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Media Decoder Blog: A Resurgent Netflix Beats Projections, Even Its Own

January 24, 2013 by NewsMaker Leave a Comment

J. Emilio Flores for The New York Times Streaming movies on an iPad. Netflix gained two million American subscribers to its streaming service in the fourth quarter.

9:12 p.m. | Updated For all those who have doubted its business acumen, Netflix had a resounding answer on Wednesday: 27.15 million.

That’s the number of American homes that were subscribers to the streaming service by the end of 2012, beating the company’s own projections for the fourth quarter after a couple of quarters of underwhelming results.

Netflix’s growth spurt in streaming — up by 2.05 million customers in the United States, from 25.1 million in the third quarter — was its biggest in nearly three years, and helped the company report net income of $7.9 million, surprising many analysts who had predicted a loss.

The results reflected just how far Netflix has come since the turbulence of mid-2011, when its botched execution of a new pricing plan for its services — streaming and DVDs by mail — resulted in an online flogging by angry customers. Investors battered its stock price, sending it from a high of around $300 in 2011 to as low as $53 last year.

“It’s risen from the ashes,” said Barton Crockett, a senior analyst at Lazard Capital Markets. “A lot of investors have been very skeptical that Netflix will work. With this earnings report, they’re making a strong argument that the business is real, that it will work.”

Investors, cheered by the results, sent Netflix shares soaring more than 35 percent in after-hours trading Wednesday. The stock had ended regular trading at $103.26.

Netflix’s fourth-quarter success was a convenient reminder to the entertainment and technology industries that consumers increasingly want on-demand access to television shows and movies. Streaming services by Amazon, Hulu and Redbox are all competing on the same playing field, but for now Netflix remains the biggest such service, and thus a pioneer for all the others.

“Our growth and our competitors’ growth shows just how large the opportunity is for Internet TV, where people get to control their viewing experience,” Netflix’s chief executive, Reed Hastings, said in a telephone interview Wednesday evening.

Questions persist, though, about whether Netflix will be able to attract enough subscribers to keep paying its ever-rising bills to content providers, which total billions of dollars in the years to come. The company said on Wednesday that it might take on more debt to finance more original programs, the first of which, the political thriller “House of Cards,” will have its premiere on the service on Feb. 1. Netflix committed about $100 million to make two seasons of “House of Cards,” one of five original programs scheduled to come out on the service this year.

“The virtuous cycle for us is to gain more subscribers, get more content, gain more subscribers, get more content,” Mr. Hastings said in an earnings conference call.

The company’s $7.9 million profit for the quarter represented 13 cents a share, surprising analysts who had expected a loss of 12 cents a share. The company said revenue of $945 million, up from $875 million in the quarter in 2011, was driven in part by holiday sales of new tablets and television sets.

Netflix added nearly two million new subscribers in other countries, though it continued to lose money overseas, as expected, and said it would slow its international expansion plans in the first part of this year.

The “flix” in Netflix, its largely forgotten DVD-by-mail business, fared a bit better than the company had projected, posting a loss of just 380,000 subscribers in the quarter, to 8.22 million. The losses have slowed for four consecutive quarters, indicating that the homes that still want DVDs really want DVDs.

On the streaming side, Netflix’s retention rate improved in the fourth quarter, suggesting growing customer satisfaction.

Asked whether the company’s reputation had fully recovered after its missteps in 2011, Mr. Hastings said, “We’re on probation at this point, but we’re not out of jail.”

He has emphasized subscriber happiness, even going so far as to say on Wednesday that “we really want to make it easy to quit” Netflix. If the exit door is well marked, he asserted, subscribers will be more likely to come back.

The hope is that original programs like “House of Cards” and “Arrested Development” will lure both old and new subscribers to the service. Those programs, plus the film output deal with the Walt Disney Company announced in December, affirm that Netflix cares more and more about being a gallery — with showy pieces that cannot be seen anywhere else — and less about being a library of every film and TV show ever made.

“They’re morphing into something that people understand,” said Mr. Crockett of Lazard Capital.

Mr. Hastings said this had been happening for years, but that it was becoming more apparent now to consumers and investors.

Mr. Hastings’s letter to investors brought up the elephant in the room, the activist investor Carl C. Icahn, who acquired nearly 10 percent of the company’s stock last October. Mr. Icahn, known for his campaigns for corporate sales and revampings, stated then that Netflix “may hold significant strategic value for a variety of significantly larger companies.”

Netflix subsequently put into place a shareholder rights plan, known as a poison pill, to protect itself against a forced sale by Mr. Icahn.

The company said on Wednesday, “We have no further news about his intentions, but have had constructive conversations with him about building a more valuable company.”

Factoring in the stock’s 30 percent rise since November and the after-hours action on Wednesday, Mr. Icahn’s stake has now more than doubled in value, to more than $700 million from roughly $320 million.

