Running up that hill

Running up that hill

The Bookseller’s Morning Briefing on Monday contained two dispiriting pieces of news for those interested in the innovations side of the book business. The audiobook streaming service Bardowl and the e-book platform Blinkbox Books were to close: the former because it simply ran out of steam, the latter because Tesco refused to back it further and a sale to Waterstones fell through. In both cases their demise was lamented not so much because of a loss of business, as one might regret the closure of a bookshop, but because the smart ideas underpinning these enterprises never got the chance to breath.

This is not unusual for start-ups, and though the blame for failure in the book business is often laid at the door of publishers (too slow to sign deals, over cautious about new models, and resistant to releasing content onto new platforms), this rate of failure is not unusual—most fail. Still, we might place both Bardowl and Blinkbox Books in a category of ‘we will never know now’, a box already filled by the likes of Small Demons, Readmill, Byliner, Paperight - and of course numerous others. As a blog posted by Michael Bhaskar’s new venture Canelo acknowledges, “the digital startup list that Michael runs is getting increasingly hard to keep up with”. We not quite in Fucked Company territory — these entities were generally not over-hyped, they did not needlesly squandor cash, and were not over-inflated by investors — but nevertheless it’s been a rough ride for the tech entrepreneurs, and one wonders what knock-on effect there is from each new failure. As the Canelo blog puts it, "What's the problem? Is there a problem?"

When Blinkbox Books launched to the public (Tesco first bought Mobcast and then rebranded it to Blinkbox) in March last year, I wrote in The Bookseller’s Leader column:“If Tesco wants to make a dent, it is going to have to be both bold and unflinching; it will need to compete on price, and back it with customer service. It must not underestimate the short-term costs of this, and it should be careful not to overestimate the medium-term rewards. It will need to treat it like a sprint, but understand that it’s a marathon.”

Sadly, Tesco proved to be none of these things, with new chief executive Dave Lewis having walked into a business nightmare that was in dire need of a refocus. Blinkbox paid the price, with its film and music bits sold off, and the books unit closed.

I do not think we learn much from Blinkbox Books’ financial accounts (the latest published document being for the 39 weeks to 28th February 2013, and reported here) except to say that it was loss making before Tesco bought it, and clearly spent the year up to it relaunch and the months afterwards investing heavily, both in under-the-hood tech, and in external marketing. Its mission to establish a tablet-based reading platform was always going to be a tough-ask, yet with the full-backing of Tesco, and access to its 17m Clubcard holders, it had a good chance of doing just that, particularly in those areas of commercial writing beloved of supermarket shoppers. A deal with Waterstones looked attractive to some — but it is hard to imagine James Daunt accepting the kind of losses Tesco might have sustained, and in truth it looked an uneasy fit. And this is not a market for the faint of heart. As Ron Martinez writes in this overview of his Aerbook project, “Replicating the success of big box, online destination retailing really cannot work anymore. That hill has been taken.

Bardowl had different issues. It was a smart idea, and built by smart people. And it was an idea of its time. There is clearly a burgeoning audio-book download market, as evidence by the growth of Audible, and appetite for content delivered via a streaming service, such as Spotify. Like Blinkbox Books, Bardowl suffered from the proximity of a larger competitor. But perhaps more fundamentally, it was hampered by the subscriptions based business model that publishers continue to be shy of getting into. Publishers might gripe at the size of Audible, its tough contracts, but since it pays a wholesale fee for each audio-book listened to, the numbers speak for themselves and what's more, they stack up. Furthermore, with the decline in production costs arising from the shift to digital, the profit margins have leapt forwards.

Bardowl was a tougher ask: under its pooled revenue approach it needed big user numbers for it to even begin registering in the minds of publishers, and in a sense for publishers it would have meant offsetting profits today for a more diverse marketplace tomorrow. Bardowl's problem was that it was unable to incentivise them (as say Oyster or Scribd have done with wholesale arrangement built on a subscription model), and therefore lacked the catalogue to attract enough listeners. I’d imagine it could have raised a bit more money, and trundled on, but with some publishers’ titles notable by their absence, it was not surprising that the founders simply decided to shutter the operation.

According to co-founder Chris Book, with only half the front-list available it couldn't market itself strongly enough to listeners, and the investment necessary to do this, or pivot, was not forthcoming given that two of the biggest publishers (Hachette and HarperCollins) declined deals on the model it was operating under. The classic publishing Catch 22. "We needed the publishers on board to get the investment, but without that investment we couldn't change the model to get those publishers on board."

On the face of it, this is dismal stuff. Publishers now have two fewer places on which to stake their content, and readers two fewer places to discover it. But there is another way of looking at all this. That the start-ups that don’t make it, simply allow us all to focus on those that still might, and help those in the foot-hills better understand what might work. Canelo is one such, and if its smart blog published today is anything to go by, it exhibits precisely that understanding about what came before to help it avoid the pitfalls. Of slightly older material is Unbound, a publisher that has deftly combined a new world approach to authors, with an old world sensitivity towards readers. I have also been impressed with Lost My Name, a personalised book publishing company that last year emulated Bardowl and Unbound by winning a FutureBook Innovation Award. Its recently issued—and somewhat cheeky press release—claiming to have have outsold Julia Donaldson showed imagination and guile.

Someday we will work out how to connect all these dots, in the meantime let's hope what was lost by the ending of Bardowl and Blinkbox Books was not as fundamental as might at first appear.