May 3, 2013 - Wattpad was founded in 2006 by Allen Lau and Ivan Yuen with a clear vision for the .... native online players such as Amazon, Apple, and Google. .... pen name âmaster of the universeâ.20 Afterwards, Erika continued the ...
HARVARD BUSINESS SCHOOL BUILDING AND SUSTAINING A SUCCESSFUL ENTERPRISE PROFESSOR CLAYTON M. CHRISTENSEN M A Y 3 , 2 0 1 3
T H O M A S L U E K E K U R T R A M I R E Z T O B I A S W E I D N E R
Disrupting the Publishing Value Chain “We are disrupting the $ 100 billion reading and writing industry by directly connecting authors with their readers.” Allen Lau, Co-‐‑Founder and CEO of Wattpad1
Has the rise of Amazon and the introduction of the Kindle been the final straw in the upheaval of the publishing industry – the last of the media verticals to undergo fundamental change? To date only a few segments of the publishing value chain have been disrupted. Disruption has only occurred in what we define as the downstream portion (printing, distribution, retail) which is struggling, as evidenced by the number of companies going out of business. The upstream portion (writing, editing and publishing), on the other hand, has largely not been affected. Currently some of the traditional publishing houses are still able to achieve significant returns, however recent consolidation among publishers indicates they’re taking precautionary measures to protect their margins. The merger of Random House and Penguin is an example. Strengthening the existing business thus appears to be higher on the priority list than developing new capabilities that will be required to succeed in the future. However, when analyzing the industry through the lenses of the BSSE theories, it becomes evident that the upstream portion won’t be protected much longer as modularization is on its way. Independent content producers and distributers such as Wattpad, often referred to as the ‘YouTube of written media’, are pushing into the market to attack the content creation portion. This paper will: • Analyze the publishing industry, particularly book publishing, from the viewpoint of Wattpad, a disruptor trying to break up the upstream part of the value chain. • Demonstrate, using Netflix as an example, how a disruption in the downstream portion of media distribution is an indicator that disruption in the upstream portion will likely follow as players skate to where higher margins will be. • Rehash what has happened up to today, outline current developments with particular regard to content creation, and predict the implications for incumbent publishing houses in the face of upcoming companies such as Wattpad.
About Wattpad
Wattpad was founded in 2006 by Allen Lau and Ivan Yuen with a clear vision for the company: “Wattpad is disrupting the $100 billion reading and writing industry”2. The company is an online social network that gives authors a platform to directly publish their work and readers to access stories for free, “[…] we’re directly connecting the readers and writers […]”. While the traditional
publishing process can take 12 – 18 months (after the author finished writing it) until the book is available in the market, works on Wattpad are available as soon as the author is done. Moreover, books are no longer written secretly and only revealed to readers after publishing. Today Wattpad has more than 10 million monthly readers3 spending over 2 billion minutes reading per month4. Wattpad makes writing an act of collaboration between the author and their readers. Authors on the platform release books in a piece meal format, chapter by chapter, and gather customer feedback along the way. Allen Lau tells us “Publishing houses are searching for a way to get the consumer involved earlier for a long time”5. Wattpad finally meets this need and at the same time makes the content accessible online and through its mobile app.
