The Importance of Innovation

In 2009, Blockbuster reported a loss of $558.2 million, in 2008, $374.1 million, and in 2007, $85.1 million. To put that into perspective...that's over a billion dollars lost in the past 3 years. In response to their gaping financial wounds, Blockbuster plans to close up to 545 of their retail locations and cut back significantly on advertising.

I never like to be the one to say I told you so, but this is what happens when people are late on the shifting trends in human behavior. In another retail business, Barnes & Noble, faces falling profits because of digital readers and online booksellers, forcing them to create their own contraption, much later than Amazon released its Kindle, and with much less hype than Apple will release its iPad.

With the internet and the instant gratification of knowledge being at ones fingertips, people are accustomed to being able to do everything from their home. And if they can get things instantly, like an on-demand video or an ebook downloaded directly to their digital reader, they're going to spend their money in that manner. They're not going to scour through a retail outlet for a product that might not even be available.

But what happens when a company is late to a party? They're not the belle of the ball. When people think of mail-service video renting they think of Netflix. They don't think of the blue and yellow of Blockbuster, and won't if the chain plans to cut back advertising. When most people order books online, they think of Amazon, not Barnes & Noble. They don't think of the Nook, they think of the Kindle and the iPad.

Blockbuster plans to place "Express Kiosks," like Red Box to compete with that source of video rental, but once again they're late. Red Box has its vending machines outside the most popular convenience store chain, 7-11, which are located everywhere and the perfect place for someone looking for an impulse $1 movie rental. So once again they're late.

There was a time when Blockbuster could have capitalized on its strong brand name to create a monopoly on these new technologies and services. But for some reason I feel like there was someone in the board room saying, "Oh, people won't go for that. Those businesses will never last." And I'm sure that same executive is asking himself every night, "How did we end up in such a dire situation?"

The answer is change. You must always be open to it, and when new technologies and methods are available...give them a serious thought. Because if it's convenient...it's going last.

-- Steve Creswick
Ad Doctor

Who wants to read an E-Book?

Over the weekend, Amazon and MacMillan book publishing got into a little scuffle over how to price their e-books. Amazon wants all e-books to be priced at $9.99 to entice people to buy a Kindle and read using their technology. When the Kindle first came out I remember an army of nay-sayers claiming people would never pay for both the expensive gadget as well as the 10 dollars for each book, but that is in the past and the venture has been successful enough.

Still, Amazon refuses to price e-books at anything other than $9.99, which has angered publishing companies. The bookseller take a loss by pricing them so low, but they make up for that loss by selling Kindles. The publishing companies believe that pricing e-books this low can last forever, and will even take a less percentage of profit to have their products priced higher. Apple will allow publishers to price their own books for the iPad, and they want the same from Amazon as well.

But the real question is not about Amazon or MacMillan or Apple. It is, why would the consumer want to pay close to the price of a regular book for an e-book? They're not thinking about the author who put so much time and effort into the tale they're reading. The reader is thinking about what they get for their money.

They do not get a tangible product they can lend to their friends. They get words on a screen, which can be found just about anywhere one looks on the internet. So, if you want to price e-books higher, there should be an incentive to purchase them over a hardcover or paperback copy, shouldn't there?

Well how about we borrow some marketing practices from other mediums.

1. Downloadable Content: It is popular for videogames in the digital age to offer free downloadable content with pre-orders of all the big releases, whether it be extra missions, or unique equipment. Maybe include a short story download, an extra chapter(not essential to the story of course), or access to those in the future.

2. Embedded Soundtrack: Set the mood with fitting music to accompany whatever chapter or page the reader is on.

3. Commentary: DVDs have optional commentary, so maybe e-books should have optional notes written by the author to clarify certain things, and expand on certain reasons for taking the path he/she did when writing the narrative.

1. Allow readers to upload their own notes and commentary, like when you buy a used book for class and most of the important stuff is already highlighted.
2. Access to commentary and opinions of reviewers, or academic essays in the case of certain books

4. Include concept art: We live in a visual culture. Some video games and movies offer concept art with their Collector's Edition packaging, so why not have an artist rendition of major scenes or characters included?

-- Steve Creswick
Ad Doctor