Article source: http://mediadecoder.blogs.nytimes.com/2013/01/23/netflix-adds-subscribers-posts-quarterly-profit/?partner=rss&emc=rss

Filed Under: Media Business Tagged With: amazon, earnings report, lazard capital markets

Hitting the Mute Switch on Europe’s Music Retailers

January 20, 2013 by NewsMaker Leave a Comment

PARIS — Across Europe, music is once again fueling protests, strikes and sit-ins. In a twist on the 1960s, it is the music sellers, rather than the listeners, who are up in arms.

Employees of two HMV record stores in Limerick, Ireland, started sit-ins last week, demanding unpaid wages after the chain, based in Britain, filed for bankruptcy protection.

In France, workers at Virgin Megastore music and video shops went on strike this month after that chain, too, was declared insolvent and placed under a court-appointed administrator, threatening the stores with closure.

In Italy, workers at Fnac, which sells compact discs, DVDs, books and consumer electronics, took similar action last autumn after the Italian division of the French chain was sold to private equity investors, who are expected to shut stores and cut jobs.

Faced with the possible demise of a broad swath of its retail infrastructure for music, movies and other media, Europe is, in some ways, merely catching up with the United States — and with the technological and economic forces that have swept through the entertainment industry. Tower Records, the U.S. equivalent of HMV or Virgin Megastore, shut down in 2006, unable to compete with online retailers like Amazon.com and iTunes, from Apple, as well as digital pirates. Tower Records in Japan, which split from the U.S. company about 10 years ago, continues to operate.

But the threat to bricks-and-mortar shops selling music and movies is being seen as a broader economic and cultural calamity for Europe. Not only are thousands of jobs at stake; these chains, European owned, also play important roles in disseminating locally produced media. Waiting in the wings to replace them are mostly American-owned Internet giants, whose growing presence and smaller contributions to European fiscal coffers worry policy makers.

“The physical cultural businesses are threatened today because of the emergence of large online sites that completely avoid fair competition, since they do not pay the same taxes as others, being based outside France,” the French culture minister, Aurélie Filippetti, said in a radio interview with Europe 1.

In addition to the potential economic fallout, there is nostalgia. HMV, for example, is an iconic British retailer, in business since 1921, when the composer Edward Elgar attended the opening of the first shop in London. HMV stands for “His Master’s Voice,” the title of a painting by Francis Barraud that became the basis for a widely used music industry trademark, in which a dog is mesmerized by the sound emanating from a phonograph.

The owner of that first store, called the Gramophone Co., was a precursor to the British record company EMI, which recently passed into foreign hands when it was sold to Universal Music Group, controlled by the French media conglomerate Vivendi.

“People feel very emotional about all this. They feel very sad about it,” said Neil Saunders, an analyst at Conlumino, a retail consulting firm in London. “They say, ‘HMV is a part of my youth.’ And then you ask them when they last went into an HMV store, and they say, ‘Um, three years ago?”’

Digital music is making significant inroads in Europe, several years after it did so in the United States, where it already accounts for more than half the market. In Britain, digital outlets accounted for 32 percent of music industry revenue of $1.4 billion in 2011, according to the International Federation of the Phonographic Industry, up from 19 percent two years earlier.

Counting compact discs sold by Internet mail-order businesses like Amazon.com, as well as digital services like iTunes, online distribution accounted for 73.5 percent of music and video sales in Britain last year, according to Conlumino. That could rise to 90 percent by the end of 2015, the firm forecasts.

The problems at HMV, Virgin and Fnac have heightened the scrutiny of online retailers like Amazon, with politicians in France and Britain accusing the company of unfair competition because of the strategies it employs to reduce its taxes in Europe. Amazon routes its European sales through Luxembourg, where corporate taxes are lower than in France or Britain.

Article source: http://www.nytimes.com/2013/01/21/business/global/hitting-the-mute-switch-on-europes-music-retailers.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: amazon, tower records, waiting in the wings

Pushing France Onto the Digital Stage

January 16, 2013 by NewsMaker Leave a Comment

PARIS — When the most prominent new face in France’s effort to oversee the new economy speaks, her pronouncements may be followed almost as closely in Silicon Valley and Seoul as in Paris.

Fleur Pellerin, a deputy finance minister, is the point woman in President François Hollande’s campaign to stimulate innovation. But in trying to put a French imprint on the digital economy, she has been drawn into a growing number of disputes with U.S. technology companies like Google, Twitter and Amazon.

In South Korea, it is Ms. Pellerin’s personal story that fascinates. Abandoned on the streets of Seoul as a newborn, she was taken in by a French family who raised her in the suburbs of Paris. While more than 150,000 South Korean children have been adopted by foreign parents since the Korean War, only one, Ms. Pellerin, has risen to the top ranks of the French government.

In one of the clearest signals yet from the French Finance Ministry that the government is intent on making the Internet conform to French law and custom, Ms. Pellerin last week waded into a dispute involving Google, whose advertising had been blocked by a French Internet service provider, Free.

The move was widely seen as an attempt by Free to force Google to pay for network access. As a preliminary step, Ms. Pellerin ordered Free to restore full service, but she made it clear that she thought the French company had a legitimate grievance.

