Content Matters

Who Should Buy Barnes & Noble?

Barnes & Noble (BKS) is being put on the block due to its depressed stock price. Current market value is barely $750 million, making it a reasonably inexpensive purchase.

The two most obvious suitors are founder Len Riggio and investor Ron Burkle, who currently owns about 19% of the company. But beyond those two, who might bid for the company?

Some have suggested Amazon (AMZN), but I don’t see that happening. First, that deal would be unlikely to pass antitrust scrutiny. More importantly, the deal wouldn’t make a lot of sense for Amazon. In Barnes & Noble, they have a weakened competitor on both the traditional book and eBook market. The Amazon model is working and there’s no reason to burden it with the negatives of running a brick & mortar business.

I’m sure that private equity firms will be in the mix (they always are) but won’t speculate on which ones might bid. Suffice to say that there will be other financial bidders here.

Barnes & Noble might also gain attention from other traditional brick & mortar retailers. It could be an interesting purchase for Target (TGT) or Wal-Mart (WMT), but neither is very acquisitive and I’m not sure that it would fit either company’s business model nor culture.

I think Barnes & Noble might have the most appeal to companies in the education market, perhaps someone like Blackboard, Inc. (BBBB). B&N already operates numerous college bookstores and its textbook division remains a strength. More importantly, the Nook seems well positioned to become the delivery platform of choice for education. B&N and Blackboard recently signed a partnership for eTextbooks. Financially, a deal wouldn’t be that easy. Blackboard’s market cap is just $1.3 billion, so they would need help in financing a deal. But a combination of the two companies could establish the dominant player in the educational e-reader space. The Nook would have incredible branding (every time a student logs on to their Blackboard service) and would have both online and offline distribution.

Amazon e-Books Outselling Hardcovers: What is the Impact?

Twitter was abuzz yesterday with links to this New York Times article quoting Amazon as saying that eBooks in the Kindle format are now outselling hardcovers.

So, what does that really mean and what does it tell us?

First, the details behind the headline (since Nick Carr suggests we rarely bother to click through). According to Amazon, for the past three months, eBooks have outsold hardcover books by a ratio of more than 1.4-to-1.  In other words, for every 100 hardcovers sold, they sold 143 eBooks. And that ratio has increased to 1.8 to 1 over the past four weeks.

That’s pretty impressive, considering the Kindle store has been open less than three years. There are fewer than 5 million Kindle-compatible readers (excluding phones) out there today, a small fraction of the book-reading audience.

Amazon has been extremely successful at managing a multi-channel device strategy. While pushing its own reader, the uptick since the iPad launch makes it clear that a lot of those eBooks are being read on the iPad. In the Times story, Amazon suggests that the iPad is a different device and is not competitive to the Kindle. While that may be true to some extent, it's naive to suggest that it won't have any impact. As an iPad user, I can't see myself buying a Kindle device. That said, I still use both Apple and Amazon libraries. While I prefer the iBooks app to the Kindle on the iPad, the Kindle has a much larger library of titles, so what I can’t get in iBooks format, I will buy in Kindle form.

It also shows that price wars have helped shift e-readers from novelty gadgets to mainstream products, suitable for young and old. Just 12 months ago, I’d perhaps see 1 Kindle user during my daily commute; today, there are likely to be 5-6 commuters using Kindles, iPads or Nooks in a single car on my train.  The Kindle price has dropped to $189 while the Barnes & Noble Nook is priced at $149. As they approach the magical $99 price point, they’ll become an impulse purchase and adoption will continue to grow.

The audience for eReaders is surprisingly diverse. While the typical technology early adopter is a 30-45 year-old male, eReader users seem equally distributed by gender and run all ages. 40+ readers have found the adjustable font size makes life easier, while teens and tweens are adopting them as well. The student market is likely to explode in the next 12-24 months. Barnes & Noble recently inked a deal with Blackboard to pursue the high school textbook market. I’ll be shocked if by the time my 11-year-old enters college she uses any printed textbooks.

What’s the likely impact?

The rapid adoption of eReaders will no doubt have a huge impact on the publishing industry.

