Sunday, May 09, 1999

5/6/99: BookExpo99, St. Martins,, 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 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. 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 Inc has agreed to buy three closely held online companies, including rare book and music seller, for a total of $645 million, mostly in stock – don’t ya love that! The site is home to, which allows users to buy and sell rare books, and, 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, 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's selection of products and services and draw more customers to its Web sites. The retailer two weeks ago agreed to buy to add live events to its fledgling auction business and recently bought stakes in and, 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 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.

Saturday, May 01, 1999

Interactive Marketing: Do You Know Which Half Works?

National Association of Broadcasters Conference, Las Vegas, May 1999

By: Michael Cairns and Marisa Kabasinskas

Benny Hill, the British comic, may have been more prophetic than anyone ever gave him credit for. In one skit, Benny plays a woman who professes to have watched more TV programs continuously than anyone else in Britain. Turns out - which is supposed to be the funny bit - that Benny only watches the ads and leaves the room to make a cup of tea when the programs come on. This is funny because we consider ads to be an intrusion - we leave the room, we fast forward the VCR through the ads, we avoid them at all cost. With the advent of interactive marketing we are now being told that the end of the unwanted advertisement is at hand. Interactive and database marketing promises to finally 'close the loop' between ad delivery and performance. The answer to the famous advertising adage, 'half of advertising is wasted, but we don't know which half' may finally be possible.

Of no news to anyone in this industry is the explosive growth of interactive marketing. As access to the Internet broadens and grows, the ability for media firms to succeed - be they publishing, advertising, interactive or broadcast - will center around the development and sustainability of Web sites, deals, alliances and communities. In the near future, media firms will be more focused on and by their audience rather than their content. As a consequence, they will be able to charge premiums for delivery of that audience to advertisers.

How Will the Paradigm Change?

One might ask how the above contrasts with today's media environment when NBC delivers a specific audience on Thursday nights. We believe that the interactive (future) paradigm will exceed the passive (current) environment in its ability to accurately identify and deliver targeted advertising and create a response from the viewer. When advertising is addressed accurately, we won't want to leave the room. Database marketing will ensure that the respondent is predisposed to a particular message and, more importantly, the advertiser will have documented and detailed information on the effectiveness of the particular message they are delivering to us. Direct marketers call this a response rate.

Before the online world, there existed a fundamental distinction between advertising and direct response.
Generally speaking, advertising in its purest form is all about reach and frequency - building brand awareness. Exposure to advertising - particularly broadcast - is rarely designed to 'elicit' a response. Direct marketing, on the other hand, does precisely the opposite. We believe this will change as traditional advertisers begin to discover "e-commerce" as a critical revenue stream. To date, their interactive marketing efforts have focused on a Web presence - brand building - rather than a transaction oriented approach. While transaction oriented companies -, The Gap - generate sales through online advertising, traditional marketers are still searching for the value in a banner ad. Consumer products companies such as Procter & Gamble and Coca-Cola are working to determine how their online brand strategy fits with their overall brand management strategy when the consumer can control the purchase decision-making process while surfing the Internet. With convergence of broadcast and online a certainty, broadcasters will also be required to deliver both brand-oriented advertising and direct (transaction) marketing, increasing the overlap in these two objectives - building brands and generating transactions.

On the Internet, the consumer is exposed to directed advertising, can view the specific product, compare prices and conduct independent research, make a purchase decision and initiate the purchase.

The consumer controls all aspects of this chain of events. The marketer is able to correlate the performance of a particular promotional vehicle; i.e., an advertisement, with specific results. For the most part, goals targeted in 'conventional' media have been geared to achieving reach and frequency targets and not to quantifying the effect of the marketing effort on sales. As digital TV becomes more prevalent, the ability for broadcasters to tailor advertising messages and direct mail will increase. Moreover, we will see a fundamental change in the manner in which we view television. The digital TV screen will allow segmentation so that when we view that ad during the Super Bowl on one side of the screen, we can also experience the product and click on the order button on the other side. It will work with programming as well; team merchandise, product placement in TV shows and movies, package vacations on travel shows, etc., will all be part of the directed advertising in the interactive world. In many ways, one can assert that the networks were the original 'portals'; it is digital TV that will allow them to leverage their market size, content and audience in the interactive world. What Do You Need to Change to Stay Competitive?

