Let’s face it, Macmillan isn’t known for its love of e-books. From the moment Jim Baen and, later, Amazon showed the viability of the new technology, Macmillan and others did their best to torpedo the new market. The Big 5 (remember when it was the Big 6) engaged in price collusion, ongoing attempts to undermine not only the market but Amazon and more. But now these same publishers, with Macmillan leading the charge, have targeted our libraries, blaming them for their problems making money on ebooks instead of taking a hard look in the mirror. Read more
Posts tagged ‘Macmillan’
There are days when I really wonder if I’m the writer or if I’m actually a character living in some writer’s head — and the writer is a mean SOB who likes to torment me with little things meant to drive me insane. The first one of those “why me?” moments happened the other day when not-our-cat (AKA the neighbor’s cat who decided he ought to live part-time with us) decided to leave a gift of a hairball and other things on my desk, covering my thumb drive. EWWWW. Then came this morning’s rude and abrupt awakening when Mom forgot to turn off the burglar alarm, waking me with the WHOOP-WHOOP as she opened the front door. Adding insult to injury, the alarm company rep who called was perky! Yes, perky. That ought to be illegal before nine in the morning and it has to be a capital offense when it occurs before six. And, if that isn’t enough, I’ve been hit by a plot for a book that is the most demanding, insane and loud plot of any I’ve had in a long time. Yes, I’m writing it. I don’t have any choice. But I am not amused, not only because I have other books I should be working on but also because this is not the sort of book I normally write and, well, I need to be working on other things.
So, if I’m a bit scattered this morning, I hope you’ll bear with me and bring me another cup of coffee and maybe a Danish (no, Sarah, not THAT sort of Danish.)
For those of you who missed it, the price fixing law suit filed by the DoJ against five of the Big Six publishers and Apple is drawing to a close. Or at least it appears to be. The last of the publishers named in the suit, Macmillan, has settled with the Department of Justice. Without admitting any guilt, John Sargent (Macmillan CEO) said the company was settling because the potential penalties were more than the equity of the company. The settlement, according to Publishers Weekly, calls for Macmillan to pay $20 million. Of course, that still leaves Apple as the lone named defendant in the price-fixing suit yet to settle. Based on Apple’s history, there is no telling when — or even if — they will settle or if they will demand their day in court. All any of us know for sure is that, assuming the settlement is approved by the court, Macmillan will join the other publishers named in the law suit in having a two year period where they return to wholesale pricing of their e-books. After that, if they negotiate in good faith with the different e-book retail outlets, they are free to return to agency pricing. Yep, that’s right. Agency pricing is not dead. The original filings by the Department of Justice do not condemn agency pricing. The issue has always been the alleged collusion between the publishers and Apple. That is something so many authors and publishing professionals seem to forget in their “Amazon is bad” mentality.
Speaking of the “Amazon is bad” bandwagon, if you’ve been following Facebook the last week or so, you’ve seen a new round of Amazon hating. Authors and others in the industry have been shouting and shaking their fists to the heavens in quick condemnation over Amazon’s plans to sell used e-books. Now, I don’t know about you, but when I see something like that, I want to find the basis for their anger. So I clicked through to the Publishers Weekly post many of them were linking to. The post is a short note (two paragraphs) about a patent received by Amazon Technologies that “indicates” Amazon might be planning to sell used e-books and other digital products at some point in the future.
Now, I’ll admit as a reader, I like the idea. After all, I can go down the block to the used bookstore and sell any physical books I have that I no longer want to keep. I can browse the stock while I’m there and look for books to buy. Readers have long been asking why they can’t do the same thing with their e-books.
Oh, wait, now I remember why we can’t resell our e-books. The publishers tell us we can’t. We aren’t “buying” the book when we buy it in digital format. We are only buying a license to read it on a limited number of devices and that license does not include being able to resell it. Heck, we aren’t even supposed to give it away. That’s why the publishers load all that wonderful DRM into their titles.
So, let’s keep that in mind as we look at what everyone is claiming Amazon is about to do (mind you, keeping Amazon’s business model in mind, I don’t doubt they are looking for a way to do just that. But they also know there are limits built into e-books right now so this isn’t something that is going to happen any time soon). When you buy an e-book from Amazon, you are still buying that book with the same limitations on it that would be there if you bought it directly from the publisher’s site. Exceptions to this may — and that is a very big MAY — come from books published under the Kindle Direct program. Even then, if I remember correctly, you are still only buying a license. So, contract language is going to have to be changed before any legal transfer of an e-book can be made.