First, the good news. Users of eReaders tend to read a lot more than others.  It’s no surprise that when you can carry as many books as you’d like in one device, you’ll buy more than if you had to carry each individually. So, despite lower prices, revenue and profits should see a noticeable bump.

It will be interesting to see, over time, how the reading patterns of users on dedicated readers, such as the Kindle or Nook, compare to those on multi-function devices like the iPad. While I have a couple of books in progress on my iPad, I’m more likely to read RSS feeds, use a news app or read Twitter much of the time.

At the same time, eReaders should quickly bring some level of disintermediation to an industry where publishers and distributors have incredible power. For bestselling titles, those blockbusters with 7-figure advances for name-brand authors, publishers will still hold court. But for long-tail titles, which never received much marketing support from their publishers, there is likely to be great change. I’d expect a new market to emerge, where PR and marketing professionals help self-published authors drive awareness of their titles.

On the channel side, it seems likely that the Big 3 will dominate. Amazon, Apple and Google (with their soon to be launched Google Editions, a store which will drive users to multiple channels for purchase) are likely to vie for dominance in the eReader market.

Barnes & Noble looks like it can be at least a niche player and can leverage its existing relationships to potentially dominate the educational market. 

That leaves question marks for companies like Borders and Wal-Mart. Borders has been on shaky ground for quite a while and despite launching its own eReader software, seems more likely to follow the Blockbuster video path than to find success. Wal-Mart has established itself as a dominant bookseller and has reach into many households which Amazon and Apple don’t reach today. Yet it’s hard to see what their value proposition will be in a segment where pricing is generally set by the publisher.

Similar challenges will be felt by independent booksellers, already an endangered group. Traditionally, these businesses thrived by their personal, hands-on touch. A market where awareness will be a huge challenge suggests a potential role for the independents, perhaps as affiliates to Amazon or Google, yet even that model suggests that a physical presence no longer serves a purpose.

Many have argued that the endearing qualities of physical books would make many hesitate to give them up. I have fond memories of wandering the “miles of aisles” at the Strand Bookstore. Yet, just as with digital music, it’s apparent that convenience and improved functionality can easily trump sentiment. Of course I still haven’t figured out how to get an author to personalize and sign a copy of an eBook.

What a Long, Strange Marketing Trip It’s Been

It’s no surprise that a key to innovation is rejecting conventional wisdom. And innovation thrives in many businesses, particularly those in the technology space. But whether in silicon valley or silicon alley, marketing is still largely done in the same way it has for decades. Companies hire PR firms who push out press releases, while marketers post product info to web sites and create factsheets for their sales staff.

Marketers may dabble with new approaches, sticking a toe into the social media space by creating a Facebook fan page or setting up an official Twitter account, but even then most apply old approaches to new platforms. Knowledge is shared through boring white papers which sit behind a registration wall while Twitter accounts push out links to bland press releases or staid marketing messages.

 When it comes to breaking the rules of marketing and rejecting conventional wisdom, David Meerman Scott (literally) has written the book. And now, he’s joined together with HubSpot CEO Brian Halligan to author a new book, Marketing Lessons from the Grateful Dead.

It’s not the first time that David has written about the Grateful Dead. Readers of his book World Wide Rave may recall a discussion framed by asking whether you wanted to be like Led Zeppelin, whose historic reunion show at the O2 arena was not made available in video format (and where YouTube was forced to remove clips posted by fans), or like the Grateful Dead who, long before the days of Facebook and social media, encouraged concert attendees to record their shows, even setting up special sections where they could plug in to the soundboard to get better quality recordings.

As the book pointed out:

If you want to remain relevant in an always-on, fan-centric, YouTube world, you need to embrace—not restrict—your most important supporters. You need to believe in the power of a World Wide Rave to sell your products and services.

In this new book, David and Brian take a look back at how the Dead worked to develop and nurture an active community of fans, then show how to apply many of those same techniques to today’s marketing platforms. For example:

Rethink traditional industry assumptions – Rather than focus on record albums as a primary revenue source (with touring to support album sales), the Dead created a business model focused on touring.

