Friday, November 30, 2007

ACAP is Implemented

At a conference in New York yesterday, World Association of Newspapers President Gavin O'Reilly updated the content community on the status of the ACAP initiative. ACAP is a technology that updates the manner in which web search robots search and index material on the web. The ACAP protocol aims to create a more balanced approach to gathering web content and enabling content owners to 'publish' specific rights information applicable to their content which can then be read by the search tool. Rather than limit the amount of free content available to web users, content owners participating in this initiative believe the ultimate outcome will be to make more content available by bringing content from behind subscription walls.

All content owners are being encouraged to implement version 1 of the protocol and Times Online announced that they have implemented ACAP on their site. From the Associated Press:
The proposal, unveiled by a consortium of publishers at the global headquarters of The Associated Press, seeks to have those extra commands — and more — apply across the board. Sites, for instance, could try to limit how long search engines may retain copies in their indexes, or tell the crawler not to follow any of the links that appear within a Web page. The current system doesn't give sites "enough flexibility to express our terms and conditions on access and use of content," said Angela Mills Wade, executive director of the European Publishers Council, one of the organizations behind the proposal. "That is not surprising. It was invented in the 1990s and things move on."

Personally, I was initially skeptical about this initiative but they have delivered on their time table, retained their broad support and even have some in the search community actively supporting the initiative.
ACAP organizers tested their system with French search engine Exalead Inc. but had only informal discussions with others. Google, Yahoo and Microsoft Corp. sent representatives to the announcement, and O'Reilly said their "lack of public endorsement has not meant any lack of involvement by them." Danny Sullivan, editor in chief of the industry Web site Search Engine Land, said robots.txt "certainly is long overdue for some improvements."
Associated Press

Wednesday, November 28, 2007

Riverdeep Syndication Gone Awry

As mentioned a few weeks ago, Riverdeeps banks (Credit Suisse, Lehman Brothers and Citigroup) conducted a roadshow to sell the debt associated with the Riverdeep acquisition of Harcourt. According to the Irish Times, the banks have suspended this process and will hang on tooth and nail to the debt themselves until the markets improve.

This will have limited impact on the operations of Riverdeep/Houghton Mifflin and while this is not positive news it could only reflect a desire for the banks to maintain a decent margin on the syndication rather than judgements about the risk of the underlying loans. At least that's what I would be saying if I were Riverdeep.

Books A Million Reports

BAM reported comp store revenues up 2% for the quarter and up 6.3% to $117.7mm over all. The Company reported a net loss of $0.5mm, or $0.03 per diluted share, for the third quarter of fiscal 2008, compared with a net loss of $0.2mm. YTD revenues are up 6% to $366.8mm and net income of $4.7mm is up $0.9mm versus the same period last year.

From the press release commenting on the results, Sandra B. Cochran, President and Chief Executive Officer, said,
“We were very pleased with our sales results for the quarter; however, operating costs for the period, driven primarily by an increase in heath care expense, exceeded our plan. Looking forward, our fourth quarter best seller lineup is solid, and we are focused on executing our merchandising and marketing plans for the holiday season.”
The closely held company also announced that its Board of directors approved a quarterly cash dividend of $0.09 per share. The quarterly dividend is payable on December 26, 2007, to stockholders of record at the close of business on December 11, 2007.

Borders Australia

The Australian Competition Commission anticipates making a final decision on the merger between Angus & Robertson and Borders Australia by December 19. In the meantime they have requested additional comments and specific requests related to several items.

The commission suggests that the reduction in competition could result in decreased discounting and notes that Borders promotions are 'particularly innovative' with 'weekly discounts' and 3/2 offers. (Gosh!) The ACC invites comments that counter or support its' contention that a reduction in competitive tension would reduce discounting to a wide range of titles.(The commisson is also asking to what degree loyalty programs are important in supporting discounts.)

The merged entity will concentrate more than 25% of all retail revenue for the industry and they are looking for comment regarding how A&R/Borders may weild this power. Principally will the retailer be able to negotiate more agressively for better discounts and will this influence publication plans by publishers? With respect to this item the commission is interested in consumer research regarding purchasing behavior. (Good luck.)

Lastly, the commission requests information about local market competition even explicitly asking what the impact has been of the entry of Borders into the Australian market. They remain interested in the impact of smaller local markets of the entry of 'large format' retail stores.

There doesn't appear to be too much consideration on the impact of international web retailing such as or b& Both of these retailers are well known to book buyers in this market. (While they note the merged entity will represent more than 25% of the market it is unlikely that they have any idea how much retail business is off-shore, and it is likely to be considerable especially given territory rights issues that can limit selection and the weak US dollar).