Instead of authors being upset with Amazon for contemplating reselling e-books, they ought to be looking at this as an opportunity to make more money. It is near to impossible to track the sales of used print books. Hell, publishers tell us on a daily basis that they can’t accurately track the sales of new print books. That’s why they rely on Bookscan to give them an estimate of the number of books that are sold. Worse, authors have bought into this and are only now, on a very small scale, starting to realize this doesn’t make sense.
But back to e-books. To sell an e-book, it has to go through a server. That’s the joy of digital. If it has been on a server, it is traceable and trackable. That means it is easily reported in sales. (Not that the publishers will agree with that because then they might actually have to pay accurate royalties.) But that also means if an e-book is sold as “used”, it will be equally traceable and reportable. That ought to mean more money to authors.
Now, the reality of the situation is that for that to happen, there are going to have to be contract changes on the publishing end. Changes in the contracts between the publishers and Amazon and also between the publishers and the authors. Am I the only one who can see publishers rushing to redo contracts with Amazon in such a way that these resells bring money into the publishers’ coffers and yet not redoing contracts with authors to make sure they get additional money? Remember, these are the same publishers who have been known to report the exact same e-book sales numbers to authors for multiple titles, quarter after quarter. These are the same publishers who say they can’t accurately track e-book sales because, duh, they are digital and physical and we know what a good job they do on print books (snark meter is about to break).
But, no matter what Amazon plans, it isn’t going to happen overnight. This is a patent. It doesn’t mean the technology is in place and ready to go. It doesn’t mean Amazon’s corporate lawyers aren’t telling Bezos and company they need to make sure all the t’s are crossed and i’s are dotted. Not that it will stop the Amazon haters from crying “foul” again. You have to ask yourself if Barnes & Noble had filed the patent, or if Apple had, if these same folks would be pointing their fingers and lighting their virtual torches. I doubt it, especially if the announcement had come from B&N. But then I’m a cynic. Sue me.
Sorry, couldn’t help it. VBEG.
What do you think? Should we send the space marines in to knock some heads together in publishing and drag it, kicking and screaming if necessary, into the current century?
Earlier this week, it was announced that Tor/Forge was going to go DRM-free by July 2012. Normally, I’d view such news as very good news indeed. However, I’ll admit I’m still playing Scrooge about it. Maybe it’s because of who owns Tor/Forge — Macmillan. You remember them. They are one of the Big 6, those major publishing houses that believed it was better for their companies to adopt the agency pricing model and make LESS money just because it might stick it to Amazon. Macmillan is also one of the five publishers, along with Apple, to be sued by the Department of Justice for price fixing.
Anyway, here’s what Tom Doherty had to say: Our authors and readers have been asking for this for a long time. They’re a technically sophisticated bunch, and DRM is a constant annoyance to them. It prevents them from using legitimately-purchased e-books in perfectly legal ways, like moving them from one kind of e-reader to another.
While I have to admit, it’s nice to see that Doherty and company finally realize that DRM is “a constant annoyance”, there is one thing I find glaringly absent from his comment or from the TOR announcement: a decrease in price. Remember, the application of DRM has been a convenient excuse for publishers charging higher prices for their books because DRM is expensive. So, if they are going to do away with DRM, will they be lowering prices? Somehow, I’m not holding my breath.
Another point of irritation comes from reading the Publishers Weekly article about the TOR announcement. It’s no secret that I am an e-book fan. I wouldn’t work for an electronic press if I wasn’t. It should also come as no surprise that I have brand loyalty to Baen. Under Jim Baen’s leadership, Baen pioneered the e-book industry. Toni Weisskopf has continued and expanded the work Jim began. Yet the only publishers PW mentions in the article are those who once had DRM and dropped it, not those — like Baen — that recognized from the outset what a bad idea DRM happens to be.
One more point about all this: don’t get too excited about the announcement. Macmillan has not yet expanded the announcement to other imprints/houses under its umbrella. In other words, St. Martins and Henry Holt, among others, will continue to add DRM to their titles. In other words, this is an experiment. Macmillan is trying to see how much of an impact removing DRM will have on its sales. My fear is that the experiment is already set up to fail. If TOR doesn’t lower its prices, there will be no dramatic increase in sales. If there is no dramatic increase in sales, I doubt (and that’s putting it mildly) Macmillan will decide to remove DRM from its other titles.
