Pearson (NYSE:PSO) has taken a 5% stake in the recently spunoff NOOK Media LLC division of Barnes & Noble (NYSE:BKS) with an $89.5 million investment.
The investment values NOOK Media at $1.789 billion, unchanged from its recent spinoff. After the Pearson investment, the Barnes & Noble stake will be reduced to 78.2% of the company, with Microsoft (MSFT) owning the remaining 16.8%.
"With this investment we have entered into a commercial agreement with NOOK Media that will allow our two companies to work closely together in order to create a more seamless and effective experience for students. It is another example of our strategy of making our content and services broadly available to students and faculty through a wide range of distribution partners."
At the same time, Barnes & Noble filed an 8K indicating that "the Nook business will not meet the company’s prior projection for fiscal year 2013″.
The NOOK is a product in a tough position. While the NOOK HD has aimed to expand its capabilities beyond that of a single-function e-reader, it faces a highly competitive market. Traffic generated by Nooks are a fraction of that from the Kindle and are a rounding error when compared to the iPad. As single-function gadgets are subsumed by smartphones and tablets (see iPod for example), the life expectancy of the standalone e-reader market will be short.
As I've previously written, I don't see a promising future for the NOOK as a general purpose e-reader or tablet. Instead, they should narrow their focus to the educational and early reader markets, where they are better positioned for success. As I wrote last fall:
Barnes & Noble needs to root itself deeply into the textbook market. That market is up for grabs and it seems that Apple or Barnes & Noble will become the likely winner. Barnes & Noble should move quickly to secure the needed partnerships and focus its efforts on winning there.
The educational technology market remains somewhat fragmented. Apple has clearly set its sights on the classroom. I think it's time for Barnes & Noble to focus all of its efforts on this market. If the Nook cannot gain significant market share in the education space, it will have no viable future as a platform.
While I generally focus on other forms of content, music is
a big part of my life, so in this post I'll spotlight my favorite albums of
2012. If you're looking for some last-minute holiday gifts, you could do a lot
worse than these.
For me, 2012 was an OK, but unspectacular year for music.
But there were some gems if you searched deeply enough. Here are my favorites
for the year. I have somewhat eclectic tastes, so there's bound to be something everyone could like (or hate). Please share feedback and your favorites in the comments.
Howler: America
Give Up. One of my favorites for 2012 came from surf-punk influenced
Howler. This album was my gym soundtrack for quite a while earlier in the year.
Howler are hard to categorize, but it's clear they grew up listening to the
Ramones as well as more recent bands like the Vines AND... Favorite tracks
include Back of Your Neck, the non-PC titled Beach Sluts, This Ones Different,
Pythagorean Fearem and Told You Once.
Jack White: Blunderbuss.
Some people can't stand anything Jack White does; I am in the opposite camp. I
find him refreshing and his multiple bands keep him fresh. Blunderbuss provides
big guitar licks with typical Jack White vocals. Song lyrics are somewhat
unsophisticated, particularly on the pop Sixteen Saltines, but I can live with
that. Favorite tracks include the offbeat Hip (Eponymous) Poor Boy, Weep
Themselves to Sleep, Sixteen Saltines (great riff) and his cover of the
Blasters' classic I'm Shakin'.
Los Straitjackets: Jet
Set. According to my Last.fm
profile, Jet Set was the new album I listened to most in 2012. Los
Straitjackets are a surf rock band, and before you think Dick Dale, they've
brought a new level of melody and musicality to the genre. Lead guitarist Daddy
O'Grande returned to the band after a successful bout with a brain tumor, and
helped create their best album in over a decade. Jet Set doesn't sound like
surf. It's more like the backdrop to a great 60's movie and at moments pays
tribute to Burt Bacharach and Hal David (but
without the vocals). Favorite tracks include Crime Scene, which should be the
soundtrack to a Quentin Tarantino movie, Walking Down 3rd Street which I
played on the guitar nonstop for two months when this album came out, Space
Mosquito, which showcases their guitar skills, and Pop Rocks and Coke.
Totsy: Red Balloon. Totsy are a burlesque/cabaret band fronted by singer Beth Curry (a Broadway performer) and songwriter/band leader Brett Boyett. Style-wise, Totsy has a bit of Squirrel Nut Zippers and Puppini Sisters in them, with a twist of Kate Bush. Totsy are the opening act for the Brian Setzer Orchestra on their current tour, and just blew me away when I saw them. My favorite cuts on the album are Fall Away, Dope on a Rope and the sultry Red Balloon. You might also want to check out their new Christmas song, Santa Likes Naughty Girls Too.