The appointment of Ms. Pellerin last May, after Mr. Hollande’s election, prompted talk of a new orientation in French technology policy, where mistrust of foreign companies has sometimes been the guiding principle.

Ms. Pellerin, 39, is the first French government minister of Asian extraction. Although she has never visited the land of her birth, in French technology circles her rise fostered a perhaps naïve hope: Might Ms. Pellerin transform France into a European version of South Korea, where ultrahigh-speed broadband is ubiquitous and electronics giants like Samsung and LG have become world-beaters?

“I would like to make France one of the top nations in terms of digital innovation,” Ms. Pellerin said during a recent interview in her office at the Finance Ministry, which juts out over the Seine in eastern Paris like a giant, modern version of a medieval river toll barrier. “If we don’t act in the next few years it will be too late.”

Yet anyone expecting a drastic break with French governing traditions might be disappointed by Ms. Pellerin. After her unusual arrival in France, her upbringing and rise through the system were largely indistinguishable from that of many native-born members of the French administration.

Raised by middle-class parents — her father, who has a doctorate in nuclear physics, is a small-business owner — Ms. Pellerin grew up in two Paris suburbs, gritty Montreuil and wealthier Versailles. A promising student from the start, she was educated at elite institutions, including Sciences Po and the École Nationale d’Administration, which serve as finishing schools for the country’s ruling class. Before joining Mr. Hollande’s government, she was a magistrate at the Cour des Comptes, a body that audits the public finances, and worked in public relations.

Ms. Pellerin’s husband, Laurent Olléon, is also in government service, as an official in the office of Marylise Lebranchu, the minister for the reform of the state and decentralization. Ms. Pellerin has an 8-year-old daughter from a previous marriage.

In her new role in government, Ms. Pellerin has become the central figure in Mr. Hollande’s drive to establish “digital sovereignty” — the principle that French rules should apply to international Internet companies, which sometimes hover elusively beyond the reach of the national authorities. This has prompted clashes with a growing number of American technology companies.

Overseeing investigations of these companies on taxation and other matters, even while wooing them to invest in France, is a balancing act, Ms. Pellerin acknowledged.

“It’s not a crusade against Americans,” she said. “We are just trying to put everyone on a level playing field.”

Article source: http://www.nytimes.com/2013/01/17/technology/17iht-pellerin17.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: amazon, french finance ministry, internet service provider

Students by Millions Fill Labor Gap in China

January 7, 2013 by NewsMaker Leave a Comment

BEIJING — In September, the largest factory in Yantai, a coastal city in northeastern China, called on the local government with a problem — a shortage of 19,000 workers as the deadline on a big order approached.

Yantai officials came to the rescue, ordering vocational high schools to send students to the plant, which is run by Foxconn Technology Group, a major supplier to some of the world’s electronics giants, including Apple, Dell and Amazon, among others.

As companies like Foxconn shift factories away from higher-cost production bases in China, like the Pearl River Delta region in Guangdong Province, they are discovering that workers in new locations across China are not as abundant as they had expected.

That has prompted multinationals and their suppliers to use millions of teenage students from vocational and technical schools on assembly lines. The schools teach a variety of trades and require work experience, which in practice means students must accept work assignments to graduate.

In any given year, at least eight million vocational students work on China assembly lines and in workshops, according to estimates from the Ministry of Education — about one in eight Chinese 16 to 18 years old. In 2010, the ministry ordered vocational schools to fill any shortages in the work force.

The country’s minimum legal working age is 16.

Foxconn, the trading name of Hon Hai Precision Industry, is based in Taiwan and is a major supplier of smartphones, computers and videogame equipment to electronics companies around the world. It employs 1.2 million workers across China. Nearly 3 percent are student interns.

The company “has a huge appetite for workers,” Wang Weihui, vice director of the Yantai Fushan Polytechnic School, told a reporter recently.

“It tightens the labor market,” said Mr. Wang, whose school sends its students to work at Foxconn and other companies.

Local governments eager to please new investors lean on schools to meet shortfalls in the number of workers. That is what Yantai, in Shandong Province, did in September when Foxconn had trouble filling Christmas orders for Nintendo’s Wii game consoles.

“It has been easier to recruit workers in the Pearl River Delta than some inland locations,” Foxconn said in a written statement in late December.

Some companies cite rising wages in southern China for the shift to other regions. Wages are a growing component of overall manufacturing costs in China, totaling as much as 30 percent of production costs, depending on the industry, according to the Boston Consulting Group.

Wages began to rise around 2006 as the migration of rural workers to Guangdong ebbed. China’s one-child policy, plus a jump in higher education enrollment, further depleted the number of new entrants to the work force, pushing wages up further.

That prompted U.S. carmakers, Korean electronics manufacturers and private Chinese firms to look for new manufacturing bases. Cheaper electricity, land and tax incentives, as well as a growing consumer class in regions beyond the booming coastal southern provinces were other reasons to relocate.

Minimum wages in Yantai can be as low as 1,100 renminbi, or $180, a month, compared with 1,500 renminbi in Shenzhen, the city neighboring Hong Kong.

