Interestinthings Law, Startups, Music; maybe in that order

27Jan/100

The iPad and the digital surplus

“Where’s the opportunity? It’s creating book experiences. It’s taking a cookbook and adding video and author updates. That’s an opportunity, because you can charge extra for that."
-Gartner analyst talking about the iPad before the announcement

This is certainly true for some consumers, but I don't think it's the opportunity that will make the device a success.  Sure, some people want to be upsold into a magical zoomy multimedia experience (because that worked so well in the CD-ROM era...), but there's also a (surely larger) group that just wants the same old books for less. Specifically, they'd like to capture the surplus that comes from not having to actually make, print, and ship paper for themselves, thanks very much. After all, I need get my five-to-eight hundred dollars to buy this fun device from somewhere, don't I?

There are plenty of people who will pay a premium just for the convenience of this device, but you can sell so many more if you can make a credible case for saving money. Amazon understands this, obviously; they've been taking a loss on many of their Kindle books in order to present a better value proposition. Apple also understood this when they launched the iTunes Music Store. It had single tracks available and brought the album price down to $9.99 almost across the board.

Personally, the reason I don't buy more books is because they feel too expensive. There's an awful lot of interesting things I can read on the web, most of which doesn't cost me a dime (though most of which I would happily pay a dime for). Fiction is largely absent from that supply, and so I do buy some books there, but even then there's enough other stuff to read that I can certainly wait for the paperback at least. But as the prices of decent, usable digital editions fall, I'm absolutely more likely to pull the trigger on purchasing a book I think might be good.

The problem is that the publishing industry seems to have convinced themselves that we want better books rather than cheaper books, but it's a serious mistake to presume that books are just an old medium, held back from ultimate glory by the restrictions of their form and the practicalities of their production. If all books were destined to be gussied up when they became digital, then we would already have seen a lot more illustrations in today's books than we do; we've had the capability for that for a long time. I think the focus provided by bare long-form text is a valuable feature of books, and a reason why they've so stubbornly resisted format changes over the years. Sure, there are some specialty forms of books that could really take advantage of multimedia and connectivity, e.g. textbooks and travel guides, but I'm not convinced those things are best conceived of as books anymore. Even if they are, then fine, charge me more for an interactive, fancified, self-updating Frommer's. But don't tell me that it will save the current structure of the publishing industry, which is based primarily on selling books that are not travel guides.

I think the most interesting possibility here is the further disintermediation of publishers, because they will not be a necessary gatekeeper in the distribution chain.  They will obviously still have a role in the promotion of bestsellers, much like music labels still do; the engine of mass marketing still requires human infrastructure. However, an independently released book will have a real shot at mass distribution, even down to the level of the individual author. We've already gotten some of this benefit from the first wave of e-commerce sites, but the prospect of end-to-end digital distribution and better recommendation algorithms makes this exciting all over again. Netflix has done it for independent films, and with drastically lower production costs, the long tail of books should have even more potential.

Personally, the reason I don't buy more books is because they feel too expensive. There's an awful lot of interesting things I can read on the web, most of which doesn't cost me a dime (though most of which I would happily pay a dime for). Fiction is largely absent from that supply, and so I do buy some books there, but even then there's enough other stuff to read that I can certainly wait for the paperback at least. But as the prices of decent, usable digital editions fall, I'm absolutely more interested in purchasing
Filed under: Media No Comments
5Jan/100

A Startup Exit Calculator

I recently came across a post by Brad Feld pointing to a really great option vesting calculator by Simeon Simeonov, wherein Brad asked at the end for a simplified exit analysis calculator. I was inspired to take some cap tables I had lying around and strip them down a bit in Google Docs, which left me with a (hopefully) pretty good quick-and-dirty tool for looking at potential investment rounds and exits for your startup. I'll get around to making it a form like that option-vesting calculator eventually, but no reason to keep it a secret until then. It's best viewed on the Google Docs site; their embed functionality really isn't what it could be:

Startup Exit Calculator

A few caveats are in order, though:
1. It is just the one spreadsheet shared publicly, so any edits you make will be seen by anyone else looking at it. If secrecy is at all important, download it as an Excel file.
2. For simplicity's sake, I didn't account for anti-dilution protections, so if you put in a down round, the resulting ownership breakdown won't quite reflect what it might be in reality.
3. Finally, and most importantly, IAAL but this is not legal advice. If you actually need some of that, send me an email and we'll talk.

Hope some find this helpful; comments and suggestions always appreciated.

Filed under: Law, Startups No Comments