Friday, August 31, 2007

Ebsco Acquire 10 Sage Databases

EBSCO Publishing one of the world's premier database aggregators, has acquired ten renowned indexes from SAGE. The deal will bring the leading print indexes in their fields to users electronically through the EBSCOhost® platform, one of the most-used interfaces available for scholarly research.

The following indexes are now owned by EBSCO and will be available electronically via EBSCOhost:

  • Abstracts in Social Gerontology™
  • Educational Administration Abstracts™
  • Human Resources Abstracts™
  • Peace Research Abstracts Journal™ (Now called Peace Research Abstracts™)
  • Sage Family Studies Abstracts™ (Now called Family Studies Abstracts™)
  • Sage Public Administration Abstracts™ (Now called Public Administration Abstracts™)
  • Sage Race Relations Abstracts™ (Now called Race Relations Abstracts™)
  • Sage Urban Studies Abstracts™ (Now called Urban Studies Abstracts™)
  • The Shock & Vibration Digest™
  • Violence & Abuse Abstracts™

These are highly-refined, specialized collections in their subject areas. Currently, each index is available in print-only. Online versions, including backfiles and other benefits, such as unlimited use, remote accessibility, multi-database searching, links to full-text, etc. are expected to be available by October 2007.

EBSCO offers a suite of more than 200 full-text and secondary research databases. Through a library of tens of thousands of full-text journals, magazines, books, monographs, reports and various other publication types from renowned publishers, EBSCO serves the content needs of all researchers.

Press Release

Thursday, August 30, 2007

Informa Post Strong Results

The Telegraph reports that Informa has raised its half year dividend by 70% as the company consolidates its purchase of Datamonitor. The company said underlying profits rose 24% and revenues grew 10% adjusted for currency movements. In their press release the company said their efforts to establish a stable revenue platform that wasn't subject to economic variables is succeeding with more than 3/4 of their revenues 'visible and renewing' from subscriptions and book sales.

Earlier in the year, analysts suggested that the company had over paid for Datamonitor however management were convinced that price was right and that better management of the company would improve results. Informa noted that Datamonitor revenues were up 62% (with organic growth up 22%) and operating income up 51%. Furthermore, growth on the top line and bottom line is expected to improve further as product sales are integrated further and final cost cutting programs are put in place.

Wednesday, August 29, 2007

Borders Reports Comp Stores Flat

Borders reported second quarter revenues of $945.1 which were up 10.4% over the same period last year. Superstore comp sales were up 4.6% but the Harry Potter book accounted for virtually all of this gain. The company reported a loss of .43 cents per share or .23 per share excluding non-operating charges. The street had been expecting .34cents a share on revenue of $916mm. In expectation of the results, which were released after the market closed the stock was down $.90.
"Progress is clearly being made at Borders Group as we continue to execute our strategic plan and are beginning to see improved performance," said Chief Executive Officer George Jones. "Harry Potter certainly gave us a big boost in sales across all businesses, yet even without it, we achieved positive same-stores sales results that are directly attributable to our focus on execution and more effective use of the Borders Rewards loyalty program to drive increased traffic to our stores. We have significantly more work to do, and we remain committed to staying on-track to deliver sales and earnings growth consistent with the long-term financial goals we set forth in our strategic plan."
Other items of note:
  • 2nd Q net loss of $25.1mm versus $18.4 last year. On an operating basis the loss of $15.3mm ($.26/share) compares with $14.5mm ($.23/share) last year
  • Gross margin increased by 1%
  • SG&A increased .9% due to non-operating charges: legal settlement expenses, promo discounts, higher expenses for 'strategic initiatives'
  • Debt net of cash was $662.9mm versus $476.7 in the same period last year
  • Comp Superstore sales were up 4.6% with HP; 0.4% without HP
  • Operating Income: On an operating basis superstores contributed $2.4mm in the quarter versus $10.4mm a year ago
  • Walden comp sales were flat excluding the Harry effect. Jones dangerously suggested that the improvement versus the last seven quarters was likely to continue.
  • Walden operating income was slightly better than last year which represents significantly better performance than the superstores.
  • Non Operating items included $3.5mm to settle a legal case in CA, severance costs for execs, store closure and relocation costs and professional fees.
  • The company also said it had adjusted some of its loan covenants to enable the sale of the international business and to potentially enable some refinancing options. The company also formally terminated the previously (surprising) announcement about seeking term financing of $150-200mm.


Press Release

Saturday, August 25, 2007

GalleyCat Rants: We Are Reading Dammit

The recent report regarding reading habits provoked a lot of discussion - most of it pointless - but this related comment on GalleyCat is spot on. I also saw this Guardian article and continue to wonder why people who should know better continue to generalize and draw dopey conclusions.

22 hours in Las Vegas is either too long or too short depending on your view point but either way what on earth was John Freeman doing spending his possibly limited waking hours looking for a bookstore? In short, the strip is not all Vegas has too offer and perhaps if he spent less time at the pool and perhaps doing some real research he wouldn't have written the article at all.