Reverend Peyton's Big Damn Band: Between
the Ditches. The Indiana-based Big Damn Band, consisting of guitarist and
singer Reverend Peyton, his wife Breezy on the washboard, and drummer Aaron Persinger is a roots blues band that sound like they were plucked from the Mississippi
Delta 75 years ago. After Peyton on Patton, an album covering songs of delta
blues legend Charlie Patton, they've returned with a great new album. Favorite
tracks include Big Blue Chevy '72, the slide guitar-driven Shut the Screen, the
anti-mountaintop removal Don't Grind It Down and Devils Look Like Angels (with its disturbing video shown below).
Japandroids: Celebration
Rock. High energy, the Japandroids are the 2012 version of punk. Strong,
guitar-driven music with lots of distortion, mixed with angst-infused vocals,
the album is much more together than their previous efforts. Best tracks are
The House that Heaven Built and the previously released Younger Us.
Runners Up: these are both good albums, but neither quite holds up to the "best of 2012" for me:
The Men: Open
Your Heart. Fans of the Arctic Monkeys, Nine Black Alps, The Subways and
Maximo Park should like the Men's Open Your Heart. My favorite tracks include
the title track, Ex-Dreams and Cube.
Alabama Shakes: Boys
& Girls. I wanted to love this album; I really did, but in the end I
simply like it. Brittany Howard is one of the best blues rock singers to come
along in ages and I have high hopes for the band going forward. Yet while I
enjoy listening to them, I rarely find myself seeking them out. Favorite cuts
include Hang Loose, ballad You Ain't Alone, Hold On and rocking bonus track
Heavy Chevy.
Often, the best new music is actually stuff from the back catalog, so
I’d also like to spotlight a few albums that I’ve long loved, but had been
buried in the back of my playlists until 2012.
The Undertones: Best
of the Undertones. OK, it’s a cop-out picking a greatest hits album, but if
you don’t know the band, then this is the one I’d suggest you buy. The
Undertones were a punk band from Northern Ireland during the late 70s and early
80s. Led by vocalist Feargal Sharkey and brothers John and Damian O’Neill on
guitars, the Undertones wrote some of the best punk-pop tunes of the period.
The Undertones have some of the best-ever guitar hooks wrapped around simple,
yet catchy adolescent love songs. The whole album is great, but my favorite
cuts are You’ve Got My Number (one of my favorite guitar riffs), Get Over You
and, of course, Teenage Kicks.
Joe Strummer & the Mescaleros: Rock
Art & the X-Ray Style. Joe Strummer was the heart of the Clash and gave
them their world beat and world view. When he returned to music, after a long
hiatus, he created a band that represented that global view. The Mescaleros are
one of those bands that I turn to when I don’t know what I’m in the mood to
listen to. And they never disappoint. Best cuts are Tony Adams, Techno D-Day, The Road to Rock-n-Roll and Yalla Yalla. While I spotlight Rock Art here, you’d do
just as well with Streetcore or Global a Go-Go. In fact, I’d suggest just
buying the Hellcat
Years set which includes all three, plus some live tracks with Mick Jones.
It’s hard to believe that it will be a 10 years this week since Joe Strummer
passed away. He’s missed but his music resonates on.
During the past week, my Twitter stream has been filled with
various thoughts on the demise of News Corp’s (NWS) tablet-centric news app, The
Daily (including my own). Some, perhaps in an effort to be provocative, have
suggested that the end of The Daily signals the idea that tablet-based
publishing itself has proven a failed model. Here are a few of those stories:
The failure of The Daily says little about the future of
tablet publishing, and mostly tells the tale of a failed publishing initiative.
Let’s take a look at what The Daily was:
A tablet-only (to start), paid
subscription, consumer app, providing general news content, with a very high
budget.
Now, let's break that down into its parts:
Tablet-only: By the end, The Daily had moved beyond tablets
to include smartphone, and also had integrated the ability to share content via
the web. But to start, it was a single-platform (iPad) product. And the fact
that it was optimized for the iPad was both a strength and a weakness.
Paid subscription consumer news app: the good news is that
we are seeing paid content take hold in various markets. But consumers are only
willing to pay for content not perceived to be readily available for free elsewhere.
