Wednesday, October 31, 2007

Borders Down Under - Update

The Dominion Post (via is reporting that bidding for the Borders Australian and NZ stores has now closed.
A&R Whitcoulls seems certain to be one of the final contenders for the 20 Australian and four New Zealand Borders stores. Dymocks is another business believed to be still keen. Other parties cited have included Berkelouw Books and possibly large general retailers such as Woolworths.
I predict a quick decision and announcement.

Here is my update from earlier this month.

Riverdeep Syndication

Riverdeep's banks are in the process of delivering their road show (Reuters) to sell the debt proposed as part of the Riverdeep acquisition. If there are any legitimate concerns regarding the financial structure of this deal they are likely to become apparent as this syndication gets underway. As reported earlier this month, an analyst from Dresdner suggested their were concerned about the ability of Riverdeep to service the debt load that their acquisition binge has imposed on the company; however, no one else has voiced a similar concern since that statement was made public. If you want to get in on it you need to be in London on the first of November or New York on the fifth. We wait to see.

Five Questions with Shatzkin on DADs

At the Frankfurt supply chain meeting, Mike Shatzkin presented his white paper on Digital Asset Distributors. I summarized the content of the presentation here but I also followed up and asked Mike to expand on several points in the presentation. Here are his responses.

  1. You mentioned that the research that resulted in the white paper on Digital Asset Distributors was developed for Klopotek. What is there interest in this research and why were they interested in this subject?

    Believe it or not, Klopotek really had a community interest in the subject (although that also translates into a marketing device.) They are not a DAD -- which we define as an operation that does digital storage, conversion, and distribution in response to a publisher's needs -- and have no interest in becoming a DAD. But they do sell systems to publishers that will have to account for digital activity, tying sales and revenues back into legacy systems to pay royalties, among other things. But, mainly, I think Klopotek -- which has been growing out of their German origins for the past several years -- saw a "thought leadership" opportunity to establish themselves in the English-speaking markets. And I think the White Paper and conferences -- the outputs from the research -- were successful for them in that regard.

  2. You have given this presentation and speech a number of times over the past six months or so. What has been the reaction of the publishing community – not necessarily from the larger publishers – but the medium to smaller publishers? Are you starting to see an appreciation for the issues that this next tier of publisher needs to understand and appreciate as they consider their digital distribution needs?

    I don't see much of the smaller publishers; I think it is the nature of my consulting practice. But the mid-size ones are definitely feeling the issues raised by the DAD study. Right now, this is being driven by a combination of driving online sales (getting the content displayed with Amazon,, Google, Microsoft) and driving online marketing (widgets for MySpace and Facebook) for the consumer publishers. Publishers are also increasingly aware that there is a real ROI in developing a digital workflow, which becomes part of the thought process when they think about DADs. The more complex are the books a publisher creates -- the more highly illustrated and design-intensive -- the more benefits come from the digital workflow improvement.

  3. What role are standards bodies playing in this area? Are the business needs and requirements moving ahead of the standards discussions and recommendations?

    Interesting that you raise this. Digital guru David Worlock said to me at Frankfurt that he wondered whether we should be worried so much about "standards" when we don't have a MARKET. Shouldn't we build the market first, he wondered? But Mark Bide, my partner in many ventures including the DADs research, would say that, without standards, you'll never build a market! I am not sure the business needs are yet moving ahead of the standards, but they probably will. I agree with something you have previously pointed out on your blog, which is that the identification of salable "chunks" can't really be done before the fact by publisher assignment of DOIs; it is the consumer who will identify what they want and how they want it put together and we don't really have a process to enable that.

  4. You mentioned at Frankfurt that long term there may only be a few DAD’s but in the short term most publishers should/will contract with one of the existing players. Why do you think this is the case: Both the short term observation and the long term evolution.

    Technology drives scale is the answer in both cases. As it stands, all the DADs are struggling to build out their offerings to cover everything they have to do. They will all be challenged to provide real digital workflows -- real DAM capabilities -- or they will suffer competitively. They all need widgets. They all need nimble content conversion capabilities. And in the future they will need the capability to add value in sales of aggregated content. In the short term, obviously the players will choose from the choices on the table. In the US, that really means three major players (four if you are an academic publisher.) The biggest companies aren't quite all spoken for, but it will be increasingly difficult for new entrants to gain the scale that is necessary to play.

  5. What will the evolution in services be for these DADs? Where/how do you think they will begin to differentiate themselves or will their services evolve into a commodity?

    One aspect of differentiation will be price and service. Pricing is a bit vague now and service is very hard to measure. But as new use cases arise -- Amazon Kindle, a Google device, new Web services like netGalley develop and need their database populated -- some DADs will handle these things more quickly and smoothly than others. That's why we urge strong service level requirements in publishers' agreements with DADs. In the longer run, I can see DADs "making sales." They can't really do that until they aggregate content and know they have it. But let's say a DAD has 500,000 recipes from 14 publishers and can convince Kroger to make use of them in marketing? If you're a publisher with that DAD, you make a sale. If you're not, you don't. In the physical distribution world, publishers look at "what else is in the bag?" when they pick a distributor or a sales rep group? It is too early for that kind of thinking in digital distribution, but it will come.

    Mike Shatzkin,

Monday, October 29, 2007

"Hey Nielsen" What About Books?

Nielsen is capturing the true voice of the consumer with the launch of their new “Hey Nielsen” social networking website. Designed to capture consumers immediate reactions to television, movie and music programming, the site launched in beta a few weeks ago. Nielsen is the market researcher most responsible for what we end up watching, listening to and going to see. They are not necessarily responsible for what we read however, but more on that later. Nielsen hopes that the Hey Nielsen site becomes the social monitor for all pop culture although my initial experimentation with the site seems to indicate that most people are focused on television.

Hey Nielsen works by ranking positive or negative comments based on the volume of submissions related to specific content. A “Hey Nielsen” score is attributed accordingly. Essentially, this social website becomes a panel: Perhaps not as organized or managed as a traditional Nielsen panel but by definition more broad based. Nielsen will be able to capture the immediate feedback generated by new shows, music, movies and other media – even celebrities. This could be a fundamental step forward over the old model of set top boxes and exit surveys.

Crucially for the book industry we don’t have such a facility and it is ironic that Nielsen having such a research presence in the book industry has not placed books into to the Hey Nielsen network. We are generally familiar with the BookScan POS service but it has been left largely to subscribers of this service (both in the UK and US) to derive their own insight into what the raw data suggests about sales trends, tastes and mores. I read about Hey Nielsen before I went to Frankfurt and it was at the supply chain meeting that Nielsen presented more of what we would like to see of their analysis capability.

In a presentation entitled
Towards a Better Understanding of a Consumer Jonathan Nowell and Julie Meynick discussed the existing publishing market and environment. The suggested for example that contrary to conventional belief the publishing market in the UK is reasonably healthy with unit sales up 5.4% over last year and up 43% since 2001. In comparison with other media – particularly TV and newspapers – book readership has more than held its own. They followed this over view with some statistics on where books were selling and what genres were moving. There would be little surprise that published material such as hotel and travel guides, dictionaries and astrology are not competing well with online alternatives and are seeing decreased sales.

The last segment of the presentation concerned a review of the panel HarperCollins constructed to better understand their readers. (It is not clear how much direct involvement Nielsen had in this research). Researchers asked over 1000 people to rank how they used different media for different tasks and also describing their visceral reactions to what reading and books meant to them. Nielsen sales data was used to build demographic profiles of readers which in turn has been used by Harpercollins to develop genre profiles of the types of book purchasers that were attracted to specific genres. In the presentation, Nielsen showed the seven defined profiles within Cooking as an example. Each of these profiles has deeper demographic information associated with it to describe the buyers in this segment.

Nielsen showed in this presentation how psychographic data from panel information and sales information from point of sale data could be merged to create a more detailed set of information about existing and potential consumers. This information in turn creates the framework for effective marketing and promotion campaigns that should drive sales.

I saw Nowell later the next day and told him the presentation was interesting and why they couldn’t do something like this in the US. After a pause, he told me to wait and see. In the short term, why can’t they use Hey Nielsen?

Friday, October 26, 2007

Update on Harpercollins'

A few weeks ago I had a post on the new authors site being launched by Harpercollins UK. Victoria Barnsley the HC UK CEO was on BBC Radio 4 talking about it. Here is the link. Her piece is about half way through the program. Meet the Author is also profiled.