Thursday, August 23, 2007

Barnes & Noble's Potter Quarter (Updated)

B&N CEO Steve Riggio commented that “Record breaking sales from J.K. Rowling’s Harry Potter and the Deathly Hallows was the principal driver behind our comparable store sales growth in the quarter,” which grew 4.4% versus the same period last year. Comparable on-line sales grew 18%. Total store revenues grew 7.3% for the period. Negating the impressive results was the revenue impact without Harry: Store sales only grew 1% and online 7.3%.

Financial markets have been noting any softness in any large retailer's results over the past several weeks and while Harry was an important factor in B&N's results, the 1% gain is an important indicator that B&N continues to make the right moves in a challenging marketplace. It will be interesting to see how Borders reports on Monday. Attention may be focused on the Harry effect and commentators may seek to eliminate these sales as an anomaly. The Harry phenom is an unnatural occurrence but in the process B&N were able to sell 1.7mm copies - they got the consumers into the store and while details are sketchy these consumers did in fact buy other titles. Riggio said the title continues to sell well.

The company also said they are confident that they will achieve their stated financial goals for the year.

For the quarter operating income of $13mm was half the amount in the same quarter 2006. The margin was 1% versus 2% last year. For the six months, operating income was $5mm versus $41mm last year. The company's gross margin was lower by a full percentage point and selling and marketing expenses for the six months were $40mm. Both line items contributed to the margin erosion.

B&N was trading up on the day.

Press Release

Some follow-up comments from the B&N conference call (Transcript from SeekingAlpha):

Riggio on the loyalty card and discounting:
We've got a strong balance sheet, good cash flow, and we thought it was the right time to take a piece of our profits and put it in the hands of the customers, and we're very pleased with the results since the launch last year. Customers love the card. They like the extra discount and we're seeing extra growth

Klipper on store growth:
Every year we say 30 to 40 stores, and it's really depending on the timing and when the development happens across America. We could clearly turn that up and open more stores if we so choose, but our criteria is extremely high. We're opening best location, not best available location, as we have in the last seven or eight years. The opening pace, we're very comfortable with it. I think there's a lot of business out there.

Riggio on Potter 'attachment'
The attachment rate is the same as it always was. It's a little more difficult to determine, frankly, because people spend two, three, four hours in the store and buy product and check out. Then at midnight, all they want is the one book. So our sense of it was that it drove sales in some categories more than others, I think especially in our cafe. But it's all behind us now. We think it was great for business, and we don't think it's over, because the book continues to sell well. All the other volumes are really doing well.

Riggio on the publishing year
I guess the thing that we try to point out most often is that while the business tends not to have lots of peaks other than Harry Potter, it also doesn't have many valleys and it's a relatively stable industry. On balance, we think this year was a bit better in the publishing season than last year, but so much is dependent on the second half of the year. September looks like a good release schedule, but we'll have to see what the customers say about all these books.

Toulantis on the on-line growth:
No. I think that while it's true if you exclude the actual sales from the Harry Potter book itself, the comparable online sales increase of 7.3% is obviously higher than recent trends, but the effect of the Harry Potter sale was to drive perhaps more interest, more traffic, and I think that drove to some more conversion. So we saw more traffic and more conversion in the quarter Again, I think a lot of it was around Harry Potter, so people coming to buy that book also when they come online, were buying some additional items.

Agatha Christie's Poirot in Comics

The BBC reports (and has some pictures) from four new Agatha Christie titles that are being reproduced as comics. Sounds like a new and innovative way to bring attention to old mystery classics. I had a great deal of difficulty finding these titles on any web site but eventually was able to find them on by using the name of the editor. Here is the list.
Apparently there is a Christie festival coming up in September.
Update: IHT covers the same story this morning. And I am sure the others will catch up later in the day.

Wednesday, August 22, 2007

Headline Guaranteed to Get Attention

It is the silly season and there is no less evidence of that in a report from the New York Post's page6 which noted that a new title from S&S will document the required etiquette for orgies and sex games.
"Be accompanied by a trusted boyfriend, girlfriend or friend; bring protection," she advises about orgies. "As a general rule, it is the uglier men who perform the best, simply because they have more to prove." She also recommends three New York City sex clubs.
(I don't have the addresses).

Curiously, in the title description on there is no mention of the above chapter.
Twenty-first-century women are called upon to perform any manner of tasks, recall even the most random bits of information, and all the while carry on a charming conversation. Thankfully, from historian and British television personality Francesca Beauman comes this indispensable and authoritative survival guide that will allow women to tackle any problem and work any party with ease, style, and grace. Everything But the Kitchen Sink is a compendium of delightfully witty facts, figures, diagrams, lists, charts, quotes, and practical advice. True, you may not ever need to know how to roast a hedgehog, treat a shark bite, or say "No, thank you. Please leave me alone" in Russian. But isn't it good to know you can?
Looks like anyone buying this book is in for a surprise.

Tuesday, August 21, 2007

Poll: Those who never attend church read twice as much.

