The Washington Post: Bezos’ Legacy

by Gary Schwartz  (06/08/2013)

The newspaper business is tough.  Over the weekend the New York Times Company sold The Boston Globe and its other New England media properties to John W. Henry, principal owner of the Boston Red Sox for $70MM. It bought the asset in 1993 for 1.1BB.

When Jeff Bezos, the CEO of Amazon, agreed to purchase the Washington Post newspaper (affectionately called WaPo by its readers) for $250m, was he buying a viable business or and the glory of 80 years of traditional media leadership.

With a net value of 20BB, Jeff Bezos can buy many things. Does he see this as an extension of his internet empire or as a way this new-age business genius can secure an old-world trophy and a media legacy?

Amazon Publishing, Amazon Studios  . . .  but this is different

Bezos has taken on incumbent media business before. He has single-handedly changed the publishing world. Amazon Crossing, Amazon Publishing’s imprint acquired Pötzsch’s Hangman’s Daughter series and translated it from German into English and launched it in audio and print. The series became a #1 bestselling Kindle book and in June 2013, the book reached the platinum one million copies sold.

Amazon Studios is now developing movies and TV series, and recently announced five new video-on-demand program pilots. It has started a crowd sourcing campaign soliciting 2-15 minute long shorts to pitch a feature-length film idea. Amazon Studios evaluates each submission, and will seed some of the submissions with $10,000.  The studio then grooms the development funding successful scripts through to the theatrical release incentivizing film makers that get their ideas from paper to the silver screen $400,000.

White-Glove Legacy

But the Washington Post is different. He did not purchase the Post’s other online assets: Slate magazine, TheRoot.com, and Foreign Policy. The flagship Washington Post newspaper purchase seems more of a personal acquisition and less a vertical strategy. Bezos will become an owner taking over the Graham family title. Does Bezos what some old-world legacy to place on his media mantel?

Post chief executive, Donald Graham has known Bezos for about 15 years which most likely helped this transition easier. He told FT.com that “He [Bezo] is a very patient, long-term investor.” He will need to be. Despite the paper’s move into digital publishing, the Washington Post has seen a decline in circulation (6.5% in the last year alone) and the trick down pain of declining advertising sales.

Innovation?

What Bezos is buying is the paper’s white-glove media position only rivaled by The New York Times. The paper hold its place as the seventh most popular daily newspaper in the US. Many in the industry is watching closely and hoping Bezos can bring his magic to the ailing publishing business.

Journalist Carl Bernstein who broke the Watergate story with the Post, told Politico that this change of power is “recognition that a new kind of entrepreneurship and leadership, fashioned in the age of the new technology, is needed to lead not just The Post, but perhaps the news business itself”. Bernstein’s partner and Post associate editor Bob Woodward, said on MSNBC. “I think in some ways, this may be the Post’s last chance to survive, at least in some form of what it was.”

So with the world watching what will Bezos do? Will he launch 3D printing with this property? Will he connect one-click commerce to this new newspaper install base? Maybe he will simply use this blue-chip Washington company as entree to the DC Beltway and all the value of being a Washington insider.

While Bezos will surely add innovation to the paper, he will be careful not to vanquish Katharine Graham’s family-run papers legacy and maybe happy to simply keep the association with grit journalism at its best.

From Singapore to Moscow: Is OPEN a four-letter word?

by Gary Schwartz  (23/07/2013)

I recently returned from speaking in Singapore at the regional CommunicAsia conference and Rasia.com event in Moscow. Innovation was a central theme.

In Singapore I was in a discussion with Google, SingTel and Microsoft. I asked Doug Farber, managing director for Google in Asia-Pacific, if mobile innovation is stifled when there are only a few power brokers that control the mobile ecosystem.

Google has always had a “healthy disregard for the impossible,” Mr. Farber said. Agreed. However, while Google has a healthy internal innovation culture, is it allowing the ecosystem to do the same?

I recall Richard Kramer from Arete Research’s jab that in mobile O-P-E-N is a four-letter word.

There are only a few powers that are trying to lock the mobile ecosystem: Apple, Amazon, Google, Facebook, Microsoft and Du. And while Apple and carrier networks are unabashedly closed fiefdoms, Google’s Android empire may not be truly open.

“But,” Mr. Farber said, “I am the open guy.”

“Open only on the front end,” responded Bill Chang, CEO of group enterprise at SingTel.

Outside of a few global plenipotentiaries, mobile developers have had to pick from the crumbs at the table.