Blog post

Thursday, October 25, 2007

Go for the Dew(ey)

The BBC goes looking to see if Dewey is still relevant in today's (UK) libraries and along the way they discuss some of the history of Mr. Dewey and his evident psychological 'issues'. These issues may have materially impacted the development of the system. So I guess, we should be happy that Prozac wasn't available. One other note: No mention of OCLC.

This audio article appeared on BBC Radio 4. Link. It is about 20mins and if you are a Dewey know-it-all you are not going to get much out of this.

John Burdett: The Bangkok Underworld

I have read all the books John Burdett has written about Bangkok and also heard him speak about his most recent book when he was on his recent author tour. The books are evocative of the real Bangkok which you will immediately recognise if you have ever visited the city. I have been back several times since 1997 but as a child I also lived there for about a year. Burdett is profiled in The Times this morning with an article and a slide show:

Mr. Burdett delivers this grab bag through his narrator, Sonchai Jitpleecheep, a cop whose mother was a prostitute and whose father was an American soldier during the Vietnam War. Sonchai is a cultural interpreter par excellence, a cross between Descartes and a Thai palm reader who has flashbacks of travels to Europe with his mother and her various client-lovers. “I still feel very Thai, despite my straw-colored hair and sharp nose,” Sonchai says in “Bangkok 8.”

The narrator’s frequent reflections on Buddhism complete the cultural mélange. Mr. Burdett himself meditates one or two hours a day. It’s hard to imagine how the broad and nuanced canvas Mr. Burdett paints in his books could be conveyed on the big screen. But Millennium Films, which recently produced “John Rambo,” the fourth movie in the “Rambo” series, in Thailand, has optioned “Bangkok 8” and is serious about making the film, Mr. Burdett said.

Video Link

Wednesday, October 24, 2007

German Bookselling

The Times has an article on the German bookselling market which maybe under threat because of legislation proposed in Switzerland to abolish fixed price policies on German language titles. Germany has an extraordinarily efficient system of distributing books and in many cases orders to wholesalers are delivered first thing the next day to all types of retailers. In some cases, the dispatchers have keys to the bookstore and boxes are sitting inside the front door when staff arrive. According to both publishers and retailers interviewed in this article, the net price agreement supports the diversity of publishing and of the size and location of all types of bookstores.
The fixed-price system is not unique to Germany. France had it, gave it up and reinstituted it after finding that discounting hurt small booksellers. But in the German-speaking book world, the system has long been a source of special pride until Switzerland jumped ship this spring. Despite vigorous lobbying from German and Swiss publishers and independent booksellers, the Swiss government sustained a ruling by the Swiss Competition Commission to overturn the fixed-price law and allow discounting there.
Here is the rest of the article.

Amazon Reports

The highlights from the earnings call were pretty impressive and here are highlights from the press release:

  • Worldwide revenue grew 41% to $3.26 billion, or 38% excluding the $75 million favorable impact from foreign exchange.
  • Q3 2007 revenue benefited by approximately 290 basis points of year-over-year growth from Harry Potter VII sales, plus attachments.
  • Media revenue increased to $2.09 billion, up 36%, or 32% excluding FX
    In the North America segment, revenue grew 42% to $1.79 billion. This is the highest growth rate in seven years.
  • US segment Media revenue grew 38% to $1.08 billion.
  • GAAP net income was $80 million or $0.19 per diluted share, compared with $19 million and $0.05 per diluted share
  • The Company sold 2.5 million copies of Harry Potter and the Deathly Hallows worldwide, making it Amazon's largest new product release.
  • The Company launched a public beta of Amazon MP3, a digital music store with Earth's biggest selection of a la carte DRM-free MP3 music downloads. Amazon MP3 has over two million songs from more than 180,000 artists represented by over 20,000 major and independent labels.

I found the reports on the growth of their services business to be most profound. The company annouced a development fund for companies or individuals that could build commercial applications using the Amazon web services. Amazon will fund expansion and further development of the best of these applications. Without staring a gift horse, etc. the only limitation is that they application has to work with Amazon services. On the back of this they appear to have really spured the growth of people and companies tinkering with webservices. (I might even have a go). A lot of this growth may be people checking in to look around but regardless the growth in registrations in shocking.

  • Over 290,000 developers have registered to use Amazon Web Services (AWS), up 25,000 from the prior quarter.
  • AWS also launched a limited beta version of the Amazon Flexible Payments Service (FPS). Amazon FPS is the first payments service designed from the ground up specifically for developers, and provides unprecedented flexibility in the movement of money through a set of web services APIs.
  • AWS recently introduced several new compute instance types for the Amazon Elastic Compute Cloud, which provide up to eight times more memory, CPU, and storage, enabling developers to support an even broader set of applications. Amazon Simple Storage Service (S3) continues to be rapidly adopted by developers, and objects in storage have doubled to more than ten billion during the last six months. In addition, we have instituted a Service Level Agreement for Amazon S3 that guarantees operational performance levels.
  • On the earnings call, Bezos had this to say about webservices:

Obviously if you're building web scale applications, in many cases you have to be able to charge people for things. The Flexible Payment Service is the first payment service specifically designed from the ground up for developers, and it has a lot of features that make it very flexible and easy to use for developers to incorporate payments into their own applications.So that set of services that we're offering to developers is growing very, very rapidly and has gotten an unusual amount of traction. We are very, very gratified to see this early uptake in the development community. It's happening at the very small scale with small software developers; one-person and two-person shops. It's also happening at the middle scale with venture capital-funded startups; and then at the large scale, with enterprise customers all the way from the small up to the big. So it's a very exciting and new product offering. These infrastructure services are things that we needed to build for ourselves in order to run the web scale application called Amazon. While we were in the process of building these things, we decided to build them in an external way so we could charge for them and turn them into a new profit center.

Looking forward to the full year the company stated:

  • For Q4 we expect net sales of between $5.1 billion and $5.45 billion, or growth of between 28% and 37%. This guidance anticipates greater than 300 basis points of positive impact from foreign exchange.

Lastly in response to questions on the earnings call were the following:

  • A question on Gross Margin: :In terms of gross margins, yes, Harry Potter is having an effect. It was slightly less than a contribution profit breakeven event for us. You should assume that's a lower gross margin than our average, so it is bringing it down."
  • A question regarding the legal challenge to 1-Click. Bezos: "In terms of 1-Click, we have a longstanding practice of not talking about such matters outside of our public filings. You should refer to our public filings."
  • A question on the Borders web store collaboration that is ending: Bezos "Re Borders: I don't really have any comments on any specific contracts."

Tuesday, October 23, 2007

Five Questions with Rosetta Solutions

netGalley is attempting to solve an intractable issue for publishers: How to ensure that your review copies get into the hands of the right reviewers, at the right time and at the lowest possible cost. In addition, tracking these reviews becomes an increasing problem as reviews publishing rapidly expands beyond traditional newspaper and trade magazines. netGalley is an innovative technology services company located in Seattle and staffed with people committed to improving the way publishing operates. For publishers, netGalley helps publicity and editorial and marketing staff reach a wider range of review publications and media and provides up-to-date status of reviews. For reviewers, netGalley helps to manage the inflow of titles and internally manage the review process. There is no cost for individual reviewers to register for the service.

I asked Michael Forney, President of Rosetta Solutions which is the corporate owner of netGalley my five questions.

  1. Who is Rosetta Solutions and where does netGalley fit in the organization?

    Rosetta Solutions, Inc. (Rosetta) is a publishing technology company full of people who love books. All of Rosetta's products and services have been designed and built with extensive collaboration from publishers and media organizations. Our goal is to streamline and automate publishing workflows to help grow the industry. We do that by providing tools and services for both print and digital editions, including production, conversion and distribution.

    Rosetta’s netGalley™ is an online service that helps publishers better connect with their book reviewer and media communities through electronic distribution and tracking of ARCs, galleys and press materials. Through netGalley, publishers can simplify existing processes with premier review and media contacts and broaden their reach to online reviewers, bloggers and specialty publications, all while significantly diminishing the cost of printed review copies and press materials.

  2. How did the netGalley product evolve?

    At netGalley, we are fascinated by how the internet continues to help connect smaller and more specialized groups of people who benefit from shared information. Books have long been sold through word-of-mouth, with traditional reviews being the most influential recommendation tool. What we wanted to accomplish with netGalley was to bring to bear the networking power and digitization of the internet on the book review process. We keep asking, “How can we make the existing process more efficient and less expensive? How can we mine the process for more information that will enable better decision-making? And last, how can we help connect the exponential number of new media outlets with new galleys at THE lowest possible cost?” We are grateful to have had the input and counsel of the some of the biggest and most successful publishers and media groups to help us shape the functionality of netGalley. Good listeners make good leaders.

