of in Sci-Fi films are now available globally.

The radio, television, and, now, personal computers have brought information into our homes in such a way that institutions like libraries and bookstores are quickly losing patronage. A quick Google search will unveil thousands of articles from Wikipedia, news websites, and other sources in an instant. Television and film provide endless hours of easy entertainment with little to no participation from the audience.

If society is so rife with machines that think for us, why would we want to think for ourselves?

With the recent occupy Wall Street movement, some may believe that people today are making significant strides forward socially; however, only a few people are involved and they hardly have a common purpose beyond expressing their general disappointment. Most of us are not inclined to hold to our beliefs so strongly that we would protest to uphold them; perhaps that is the result of not educating ourselves enough about our own beliefs. Most people in the western world receive much of their beliefs and information from radio, television and movies, allowing little time for imagining much else.

The Growing Role of Imagination-Deficient Mediums

Visual stimulus has been an enormous factor affecting human imagination. In an online poll, 66% of voters rated sight as their most important sense,¹ clearly indicating that most people value their ability to see strange and beautiful and interesting things above everything else. The creators of big budget films and television shows truly understand our love for images, often painting rich tapestries of lighting and make-up and camera angles and famous faces and explosions. Critics and average viewers alike continuously agree that the majority of features that focus mainly on the visual wow-factor usually fall flat when it comes to character and plot.

The desire to read epic or romantic or hilarious tales is being siphoned into the film and television industries as well. The two industries’ combined revenue³ casts a large shadow over the book industry’s relatively paltry gross. Even stories already brought to life visually within comic books and graphic novels, such as The Green Lantern and Watchmen, are being shortened and modified for the screen. Despite the limitless budgets of our imaginations and the depth of stories within books, people are increasingly choosing movies and TV shows over novels.

Reading a book for the first time and imagining what the characters look like, how they act, where they are, what they are doing, is an experience unmatched. When movies and television shows cast one individual to a role, design one interpretation of the landscape, and shorten and modify key points within the plot - they permanently affect the way that the viewer will see every aspect of that story. Our imaginations are nullified by the films, thus we do not bother using them at all.

The persistent image of Daniel Radcliffe as Harry Potter keeps readers from properly imagining his wild hair and striking almond-shaped eyes. Adaptations take away our ability to imagine stories as we were meant to imagine them. Some may argue that some of the most profitable modern book franchises of today would not exist without their film counterparts. To them I say that no modern film franchise today could exist without books.

The high number of book re-interpretations by film and television creators shows that they are fast running out of fresh ideas. The audience has become so jaded and sick of the same-old plots that the industries have been forced to drastically change their formula and go back to books. Films and television shows now often pay overly aggressive homage to older versions of themselves or provide a constant stream of Family Guy-esque shows. The romantic and fantastic seem to have been lost.

Where is the Quality Control?

Our endless supply of solutions to problems (apps, sites, quick fixes) have perhaps taken much of the mystery from our lives. With Facebook telling you how your friends are, Google answering every query, and Twitter alerting you of the thoughts of everyone in the world - curiosity is usually cured instantly. Why imagine when you can mindlessly tweet and follow?

As a culture, we have virtually no boundaries. With no filter between thinking and posting, people across the world tweet their every thought. This behaviour has led to a society in which people generally do not think before they speak, nor do they listen to what others say. A great example of this behaviour can be found on any of The Real Housewives programs. The women on these shows screech and scream at each other about respect and class constantly. Every sentence each woman yells contradicts her last. Despite the absurdity of the content, these shows are hugely popular, with eleven versions internationally. While these “reality” TV shows may not be an accurate representation of the entire world’s population now, they are the shows that are shaping the minds of our youth. This behaviour allows no room for trying to understand what we do not understand and to imagine what we do not know.

The lack of filtered content in our society has affected our imaginations in other ways. While the number of patents and products created each year is massive, the quality is hugely lacking. The Internet and excessive lending allow people to have an idea and execute it simply without much forethought. Like the film and television industries, others are running out of ideas and creating absurd and unnecessary reimaginations of projects instead of focusing on new content.