What makes vocational students attractive is that they can be paid less than full-time workers, although some companies — including Foxconn — pay the same base wages.

Still, even if they pay the same base salary to both full-time staff members and interns, employers can save 10 percent to 40 percent per person because legally they do not have to pay health insurance or social security benefits for student interns.

Yantai was not the only local government to help Foxconn.

Two months earlier, Foxconn’s 100,000-worker factory near the city of Zhengzhou, in Henan Province, was racing to meet a deadline for the Apple iPhone 5.

Article source: http://www.nytimes.com/2013/01/08/business/global/students-by-millions-fill-labor-gap-in-china.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: amazon, pearl river delta

Amazon Book Reviews Deleted in a Purge Aimed at Manipulation

December 22, 2012 by NewsMaker Leave a Comment

After several well-publicized cases involving writers buying or manipulating their reviews, Amazon is cracking down. Writers say thousands of reviews have been deleted from the shopping site in recent months.

Amazon has not said how many reviews it has killed, nor has it offered any public explanation. So its sweeping but hazy purge has generated an uproar about what it means to review in an era when everyone is an author and everyone is a reviewer.

Is a review merely a gesture of enthusiasm or should it be held to a higher standard? Should writers be allowed to pass judgment on peers the way they have always done offline or are they competitors whose reviews should be banned? Does a groundswell of raves for a new book mean anything if the author is soliciting the comments?

In a debate percolating on blogs and on Amazon itself, quite a few writers take a permissive view on these issues.

The mystery novelist J. A. Konrath, for example, does not see anything wrong with an author indulging in chicanery. “Customer buys book because of fake review = zero harm,” he wrote on his blog.

Some readers differ. An ad hoc group of purists has formed on Amazon to track its most prominent reviewer, Harriet Klausner, who has over 25,000 reviews. They do not see how she can read so much so fast or why her reviews are overwhelmingly — and, they say, misleadingly — exaltations.

“Everyone in this group will tell you that we’ve all been duped into buying books based on her reviews,” said Margie Brown, a retired city clerk from Arizona.

Once a populist gimmick, the reviews are vital to making sure a new product is not lost in the digital wilderness. Amazon has refined the reviewing process over the years, giving customers the opportunity to rate reviews and comment on them. It is layer after layer of possible criticism.

“A not-insubstantial chunk of their infrastructure is based on their reviews — and all of that depends on having reviews customers can trust,” said Edward W. Robertson, a science fiction novelist who has watched the debate closely.

Nowhere are reviews more crucial than with books, an industry in which Amazon captures nearly a third of every dollar spent. It values reviews more than other online booksellers like Apple or Barnes Noble, featuring them prominently and using them to help decide which books to acquire for its own imprints by its relatively new publishing arm.

So writers have naturally been vying to get more, and better, notices. Several mystery writers, including R. J. Ellory, Stephen Leather and John Locke, have recently confessed to various forms of manipulation under the general category of “sock puppets,” or online identities used to deceive. That resulted in a widely circulated petition by a loose coalition of writers under the banner, “No Sock Puppets Here Please,” asking people to “vote for book reviews you can trust.”

In explaining its purge of reviews, Amazon has told some writers that “we do not allow reviews on behalf of a person or company with a financial interest in the product or a directly competing product. This includes authors.” But writers say that rule is not applied consistently.

In some cases, the ax fell on those with a direct relationship with the author.

“My sister’s and best friend’s reviews were removed from my books,” the author M. E. Franco said in a blog comment. “They happen to be two of my biggest fans.” Another writer, Valerie X. Armstrong, said her son’s five-star review of her book, “The Survival of the Fattest,” was removed. He immediately tried to put it back “and it wouldn’t take,” she wrote.

In other cases, though, the relationship was more tenuous. Michelle Gagnon lost three reviews on her young adult novel “Don’t Turn Around.” She said she did not know two of the reviewers, while the third was a longtime fan of her work. “How does Amazon know we know each other?” she said. “That’s where I started to get creeped out.”

Mr. Robertson suggested that Amazon applied a broad brush. “I believe they caught a lot of shady reviews, but a lot of innocent ones were erased, too,” he said. He figures the deleted reviews number in the thousands, or perhaps even 10,000.

The explosion of reviews for “The 4-Hour Chef” by Timothy Ferriss shows how the system has evolved from something spontaneous to a means of marketing and promotion. On Nov. 20, publication day, dozens of highly favorable reviews immediately sprouted. Other reviewers quickly criticized Mr. Ferriss, accusing him of buying supporters.

He laughed off those suggestions. “Not only would I never do that — it’s unethical — I simply don’t have to,” he wrote in an e-mail, saying he had sent several hundred review copies to fans and potential fans. “Does that stack the deck? Perhaps, but why send the book to someone who would hate it? That doesn’t help anyone: not the reader, nor the writer.”

As a demonstration of social media’s grip on reviewing, Mr. Ferriss used Twitter and Facebook to ask for a review. “Rallying my readers,” he called it. Within an hour, 61 had complied.