  3. You describe yourselves as a services company in this context what are the solutions that netGalley can provide? Is netGalley a discrete product or tool or do you see it as part of a platform or suite of products?

    When we first began with netGalley we saw the immediate benefits of better connecting review organizations with publishers to streamline the back-and-forth communication that characterizes this process. What we then began to see by talking to publishers is how netGalley can equally be applied to the larger publicity process by providing media with a central location to access a broad range of ancillary material about a title. We began to see how netGalley can benefit a range of constituents, directly (in the publishing house or media organizations) or indirectly (for example providing better information and services to authors). So, absolutely, we see netGalley as a platform providing a continuum of services.

  4. You are currently working with a number of publishers on the netGalley launch. What have been some of the issues you have faced as you have designed and built this product?

    Probably the biggest challenge for us has been straddling the current reliance on printed materials with the gradual evolution toward digital media. We recognize that publishers and media will continue to rely primarily on printed galleys for some time. At the same time we can be evangelists for digital content, particularly by making it easy and secure to distribute within a given professional community. To be clear, netGalley does not require the distribution of digital galleys and facilitates the distribution of physical galleys. Yet many publishers have indicated that they can use digital galleys to supplement their physical galleys, especially to the online media and blogger communities.

    Have you faced particular issues in convincing publishers of the ROI involved in implementing at productivity tool like netGalley?

    The publishers and media organizations we have talked with all agree that there is a great deal of opaqueness in the current communication media and review processes. There is equally a sense that it is difficult to understand the true costs of reviews or media coverage. When you pair that difficulty with the explosiveness of new sites covering and reviewing books…it seems reasonable to want to automate and capture more information in this area.

    The distribution of marketing materials and the breadth of potential reviewers are growing rapidly. None too recently, a publisher had a fairly static list of people they needed to send ARC’s to have you heard from publishers that this is becoming an unmanageable task unless fundamental changes are made?

    We haven’t met a publisher yet who has noted the diminishing importance of The New York Times in selling books. We haven’t met one who says that their list of daily tasks is shrinking. The traditional media outlets will continue to have enormous impact on the books purchased by the reading public. The publicists’ day will get fuller and fuller.
    I think the challenge for publishers is partially in verifying the influence of potential new media sources. We see a lot of heads nod when we talk about automating and consolidating communications online, about bringing together potential reviewers/media who might find you as much as you find them, about cutting down the number of manual tasks particularly around formats and files.

    What kinds of improvements would you anticipate in a typical installation of the netGalley product?

    First I would ask, improvements for whom? Review organizations for example are going to see enormous benefits in terms of improving their internal workflow and minimizing redistribution costs to off site reviewers. Media organizations will see improvements in time efficiencies and task management. Publishers can anticipate lower direct costs of producing and distributing physical galleys, replacement of manual processes, and a broadening of the publicity universe at lower cost.

  5. What is next for netGalley. Do you have a sense what your next development phase will be?

    On the netGalley side, we have a development plan that extends through the next two years and includes new functionality in the existing application as well as services to new segments such as the library and educator markets. Our research indicates that many of the benefits of netGalley to review and media communities can be transferred to other book communities.

    From the Rosetta perspective, we have a number of new products and services in development all surrounding the automation of publishing workflows and the consolidation of information derived from these processes. Watch this space for more!

Monday, October 22, 2007

Scanned! Libraries See the Folly in Proprietary Programs

The Open Content Alliance was established as a non-profit, non-proprietary program to aid libraries in developing their own book scanning efforts. It was partially a reaction to the far more renowned Google book program but some could argue it was a logical extension of the work of the Internet Archive program that the OCA founder Brewster Kahle also established. There are fundamental differences between the OCA approach and other digitization programs: Firstly, the library pays OCA for the scan, secondly, the content is limited to out of copyright material and thirdly, the library has no restriction on what is done with the scan.

This morning the NYTimes examines the developing resistance to commercial digitization programs such as Google and Microsoft and uses as an example the decision by a consortium of Massachusetts libraries not to go commercial.
But the resistance from some libraries, like the Boston Public Library and the Smithsonian Institution, suggests that many in the academic and nonprofit world are intent on pursuing a vision of the Web as a global repository of knowledge that is free of business interests or restrictions. Even though Google’s program could make millions of books available to hundreds of millions of Internet users for the first time, some libraries and researchers worry that if any one company comes to dominate the digital conversion of these works, it could exploit that dominance for commercial gain.
But Google continues to add libraries to their digitization program with regularity and why this continues is not really discussed here. Within the library community the disquiet regarding the Google program has been growing all year and the discussion as been as much about the restrictions as it has about the quality of the scans themselves. Less has been said about public trust and this aspect is not directly addressed in the Times article either.

As repositories of our collective knowledge and most often as beneficiaries of our tax revenues or public donations, libraries have an obligation to ensure that the general public has ready access to the content collected on our behalf. Perhaps this is a controversial point and perhaps this thought it not directly applicable in an academic context (unless it is a public institution) but the President of the Boston Public Library obliquely references this point when he says in the article:
"We understand the commercial value of what Google is doing, but we want to be able to distribute materials in a way where everyone benefits from it,” said Bernard A. Margolis, president of the Boston Public Library, which has in its collection roughly 3,700 volumes from the personal library of John Adams.
So what of the libraries in the Google program? Some are having second thoughts, some are entirely happy and some have made it work to their advantage. Generally, speaking it appears that everyone believes that all library content will eventually be freely accessible. If that means that works will have to be scanned again for those works that have restrictions placed on them by the original scanner then so be it. Since this second effort is likely to take some time, this content may be available in digitized form at a network level in advance as more and more libraries take advantage of 'open' programs like OCA.

I was intrigued by the last sentence of the article:
On Wednesday the Internet Archive announced, together with the Boston Public Library and the library of the Marine Biological Laboratory and Woods Hole Oceanographic Institution, that it would start scanning out-of-print but in-copyright works to be distributed through a digital inter library loan system.
"digital interlibrary loan system" sounds very interesting.

Pearson Ups Full Year Guidance

Last weeks positive results for McGraw Hill were said to bode well for Pearson's upcoming report and the news was confirmed this morning with Pearson reporting underlying revenues up 6% and operating profit up 20% for the first nine months versus the same period last year. Results including the impact of acqusitions and currency were 4% and and 17% respectively. From the press release:
Marjorie Scardino, chief executive, said: "We still have a lot of trading ahead of us, but every part of the company is doing well. We're benefiting from rapid take-up of our learning technologies; sustained increases in our audience and advertising at the FT; and bestselling publishing combined with operating efficiency at Penguin. This increases our confidence that 2007 will be another year of record profits for Pearson."

For the full year, the company is firing on all cylinders and is expected to achieve record performance in revenue, operating profit, cash flow and return on equity. The company is generally conservative in forecasting full year results but the confirm that all operating units are performing at or above their previous full year guidance.

Highlights for the first nine months of 2007:

Pearson Education underlying sales up 7% with good growth in all parts:

  • Our School business: Sales up 7% from sustained investment in content and technology and breadth in publishing, testing and services. Full-year sales growth around the top end of the 4-6% range and further margin improvement is expected even after reorganisation costs.
  • Our Higher Education business performed strongly through the start of the academic year. Sales are up 5%, with rapid growth in subjects where we offer our online teaching and assessment programmes (established services such as MyMathLab, MyEconLab and Mastering Physics as well as new programmes in Spanish, nursing and information technology).
  • More than 1.3 million US College students registered for our online learning programmes in the August and September back-to-school period, a 44% increase on the same period last year.
  • We now expect our worldwide Higher Education business to achieve full year sales growth around the top end of the 3-5% range with stable margins.
  • Our Professional education business continues to show strong growth. Sales are up 12% in the first nine months, and we now expect full-year sales growth of 8-10% (against our previous guidance of 5-7%) with further margin improvement.

In FT Publishing,

  • Sales are up 8% overall, with increasing content revenues. Our advertising revenues are up 9% in the first nine months (up from 7% growth in the first six months of the year).
  • We continue to expect FT Publishing to achieve double digit margins in 2007.