Imagination is being kicked out, but will it turn out to be irreplaceable

We are replacing the uniquely human tool that is our imagination with another uniquely human tool, technology. We are constantly able to create new versions of things, but nothing seems to be genuinely new. Perhaps this is because outstanding things are truly rare, but we feel entitled to a new, exciting, and funny TV show, movie, or video game every day. The world is not populated by seven billion geniuses. It is rare to have a great film, just as it is rare to have a great book; there was not a classically brilliant novel released every month for the past several hundred years.

True beauty is something to be wondered at. It is something that we should spend our lives imagining and we should be bowled over the first time we see it. Instead, we have hundreds of books, films, songs, paintings, sculptures, and so on that are beyond fantastic. The best work of the past centuries is easily accessible. We have become accustomed to the wonderous; thus, we expect it. However, we gloss over the amount of time and effort required to create such masterpieces. We gloss over the imagination and effort needed to create masterpieces.

The want for instant gratification and the death of imagination at the hands of technology will eventually kill every entertainment industry because we cannot produce at the rate that we desire. We definitely can’t produce if we lose our imaginations. We must re-learn how to use our imaginations to see old stories in new ways, to draw inspiration from the past, and to create a brand new world that is the product of our imaginations and not of our tweets and status updates.

What do you think?

Is technology and a focus on instant gratification eroding away our imaginations?

Footnotes:

1. P. Balaram, Current Science 8:1, “Smell, Science and the Press” 5.

2. The Numbers “http://www.the-numbers.com/market/”.

3. Rikard Bandebo, American Business “http://american-business.org/2758-television-broadcasting-industry.html”.

Is the Kindle’s free 3G wireless advantage turning into its Achilles Heel?

The Kindle revolutionized book delivery with its 3G wireless powered free 60 second downloads.

There really isn’t any other way to put it. The wireless delivery turned your Kindle into a bookstore – one that was literally in the palm of your hand, open 24/7, and delivered your book purchases instantly.

There was a slight downside. The use of 3G meant there was a bandwidth charge. With a $9.99 book, which was usually 500 kb or less in size, the bandwidth cost wasn’t a big deal. It was just 7 to 8 cents – less than 1% of the cost of the book. Even if you assume 4 total downloads (2 downloads each on 2 separate Kindles sharing an account) it’s just 30 cents and is just 3% of the total cost.

Note: We’re assuming a bandwidth cost of 15 cents per MB of 3G data. It probably costs Amazon between 10 and 15 cents per MB.

Bandwidth Costs become a huge issue for everything other than books

Contrast the bandwidth costs of downloading different items -

  1. A 500 kb book at $10. Assuming 4 lifetime downloads we get bandwidth charges of 30 cents. Just 3%.
  2. A 500 kb indie book at $1. Assuming 4 lifetime downloads we get bandwidth charges of 30 cents. Now, it’s 30%. That’s probably why Amazon gives only 35% royalties for books priced below $3. Note: Another factor might be a desire to keep book prices above $3.
  3. A 2 MB comic at $10. Assuming 4 lifetime downloads we get bandwidth charges of $1.20. That’s 12%.
  4. A blog subscription that’s 3 MB of data per month. Assuming only 1 lifetime download we get a cost of 45 cents. That’s still 45% of the $1 monthly charge.
  5. A newspaper subscription that’s 10 MB of data per month and costs $15. Assuming 1 lifetime download we get a cost of $1.50. That’s around 10%. The cost probably goes up a lot if newspapers try to add lots of pictures.
  6. A 3 MB game. Assuming 2 lifetime downloads just the data costs are 60 cents. That instantly means that a game with lots of images like Warlock or Dusk World can never come in at $1 or $2. If it were priced at $2 just the bandwidth charges would be 30%.
  7. A 2 MB magazine with lots of images. Assuming 1 lifetime download we get a cost of 30 cents. If the magazine is $2, then 15% is instantly going to bandwidth costs.

