Friday, April 10, 2009

Independent Bookstores, the Printernet and the Bottom of the Pyramid

The problem with 20th century large organizations is that they have evolved to make money at the top of the pyramid. Now that prosumers are becoming their own VARs, the real action is at the bottom of the pyramid.

Some retailers have learned the lesson. Walmart and Costco figured it out. Starbucks not so much. Starbucks was best of breed in pushing and executing a global brand. When the funny money disappeared, they have to readjust. Now they are scrambling to succeed in a world of prosumers who can choose McDonalds - now the largest coffee seller in the country - or Dunkin Donuts at number 2. Starbucks aggregated the market for coffee that they can no longer control.

Will this play out in Print with AlphaGraphics and Staples doing most of the printing for sMB?

As in coffee, so in newspapers, education and book publishing. Borders is searching for the next way. They're testing out selling computer stuff. If they have enough time, they'll get it right. Enough time usually does cure all ills. But, once you take on debt, time is measured in monthly debt payments. If Starbucks doesn't have alot of debt, they will probably figure it out, as long as the stores keep creating a revenue stream.

The financials and GM demonstrated with brutal clarity what happens when business-time and corporate-time turns into servicing-the-debt-time. They couldn't get it right enough, fast enough. Now that the federal government is involved, the feds created time for them to reorganize and get it right, sooner or later. But power moved from the Board of Directors to the largest debt holder. Just they way it has always been.

Independent Bookstores and Facilitated User Networks
According the Boston Globe, contrary to much of the blablabla of the last couple of years, independent bookstores holding up vs. big rivals
BROOKLINE - Signs on the doors of two Coolidge Corner bookstores told a tale challenging the conventional wisdom. The one at Barnes & Noble said "Closed." The one on the independent Brookline Booksmith welcomed the chain's customers and solicited their suggestions. Now, three months after Barnes & Noble departed, Booksmith savors modest growth in the midst of a recession that's battering most retailers.

It's not about smarter or better. It's about people becoming prosumers. Prosumers have the time and the technology to become their own VARs. They are value added resellers to themselves. There could be a better word, but I think VAR's is general enough to be able to discern the patterns of a google-mart user network economy.

The vanity press is built for people who have to solve their own problem of putting their words and experience in book form. Then print OPM's used web technology to talk directly to prosumer VAR's. The value of channels was destroyed for vanity press. Prosumer VARs are focused on solving their own problems.

The opportunity of the printernet
As the PDF standard is supplemented by pricing and process standardization, a distributed print production network, which I choose to call the printernet, will become more clear.

At the appropriate level of analysis there are only three moving parts; OEM - equipment manufacturers, OPM - print manufacturers, VAR's value added resellers. The emerging publishing company will earn their money by facilitating the user network that is created by everchanging relationships between OEM-OPM-VAR.

I know nothing about the process they use, but today I did a Google on

Greenleaf Book Group, Book Publishing, Self Publishing ...

Greenleaf Book Group, one of the fastest-growing companies in America, is a New York Times bestselling publisher and distributor that specializes in the ...

When I clicked I found "A publisher and distributor for independent authors and small presses."

In my jargon, "independent authors" and "small presses" are OPMs. They manufacture a product of words and pictures that should live in a book. The VAR's are the independent bookstores. The value add is to connect OPMs with VARs, without the constraints of legacy channels. OEM's sell and help maintain equipment to both.

Given what they say about how they are growing, their experienced professsional staff, my take is that the Bookleaf Book Group are just in the right place to facilitate that particular user network of OEM+OPM+VARs. As the print ecology continues to evolve similar facilitators will emerge for printing. As the pieces fall into place, the printernet might be a useful word to capture a new reality.

The most sustainable kernel is an OPM that is also a VAR. They get new money from their local space. They produce product in the local space that they can monetize in their role as a VAR. For an independent bookstore this could mean be the entry point for the printernet for "independent authors and small presses" that sell the books in the independent bookstore.

Meanwhile, I guess I'll have to wait to see if Greenleaf decides to go public, so I can add them to my IRA.

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