 (blogger note: if you’ve read what Fred Wilson and others have written suggesting media companies look to monetize the audience, not the content, this is a great example)

Bypass accepted channels and go direct – The Grateful Dead created a mailing list in the early 1970s where they announced tours to fans first. Later,they established their own ticketing office, providing the most loyal fans with the best seats in the house.

The foreword to the book is written by one of the biggest (literally and figuratively) Deadheads, former UCLA and NBA great Bill Walton. As he so eloquently describes it:

Their passion, creative spirit, imaginative soul, and industrious commitment to promote truth, fairness, justice, and the Grateful Dead way led them through the evolutionary transition where they went from playing for silver to playing for life. This book tells you how to make that transition for your own career.

David Scott’s books are always practical, insightful and a fun read. Fans of his prior books won’t be disappointed here. Marketing Lessons from the Grateful Dead may be his finest book to-date.

 

The Two Horsemen of Tech: Google and Apple

For  years, the four horsemen of technology were Microsoft (MSFT), Intel (INTC), Dell (DELL) and Cisco (CSCO) (though some argued that IBM was the 4th). The first three dominated the desktop PC environment, while the fourth sold most of the plumbing used on the Internet.

During the past few years, there were debates over whether there were a new four horsemen. As recently as 2007, Cramer suggested that the new big four were Apple, Research in Motion, Google and Amazon.

What’s becoming rapidly clear is that for the foreseeable future, there are really only two horsemen of tech – Apple and Google, who together are poised to dominate almost every significant segment of the industry.

In some ways, it’s amazing to think how quickly Google and Apple have become competitors. It was only last August that Google CEO Eric Schmidt resigned from the Apple board due to potential conflicts of interest. At the time, those conflicts were largely focused on Android and Google Chrome O/S. Now, 9 months later, it seems almost unfathomable to think of Steve Jobs and Eric Schmidt sitting around the same boardroom table.

Today, Google and Apple are vying for virtually every important technology space.

• Android is quickly closing the technology gap on the iPhone. And while Apple is working hard to marginalize Adobe’s Flash; Google’s new Froyo version of Android includes Flash support.
• In mobile advertising, the imminent release of Apples iAd platform was a critical factor in the FTC’s approval of Google’s acquisition of AdMob, a target Apple had pursued as well.
• While Apple TV remains a poor stepchild, Google’s announcement last week of Google TV gives them the upper hand, at least in the near term.
• There are rumors that Google is considering an acquisition of Catch Media, providing a platform for users to access music via Android devices. Previously, Apple outbid Google for Lala, a leading provider of streaming music in the cloud. It would not be surprising to see Google soon challenge iTunes with a cloud-based subscription music service.
• And while the iPad is today’s must-have gadget, there will be a wide range of Android-based tablets hitting the market in the coming months

It will be interesting to watch how this plays out. Google taking the “open” approach, much as Microsoft and Dell did in the PC world, while Apple stays in the world of proprietary hardware and software. It's not clear which path will win, and I think it may vary by market. The multi-channel approach of Android is likely to give Google greater market share in mobile and tablet devices over time. And strong partnerships with both television and set-top-box manufacturers may allow Google to succeed in a market where Apple has failed to make headway. Yet the Apple approach has merits. If users view these devices as consumer electronics - like an iPod or a VCR, as opposed to computers, plug and play will be attractive to the mainstream user.

And where are Microsoft, HP, Cisco, RIM and other technology providers during all this? They still play important roles inside the enterprise, but are ceding the key advertising and mobile platforms to Google and Apple, the Two Horsemen of Technology.

There’s No Room for News Weeklies in a World of Real-Time Niches

Yesterday’s announcement by the Washington Post of their intention to sell Newsweek should come as no surprise. In fact, it wouldn’t have shocked me to see them announce they would simply shut it down. Yet many traditional media analysts still seem surprised by the news.

Time and Newsweek have held prominent positions in media history. For decades, it truly mattered what topic they chose to adorn their covers each Monday. In a world where news was dominated by the evening newscast, these two publications truly influenced the national agenda. But it’s been at least 15-20 years since either publication was truly relevant. As David Carr asked in a tweet yesterday, when was the last time you picked up a copy of Newsweek other than in a dentist office?