Twenty-five applications command 50 percent of the app store revenue. The billions in revenue do not feed many mouths. The average developer lives on $5,000 per month, which is a bread-and-water diet of $60,000 per year, said Richard Kramer. “Where are the developer’s yachts?”

Hardware innovation has flat-lined and power is exclusively in the hands of Apple and Samsung.

The yearly CES announcements have underwhelmed and recently left the Las Vegas melee altogether. Another handset release with faster “mega” screens does not excite the crowds. With $75 smartphones entering emerging markets, smart has become a commodity.

SingTel’s Mr. Chang said in a market where companies are “cost-cut to death, it is difficult to drive innovation forward. Mobile-first is a challenge.”

Mr. Chang talked about the importance of the CIO is this process. He plays the initialism game that we all do at public events: “The CTO is now the chief transformation officer and the CIO the chief innovation officer.”

But what does that really mean to companies trying to navigate the mobile marketplace?

The CIO never had power, said Michael Thatcher, chief technology officer of Asia for Microsoft. “It is only when something is broken they have power. How can we advance this and stop being tech centric? Stop being reactive. Follow the money.”

But is there money in mobile innovation?

Outside of the big six ecosystem players, there are few that command significant market share. We live in an “app store economy” where we all need to play the piper 30 percent and never own the customer. To make money on Apple’s SDKs or Google’s, dominant big data position is difficult.

The social leviathans are also closed.

Facebook has built a business on connecting people. With its post-IPO revenue focus, it has worked hard to create a media buying tollgate on the impressions and big data that it owns.

In social portals there is little big data sharing and little opportunity to make money as an outside developer. It is a bigger issue for the entire social ecosystem.

The more that these social portals try to leverage these assets to generate revenue, the less socially authentic they become to the consumer. Our social spaces have become more like driving down the public highway.

Social portals such as Tumblr and Instagram have generated such value in the market because they remain authentic – pre-revenue and pre-commercial, of course.

Everything is disintermediated. App stores and social portals are all controlled by Facebook, Amazon, Apple, Microsoft and Google, and somewhere we all have to pay the piper.

Telecommunications is the history of open and then closed systems, from RCA closing down FM Radio and early television.

It is the same recent history of Apple disintermediating the wireless carriers with an “Internet device” and then turning around and using the same iPhone to shut down the mobile Web with a closed App Store.

Are we entering another closed loop where innovation becomes stifled? What does this mean for business?

Google sponsors the ship, “Unreasonable at Sea,” to sail around the world evangelizing entrepreneurism and innovation. How can we make the power brokers more unreasonable at home?

SCREEN WARS (Digital Media Forum Keynote 2013)

In Dubai talking to agencies and brands about “digital velcro”. How linking content seamlessly between one screen plus other consumer screen equals a multiple of value for a brand.  20  mins – view here.

Premature Technology Arousal (PTA) in Barcelona

To sum up Mobile World Congress 2013, I will borrow from Peter Marx, head of business development at Qualcomm Labs. Peter talks about a tendency for PTA or (for those in the know) Premature Technology Arousal in the mobile industry.

Much of the MWC 2013 floor area at the new Fira Gran Via venue exhibited PTA or Premature Technology Arousal. Solutions that are excited about being solutions. Solutions that are too early. Solutions that are missing reach and frequency. Things that are just not simple enough to drive adoption.

Even before 70 thousand executives hit the show floor, there were signs of “PTA”. From the Near Field Communications (NFC) show name tags that tried to emulated plastic (but that few used because you still needed to show the plastic) to tapping on Coke dispensers with cloud-base wallets that are many quarters away for mainstream adoption.

Booth after booth in this 1.01 million square feet techno-playground displayed incredible solutions and screens.  But the real story to follow was how each solution quietly added value to a given business ecosystem. There was an invisible hand playing connect the dots. Here are a few examples:

The Invisible Google Hand

Google was almost absent – unlike the MWC of 2011 and 2012 where Google groupies ran from partner booth to partner booth in search of cute Android pins. But Google was most definitely on the floor. This year the company is wisely playing “powered by Google”. They are the dark silent type. Turn left or right in every hall, Android is the fuel this industry is consuming.

The same holds for Qualcomm. They are the chip manufacture that is quietly taking the lion’s share of the revenue on each global handset. (Intel just cannot seem to create a competitive landscape.) Qualcomm Labs is building in consumer identity and credentials onto its “platform” hoping to not only power the connected device but also own the big data behind the user. When Qualcomm demos a vision of a home of the near future, they power many of the moving pieces.