Penguin sales

  • Up 2% with a strong publishing performance from both new and established authors including Alan Greenspan (The Age of Turbulence), Khaled Hosseini (A Thousand Splendid Suns), Jamie Oliver (Jamie at Home) and Elizabeth Gilbert (Eat, Pray, Love). For the full year we continue to expect Penguin to improve margins further, as our publishing investment and efficiency programmes bear fruit.
Pearson Press Release

Friday, October 19, 2007

McGraw Hill Third Quarter Strong

MGH continued to delivery strong financial results on the back of their strong start to the year. In the third quarter revenues up over 9.8% to $2.2billion. Net income for the third quarter grew by 18.2% to $452.0 million. Foreign exchange rates positively affected the growth of revenue by $21.3 million and contributed $1.8 million to operating profit. From the press release,
"Double-digit growth and increased share in the elementary-high school market in
the most important quarter of the year for education and solid performances in Financial Services even as the structured finance market deteriorated were key to our results," said Harold McGraw III, chairman, president and chief executive officer of The McGraw-Hill Companies. "The operating margin expanded in all
three segments."
Net income for the first nine months was $872.9 million. and Revenue for the first nine months grew by 11.6% to $5.2 billion. Commenting on the outlook for the balance of the year the company stated:
"We are still on course to produce double-digit earnings per share growth in 2007, as well as improved operating margins in the Financial Services and McGraw-Hill Education segments. For the fourth quarter, revenues and earnings will not match last year's results because of challenging conditions in the structured finance market and some softness in education."

  • Revenue for the McGraw-Hill School Education Group increased 11.2% in the third quarter to $670.8 million.
  • Revenue for the McGraw-Hill Higher Education, Professional and International Group grew by 8.1% in the third quarter to $505.1 million
  • Capturing 32% of the fast-growing state new adoption market was the key to this year's industry-leading performance by the McGraw-Hill School Education Group
  • In professional markets, digital products, which include Access Medicine, Access Surgery, Access Emergency Medicine and Access Pharmacy, continue to attract a growing number of domestic and international subscribers. Our new digital iSpeak products, launched in April and now available in seven languages, are gaining traction

Financial Services:

  • "Revenue for this segment increased 12.5% in the third quarter to $759.6 million compared to the same period last year.
  • Operating profit grew by 17.3% to $346.7 million. Foreign exchange rates positively affected revenue growth by $12.6 million and had an immaterial impact on operating profit growth.
  • Double-digit growth in Standard & Poor's international fixed income markets, a strong performance by corporate and government ratings, and outstanding results from financial information products and services offset growing weakness in structured finance
  • "Standard & Poor's data and information products and index services recorded solid gains. Increasing assets under management in exchange-traded funds, stepped up trading volume of derivative contracts, and growth in licensing fees, all linked to Standard & Poor's indices, contributed to the improvement.
  • "Strong demand for data and information products is spurring growth. Capital IQ continues to add new customers and expand services to existing clients. A primary revenue driver has been the addition of new modules to the Capital IQ platform, including portfolio management tools and detailed fixed income information.
Information & Media:
  • Revenue for this segment increased 2.1% in the third quarter to $252.4 million compared to the same period last year.
  • Operating profit grew by 35.8% to $18.6 million. In the third quarter of 2006, the segment incurred a pre-tax restructuring charge of $5.8 million.
  • Foreign exchange rates did not have a material effect on revenue or operating profit growth.
Full press release

Thursday, October 18, 2007

Identifying My Package

As publishers we remain committed to defining for our readers and users the ‘package’. At the Frankfurt supply chain meeting last week as I listened to another “history of the ISBN” and other bedtime stories I was stuck by our insistence as publishers to define for our customers just how they should consume our content. This was manifested in our approach to identifiers for segments of content. I include myself in this criticism as a proponent of ISBN, DOI, ISTC and other alphabet defying groupings over the past 10 years. Three or more years ago, I think we were on the right track but in today’s user defined world the consumer is telling us what parts they want to consume and we will need to come up with easy to use flexible solutions that can identify the content and use.

On the Exact Editions site a user can select, by highlighting, a piece of text they want to use from any number of the journals and magazines hosted by EE. (The tool is named The Clipper). It is a fun and useful tool but in its implementation it doesn’t restrict the user in any way (other than a limitation on the amount of content). If a similar solution were implemented in a research context (within Refworks for example) I would like to see a persistent identifier created on the spot who’s syntax could be partially defined by the user. This is a perfect implementation for a DOI (one of the few perhaps) that enables the user to select a segment of the content they want, makes it persistent, creates a record for the publisher and enables any necessary reporting to take place.

It would seem to me that formatting a programmatic standard syntax to represent paragraphs, chapters, images etc. is a backwards approach simply because we will never fully anticipate how our users will use the content. We also continue to use the printed page as a construct which is fast diminishing in the online context and further undercuts the current standards approach. Attempts to build out a standard by unilaterally assigning executable identifiers to works (books) will be a waste of time and I simply don’t see the benefit of this approach; moreover, I don’t see anyone paying for it. It is not even clear publishers would welcome this approach.

Several implementations of technology that places at the point of need an easy to use script has proven that users want and are willing to purchase or gain approval for the use of content. CCC and O’Reilly are two differing examples of this concept. In the same manner, enabling an easy to use [citation] solution that provides a user with a simple pop-up window tied to the content they are interested in is a far more flexible and appropriate solution to identifying content. Avoid proscriptions: Let the user decide.

Amazon to Loose "One-Click"?

From my Aussie stringer, the Sydney Morning Herald has an article this morning on a New Zealander called Peter Calveley. Peter has been engaged in what is becoming a sport of sorts for dedicated people, crank-heads and other patent crusaders who seek to challenge existing patents for various technical solutions and products. In this case, he has waged a long battle over's famous 1-Click patent, a process that enables online shoppers to buy goods with the single click of a mouse button. From the news report:
In response to Calveley's request to re-examine the intellectual property, the US Patents and Trademarks Office (USPTO) has just handed down a decision
rejecting all but five of Amazon's 26 claims to the patent. The Patent Office agreed with Calveley's claim that processes similar to the 1-Click solution had been documented before the Amazon patent was lodged in 1997. Eight of Amazon's 26 intellectual property claims were dismissed because of a Newsweek magazine article entitled The End of Money?. It was published in 1995 - two years before the 1-Click patent was lodged. The article described a process where someone could click a button to pay for "an annotated bibliography of every article ever written about Sandra Bullock" and download the file.

Naturally, are not giving up so easily and can opt to appeal or take the case to the civil courts. As for now, the decision has been posted on the USPTO website but don't go adding 'one click' to your transaction module just yet.

Wednesday, October 17, 2007

Booker Short List is Free

The Times Online is reporting that the MAN Booker prize short listed titles will be made available for free download. Apparently the initiative is well advanced but what I really thought interesting was this statement:
The downloads will not impact on sales, it is thought. If readers like a novel tasted on the internet, they may just be inspired to buy the actual book.
Hummm. I must be missing something because while some forward thinking people in the industry subscribe to this theory it is by no means universally held. In fact I laughed when I read it. Surely, if free downloads were a promotional vehicle there would be more (all) of them.

Also, in one sweep the publisher disparaged the sales data in Nielsen's bookscan product by suggesting that the sales units of the Booker winner documented in the Nielsen reports were only 10% of the actual total. (Me thinks they are counting in Cusslers). The writer goes on to say that winning will do wonders for sales of the title - breathlessly, "Enright’s sales may now quadruple, at least". Gosh, is that an extra 12,000 units?

Lulu Name New President the self-publishing juggernaut announced the appointment of Bryce Boothby Jr. as President and COO of Lulu Enterprises. Boothby, 57, will oversee all finance, engineering, and business at as well as Gnack, the Lulu Enterprises company that provides support and services for open media businesses.

From the press release:
"We are very excited to have an executive of Bryce's caliber joining the company," said Lulu Founder and CEO Bob Young. "Because of our rapid growth we must prepare our company to serve millions of customers. Bryce's experience and remarkable track record of success will ensure Lulu's ability to continue to scale rapidly into the future."
Boothby appears to have no direct publishing experience other than a stint at Quebecor in the 1990's. He does have strong manufacturing, process and technology experience which should give you a sense as to where the publishing industry is headed.