It looks like this merger will be approved: Whether there will be any constraints placed on the merged entity remains to be seen.

Tuesday, November 27, 2007

Broadcasters Unite!

What if CBS, NBC and ABC launched a joint web-based broadcast portal? Highly unlikely you say? Well, in the UK pundits might also have dismissed out of hand the notion that the BBC, ITV and Channel 4 could ever agree on anything let alone jointly developing a web portal for distribution of their content. Today these three companies announced they would launch such a web site in the early part of 2008. All three have existing web content portals and both BBC and ITV intend to keep theirs going in the short term. Earlier in 2007, the BBC launched their i-player client which has not been as successful as the hype that presaged its launch would have suggested. Residents outside the UK are unable to use the i-player and it is assumed the tri-company web site will be off-limits to non-UK users.

The web activities of BBC and ITV place them significantly ahead of the network broadcasters in the US. One aspect of their business model which has made their experimentation with web distribution possible is that the UK companies generally own the content they broadcast. This is not the case in the US although in recent years the networks have built production capability.

The collaboration in the UK will be watched closely and while it may be spun as a consumer bonus - having one location to access the content from the nations' primary broadcasters - the reality could be more prosaic. The costs of building and maintaining a portal for this content could be extreme and each would ultimately be in a race to augment their content with content from other providers. Why not join forces, pool resources and reduce the market for third (fourth) party content? It makes a lot of sense especially in a market that isn't that large to begin with.

In the early 1990's Sky beat the traditional broadcasters into new distribution territory and the broadcasters had no solution. As a result, they lost out on a vast expansion of the consumer broadcast market (satellite). In developing this new collective content portal they could be setting themselves up to be meaningful players in a potentially much larger market place for distributed content.

When Newscorp launched Sky these players were warming the bench but this announcement may enable them to have a role in the future of television.

Monday, November 26, 2007

Not OK Computer

My trusty laptop committed suicide over the weekend. There will be a brief interruption to our service as I decide what my options are. Sadly my life seems to revolve around the machine and with its loss I seem at times to be entirely untethered to temporal life. The machine holds my calendar of course but the daily rhythm of email - and there is one - has been disrupted as well and as a result I feel I like a prisoner on being suddenly set free finds the lack of regimentation impossible to deal with. This is a very sad situation and the sooner I get a replacement the better. Help.

Wednesday, November 21, 2007

Quebecor Share Debacle

Quebecor the big printing rival to RH Donnelly cancelled a $250mm share sale and a related $500mm debt issue yesterday after the offers received less than full participation from the markets. From the Globe and Mail:
Shares dropped from $5.10 to $2.80 in the past seven days - this was a $40 stock five short years ago. Much of the drop over the past week can be traced to short sellers who sold, with the intention of buying back Quebecor World shares by participating in the equity or debenture sale. If these same short sellers own the convertible preferred shares, they have even more to gain from a lower stock price, as they will get more equity when they swap the preferred shares for common. Long-time Quebecor World shareholders seemed unwilling to step in and support the stock over the past seven days, which should be a cause for some soul-searching at head office.

According to the newspaper, the company will now have to completely rethink how they refinance this company which is debt ridden despite selling their loss making European operations earlier this year. The performance of Quebcor compares unfavorably with the performance of RH Donnelly who appear to have weathered fundamental changes in the printing industry and intense competition from Asia to post consistently good results. Donnelly has also spent the summer successfully recapitalizing the company.

Barnes & Noble Report 3rd Quarter

Barnes & Noble reported a solid same store sales increase of 2.6% and a 14.5% increase in dot com revenues for the third quarter. Gross revenues exceeded $1.2billion which reflected a 5.7% increase over the same period last year. Net income for the period was $4.4million or $0.07 per share but reflected an after tax benefit of $6.2million ($0.09/share). Excluding the one time effect, the company had a third quarter loss of $1.8milion or $0.03/share which was was "better than guidance of a loss of $0.06 to $0.10 per share."

From the press release:
“The company’s sales continued to perform at the higher end of expectations, due in part to strong sales of new releases and bestsellers, which combined with a better than expected gross margin rate enabled the company to outperform its third quarter earnings expectations,” said Steve Riggio, chief executive officer of Barnes & Noble, Inc. “In addition, we are encouraged by the sales trends at Barnes & that began earlier this year and continued through the third quarter, in which we launched a newly designed website.”

The company also raised guidance for the full year (which should be anticipated given this and the second quarter performance). The company now expects full-year GAAP earnings per share to be in a range of $1.91 to $2.09, compared to previous guidance of $1.69 to $1.87.