Wattpad is Directly Connecting Authors with Their Readers
Connecting authors and consumers sounds great, but why is it powerful? A good example to illustrate this is the recent success of 17 year old Beth Reekles in writing her book The Kissing Booth. Beth started writing at the age of 14 and was always looking for ways to make her work accessible to people.6 When Wattpad started she became a contributor early on and became popular on the platform. She started publishing chapters of her book The Kissing Booth and quickly established a fan base that provided her with helpful comments and feedback. She eventually received 19 million views, 40,000 comments and won the user-‐‑elected award for best teen novel in 2012. All this helped her to build a great story chapter by chapter. Logically it also didn’t take long until she caught the attention of traditional publishing houses and was quickly signed by Random House for a three book deal. This shows the power of social platforms and interaction with readers. Similarly, authors have become famous through other unconventional ways on Wattpad: teams of authors have connected to jointly write a book and even established authors have discovered Wattpad as a tool to crowd source feedback. 7 For example, Man Booker Prize winning author Margaret Atwood started publishing pieces of her work on the platform and says “It is a great practice space”.8
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Industry Structure
In the current industry structure, multiple players are involved in the process of converting the writer’s content into a final book and ultimately into the hands of the reader (Figure 1). An agent who engages in a book acquisition deal with a publishing house usually represents the author. Editors at the publishing house select and sign writers for either a single book deal or a longer-‐‑term contract involving a series of books. The writer usually receives an advance payment, a payment upon completion of a book, and a variable component depending on the success of the book. The publisher is involved in the editing, copywriting, cover design, and marketing of the book as well as the brand building of the author, amongst other services. The editorial work of the publisher can greatly affect the quality of the final book. The printing of books, which are distributed in physical format, is done mostly through third party outsourcing providers. The publisher then manages the multiple channels through which the final book is distributed into the market. This may involve wholesalers or direct distribution through retailers or e-‐‑publishers before the book reaches the final reader. The publisher is in charge of the integration of these steps in the value chain and promotes the book and author after the book has been published.
Figure 19
Changes in the Publishing Value Chain Due to the Rise of Digital
The last decade has seen the emergence of new giants in the publishing industry’s downstream. With the advent of e-‐‑commerce, pushed forward primarily by Amazon, traditional brick and mortar book retailers are struggling and the market has seen its first bankruptcies (e.g. Borders). The rise of digital, however, has impacted mainly distribution and has left the upstream portion of the value chain unaffected. Amazon and its Kindle have gained a significant share in readership and books sold, but also other platforms such as tablets or phones on which books can be accessed through apps or digital bookstores are exhibiting significant growth. While ebooks already accounted for about 7% of the volume of the global ~ $ 110 billion book market in 201010, the share of ebooks was up to 22% in 201211. Overall ecommerce accounts for 44% of the book retail market (Exhibit 1). This significant shift to digital has led to new distribution channels and to publishing houses facing new challenges and opportunities to deliver content to the largest possible readership. This industry dynamic has led to changes in the business model of publishers with regards to digital content. As of March 2011, all major publishing houses have switched from a wholesale to an agency model for their digital book content. The publishers are now tasked with setting retail prices for their ebooks which was previously the role of wholesalers or retailers.12 The agent, i.e. the bookseller, now receives a certain commission on the sale of the book, e.g. 30% in case of the Apple iBookstore13. Broader industry implications are that booksellers can no longer discount titles at their discretion. Some physical retailers applaud this move as they expect higher prices for ebooks. Bookstores were particularly afraid of aggressive ebook pricing by industry giants such as Amazon, which may have a cannibalizing effect on other retailers’ core hardcover sales. At the same time, the expectation of higher consumer prices has led to investigations by the Department of Justice for a consortium of publishing houses.14 Concerns of publishing houses mainly regard the visibility of new books due to ever declining shelf space as physical retailers struggle and more and more bookstores close. This in turn also requires publishing houses to identify new ways to make books easily discoverable and guide readers in finding relevant books in a world with fewer bookstores – something Wattpad does particularly well. This poses particular challenges for publishers as it requires the development of a new set of capabilities in digital and online marketing and constitutes a shift in marketing power to native online players such as Amazon, Apple, and Google. To continue to convince authors that traditional publishing houses are still best positioned to 3
reach the widest possible audience and to create a strong brand around the book and author, publishing houses are now forced to create their own consumer facing platforms. Further, they must participate on existing platforms and create internal tools that will allow for scalable digital marketing and distribution.
