Sunday, May 09, 1999

5/6/99: BookExpo99, St. Martins, Amazon.com, Primedia, Reuters, Barnes&Noble

Publishing News: May 7, 1999
BookExpo 1999
NuvoMedia, Announces RocketPress
St. Martin's Press Provides Golden With Parachute
Yahoo Life did it now eBay tries the Newstand
Amazon Buys Three Companies
Primedia for Sale
Newspapers are Dead
Fast Company Sale
Reuters Job Action
Miller Freeman Inc. Acquires CMP Media For $920 Million
Selling Books from Vending Machines
Barnes and Noble the Publisher
Economist Privacy Article

This is the last issue of Publishing News. Anyone interested in developing something similar should contact Ian Krantz. Anyone needing to get hold of me can e-mail me at mpcairns@sprintmail.com. Thanks for your support.

BookExpo 1999
At the BookExpo show in Los Angeles, the Book Industry Study Group (BISG) reported that last years trade sales declined for the first time in seven years. This information was in contrast to the popularly held belief that internet or online sales had expanded the market for books generally and further the report indicated that affluent educated readers are buying fewer titles. In the day prior to this announcement, I asked Peter Olson CEO of Randon House (who was participating in a panel discussion) that if the market share of online booksellers was to grow to 20-25% of the market by 2003 as is predicted by BCG and Jupiter Communications where he thought this additional share was going to come from. He responded by saying that he believed online sales were incremental to existing book sales and therefore there would occur limited shift from other traditional outlets. The BISG reported that online selling accounted for 2% of total sales last year and as has been the case over the past five years independent book store sales declined and chain stores saw their share of the market increase.

During the same panel discussion, Michael Lynton – CEO of Penguin Group commented that the current price model for online book selling would almost certainly change and that the biggest risk would be the negative gross margin model. “If someone were to take all front list titles and sell them at a loss this would radically change the model for selling publishing product online.” Such companies sell ‘below the line’ products such as credit cards, services and advertising as sources of income. Priceline.com is the most recent example of a model that didn’t really exist on the web six months ago.

While at the show I also had a conversation with Mike Lovett who is the CEO/President of the Ingram Distribution Company. We spoke about the proposed purchase by Barnes and Noble of the company and he is convinced that the merger will go ahead. “They have interviewed – which is a polite way of saying deposed – many, many B&N and Ingram people over the past six months as well as others in the industry” he commented and that the Justice department he believed were ‘trying their best to understand the publishing industry.’ At this point he thinks that the original issues with the merger have been answered and that there may be some request to reduce operations in certain areas but for them it wouldn’t be a big deal. I would think that the transcripts from this review would be interesting reading for anyone interested in this industry.

At the BookExpo show, a company named On Demand Machine Corp displayed a book printing system that can print and bind a standard trade paper back in a machine which measures eight feet by four feet. This machine is designed to fit in a bookstore and can both store electronic titles in its memory and call up additional titles from the company head office via satellite. Customers can order the books, confirm the title is the one they want and purchase using a credit card. The transaction takes a little more than five minutes. The first full implementation is scheduled to take place in June at The Tattered Cover in Denver. My guess is you will see similar machines at Kinkos, Airports and other public places in the not too distant future.

Other interesting comments from panel discussions at BookExpo:
The traditional book distribution channel poses too many problems for some publishers particularly those which are smaller. The difficulty they face is not the risk people will copy their books rather that customers couldn’t find them in the first place. Placing content on the web actually increased sales of the printed product by 30%. National Academic Press and Rough Guides are examples of this. Additionally, McGraw Hill’s Beta Books have been so successful on line (while still generating bookstore sales) that the company is expanding the availability on the internet of non technical titles as well.

Many people commented that the highest risk job in publishing is ‘International Rights Manager.’