3G wireless downloads were a magical, low-cost solution for a $10 book - because the book was just 500 kb in size.

3G wireless downloads turn into a bit of a nightmare when we consider content that’s large in size or low in price.

People everywhere are noticing this. Publishers Weekly talks about the struggle for comic book publishers (found via Teleread) -

… while there is a nascent market for comics on e-book readers like the Kindle and B&N’s color device, the Nook, Amazon’s recently introduced digital “delivery fee,” charging publishers 15 cents per megabyte to transfer a book’s file to the Kindle, has forced some comics publishers to rethink using the Kindle platform.
 
While novels are text-based and unlikely to run up a delivery charge much over $0.02, graphic novels have a much higher bandwidth, and could be forced into a lower payment/royalty rate and higher list price because of their file size, directly because of these Amazon fees. 

Publishers Weekly mentions there is a list available from Amazon that suggests minimum pricing for books based on file size -

  1. A file over 3MB can’t be priced below $2.
  2. A file over 10 MB must be priced at $2.99 or higher.
  3. This is in addition to the requirement that you have to price a book between $2.99 and $9.99 to get a 70% cut.

This is all news to me. However, it does make sense. Amazon must pay for bandwidth used - it can’t really afford to sell 10 MB books for $2 if the bandwidth charges for a single download come to $1.50.

Things are exacerbated by the fact that customers have no concept of bandwidth charges

The real dagger is that all this is invisible to Kindle owners.

No one, that includes me, makes the mental jump that the content (book, newspaper, game) has to pay for the cost of bandwidth. We’re used to paying for the data separately. We compare Kindle content prices with content prices outside the Kindle Store - where we are paying for the data separately.

If you get a magazine subscription online you tend to contrast that with the Kindle price – without factoring in that you pay a separate fee for your Internet connection. If you get a $1 app in the iPhone App Store you don’t factor in that you pay AT&T for a data plan.

There’s no way Kindle content can be competitive – unless it’s really small in size.

Does Amazon even realize this is a problem?

That might seem like a strange question. However, it’s worth asking because Amazon’s current approach seems to be to fix a symptom and not the actual problem.

What’s the real underlying problem?

That there’s a 15 cents per MB data charge.

What is Amazon fixing – Not sure. It just seems that Amazon is passing on the bandwidth charges to content creators and asking them to factor that in when pricing their content. That’s not a solution.

Neither is it a solution to ‘educate’ Kindle owners about data charges. No matter how much you tell them about it, they won’t like it. You can’t really say – You pay $20 per month for the Internet. Just divide that across the 100 things a month you download and turns out that it costs you 20 cents per download.

With the Kindle the download charges show up in the content price and that makes content seem more expensive than it really is.

The real solution would be to eliminate the download charges.

Basically, content could be clubbed into two categories -

  1. All content where download charges are less than 5% of the price. This content would use the ‘free’ 3G. 
  2. All other content. This content would come with the option to be downloaded via your PC. In return you would get lower prices. You could still get this content via ‘free’ 3G, for a higher price that included download costs.

Of course, we haven’t looked at one very important option.

Does WiFi provide an easy solution?

I think it does.

In fact, we could look at every scenario where there is a high data charge, and figure out how to use a combination of WiFi and PC downloads to eliminate the download charge. Please note that when the download charge is less than 5% of the price we would just default to 3G.

  1. Kindle WiFi owners – Should never have to pay any download charges.
  2. International Kindle Owners – Should have the option to use WiFi or PC download software. Then they would no longer have to pay the international premium.
  3. Subscriptions – WiFi option, PC download option. Let users plug-in their Kindles to their PCs - the subscription would be downloaded via download software and would be transferred over to the Kindle.
  4. Large Size Books – WiFi option and PC download option.
  5. Apps and other content. WiFi only.

It’s a choice between two inconvenient options -

  1. Make everything 3G by default. It’s easier but everything costs more. In some cases, a lot more.
  2. Make everything that’s not small in size a WiFi download or a PC download. It’s not as convenient but it’s cheaper.