A few of his early reviews were written by people who admitted they had not read the book but were giving it five stars anyway because, well, they knew it would be terrific. “I am looking forward to reading this,” wrote a user posting under the name mhpics.

A spokesman for Amazon, which published “The 4-Hour Chef,” offered this sole comment for this article: “We do not require people to have experienced the product in order to review.”

The dispute over reviews is playing out in the discontent over Mrs. Klausner, an Amazon Hall of Fame reviewer for the last 11 years and undoubtedly one of the most prolific reviewers in literary history.

Mrs. Klausner published review No. 28,366, for “A Red Sun Also Rises” by Mark Hodder. Almost immediately, it had nine critical comments. The first accused it of being “riddled with errors in grammar, spelling and punctuation.” The rest were no more kind. The Harriet Klausner Appreciation Society had struck again.

Mrs. Klausner, a 60-year-old retired librarian who lives in Atlanta, has published an average of seven reviews a day for more than a decade. “To watch her in action is unbelievable,” said her husband, Stanley. “You see the pages turning.”

Mrs. Klausner, who says ailments keep her home and insomnia keeps her up, scoffs at her critics. “You ever read a Harlequin romance?” she said. “You can finish it in one hour. I’ve always been a speed reader.” She has a message for her naysayers: “Get a life. Read a book.”

More than 99.9 percent of Mrs. Klausner’s reviews are four or five stars. “If I can make it past the first 50 pages, that means I like it, and so I review it,” she said. But even Stanley said, “She’s soft, I won’t deny that.”

The campaign against Mrs. Klausner has pushed down her reviewer ratings, which in theory makes her less influential. But when everything is subject to review, the battle is never-ending.

Ragan Buckley, an aspiring novelist active in the campaign against Mrs. Klausner under the name “Sneaky Burrito,” is a little weary. “There are so many fake reviews that I’m often better off just walking into a physical store and picking an item off the shelf at random,” she said.

Article source: http://www.nytimes.com/2012/12/23/technology/amazon-book-reviews-deleted-in-a-purge-aimed-at-manipulation.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: amazon, buying books, judgment

Online Retailers Rush to Adjust Prices in Real Time

December 1, 2012 by NewsMaker Leave a Comment

Then the holiday pricing shuffle began.

Amazon dropped its price on the game, Dance Central 3, to $24.99 on Thanksgiving Day, matching Best Buy’s “doorbuster” special, and went to $15 once Walmart stores offered the game at that lower price. Amazon then brought the price up, down, down again, up and up again — in all, seven price changes in seven days.

The unluckiest buyer paid more than triple the price that the luckiest buyer paid.

Retail price wars online have entered a new era of speed and precision, creating a confusing landscape for shoppers in which prices leap and plummet on short notice. In the old days, merchants sent employees into competitors’ stores to check on pricing, and days later “sale” signs reflected new markdowns. Now, sophisticated computer programs accomplish the same goal online within hours, and even minutes.

The battle was fierce over the holiday weekend. At the request of The New York Times, the pricing firm Dynamite Data tracked prices at three major online retailers — Walmart.com, Amazon.com and Target.com — starting the week before Thanksgiving and going through Tuesday, after most heavy promotions ended.

The data shows that retailers paid close attention to competitors’ online prices and in-store specials, battling to undercut one another by as little as 2 cents and forcing each other into out-of-stock positions as they pushed prices down. Retailers fight to have the lowest prices to increase sales volume, aid in search-result prominence and help burnish a thrifty reputation.

“There was definitely some gamesmanship going on,” said Diana Schulz, chief executive of Dynamite Data, which tracks online retail pricing, stock status, ratings and other information for clients like Samsung and Abt Electronics.

While Amazon has long tinkered with prices, its competitors are now fighting back. In the last year, Walmart invested heavily in pricing tools, a Walmart eCommerce spokesman, Dan Toporek, said. Dynamite Data said there had been a marked increase in how much Walmart played with prices, and smaller retailers, including GameStop, Best Buy and Toys “R” Us, were now also adjusting some prices at least daily.

The goal is to attract shoppers with competitively priced products that show up on Web searches, but there is risk, too: some consumers tire of price whiplash.

“People are starting to realize, ‘I can’t trust the price I’m getting, because it might change,’ ” a pricing consultant, Rafi Mohammed, said. Shoppers have few ways to gain an advantage — ordering the same product at different prices requires expensive return shipments — but Mr. Mohammed said retailers had an opportunity to soothe consumers by offering refunds for price adjustments.

The parrying could be seen with a Nintendo game, Mario Kart DS.

A week before Thanksgiving, the retailers’ prices varied, with Amazon selling it at $29.17, Walmart at $40.88, and Target at $33.99, according to Dynamite Data. Through Thanksgiving, as Target kept the price stable, Walmart changed prices six times, and Amazon five. On Thanksgiving itself, Walmart marked down the price to its advertised $29.96, which Amazon matched.

Ms. Schulz said sophisticated retailers set algorithms to change prices in response to competitors. “Retailers pipe a bunch of information in electronically, like internal information — cost, availability of inventory, sales goals,” along with competitors’ prices, she said.