The M&A Playbook in the Publishing Industry
A means to react to the changing industry dynamics may entail strengthening a firm’s relative market position by consolidating with other firms and strengthening core capabilities in order to demand higher prices and/or lower the cost base. The publishing industry seems to follow this prediction: on October 29, 2012 Random House and Penguin announced plans to merge the two companies in a non-‐‑cash deal, creating the world’s largest publishing house.15 Other publishing houses are in talks to further consolidate. After the merger the companies issued the following rationale: [Management] (…) believe(s) that the combined organization will have a stronger platform and greater resources to invest in rich content, new digital publishing models and high-‐‑growth emerging markets. The organization will generate synergies from shared resources such as warehousing, distribution, printing and central functions.16 According to the M&A playbook theory it is easy to conclude that the goal of the merger is to leverage the companies’ existing business models in order to respond to competitive pressure within the industry and to gain negotiation power over the dominant channel player Amazon. Industry observers further speculate the possibility for Penguin Random House to create its own distribution 17 channels for digital content. However, the customer value proposition and profit formula are largely identical between the two merged companies and among the traditional publishers in general. The merger thus has no transformative impact on the business model of the merged companies, but aims to leverage existing resources -‐‑ employees, technology, distribution, cash, etc. – to improve performance. When analyzing whether the combined resources will be able to strengthen the merged company we see a fit with regards to resources and processes. The companies have a complementary yet similar product catalog that is aiming at similar customers. Both sales and physical infrastructure are highly compatible and can be amortized over higher unit sales. Further gains result from increased purchasing power and consolidated overhead and technology systems. Thus, the acquisition will most likely improve the resource velocity of the Penguin Random House’s profit formula, i.e. the 18 utilization of assets and fixed costs, while addressing current market needs. Given the fundamental changes in the industry – not just in terms of distribution but in content creation as well – it is questionable whether Penguin Random House will be able to address new market requirements at the same time it is leveraging its current business model to improve performance. Taking into account the Resources, Process and Priorities module note, we find that its underlying theory presents deep concern over whether the merger is the right reaction to the anticipated industry change. Executives […] who engineer mega-‐‑mergers among already huge companies in order to achieve cost savings need to account for the impact of these actions on what the resultant companies can prioritize. Although the merged corporations might have more resources to throw at innovation, their commercial organizations tend to lose their appetites for all but the biggest blockbuster [i.e. profit maximization] opportunities. Unless it keeps dividing itself into smaller units, huge size constitutes a very real disability for a company in creating new-‐‑growth businesses.19 The playbook reminds us that companies should turn to acquisitions to meet goals they cannot achieve internally. We suspect that further cost improvements could have been attained by 4
the individual companies on their own, implying that instead the respective companies should have focused on acquiring new business models to complement, extend, and in the long-‐‑run potentially even replace the existing business. Mergers per se require significant management attention and resources. This bears the risk that the merger de-‐‑prioritizes management to fundamentally rethink where the money is going to be in the future and to redirect its resources accordingly. We may be left with a larger and in the short-‐‑term more profitable company that is equally incapable of sustaining innovation and protecting itself against low-‐‑end disruptions by companies such as Wattpad.
What is the Job-‐‑to-‐‑be-‐‑Done?
Since publishing houses traditionally serve two customers, the end-‐‑consumer who is reading books and the author who is creating the content, the job-‐‑to-‐‑be-‐‑done is relevant to our analysis of the upstream activities on each of those fronts. End-‐‑consumer. The job the end-‐‑consumer hires a book for has various facets. Typical jobs books fulfill are: “I want an escape”, “I want to be entertained” or “I want to learn something”. It is, however, important to distinguish categories of books for this matter. A consumer is more likely to hire a fiction novel for “I want an escape” rather than a non-‐‑fiction book. On the other hand, a non-‐‑ fiction book is more likely to be hired for “I want to learn something”. Both categories can help with “I want to be entertained”. Moreover, another typical job fulfilled by readings is “I want to use my downtime”, which mostly occurs during traveling or commutes. While this job can also be served by newspapers