Let Kindle owners make the call. For every person who’s willing to pay $3 per month for automatic newspaper downloads via 3G, there will be a few people who’d rather choose WiFi or PC download and not pay AT&T that $3 per month.

Amazon has to figure this out quickly

The download charges are leading to a lot of problems - higher prices for content that has a larger file size, higher prices for anything that has images, content providers having to choose between raising prices and skimping on images, Kindle owners feeling prices aren’t as good as they could be.

It all points to one single underlying problem – AT&T’s ridiculously high download charges. 15 cents per MB is $153 per GB.

The high download charges are something only small-sized $10 books can afford. For everything else in the Kindle Store the download charges are an albatross. The only effective solution is to get rid of download charges or bypass them.

Why should users and content creators be paying 15 cents per MB to AT&T? If WiFi and PC downloads are available, why not take advantage of them?

Finding a Direct Path to Customers (eBook Store challenges)

The Kindle and the Nook come with built-in stores. This might seem a bit of a bother, if you want to sell ebooks to Kindle and Nook owners - However, it’s far more than that.

iPhone and iPad allow reading apps – But they don’t allow eBook Stores to be embedded in reading apps. This seems negligible – but it’s not.

Let’s explore why finding a direct path to customers is the biggest challenge eBook stores face.

Kindle locks out most other ebook stores

Amazon has the smartest strategy when it comes to rival eBook stores -

  1. It doesn’t allow ePub. 
  2. It doesn’t allow ANY DRM’ed format - other than its own.
  3. It doesn’t allow any generic eReader apps.

That leaves only the Kindle Store, and eBook stores that will sell DRM-free ebooks in one of the formats supported by the Kindle.

How do you tap into the Kindle owner market?

You go to the browser, or you go DRM-free.

The first is difficult because the Kindle’s browser isn’t the most straightforward. Imagine trying to run an eBook reading website inside of that. Google has the right idea – It just doesn’t have the required browser capability on the Kindle.

Going DRM-free is something most Publishers aren’t going to buy into. We only have a few smaller Publishers, like Baen and O’Reilly, trying it.

For the moment, the answer to ‘How do you tap into the Kindle owner market?’ is – You don’t.

Nook allows ePub stores – But You have to Fight the Power of the Default

B&N plays ‘open, but not really open’ very well -

  1. The default ebook store on the device is the Nook Store. It provides 60 second downloads (via 3G or WiFi on Nook, via WiFi on Nook Color). It’s ALWAYS the path of least resistance.
  2. In theory – every ebook store has a shot at Nook owners, provided it uses ePub. In reality – B&N just has to be as good as every other store, or not too much worse, and it will always win out, due to being the default option. 
  3. B&N has an upcoming Nook App store, and it isn’t going to let Kindle for Android, or any other ebook app/store, in.
  4. Any books you buy from the Nook Store, have special DRM on top of the Adobe DRM. Which means that you can’t read them on another eReader. So you’re locked into staying with a Nook. B&N does exactly what Kindle does – it locks you in via the books you buy. It just manages to do this in parallel with supporting ePub.
  5. B&N segregates books you buy from Nook Store, from all other documents. So, for books you buy from other stores, you can’t do things like placing them on your home page.

Add up all the ways in which B&N makes it inconvenient to use any other store, and the smart way it creates lock-in by adding its own DRM on top of Adobe DRM, and it becomes extremely tough to compete with the in-built Nook Store. B&N’s pretend-open system is close in effectiveness to Amazon’s totally closed system.

How do you tap into the Nook owner market?

There’s the tantalizing prospect of simply providing DRMed books in ePub format. However, you have to make your store more convenient than the Nook Store. Therein lies a big problem – Nook Store is on the device itself, and there’s no way your store can get on the device.

You could hope Nook owners root/hack their Nook, and get your eBook store’s Android app. You could price your books lower, and hope the lower prices get Nook owners to buy books from your store. However, those are both long shots.

All B&N has to do is ensure Nook Store is as good as your store, or close.