 

The impact of real-time news cannot be dismissed. Looking at the Newsday announcement itself, the first tweets appeared yesterday around 10:45am in a tweet by Anthony Edgecliffe-Johnson.  Within 15-20 minutes, I’d seen 40-50 comments on the announcement in my tweetstream. In fact, when I saw a tweet “announcing” the sale yesterday afternoon around 2:30pm by Steve Rubel, I recall thinking “why is he tweeting old news as though it were just breaking?”. 

I realize, of course, that only a small number of consumers are Twitter users, but cable news has the same impact. How many people have seen the photo of the Times Square bomber already?  Would you buy an issue of Newsweek or Time next Monday if his picture were on the cover?

I can only think of three weekly news-oriented magazines which remain relevant to a wide audience. The Economist is successful largely on the quality of their writing, their willingness to do long-form stories which lend themselves to deeper analysis, and the fact that they bring a global (or at least European) perspective to world events. New York Magazine remains relevant because it covers stories that others don’t. They don’t have a new focus, though certainly have elements of news in their pages. For New Yorkers, they provide a mix of who, what & where that remains important, though I can see them threatened in the long run by various blogs from Gothamist to Gawker. The New Yorker remains relevant for some of the same reasons as the Economist. Long-form stories, often on topics barely touched on elsewhere, combined with fiction from top writers make the New Yorker a good read.

Newsweek certainly has some quality writers, Jonathan Alter and Fareed Zakaria among them. Yet their format doesn’t provide a forum for these writers to do quality investigative journalism. How much of a difference in quality shows through in a 500 word story? Let’s face it- Rolling Stone has probably produced more relevant and impactful articles on politics and finance in the past year than Time and Newsweek together.

Of course the key parlor game question is “who will buy Newsweek?” I’ll play along with a few suggestions (apologies to those who saw me tweet these yesterday morning – I guess blog posts can seem old compared to real-time tweets).

First, I’ll dismiss the one that many others have suggested. I don’t see any likelihood that Bloomberg will buy Newsweek.  Yes, they have a lot of money and just bought Business Week, but their efforts to reach a wider audience don’t go as wide as Newsweek. Bloomberg wants to reach the corporate C-Suite, not Main Street. The new Bloomberg BusinessWeek gives them a great vehicle, in print and online, to do that, while providing more commentary to deliver through their terminals. Newsweek provides neither. So, those hoping to see a BloombergBusinessNewsWeek masthead will be disappointed.

News Corporation (NWS) could buy Newsweek. During its heyday, Newsweek was always a center-left publication, as compared to the more right-leaning Time under Henry Luce. From an ego standpoint, I can imaging Rupert Murdoch’s delight in moving Newsweek aggressively to the right. I can imagine his enjoyment in letting Glenn Beck or Sean Hannity sit behind the desk formerly inhabited by Ben Bradlee. Yet I see this as unlikely. Fox has print vehicles already (most prominently the WSJ) and I don’t see Newsweek as ultimately that attractive.

The Huffington Post or Politico should buy Newsweek. These alternative media have grown tremendously. HuffPo traffic is now ranked 10th among news with more than 13 million uniques in March. They have aggressively moved beyond politics, covering world events and local news. Yet the brand perception remains as a left-leaning political site. The Newsweek brand could bring instant credibility with a wider audience. While the print side of the business may not be that attractive, I could see where keeping print alive might bring them some advertisers they would otherwise not reach. If not, they could easily shut down the print operations a year or two from now, keeping the brand as an online-only news product.

For magazine publishers, the long-term question may be the one posed by Mathew Ingram:

Hopefully trade rags like Adweek and Mediaweek have already given some thought to their business model, but they might want to change their names while they're at it. And, in the world of real-time news, will we soon be saying that Women's Wear Daily and Investors Business Daily sound too static?

Salesforce Acquires Jigsaw, Shifting Prospect Data Landscape

Salesforce.com (NASD: CRM) acquired Jigsaw in a deal worth $142m this week. Once described by TechCrunch’s Mike Arrington as “one of the most evil companies on the planet”, Jigsaw has leveraged crowdsourcing of editorial content to effectively transform the prospecting database segment of the content industry.