Maybe I’m being overly pessimistic. What do you think?
# # #
Now for the promotional spiel. Nocturnal Origins (Book 1 of the Nocturnal Lives Series) can be purchased through Amazon. Nocturnal Serenade (Book 2) and Nocturnal Haunts (a novella set in the Nocturnal Lives world) can be purchased through Amazon, Barnes & Noble and the Naked Reader Press webstore. And, because RES rightfully chastised me for not making it clear in yesterday’s promotional post, authors get a larger slice of the pie if you buy your copies from the NRP store. Finally, as always, there is no DRM added to any of the Naked Reader Press titles.
by Amanda S. Green
I’m a little late posting this morning because I’ve been going round and round about what to write. Dave did such a wonderful job yesterday discussing his thoughts on Mike Shatzkin’s blog about what he thinks will happen if the Department of Justice’s possible antitrust investigation into Apple and five of the big six publishers causes the agency pricing model to disappear. I’ve already covered my thoughts on Scott Turow’s letter about the issue. Then I made the mistake of reading some of the comments from the “enlightened” on it and, well, you guessed it. I’m weighing in again on the issue.
I’ll admit, part of the reason for this post is a thread started by what I can only term a publishing troll on one of the boards I read every morning. This person posted a defense of big publishing comment that included a statement that the people “attacking” legacy publishing are doing so because they don’t have the talent to be published by a “real” publisher.
I beg your pardon? Oh, and that grinding sound you hear is the sound of the teeth of innumerable mid-listers who have suddenly been cut loose by their publishers because, even though their books are still on the shelves more than a year after publication and even though there are continued demands from their fans for more in a series, the publisher claims they just didn’t connect with the public. And that evil laugh you hear is me as I contemplate what will happen when these same mid-listers, free of the fear of upsetting their publishing masters, finally demand full audits and the publishers are caught between a rock and a hard place because of their “creative” bookkeeping methods.
So, yeah, I’m in a pissy mood this morning. I’m tired of legacy publishers thinking they can pull the wool over the eyes of authors who should know better. I’m tired of them also thinking readers, those good folks who buy their products, as so dumb they can’t see what is happening. With that in mind, I’m going to revisit Shatzkin’s blog and some of the sources it cites.
From the opening paragraph: But if this does mean the end of the agency model, it would seem to be a cause for celebrating at Amazon and a catalyst for some deep contemplation by all the other big players in the book business.
Duh. Of course it will be “a catalyst for some deep contemplation”. The problem is, they should have been doing this “deep contemplation” years ago. Market trends and technology have been changing for the last three plus decades and yet the publishing industry hasn’t really embraced these changes. The publishers should have been concerned when the big box stores came onto the scene and forced the smaller, locally owned bookstores out of the market. But publishers weren’t. Oh no, not at all. They embraced these new stores, loving the fact they could do larger orders and write bigger checks. But now, with the economy and other trends causing these large stores to close down, publishing is running scared and blaming Amazon for the problems faced by these brick and mortar stores. But the truth of the matter is, Amazon is only one small part of the whole equation. Unfortunately, neither the big box stores nor publishers did any “deep contemplation” before things became so bad their entire companies are in danger of failing.
Agency pricing, for those who have not been following the most important development in the growth of the book market, enabled the publishers to enforce a uniform price for each ebook title across all retail outlets
Okay, pardon me while I laugh for a bit. Is he really saying agency pricing is the most important development in the growth of the book market? Sorry, but no. E-books are the most important development in the growth of the book market. If you’ve followed the sales numbers over the last few years, the only segment of the market to consistently grow, usually in triple digit percentage points, has been e-books. The only thing agency pricing has done is artificially inflate the price of certain e-books and that, in turn, has opened the market to small press published and self-published e-books.
This was Apple’s desired way to do business, and it addressed deep concerns the big publishers had about the effect of Amazon’s loss-leader discounting.