High budget: one of the challenges large companies have when
trying to launch something new is that they bring with them high cost
structures. Startups don’t dangle 7-figure salaries to attract talent, but
large companies fall into an expense base that’s not sustainable. Oh, and The
Daily was the only app to run a Super Bowl commercial.
Yet, despite that high cost structure, The Daily really only
faced a challenge once News Corp split into two companies. As part of a single,
diversified entertainment business, a $30m annual budget for the Daily was
almost a rounding error, easily covered by box office proceeds for the movie Avatar in Poland.
Not much to pay for a real-time R&D lab, whose learnings can be applied throughout the
multi-billion dollar company. Yet, split off into a business already wracked by
difficulties, it became an expensive luxury.
So, what lessons can we learn from The Dailly
Mobile First vs Tablet-Only: There’s a real difference between being Mobile First and
being Tablet Only. The Daily became a walled garden, making it difficult to
share content or to shift your reading from one platform to another.
In building digital products, it’s critical to understand
user behavior. Will users skim your content on their mobile device during the
morning commute, marking content to read on the desktop when they get to the
office? Or, are they marking content during the day to read later on their
tablet on the ride home? Do users need to share your content with peers?
Particularly for b2b content, the need to shift from one platform to another is
critical.
User Experience Matters: While The Daily ultimately failed in reaching their goal of
a half-million paying subscribers to a consumer news product, they did exceed
100,000 paid subs. That’s pretty impressive considering the ubiquity of free
news sources on tablets and the web. User engagement was high and they created
many real fans. Rather than a boring “replica” app, the Daily created a
compelling user experience, leveraging the iPad in ways few others have done.
Specialized, hard-to-find information beats generic news: This one almost goes unsaid, but while many companies are
finding that users will continue to pay for information they can’t find
elsewhere (particularly in b2b),there’s no appetite to pay for content where
there is a viable free substitute. Editorial quality and a big marketing budget
can’t overcome “good enough” free alternatives.
SIPA members, by definition, should not face the problem of
selling generic information to consumers. These companies offer niche products
aimed at b2b markets. During this session, we’ll be exploring trends in mobile
and tablet use, particularly among business users and explore how to develop an
appropriate mobile and tablet strategy. We'll take a hands-on look at publishers who are doing it right (and a few who appear to be on a misguided path). I hope to see you there.
There's an interesting discussion going on this morning on Fred Wilson's A VC blog in a post called Rethinking Mobile First. I'd encourage you to read the entire post AND the comments, but here's a short recap, along with my thoughts.
Fred's post is in response to a post by Origami Labs and Everyme co-founder Vibhu Norby questioning whether mobile is the right platform for many new app developers to focus on and why Origami is pivoting from mobile first to web first.
The Norby post highlights the fact that mobile-centric startup success has been limited to a handful of apps:
Only a handful of apps have succeeded mobile-first: Instagram, Tango, Shazam, maybe 2 or 3 others
The challenge, as he notes, is that the conversion process from download through true engagement eliminates most users. In the case of Everyme:
At best, we retain 5% of users through the entire onboarding process. Attempts to fix it have raised it only nominally. We are not alone on that count even amongst apps with much better onboarding and many more app versions than our own.
In his response, Fred notes that despite the fact that it's hard, it's necessary:
But just because something is hard doesn't mean you shouldn't try to do it. I am convinced the next set of large and valuable consumer facing services will be built with mobile as the primary user interface. You can see it in the success of Uber and Etsy this holiday season. That's where your users are most of the time. And if you don't design your products and services for what is rapidly becoming the dominant UI, you will not maximize the success of your business in the long run.
I tend to agree with Fred on this one. Mobile IS difficult. It's hard to get your app noticed in the first place, hard to get users to download it and even harder to get them to return to it a second, third and fourth time. But that's not altogether different than the web experience. In the early days of the web, people bookmarked sites all the time. I had hundreds of bookmarks in my Netscape bookmark manager. Of those hundreds of bookmarks there were even a dozen or more than I returned to frequently, but most just sat in the list, never to be clicked again.
Your platform is not the biggest factor in user engagement. Your application is. Are you providing a compelling experience that users rely upon in their daily life? If so, I'm convinced you can deliver that experience on any platform. That's not to say that the experience won't differ on the mobile platform than on the desktop, but if you deliver value, users will return.
That said, the platform is key in how users interact with your app. Does your onboarding process require users to type a lot? That's fine on the web, less so on tablets and a real challenge on smartphones. Does your business model depend on running tons of ads on every page? Again, that may be fine on the desktop (though I could argue otherwise), less so on mobile devices.
