Friday, June 18, 2010

The bookshop Casa del Libro was founded in 1923 and is currently the second bookseller in Spain after El Corte Inglés. Nowadays Casa Del libro has 22 bookshops all over Spain and 9 of them in Madrid. Since 1995 is selling books on the internet, at the beginning through a non-sofisticated web site and later in 1999 with a new technological plattform that turned out to be a fiasco because it couldn't be integrated by the consultants hired to develop a new business plan for, due to mistakes during the design process.

In 2002 a meeting with Planeta, editorial owner of Casa Del libro, took place. in that meeting the board had to decide between two possibilities: To stick to the previously developed UNIX platform, or switch to a new Microsoft platform...In today's post i am going to shine a light on the following questions:

1. Would you stick to the previously developed UNIX platform, or switch to the new Microsoft one?

For the first question, I would have decided to shift for the new Microsoft platform. A hint of what should have been done can be found next 15th July when Libranda, the largest spanish platform for on-line books will be launched, containing (only) 2,000 books from the editorials Planeta, Random House Mondadori, Santillana, Roca Editorial, Grup62, SM, y Wolters Kluwer.

Libranda's web in its beta version describes (in spanish) its function:

"LIBRANDA es una plataforma que ofrece servicios auxiliares para la comercialización de contenidos digitales y para la promoción de los mismos. LIBRANDA actúa como un operador logístico que presta servicios de almacenaje y distribución digital a las editoriales y a las tiendas on-line. Su principal objetivo es poner a disposición de las tiendas on-line el contenido digital de las editoriales con las que trabaja. Paralelamente, y con el fin de aportar valor tanto a las editoriales como a las tiendas on-line con las que colabora, LIBRANDA ofrece herramientas de marketing digital para la promoción y la difusión de sus contenidos. El modelo de negocio de LIBRANDA permite respetar la cadena de valor del libro, promoviendo la labor cultural de los autores y agentes, de los editores y de los canales de venta del libro. En este sentido, LIBRANDA no vende directamente al público final. La labor de venta la desarrollan las tiendas on-line".

2. Which are the most relevant criteria for you to make the decision? Name each criterion and explain it very briefly.

My answer for the second question once I have decided that it would be more convenient to shift to the new Microsoft platform, based on the same ideas that LIBRANDA expect to accomplish in order to succeed (extracted from publishing perspectives and summarized the most important aspects below) in the on-line books market:

- Availability: Libranda's services are offered through 21 online stores and it is important to note that the ebooks will not be sold directly to end customers from this platform, Libranda is targeted at bookshops, who will in turn sell to consumers.

- Price settings open: All decisions about release timing and pricing, as well as negotiations with retailers on terms and discounting, are left up to individual publishers, which enables to each seller to develop a more competitive price strategy.

- Competitive advantage in prices: For me, the most important competitive advantage of having a new and strong platform is that the average e-book from Libranda will cost 20-30% below the print book price (about 6 euros for paperbacks and 11-14 euros for hardcovers).

- Growing number of e-books: Although the initial number of 2,000 e-books available at launch seems small, Libranda hopes to grow the number of titles to 8-10,000 by year’s end.

- Large number of downloads: The number of downloads is not limited to one file, but up to 12 devices: 6 desktop and 6 mobile files protected with Adobe ACS4 DRM that a. Individual publishers can put a lower limit on the number downloads if they choose. All files will reside in Libranda’s digital warehouse and will be sold exclusively through their online retail partners.

- Possible agreement with Tech Giants: In a future second phase the platform plans to negotiate agreements to offer their e-books through tech giants Apple, Amazon and Google (though publishers will have to kick in an extra 2% for this service), and will also contemplate different models including subscription, streaming and lending.

- Potential expansion to Latin America's market: Also in the cards for the immediate future is expansion of the platform into the rest of the Spanish-speaking world, planned for early 2011. Libranda is negotiating with publishers in Latin America and hopes to work with local online retailers and booksellers (some of which have a more mature market and established customer base than their counterparts in Spain).

- Possible VAT reduction to equalize with physical books:The VAT is stuck at 18% for any book without a physical component, though the Spanish government has promised the publishers it will fight in Brussels to convince EU regulators to reduce the rate for e-books to the same preferential 4% enjoyed in Spain by paper books.

- Space for smaller booksellers: Libranda will offer marketing tools like widgets and samples, though it’s up to publishers whether or how they will use these. The platform will also create white pages for booksellers who don’t have their own retail website set up.

- New Website — will allow readers to search for available titles but to purchase e-books they will have to go to one of the participating online stores. Publishers using the platform will be able to use the website to manage their catalog of titles, upload new books, and access sales figures.

- Break even in about 5 years: 2 million euros have been raised to set up the platform and request exclusive digital distribution rights from all participating publishers, though with some flexibility. Planeta’s Badenes admitted that the platform expects to lose money in the beginning and likely won’t turn a profit for the first five years.

All the above presents a favorable scenario and could have been applicable to the case in 2002, and probably without the pessimistic expectations that surrounds every new venture nowadays in Spain.

Brit sound for today's songs! "Michael Caine" by Madness has been my favorite song of the band, and "Something for the weekend" by Super Furry Animals is one of the songs that kept my attention for brit pop music in 1995 when this style was in his highest peak. Enjoy them!

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