Okay, whether he meant to or not, he just admitted that agency pricing is something dreamed up by Steve Jobs and agreed to by five of the big six publishers. And, if you read the link included in the quote above, you will see this wonderful piece of logic from Macmillan: The agency model would allow Amazon to make more money selling our books, not less. We would make less money in our dealings with Amazon under the new model. Our disagreement is not about short term profitability but rather about the long-term viability and stability of the digital book market. Am I the only one to see all sorts of wrong in this statement? How in the world is lower profits for the publisher–which would mean less money for authors under most contracts–be good for the publisher? How is this sort of an agreement going to safeguard the “long-term viability and stability of the digital book”? It makes absolutely no sense. My opinion is that they went along with this because they wanted into iBooks/iTunes and the only way to do so was to accept Steve Jobs’ terms and that meant forcing Amazon, B&N and other e-book retailers to adopt the agency pricing model. Remember, the key to the agreement with Apple was that these publishers would not allow their e-books to be sold for less anywhere else. So Amazon isn’t the only market where these publishers would be making less money. Funny how folks seem to overlook this little item.
Back to Shatzkin: Although the WSJ article and Michael Cader’s follow up in Publishers Lunch make no “agency is dead” declaration and there are quotes from publishers and others indicating that there are a range of possible outcomes, including a version of agency that is modified to allow some discounting, everybody in the industry now has to contemplate what it would mean if the agency model is legally upended.
Again, why weren’t they already considering this? For one thing, the contracts signed with Amazon, B&N, etc., weren’t for perpetuity. There would soon be a time when they came up for renegotiation. For another, The European Union, not to mention more than a few states’ attorneys general, were already looking into the legalities of agency pricing. The fact that the industry hasn’t been considering “what ifs” simply shows how out of touch it is with the reality of the market these days.
To Amazon, it would mean they would be free to set prices on all books again, including the most high-profile and attractive ones that come from the big trade houses. That is an opportunity they are likely to seize with loss-leader discounting of the biggest marquee titles.
Ah, evil Amazon. Conducting its business as, gasp, a business. The ability to sell a product wanted by the public at a lower price has been an age-old tactic of shop owners and merchants. It gets folks through the doors, be they physical doors or cyber doors. And isn’t this basically what the brick and mortar stores did when they burst onto the market? They were able to price hard covers much less than the mom and pop bookstore could. That’s why the public initially loved these larger stores. It’s also why publishers loved them. These lower prices meant more units being sold. Funny how the publishers have forgotten that.
To Barnes & Noble, it would mean they have to devote cash resources to ebook discounting that they might have preferred to dedicate to further development of the Nook platform, maintaining the most robust possible brick-and-mortar presence, and improving the user experience at BN.com.
This very well may be true. The problem with this statement is that it omits the part about BN waiting too long to enter the e-book market. It forgets that BN spent too much time selling third-party e-book readers instead of developing and putting on the market its own e-book reader. It also ignores the fact that the BN online presence is not user friendly, especially not when it comes to e-books. It also lacks the vibrant online community Amazon has built.
Unconfirmed stories abound that B&N is about to announce an international expansion. Whether that will produce cash flow immediately or require it for a while is not yet known. For B&N’s sake, it would always better if it were the former, but if they’re about to fight discounting wars, it might be critical.
I seem to be saying, or at least thinking, “too little too late” a lot as I re-read Shatzkin’s post. BN needed this international expansion long ago. The fact that it may, finally, occur probably is too little too late. I’ll note here that this possible expansion is for e-books, not brick and mortar stores. Again, why has it taken this long? I’ll also note that the source Shatzkin cites is from August of last year. So far, to the best of my knowledge, that expansion has yet to occur.
To Kobo, it would mean that they also will need to devote cash resources to subsidizing price cuts to match Amazon. With their new ownership by Rakuten, they should have the capital they need to fight this battle. They must be glad that deal got done before agency was upended.
Nope, sorry. For those of you familiar with Kobo, you know they don’t always match Amazon prices. There are a number of titles Kobo offers for substantially higher prices than the same title is offered for on Amazon. And, before you ask, I’m talking about legacy published e-book titles. So I don’t see them trying to match prices with Amazon except on certain titles.
To Google, it would mean that the bookstore service piece of their ebook business will suddenly be highly challenged. Many independent stores might be pushed out of the ebook game completely; it certainly would be extremely difficult for them to support competition with Amazon’s prices. To Google itself, with their new Google Play configuration, it means they will have to both spend more margin and more management energy to be a serious competitor in the retail marketplace. There’s no clear evidence that they have the interest at the top to do that, although they certainly would have the resources.
