Oct

26

Wider Still, and Wider, Shall Thy Bounds be Set

Filed Under Blog, eBook, Education, eLearning, Financial services, Industry Analysis, internet, mobile content, Pearson, Publishing, Reed Elsevier, Thomson, Uncategorized | 1 Comment

Today’s announcement of talks on a merger between Penguin and Random House has provoked a storm of pseudo-analysis of the “well, the big players must get bigger because they have to fight bigger battles with ever more powerful device manufacturers or online suppliers etc etc…” variety. I find this fairly unsatisfactory, and since the shrunken corpse of the UK retail book trade will undoubtedly seek to have this deal referred to the Office of Fair Trading on the grounds that the new combine will have a 25% market share it may be a good thing to think if there are better arguments for defending size other than negotiating power with Amazon or Apple. Here are a few:

* Most of the books published by both of these companies are agented. There is therefore no question about author access to markets here. The selectivity question comes down to who can pay the level of advances demanded and still market enough bestsellers to stay in business.

* The new driver in terms of author development is likely to be self-publishing, a remarkably democratic development in which huge progress is being made by start ups like Eileen Gittin’s amazing www.blurb.com, and by Amazon, but where neither of these players have much market share at all.

* The trend in media marketplaces seems to be towards size, clustered around the old market model, supported by shoals of start-ups, of which only a small percentage survive. If the key to survival for the old market model is cost-cutting and making infrastructure services work better and more cost effectively, then size is vital. And compared to the size of Apple, all of the so-called Big 6 consumer publishers would still seem fairly puny even if they were all lumped together.

* There is no brand loss here. Random House has little by way of consumer-recognizable brand, and Penguin, though it has a distinctive resonance for an ageing demographic who, like me, recall it as our Adult Education Institute, has little of that left in bestseller markets, where the real money is made.

* Other information and communication markets have survived consolidation. Law is the domain of West (Thomson Reuters) and Lexis (Reed Elsevier), yet a determined venturer like Michael Bloomberg has been able, via BNA, to get into the magic circle. And there is no real indicator that consolidation or the expansion to admit more major players has been good or bad for users, except that law has become a very advanced marketplace in terms of user technology and changing working practices.

* If this merger goes ahead it is likely to be followed by others. If this one is blocked in the UK does that mean that, for example (purely fictitious thought) the future merger/purchase of Hachette by Harper Collins/News as News  Corp seeks to make sense of the media businesses that it has now cut adrift from the film/TV/music mothership is also impossible? I doubt it.

* What is the alternative to merging these weakened businesses whose margins are in decline and who seek to blame the new world for being unfaithful to the practices of the old? They will decline further, there will be fire sales, redundancies and eventually closures. Pearson know all about this. Their focus is education, where they have a pre-eminent global position. Behind them trail the  three remnants of the former Big 4 of the textbook world of  1990. Harcourt are now with Houghton Mifflin, just moving out of Chapter 11 protection and still with no answer for the future, and McGraw-Hill Education, despite some good initiatives, is cast adrift by its owners into a separate company so that its margins do not pollute perceptions of McGraw’s bid for survival via financial services. Do Pearson bid for these ageing relics? Certainly not – no one has seen them buy a textbook for many a year. They buy cutting edge, tech progressive companies in growing markets with expanding margins. And they are very good at it indeed.

Here then are some of the arguments which I would present to the regulator, albeit in a rather less direct format. Then, during the coffee break, I would take him aside and remind him that book readers are a small proportion of human kind, though hugely vocal and opinionated (I, for example, am an avid book reader). This does not mean however that their marketplace should be immune from the pressures being felt elsewhere. Why, I would ask him, were these players not experimenters in the early days of digital change? Penguin bought Dorling Kindersley, the only publisher who could have been said to have followed the clues to multimedia in pre-internet days but threw away the learning experience. Both are now Johnny-come-latelys to the digital marketplace which they point to as a disruptor. Please, Regulator, let them have their way. Unless they discover Plan B they will deflate, separately or together. Do not stand in the way of market forces in very small markets.

And should this be a merger? Pearson should not neglect, obviously, the huge power of consumers as buyers of self education or of educational materials for children. But I doubt if this merged venture is a vehicle for that. Pearson may have a residual feeling of responsibility for the Penguin brand, which is the best there is outside of OUP in the sector. But sentiment should not stand in the way of liberating capital which can be used in further global educational developments. That is something for the Brits , who have few global brands  as resonant as Pearson is in education, to relish, and could be worth a shaky chorus of Land of Hope and Glory…!

