In March, my friend Robyn and I started a meet-up in Portland for book publishing professionals. There is a great mix of folks in town who work in all different nooks and niches of the industry. Some of us know each other, but we rarely have a reason to get together and talk shop. We’re hoping to solve that.

This weekend, our group took a field trip to Amazon Books at Washington Square, just outside Portland.  This store was the second store to open. They now have over 15 stores open and almost 50 pop-up locations around the country. We made the trip because many in the group hadn’t visited one of the Amazon stores yet.

I wrote about my visits to stores in 2017, so I don’t want to repeat too much of that review but let me share some of the group’s observations from the visit:

• There was a generally agreed upon feeling that it felt like “a showroom for books”. All of the big books in all of the categories were represented. If you had a popular series like Game of Thrones, all the books were there in their signature face out, cover view on the shelf.
• A more cynical way to describe the store would be as “a place for people who don’t read”. It was be hard to go wrong with the selection they have in the store.
• The opposite side of that is that you didn’t feel like you were going to find new or edgy or out of the way titles that book nerds would be on the look out for.
• The selection in the store is 100% determined by headquarters. One of the bookcase descriptions said they used customer ratings, pre-orders, sales and popularity on Goodreads. Another bookcase was a selection of books that has been read on the Kindle in three day or less.
• Every book has a placard with the title, author name and a customer review from Amazon.  A few didn’t like them on every book. A few of us observed that with the books face out, we were much more likely just to pick up the book rather than read the signage for each book.
• A favorite transposition from the online to the physical was the “If you like this, you might like that…”. There were a number of bookcases through out the store stocked in that configuration.
• Two people in the group bought books in the store.  With an Prime membership, you get the same price as the online store.  If you used a credit card stored in your Amazon account, they auto-magically looked up your Prime eligibility.
• At the checkout, there was a upsell offer for either 30 days free of Amazon Music or two free audiobooks at Audible.
• It appears they sell alot of Prime memberships in the store with people wanting to get the discount at checkout and then use all the other benefits that come with it.
• The electronics section with Alexa, Kindle and Fire takes up about 20% of the store but not many people were interacting with the devices.

The store was fun to explore with like minded folks. Glad we did it.

Photo Credit: Jean Wimmerlin

Jens Krause studies the flocking behavior of animals such as birds and sheep.

By observing schools of fish, Krause, with his collaborator Ashley Ward, developed a theory involving what they call quorum responses. In small groups, a single leader could dictate the direction of the group, but as more fish were added, more leaders were required to determine the direction for the group.

In 2008, he published a paper suggesting an additional set of animals—humans— followed a set of behaviors similar to those of the others he studied. At the prompting of a German TV station, Krause ran an experiment to see if humans displayed similar behavior.

The study put two hundred volunteers in a convention center and gave them three rules:

1. Don’t talk to anyone
2. Walk slowly
3. Stay within arm’s reach of one person in the group.

With that, the group was told to wander freely within the constraints of the given rules. In every test they ran, the group formed two concentric circles.

Krause ran a second experiment with a slight alteration. Keeping the same three basic rules, the researcher pulled aside five people and asked them to walk toward a target on the far side of the room.

The small group, which made up 2.5 percent of the overall, arrived at the target with the rest of the volunteers in their signature concentric circles. Krause added five more people to the target seeking group, raising the overall amount to five percent. With that small change, the entire group of two hundred arrived at the target.

What’s amazing is the power of a small group to influence a large group even when the minority is acting individually and without knowledge of one another. Krause says that when information is scarce, a small group of people can become “disproportionately influential” until the information has spread. Our participation in many social networks decreases the likelihood of complete obedience to the desires of any single group, but Krause’s research shows how we might create information cascades for our startups, situations where people observe others and make the same choice as the group, independently of their own personal knowledge.

Thresholds clearly exist for when a few can influence the many.

Author’s Note: Please read Nick Bilton’s great book I Live in the Future & Here’s How It Works. His Chapter 4, “Suggestions and Swarms,” talks more about Jens Krause’s research.

I was listening to Daniel Glass today at Bob Lefsetz‘s Music Media Summit. His fourty year career with labels in the music industry is marked with hit artist after hit artist. There were misses too. He talked about making bad picks on what seemed like good bets. Yesterday, it was Troy Carter, who managed Lady Gaga through her rise to stardom. Bob did a good job with the interviews but you still had to listen close. There were faint patterns in both stories.

I heard focus. Gaga had been dropped by her label when she started working with Carter. It was his only act. Glass’ first act at Glassnote was Secondhand Serenade and he poured everything into it.

I heard quality. People wonder why records (that is the word they used) don’t work and it’s because they are not good records. They aren’t hits. Both of them talked about the tension and the honesty needed to make great music. You need producers. You need musicians. Glass tells artists to stay in the studio until they find it.  He then tells them to test the songs live with an audience. Mumford and Sons have been play new stuff for a year at their concerts and Glass is just hearing it now as they make the next album.

