Selected items of interest to the media community

• Netflix Strategy To Force Digital Shift

August 01, 2011: 

Netflix announced a large price increase in their DVD by mail service, in an effort to force customers to their lower priced streaming service.  According to Nieman Journalism Lab at Harvard University, the new strategy is showing lower costs.

The economics of his business is clear. Charge consumers less (for now) for streaming ($7.99 a month) — and profit more. As he shifts the business, the cost of revenues has already decreased almost two percentage points in a year, from 64.6 percent to 62.8 percent. Lower cost of revenues means higher cross margin, and that’s what investors have loved about the company.

In the new strategy, we can see how Netflix can both push the digital transition faster andmanage the DVD decline better. We can assume that the digital customer is worth more in profit to Netflix than the DVD customer. Then, Netflix wants to take out as much of that cost infrastructure (Post Office, warehouses, associated customer service) as possible, as fast as possible. Differential pricing is one way to do that.

Read the entire article from Nieman Journalism Lab here.

• Final Chapter For Borders Bookstores

July 22, 2011: 

Borders' President Mike Edwards released a statement thanking his loyal customers for 40 years of support.  The New York Times summarizes the closure:

The Borders Group prepared to enter its final chapter — liquidation — on Friday after a federal bankruptcy judge approved its plan to wind down its remaining stores.

The Borders store closings will be run by a group led by Hilco and the Gordon Brothers Group and that also includes the Great American Group, the SB Capital Group and the Tiger Capital Group.

The liquidators will offer discounts of up to 40 percent. Should customers be more interested in shelving and coffee machines instead of books and CDs, the store fixtures can also be bought.

Read the full story on the New York Times site.

• Print, Digital, and Audio Books Combine For Record Sales

July 18, 2011: 

Publisher’s Weekly reports that opening day sales of two books have broken this year’s record, with e-book sales approaching 100,000 copies on the first day of sale.  Publishers should look for growth in non-traditional distribution channels.

On Tuesday, two books broke records for opening-day book sales: Jaycee Dugard’s memoir A Stolen Life sold a total of 175,000 copies and George R.R. Martin's A Dance With Dragons achieved the highest single- and first-day sales of any new fiction title published this year in the U.S. and Canada with 298,000 copies in print, digital, and audio formats. 

For Dugard's memoir, the combined sales figure includes print books, audiobooks, and nearly 100,000 e-books, a new Simon & Schuster record for one day e-book sales. The book has already gone back to press five times for a total of 425,000 copies in print.

Read the full article at Publisher’s Weekly here.