There’s no clear answer for how you could tap into the Nook owner market. Cutting prices, introducing a new paradigm like free books, trying browser-based books – These are all things worth trying, and they are all things that are quite likely to fail.

Kindles and Nooks might not be worth fighting for

If a user buys a Kindle or a Nook, and you run an ebook store, you might as well consider that reader a lost customer.

For Kindles, there’s no way in.

For Nooks, the easiest path leads to the Nook Store. You’ll have to expend so much effort to overcome that natural advantage, you might not be able to make any money.

Which leaves us with all the devices that do let in ebook apps and ebook stores.

Being an eBook Store on an iPhone, or Android Phone, or another semi-open device

It’s important to understand the context.

All these devices are not letting in your ebook store because they are open. They are letting in your ebook store because they want people to feel there are lots of options. Which will make more people buy their device.

So, they let you in, and then they set-up their own stores as the default option. You again have to fight the power of the default. In addition, you have to fight Kindle Reading Apps and Nook Reading Apps.

Does it sound like fun yet?

Since the App Store providers want to make sure that you stick to doing your role (providing choice so that people buy their device), and don’t steal too much of the profit, they put in restrictions such as no in-app purchases unless you give them 30%.

Which means – Not only are you competing against the default option, you also have to send your users to the browser to buy books. That’s two strikes.

Luckily, it’s possible to work around these two restrictions. Kindle for iPad, Nook for iPhone, and other apps like Stanza have shown that it’s possible to work around these restrictions and succeed.

The Tiny Window of Opportunity

It’s a tiny window of opportunity - but it’s there. If you can fight off the power of the default, and the inconvenience of in-browser purchases, you can sell your ebooks to all these casual readers buying phones and tablets.

the simple option – Build Your Own eReader

Strangely enough, the simplest way to find a direct path to customers is to create one yourself. Build your own eReader.

Take Kobo. It might not have the fanciest eReader – However, it’s managing to sell it to a decent number of people. All those people are then presented with the Kobo ebook store as their #1 option. It’s actually a very decent store, and it finally gets a fair (well, slightly more than fair) chance.

Compare that with the headache of trying to do one or more of the following -

  1. Getting browser-based books to work on the Kindle.
  2. Convincing Publishers to release DRM-free books.
  3. Competing with the default Nook Store on the Nook.
  4. Going with other devices, and a user experience where books are read in an app, but bought in a browser.
  5. Going with other devices, and fighting off the default store, the Kindle Reading App, and the Nook Reading App.

It’s so much simpler to sell readers your own eReader, and ensure your eBook Store gets a fair chance.

Stumbling onto Kobo, reviewing its threat to Kindle Store

The Kindle and the Kindle Store co-exist only for each other. They are like two childhood friends who shun the company of others. No other eReader, and no other eBook Store, is let in – although a few tablets and phones are allowed to partake of the exquisite joy found in conversing with the Kindle Store.

In the world of eReaders, outside of the little Kindle clique, lie a variety of stores and eReaders that mingle freely. Amongst that milieu one store has begun to attract quite a lot of attention.

Stumbling on to the Kobo Store

Yesterday, the Kobo Store had a one-time use 50% off coupon – a coupon you could use on one out of a few hundred books. Today, it has a 20% off coupon valid on 40 or so books.

On top of these offers is this enticing claim -

Between 13th and 26th December, spend over $35 and get a 45% off coupon. Spend over $25, and you get a 35% off coupon.

Let’s get this straight – First, there’s 50% off, then there’s a coupon for another 35% off?

That does sound very compelling.

There are also a few other things working in Kobo Store’s favor.

Wonder of wonders – The store isn’t restricted to the US. Nor does it make things difficult – In fact, the store is reasonably easy to search through. Plus, unlike the Nook Store, its books work on any eReader. Finally, it uses the mildly awkward Adobe Digital Editions to authenticate books for devices, and not custom-made, super-awkward software like Sony Reader does.

It’s also a civilized store – not asking eReader owners to do anything untoward like enter special passwords.

