What Amazon/Macmillan brawl means for games

Late last week, Amazon and book publisher Macmillan got in a scrap. Macmillan demanded higher prices for it's ebooks on Kindle, and Amazon responded by pulling all books (digital and posthumous tree varieties) from it's store.

BoingBoing has a post going with updates [in which the discuss the fact that Amazon caved eventually].

A more detailed post describing one view of the battle that is really at play, can be found on (awesome) author Charles Stross's blog, here.

In it, he describes what is going on is really a more significant chess game in which Amazon and Apple (and the publishers for that matter) are trying to re-define the supply chain as it shifts to digital, and hoping to capture a bigger share of the pie as that happens:

The agency model Apple proposed -- and that publishers like Macmillan enthusiastically endorse -- collapses the supply chain in a different direction, so it looks like: author -> publisher -> fixed-price distributor -> reader. In this model Amazon is shoved back into the box labelled 'fixed-price distributor' and get to take the retail cut only. Meanwhile: fewer supply chain links mean lower overheads and, ultimately, cheaper books without cutting into the authors or publishers profits.

Amazon are going to fight this one ruthlessly because if the publishers win, it destroys the profitability of their business and pushes prices down.

The way I see it, as I commented on Stross's blog, is that Amazon is trying to use their strengths to squeeze suppliers out of a greater share of margin, while Apple is instead going to give suppliers a decent margin to get them favorable terms which they can use to deliver better end user offerings. This in turn they can use to try and win market segment share.

It will be very interesting to see how this plays out over time now that there is (real) competition in the ebook space.

What's interesting for anyone in the games business is that the same issues and tactics come into play in games, and you can see how people's positions shift over time. [e.g. MS offered 70 points to developers when they were trying to build a platform (XBLA) and win MSS (vs other consoles) but over time as the business stabilized and it was clear they had a winning platform, we saw the temptation to put the squeeze to that 70 point handover.]

It'll be worth watching what happens in the ebook space (as well that of music, movies, etc), as the same sorts of battles are being fought across all of them. Developers and publishers will do well to watch whether there are mistakes in other spaces they can perhaps avoid. For example should they make move to ensure competition, even at the expense of a more lucrative deal in exchange for exclusivity?

Book Review: Body for Life

On the recommendation of a friend, I borrowed and read Body for Life, and fitness book by Bill Philips.

I have mixed feelings about it. Short version is that the book is awful, but the workout program is pretty good.

From the first crack of the cover, when you are attacked with an array of Photoshop disaster before-and-after fakes, the book's 'facts' are pretty questionable. Worse still is that the author's writing is mostly a snake-oil pitch of pseudo-science (i.e. 'studies have shown that...' with no pointers to what studies, or what the science was behind the conclusion. In other words, 'take my word for it').

Here's the thing though. I thought I'd give it the benefit of the doubt (mostly based on my friend's praise for it) and try the workout program. I'm two weeks in, and it is *kicking* *my* *butt*. Definite results. Whether this is just a matter of changing routines up and pushing myself harder, or whether there's something special to the routine itself, I don't know.

The majority of the book is intolerable, and completely unnecessary filler. If you want to try it out, this one page gives you basically the entire workout portion of the book, consumable in 5 minutes.

There's a nutritional component to the book as well, but I skipped it (I have my own routine there already).

Body for Life: 12 Weeks to Mental and Physical Strength

Special Guest: Socrates!

I'm digging the iPhone game, Think Like a Shrink.

It's a text-dialog, adventure style game in which you play a therapist, interacting with characters and trying to get to the root of their issues. Only the characters are guys like Achilles, who will draw his sword if you ask the wrong questions.

As the characters respond to questions, you have to identify which defense mechanisms they are using and auger in on those areas with further questions.

It's fun, different, and educational. And for $2, you can't go wrong with any game where there are guest appearances by Socrates!

Night at the Museum

BoingBoing has this post explaining how the London Natural History Museum offers sleepovers for kids in groups of 5 or more (plus guardian) where they get to roam the museum's dinosaur skeletons and other wonders at night by flashlight.

OK, check! World, STILL AWESOME!

Book Review: Free

Free: The Future of a Radical Price

Man, I really wanted to not like this book. I'm not sure any other book has been cited, oft out of context, to me over the past year. The fact it was cited to me to make points I disagreed was what made me want to read it. I realized it was often being cited incorrectly or out of context, but did have other issues with the book.

After reading it, while I *do* have issues with it, I have to highly recommend it nonetheless.