Sommers Named President of Gale

Pat Sommers who until recently was President & CEO of Sirsi/Dynix has been named as the new President of Gale Reference. He replaces Gordon Macomber who announced last week that he was leaving for Wolters Kluwer Education. Sommers will report directly to Cengage CEO Ron Dunn. From the press release:
"Pat Sommers is extremely well qualified to lead Gale. He has anoutstanding record of success in managing information service businesses,and I am confident that he will provide strong leadership to help Gale growand further solidify its position as the world's premier library referenceinformation business," said Mr. Dunn. "I am delighted to welcome Pat toCengage Learning and look forward to working with him to provideoutstanding products and services for Gale's customers."

He starts Monday.

Press Release.

Pick Up and Go Book Vending

Doughty thieves made off we two new book vending machines over the weekend (as reported by the BBC). And to think we believe reading is in the decline. Who said reading isn't popular.

"The machines, worth £10,000 each, were in a trailer attached to a lorry parked at PN Computer Services on High Street, Elsenham near Bishop's Stortford. They were due to be delivered to Stansted Airport, but thieves took the trailer between Friday 14 and Monday 17 September. Essex Police said they have few leads and want information from the public."
I could have told them to avoid Bishop's Stortford; too many angry booksellers. I have always liked the idea of book vending machines and proposed the idea when I worked for Berlitz publishing as a unique way to sell our travel guides and phrase books. Idea died.

Tuesday, October 16, 2007

Swets Acquires MPS Scholarly Stats

The MPS resource management tool Scholarly Stats was quite innovative but in my opinion never really fit with the MPS core business. As a result I think they struggled to sell it into the library market and gain any significant market share. At a time when librarian's budgets are threatened or limited in some manner, Scholarly Stats is a tool librarian administrators can use for library usage statistics of licensed materials. From their website:
ScholarlyStats has been developed to provide information professionals with a single point of access to their vendor usage statistics. Providing faster access to consolidated data, it can help you to analyse usage of your online content more easily and more effectively. ScholarlyStats delivers consolidated reports to libraries around the globe, providing a clearer view of usage of over 70,000 journals and almost 450 databases from 46 platforms.

MPS was not a subscription agent as Swets and Ebsco are so could operate as a neutral party. With this purchase, the Scholarly Stats tool will be integrated into the Swetswise product portfolio and this will require some of the other platform providers and agents to beef up thier own tools for managing and monitoring licensed content usage.

More on the acquisition: Information Today

On a related note, the EU competition commission has cleared the acquisition of Swets by Glide Buyout Management Holding BV. This deal was previously announced in early September. Forbes

Olivieri Resigns From Wiley Blackwell

The Bookseller (UK) is reporting that Rene Olivieri who was responsible for the integration and merger of the Blackwell business into Wiley has resigned. There is no official report from the company which seems to indicate that the timing is unexpected. (Not least because senior execs in the US will still have been in bed when The Bookseller was reporting this). Having said that, it would seem that senior executive level changes were on the cards as the integration progressed and while this change may be presumptive it may also have been inevitable. Steve Smith was appointed earlier this year as head of all Wiley operations in Europe, Asia and Australia.

Monday, October 15, 2007

LibraryThing Launch Wiki Books In Print

The success of wikipedia, Librarything and other social databases has always intrigued me in terms of the models potential application to the development of a wiki-like bibliographic database. Well, it looks like Librarything has launched something that seeks to build a collective database of book catalog information. They call it Common Knowledge and describe it thus:

Common Knowledge works like a wiki. Any member can add information, and any member can edit or revert edits. All fields are global, not personal. Common Knowledge diverges from a standard wiki insofar as each field works like its own independent wiki page, with a separate edit history. Some examples:

Jonathan Strange and Mr. Norrell. I've been conservative with characters and places. (See Longitude, worked on by Chris for the opposite approach.) But I wish I had her editor! The history page for "important places" in Jonathan Strange and Mr. Norrell, showing improvement over time.
David Weinberger. Half-filled. He mentions his agent, but I can't tree his major at Bucknell and the honors section is empty.
Hugo Award Winners. This is going to get very cool.
The global history page. Mesmerizing.

In order to get Common Knowledge off and running, Librarything are "slapping fields up there" but this effort it really intended to give Common Knowledge some initial heft. Since all fields are editable this gives significant content for users to react to and add, correct and expand which is, of course, the intention. Tim at Librarything says that this is the perfect Librarything feature and he is very excited about it. As with other similar wiki like applications, users will be able to use and build off the data (as long as they cite the source) and there is strong encouragement to do so. Tim goes on to say that they will be building API's to promote even greater use.

As a result of this initiative we are going to see a much greater blending of user generated content and structured content from the likes of Ingram, Nielsen and Baker & Taylor. The commercial database companies would be crazy not to incorporate this content into their products but they have to be careful. What Librarything is doing is compounding the notion that biblio data is a commodity. Value still exists in the logical compilation of bibliodata but how long will it be before crowd sourcing encompasses the development of logical frameworks, data standardization and taxonomies. Perhaps this is starting to happen and indeed examples such as software development (Linux) prove that groups can build logical and powerful constructs. A wiki biblio database is probably easy by comparison and I can see the day when a biblio manager will no-longer have 50 data entry staff in New Jersey but will rely on an army of free contributors with far more collective expertise. The trick will be how each of the current commercial providers are able to differentiate themselves.

Saturday, October 13, 2007

Wire Loose

Wired notes the 'rumor' regarding Random House's possible inclusion in the Google Book Program. It was mentioned as an aside by Peter Olson in a panel meeting at Frankfurt. I don't believe this article is particularly accurate and commented as such. Especially this quote:

As for Random House's rumored about-face, there's certainly the distinct waft of
desperation to it; a struggling publishing company facing stagnant sales and falling revenue trying to "compromise" with a internet titan.


Friday, October 12, 2007

The Radiohead Agenda

Dear Sir,

We will not be requiring your services any longer and will not be renewing our contract. We thank you for your 10 years of often frustrating, painful but finally rewarding management expertise but as a band we have decided we need to be masters of our own creativity and financial development.

All the best for your future plans,


P.S. If you would like a copy of our new release click here. It's free.

P.P.S. Our mates OASIS and Jamiroquai are joining us.

My Foreword Article

Harpercollins Launches

Harpercollins UK has announced the launch of an author community site that will attempt to mimic the success that MySpace (and others) have had in the development of new music. Interestingly, the parent of both Myspace and Harpercollins is Newscorp and leveraging Myspace across the Newscorp businesses was something observers were expecting when the deal was consummated last year. No matter.

Authonomy will be expanded globally and will seek to develop the type of social networking framework that has been the hallmark of myspace, bebo, facebook and others. That type of success is hard to bottle so it remains to be seen whether Harpercollins can create the same type of social interest around writing and authorship. Users of the site will be encouraged to upload their own writings, comment on others and generally support the efforts of their fellow Authonomists.

As talent is spotted, Harpercollins will consider the works for general publication. No guarantees of course. Thus far, the launch hasn't really generated too much excitement.

Thursday, October 11, 2007

Frankfurt Bookfair Blog

The bookfair has a blog and they kindly added me to their blog roll. I wish I had known in advance and I would have been more diligent in publishing material about the fair. No matter there is always next year. I think I have my old colleague Andrew Wilkins to thank for this.

Frankfurt Blog

Frankfurt Supply Chain Meeting: MVB Content Warehouse

I attended the 29th Frankfurt Supply Chain meeting this week and from a jet-lagged audience I report on a few of the presentations. The room was typically full of vendors, publishers, data suppliers, software providers and consultants. There was a disappointing number of questions and follow-on discussion with all the presentations and I am unsure of the reason for this. Perhaps most disappointing was that the promised drinks cart failed to arrive at the end of the day - not as it turns out, the responsibility of the conference organizers.

Roland Schild: The Changing Landscape of the Book World.
Schild is the director of the German publishers and booksellers organization (MVB) has took over management of their book digitization program when he joined MVB from The digitization program was originally announced at Frankfurt 2005 and is based on the Macmillan Bookstore platform. In presenting their project, Schild noted that they are announcing a name change to Libreka. The launch of the site is going to be somewhat limited with "purely search" only until added features such as purchasing are added sometime in 2008. The focus of the site is on titles "with economic value" that is those titles in German Books In Print. (MVB is the publisher of German books in print). Schild noted they have three objectives in supporting both publishers and booksellers with this initiative:
  1. Maximize reach to the publishers target audience with two 'aspects': Firstly in a quantitative manner in driving traffic where the publisher is less concerned with a targeted approach: A Dan Brown novel where they just want mass exposure. Secondly, a targeted approach where the book content may appeal to a narrow audience such as 'rose gardeners'. The product will enable both models
  2. Beginning in the first quarter 2008, they will become an 'open sales channel for booksellers and publishers' offering new content and content models for sale.
  3. They intend (must) operate in a 'copyright friendly' way and adhere to all copyright requirements.