The software also lets retailers establish rules on the pricing of certain products: always price Furbys 5 percent below Kmart, for example, or make sure some goods are priced at an average of Amazon’s and Walmart’s prices. Generally, pricing managers also manually adjust prices.

Mr. Toporek said Walmart.com used a combination of computer tools and human adjustments. On popular items, like Walmart’s best sellers, the site tries to “maintain low prices on the items people want the most,” meaning it usually responds to competitors’ price changes.

Mr. Toporek said, however, that the site also tried not to jostle shoppers.

Article source: http://www.nytimes.com/2012/12/01/business/online-retailers-rush-to-adjust-prices-in-real-time.html?partner=rss&emc=rss

Filed Under: Business News Tagged With: amazon, gamesmanship, sales volume

The Shrewd Shopper Carries a Smartphone on Black Friday

November 22, 2012 by NewsMaker Leave a Comment

Retailers are trying to lure shoppers away from the Internet, where they have increasingly been shopping to avoid Black Friday madness, and back to the stores. The bait is technological tools that will make shopping on the busiest day of the year a little more sane — and give shoppers an edge over their competition.

Those with smartphones in hand will get better planning tools, prices and parking spots. Walmart has a map that shows shoppers exactly where the top Black Friday specials can be found. A Mall of America Twitter feed gives advice on traffic and gifts, and the Macy’s app sends special deals for every five minutes a shopper stays in a store.

“The crazy mad rush to camp out and the crazy mad rush to hit the doorbusters have really made people think, ‘I’m just going to stay home on Black Friday,’ ” said Carey Rossi, editor in chief of ConsumerSearch.com, a review site. “This is going to invite some people back and say, ‘You know what? It doesn’t have to be that crazy.’ ”

Part of the retailers’ strategy is to slap back at online stores like Amazon.com, which last year used apps to pick off shoppers as they browsed in physical stores. But the stores are also recognizing that shopping on the Friday after Thanksgiving need not require an overnight wait in line, a helmet and elbow pads. A smartphone gives shoppers enough of an edge.

“This takes away that frantic Black Friday anxiety,” said Lawrence Fong, co-founder of BuyVia, an app that sends people price alerts and promotions. “While there’s a sport to it, life’s a little too short.”

Denise Fouts, 45, who works repairing fire and water damage in Chandler, Ariz., is already using apps to prepare for Black Friday, including Shopkick, Target’s app and one called Black Friday. “There still are going to be the crowds, but at least I already know ahead of time what I’m going specifically for,” Ms. Fouts said.

Last week, Macy’s released an update to its app with about 300 Black Friday specials and their location. In the Herald Square store, for instance, the $49.99 cashmere sweater specials will be in the Broadway side of the fifth-floor women’s department.

“With the speed that people are shopping with on Black Friday, they need to be really efficient about how they’re spending their time,” said Jennifer Kasper, group vice president for digital media at Macy’s.

When shoppers keep the app open, Macy’s will start sending special deals to the phone every five minutes. The deals are not advertised elsewhere.

Walmart has had an app for several years, but recently introduced an in-store mode, which shows things like the current circular or food tastings when a shopper is near a certain location. Twelve percent of Walmart’s mobile revenue now comes from when a person is inside a store.

For Black Friday, the app will have a map of each store, with the precise location of the top sale items — so planners can determine the best way to run. “The blitz items are not where you think they would be, because for traffic reasons, maybe the hot game console is in the lawn and garden center,” said Gibu Thomas, senior vice president for mobile and digital for Walmart Global eCommerce.

Target is also testing a way-finding feature on its app at stores that include some in Seattle, Chicago and Los Angeles. If a shopper types in an item, the app will give its location.

Other app makers are betting that shoppers want apps that pull in information from a range of stores.

RedLaser, an eBay app, lets shoppers use their phones to compare prices and recently started using location data to give shoppers personalized promotions when they walk into stores, including items not on store shelves at Best Buy, for instance. RetailMeNot, which offers e-commerce coupons, now has offline coupons that will pop up on users’ cellphones when they step near 500 malls on Black Friday.

“Consumers are not going to download 40 different apps for 40 different stores,” said Cyriac Roeding, co-founder of Shopkick, a location-based app that gives shoppers points, redeemable for discounts or gifts, when they walk into stores or scan certain items.

Article source: http://www.nytimes.com/2012/11/23/technology/the-shrewd-shopper-carries-a-smartphone-on-black-friday.html?partner=rss&emc=rss

Filed Under: Business News Tagged With: amazon, macy, twitter

Bits Blog: Publishers Back African Literacy Effort With E-Books

September 6, 2012 by NewsMaker Leave a Comment

Courtesy of Jon McCormack and Worldreader

Years ago, David Risher, a former Amazon executive, came up with the unlikely plan of distributing Kindles to children in the developing world to help increase literacy.

Why take a fragile piece of technology that requires charging and Internet connections to places where infrastructure can be sparse, especially when there’s an inexpensive, low-tech alternative in print books?