The basic thesis is as follows: As the marginal cost of creating & delivering a product drops towards zero, its price will do the same. It then goes on to discuss how when the price goes to zero, interesting things happen.

The thesis is sound. And the important part relevant to many cases cited (e.g. print, music) is that when the cost of *creation* of the product is near zero, then you have a market where the cost of delivery is the biggest factor, and when that falls to zero, things go non-linear. (Divide by zero = undefined :-)

I agree with this 100%, and it's clearly had huge impact in many areas, some of which are cited in the book. Craigslist decimates Newspaper classifieds. Online distribution completely tips the music industry on it's side, Amateur journalism gives pro a run for its money, etc.

There are a couple issues I have with the book:

1. Inconsistent definition of "Free". The author cites many different versions of 'free', some of which have been around a long time. Take for example "free prize inside". Early in the book, he points out that this isn't really what he means by free, because it's just bundled into the price of the product. Yet later in the book, he cites this as an example model of free. I think this a case of the author falling into the very common trap of trying to stretch the thesis too far. This happens a lot in business books, and it's a shame, because it dulls and confuses the fundamental point, which is a really good one.
2. The author doesn't adequately take the cost of creating the product into account. He mentions it, but often only looks at the cost of distributing the product. He gets around this by saying that when the product is made of bits, the distribution cost goes to zero, the development cost is sunk, and therefore can be viewed as negligible. However, there are two cases where the cost of development cannot be ignored. One is when the market for a product is limited. At the end of the day, the development cost has to be distributed across the total customer base, and if that is finite, then lowering your distribution costs may let you get more efficient, but once you saturate the market, that's it. The second issue (and it's kind of the same) is when the cost of developing the product is really high. If you made a film that takes $100M to produce, and you beleive it has a market of 100M people, then the per user cost doesn't go to zero, it goes to $1 (given perfect efficiency, etc). Anyhow, I would have liked this more thoroughly taken into account.
3. Free doesn't exist in a vaccuum. While the simple thesis looks at cost of developing a product and cost of distributing the product, these are only a couple factors. Lip service is paid to things like cost of supporting a product, shelf life of a product, value of scarcity (real or perceived), value of exclusivity (real or perceived), etc. While these are mentioned, it is only in passing. Depending on the product or business being looked at, the value of these things may be a signficant factor that needs to be taken into account.

These issues aside, the book is highly recommended. At the very least it'll give you some food for thought about your business. As a bonus, there are many examples included from the games space, including demos/trials, freemimum models, etc.

I'll post another set of thoughts about some implications for the games industry when I get a few moments.

Book Review: Starbucked

I find Starbucks a fascinating business. Last year I posted a review of Its Not About The Coffee, which I didn't find very useful at all.

Not so with Starbucked. It's a far more even handed look at the Starbucks phenomenon. It both gushes about the ingenuity and bravado of its management in growing the company as it has, and also shines light directly on the areas of criticism the corporation receives.

On the positive side, the book looks at how Starbucks spread the taste for better coffee, brought it's own version of the italian cafe to America and then to the world, and had the bravado to put a starbucks across the street from a starbucks and prove that it RAISED sales of the first store.

On the other hand, it doesn't shy away from talking about the plight of coffee growers, asking whether mom and pop independant coffee shops are being crushed by mega-chain outlets, and whether their ecological and humanitarian efforts are just a thin veneer on an otherwise profit-driven machine.

Both sides of the argument hold some good lessons, so give it a read.

Starbucked: A Double Tall Tale of Caffeine, Commerce, and Culture

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There's another discussion to have about this book, which is a parallel with a part of the games industry, which I'll discuss in another post. The book talks about this argument that the Starbucks mega-chain is putting mom and pop coffee shops out of business. Then it goes on to cite evidence that there are actually MORE independant cafes now than before Starbucks inception, and goes on to make the case that while there certainly is the issue of competing with Starbucks, this is dwarfed by the growth Starbucks has brought to the market itself. In other words, Starbucks brought people to $3 latte's that were never there before, creating a market that didn't exist.

Doesn't this sound familiar?

Both World of Warcraft and the Wii come to mind as games phenomena that some argue have kept gamers from buying more product and spending more money. Others then argue that these have grown the overall market. Time will tell which is correct, but if Starbucks can grow the overall market for indie coffee shops, then its certainly feasible that WoW and the Wii will prove to have done the same for gaming.