Xerox has developed a product that allows the production of a book anywhere in the world via web ordering. There will be literally 100,000’s of titles which were previously ‘out of print’ available via print on demand to individuals over the next five years. Additionally, what are now considered ‘non viable’ titles by publishers will also be made available as publishers make publishing investments without the huge investment in large volume printing. Coupled with this, some projections assume that front list sales will decline as a percentage of total sales as back list sales increase.

NuvoMedia, Announces RocketPress NuvoMedia, Inc., the creators of the Rocket eBook, announced the introduction of RocketPress(TM), a turnkey solution that provides a full spectrum of publishing services for RocketEdition(TM) content. With the announcement of this free Web-based feature, publishing companies as well as self-publishing authors can become publishers of RocketEdition titles. The easy-to-use RocketPress works as a free Web-based interface that allows publishers and individuals to control and monitor the publishing process of RocketEditions from end to end. Users can upload manuscripts into RocketEdition format for distribution over the Web; set the price of a publication; determine the timing of a RocketEdition release; list, preview, edit, and withdraw titles; and view and change title information and status. The service also lets users view or download a record of all transactions associated with a RocketEdition title, while affording state-of-the-Web security protection. As with all aspects of the Rocket eBook System, the RocketPress fits into the existing publishing business model, including full support of such necessary details such as territorial rights.
Source: PRNewswire 4/28/99

St. Martin's Press Provides Golden With Parachute Golden Books Family Entertainment and St. Martin's Press last week announced the acquisition of Golden Books Adult Publishing Group by St. Martin's Press. Golden Books has been beset by financial problems recently and this sale required the approval of a US Bankruptcy Court Judge. The transaction will include the Golden Field Guides, Whitman Coin Guides and such successful titles as Stephen R. Covey's "The Seven Habits of Highly Effective Families", Maria Shriver's "What's Heaven?" and "Parents' Magazine Parents Answer Book." Terms of the transaction were not disclosed. St. Martin's Press is one of the seven largest trade publishers in the United States. Based in New York, it publishes more than 1,800 new titles per year through its five publishing divisions. Golden Books Family Entertainment, Inc., is the leading children's book publisher in North America. The Company owns one of the world's largest libraries of family entertainment copyrights and creates, publishes and markets entertainment products for children and families through all media.
Source: Business Wire 4/26/99

Yahoo Life did it now eBay tries the Newstand
In July you will be able to read eBay, the magazine. Krause Publications, a Wisconsin-based publisher, plans to start publishing a monthly magazine planned to help readers navigate the ins and outs of online auctions. Although the name of the magazine is yet to be decided, the name and brand cachet of eBay will be prominent, says the publication's executive editor, Kevin Isaacson. Its tagline will be: Your roadmap to treasures on the Internet. Isaacson says his initial circulation goal is 400,000. Isaacson says Krause has a marketing partnership with eBay, but eBay hasn't invested in the launch of the magazine.
Source: Business Week, 4/22/99

Amazon Buys Three Companies
Amazon.com Inc has agreed to buy three closely held online companies, including rare book and music seller Exchange.com, for a total of $645 million, mostly in stock – don’t ya love that! The site is home to bibliofind.com, which allows users to buy and sell rare books, and musicfile.com, which provides the same service for fans of recorded music and memorabilia. The company employs about 40 people and had secured about $16 million in venture capital, according to an April 5 article in the Boston Business Journal. The two other companies are Accept.com, which is developing ways to simplify online transactions, and Alexa Internet, which offers a free service to help people navigate the Web. The purchases are the latest by Chairman and Chief Executive Jeffrey Bezos to expand Amazon.com's selection of products and services and draw more customers to its Web sites. The retailer two weeks ago agreed to buy LiveBid.com to add live events to its fledgling auction business and recently bought stakes in Drugstore.com and Pets.com, two retailers that operate Web sites.
Source: PRNewswire 4/22/99