For those unfamiliar with Jigsaw, they’ve built a prospecting database using a simple premise: sales reps could enter “business card info” for their prospects and clients, accessing one free record for each they uploaded. While no sales reps will give away their “Glengarry leads”, Jigsaw understood that one sales reps trash was another’s treasure, and reps would gladly share info on non-active prospects in return for new leads.

Jigsaw has transformed the industry in a few ways.
First, and most obvious, is the use of a crowdsourcing model for data maintenance. The crowdsourcing model is compelling for several reasons:

• Cost structure is low, as you push the cost of maintenance to your users. In Jigsaw’s case, they developed a thriving community who would actively source and update contacts in the Jigsaw database in return for free access to the service. Over time, Jigsaw found that by providing a “leaderboard” of the most active in the community and a marketplace for selling the points acquired by cleaning data, a subset of these users were updating thousands of records.

• Scale and reach go beyond what any traditional data collection process could provide. Today, Jigsaw has more than 46,000 people at Deloitte LLP, for example. Traditional people databases might capture 50 or 100 or maybe 500 executives at a firm like Deloitte. But they’d never be able to navigate the structure of a firm that large to amass that number of contacts.

• Maintenance is the greatest challenge for people databases. It’s easy to aggregate a bunch of names and titles, but once you go beyond the C-Suite, it’s incredibly difficult to maintain that information. Jigsaw implemented a crowdsourcing model where its users could challenge and update any records that were incorrect. In other words, every time a sales rep dialed an outdated number or had an email bounce back, rather than getting annoyed, they had an immediate opportunity to gain “points”  by updating the record in Jigsaw.

 
The second, and less obvious change that Jigsaw has brought is a mass-market data cleansing & management solution. While Jigsaw is known as a prospecting database, a large part of its revenue comes from selling what it calls its “graveyard”. Customers with large CRM databases can compare their data to the Jigsaw graveyard, identifying and cleaning up any “dead” records. For those records that are active, Jigsaw can append missing or updated information such as direct dial phone number, new titles and more.

Acquiring Jigsaw is a very smart move by Salesforce.com. Since the birth of the CRM industry 20 years ago, one of the biggest challenges has been populating and maintain quality data. The way to get sales reps, generally averse to any kind of reporting, to actively use a CRM system is to provide compelling leads. Unfortunately, maintenance is often an afterthought, so even those systems that get off to a good start often become a neglected mess of useless information.

For traditional aggregators of people data, this will place added pressure on what was already a difficult market. Providers such as InfoGroup, D&B, Leadership Directories, Hoovers, ZoomInfo and others will need to step up their game. While each of those providers can point to core markets where they provide specialized services not offered by a generic database like Jigsaw, a significant portion of their revenues come from more general use of their data. As Salesforce more closely integrates the Jigsaw platform, it will make it significantly more difficult for these businesses to succeed.

Congratulations to Jim Fowler and the Jigsaw team. They’ve built a rapidly growing, highly disruptive business in an important segment of the content industry.

(Note: Jigsaw was named one of the "50 Content Companies that Matter" by the Content Matters blog in December, 2005).

Does the SEC need to win its case to punish Goldman?

There’s been a lot of talk this week about how the SEC’s case against Goldman appears somewhat flimsy and that 2 of the 5 commissioners voted against bringing the suit. Yet I wonder, how important is it that the SEC wins its suit?

Regardless of how the legal battle turns out, it’s pretty evident that Goldman was not acting in the interest of the clients to whom it peddled the deal. Whether or not Goldman’s behavior was illegal will be left to judge and jury; whether its actions were unethical will be decided in the courts of public opinion and by its clients.

Regardless of whether they win their case, the SEC will achieve its goal of exposing unethical behavior that flies in the face of Goldman’s purported “customer first” culture.

At the same time, it’s likely that the SEC will bring charges against other firms, perhaps Deutsche Bank for the Magnetar deal.

This will strengthen the SEC; Mary Schapiro has already demonstrated a much more aggressive approach to enforcement than Chris Cox or, certainly, Harvey Pitt. I think that it will also make CEO’s of financial institutions approach their business differently. No longer will the signoff of the firm’s general counsel be enough to say that something is legal; unethical behavior can bring punishment as well.