The online environment has the potential to become the most accountable advertising medium available to merchants. Yet while marketers are driven towards being able to quantify their return on investment, online advertising agencies do not currently have the ability to tie the delivery of an ad message to its actual performance (at least as precisely as is envisioned). As is routinely reported in the trade press, all view this capability as a key strategic goal. In fact, for the reasons above, this ability will be a price of entry into the online advertising business within 18 months. Currently, it is commerce sites -,, and others - whom are able to deliver specific audiences based on their affiliate and affinity marketing programs, customer profiles and visiting/viewing habits. These 'communities' of like people will prove to be the 'holy grail' for marketers.

PricewaterhouseCoopers is helping our clients develop the infrastructure and technical environment to compete in this area. Currently, we are working with an interactive agency in the development of a data warehouse solution which will enable them to report to clients on the performance of a specific ad on a specific Web page. Not only will this allow optimization of both the media buy and the creative, it will also allow the agency to present clients with strategic marketing information supported by proven advertising messages - e.g., sales by Web sites and creative unit. In pitching new clients, this agency will be able show the past performance of advertising they created for similar types of clients using specific media (Web sites). Additionally, the data warehouse will allow them to catalogue all their creative with metadata (descriptors), documenting in summary form the actual performance of the creative for every occasion it was used. Armed with this type of information on media and creative performance takes marketing to a whole new level, enabling interactive agencies to partner with their clients by not only influencing purchasing behavior but driving that behavior.

We envision an environment where (online) advertising agencies will become broadcasters of advertising messages and concepts for clients. Rather than developing individual broad-based campaigns, agencies will deliver a constant stream of specific targeted advertising messages on behalf of clients. Advertising will be 'tagged' with demographic data, target market, direct sales data/response data, etc. Clients - if they choose - will be able to pick and choose the messages they want to use for particular products and services and/or messages. Ads with a 'history' of performance maintain a profile so that advertisers and clients can predict how particular ads will perform under particular circumstances. This will encourage a three-way path of communication between the advertiser, client (marketer) and customer. All of this information will be collected in a data warehouse application for analysis, and current and future marketing.

Given that we believe this type of "closed loop" application will be a requirement for entry, it will also mean that the technology driving this will eventually become a commodity. Agencies will be back to providing good and effective creative and cogent strategic advice. The difference will be that in contrast to today's environment, these activities will be backed up with actual data, and their ability to measure the return on investment (advertising) will be a transactional requirement. In direct mail, any mailing has a key code to track the performance of the mailing, but the analysis of results is delayed. Moreover, all the expense is up-front and sunk the moment the material is printed. In the interactive world, ads which don't work can be switched out as soon as the performance is apparent - sometimes within hours. There is no sunk distribution cost other than the cost of the failed ad, but even this ad could conceivably be used again on a different Web site. The ad is simply deposited into electronic storage with its metadata.

Marriage of On-Line and Database Marketing

Perhaps the best example of the change in this industry is evidenced by Peter Georgescu, Chairman of Young & Rubicam, who believes that advertising is becoming more predictable and measurable and is encouraging clients to pay not on a commission basis but a fee based on results achieved. The difficulty is to agree what defines success, especially when the advertising is brand driven and not transactional. This is where common standards need to be defined.

In the intervening time, standard audience measurement guidelines and definitions are required. Recently, the two largest online research monitors, Media Metrix and Relevant Knowledge, agreed to merge, increasing the likelihood that a standard measurement methodology will emerge in the near future. An industry association is also considering standards to cover ratings services, server logs of site traffic and third-party ad-server reports. And Nielsen, the leading provider on television ratings, has recently announced its service to supply Web-site ratings and track Internet traffic.

With the hype surrounding, it is easy to lose sight of the fact that a still relatively small amount of commerce is transacted on the Web, or that daily use of the Web is still small and not broad- based. Regardless, the interactive environment is fundamentally changing the manner in which advertisers and media companies view their relationship with customers. In these days of increasing clutter and short attention spans, we don't want to be bothered with advertising or programming that we are not interested in or predisposed to. Online marketing married to database marketing will allow marketers to effectively manage their ad spend and draw the precise relationship between an advertising event and a transaction.