But Mr. Risher has gradually found acceptance for the nonprofit he founded to take e-books to Africa, Worldreader. Now he’s getting a significant boost from book publishers that could help expand its reach. Simon Schuster, HarperCollins, Egmont UK, Rosetta Books, Hardie Grant Egmont and Ripley Publishing have all agreed to donate e-books to Worldreader, allowing the nonprofit to triple the size of its digital library to more than 900 books.

About 500 of those titles are African textbooks and storybooks, while another 425 originate from publishers in the United States, Britain and elsewhere. All of them are free for the roughly 1,000 children in Ghana and Kenya to whom Worldreader has handed out Kindles. Worldreader says it has distributed more than 200,000 e-books into the hands of children in its program.

In a recent interview, Mr. Risher said he came up with the concept for Worldreader while visiting an orphanage for girls in Ecuador, where the library had fallen into disuse because of a lack of printed books. The few titles that remained in the library were largely the castoffs of backpackers that the children had long since read. “This was one of those moments where I said, ‘This is crazy,’” Mr. Risher said.

Mr. Risher — who retired from Amazon in 2002 and was honored with a permanent tribute on Amazon’s site from the company’s chief executive, Jeff Bezos — called up his old pals at Amazon and eventually persuaded them to donate some Kindles. Worldreader also purchases e-readers itself using donations.

Mr. Risher said keeping the devices charged has not been a serious problem. The Kindles can run for nearly a month on a charge. Many of the students charge their Kindles at school, where power is often available intermittently in the villages where Worldreader has distributed devices. Wireless Internet access is also becoming more common in those areas, Mr. Risher said.

There have been problems with the technology. Mr. Risher said about 40 percent of the first 400 or so e-readers that Worldreader distributed broke, mostly because the students didn’t know how to take care of them properly. To keep the devices safe during class, students often placed their Kindles beneath their legs, which caused screens to crack.

Mr. Risher said the breakage rate for Kindles has dropped sharply since Worldreader stepped up its efforts to educate students about how to care for the devices. Better Kindle cases helped as well.

Mr. Risher said Worldreader expects to distribute 3,500 e-readers by the end of the year, with a goal of reaching 10,000 by the end of 2013. Worldreader is expanding to Rwanda next.

Mary Pope Osborne, author of the best-selling “Magic Tree House” series of children’s books, said one of her first questions for Worldreader after learning about the program was how well its e-readers held up. “I have trouble keeping my own devices alive,” Ms. Osborne said.

But Ms. Osborne said she warmed to the idea as an efficient way to put books quickly into the hands of children. Her publisher, Random House, donated the entire “Magic Tree House” series to the Worldreader program. “I think what they’re doing is beyond words, really,” she said.

Carolyn Reidy, president and chief executive of Simon Schuster, said donating printed books to Africa was easy, but getting them to their destinations was expensive. Once Worldreader deals with the problem of getting e-readers into the hands of children, it is painless getting more books to them, she said.

“Once they’re there, there’s no hurdle,” Ms. Reidy said. “That one reader can open a whole world.”

Article source: http://bits.blogs.nytimes.com/2012/09/06/publishers-back-africa-literacy-effort-with-e-books/?partner=rss&emc=rss

Filed Under: Business News Tagged With: amazon, e books, literacy effort

Bits Blog: His Biggest Fan Was Himself

September 4, 2012 by NewsMaker Leave a Comment

Andreu Dalmau/European Pressphoto AgencyThe thriller writer R.J. Ellory.

In a recent article I wrote on faked book reviews on the Internet, a Chicago researcher, Bing Liu, estimated that a third of all online reviews are suspect. Perhaps that seems hard to believe. Surely the bright promise of peer reviews on the Internet has not degenerated so far so fast.

Or maybe it has. A new review scandal that erupted over the weekend in England confirmed the worst suspicions of how some authors act when given the cloak of anonymity: They praise themselves and trash the competition.

According to reports in the English media, the crime writer R.J. Ellory wrote encomiums to himself on Amazon under pseudonyms, saying, for instance, that R.J. Ellory was “one of the most talented authors of today.” Mr. Ellory, who confirmed his Amazon writings in a statement over the weekend, continued his online self-praise this way: “His ability to craft the English language is breath-taking. You find yourself experiencing so many emotions as you read this book and when you come to the end you don’t want it to stop.” Under a second pseudonym, he said the same book was “a modern masterpiece” that “will touch your soul.” But if Mr. Ellory gave himself five stars, other writers got only one.

The most interesting thing here is that Mr. Ellory is successful; he has won a number of awards for his crime tales. They are issued by the mainstream house Orion, and they have sold well. But that apparently wasn’t enough.

The sorry tale was first pieced together by another crime writer, Jeremy Duns, who outlined his accusations on Twitter. “Praising yourself is pathetic,” Mr. Duns wrote.

Amazon does not seem to have commented on this latest blow to the credibility of its reviews, but it did take the offending pieces down. In his statement, Mr. Ellory said, “I wholeheartedly regret the lapse of judgment.”

