Get a slice of the digital profits

Any product that you sell that can be provided over the internet is under threat because of the turmoil higher up in the supply chain, where once dominant content publishers are likely to have their business models ripped apart. This is also a business opportunity.

At the same time that Apple was announcing its iPad launch, coming early next month, the boss of McMillan was visiting Amazon to say that he would pull its catalogue of best sellers if the online bookseller did not raise its prices from $9.99. Amazon initially refused to play ball before changing its mind and backing down because it needed the range, perhaps also aware of the threat to its Kindle reader from the iPad.

There are two reasons for McMillan wanting to have a higher price. One, it wants to establish as high a price point as possible for the new e-book market. Two, it wants to protect its existing booksellers for as long as possible.

Unfortunately for publishers, in the digital world even $9.99 is expensive. Once books are widely available in digital form they will be widely available for free. In response, publishers will have to come up with new models for selling content.

However, even ardent fans of digital books believe there is a case for printed books to continue. They reckon that the airport bestseller is likely to disappear but quality books that benefit from the physical form will thrive. If books become a niche product, so much the better for the specialist retailer.

Bringing this logic back to your shop: look at your greeting cards range, your newspapers, and your magazines. These products are all under threat from digital delivery systems.

For local retailers there are two decisions to make. First, what can be done to get a slice of the new digital revenue streams? Second, how can I make a profit from selling traditional news, magazines and cards – both today and in five years time?


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