It’s already apparent that derivatives regulation is getting a new bounce from this and will likely be part of a banking reform package more likely to now pass. Meanwhile, Goldman is likely to have some fallout from clients, particularly public pension funds.

Now, there are many who will argue that the SEC (or any regulatory body) is overstepping its bounds by using litigation as a means to punish, even if they don’t believe they will ultimately win. But the regulators are working from a position of weakness. Policies of the past decade, combined with budget cuts have lessened their authority and effectiveness. Meanwhile firms often see fines as simply the cost of doing business. 

But it wasn’t the $16m fine that has so damaged Toyota and it won’t be the dollar value of any ultimate fines handed down by the SEC that hurts Goldman, Sachs. The only real asset a financial institution has is its reputation and, win or lose, the SEC has already tarnished the appearance of 85 Broad.

What the iPad Will Replace (and what it won’t)

Yesterday, I had an interesting conversation with a good friend, who asked me the following seemingly simple question:

I have a (company-provided) laptop and Blackberry, a mobile phone and a Kindle. Which of these devices does the new iPad replace?

While the easy answer would have been “the Kindle”, the more accurate answer took a little longer to explain. In essence, the answer was “with the exception of the Kindle, the iPad really isn’t designed to replace any of those. In fact, the iPad isn’t really aimed at you as a business device.”

Now, my friend Jim is no technophobe. He’s the top salesperson at a rapidly growing technology company. He’s spent his entire career doing missionary sales, taking technology products into new markets. But he made the same mistake many of us who’ve spent our careers in technology have made – assuming that new technology products are aimed at the business user.

To a great extent, that’s no longer the case. The days of the hand-me-down PC moving from the office to the home ended years ago and much of today’s innovation are coming in the consumer space.

So, when I think about what the iPad will replace, I don’t look at my briefcase. Instead, I look around my house.

At least 2-3x per week, I find myself searching on the iPhone to answer a question from my daughter. Usually simple things like using IMDB.com to see who was in a given film or to look up an address.

I have multiple ways to listen to music – through iTunes on a PC, through Pandora or Hype Machine, or by playing CDs through an old fashioned stereo.  I also like to listen to NPR and other radio stations.

When I want to access a movie, I can buy a DVD or get one from Netflix, use my DVR or search through cable’s On Demand menu. Oh, and when my daughter asked me if Spider Man 2 would be on TV soon, I used the What’s On? App on my iPhone.

My daughter likes to use her Nintendo DS to play games at home; she also uses it when she expects to be waiting around for a while, such as at a doctor’s appointment or waiting to be seated at a restaurant. When she forgets her DS, she grabs my iPhone to play Skeeball.

On a bookshelf in my family room is a digital photo frame showing the latest family photos. OK, not really the latest, because it doesn’t synch with my PC, so I have to remember to update the images on the CF card. So, no, my daughter’s not 8 anymore, but I haven’t updated the photos in 3 years.

My daughter is also a voracious reader; she typically has at least 4-5 books on her nightstand at any given moment.

I still get the NY Times delivered in print form. I’ve come close to getting rid of it a few times, but the format still works on the subway where I have no connectivity.

I’ve got a high quality metronome, but for quick guitar practice I sometimes use the one on my iPhone (Guitar Toolkit app) but the volume isn’t as loud as I’d like.

I read tons of content on my iPhone – from Twitter, RSS (NewsRack) and various apps – NPR, FT Mobile and the NY Times.

I’ve got a 45 minute train commute from the Westchester ‘burbs; I fire up the laptop when I get on. Then I’ve got a 25 minute subway ride that is much less productive (hence the printed NYT).

I think that the iPad could easily impact all of those uses. If you have one on the coffee table, it becomes your music controller. Web browsing is a lot easier than on the iPhone, especially for my 45-year old eyes (that’s 90 years of eye strain between the 2). Netflix on the iPad is a great start, but I see this replacing Roku and other devices soon. The NY Times is a no-brainer, of course, as are all the other sources I read on my phone. And while my daughter isn’t ready to give up her DS, if Super Mario was available on the iPad, she’d definitely give it consideration.