The Samsung Show

While Qualcomm’s chip and Google’s OS were the main stories in Barcelona, another key and not so silent player is Samsung. (So much so that my hotel concierge asked me if I was attending that “Samsung” show that was in town.)  The word that floated above the white new-age Samsung booth was “innovation” but the innovation is not just the 3D camera or the ubiquity of the new S-Pen. The innovation was in their business model connecting their screen across the consumer journey. The 3D camera sells their tablet and television. The S-Pen and its SDK allows for ergonomic continuity across their new tablets and fablets.

Mozilla is other important story in Barcelona. Using the Firefox browser on lower-end ZTE devices to run the camera, map and  . . . oh ya the browser was a definite tech-turn on. Moving the developer and more importantly the consumer out of the (Apple-invented and dominated) app store into the real world super-app is an inevitable step and fundamental to our mobile evolution. The quicker the industry can move away for relying exclusively on industrial design and the app storefront as the sales tool, the faster we will grow.

2014 Screen Wars

The most important leitmotif was the screen. Not only the proliferation of devices with new form factor and appliance, but the realization that it is in the connecting of these screen that the we can accelerate business models. Samsung, ZTE, Motorola, Nokia all address the consumer journey across all screens and throughout their day. Nearly all marketing VPs had spent their last few months and budget trying to tell this consumer story.

Again while many products had indecent “PTA”, the most important insight was not what was happening on the screen but what companies were doing to connect them seamlessly. The new battle ground this year moving into MWC 2014 will be centered around who can best manage big data, wallet credentials and identity between the screens.

The End of Pennies & Amazon Coins from the Cloud

With the Canadian Mint abandoning the mighty penny and Amazon creating its own digital currency system called Amazon Coins (to be used to purchase apps in its Kindle Fire Tablet), where is cash heading?

In May, Amazon Coins will flood the market with “tens of millions of dollars” of virtual coins. The Canadian mint will remove the equivalent in copper.  This value transfer from cash coins to promotional coins is not connected but illustrative of the value of currency to drive engagement and what is often referred to as “big data.”

The penny and the dollar have not lost their value in our digital economy (*) but the ability for the data behind our purchase behavior may yield more value.

How we buy has changed so profoundly over the past few decades. Money and path to purchase has become more fluid. Days waiting for cash to clear is now instantaneous. Digital credentials such as Paypal and Paypass allow for seamless payments inconceivable few years ago.

We know that financial institutions and the new mobile wallets snub their nose at cash and hope that all transactions move through their gateway and pay a service toll. But more importantly for the Google’s and Apple’s wallets to tether a digital relationship that allows for incremental advertising and engagement opportunities.

As we move into digital wallets in the cloud and the store, look for more “Amazon” pennies from heaven. Or in this case, from the cloud.

* (Cash is a clumsy system and removing pennies can upset the countries cash register.  In 1971 the penny was axed in the UK. Cash confusion and many retail that were accused of rounding up rather than down allowed price increases that pundits attributed to increased inflation in the country for a quarter of a century. By the 70s, inflation was upward of 25%.)

Interview: Shopper + smartphone = impulse purchase (WSJ)

Smartphones and other mobile devices are changing the way we shop. Gary Schwartz, founder and CEO of Impact Mobile and author of “The Impulse Economy,” tells Radio’s Adrienne Mitchell smart businesses are responding to more-impulsive shoppers.

Interview: Mobile Driving Impulse Shopping

LINK TO VIDEO HERE (11 mins)

Rob Woodbridge: I’m sitting with Gary Schwartz, you’re CEO of Impact Mobile and author of The Impulse Economy.

Gary Schwartz: Hey, thank you for having me.

Rob Woodbridge: A long time coming, I remember when we talked about this a long time ago about the — not the struggles, but the joy we’ll say of writing a book.

Gary Schwartz: No, you know, the struggles, struggles, they were there — two years of airport writing, meeting with folk coast to coast, struggles but good struggles. To understand anything when you’re in the middle of the battle and you’re really down in the trenches, it’s a challenge because it’s hard to know who’s winning, you know.

Rob Woodbridge: It is, especially you know, you’re talking to guys, they’re building as the industry is developing, so who knows what directions it’s going to go in.