The key, of course, is understanding what you are enabling users to do, then optimizing your offering (whether a native app, a mobile web app or a web page) to deliver that capability as simply as possible. Understanding your audience is critical. Are you aiming for smartphones or tablets? Do you expect a lean forward or a lean back experience?
And mobile first doesn't have to mean app-first. For publishers, mobile first can simply be rethinking your content so that it thrives in a mobile and/or tablet experience. That may mean creating shorter articles with more images and video content. If you build web pages that look great on tablets, they'll probably serve you well on the desktop. The reverse is rarely the case.
So, is mobile development easy? Not at all. Is there a simple path to success? No. But does that suggest that mobile-first is not the right strategy? No. Your customers are shifting more of their time to tablets and mobile devices. Mary Meeker's latest study shows that 29% of American adults currently own a tablet or eReader. And it's safe to say that after this holiday season, that number will probably be more like 33%. Is that a trend that you're willing to bet against?
Success will come to those publishers and developers who understand their audience and delight them with engaging products on the platforms where they are increasingly spending their time.
Many took delight in today’s announcement that News Corp (NWS) would
be shuttering the Daily, the first paid tablet-only news product. I take no
pleasure in seeing that product fail.
I’m biased in that I had the opportunity to work with the
Daily team while at Crowd Fusion. Yet beyond getting to know many talented
people, I got the chance to see them doing some really great things.
"There is so much national
news out there,” Kramer said. “I think we would lose more than we would gain.”
The Daily struggled to differentiate its content. When it
was first launched, the editorial content was a bit weak. But they definitely
strengthened their editorial during their two year run. More importantly, the Daily, more than virtually
any other publication, has experimented with ways to best leverage the tablet
environment.
Portrait or
Landscape? While cost-cutting forced the Daily to shift to “portrait only”
last summer, the Daily initially had two complete versions of every page – one optimized
for portrait (vertical) mode, the other for landscape (horizontal). It’s not
just that the page could be viewed either way, but that they actually did a
full layout of each edition in both portrait and landscape mode so that every
page could be optimized for either. This enabled features and functionality
that would only work in landscape mode, for example.
Visual news While
Pinterest and Instagram have made the image the key element of the mobile web,
the Daily was early to realize that tablets were a visual experience and that
text-heavy pages would not fly. Today, many others have followed suit – Reuters
Wider Image, the Guardian’s PictGrid and others – but the Daily was early to
that decision. And it makes reading the Daily on an iPad much more enjoyable
than reading a typical newspaper app.
Video content Again,
the Daily may not be unique in this, but they were quick to realize that HD video
was a key aspect of tablet news consumption.
Navigation The
Daily simplified their navigation this summer, but the app offered multiple
forms of navigation at its start. A news carousel, similar to the iTunes cover
flow, greeted new readers, while a traditional table-of-contents was available
as well.
360 Degree Photos
The Daily’s 360-degree photos were another way in which this daily newspaper
became more of a visual magazine. Whether swiping your way through the St.
Patrick’s Day Parade or the surface of Mars, these panoramic images were
compelling.
Did the Daily have its faults? No question. The editorial
content got better, but was never unique enough to make it a must-read for me.
The navigation features were cool but remained clunky at times. And despite
adding social sharing and other features, they were never able to fully
integrate the app with the web. And while they exposed all of their
functionality to advertisers, it seemed few were able to come up with creative
campaigns that took full advantage of the device.
Update: Ceros (formerly Crowd Fusion) Chief Scientist Brian Alvey adds his thoughts to the Daily's legacy from a technology standpoint. While some suggest the $30 million per year cost of the Daily was high, noting that:
"...that’s a great R&D lab within a $60 billion company. If you spend $30 million every year to test every new platform that’s actually cheap.”
In the end, all of these features were not enough to attract
the 500,000 paid subscribers that News Corp set as its break-even goal. It’s
really hard to get consumers to pay for news, regardless of the container. But
many of these features are now prominent in other news apps, by News Corp and
its competitors. The Wall Street Journal
has begun adding 360 panoramic images to its iPad app, and countless publishers
are investing in more video content.
And while it’s easy to poke fun at the failure of this well-funded
startup effort, I would instead commend News Corp for doing what’s really hard for
large companies to do – innovate. At a time when most publisher's tablet and mobile apps are Zinio-like replicas of print, the Daily attempted to create a product that new and exciting.I hope this failure won't make other publisher afraid to even try.