Yes, I’m laughing again. Google’s e-book business is already highly challenged. They’ve dropped the number of stores able to take part in their program. Their interface for authors and small presses leaves a lot to be desired. As for Google Play, why is Amazon the only reason they would have problems? Doesn’t Shatzkin remember a little company called Apple and its iTunes store? Or does he not see the parallels between Google Play and iTunes?
To Apple, it would mean that their entire iBookstore model is in question. They apparently didn’t want to take on all the normal responsibilities of a merchant, which would include setting prices. Now they may have to.
Oh, cry me a river. If Steve Jobs hadn’t presented the agency model to publishers and said “accept or else”, we’d not be having this discussion. But then, I’m just a bitter small publisher employee who can’t put our e-books directly onto iTunes/iBooks because we use PCs and not Macs, something required to use their interface. And, btw, they are the only storefront for e-books that we’ve come across that requires a certain computing platform in order to upload a file.
To all the big publishers, including Random House (the one of the Big Six not being sued, because they stayed out of agency for the first year and therefore were not considered part of the “collusion”) it would mean that they will have to painfully reverse the re-pricing and systems adjustments they went through to implement agency in the first place.
“Painfully”? How can it be painful if they can return to a pricing model where they made more money? Remember the quote from the Macmillan post above. It was admitted then that agency model pricing meant less money for publishers.
Smaller publishers and distributors might be beneficiaries if agency is eliminated, but they might not. The agency model is a great advantage for those publishers who are able to fully implement it. But that is only six publishers — the Big Six — because Amazon has simply refused to let anybody else sell to them that way.
I ask again, how is ia great advantage for publishers when these same publishers admit they don’t make as much money from agency pricing as they did before? As for Amazon refusing to let anyone else use agency pricing, good for them. It means Amazon is looking out for the economic well-being of the company and making sure it keeps its shareholders happy. It also means Amazon is looking out for its customers. But that’s a bad thing I guess because, gasp, it isn’t saving legacy publishing from the follies of the boardrooms in NYC.
That creates problems for the smaller publishers but an even more threatening one for distributors. All but the Big Six, if they want to sell to both Amazon and Apple, must operate a “hybrid” model, selling Apple on agency terms and Amazon on wholesale terms. The two are inherently in conflict. What is ultimately a threat to the distributors is that distributees that desire agency terms, and many would. might seek distribution deals from one of the Big Six. (It might be coincidental, but it is worth noting that IPG, the company having a fight with Amazon at the moment over terms, is a distributor.)
Okay, here is where I have to watch myself. It doesn’t create a problem for small publishers. We set our own prices both with Amazon and with Apple. If one lowers the price for promo reasons, the other can and does the same. As for the two being inherently in conflict, thank Apple. As noted before, Jobs required the first five of the big six to accept agency pricing or not sell in iBooks. Blaming Amazon for something it had no control over is ridiculous.
As for the threat to distributors, get real. I’ll admit distributors have a role in publishing, but not when it comes to e-books. Sorry, but there is no reason a small press has to use a distributor to get into Amazon or BN. The process is simple and relatively pain free to upload titles to either of these stores. Given the proper Apple computer, I assume it is for iTunes/iBooks as well. So I have no sympathy for IPG or other distributors moaning the fact Amazon won’t let them go to agency pricing. As an author I have even less sympathy because I know publishers take out the cost of distribution before figuring royalties. Why would I want to lower my already too small royalty payments?
Of course, we don’t know how the Big Publishers will respond if they’re forced off agency. It’s long been my opinion that the 50% discount for ebooks is unworkable. It leads to ridiculous and unrealistic retail prices. (Publishers operating on the hybrid model have to have two retail prices: one on which to base the wholesale discount and another at Apple operating agency-style. It’s crazy.) Would the big publishers, if they couldn’t do agency, keep the 30% discount and their current prices? Would they go back to the 50% discount and jack the suggested retail prices back up? If they did the former and nothing else changed, the smaller publishers could be at a much greater disadvantage than they are now.
Ah, the economic double-speak. First of all, small publishers won’t be at a “much greater disadvantage” because we will still be pricing below major publishers. Why? Because our overhead is much smaller. Also, for those of us with a limited paper-side publishing, we aren’t trying to artificially prop up the hard copy publishing arm with the digital arm. And that is exactly what the legacy publishers are doing. They are trying to use their e-book sales to keep the print side alive.