Oct

23

The PM and the Hub

Filed Under Big Data, Blog, eBook, Education, eLearning, Financial services, Industry Analysis, internet, mobile content, news media, Pearson, privacy, Publishing, Search, social media, Uncategorized | Leave a Comment

The Story So Far (for slow readers and foreigners): One morning, three years ago, the then newly elected UK Prime Minister awoke determined to right a wrong. The previous day, in a meeting with the fabulous founders of Google, he had heard that it would have been impossible to start Google in the UK because of the UK’s intellectual property law regime. “Something should be done” turned into “writing a report”, as so often in political life, and the good Professor Hargreaves was duly appointed to do just that. After pouring down invective and contumely on the industry he was meant to be examining, the good Professor recommended a Hub, and everyone agreed. The good Richard Hooper, late of OFCOM the regulator, was then appointed to decide what the Hub was and what it might do. He decided that it had five roles:

The sensible Mr Hooper then retired from the fray and the really very good Dr Ros Lynch took on the role of implementing the Hub. She was appointed last month and now has 11 months in which to complete her work.

I have been thinking about this a lot recently. The four 25 year old professional users of information who “keynoted” the Outsell Signature Event in early October are much to blame, since their apparent indifference to the existence of copyright – and their confidence that anything they needed could be found on the web, and usually for free, reminded me forcefully that the PM, Prof Hargreaves, Mr Hooper, Dr Lynch and myself live in a different world from those young(er) people, and it is not necessarily the real one. So I decided to to get back to the source of all of this and see if I could not find what had been in the PM’s mind at the time and whether he thought we were making progress. And as it happens my thinking about the future has just about reached thought and gesture based computer interfaces, so I thought I would get around the Press office at No 10, avoid the difficulties of where to put one’s bike in Downing Street, and go straight for Mr Spock and the old Venusian mind transfer. And the old one’s are the best ones: within minutes I had caught the great man between speeches on the new British criminal justice regime, which he said would be “tough and intelligent” (like the Guardian I wondered if the regime of the past three years had been ” tepid and demented”), and very happy to answer my thoughts with his own.

I started where he had started. Did the changes mean that the next Google could be sourced in Shoreditch? Well, the changes had not taken place yet, and were unlikely to do so before the next election, but he wanted to hope that we were building a regime  which would mean that any enterprize could start within this Green and Pleasant and not be disbarred by an inadequate legal framework. But, I urged, IP is about Global Networks in Global Marketplaces, surely. The next Google will grow where there is cost-effective labour, the most favourable tax regime, a large domestic market and an abundance of entrepreneurial drive. Well, he thought, it was unlikely that George would let him tweak the tax base in this sector, and we were a small country, but surely I must admit that we were smart and entrepreneurial? And the Hub, a great British notion, would create a point of exchange in the network for trading IP which would become as important as the City in financial services, leaving the nations of the world once more gasping in our wake at the ability of the Brits to organize the world’s marketplaces for them.

I admit this thought set me back a bit, but I countered by asking why, in that case, Dr Lynch had been given a year, and a staff of one, and was currently based in a small office gifted by Pearson for the purpose. He thought it vital that the Hub was not imposed, or, in these straightened times, funded by government. It should grow from the industry and be funded by the industry. My thought was that getting the whole media and information sector to think together was likely to be a difficult task – getting consistent data on rights – probably a Big Data issue in itself – to plug into the back of the Hub would prove hard for some sectors, and almost impossible for others. Might this not be an area where more government leadership was required? I thought, but banished the thought, that the strategy might be to get the media sectors spending the next two years building their rights databases and fighting each other, so they could be seen to be to blame when the Hub’s likeness to the tower of Babel at length became clear.

He thought that this was unworthy. And his counter-thought really interested me. “So where would you put the priority, clever clogs” obviously matters. My thought was that the front end was what needed government support if industry was to get the back end done in time. The interface that changed behaviours had to have values. Free or discount purchases for registration and the ability to audit? Want those graphs from this market research report in your powerpoint – subscribe to our loader toolset. Want to use this lesson with that video and this music in your classroom? Use our special comprehensive school-rates education one stop clearance system (Hooper says schools currently need to use 12 clearance agencies in the UK). I pointed out the precedents in this education zone alone: teacherspayteachers.com in the US, now competing with the UK’s TES Connect working with the US teaching unions. Was that not entrepreneurial? We needed to re-invent the way users saw rights, and we needed to make rights protection relevant to the work of every individual as a creator of IP, and offer them real value to be licit!

But, sadly there came no reply. All I faintly recall was the echo of another thought, as though someone was whispering in his ear, “now this Savile scandal has broken you can attack the BBC on all fronts without fear” and the thought transfer process came to an abrupt end. I will try to re-connect, but, in the meanwhile, these are make or break months for the Hub.

 

 

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