According to an associated press IPOS survey those who consider themselves liberals read more - but only slightly. The bible and other religious books were the largest category with 2/3rd responding that they read this type of content. Further details from
There was even some political variety evident, with Democrats and liberals typically reading slightly more books than Republicans and conservatives. The Bible and religious works were read by two-thirds in the survey, more than all other categories. Popular fiction, histories, biographies and mysteries were all cited by about half, while one in five read romance novels. Every other genre -- including politics, poetry and classical literature -- were named by fewer than five percent of readers. More women than men read every major category of books except for history and biography. Industry experts said that confirms their observation that men tend to prefer nonfiction.
As the title of this post suggests, the poll also confirmed that organized religion is the enemy of publishers. I’m not sure how this jells with the above noted religion readers, but those who responded that they never attended religious services read twice as much compared with those who attended frequently.
Those likeliest to read religious books included older and married women, lower earners, minorities, lesser educated people, Southerners, rural residents, Republicans and conservatives.
Twenty five percent of the respondents said they had not read a book in the past year. One respondent would rather sit in his pool (evidently not one of the people Kassia vacations with) than read. While the article describes Americans has hardly ravenous readers, I wonder who we are compared with. Personally, I am well on my way to reading 15+ books this year and I am rapidly clearing out my inventory.

(Not sure what Pat Schroeder is on about...)

Saturday, August 18, 2007

Trip Advisor Buys Facebook Application

I'm not much of a joiner but I grudgingly set up a Facebook page when I got several invites and I am still not convinced it is up to much. All the cool kids are doing it so why not me? Facebook is an open application platform (and if I were remotely technical this would really excite me), which enables a multitude of developers to build mini applications that Facebook users can 'load' to their page and use. These applications cover any number of uses and I have loaded one for books, questions and a travel application named 'where I've been'.

Here is my 'map':

According to the NYT the developer of this application is now $3.0mm richer via Trip Advisor. Trip Advisor is itself a fun site to browse if you are looking to find out what other travelers have said about airlines, hotels, destinations that you may be thinking about visiting. What they will do with this application is any one's guess. Perhaps I am cynical but the application as it exists is akin to notches on a bedstead - more bragging rights perhaps than anything useful.

Friday, August 17, 2007

Harlequin is Torstar's Waking Beauty

The McClatchy’s, the Chandler’s, the Bancroft’s: Is the family that owns Canada’s largest newspaper by circulation The Toronto Star the next to evacuate the newspaper business? Cash cows with seeming locked-in revenue growth for decades, these businesses provided expansive income for the growing web of family members over the years, and they also enabled particular social and political agendas to comfort their sense of responsibility.

Revenues have stagnated, and perhaps some bad decisions can’t be so readily ignored nor radical changes in business models experimented with since revenue growth is no longer a luxury they can take for granted. Younger members of the family don’t share a cohesive sense of mission and grow skittish at any suggestion the nest egg some may have yet to get may be waning. Quarter by quarter management runs out of ways to describe their ‘difficult’ business environment as circulation drops, display ads decrease and classified ads migrate to craigslist and

Torstar is controlled by five families who own ‘A’ shares in the Torstar two share structure. 'A' shares hold all voting rights. B shares have none. Only a member of one of the five families can own A shares meaning that if A shares are sold and are purchased by someone other than a family member they become B shares with no voting rights. Torstar owns The Toronto Star, a stable of community newspapers in Ontario, a percentage in a Canadian broadcaster and the publisher Harlequin. The company is not reported to be for sale even though there has been a natural increase in interest in the company given the churn in newspaper properties south of the border.

On their earnings
call last week, the company warned against investors believing the company could sell-up: "I would never counsel someone to acquire Torstar shares on the assumption that there will be a transformational transaction with respect to the ownership of the company," Torstar chief executive officer Rob Prichard said while discussing the second quarter.

Nevertheless, rumors circulate within the company especially as a result of
an investment by Fairfax Financial Holdings Ltd. which bought 5.4 million non-voting shares earlier this year. Fairfax owns over 18% of class B shares but has said this represents a long term investment and they are not looking to influence the board. Torstar shares have traded in the low C$20 range but some analysts have suggested it could be valued at C$30+ per share.

Harlequin was founded in 1949 as a general trade publisher and morphed into the romance publisher we know today by acquiring publishing rights to Mills and Boone titles during the 1950s. As the popularity of these titles grew they began publishing their own romance titles and eventually acquired Mills and Boone. Torstar purchased 52% of the company in 1975 and until recently Harlequin has been a strong financial performer for Torstar.

In my view, Harlequin is a lost jewel of the publishing industry in the sense that no major publisher has set its sights on acquiring the company. Some have attempted it and difficulties exist particularly with the Canadian ownership requirements that preclude a foreign company from buying a Canadian company; however, with the recent acquisition of Thomson Learning which was (is) also a Canadian company a deal could be constructed that satisfies the legal requirements. Unfortunately, from a Torstar perspective selling Harlequin may not be in their interests because as the Harlequin business improves – and recent results indicate they will – then Harlequin may be responsible for a significant amount of the earnings growth the company can be assured of as their core newspaper business continues to falter.

On projected 2007 revenues of CN$475mm and projected operating profit of CN$65mm the company could be worth CN$500mm. They could generate a higher multiple since they have been able to push margins over 18%. The current Torstar market cap is C$1.3billion which might indicate that the current share price does not reflect a realistic valuation for Harlequin (or the valuation on the newspaper is depressing the share price which seems more likely). It remains to be seen if there is any action here, but on a positive note, Harlequin seems to be improving financially and broadening their revenue base to include the Internet and e-book publishing.