It remains to be seen whether Schild and his team will be able to build what he described as a 'European Digital Library' especially in competition with the likes of Google and Yahoo and even some specific library programs. Nevertheless, MVB has been seeking the support of 'GYM' (Google, Yahoo, Microsoft), libraries, publishers and others to make them aware of the program and to ensure that their content is included in search results. That seems rather obvious but the biggest challenge will be to establish a relevant content warehouse will all digital content that is a real destination. Assuming digital content is searched via GYM how MVB will draw traffic to their site will be a big challenge. Of note, Springer which is a Google Library client was not mentioned as an MVB participant and if the case represents a significant hole in MVB's digital content repository.

Schild mentioned that they would like to use the ACAP content access protocol which will allow the MVB content to be indexed but will enable traffic to be referred back to the MVB site where various content access parameters are in place according to publisher preference. Their approach is similar to the Microsoft Live Book search approach.

It was interesting to hear about the production issues they faced in this project but there were two strange things: Firstly, Schild announced they were rebranding the product but didn't show us the brand and Secondly, most importantly there were no screen shots or a demo...

Frankfurt Supply Chain Meeting: Random House

Fionnuala Duggan spoke of RH's internet marketing efforts: "Web2.0 and the marketing mix" and 2005 to RH. She has experience in music, newspapers and publishing so offers a broad base of experience in web 2.0 applications. She introduced her discussion by commenting on how there has been a rapid increase in 'a different type of company'. She noted Myspace, facebook, ebay, photobucket and librarything. The central tenet of these social companies is that users are "choosing to interact" with them rather than having something imposed on them.

Fionnuala noted that attention and activity is now widely dispersed across the panoply of media choices. Media is vastly more fragmented than ever before and unless you as a publisher have a strategy to hit potential consumers in the locations where they are surfing then she concludes "you haven't got an internet strategy". You need to fish where the fish are and be present where the consumers are active. The object of internet marketers is to reach out into the internet and bring back the consumers to the RH site where they can interact/engage with them.

Vehicles used include email which if closely and accurately marketed can be an "extraordinarily powerful marketing tool and has been for RH." Most of traffic for RH comes from search and while a competitive market, search is a priority for RH in navigating traffic to RH. Google booksearch is also going to be an enormously important step in the growth of books. Books will now compete with all kinds of published works and the challenge for publishers is to make books relevant within the context of all other types of printed media. So, publishers need to be far more aware of the consumer experience, the content of books, the presentation of books, etc.

She reminded the audience however, that making books available is not the same as selling them and as an example she showed a music retailer named emusic. The company is a 'long tail' retailer of music content and has been able to create a strong viable content retail operation entirely through merchandising. The company has a catalog of over 2mm tracks and has "electrified and made interesting" the long tail of music retailing.

The Random House widget has been very successful for them and is an important aspect of their desire to seed social sites like Myspace and Facebook with Random House content. Other social applications she mentioned were iLike, iBook, Bebo and librarything. As book publishers they should be trying to infiltrate these sites with their content and also be prepared to engage the resulting consumers/users in social interactions.

Lastly, having an internet presence is a lot more than having a web site. It is far more than that and while important to front list, if done correctly their activities will have far more impact on the long tail of Random House titles which provides the excitement.

Frankfurt Supply Chain Meeting: Shatzkin & The Emergence of DADs

Mike Shatzkin of Idealogical company presented his research into Digital Asset Distributors in a speech entitled An Emerging Infrastructure of Digital Asset Distribution. Mike has presented this material on at least three occasions and I discussed it earlier this year here. He also has a copy of a similar speech from earlier this year on his web site here.

The publishing supply chain is changing and is no longer simple. In digital distribution even without ebooks they have more content to supply more trading formats, more trading partners and more customization. A lot of this content is about sales but also a lot about marketing. A little more than a year ago, Shatzkin saw a number of companies developing digital asset distribution (DAD) services who distribute content for digital asset producers (DAP) and pass the content to digital asset retailers (DAR). The role of a DAD is to get content delivered to a wide aray of content users. In his view there are more scale reasons for the development of DADs than there are/were for physical distribution which has been consolidating steadily for 40 years. Shatzkin went on to identify eight companies in the publishing arena he considers to be DADs: Biliovault, Bookbank, MPS Bookstore, Code Mantra, Ingram Digital, LibreDigital, Random House UK and ValueChain International. (These companies are also noted in the speech cited above).

In determining the need for a DAD a publisher should document all their use cases such as, files sent to printers including archiving and version control, files to merchants to support sale including covers, toc's etc., files sent for subrights reasons, files sent to websites and/or syndicators for pr reasons and files sent to online booksearch programs. Finally ebooks are the least important of the use cases as don't currently provide a lot of revenue but do provide promotional benefits. The objective of a publisher is to get a DAD that can support all their use cases and avoid retaining DADs that can only fulfill part of their use cases. New use cases arise all the time so the DAD also needs to be flexible.

In the long run Shatzkin believes that most DAD's will become industry resources for most publishers and publishers (with only a few exceptions) will forgo development of their own DAD capability.

There are a number of steps a publisher should take in beginning their DAD strategy.
Firstly, a publisher needs to develop a spreadsheet inventory of all their files, their locations and their formats. Secondly, the publisher needs to document all their use cases. Thirdly, understanding both the current costs of fulfillment and what is not getting done is also important. These three items are critical for the publisher to have a meaningful discussion with the potential DAD's about services and costs. If the publisher doesn't have the content in a form to distribute, the DAD will almost certainly work with them to transform the content for a fee.

Lastly no DAD is future proof and so you must get to know the provider not just the sales team. Be sure to build strict service level agreements into your contract which also includes an innovation clause enabling you as a customer to ensure the DAD continues to innovate and expand their services in line with your customer needs and requirements.

WH Smiths Beats Estimates

For some reason AOL Europe put this article at the top of their search results for WH Smith this morning. As the article is six months old you might want to look at more recent results here.


Good news for UK book retail this morning in the results for WH Smith's. Annual revenues and profits were higher versus last year on the back of better results in their railway and airport stores. City center stores continue to plague the business and revenues were off 6% versus last year; however, the company indicated that market conditions are masked in this result as they continue to realign their store product mix.

Highlights from the company press release:

Profit before tax and exceptional items up 29% to £66m (2006: £51m). Profits from trading operations are:
• High Street profit up 5% to £44m (2006: £42m)
• Travel profit up 16% to £36m (2006: £31m)
• Total Group profit before tax of £76m (2006: £44m).
• Like-for-like (LFL) sales down 4% reflecting our strategy to rebalance the mix of our High Street business towards our core categories.
• High Street LFL sales down 6%, with total sales down 6%
• Travel LFL sales up 2%, with total sales up 6%
• Gross margin has improved by 230 basis points year on year.
• Cost savings of £10m, with £3m delivered ahead of plan; further incremental cost savings of £11m identified.
• Strong free cash flow of £81m (2006: £68m).
• Underlying earnings per share2 up 26% to 29.3p (2006: 23.3p).
• Basic earnings per share up 82% to 33.1p (2006: 18.2p)3.
• Final dividend proposed of 8.1p, up 31% on the prior year. Total dividend per share of 11.8p
up 27% on prior year4.

Specific to books the company stated:
Books LFL (like for like) sales were up 1% as we continued to focus on rebuilding our authority as a popular book specialist and maximising profitability. Excluding the Harry Potter release in the second half, LFL sales for the year were flat, with gross margin slightly down including Harry Potter and up excluding Harry Potter. We maintained our strong performance versus the general high street, a trend which has continued for over 2 years now. We are particularly pleased to have maintained this performance during the second half of the year in the face of very strong competition on Harry Potter. During the year, we saw strong shares in some of the front list books, both over the key Christmas period on titles like Peter Kay, The Sound of Laughter, and then with further strong shares on key summer titles such as Cook Yourself Thin and the Richard & Judy Summer Read. Improvements to category planning and management have delivered good results, notably through improved ranges, innovative promotions and a focus on specific genres, such as Kids.