and magazines, books are a good alternative to hire. Particularly shorter books or stories are serving that job better. The current structure of the publishing industry is serving these jobs, however, it is not ‘nailing’ it. Firstly, there is very limited opportunity to obtain feedback and improve content to better serve the job. And secondly, the amount of good, short content is rather limited. Both drawbacks are better served in a more modular structure of the upstream. Platforms like Wattpad are bringing consumers and creators of content closer to each other and facilitate productive iterations around serving the job. Author. The job an author traditionally hires a publishing house for is quite different to that of the end-‐‑consumer. The key jobs an author needs to be done are: “I want to create the best book possible for my readers”, “I want to reach the biggest possible audience”, and “I want to create a brand for myself”. Editing expertise and feedback from experienced publishers as well as marketing the book are the services publishing houses provide. However, while marketing books and pushing them out into the distribution channels is quite effective, there is a lack of feedback to increase the success of the book. A vivid example to illustrate this is the recent blockbuster Fifty Shades of Grey. At first no publishing houses took on Erika L. James so she opted to go down the unconventional route of publishing parts of her ideas for the book on the online forum FanFiction.com, back then under the pen name “master of the universe”.20 Afterwards, Erika continued the unconventional way by self-‐‑ publishing a first version of the book, using new media to helping her improve the content.21 This path enabled her to get a deal with Random House, which now publishes the series of the book for her. Direct feedback and modular content creation facilitated this success in a way never seen before. The job going forward. Our society is living in an increasingly fast-‐‑paced life. The job-‐‑to-‐‑be-‐‑done with regards to spending leisure-‐‑time is changing accordingly. In the past we took more time to consume media and had fewer alternatives. Today, we want quick entertainment during downtimes such as subway rides or work breaks. As a result new, more segmented forms of media are gaining increasing popularity. One example is the recent trend from movies to TV shows in the film industry. A decade ago the cost for a blockbuster movie was 10x the cost of a season of blockbuster TV-‐‑Show. Today, however, blockbuster TV-‐‑Shows such as Netflix’s House of Cards cost its sponsor $100 million22 compared to $65 million23 that it cost to make Lincoln, the award-‐‑winning movie from Steven Spielberg. Watching a movie has been replaced by watching 3 episodes of House of Cards. Media consumption is changing and the industry is adapting. We believe that this will also create 5
opportunities in the publishing industry. Budgets may need to be reallocated and publishers and authors should at least consider opportunities around series of short novels that can be read in 30-‐‑ 45min. Thus consumers could easily read it in one day during commutes and weekly introductions of the next novel in the series could create a buzz. We believe that upcoming companies like Wattpad are best positioned to address this job that seems to be arising in a fast-‐‑paced world with changing consumption patterns and less physical book discovery opportunities. With instant delivery and feedback, the creation process could resemble that of high-‐‑end TV-‐‑shows.
The Customer Channels are Changing
As previously noted, the advent of Amazon’s Kindle and growth of ebooks disrupted the downstream portion of the value chain. But why is it that online retail and ebooks have been so appealing to consumers? Analyzing the emergence of ebooks from a channels perspective, it becomes evident that ecommerce is solving a need brick and mortar stores weren’t capable of: Convenience. The consumer can sit at home, read through the sample pages of the over 1.7 million books on Amazon24, and make her purchases with a mouse click from home. The only current advantage brick and mortar stores may still have over delivery is that they offer a better experience with regard to expert advice. The advent of the ebook solved the issue of fast delivery, which was one reason for almost a fourth of consumers to make the ebook their book of choice.25 Of course, this is next to the convenience of not having to carry around heavy books. The publishing industry is a great example of the two-‐‑phase disruption many industries are faced with. First, key innovations in products or business models disrupt the distribution of an industry as described for books. Another good example is Netflix’s online streaming, which disrupted the movie rental market. Second, the disruptors of the downstream part of the industry start reaching for the upstream part where margins are more attractive. For example, Amazon is establishing its own online publishing platform and trying to disintermediate publishing houses entirely. Netflix’s recent push into its own content creation with its TV Show House of Cards is another example. Thus in the following sections we will analyze the future prospects in the upstream part of the publishing industry’s supply chain.