Who is R.J. Ellory? According to his Wikipedia page, he was born in 1965, has published 10 novels in the last decade and is the smartest thing since Wittgenstein: After flunking out of college, it says, Mr. Ellory “then pursued an intense study of philosophy, religion, psychoanalytic techniques, psychology, drug rehabilitation techniques and associated physiological and mental therapies,
including the works of Socrates, Plato, Kant, Adler, Schopenhauer, Freud, Sartre, Kierkegaard, Gibran, Descartes, Dewey and Hubbard.”

“Citation needed,” Wikipedia adds sternly in a footnote.

In a post on his blog last year, Mr. Ellory approvingly quoted yet another heavyweight, Ralph Waldo Emerson: “There is something which you can do better than another.”

Was he trying to tell us something, like the murderer with a guilty conscience in so many crime novels? After all, who can praise you better than you? In his blog, Mr. Ellory also noted this: “The vast majority of people who buy and read books don’t post reviews on Amazon. Hence, the reviews you wind up with – though very positive in the main – are not wholly representative of the overall opinion.”

You don’t say.

Article source: http://bits.blogs.nytimes.com/2012/09/04/his-biggest-fan-was-himself/?partner=rss&emc=rss

Filed Under: Business News Tagged With: amazon, cloak, five stars

Bits Blog: Reviewing the Review Story

August 31, 2012 by NewsMaker Leave a Comment

There was a large and energetic reaction to last Sunday’s article about a service that allowed writers to commission five-star reviews of their books. Some readers were shocked that the world of online reviews was pervaded by fakery and insincerity. “Sure puts a damper on online shopping,” wrote one. Said another: “This practice is the review equivalent of doping.” But just as with sports doping, others were not surprised and said it would be impossible to eradicate.

Log-rolling, of course, has been going on forever. Anthony Trollope’s 1875 satire, “The Way We Live Now,” opens with Lady Carbury soliciting a boost for her new efforts: “I have taken care that you shall have the early sheets of my two new volumes to-morrow, or Saturday at latest, so that you may, if so minded, give a poor struggler like myself a lift in your next week’s paper. Do give a poor struggler a lift. You and I have so much in common, and I have ventured to flatter myself that we are really friends!”

If you’re not sucking up like Lady Carbury, a reader named Porter suggested, you are just not trying:

“As a writer (under another name) I have many other writer/friends who ask me to post reviews on Amazon and Good Reads ALL the time. I know they expect a 5 star review. Of course, they are sending emails out to all 1,500 or 15,000 of their facebook friends or people in their address books at the same time. They would be fools not to. Nobody wants to cross anybody else, in hopes of good reviews when their own books hit the store, virtual or otherwise … Over the years I have seen mediocre books become hot sellers because the writers are dogged marketers, and not shy about asking for reviews (or booking themselves readings). Great or nearly-great books have languished.”

Many readers wondered what Amazon’s responsibility was. Shouldn’t the retailer “be spending more effort and money to fix this?” one reader asked. “They make a profit off these reviews so I would think they have some responsibility to make sure they are honest, or at least flag the most egregiously dishonest reviews. It would be *very* easy for them to write a computer program to do this.”

I’ve tried to talk to Amazon about this, but in general it is unwilling to discuss — well, just about anything, in my experience. An executive there briefly dismissed the problem, telling me that it would be easy to fake one or two reviews but when an item had hundreds, you could trust that the reaction was authentic. Then I wrote about a case for the Kindle Fire where the manufacturer was secretly refunding the price if readers wrote a favorable review. Just about every review of that case was fake, and there were hundreds.

On the basis of that story and others, I got a lot of messages from Amazon customers about suspicious review activity. Amazon, it seems, is not overly interested in policing its own site. Authors buying book reviews to establish their credibility is one thing; manufacturers trying to juice sales of their new products is much worse.

There’s a larger point here. Technology companies visibly improve people’s lives and sometimes talk about their higher purpose (think Google’s “Don’t be evil” motto) but in the end they are profit-seeking corporations. Amazon may in some ways be replacing the public library, but unlike the libraries of yore, it is not a public service. It exists to sell things.

So what, in the end, can readers of reader-generated reviews implicitly trust? Very little, I’d suggest, except of course for the critiques at leasthelpful.com, which bills itself as “daily dispatches from the Internet’s worst reviewers.” These notices, most of which seem to have been posted on Amazon, are usually completely bananas but clearly from the heart. Here are two reviews reprinted verbatim:

From a review of “Lord of the Flies”: “The whole plot of the story is the same as ‘Lost’ so that is kind of cool.” But not cool enough: “My little tip to the auther is never write another book. I would rather read cifford the dog.”

And here’s an unusual take on the child’s tale, “There Was an Old Lady Who Swallowed a Fly” “I read this book and I became sick. What could a child possibly learn from a book like this? With the last sentence being, shes dead of course! This should be taken off the market and the auther penalized.”

Article source: http://bits.blogs.nytimes.com/2012/08/31/reviewing-the-reviewers-story/?partner=rss&emc=rss

Filed Under: Business News Tagged With: amazon, facebook friends, great books