Gary Schwartz: Listen, the industry doesn’t know which direction it’s going. And everybody’sgrasping for straws and trying to read the tea leaves to mix metaphors, but that’s what makes it really exciting. I think what happens when you write a book over a two year period, is you start cutting up the edges and you start to realize that you develop a really good core. And that core is really sound because you’ve spent two years cutting off the edges. And of course things change like as we put this to print, you know, there have been just a whole flurry of announcements, andthey will continue to flurry. I think the thing to understand is that the philosophy, the engagement with the consumer doesn’t change. And so the understanding and the need to have frictionless engagement, the understanding and the need to reinvent the store intelligently, the angst of the storekeeper, the needs of the shopper, those things don’t change.

Rob Woodridge: No. And they never will, right? It’s just a different medium for them to worry about.

Gary Schwartz: Absolutely.

Rob Woodridge: So go over the book, give us a brief overview of exactly what’s in The Impulse Economy?

Gary Schwartz: Well it’s called The Impulse Economy because it’s about the impulse consumer. The impulse consumer predated mobile. We are intrinsically impulse consumers. What’shappened is a lot of the things that we put into the mall, into the store, have interrupted purchase, you know, there have been whims of the storekeeper, somewhat contrived from a consumer perspective. What’s happening is we’re getting back to our native shopping behavior which is theability to do things on the fly from our couch, from the street, from the car, from the mall. And now we’re bringing that impulse ability to shop within a shop and that’s an impulse engagement but not a pleasant impulse engagement from the storekeeper’s perspective. So it’s about that whole reengagement with the shopper and understanding how to as a storekeeper or as a service provider to hit the right note with that consumer, understand how to use the phone to effectively drivepurchase.

Rob Woodbridge: But that’s the key, right, is that to drive purchase?

Gary Schwartz: It is, it is, it is all about driving ‘ ka ching’. And so it’s nice to have all the fluff of a campaign and brand awareness and all the things that we love, but if it aint driving sales. It’s not going to be … it’s not going to be a front and center focus for anybody the next year.

Rob Woodbridge: Well you talked about that core and my guess is the core as you were chipping away, the core is a philosophy isn’t it, or is it a methodology around this?

Gary Schwartz: You know, I mean there is obviously a methodology that sort of evolved. When you start looking at the industry and when you look at the way that the mobile marketing has evolved and mobile marketing was very focused on campaign engagement and doing things that were really cool and getting into the magazine as the cool brand. And what it’s evolved into is anindispensible channel and brands that really know where the future is with their consumer have understood that they need to now use that channel. So the philosophy is really on in the world which has cross channel disconnect as its central layer of angst. What are the things, the toolkits that you can use to engage with that consumer, follow that consumer and drive sale? And it doesn’t matter if it’s in the store, in the cloud or in their home, whether it’s in the car or at the dwell at elevator and it’s that central philosophy right across all your the media touch points across all your retail touch points, that has to be ground in continually. And that’s what the book’s about.

Rob Woodbridge: 100%, and what was surprising about this was that the — is it the adoption rate that you’re seeing now? Or is it the fact that it’s so influx that this industry doesn’t really have a border, it doesn’t have…  it’s a morphis isn’t it?

Gary Schwartz: Well you know what, the biggest problem with mobile is mobile. It’s the biggest problem with mobile is everybody talks about mobile and it’s not about mobile, it’s aboutunderstanding how to engage the new shopper. And if you fixate on the technology, if you fixate on the device, you’re never going to be able to to integrate it into your business as usual core focus. It’s always going to be a bell and a whistle. What brands, retailers, what anybody out there needs to understand is it’s about ROI, it’s about understanding how to drive your objectives with sales and if that’s your focus and then you say, “Oh, you know what, mobile or you know, a cloud based integration with a portable screen or whatever, you know, can sell that product. That is the realization a lot of brands have to go through otherwise they continue to build campaigns, they continue to rely on bells and whistles. So sometimes it’s the dumb solutions that are the most exciting. And do you know why they’re most exciting? It’s because they generate revenue and revenue is exciting. So sometimes it’s SMS and mobile web, not you know, high end integrations, very costly integrations with POS, with apps, with things that sound fun but just on driving the tonnage and engagement and reach and  frequency the brands the need.

Rob Woodbridge: So where are, I mean what’s driving revenue now for these guys? Is it that, is it the low level stuff that we’re looking beyond right now, that’s making money?

Gary Schwartz: You know what, what is driving revenue is when you can connect the channels effectively, when you can drive … when you can make sure that between this touch point and that touch point, there’s no dropoff, to make sure that the conversation that started online continues with me and not a competitor into store, into my media, back into my CRM platorm, if you canconnect the dots, you will always be able to win. The problem is, is that there’s a lot of focus on, what do I do in the store and what do I do in my catalogue and then what do I do online? And it’s in between, it’s the cracks … it’s between the cracks the consumer falls.