The High street revival is part store remix (DVD and CD sales are rapidly declining) and also based on the integration of post office concessions. The company has announced plans to integrate these concessions in 71 of its 544 high street stores and while operationally complex they have said they are on plan to achieve their goals. Currently they have 23 concessions in operation. The company has previously said the object of installing the concessions in the stores is to provide increase foot traffic and in prior interviews Kate Swann (CEO) has said their assumptions of the impact of this strategy is being borne out.

The company is naturally guarded about the coming year and warns that the marker should not expect too much by way of a rapid turn-around in the High Street stores. Regardless, shareholders and the publishing community generally should be relieved at these results which show significant performance improvement.


Wednesday, October 10, 2007

Borders' UK New Investor

There was a profile of Luke Johnson in the Wednesday Evening Standard which I read wedged into seat 26a coming home. Even thought he is only 45, Johnson has a long history of both entrepreneurial activities and private equity investing. He is currently Chairman of Channel 4 which was one of the early commercial UK broadcasters but if there is a theme to his business history it is in retail customer management. He believes that the Borders UK operations have a lot to offer and,

"It's like gold to us." Come on, there's a Borders near me, and while it's great wandering round the basement listening to the CDs, I'm also aware I'm often the only one down there. "In music retailing, life is tough," Johnson says. "HMV and Virgin have shown that. Borders needs reshaping. "When the internet came along, people said it would transform retailing -- it's taken until now for it to really make an impact. It's not just CDs -- travel agents, cameras shops, video rental, they all face a difficult future. But Borders doesn't just sell CDs, its main business is selling books and the good thing about them is that their sales are still growing. Millions of people want to browse in bookshops. Did you know the average dwell time in a Borders is one hour?"

Tuesday, October 09, 2007

Macomber appointed President & CEO Wolters Kluwer Health

Wolters Kluwer Health, a division of Wolters Kluwer, a leading provider of information and business intelligence for students, professionals, and institutions in medicine, nursing, allied health, pharmacy and the pharmaceutical industry, announced today the appointment of Gordon Macomber as President & CEO of its Professional & Education business unit, with responsibility for the Lippincott Williams & Wilkins product lines.

For the past four years, Macomber had been President of Thomson Gale Reference in Farmington Hills, MI.
"The appointment of Gordon Macomber brings us extensive publishing experience as well as the leadership skills and business proficiency to take our books and journals business into the next era of content-in-context," said Jeff McCaulley, President & CEO of Wolters Kluwer Health. "We could not be more thrilled to have Gordon join our leadership team."

Press Release

Monday, October 08, 2007

Borders Down Under

As reported before, final bids are due by the end of the month for the Borders store operations in NZ and Australia. Bids are expected to be in the A$80-100mm range with Private Equity Partners the owner of Angus & Robertson the presumed front runner. Some serious contenders are already reviewing the books and according to this article from the New Zealand Herald there may be more than one or two candidates. Already mentioned were PEP and Berkelouw Books (a small book company), and now Dymocks the other large bookseller in the marketplace has confirmed it is looking to make a bid. Additionally, Woolworths and Paper Plus, a PaperChase like franchise operation, may also join in. This additional interest must be good news to Border's US who need to get a high price for these operations to mitigate the disappointing sale of the UK operations. Also noted in the article is a suggestion that Borders Australian management may have backed off a management buyout in order to align themselves with one of the purchasers most likely PEP.

Saturday, October 06, 2007

Riverdeep Rumor and Reed Elsevier "Buy"

A curious note from Usman Ghazi of Dresdner Kleinwort who, in the process of recommeding Reed Elsevier as a buy - with a target price of 780p - takes note of rumors suggesting Riverdeep risk "either not securing the bank funding required to finalize the [Harcourt] transaction or going bankrupt in the intervening period, leaving the deal unfinished." He dismisses these rumours and I can't find any other suggestion of these issues so how much of a concern are they?

Friday, October 05, 2007

Borders CEO Jones Buys 50,000 shares

Nothing speaks to committment than dipping into your own pocket and putting your money where your mouth is and that's exactly what Borders' CEO George Jones has done with his purchase of 50,000 shares. While Borders' hit a long term low after their recent earnings announcement this endorsement may both shore up the share price and let investors know that senior management believes the future looks good for Borders. This purchase was one of the largest single purchases of Borders' stock in recent years. The purchase cost over $660,000 and as a result, Jones owns over 121,000 shares.

In related news, the company also annouced a fulfillment agreement with Baker&Taylor for support of the to be launced retail site.

"We selected Baker & Taylor as our primary fulfillment partner because of their excellent track record with consumer-direct fulfillment of all of the product types we'll offer at, and their ability to serve our customers in the superior manner they deserve," said Kevin Ertell, vice president of e-business for Borders Group.

"We are delighted to be Borders' fulfillment partner for book and entertainment products" said Richard Willis, CEO, Baker & Taylor, Inc. "We look forward to working closely with Borders on this exciting initiative and providing their customers with the world-class fulfillment services that are a standard of B&T."

In the same announcement, the company formally annouced the beta for the new retail site with some description of the site's features.

One such feature is the Magic Shelf(TM), which Borders has been testing on the beta site for over four weeks. The Magic Shelf is Borders' unique online version of the warm and engaging shopping experience that takes place in its bookstores every day. When arriving at the site's home page, customers see a realistic looking, three-dimensional shelf of actual book covers displayed as they would be in a Borders store. For details on each title, customers simply click on a book that interests them, much the way they pick up books that catch their eye in Borders stores. Over time, as customers shop at the future, the Magic Shelf will become personalized for the shopper based on past purchases and will display books that the customer may be particularly interested in exploring. On the beta site, there is a related Magic Shelf feature called "Picked for You." Customers simply indicate the subjects in which they have an interest, and Borders will stock the "Picked for You" shelf with books on those subjects.

Thursday, October 04, 2007

Penguin Lives in Whyville

Mediapost has an interesting post about the virtual world whyville and how the site is being leveraged by Virgin, Penguin and the University of Texas Health Science Center. The virtual world has over 2.4mm active users between the ages of 8-15 and is billed as place where children can gain an understanding and appreciation for math and science. It is also a place where companies can advertise there products as long as the advertising is 'active brain advertising'.

Here is what Mediapost said about Penguin's activity:
For Penguin Books' kid-friendly adaptation of Al Gore's "An Inconvenient Truth," Whyville created an entire Global Warming program--complete with in-world climate changes and tropical storms. Kids were able to band together for community clean-up activities after a storm trashed the Whyville beach, and take CO2 and temperature readings of the island at the Penguin-sponsored Climate Center. Almost 400,000 members visited the Climate Center within months of its launch at the end of June.

Foreword Magazine

Foreword magazine asked me to blog for the which I have been doing for the past four weeks. Most of what has appeared there is content from PND but Competitive Writing is something new. You may also like the new Foreword website recently redesigned.

Wednesday, October 03, 2007

Media Deals Keep Getting Better

The Jordan, Edmiston Group released their quarterly press notice on media deals and the results keep getting better and better - if you are selling. Amidst general worries about personal retirement accounts (mine) and decreased real estate valuations (my ex-neighbor but they deserve it) here we have our industry's bell weather shooting through the roof. JEGI tracked 637 deals and $95billion in value for the first three quarters of 2007 and they say deal value has already far outstripped the total value for all 2006.

JEGI tracks 11 industry segments and the leading segments were Marketing and Interactive Services and Online Media. In both segments the number of deals were up over 50% and the valuations were also up over at least 50% versus 2006. While there were a lot of deals in these segments they were 'small' compared to education where several very large deals resulted in a valuation increase from $387mm in 2006 to $14,239mm this year. There was a similar increase in Information Services.

Laggards in value included Business to Business media, consumer books and Directory and Reference Publishing.

You can read the entire release here.

EBAY Takes Charge

It was obvious to me in December that EBAY had either not purchased the right company or they had and had failed to execute with the acquisition of Skype. That's why in my (self indulgent) predictions for 2007, I suggested that EBAY would sell the unit. However, things are worse than that. With EABY's listings listless and core revenues a concern to business analysts, the company annouced yesterday that they made a mistake and overpaid for Skype and would take a $1.4billion charge in the third quarter. The purchased the company in 2005 for $2.6billion. Talk about dialing the wrong number.

There is still time for T-Mobile to step in.