3 Magic Words

Bought a book. Now reading it on the Nook Color.

There was one magic moment. The book bought from the Kobo Store had this in the ‘Book Info’ section -

Permissions set by the publisher

Allow viewing: on any device.

It’s such a strange contrast. My Kindle books are permanently welded to the Kindle, and to Kindle Reading Apps. My Nook Books are similarly intertwined with B&N’s offerings. Yet, here is a Kobo book that doesn’t discriminate.

3 magical words - on any device.

All it takes is one purchase

After that one purchase everything changes -

  1. Kobo has my credit card information now.
  2. Reading a Kobo Store book makes me a Kobo customer.
  3. The realization hits home - There is an option other than hacking Nook Color to run Kindle for Android. 
  4. The 3 magic words are now stuck in my subconscious.
  5. It becomes apparent that the Kobo Store is pretty decent. Prices for some books are higher than Kindle Store, and the range is less – But it’s decent.

That 50% sale paid off with this eReader owner – Kobo becomes the default store powering my Nook Color.

The Nook Store won’t even let me buy books. My US credit card has a Canadian address, and that’s not good enough for B&N. Understandable – given all the profit they’ve been making recently.

Kindle Store won’t let me read books on Nook. Hacking an eReader just to run Kindle for Android is a bit extreme – especially when Nook Color works really well as is.

Kobo Store is a valid threat to Kindle Store

Kobo eReader lacks punch. It also lacks personality, features, infrastructure, and any hint of excitement. It’s the type of device Steve Jobs has nightmares about. He probably screams – Not a Big Blue Button. For the love of God. Off with his head! - in his sleep.

Yet, Kobo eReader has the support of a Kobo Store that is quite impressive.

Here are a few of the Kobo Store’s advantages -

  1. The books work on any eReader that supports ePub.
  2. You can take your library with you if you switch devices.
  3. It works internationally. Not sure which countries other than US and Canada.
  4. It’s very aggressive with discounts and coupons.
  5. It’s managed to incorporate a lot of free books from Smashwords.
  6. It’s a decent store – easy to navigate, clear and clean-cut, beginning to get user reviews.
  7. There are good Kobo reading apps for other platforms.

Perhaps most importantly, it doesn’t make any big, huge mistakes. There are some horrendously priced books – However, that has more to do with the kind and benevolent Agency Model.

Amazon has no option but to sell ePub editions to eReader owners whose eReaders support ePub

Here’s a suggestion from K H Acton -

What if Amazon SOLD ePub books along with its proprietary format, but limited the Kindle to the proprietary format. Then it could keep Kindle customers using the best ebook store around AND open the best bookstore to the ePub readers.

It’s an absolutely brilliant suggestion.

Look at the threat Kobo Store poses, and the suggestion is not only brilliant, but also timely. It would be a proactive move that would prevent Kobo Store from eating up the entire non-Kindle market.

  1. With Sony’s terrible Reader Store, and B&N’s ‘ePub that works only on Nook’ fiasco, the Kobo is the clear #1 choice.
  2. If Amazon lets that status quo remain, soon Kobo will be making a ton of money from eBook sales.
  3. That would put Kobo in position to mount an all-out attack on Kindle’s lead – in both eReaders and eBooks.
  4. If Amazon sells books in ePub format, to eReader owners whose eReaders support ePub, it becomes the best eBook Store for them instantly. That prevents Kobo from being their #1 option.
  5. It would curtail the Kobo threat - Before it became a huge one.

Amazon can ill-afford to let a single rival store become the eBook source for all non-Kindle devices. Kobo is threatening to do that with its excellent, ‘works on any device’, ebook store.

Will Amazon make a proactive move to fend off Kobo?

Kobo Store is likely to grow into a big and dangerous threat to the Kindle Store. You could argue that Kobo isn’t yet a real threat – that Amazon should wait 2 years to see if Kobo or another ePub store manages to unite the ePub hordes.

However, there’s no point in launching ePub support for non-Kindle eReader owners after another store has established itself. The real value would be in making the move now.

