Thought du jour from Harvard Business School (motto: “There’s no B.S. like our B.S.!”)

Columbia Business School professor Rita McGrath studies innovation, corporate venturing, and entrepreneurship.  Her latest book is Discovery-Driven Growth (2009):

My biggest concern with the commercial model for social media . . . is that I don’t see how they are going to deliver complete user experiences in exchange for payments or advertising. I’ve written for a long time about the need for companies to create a complete “consumption chain” in order for their products or services to be successful. A consumption chain is the total set of activities a customer goes through in order to get their needs met, or their jobs done. When a link in the chain is broken or unfulfilling (or offers more than the customer actually wants), the business model breaks down.

Social media have some of the links in the chain covered perfectly. But they don’t make payment easy, delivery is unspecified, and there is no particular social benefit to buying from one party or another. On Amazon, in contrast, you expect to be sold something (it isn’t an interruption in a social conversation); they cover every link right through to final disposition; and it is easier to do business with them than to cobble together a solution from many different players.

Contrast the two experiences. Say you hear about a cool new something or other — say a handbag — from a friend on Facebook, or through a Facebook ad. If you want to buy the handbag, you have to visit the vendor’s site. Then find the model you want. Then dig out your credit card and enter a ton of information about shipping and payment. Then (probably) pay more for shipping, etc. The experience takes a lot of effort, and it’s fragmented. Shoppers are very likely to drop out somewhere along the way. Let’s take the same experience on Amazon. An image pops up saying, “People like you bought this handbag.” You click on the handbag. There it is. You click on one-click — there is your payment and delivery information. And if you are a “prime” member, there’s no delivery charge. It is easy and effortless, all the way through the entire purchase and delivery process. Facebook and other companies similar to it are a long way away from having something like that to offer advertisers. And of course, if the advertising on Facebook is truly engaging and interesting, why would an advertiser pay them to feature it?


Bad news from Kindle for indie publishers

Here’s my thumbnail summary of the news that’s been coming out this month about Amazon’s changes in its algorithms for calculating sales rank, which powerfully affect e-book visibility & sales.

First:  Just before Xmas 2011, along with 3 new Kindles, Amazon introduced KDP Select (KDPS) for authors.  If you commit your e-book to an exclusive 3-month contract with KDPS, it can still be purchased the same as ever, but now it also can be borrowed (for each loan, you get a cut of Amazon’s $600M promo pot), and you can promote it by making it FREE for up to 5 days during your 3-month contract.

FREE turned out to be a huge booster of visibility, & therefore sales.  First:  Amazon counted freebies as sales in calculating sales rank. The higher your book’s sales rank, the sooner readers see it when browsing.  Second: Any time someone downloads your book plus someone else’s, your book appears on the other book’s website, in the “People who bought this also bought…” section.

The result?  Indie/self-published books got to compete as equals with traditionally published books!  From Dec. to March, a well-written, well-presented indie e-book could “break through” into huge success & profits.

What happened next?  Here’s a summary from Ed Robertson (

Around March 19, Amazon changed the way they sell books. In a Kindleboards thread devoted to the subject, authors tracking the performance of books during and after a free promotion began reporting strange results. Prior to then, books that gave away several thousand copies during a promo would shoot to the top of the popularity lists some 36-48 hours later. It was like clockwork. Clockwork that paid you several hundred dollars.

Because the popularity lists are a big deal. These are the default book listings you’ll see when you’re browsing around by genre…. If you could ride a free promotion to the top of those lists, your book would be extremely visible to shoppers. Depending on genre and your book’s presentation, topping the pop lists could snag you dozens or hundreds of sales before other books overtook you. Sometimes that visibility was enough to launch a book into the stratosphere, where the stratosphere is also made of money….

Then, things changed…. Authors began reporting lower sales than expected as well as strange-looking lists. Chaos reigned!

Robertson did extensive tracking research, & found these changes in the new sales-rank lists:

    • Ranks are determined by the last 30 days of sales, with no extra weight given to the most recent sales
    • Free book downloads are discounted heavily–maybe as little as 10% the value of paid sales
  • Borrows don’t count as sales

…What does this mean, then? Well, for starters, it’s probably the end of the 3-day bump. This was the term coined on Kindleboards for sales on Select titles that had recently been free. In the past, … if you went free and gave away 5000 books, … your book would be credited with 5000 sales, vaulting it to the top of the “most popular” lists. With your book in front of so many customers, you’d see a lot of [paid] sales, spiking late on Day 2 and carrying through Day 5 or so as your rank decayed and your book was pushed down the lists by new titles rolling off free.

I don’t think that’s going to happen anymore.

So, many indie authors are looking for a new approach.  Smashwords?  iTunes?  Others are ignoring the change & figuring a little boost is better than none at all.

What’s your response?

writing in Italy with Henry James

from earth to heaven @ Scuola Grande dei Carmini, Venice

“…Romantic and historic sites, such as the land of Italy abounds in, offer the artist a questionable aid to concentration when they themselves are not to be the subject of it. They are too rich in their own life and too charged with their own meanings merely to help him out with a lame phrase; they draw him away from his small question to their own greater ones; so that, after a little, he feels, while thus yearning toward them in his difficulty, as if he were asking an army of glorious veterans to help him to arrest a peddler who has given him the wrong change.”  (from the Preface to Portrait of a Lady)