Tuesday, October 02, 2007

Penguin Blog a Classic

Penguin has launched a blog site that seeks both reviews and social commentary on their list of over 1,400 classics. You can register to receive one of their titles in the mail and then 'blog' about it on the site. It launched a few months ago but at the moment this interesting experiment looks like a site for reader submitted reviews. There are some comments attached to some reviews but the site doesn't seem to capture the spirit and spontaneity that blogging could engender.

Blogging can be anarchic and to some extent that's what you would want to see from this project: Someone having a conversation with or interaction with a book as they read it. What they feel, what they don't understand, what happened that day in their lives that reminded them of the book, whatever.... We can get a book review from Amazon. I think Penguin should take the shackles off and loosen up.


Harpercollins Goes to The Movies

The Associated Press reports that Harpercollins has established a strategic relationship with Sharp Independent.
Under a multiyear agreement, Sharp Independent at HarperCollins will be based at the publisher's Manhattan offices and will work with authors and agents on developing film versions of HarperCollins books. "We are always looking for ways to give our authors' works greater visibility. Providing an avenue and competitive advantage in the film world is another example of this," Michael Morrison, president and group publisher of Harper/Morrow, which includes the HarperCollins and William Morrow divisions.


FT is Free

The Financial Times announced on Monday that they would be allowing free access to the content on their website. The FT was a late player in paid web access following the WSJ but are now following the lead of the NYT in opening up the site. From Mediapost: isn't actually opening the doors all the way: there's a limit of 30 free stories per month, and visitors are required to register at the site after viewing the first five. The paper said the new policy is designed to make the site more accessible to blogs and news aggregators--increasingly important sources of traffic for news sites. Around the same time, will also launch a number of new products, including more video journalism and new editorial features, columns and tools.

It is great to see some of these newspaper sites change even though it can be argued it is Murdoch's purchase of Dow Jones that is prompting the action.

Monday, October 01, 2007

Who do these 'Literary' Competitions help?

Yet more competitions to seek new publishing works. Why, I don't know. This seems a dopey way to generate product IMHO. But then, that's probably not the point just like finding The Next Top Model is about modelling.

News on Borders/CourtTV/ and


Five Questions with Harlequin (I ♥ Presents)

At Harlequin there is good news on multiple fronts as Harlequin’s financial performance improves and their e-publishing initiatives are showing real signs of resiliency and development. Harlequin began their e-book program in October 2005 when they launched 9 titles and the company announced last week that all front list titles will have e-book versions. To spur growth and motivate buyers the titles are priced below the list price of print titles. As many know, the Harlequin community is incredibly loyal and by accounts read more than 2x as many books as a typical reader. The e-book customer is little different in their (her) dedication: She is willing to overcome the invariable technology issues of e-books to enjoy the benefits of e-books and loves the immediacy and portability that the e-book format enables.

In addition to e-books being available at all known e-retailers and in all formats, the company is also experimenting with content on mobile phones. This distribution method has been insanely popular in Japan and Harlequin has launched a monthly subscription offer that includes chapters, games, polls and reading lists. Priced at $2.49 it is competitive.

The Harlequin community has always been cohesive and their web community site is now 10 years old. The site traffic is significant with ¾ million page views per month: What other publisher has traffic that large? Currently they receive over 20,000 posts per month discussing and reviewing books, interacting with editors and even pitching their own titles: Fifteen members sold books to Harlequin in 2006.

Yet another more recent initiative is Harlequin Presents (
I ♥ Presents) which was launched in February 2007. Among the features, editors and writers post blogs and interact with readers who comment on average 13 comments per blog post. Harlequin has a built in advantage in developing social networking but they could have fumbled it. What is increasingly clear is that they are the dark horse in publisher’s race to engage their customers. Harlequin is proving that social networking will improve reader engagement, has the potential to turn customers into product ambassadors and facilitates two way communication between publisher and customer. Harlequin’s branding is well known in print but they are increasingly making it known online.

And with that intro, I asked Malle Vallik, Harlequin's director of digital content my five questions:

1. Harlequin has always been about community and somewhat 'cultish' in the level of obsessiveness of its readers. Is that an accurate description?

The majority of our readers are avid readers and incredibly knowledgeable about both our authors and our various series. A Harlequin Presents reader loves her Harlequin Presents stories, has favorite themes (like Mediterranean heroes) and knows when the books are available for sale. She shows up on the date the book goes on sale in a bookstore or mass merchandiser and at online retailers on the first of the month when the new titles are released.

Moreoever, our readers do like to share their thoughts about the books; that is what community and all the other new social media platforms offer – a means to connect readers from around the world and authors to readers.

2. Harlequin is doing a lot in online community building and social networking, is the ability to leverage these new technology tools a dream come true for Harlequin in that you are able to build immediate and direct relationships with highly responsive customers? Has this been all good? Tell us how it has it fostered changes in the organization.

Overall, it’s fantastic! You have basically hit the nail on the head. We can build immediate and direct relationships on a global scale. We can connect readers from Texas to Switzerland and connect readers to authors no matter where they are in the world.

We can also connect aspiring authors to our editorial team. Our community hosts writing events from authors along with editor meetings and pitches.

3. What new markets have opened up for Harlequin due to your web initiatives? Any surprises - like men as readers for example. Are these markets segments - narrower elements of existing markets - or are they completely new to Harlequin?

We have been able to create new products specifically for the digital market, whether it is bundles combining several titles together like the NYT bestselling author Jennifer Crusie 4 novel bundle. Or a bundle that makes shopping easier – what we call a one-click bundle. You can get all 8 Presents novels published in one month, with just one click and one download!

We launched the Harlequin Mini, a short story, available only as an eBook in August 2006, and launched Spice Briefs, short erotica, a spin off from our Spice imprint, again available only in eBooks in August 2007. We are publishing 2 – 3 Spice Briefs every month and are publishing both new and existing authors.

Perhaps our biggest surprise is how willingly women are approaching eBooks. It is still a very small part of our business but clearly a big growth area for the future.

4. Do authors bring you new ideas for using networking and the internet in new ways? Does what you do on the web result in new content? How much user content is solicited and used?

Yes, authors bring us new ideas. We work very closely together as a partnership with our authors: we have a website exclusive available to our authors where we offer suggestions on how to use digital more effectively and authors also contribute their case studies and ideas here. This is a collaborative learning experience for us both as we figure out how to maximize time commitment to return.

5. What is next for Harlequin on-line and social networking?

We just launched 100% frontlist in eBooks

We have launched the Harlequin Author Spotlight podcasts and will be soon launching a series of podcasts on how to write romance novels.

We are strengthening and expanding the back end power of our community by building a new platform that will be much more richly integrated into our website and let community members create meaningful profiles that include links to other social media.

We held our first author reading in Second Life yesterday, September 25 with author M.J. Rose, THE REINCARNATIONIST.

We have plans to acquire more eBook only content and other interesting new content for eBooks, create a new kind of eBook (more details to come!) and to continue to work with authors to launch more blogs.

BBC Worldwide Buys Lonely Planet

BBC Worldwide the commercial arm of the BBC has purchased Lonely Planet travel guides and although it had been rumoured for quite some time that LP was for sale the purchaser is a bit of a surprise. Founders Maureen and Tony Wheeler will remain with the business and retain 25% of LP.
''Joining BBC Worldwide allows us to secure the long-term future of our company within a globally recognised media group,'' the Wheelers said in a statement.
While the terms of the deal were not disclosed, The Herald noted that a 10% stake in the company was sold in 2005 for A$10mm to ANZ (that's a bank btw). Mr. Wheeler believes the bank did well out of the deal which values the company at over A$100mm.
Commenting on the deal John Smith, CEO of BBC Worldwide, said: "We are delighted to be announcing this acquisition today. Lonely Planet is a highly respected international brand and a global leader in the provision of travel information. This deal fits well with our strategy to create one of the world's leading content businesses, to grow our portfolio of content brands online and to
increase our operations in Australia and America."

BBC Worldwide is the commercial arm of the BBC and seeks to leverage the vast content owned by BBC into new distribution channels around the world. They have six core businesses: Global Channels, Global TV Sales, Content & Production, Magazines, Home Entertainment and Digital Media. In the year to end March 2007, BBC Worldwide generated profits of £111.1 million on sales of £810.4 million. The company has begun to invest heavily into digital distribution and has also recently announced key hires and organizational changes in this segment as well.

BBC Worldwide Press Release
The Herald
The Age
Five Questions with Lonely Planet