Book Review: Media Meltdown

When I was a kid, I don't know exactly what age, maybe 10, my dad had a conversation with me about interpreting the news. I don't remember exactly what precipitated it, I think it was a newspaper headline that he didn't agree with. He asked me to think about who might have written the story and why, what they were trying to get me to beleive, and whether there might be another point of view. I don't remember the subject of the piece, but the conversation itself was pivotal for me, and I always questioned media messages after that.

In recent years, I've wondered at what age I should be having that same conversation with my own kids. The twins are 6 now and they are certainly exposed to a lot. I've heard Tom telling his sister that "batteries are not included" with a toy, or that she might not be able to buy something because "supplies are limited" (shudder).

I don't think it's something that you specifically sit them down for a talk ("Now kids, let me grab my pipe and slippers and talk you about the birds and the bees") but rather plant seeds of questions for them to ask themselves as they consume media, play with toys and games, etc.

Given that I've been asking myself these questions in recent months, my ears perked up when I caught wind of the following book:

Media Meltdown is a comic book adventure about some small-town kids that witness a crime and attempt to bring the perpetrators to justice. Along the way, they learn about media, advertising, and how it is changing with the advent of the Internet. It's a short, fun comic that I'd highly recommending adding to any 8-15 year old's diet.

I'm going to see if the twins like it. I fear it may be a little too complicated for them just now. I'll post an update on how its received.

The Five Year Post

2010 has started with a ****load of work, and so the usual set of predictions I'd write at the beginning of the year has had to wait. At the same time though, I noticed that the fifth anniversary of my blog has come up. I thought it was worth taking a few minutes to ponder what's happened in that time.

Personally, a lot has happened. The twins went from cute little one year olds to thriving, brilliant little kindergartners (and gamers!). We had a smaller auxiliary backup child. I moved from Intel to Microsoft and back to Intel again (which brought a move from PDX to SEA and back to PDX). I went from running an engineering team to doing business development to doing long-term business planning. Hard-core games to casual games and back again. I edited GPG5, and of course, wrote a 1301 of blog posts. 1302 if you count this one.

To quote JK Simmons in Burn After Reading, "So... what have we learned?"

I'm certainly posting a lot less, from almost 400 posts in my first year, down a bit in 2006, sharply dropping off 2007,2008, and levelling off in 2009 with almost 150 posts. Part of this is attributable to things like Facebook, where more trivial short subjects and links might get posted as a FB status update rather than a blog post. Mostly though, it's concentration of my effort on the blog toward matters that I think will provide interesting food for thought and spur conversation in the blogosphere. In contrast, I do less linking to other people's stuff (I really should get my del.icio.us links working in an automated fashion, as it would make doing that far easier)

I did a couple experiments in generating revenue. I never thought these would amount to much, but want to experiment a bit just to understand the mechanics of it:

• I tried advertising with Google, later switching to TextLinkAds. the latter pays WAY more, generating a steady $30/40 month (google was much less). Hey, its beer money.
• Amazon associates, for my level of traffic, is hardly worth the effort, generating maybe $10/year for me. The new relationship with Google should make the link building/posting easier, but otherwise its not worth the bother.
• There was a period a couple years back when bloggers/social media frequented the news. A bunch of people sent me copies of products in hopes that getting blogs to write about them was the new path to success. That seems to have tapered off, which I believe indicates less indiscriminate shot-gunning of product.

It's no secret that traffic can spike depending who links to you and why. The most popular posts (as judged by linkage, comments, etc) fall into a couple categories:

• Post-mortems of conference sessions that people couldn't attend, like this one trashing Google's Casual Connect session on AdSense for games, or this one on Stumptown Game Machine's iphone post-mortem.
• Opinion pieces on games business models/economics/marketing, like this one on used games, or this one on Indie games marketing.
• Anything controversial, like my post in defense of Chris after his Wii rant.

In thinking about it though, the popularity of the blog (what little it has) is of little import. The entire effort has been highly positive, and the value has come mainly from two things:

First, the blog provides a place for me to post my thoughts, and this in turn requires me to organize them. When I post something on a technology or business models or whatever, I'm forced to structure my thoughts into an argument, look to the other side, etc. This leads to a better understanding on the topic.

Bigger than this though, is what the blog has done to start new friendships or reinforce existing ones. It's through the blog that I've become (or become better) friends like Mark, Robin, Alice, Darius, Raph, David, and many many others.

For these two reasons alone I would highly recommend blogging as an activity for building relations, structuring ideas, and getting feedback. From this respect its been a huge return for the time invested.

Lets hope it continues to be for the next five years!