Some of the Torstar family members may be casting about for their own ‘Murdoch-like’ acquirer. Coincidentally, Independent News and Media which owns newspapers in the UK, Ireland, New Zealand and elsewhere could be a candidate. The company is controlled by Sir Anthony O’Reilly who could be more than interested in adding The Toronto Star to the portfolio.

Thursday, August 16, 2007

I’m With Him

In an Associated Press article posted in early June, “Publishers Testing e-books for Young People” (MSNBC), Jon Yaged, U.S. publisher of the Disney Book Group, expressed his reluctance to use the term e-book, instead preferring “digital books.” His quote: “There hasn't been enough success with the e-book. We believe it's better to call it something different."I’ve had it with the term e-book too (or is it eBook? ebook? What if it starts a sentence? Is it EBook?). It’s messy, it’s inconsistently spelled, and it conveys the entirely wrong message. I have a hope that changing the terminology around the e-book might help to spark some new thinking on the subject. There has to be a better argument for digital books than “you can read in bed with the light on” (frequently cited, see this NY Times article from August 9 ).

If the goal of the e-book isn’t to replicate the reading experience online but change it fundamentally, what new business models could ensue? This is not to criticize the worthy efforts and significant technology and standards hurdles overcome by those working in this area—just a shout out to the sales and marketing strategists who might capitalize on what is indeed a growing market by changing things up a bit.

Susan Ruszala who is a freelance marketing consultant to publishing technology companies and was formerly responsible for international marketing activities for VISTA (now Publishing Technology Plc). She is an avid reader. You can contact Susan at

Metadata and Google Booksearch

Peter Brantley (on O'Reilly) blogs about a journal article by Paul Duguid on the quality (representation) of Google Book Search. It is not good. Peter's blog is worth reading in its entirety but I was interested in what he said about metadata:
However, Duguid's analysis of Google Book Search is far deeper than a consideration of the cosmetic defects of the books' electronic skin. Rather, he
recognizes that faults lurk so visibly because Google is throwing away information that are fundamentally characteristic of books -- metadata that describe and even determine what books are, as simple and trivial as volume numbers, or artifacts of type design, editing, and artistic production. Books are not, in other words, mere bags of words, but vehicles in which ride a wide sundry of other passengers -- metadata, artistic expression, whimsy, and error.

I have long believed that the sheer explosion of information makes consistently constructed bibliographic databases like WorldCat more valuable than less. What I don't understand in the Google Book Search production process is where the connection between the call number and the book broke down. Surely, detailed metadata exists for these titles in the library catalogues from which the books emanate. Admittedly not all the physical characteristics that Peter notes but perhaps the catalog record is a starting point. How hard will fixing the broken synapse be? Ironic to think the full text exists in an electronic database but can't be recognized.

Wednesday, August 15, 2007

Queensland: A History for A$900,000

The Courier Mail in Queensland is reporting that one lucky University Professor has won a no bid contract for A$900,000 to write a history of the State of Queensland. Sounds like a plum assignment given that he has already written a two volume history of the state up to 1980. How much more work can there be?
Henry Rosenbloom, publisher of the highly respected independent Scribe, Australia's small publisher of the year in 2006, was astonished at the figure. "I've never heard of anything like it," he said. "It's the sort of advance you would give a major sporting celebrity like Steve Waugh for a biography that you could be certain of selling hundreds of thousands of copies." The history will be published in 2009 to coincide with sesqui-centenary celebrations as Queensland turns 150, with its funding coming from the State Government body Q150 Celebrations.
This conincidentally (or comically) occurs at the same time as Angus & Robertson are being lambasted for trying to run a profitabe retailing operation and being charged with not supporting the small publisher and indigenous author. Wouldn't it be nice if that A$900,000 went to support publishing in Queensland across the board rather than one lucky fellow who's end product won't even be commercial. It certainly won't win any awards.

SharedBook Launches Partnership with Carepages

I have mentioned Sharedbook a few times recently and they announced today the launch of a partnership with Carepages, Inc. From the press release:

SharedBook Inc., the Reverse Publishing Platform provider, and CarePages, Inc., the leading Internet service for building online health communities, launched the CarePages Keepsake Book today in response to member requests to publish the health updates, photographs and encouraging messages posted in their online CarePages communities in professionally-printed book format. offers free, personal, private Web pages that help family and friends communicate when someone is hospitalized or receiving care. builds communities of support where families and friends can access resources, tools and guidance to learn what to do and say – and how to communicate and care with compassion and sensitivity.

“We hear from hundreds of families each day regarding how has helped them during a time of need,” said Eric Langshur, Chief Executive Officer, CarePages, Inc. “We value our members’ feedback and are pleased to introduce a feature they requested – the ability to preserve their user-generated content in book format.”

Earlier this month ShareBook also announced an enhanced version of their Blog2Print widget which enables easy production of blog content into book form. From the press release"
Blog2Print now automatically flows photographs and other images into blog book format along with the appropriate text, similar to the way content appears online. Additional enhancements include the ability to format more complex blogs. All updates will seamlessly apply to the Blog2Print widgets that have been placed on blogs to date. "Since we first introduced Blog2Print in beta form, bloggers from around the world have been telling us what works, what doesn't and which features they would like to see," said Caroline Vanderlip, Chief Executive Officer, SharedBook Inc. "The feedback we've received from the user community has been invaluable to date, and we hope to learn more as the public beta program continues."
Seeing how SharedBook can turn your blog into book form is incredibly easy. Anyone constructing publishing a blog for a specific event or commemoration requires very little technical skill (if any) to go the next step to produce a book.