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Modularization of the Industry is Underway
As aforementioned, theory tells us that the incumbent position of the integrated publishing houses was safe until the downstream portion of the value chain became disrupted. As a result authors now need the integrated publishing houses less than they did before as there are now alternative means for distribution. Theory also suggests that upon examining the entire publishing value chain, when elements of function and reliability within each step of the chain are met there is a redefinition of what isn’t ‘good enough’ – this is where the value will lie and indicates modularization is taking place. This then implies that the flood gates for competition will open for non-‐‑integrated players to compete for each step of the value chain. Our hypothesis is that the break-‐‑ up of the incumbent upstream system and modularization of its functions will therefore shift value to the next subsystem that is not quite good enough – the generation and curation of content. A problem with the incumbent system is that it caters heavily towards the few authors that have their work selected by the integrated publishing houses to proceed through editing, marketing, publishing, and distribution. These authors are not over-‐‑served and are quite happy with the attention and resources devoted to them by publishing houses. However this model locks out a very long tail of authors who try to find alternatives to fill the role that the incumbent publishing houses play. This represents a large group of non-‐‑consumers that Wattpad is addressing. Additionally, for these authors we find that the publishing chain is a very modularized architecture. Each step of the chain, from selection to editing to marketing to publishing, aligns tightly with the preceding and following steps. What’s crucial for authors in this modularized world is that there are multiple firms
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that can provide ‘good enough’ service through each step; the authors that are taking advantage of this architecture are happy with the simplified services they render. In this environment we hypothesize that Wattpad is well positioned because it can provide ‘good enough’ services through all of the upstream steps -‐‑ Wattpad replaces professional editing with crowd-‐‑sourced fan edits and marketing is done on a social and viral basis. The last subsystem in the value chain that isn’t ‘good enough’, and where the value will lie in the modularized world, is the creation and curation of content. Wattpad is well positioned in this segment because they have a wide breadth of stories and authors creating and continually improving content. As an open-‐‑sourced platform Wattpad has a YouTube effect on authors: by exposing authors to a massive reader base fans can identify and create hits outside the reach of the traditional publishing houses.
Low End Disruption of Publishing Houses Taking a step back, at an industry level theory indicates that the upstream portion of publishing is ripe for disruption at the low end. Wattpad is an example of a platform that picks off the least attractive authors from established publishing houses in an uncontested manner. These authors represent the ‘long tail’ of content creation and can range from novice writers new to publishing content to professional writers whose work was not selected for widespread publishing and distribution. Evidence of low end disruption at select stages of the upstream publishing process is as follows: Selection. Traditional publishing houses select which books to publish from a large pool of material, leaving a vast number of works in backlists. Wattpad eliminates this selection bias and allows authors to publish any of their works to the platform. To put this into perspective, in 2012 established publishing house Penguin published ~5000 books, whereas Wattpad authors are adding stories at a rate of roughly 1 million per month. By replacing the selection bias Wattpad has a far wider breadth of material for its readers to draw from and facilitates crowd-‐‑sourcing of content. Rather than expensive professional content curators, presumably less sophisticated Wattpad members vote for their favorite stories, comment on author submissions, and drive the most read content to the top of recommended reading lists. This results in an algorithmic selection of stories that millions of users are reading. The selection process is driven by data. Yet, selected stories represent content that fell outside of the traditional publishing houses radar. Currently publishing houses are using Wattpad as a funnel to pick off authors, however in the future these authors represent money that will stay with Wattpad or be dispersed amongst parts of the modularized value chain. Editing and Marketing. A driver of the limited numbers of books being published by traditional firms, and related numbers highlighting the limited scope of books that are published, is the capacity of traditional publishing houses to edit content and market efficiently – there simply aren’t enough resources to address more than the 5000 books they currently do. Wattpad, on the other hand, allows authors to forego the professional editing services of established firms and replace them with simpler, less professional editing services provided by the Wattpad reader community. The service Wattpad offers is good enough for a lot of authors who either never received editing services before or weren’t signed by a publishing house. Wattpad is structured to facilitate these editing services on multiple levels. For example, many authors publish portions of their books chapter by chapter. This allows fans and readers to comment on the storyline, characters, and overall structure that the author can use to re-‐‑write the chapters or develop subsequent chapters of the book. Previously authors would write the entire book first, locking them in to perhaps less than desirable characters and/or unpopular storylines. Authors taking advantage of the Wattpad user base are quite satisfied with the offering, which continues to improve, and publishing houses are oblivious to the long tail of authors being sucked
out from below. As the technology develops, crowdsourcing editing services and other parts of the modular value chain that are enabled by technology are likely to improve the quality of content. From the established firms’ view, the authors that are being serviced by Wattpad were producing work that wasn’t going to be selected anyway and are therefore ok with not competing for these content creators.