And that’s just to start. In the kitchen, the iPad replaces cookbooks and the small screen TV many of us have (note to accessory makers – strong opportunity for a cool iPad easel).  Parents with young children likely own at least one portable DVD player for long car trips.

I’m not the road warrior I once was, but when I travel, it would be great to have that single device on the flight which I can use to read, listen to music and watch a movie. Yes, I can do that today with a laptop + iPhone + Kindle, but would be nice to have it all in one slim device. And when my flight is delayed 2 hours, I’ve got pretty full productivity in the airport.

And of all the things I've described above, wouldn't it be nice to be able to do them when I'm at the skating rink, waiting for my daughter to finish her lessons or in the park or at my in-laws, who don't have a computer? (And that's why I won't be among the first to get the iPad - getting the iPad without 3G would be like buying a laptop that only runs on A/C power, not batteries).

And the apps. All those apps. I have 5 screens of apps on my iPhone, many of which I use regularly. With all that screen real estate, creative developers will come up with even more great apps.

So, I think the iPad will replace a lot of the things we use on a daily basis, though many of them are not “devices” today.

Now, back to Jim and how it will impact the business user. Perhaps it won’t be powerful enough to replace Jim’s laptop. Jim’s a road warrior type and spends 2-3 weeks of the month traveling. I can see where he’d want his “full” PC with him at all times. But that’s not the case for many business travelers. I recall when investment bankers first got their Blackberries (circa 2002) and many were thrilled that they could leave their laptops home when they travel, as they really only used them for email. I’d bet that there are many business travelers who could survive on the road with a smartphone and an iPad.

Of course, what has made the iPhone so successful is the creativity of users and developers. There were many naysayers a few years ago who thought the audience for the iPhone would be limited. You don’t hear that so much today.

The iPad is only the first of what should soon be many inexpensive tablet devices. Some will run Android, others will run variations of Windows 7. Within 2-3 years, these devices will sell for $200-300 and most of us will have several in our homes. Will the iPad be the perfect device? Of course not, but it will probably impact our lives in ways we’ve yet to imagine.

TheFlyontheWall.com barred from republishing analyst recommendations in real-time

In a court ruling yesterday, US district judge Denise Cote ruled against financial content aggregator TheFlyontheWall.com, barring them from distributing analyst recommendations from three key banks in near-real time.

The suit was brought by BarCap, BofA Merrill Lynch and Morgan Stanley, which argued that the service should not be allowed to republish their upgrades and downgrades until at least four hours have passed from publication and not before noon each day.

Under the judge’s ruling, theFlyontheWall will be barred from publishing such recommendations before 10am for reports published prior to the market open (9:30am) and within 2 hours of publication for those issued during market hours.

The ruling could have serious implications for news services and blogs which often write about analyst recommendations soon after publication. The judge’s ruling did leave a bit of a window, saying that reporting the analyst changes in the context of market movement would be ok (for example, to report that PALM stock was down 20% on Canaccord Adams downgrade). Specifically:

Theflyonthewall.com won’t violate the injunction if it refers to the banks’ recommendations “in the context of independent analytical reporting” of a significant market movement on the same day, the judge wrote.

Unsurprisingly, the ruling has caught the attention of financial bloggers.

Barron’s Tiernan Ray writes “The question for myself and others, such as my friend and colleague Eric Savitz, over at the Tech Trader Daily Blog, is how much room the ruling gives bloggers and reporters to write about what’s already moving stocks pre-market or throughout the day.”

He asks the logical follow-up question:

So, does that mean that before 9:30 am, Eastern, I and others should refrain from even referencing analysts’ equity research reports regarding stocks?

The Globe & Mail's Streetwise blog points out that while BarCap, Merrill and Morgan may have sued, many firms actively seek the exposure provided by having their recommendations published:

The banking industry is pretty split on the practice. Some firms send research immediately to media organizations (including this one), while others still try to protect analyst reports so that they have more value to select clients - the ones who pay the bills by generating trading commissions.

For those that encourage media reports, the tradeoff is a little free publicity, and in general the pendulum has been swinging that way.