Tuesday, August 14, 2007

Outsourced Future for Newspapers?

Is page proofing and editing a value added function for newspapers? Evidently the New Zealand Herald has decided that it is not and are outsourcing these functions to a third party.
According to news reports (Forbes):
Starting Sunday, 20 sub editors will work full time at contractor Pagemasters New Zealand at a site 20 minutes from the paper's editorial offices. By year end, Pagemasters will employ about 45 editing staff at their site to edit the seven newspapers - nearly 30 fewer than the newspapers employed.
If all goes according to plan, by year end five daily and three weekly papers will enjoy the benefits of this outsourced program. Among those benefits are better use of content across all the papers, lower expenses and more efficient use of production and editorial technology.

Naturally journalism groups don't approve of this measure (Seven Network)
"This is a panic measure to save money, but in the end it is crazy economics because it will only further reduce the quality of journalism and accelerate circulation decline," IFJ general secretary Aidan White said in a statement. When APN's outsourcing was originally announced earlier this year the IFJ said it had never before been attempted on such a large scale and represented a threat to news around the world.

This could be just the tip of the proverbial iceberg since the Herald is part owned by Independent News and Media which also announced a similar program for newspapers in Ireland. INM owns over 170 newspapers around the world including The Independent and The Irish Independent. If this program works it will be rolled out to many more newspapers.

I am however reminded of Bill Keller's (NYT Executive Editor) recent comments that in the age of Internet reporting, perhaps journalists will be required to edit themselves more than they have ever been because the inherent need to publish quicker doesn't allow for edit and revision cycles found at traditional newspapers. He also said editorial standards may fall because of this evolution. How much then is this move to outsource only a weigh station in the elimination of the process of editing itself?

Monday, August 13, 2007

Japan Bought 331% More Books on Phones in 2006

New publishing models abound if you just look hard enough for them. We have mentioned before the success that e-book producers have had in Japan selling e-books segment by segment on phones and here is some proof of the success:
Mobile phone sales of electronic books, including manga, grew 331.3% from 1.6billion yen (about US$14 million) to 6.9 billion yen (US$58 million) in 2006. The non-phone Internet sales of electronic books grew 69.7% from 4.8 billion yen (US$41 million) to 8.1 billion yen (US$68 million).
The Digital Content Association that reported the results expect sales to reach $100mm by year end. Not too shabby.

Tip of the Hat to Nick Bogaty.

Textbook Pricing: Any New Ideas?

In an op-ed piece for the New York Times this weekend Michael Granof proposes a subscription based financial model while debasing the recent Congressional "Advisory Committee on Student Financial Assistance."
Unfortunately though, the committee has proposed a remedy that would only worsen the problem. The committee’s report, released in May, mainly proposes strengthening the market for used textbooks — by encouraging college bookstores to guarantee that they will buy back textbooks, establishing online book swaps
among students and urging faculty to avoid switching textbooks from one semester to the next. The fatal flaw in that proposal (and similar ones made by many State Legislatures) is that used books are the cause of, not the cure for, high textbook prices.
His model is similar to the software license model and it is a model I have suggested is inevitable in educational publishing. Interestingly, all the major educational publishers are completely familiar and at ease with subscription models because they are used universally for their information products and in certain market segments.

The financial constraints are such that implementing a subscription model for educational texts is almost impossible to imagine unless, as the adage goes, 'they make it up in volume.' Just do the math: a $150 text book is now a five year subscription for $15 per year. So annual revenues are 1/10 of what they would be if the publisher is able to sell copies at 'full price.' As the publisher is able to progressively eliminate all second hand texts and the fee is made a requirement of each student in each class then perhaps by year five their income statements resemble those before the change. This is how Mr. Granof puts it:
Here’s how it would work: A teacher would pick a textbook, and the college would pay a negotiated fee to the publisher based on the number of students enrolled in the class. If there were 50 students in the class, for example, the fee might be $15 per student, or $750 for the semester. If the text were used for 10 semesters, the publisher would ultimately receive a total of $150 ($15 x 10) for each student enrolled in the course, or as much as $7,500.
My numbers may be slightly out of date (please challenge if so) but currently only about 25% of enrolled students buy a new textbook each semester. Something like 25% buy used and the rest get away with none. So if only 25% of the 50 students above by a $150 textbook that is $1,850 per class versus the one year $750 calculated above. So with the high price point but low penetration the publisher has no incentive to change to a subscription model. The potential benefit for publishers here could only be to their advantage if the sales penetration declines over time (perhaps first year they sell in 50% but as more copies are in circulation penetration of new titles drops significantly). But it does seem unlikely that the model would produce revenues at a similar level as currently enjoyed.

