Black Friday? More Like $Green$ Friday

The initial returns are in. Unit sales of Kindles were 4X higher over Black Friday this year versus 2010 – and certainly the Kindle Fire helped drive it.

A man with nice starched cuffs holds a Kindle Fire

Amazon’s Kindle Executives had good things to say: “Black Friday was the best ever for the Kindle family – customers purchased 4X as many Kindle devices as they did last Black Friday – and last year was a great year,” said Dave Limp, Vice President, Amazon Kindle. “In addition, we’re seeing a lot of customers buying multiple Kindles – one for themselves and others as gifts – we expect this trend to continue on Cyber Monday and through the holiday shopping season.”

I love it! Another trove of consumers are enabled and buying eBooks.

A more interesting tidbit is that multiple media outlets picked-up on the rumor that Amazon reportedly takes a loss on every Kindle Fire sold. I want to know, however, why so may media pundits see this as a bad thing. Maybe they have a special concern for Amazon’s balance sheet or see an article with nothing but good news as boring – I dunno. But I do know this: if it’s true, and I believe it is, then Amazon is subsidizing the Kindle Fire the same way that Sprint, AT&T, Verizon and T-Mobile subsidize mobile phones. C’mon, you don’t think a 4G touchscreen smartphone with more power than Apollo 11 or the laptop you owned in 1995 really sells for $149? Or, do you?

Let me step back and channel Gordon Gekko for a moment, “Subsidies are good. Subsidies are right. Subsidies enable, lower barriers, accelerate efforts to win consumers and drive the sale of content. Subsidies will save publishing and that broken entity called the United Stttttttttt…” Wait – America needs more than subsidies.

OK, I’m back. Where was I? Oh yeah, so a subsidized Kindle Fire provides two positive incentives for the eBook industry:

1) It incents consumers to get in the eBook game by lowering the entry price (a good thing)

2) It incents Amazon to market and merchandize content like crazy so they can turn a profit on each Kindle as soon as possible (a very good thing)

Except for Wall Street analysts and Amazon’s direct competitors, I don’t know for the life of me who would be upset. I’m sure not and neither are my stable of authors.

Happy Holidays – Are You Working?

The political pundits and talking heads in the media are saying the unemployment rate just dropped.  No Kidding?!?!?

The seasonal workers are being hired to ensure stores are staffed for Black Friday.  Do the pundits think we are so dull as to overlook that fact?  Are we supposed to feel better?  The drivel is unbelievable.

This holiday I wish you luck in starting a search or finishing one that finds you fully employed in the new year in a full time job in the function and industry of your choosing.  Get a copy of The Rat, The Race and The Cage and start working on your plan now.

Why the EMI Deal Matters A LOT to Book Publishing

Think carefully as you read this…

In Publishing, we used to call it the “Big 6.”  That is, until the sinking Thomas Nelson ship was sold to NewsCorp.  Now it’s the “Big 5.”

In music, they call it the “Big 4” – Warner, SONY, Universal and EMI.  Well, they did until today when the EMI soap opera ended with Vivendi and SONY each buying about half of the once proud label.  Today Vivendi, a French media and telecommunications company, said it was acquiring the recorded music division of EMI for about $1.9 billion.  At the same time, SONY’s music division said it would buy the publishing side of EMI for $2.2 billion.

That’s $4.1 Billion total, for EMI.  Now, way back On February 11th (a mere 8 months ago) Citigroup acquired EMI Group and recapitalized the major label group in a debt-for-equity swap. Translation: Citgroup took equity ownership in exchange for a BIG PILE of debt it was owed.  Yowzza!

What would become a rocky ride started in August 2007 with the $8.4 billion buyout of EMI by private equity firm Terra Firma. That acquisition was financed with debt from Citigroup, and it became obvious that Citigroup would be forced to take over when Terra Firma’s debt came due here in 2011.

$8.4 Billion paid for EMI in 2007… $4.1 billion paid in 2011 equals a loss of approx $4.3 billion over 4 years and 3 months…. SO, on average EMI lost $81 million in enterprise value per month over those 53 months.  Sound familiar?  Go back and read my post on Thomas Nelson, the 7th largest trade pub that was acquired by NewsCorp / Harper Collins.

This is sad for music because it is the end of an era.  EMI, Electric and Musical Industries, was formed in 1931 when Columbia Graphophone Company merged with the Gramophone Company (remember the image of the dog and his master’s voice?).  EMI’s history started with the origin of recorded sound.  Now they are gone.

Why does this matter?  

The music labels got to where they are today because they failed to successfully navigate the digital revolution/conversion.  Along the way, small labels and ‘indies’ got acquired by large labels and, until today, there were the “Big 4.”  

If you don’t think book publishing is headed in this same direction, you are simply not paying attention – or you refuse to pay attention.  The difference being directly tied to the logo on your business card. (No offense.)