I heard amplifying. All artists should build relationships with their fans. There is a line of thought that says the indie route is enough. I believe to scale an idea that there are many well worn paths in each industry and people who have spent decades walking those paths who can help. Those sales, publicity, marketing and promotion people can open doors that most artists can’t. Glass talked about the key radio stations he needed to convince to get the airplay needed to launch a new track. I have heard people say that you are just renting those roldexes and in the long term you don’t gain anything. That might be true but the right connections can give immediate power to an artist’s idea in a way they can’t do themselves.

Last summer, one of Bob Lefsetz’s emails arrived in my inbox. I like Bob’s take on music, the music industry and culture in the broadest sense. I don’t always agree and on this morning, I found myself in that position.

Bob was writing about books and the myriad mistakes that the publishing industry was making:

Now I’m hesitant to recommend books unless they’re slam dunks. In a short attention span economy people want to go deep, but to get them over the hurdle, to get them invested in a book, is a huge step. Meanwhile, the inane book industry is doing is best to kill the Kindle, with readers and bookstores singing hosannas, not realizing they’re relegating themselves to second-class citizens in the digital economy where we all live. Music revenue goes up with streaming and publishers believe by charging more for digital books they’re winning. That’s why Kindle sales are off. Used to be all digital books were under ten bucks. Makes sense, doesn’t it, with no printing and no shipping and no returns? But now, oftentimes the paperback is cheaper than the digital equivalent. ON AMAZON! People pay attention to price. And they’ll pay for convenience, but not if they think they’re being ripped-off, and this just sticks in my craw. T-Mobile revolutionizes the mobile business with competition, by lowering prices, but the publishers are a cabal supporting unrealistically high book prices to their detriment. And ours. And now I’m off on a rant, but no one is more self-satisfied than those who work in the publishing industry. The only reason they can survive is because there’s so little money in it. If there was any cash, Silicon Valley would swoop down and disrupt them. Which is what Bezos tried, instead he’s now revolutionizing news with the “Washington Post” and voice-activated computing with the Echo. If someone is not turning over bricks in your space that means you’re too far from the mainstream.

End of rant. Because now I’ve lost all the readers, because they love their physical books, and the non-readers, because they don’t give a shit.

Not sure what posessed me that morning, but I felt I could respond to his rant with my experience from the world of book publishing. For some of his more popular posts, Bob will send a follow-up with a collections of the responses he receives.  The next day he shared my response and unless you subscribe to his newsletter, you never saw it.

Bob,

Long time listener, love the show.

I have worked in book publishing for the last 15 years and have played in just about every role of the ecosystems – author, agent, editor, publisher, bookseller, foreign rights. It’s been a trip to watch all the change over that time and I don’t think that change has the same effects across all media industries.

Your rant about books, digital and pricing is one near and dear to my heart. Here is my take.

Most book publishers look at the world as one of scarce attention.  They use price discrimination as their mental model for how the economics of the industry should work. They think they sell a product with a limited shelf life, like a baker or cruise ship company.  Release the expensive hardcover, followed by the less expensive paperback, followed by the now largely retired mass paperback.  This creates high profits early in the cycle for the people who really want the book and attempts to open up other segments of demand as the price goes down. Since most books don’t sell many copies, they are doing their best to maximize profit early in the sales cycle.

You and Amazon share the worldview of price elasticity – if you lower the price, more people will buy it. I have run experiments with publishing projects and found this is true.  Lower prices sell more stuff. Here is the trick: Can you sell enough volume to make up for lost margin?  If you are selling a Top 100 title, I think the answer is yes.  For the thousands of other books in the long tail, this is the wrong answer and you can’t make the margin up on your hits.

Subscription services are the end game of a world of price elasticity.  Books are different animal though.  I can watch an entire season of Orange Is the New Black in the same time it takes to read the latest from Stephen King. Most people read one or two books in a YEAR. True readers might read ten to twenty books in 2017. Having a thousands of books to choose from and pay a monthly fee doesn’t make sense to even the one percent of readers.

And higher prices didn’t kill digital books. Yes, sometimes, I like to press a button and being able to start to read a book now.  Others like their books in the cloud rather than on a shelf. Turns out only 10% of the market has those needs right now. The screens that most people use (phone and laptop) are not great for reading. Research shows people read slower on devices. The 550 year old codex format is still a better device for the vast majority of people who like to read books. This is a technology problem. Maybe something like VR gives us a better way to read books.

Look for the market to move to shorter books with shorter chapters to fit better into our widely varied, time segmented media life.  You already see this in YA and business.

Thanks for listening.

It feels like a good day to share all of that. This morning, I flew down to Santa Barbara to attend Bob’s Music Media Summit.  I am here to listen to folks from a different segment of the media business and hear how they are dealing with the shifts and changes in the business of music.