I may be missing something, but Mr Granof is also missing the intermediaries that are also making money both out of sales of new titles (wholesalers, bookstore) and sales of used titles. The used book market is a very large and profitable industry for the likes of Barnes & Noble and Follett. Both these companies manage college bookstores and run wholesale systems that buy used books at college stores, warehouse them and distribute them as needed. The sophisticated businesses generate significant profits and they would not be keen on a change in business model. So for now, there are too many disincentives for a change to happen. A more likely driver for business model change will be a change in the educational product itself and the way it is delivered. As there is a more discernable (and material) difference between the print and online product then the publishers may also experiment more with different price models.

Friday, August 10, 2007

WH Smiths Interested in Borders

The Manchester Evening News is reporting that WH Smiths may be considering a bid for the UK operations of Borders which were placed on the block as part of the company's restructuring.
However, a bid from WH Smith could face a number of hurdles, including competition issues, with objections from the books industry and smaller retailers if a bid for Borders in the UK was successful. Borders employs around 2,000 people in the UK and operates 71 stores - consisting of 41 Borders stores, 27 Books etc stores and three Borders express sites.It is thought the sale could generate bids of around £50 million. WH Smith is estimated to hold a 16 per cent share of the British books market, while Borders' share is thought to stand at around seven per cent.

Smith's has also faced a tough retail environment over the past several years but under the direction of CEO Kate Swann the company has rebuilt their store merchandise and redesigned their stores to positive effect.

High Voltage: Australian Publishers Upset by A&R Policy

Angus & Robertson is one of the two largest booksellers in Australia. The company has a long tradition of retailing across the country and operates a combination of corporate owned and franchise stores. Until recently, the company was owned by WH Smiths who sold the company to a private equity group, Pacific Equity Partners. A&R, together with Dymocks the other major book retailer, has been mentioned as likely buyers of the Borders operations in Australia and New Zealand. PEP wants to build a larger retailer and take the company public within the next two years.

There is no current news about the Borders sale situation but A&R has stirred up some controversy in outlining their new vendor management policy. By the way, can you imagine anything (other than If I Did It) that the publishing industry could do that would land it on the national news over here? Reported in this story is A&R's new policy to have publisher's pay for shelf space if their unit sales aren't at a sufficient level to be self-sustaining.
Australian publishers are reeling, after being told one of the country's biggest bookstore chains won't stock their books, unless they pay up thousands of dollars within weeks.The publishers are calling it blackmail. The company, the old established Angus and Robertson, says it can't afford to stock books that don't generate enough profits.
According to Mary McCaskill, President of the Australian Publisher's Association, publishers there are reeling at this 'unprecedented' step by A&R. She suggests this is a classic supermarket tactic where suppliers pay up front for shelf space.

Michael Rakusin of Tower Books comments:
[The letter] arrived on my table on Friday afternoon, and it said, very simply, 'The amount of profit we make out of Tower Books has not been sufficient to justify keeping your books on our shelves. Here is an invoice for just slightly shy of $20,000. Please pay it by the 17th of August. If you don't pay it, we will have no choice but to de-register you as an authorised supplier.' In other words, we won't buy your books anymore.
Further arguments in opposition to the new A&R policy were the old chestnuts suggesting that A&R is anti-indigenous publishing, against the small guy and other pointless arguments. The company itself is not quoted in this report. Here and here are two blog articles about the same story.

In my old home town newspaper The Age (tomorrow) they quoted from the actual letter mailed to some 40% of A&R vendors:
A&R said more than 40 per cent of its suppliers fell "below our requirements in terms of profit earned" and A&R would be "rationalising our supplier numbers and setting a minimum earnings ratio of income to trade purchases". The letter demanded payment of a sum that "represents the gap for your business, and moves it from an unacceptable level of profitability, to above our minimum threshold". If the recipient failed to pay, it would be removed from A&R's supplier list.
Suggestions that award winning books from small publishers such as Carpenteria will be hard to find in A&R stores are inaccurate and belie the fact that A&R is saying that almost half their stock is loss making. Why doesn't this penetrate? Why is A&R obliged to carry this risk? Furthermore, doesn't the continuation of this loss making activity put the money making 60% at risk? I was once told by a director at a large UK retailer who told me that 40% of their vendors received less than three invoices per year with less than five titles per invoice. (Many with only one title and one invoice per year). It cost them £10 to process each invoice which far exceeded the margin on the sale of each book. Nutty.


From BeattieBookBlog a long response from A&R General Manager Dave Fenlon that includes the following:
As a commercial business, we have the right to make decisions about which suppliers we do business with. In our negotiations with suppliers, we are the customer. Unfortunately we cannot work with every publisher in Australia, particularly if the relationship is not commercially viable for us.To give you some context, we currently have 1,200 suppliers to our business and have sent letters to 47 of those whom we hope to hold discussions with over the coming weeks. The payments we have requested from those suppliers represent a gap payment for profits that were lost or costs that were incurred as a result of our commercial relationship with those particular suppliers.We are trying to operate a successful bookstore chain and if we cannot strike a balance that allows us to maintain our retail operations, the impacts on the industry will be far greater if we are forced to close stores or drastically cut down titles.Again, let me assure you that this is not about penalising authors. It is about establishing commercial arrangements with our suppliers that are viable for both parties and that allow us to offer the best value to our customers.

