Tuesday, July 17, 2007

Asda versus Bloomsbury

extract from POSIWID blog

Following my earlier post on Lost Profits, a row has blown up between Asda (part of Wal-Mart) and Bloomsbury (publisher of some obscure children's book).

Potter publisher halts Asda order, BBC News July 17th 2007

The facts are (not surprisingly) disputed. But there is a suggestion that Asda has failed to pay in full for previous Harry Potter books. I don't know what has happened in this case, but supermarkets often apply retrospective discounts to their suppliers - paying less than the agreed price.

Supermarkets typically defend their price-cutting stance, and their aggression towards suppliers, by claiming that they represent the interests of consumers. In this case, Asda is claiming that the Harry Potter book is too expensive for children. Obviously Asda wants to make sure the children have some pocket money left for sweets as well.

... for the rest of this post, read Wal-de-Mart and the Profit Eaters

analysis
The Harry Potter phenomenon raises some interesting questions about the business model of media companies, which relies on large profits from a few blockbusters to cover the large risk of publishing unknown products. Emerging retail models, which seek to cream off the excess profits, represent a serious challenge to this traditional media model.

Similar analysis is prompted by Prince's recent decision to allow his latest album to be distributed in a newspaper, rather than through traditional channels. (Discussed in my post Lost Profits and by Fake Steve Jobs.)

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