The Road Ahead
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Reflecting on Wattpad’s achievements over the last 7 years poses the question of what the next steps are. The platform is demonstrating that it can attract extremely talented writers. However, the monetary benefits of marketing talents, until now, have been claimed by traditional publishing houses. This is mostly due to their better access to more channels including online, and ultimately to a broader readership. While already impressive in size and rapid growth, Wattpad’s readership is still small compared to the overall market. There is still massive upside potential. One of the key uncertainties is demand. “The long-‐‑term shape of the industry depends on the dynamics in demand in terms of consumption patterns”26. Over the last years, demand for books has been flat, while all other media forms have seen dramatic changes in the nature of their use. Wattpad has the potential to make this change for books. In our view, however, Wattpad should build on its unique funnel of new talent. In that sense Wattpad has potential to become an active marketer of content and books itself. This is the logical next step to reach for profits and it would challenge the incumbents’ core. Wattpad is uniquely positioned to leverage technology and its user base to edit and curate the content in an unseen, modular format. Furthermore, Wattpad should focus on where the value in a modularized world will lie: the curation and editing of content. While there are many uncertainties about the future of the industry, after this analysis we are confident about Wattpad as a disruptor and its prospects to redefine the industry. If we had the chance to invest, we would take a long position in Wattpad.
Exhibit 1
Source: Jon Evans, “The Business Of Literature Is Blowing S*** Up”, TechCrunch, March 23, 2013, http://techcrunch.com/2013/03/23/the-‐‑business-‐‑of-‐‑literature-‐‑is-‐‑blowing-‐‑shit-‐‑up/, accessed May 2013.
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Endnotes
We would like to thank Allen Lau, CEO & Founder of Wattpad, for his support of this paper, and Nihar Malaviya VP, Director, Business Strategy & Operations at Random House, for his invaluable industry insight.
Allen Lau, Co-‐‑founder and CEO, Wattpad, interview by author, May 2013, Boston, MA. Allen Lau, Co-‐‑founder and CEO, Wattpad, Presentation at TechCrunch; http://www.slideshare.net/beltzner/wattpad-‐‑disruptive-‐‑ minimal-‐‑viable-‐‑publishing, accessed May 2013. 3 Wattpad, “About”, http://www.Wattpad.com/about, accessed April 2013. 4 Allen Lau, Co-‐‑founder and CEO, Wattpad, Presentation at TechCrunch; http://www.slideshare.net/beltzner/wattpad-‐‑disruptive-‐‑ minimal-‐‑viable-‐‑publishing, accessed May 2013. 5 Allen Lau, Co-‐‑founder and CEO, Wattpad, interview by author, May 2013, Boston, MA. 6 Sally Lodge, “Random House Acquires Novel by Teen Wattpad Star”, Publisher’s weekly, http://www.publishersweekly.com/pw/by-‐‑topic/authors/pw-‐‑select/article/56650-‐‑random-‐‑house-‐‑acquires-‐‑novel-‐‑by-‐‑teen-‐‑Wattpad-‐‑ star.html, accessed on April 2013. 7 Grace Bello, “Wattpad Revolutionizes Online Storytelling”, Publishers Weekly, December 21, 2012, http://www.publishersweekly.com/pw/by-‐‑topic/authors/pw-‐‑select/article/55231-‐‑pw-‐‑select-‐‑december-‐‑2012-‐‑Wattpad-‐‑ revolutionizes-‐‑online-‐‑storytelling.html, accessed April 2013. 8 “How to get 19 million readers”, Macleans, September 3, 2012, ABI/INFORM via ProQuest, accessed April 2013. 