Amazon has shown a tendency to let its rival eReaders and rival stores make moves first – PDF support, books in the browser, touch. It waits for the move, measures/estimates the impact, and then counters. With Kobo, it’s a different situation – Kobo is wrapping up customers and becoming stronger. Amazon needs to be proactive – It needs to stop the rise of Kobo before Kobo gets to the stage where it turns into a monster.

What might Kobo do to become a bigger threat to Amazon?

Kobo can actually do a lot -

  1. Match Kindle Store on ebook prices across the board.
  2. Release an eReader that looks like it’s at least trying.
  3. Target Nook and Sony Reader owners more aggressively.
  4. Keep expanding its international reach.
  5. Find a way to sell to Kindle owners.
  6. Release a Kobo Tablet.
  7. Target Nook Color owners very aggressively.

Perhaps the biggest opportunity for Kobo is in targeting all the new Nook, Nook Color, and Sony Reader owners. Kobo’s already good enough to become the eBook store of choice for non-Kindle eReaders – It just has to get the word out.

The threats to Kindle and Kindle Store keep multiplying

Kobo is the latest addition to a long list of significant threats to the Kindle.

Nook Color is currently the single biggest threat to the Kindle – ever. Nothing else is even close – Nook Color makes the iPad seem like an overweight sumo wrestler trying kickboxing.

Kobo Store seems a distant threat – However, it’s almost as dangerous as Nook Color. Kobo Store can sell books to every single non-Kindle eReader. It might end up being the one eBook store that rules the entire ePub world.

The other threats we keep hearing about. Yet, they aren’t the ones Amazon should worry about first. Nook Color and Kobo eBook Store will end up being the biggest challenges for the Kindle.

A few reasons NewsLabs is a worthwhile idea

There’s a news start-up called NewsLabs (born at YCombinator) that was among a bunch of start-ups introduced at Demo (or perhaps it was another start-up launch conference). Media Memo are talking about NewsLabs and it’s worth taking a closer look.

Reasons that NewsLabs is a worthwhile idea

The Collective Idea

It’s akin to a blog network where each blog is an individual journalist’s work and brand. The real power is the collective aspect -

  1. Successful News Journalist A can send his readers to successful journalist B or even to upcoming Journalist C. 
  2. There are economies of scale – hosting, coding, marketing, design, and most other costs.
  3. Specialization and lessons can be shared.  

There is an incredible amount of power in bringing together a few hundred very good journalists and linking them to each other.

Journalists can focus on their core competency and build their brands

The collective idea and the support of NewsLabs means that journalists can focus on creating great content -

 The idea is that the writer writes and NewsLabs does everything else: Ad sales, “community management,” promoting the work on Google, Facebook, Twitter et al, and so forth.

Being able to focus on their core competency and the opportunity to build out their own brand gives journalists a lot of freedom and motivation to create quality content.

On their end NewsLabs have to figure out some way to become more than just a producer of journalistic brands that newspapers snap up or that leave for their own sites.

The Community Idea

If NewsLabs takes this in the direction of KK’s 1000 True Fans and let’s the journalist’s true fans financially support the Journalist this could be all the revenue they need.

The other aspects are not very efficient - it sounds great to build social networks and forums and let people socialize but people don’t spend money on either.

They said in an interview that they have 40 journalists registered and another 100 interested.

Taking Journalists with proven experience and Focus on Quality

It’s good to see that the first three journalists they have are all very experienced. They also seem to be focused on quality journalism and quality content and not just mirroring the content factories.

Founders have technical skills

Both the CEO and CTO have solid technical skills. It’s essential because otherwise news companies just get fleeced at all levels by technically adept companies.

Quick summary

There are three very good ideas here – Journalists as Brands, Brands organized into a Collective, Focus on Quality.

Some of the obvious candidates to be added are – Selling Content and not something else, 1000 true fans, Customers of Good Intent, Choosing Good Channels, Setting themselves apart.

It’s a model that could not only work but also scale up remarkably well.