The other thing Shatzkin keeps overlooking is the fact that publishers aren’t making as much per sale under agency pricing as they did before. So, going back to the previous pricing method would actually give them more money in their pockets. How that is a bad thing, I don’t know.
Over time, the biggest losers here will be the authors. The independent authors will feel the pain first. Agency pricing creates a zone of pricing they can occupy without much competition from branded merchandise. When the known authors are only available at $9.99 and up, the fledgling at $0.99-$2.99 looks very attractive and worth a try. Ending agency will have the “desired” effect of bringing all ebook prices down. As the big book prices are reduced, the ability of the unknowns to use price as a discovery tool will diminish as well. In the short run, it will be the independent authors who will pay the biggest price of all.
This guy really should try his hand as a comedian because he’s killing me here. First of all, do any of us really see legacy publishers pricing their books under $5.99, much less as low as $2.99? And let’s forget about the fact that they already have e-books in the $7.99 range. The loss of agency pricing will simply allow best sellers and new releases to come down in price to something more readers will be willing to pay. This will be, in my opinion, back in the $9.99 range and there simply aren’t that many self-published or small press published titles that are in that range.
With regard to his comment that the lower prices will make it harder for “unknowns” to price their titles low enough to be discovered by the average reader, wrong again. I would be very surprised if legacy publishers will price any book, much less a new release, at less than $7.99. Remember, they are using e-books to prop up their print divisions. If they price low enough to shut out these so-called “unknowns”, they will have to do some major cost cutting somewhere and that isn’t going to happen. They like their plush offices and they’ve already cut out or outsourced so much of the editorial process that it isn’t funny.
But, in the long run, all authors will just get less. They will join the legion of suppliers beholden to a retailer whose mission is to deliver the lowest possible price to the consumer.
Authors already get less. Most authors are not paid royalties based no cover price, not really. Publishers take out expenses. So, if an e-book has a price of $12.99 and the publisher gets 30% of that under agency pricing, that starts the share of the pie the author gets to look at at $3.90. Believe me, the author is not getting much of that at all. Once more, I remind you of what the Macmillan post said. Agency pricing means less money for publishers than the previous pricing plan paid. Less money for publishers means less money for authors.
Seth Godin has recently made the argument that this is simply inevitable. Perhaps it is. The laws of supply and demand would support that contention. But from my personal perspective, I don’t like seeing the government hasten the process along.
Could this be because he works with/for publishers? I am not, and never have been, one to want our government interfering in business. However, we do have laws and the Department of Justice is tasked with upholding these laws. If there has been collusion between the publishers and Apple — and I think it is pretty clear there has been — then those laws need to be applied to them.
The truth of the matter is simple. Agency pricing has hurt publishers and hasn’t done what they wanted–it hasn’t saved their print divisions. Those sales continue to fall while e-book sales continue to rise. Amazon is not the only reason for the problems publishers face. Despite what one commenter on the thread that got me started on this this morning said about publishing’s business model not being broken, it is. Until legacy publishers address ALL the issues facing them and not just try to save things by artificially inflating e-book prices, the industry will continue to flounder. Just a few of the issues they need to address are:
1. the failure of agency pricing to do as they wanted
2. low royalty rates to authors
3. cutting of mid-list authors, traditionally the work horses of the industry, as a cost-cutting means to allow them to continue paying higher advances to their so-called best sellers (note here that those advances have fallen just as have the advances to mid-listers)
4. lack of push or promotion for books
5. decline of physical bookstores (yes, Amazon has had a hand here, but so has the economy, over-expansion of the big box stores after pushing the locally owned stores out of the market, mismanagement of the big box stores, etc.)
6. decline in the quality of their product (publishers have cut their editorial staffs, often use interns to do copy edits and proofreading, lower quality bindings and paper, etc)
7. economic downturns that have people unable or unwilling to pay $10 for a paperback or $30 for a hard cover
There are a number of others as well. But agency pricing is not the savior of the industry. Amazon is not the big bad that a few outspoken publishers and authors would have us believe. Publishing is plagued by what could almost be termed a perfect storm, a combination of factors that it failed to see coming and that it has failed to effectively deal with once those factors could no longer be denied.