Primedia for Sale
Primedia plans to sell its supplemental education group to streamline operations and reduce debt. The company expects to receive $500MM for the group. There was also speculation the company will sell other units separately. In other news Primedia announced it was setting up two autonomous internet companies to deliver integrated consumer and business oriented content derived from their consumer and trade publications. In addition to the content from the existing 350 titles the company plans on using content from its existing 180 print linked web pages. Details of the plans were sketchy with no indication as to how these companies will operate with the existing Primedia properties; however, the company has indicated tha these new internet companies will be entirely separate from Primedia with their own boards of directors and new senior management. Primedia is actively searching for CEO’s for these businesses. The model appears to be the VerticalNet.com model which offers information and business solutions to subscribers across the value chain. Primedia’s stock price rose dramatically on the news at one point going from $13.56 to $18.69.
Newspapers are Dead
Andy Grove, after being invited to speak at the National Association of Newspaper Editors, told them that ‘newspapers are close to death’ – seems a bit harsh given they were paying for his expenses. Grove believes that because the internet offers instant access to the days events that the traditional role of newspapers has disappeared coupled with emerging problems with advertising – particularly classified – newspapers will be out of business in three to five years.

Fast Company Sale
Appears Fast Company is for sale. The company is shopping the title to Conde Nasty, and a couple of other unnamed companies. Mort Zuckermann is looking to reduce his financial commitment to the three year old magazine, which despite being one of the hottest properties in the business is still not making money. (This is not unusual as it generally takes five years for an new publications to turn a profit). Which reminds me… is there any saving the New York Daily News? They have had major problems transitioning to a new printing plant in Brooklyn which is by some counts a year behind schedule, the color presses at said plant don’t work after an investment of $100MM and now a Brooklyn judge has award a union group millions in accrued back pay at a time when new negotiations are to start with journalists over their contracts. The union award (which could cost over $100MM) is being appealed. Stay tuned.

Reuters Job Action
You will not read this on Reuters newswire: Reuters staff (600 of them) recently voted to strike by a 10 to 1 margin. No word on when this would take place.

Miller Freeman Inc. Acquires CMP Media For $920 Million United News plc unit Miller Freeman announced the purchase of CMP, a leading US technology media company, for $39 per share, a net total cash consideration of $920 million. Rumors about the future of CMP have circulated for months and as a result of this sale CMP will become a division of Miller Freeman Inc. Ad pages in the technical pubs sector are declining and are down 14% for the first quarter this year versus last year and according to AdAge CMP’s pages are down 27%. The combination of Miller Freeman's trade show and publishing businesses and CMP's publishing and internet assets will transform Miller Freeman Inc. into one of the leading market-focused business media groups serving the U.S. and global high-tech sector. It will represent over 300 publications, 480 trade shows and conferences, 250 web sites and revenue approaching $1.5Bill. The acquisition also represents a major step forward in Miller Freeman's strategy to become a leading online provider of business-to-business products and services for the technology market. The merged online businesses are expected to achieve revenues of $35 million in 2000, and to grow rapidly thereafter. The acquisition represents a continuation of the consolidation taking place in the trade magazine publishing business. AdAge also commented that Miller Freeman may also IPO the web site CMPnet before the year is out and it seems clear that without the web sites CMP may have been sold for less than $400MM.
Source: PR Newswire 4/29/88

Selling Books from Vending Machines
A proposal I presented five years ago at Berlitz; a company in the UK will begin selling trade paperbacks from vending machines in the next few months. The machines will be located at Airports and Rail Stations in the UK. Heck, if you can sell bait and beer out of them you certainly should be able to sell books. (I only put this in to show how brilliant I am).

Barnes and Noble the Publisher
An original Barnes and Noble publishing title will be reviewed by the New York Times Book Review; a first. Barnes and Noble your everyday publisher, distributor, book retailer – isn’t this illegal in the US? No wonder they are being circumspect about it; apparently the book is not in Books and Print – so booksellers can’t find it and they have not offered it for sale to Ingram (gee I wonder why). At this point the book is only available in Barnes and Noble stores.

Economist Privacy Article
Anyone interested in the issue of privacy on the internet should read the article in this weeks (May 1st) Economist. Scary stuff.

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