Thursday, August 09, 2007

Gervais On Art: New York Skyline with the Opening For Heros

This Ricky Gervais video is noted by Virginia Heffernan (happy birthday?) on the New York Times site today. It was shot for GQ and Details magazine. As she says, his stuff is set on a knife edge between hilarity and squeamishness (my word).

Harpercollins Reports Higher Revenues

Newscorp reported financial results for their fiscal 2007 (ending June 30th) and while understandably much of the conversation on their conference call related to Dow Jones there was not one reference to Harpercollins. (Transcript). At this stage it would be premature to read anything into this for a few reasons. Firstly, Harpercollins has done consistently well over the past several years. Revenues and profits are down recently but they are off the back of a few very strong years and in particular several strong titles. Secondly, there is a divestiture log-jam at NewsCorp as they look to sell Gemstar, some small TV stations and some of the community titles that came with Dow Jones.

Harpercollins reported revenues for the quarter of $295 million, a $39 million improvement over 2006. Full year revenues of $1,347 million were $35 million better than the prior year.

Operating Income results at Harpercollins were as follows from the press release:
HarperCollins reported fourth quarter operating income of $21 million, an improvement of $27 million versus the fourth quarter of fiscal 2006. Full year operating income of $159 million declined $8 million from prior year results that included strong sales of The Chronicles of Narnia by C.S. Lewis. Current quarter results were led by sales of The Dangerous Book for Boys by Conn and Hal Iggulden and The Reagan Diaries by Ronald Reagan. In addition to these titles, full year results included strong sales of Marley and Me by John Grogan, The Measure of a Man by Sidney Poitier and Michael Crichton's Next. During the fourth quarter, HarperCollins had 53 books on The New York Times bestseller list, including 8 titles that reached the number one spot, and for the full year HarperCollins had 128 books on The New York Times bestseller list, including 16 titles that reached the number one position.
Operating margin of 11.8% in 2007 declined almost 1 percentage point versus 2o06. No detail was given on the margin erosion.

PDF of the earnings report is here.

Librarything and MediaLabs

Librarything (which I have mentioned a few times) has teamed up with MediaLab the developers of the AquaBrowser faceted search tool. Via EoinPurcell.

Tim Spalding over at LibraryThing speaks highly of the Aquabrowser people and the new product:
AquaBrowser which makes one of the few really interesting online library catalogs, has teamed up with us to offer LibraryThing tags and recommendations within AquaBrowser. The product is called My Discoveries. Basically, it gives AquaBrowser a series of desirable social features, like tagging, list-making, ratings and reviews—and not in some half-assed way either. LibraryThing comes in as a way to kick off the tag data (a 21-million-tags kick) and to add recommendations to it. My Discovery customers who choose to go with LibraryThing data will be able to see both LibraryThing's as well as their own patron's efforts.
This is an interesting application using data gathered in a social network (that is for free) to create additional value in an application that is fee based. Nothing wrong with that. Since MediaLabs is owned by Bowker (and AquaBrowser was implemented in BooksinPrint under my watch) when will Librarything data be incorporated into BIP?

Wednesday, August 08, 2007

Amazon and Self-Publishing

Shelf Awareness had the following interesting blurb about an new initiative:

CreateSpace, which bought in 2005, has launched an online Books on Demand service and will not charge setup fees for those books--and at the same time is ending setup fees for its DVD and CD on demand services. CreateSpace on demand books will be displayed on Amazon as "in stock" and will be shipped within 24 hours. They are eligible for various Amazon programs, including Amazon Prime. Books are printed with full-color paperback covers and text may be printed in black-and-white or color and in multiple trim sizes. Authors may order copies at "competitive wholesale prices."In a statement, Amazon's senior v-p, North American retail, Jeff Wilke said, "The new CreateSpace Books on Demand service removes substantial economic barriers and makes it really easy for authors who want to self-publish their books and distribute them on"

It will be interesting to see what impact this initiative is going to have on the iUniverse, Exlibris, Author House and Lulu's of the self-publishing world. Of course, many self-publishers (and some may say authors generally) have grandiose notions about their sales chances and the direct connection to the biggest on-line book emporium may be a huge attraction. There is of course the virtual certainty that these books won't do any better than if published by Publish American: Will that become a customer service problem for

Tuesday, August 07, 2007

Do it Your Self Penguin Covers

A new twist on the Penguin initiative that allows you to design your own Penguin classic cover.

At MyPenguin several bands and musicians have added their own covers. Razorlight, Beck, Goldspot, Dragonette, Ryan Adams, Johnny Flynn and Mr. Hudson & The Library all chose the Penguin Classic they most wanted to see NAKED... then they did a cover for it.

At left is Beck's cover.

Monday, August 06, 2007

Playboy Archive & Bondi Digital

Update: This post was made a few months ago and this morning The New York Times comments on both the Playboy and the Rolling Stone DVD archive coming soon from Bondi Digital.

Since posting the following, I have seen the packages and they are impressive.

In October, I found myself in a cold gloomy basement antique store in Omaha, Nebraska. It was a fairly large room with variable content including a collection of magazines and books. The books were not special - although there was one first edition I knew was worth over $100 except that some moron had made a square cut in the dust jacket. The magazines included hundreds of Playboy magazines and I wish I had taken a photo of them as they were impressive and in much disarray. No doubt many old geezers like me spent time in that area.