9 Allen Lau, Co-‐‑founder and CEO, Wattpad, Presentation at TechCrunch; http://www.slideshare.net/beltzner/wattpad-‐‑disruptive-‐‑ minimal-‐‑viable-‐‑publishing, accessed May 2013. 10 PWC, Turning the Page – The future of ebooks“, p4, accessed via http://www.pwc.com/en_GX/gx/entertainment-‐‑ media/pdf/eBooks-‐‑Trends-‐‑Developments.pdf on April 2013. 11 Jim Milliot, “E-‐‑books Market Share at 22%, Amazon Has 27%”, Publishers Weekly, http://www.publishersweekly.com/pw/by-‐‑ topic/digital/retailing/article/54609-‐‑e-‐‑books-‐‑market-‐‑share-‐‑at-‐‑22-‐‑amazon-‐‑has-‐‑27.html, accessed on April 2013. 12 “Random House Switches to Agency Model For E-‐‑book Sales”, Publishers Weekly, February 21, 2011, http://www.publishersweekly.com/pw/by-‐‑topic/industry-‐‑news/bookselling/article/46325-‐‑random-‐‑house-‐‑switches-‐‑to-‐‑agency-‐‑ model-‐‑for-‐‑e-‐‑book-‐‑sales.html, accessed April 2013. 13 Jay Yarow,“Apple Just Declared War On Amazon Kindle”, SFGate, February 1, 2011, http://www.sfgate.com/news/article/Apple-‐‑Just-‐‑Declared-‐‑War-‐‑On-‐‑Amazon-‐‑Kindle-‐‑AAPL-‐‑2382508.php, accessed April 2013. 14 Ingrid Lunden, “With DoJ Suit Still In Play, Apple And Four Big Publishers Settle Price Fixing Probe In Europe”, TechCrunch, December 13, 2012, http://techcrunch.com/2012/12/13/with-‐‑doj-‐‑suit-‐‑still-‐‑in-‐‑play-‐‑apple-‐‑and-‐‑four-‐‑big-‐‑publishers-‐‑settle-‐‑price-‐‑fixing-‐‑ probe-‐‑in-‐‑europe/, accessed April 2013. 15 Pearson, “Announcements” http://www.pearson.com/news/2012/october/pearson-‐‑and-‐‑bertelsmann-‐‑agree-‐‑consumer-‐‑publishing-‐‑ partnership-‐‑-‐‑p.html?article=true, accessed April 2013. 16 Ibid, Pearson, “Announcements”. 17 Romain Dillet, “Meet Penguin Random House, The World’s Largest Book Publisher That Will Counter Amazon”, TechCrunch, April 5, 2013, http://techcrunch.com/2013/04/05/penguin-‐‑random-‐‑house-‐‑the-‐‑worlds-‐‑largest-‐‑book-‐‑publisher-‐‑that-‐‑will-‐‑counter-‐‑ amazon/, accessed April 2013. 18 Clayton M. Christensen, Richard Alton, Curtis Rising, et al., “The New M&A Playbook”, Harvard Business Review, March 1, 2011. 19 Clayton M. Christensen and Stephen P. Kaufman. "ʺAssessing Your Organization'ʹs Capabilities: Resources, Processes and Priorities"ʺ, Harvard Business School Module Note 607-‐‑014, August 2008. 20 Jason Boog, “The Lost History of Fifty Shades of Grey”, November 21, 2012, http://www.mediabistro.com/galleycat/fifty-‐‑shades-‐‑ of-‐‑grey-‐‑wayback-‐‑machine_b49124, accessed April 2013. 21 John Barber, “What Fifty Shades of Grey taught us about publishing”, The Globe and Mail, December 20, 2012, http://www.theglobeandmail.com/arts/books-‐‑and-‐‑media/what-‐‑fifty-‐‑shades-‐‑of-‐‑grey-‐‑taught-‐‑us-‐‑about-‐‑publishing/article6580566/, accessed April 2013. 22 http://www.theatlanticwire.com/technology/2013/02/economics-‐‑netflixs-‐‑100-‐‑million-‐‑new-‐‑show/61692/, accessed on April 2013. 23 http://www.bloomberg.com/news/2012-‐‑11-‐‑09/spielberg-‐‑s-‐‑lincoln-‐‑risks-‐‑losses-‐‑for-‐‑dreamworks-‐‑studio.html, accessed on April 2013. 24 http://askville.amazon.com/book-‐‑titles-‐‑amazon/AnswerViewer.do?requestId=7298162, accessed on April 25, 2013. 25 Jim Milliot, “E-‐‑books Market Share at 22%, Amazon Has 27%”, Publishers weekly, http://www.publishersweekly.com/pw/by-‐‑ topic/digital/retailing/article/54609-‐‑e-‐‑books-‐‑market-‐‑share-‐‑at-‐‑22-‐‑amazon-‐‑has-‐‑27.html, accessed on April 2013. 26 Nihar Malaviya, VP, Director, Business Strategy & Operations, Random House, interview by author, April 2013, Boston, MA. 1 2
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