Unfortunately, there are currently a lot of flaws in NewsLabs’ model. Mostly to do with the fact that NewsLabs are still too tied up with models that worked in the past and models that never worked.

Reasons that NewsLabs might fail

They want to make money off of things other than content

Their focus is on making money off of things like Job Boards, Advertising, and making money off of the Brand.

This is a really flawed idea we’ll discuss later – Why give away what people come to you for and what they are willing to pay for?

At some level it’s depressing that even News Start-ups don’t think their content is worth enough to ask customers to pay for it.

To make things worse want to sell their content to news sites – which is madness. That content is their identity and differentiator.

Infinite competition and lack of differentiation

Media Memo point this out -

My concern is that the help NewsLabs says it can offer doesn’t solve the real problem:

            The economics of Web publishing are brutal, and in most cases they only work on a Google (GOOG) or Yahoo (YHOO)-size scale.

Media Memo are right – The Web is brutal and there is a lot of competition.

It’s basically two points – move away from the web, don’t position yourself as news content. Let’s start with the latter.

Having News in the name and being ‘news’ oriented

The biggest mistake any content company could make is position their content as zero-value news.

Breaking News is better than News. Editorials and Op-eds are better than news. Analysis and Reports are better than News.

Anything is better than news which has been devalued to zero.

Lack of adequate funding and they’re taking too little

It’s a start-up and it’s going up against giants. They’re taking only 20% of revenues when the revenue is amorphous things like advertising and branding related things and job boards.

How are they going to survive?

They should go find a billionaire who’s willing to give them $10 or $20 million to test out their idea over 5 years. Not VCs and other profit-driven entities who just want to make money and don’t care about what, if any, impact the survival of journalism has on democracy (or whatever reasons journalists have for being overworked and underpaid).

Plus journalists are desperate – Take another 30% and put that into building great infrastructure which helps both the company and the journalists.  

It’s focused on hiring journalists

Along with the good (experience, skills, committment) they get the bad – All Journalists are trapped in the failing business model of newspapers.

All those beliefs are going to be impediments as they try to work with new models. Even journalists that have worked for 3 to 5 years will have lots of trouble letting go of what they know. The ones who’ve worked for 20 years are going to really, really struggle.

The perception (and perhaps the reality) that laid-off Journalists are being targeted

If it’s about branding and quality they need to hire the very best.

The whole giving away content and making money off of something else mistake

Let’s consider a few of the models that have worked for newspapers and news sites -

  1. Selling content.  
  2. Giving away content and selling ads in print. 
  3. Giving away content and selling ads online. 
  4. Selling content and ads and classifieds.
  5. Giving away content and selling Classifieds.
  6. Selling breaking news and breaking financial news.
  7. Selling exclusive analysis and in-depth reports. 

There were always one of two key things – selling content or having a captive audience that had no option other than to consume what was attached to the content (classifieds, advertising). With the Internet the second is gone. That only leaves content.

There are three big mistakes news sites make when they try to make money online -

  1. Assume they can trust another company or even users to pay for what content is worth.  
  2. Assume that they can no longer sell content. 
  3. Assume that users MUST or WILL do something in return for the free content they get.

Users are coming to the site for content. The entire Internet is built on content. Quality content is what drives everything - even low quality content is propped up by quality content.

Newspapers have to start looking at sites that actually make money off of content and the ways that money is made from content. Very, very few of those models involve giving away content for free.

If you can’t sell your main product you need to find another line of work

Newspapers and news sites and journalists need to face the grim truth – If their news content isn’t good enough to get users to pay for it then they need to quit.

It’s very simple -

  1. Create great quality content and sell it.  
  2. If you can’t get people to pay for your content – Quit and do something else. 

Quality content costs money to make and sooner or later people are going to realize that and start paying for it. By choosing a ‘content has no value, let’s trick users into something else’ model news organizations are killing themselves and the value of content.

It’s best for everyone if all the ‘give away content’ companies die out so we can move to a ‘pay for quality content’ model sooner.

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