At around the same time, I met David Anthony of Bondi Digital who was just wrapping up an agreement with Playboy Publishing to digitize the entire run of Playboy magazines. It is an exciting project and they hope to have the first products in stores for Christmas. They will approach the project by creating decade long sets of the magazine which will be available on discs packaged in large format book like packages. Each package will also include a booklet reflecting on the content on the disc which will be an exact replication of the print product - cover to cover. The content will be searchable and there will be an index.
"This digital archive is a first in the mass consumer magazine andmen's category," says Hugh M. Hefner, Playboy Founder, Editor-in-Chief and Chief Creative Officer. Playboy magazine has a tremendous legacy. With ourloyal readership, which has always shown a real interest in our archival issues, we knew this would be the perfect opportunity to offer Playboy fans what they have wanted for years."
Given this initiative (it follows Bondi's work with The New Yorker Archive) those interested in Playboy (and you know who you are) will not have to skulk around in basements anymore to find missing issues. By the end of next year the full set should be completed to the eternal enjoyment of all Playboy 'readers'.

Rolling Stone Post

Thursday, August 02, 2007

Borders Australian Stores

The Australian Bookseller and Publisher is reporting (via SMH) that KPMG will be circulating the black books to parties interested in acquiring the Australian Borders stores on Thursday. The magazine is reporting that the business unit could be worth over A$200mm and Dymocks may be the leading candidate for acquisition. Angus and Robertson the other leading contender is owned by Pacific Equity Partners which also owns New Zealand retailer Whitcoulls and has stated an intention to form a large retail chain and then float the business on the stock exchange.

ABP also suggested that Australian big box retailers Woolworths and "Big W" may also be interested. Stay tuned.

(ABP is a Bowker property - Hello to all the staff down under).

Harlequin Reports

Torstar the owner of Harlequin reported marginally higher revenues against the same period last year for the Harlequin operating unit. They expect full year revenues to continue to improve against a 'difficult' 2006. Torstar's main revenues are generated by newspaper advertising revenues which continue to fall (as is the case with most North American newspapers). Overall the newspaper group's revenues rose just less than 2% for the quarter versus the same period last year.

Harlequin has been under-going a reorganization which began earlier last year and in the quarter operating profit was up 20% from $10.2mm to $12.5; however, the company also stated that operating profits in 2006 were artificially low due to shipping problems. (Torstar Press Release). First quarter revenues were up $6.2mm but included $5.1mm in exchange rate benefit. Second quarter revenues were up $1.4 including a gain of $0.9mm in exchange rate fluctuation. For the first six months Harlequin revenues are up only $1.4mm at constant rates on total revenues for the six months of $240.4mm (less than 1%). Operating income, where it looks like efficiencies are having some impact is $31.6mm for the first half which represents a 25% increase and an operating margin improvement from 11% to 13%. (There was an $0.8mm exchange benefit in operating income).

Details on the company's operating issues is sparse but it does look like the company continues to have difficulty expanding their revenue base. The lack of revenue growth is clearly the story here with the company struggling over the past several quarters to burst out of the doldrums. They have commented that mass market continues to be a difficult market for them and it would be interesting to hear from the company how some of their new sources of revenue - particularly online - are doing. Some of the things they are doing with online community building and leveraging their brand online are truly exciting and innovative but strangely lacking in the company reports.

Everyone knows this is a company with a tremendous brand name and image: With many other trade publisher's (with far less brand strength) reporting good to strong growth in revenue and operating income in the last few weeks it seems Harlequin are not performing to expectations.

Interview with Jane Friedman

Interview in Forbes with Jane Friedman, CEO Harpercollins.
Forbes: When you look out into the future of publishing, what do you see?
JF: I think the book business is the healthiest I have seen it in a very long time. We are seeing a breadth of titles selling in many different channels of distribution. We are no longer publishing for the independents only, the chains only, the big box merchandisers only, the online sellers only. We are selling across the board. The health is the breadth, diversity and range. That's good for business, and more importantly, it's good for society.
Rest of the interview here.

File Under Any News is Good News

Personally, my interest in the Tour Dey France ended the day after Floyd Landis won last year and we found out he was a doper. The feel good story bleed to death. After watching the tour through the Lance years Mrs PND and myself now have no interest; however, we are unique because Versus (candidate for dumbest brand name change of the year) the cable channel is reporting the highest viewship ever. This proves that any news is good PR and notoriety is paramount.

Wednesday, August 01, 2007

E-book Reader for IPhone

Via teleRead an application for the IPhone that enables the reading of over 10000 books on the IPhone.

Adam at Exact Editions will be excited.

Note one of the comments (not sure if it applied to the IPhone or not):
Having played around will all the current iPhone ebook “solutions”,
including the one mentioned here, I’m afraid none of them will really fit the
bill for a serious ebook reader. There are two major problems:
1. Lack of local storage. If the book is stored on a server then the reader is pretty much out of luck in areas of poor cell or wifi coverage.
2. Inconvenience. Reading a book in a browser doesn’t work well because you can’t bookmark your page. Several times I’ve had Safari quit on me and then had to re-open the book and scroll through 250 pages to get to my place. Storing the ebook as part of the url solves the local storage problem, but doesn’t solve this one.