Rob Woodbridge: Yeah. I love that, I mean I look at mobile as a gap filler, right, and it’s not an elegant way of putting it.

Gary Schwartz: Yeah, well I mean it’s gap filler or maybe it’s a bridge and it’s the ability to…

Rob Woodbridge: That’s an elegant way of putting it.

Gary Schwartz: Well you know, sometimes I also call bridges gap fillers.

Rob Woodbridge: Exactly.

Gary Schwartz: But you know, it allows you to get from one place to another more effectively. And then what it’s doing,  is resuscitating your existing legacy infrastructure and that’s what’s exciting, my gosh, it’s like, “Oh my gosh, my store would be reinvented because I understood how to move somebody from my media into store and into the cloud”, that is very sexy for a retailer because that’s where they need to focus. Mobile is just a means to that end.

Rob Woodbridge: Yeah. Well what’s the big picture for that, I mean is mobile about driving, it has to be about driving new revenue, not just moving revenue from one bucket to another, it has to be new revenue?

Gary Schwartz: No, absolutely, it has to be new revenue and it has to … it has to be new revenue or it has to make sure that I’m driving incremental revenue to my existing touch points. So if I candrive — if I can make sure there are fewer banner shopping carts in the cloud, if I can make surethat there is a less abandoned intent to buy, and I can make sure that that idea actually was executed into my store or the idea in the store wasn’t lost into the Amazon cloud, then I’m a winner. And mobile can do that for you.

Rob Woodbridge: I have to ask, I mean next 12, 18 months, what is getting you excited about? I mean I’m loathe to ask this question because you’re excited about it today, but is there anything that you see that’s coming that you say, “God, I can’t wait for that to arrive?”

Gary Schwartz: You know what, I’m very much a here and now guy and I’m very excited about the future, I’m excited to see what hand Apple plays in the next year. But I know, we know from the IP, you know, tea leaves, that they are totally focused on NFC, that they have patents [inaudible] ties that to iTunes that they now launch in Easypay as a trial in their stores with scanning which is going to die and it’s going to move to much more mature NFC integration. That will be exciting because once the aspirational brand comes in with a strategy, the mobile will validate. And do you know, other things that are exciting, you know, I think the goal is to always look at the future and see where things are going but to be excited by the here and now because if it’s all about the future there is no learning in the present. If you don’t do learning in the present when you get to thefuture you’ve got nothing. And so things like, simple things that retailers can do like take their existing snail mail email which is … I consider email the snail mail of the phone, right?

Rob Woodbridge: Right.

Gary Schwartz: And make sure that you’re creating a messaging channel to the phone through SMS, that is a simple exercise that you can do now that allows you to drive – and stats will hear me out on this –  fivetimes to ten times conversion of your email.  That in and of itself should stop everybody in their tracks and to focus on that because if you have engagement with the consumer, if you can understand how to talk to that consumer in a targeted way on messaging then when the wallet comes down the road, when some amazing mobile evolution is in a not too distant future you’re ready for it.  You have a relationship with the consumer, you understand how they work on the phone, you’ve tied your retail touch points together fluidly through mobile web and messaging and you’re ready for the next big thing.

Rob Woodbridge: Gary, I wish we could talk forever. Thank you so much for bringing in the book, it’s The Impulse Economy, go check it out. Gary, congratulations.

Amazon & The End of The Book (NOOK)

By Gary Schwartz

With the supposed separation of the Nook digital books business from Barnes & Noble, expected company losses and lowered guidance for fiscal 2012, the bookseller’s stock fell dramatically last week. The Nook tablet and ereader was the poster child of Barnes & Noble’s in-store growth strategy, but now that approach is in play.

Meanwhile, Barnes & Noble’s nemesis, Amazon, is doling out cash to authors who make their ebooks available exclusively on Kindle for 90 days.

Kindle Direct Publishing – KDP for those in the know – has put aside at least $6 million in 2012. Books can be “borrowed” for free and authors receive royalty payment based on the popularity of their title. This may be one more step towards the end of the bookshelf as we know it.

While Amazon erodes the viability of the physical store, the Amazon storefront is fast becoming  confusing to navigate, and it is a slippery slope for authors.

If we let the age-old publishing process that allows a book to percolate, sometimes arduously, from manuscript to agent to editor to published work to fade away, who will curate our content? Can the publisher and bookstore forge a new role in the value chain?

FULL ARTICLE HERE