The ZeroHedge blog, whose servers host TheFlyontheWall service, responds in their typically snarky way in a post with a title too long for Twitter:

Banks Stifle First Amendment, Attempt To Create A Tiered Market Of "Clients" And "Everyone Else" As Theflyonthewall.com Is Blocked From Instant Stock Research Reporting

This is merely a case of picking on the weakest: the next ones to lose their First Amendment right will be, in order of importance, StreetAccount, Thomson Street Events, Briefing, and, ultimately Bloomberg. The reason: keep the market as two-tiered as possible so that clients of the above three banks (which list will likely expand promptly as more banks join in) have an upper hand over all the slower retail and algo operations. With this forced lag in information (which is a joke because anyone who cares, knows the second a research report goes public anyway), and with the ever increasing transaction times courtesy of nanosecond collocation facilities, soon the self-cannibalizing market will only rely on stealing money from those accounts who are still willing to participate in a market that is now split into two distinct groups: those who make money, and are clients of MS, ML and Lehman (and the rest of Wall Street), and everyone else.

For those interested in reading the full ruling, you can read the complete injunction here.

Burn the Boats: Marc Andreessen's advice to old media

Eric Schonfeld at TechCrunch has a fascinating post today, based upon an interview conducted with web innovator Marc Andreesen.

Andreessen's advice to traditional media companies: burn the boats, a reference to the legend that Cortes ordered his men to burn their ships upon arrival in Mexico, so there was no option of going back. Andreessen has long suggested that print media abandon its roots, killing their print offerings and fully embracing the web.

The comments have spurred a spirited debate on Twitter, and ignoring the chatter about whether or not Cortes actually issued such a command, the debate is a good one. 

John Robinson, editor of the (Greensboro, NC) News & Record says "My advice to Andreessen: Buy a newspaper & show us how to do it, big talker"

While of course, Marc can raise these issues without personally worrying about how to deal with laying off thousands of employees or explaining massive short-term losses to shareholders, he brings out some very interesting points in the discussion.

I found most interesting his comments about the iPad:

”All the new companies are not spending a nanosecond on the iPad or thinking of ways to charge for content. The older companies, that is all they are thinking about.”

But people pay for apps. Wouldn’t he pay for a beautiful touchscreen version of a magazine? Maybe, if it were something genuinely new that blew him away. It would have to be more than an article with video and graphics though. (I agree, otherwise it’s no better than a CD-ROM).

Oh, and he points out, that the iPad will have a “fantastic browser.” No matter how many iPads the Apple sells, the Web will always be the bigger market. “There are 2 billion people on the Web,” he says. “The iPad will be a huge success if it sells 5 million units.”

I think that's a huge point. The iPad, Kindle and new eBooks to come cannot save traditional media. Sure, they can provide a short-term revenue bump, but they are not going to replace the classified ad business and it's not going to restore paid subscription rates to where they once were.

As for Cortes, I can't answer whether he made the famous "burn the ships' command as they entered Mexico or only later, when he feared his captains would leave for Cuba. But I'll use a different analogy, one familiar to any New Yorker.

In 2000, after trading Patrick Ewing, the NY Knicks went into a downward spiral. They threw good money after bad, putting themselves deeper and deeper into a hole. Rather than cleaning up their balance sheet when they could, they brought in Isiah Thomas, who took on horrible contracts for players like Stephon Marbury, Tim Thomas and Vin Baker. At each step along the way, Isiah seemed convince that adding one more high-priced former star would turn the team around. Predictably, the team's record got worse while their salary cap situation worsened.

As with newspaper companies, who say their shareholders would not tolerate years of painful losses in order to transition the business, we always heard that New Yorkers would never accept a few years of rebuilding by the Knicks.

Fast-forward a few years and the Knicks finally fired Isiah, replacing him with Donnie Walsh. Walsh set as his top goal to get the team below the salary cap in time for the free agent class of summer, 2010. And while it's still months before we'll learn whether the Knicks will be able to sign Dwayne Wade, Chris Bosh or the ultimate prize, Lebron James, Knick fans have been incredibly patient and supportive of the turnaround. Will it all end well for the Knicks? No one knows, just as we can't yet know whether a clean break from print for media companies will ultimately pay off. But, as with the Knicks, following the same failed course does not seem to be an option.