B&N's stock price has fluctuated over the past six months from a mid-year high of $43 to its current $36. On the basis of these reported results the share price jumped on Tuesday. In contrast to Borders share performance and market cap ($715million), B&N has a market cap of over $2.4billion. Looking at that comparison with Borders may well make some private equity bankers sweat in anticipation.

Press release

Not Your Ordinary Publishing Contest

There has been a veritable explosion of publishing contests in the past two years, all with the intention of seeking that needle in the hay barn, the next great book. In contrast this contest announced by Scholastic and Coldwell Banker of all people seems to have little point -at least as far as its relevance to publishing. Perhaps I am missing something but it does seem to stretch the logic of strategic alliances very thin.
Coldwell Banker Real Estate Llc Announces The Launch Of Its Third "my Home: The American Dream" Contest. In Collaboration With Scholastic, The Global Children's Publishing, Education And Media Company, Coldwell Banker® Invites Students In Kindergarten Through Eighth Grade To Tell Their Personal Stories, Through Images And Words, About How Their Houses, Apartments, Or Condominiums Are Not Just Places They Live, But Homes Where Dreams Are Shared And Memories Are Made.

(Mrs PND would be going crazy with all the caps in that press release).

I'm not really a fan of similar competitions but this one appears to be pure publicity stunt and the advantage for Scholastic escapes me.

Borders Reports Improvement

While the sale of their Australia and New Zealand operations is still unconfirmed despite spurious reports to the contary, their most likely acquirer has cleared regulatory approval in New Zealand. Pacific Equity Partners has recieved clearance from the Commerce Commission indicating that they do not believe a combination of Whitcoulls and Borders would decrease competition in the NZ book market. Next up is Australia's Competition commission which may rule in early December. An announcement on the sale is expected any day.

Borders announced third-quarter results after the market close yesterday reporting a revenue increase of 5.3% to $805.2 million from $771 million a year earlier. Analysts' consensus estimates were expecting higher revenues ($831million) and better operating performance so we will see how the stock does on Wednesday. Their net income loss for the period included the previously announced one time charge for the sale of their UK operations ($116.5million) and thus the loss for the quarter was $161.1million or $2.74 per share. This compares with a loss in the same period last year of $32.9million or $0.54 per share. Excluding the one-time charge, the company reported an operating loss of $39.1million or $0.66 per share.
Comparable store sales increased in all business segments for the second consecutive quarter. At Borders domestic superstores, same-store sales increased by 1.1% driven largely by a continued increase in traffic as the company further leveraged its 22-million-member Borders Rewards database, among other initiatives. Comparable store sales increased by 3.6% in the Waldenbooks Specialty Retail segment led by growth in traffic and transaction size. In the International segment, comparable store sales increased by 7.8% as a result of strong performance in Asia Pacific stores

Borders' gross margin is eroding as they expand their Border's Reward program. More customers are visiting the stores but they are also recieving discounts and these redemptions are exceeding rate (by design) that occured last year. For the quarter, the company lost almost 1% on gross margin and this on top of the actual expense for promoting and expanding the new rewards plan. Clearly the company needs to invest in new customer acqusition and retention programs but Analysts will watching this program closely for its effectiveness in driving store metrics closer to those achieved by B&N.

Troubling will be the doubling of the operating loss at the US Borders super stores where the company reported a $30.8million loss compared to a loss of $16.7million. This negative performance was blamed on the member program and rapidly declining DVD/Music sales. Books were up 3% but clearly considerably less than the revenue required to cover the investment. George Jones commented on these results:

"Profitability in the Borders domestic superstore segment was negatively impacted by investments we are making now -- in efforts such as our upcoming e-commerce site and concept store development -- that are currently not providing returns, but will drive contributions in the long term," Jones said. "We have also been experimenting with our promotions and discount structure to gain a solid understanding of the levers that drive traffic and sales in our stores. Our Borders Rewards program has proven that it clearly and consistently works to achieve both. Now, we need to fine-tune our approach further so that we better balance the bottom-line impact with our top-line growth," he added.
The Borders share price has fallen from a mid-year high of $24 to its current $12. Correspondingly, the company's market cap is now below $715mm which in my estimation makes it a cheap acquisition candidate.

Full press release

Tuesday, November 20, 2007


I was contemplating listing some of the articles and posts related to the Amazon news this week but thankfully Eoin Purcell has done it for me.


In some strange way I feel some appear to be rooting for Kindle versus Sony (or Apple) as if it is a contest that in earlier years would have pitted Donnelly against Quebecor.

Videologblog: Writers Strike (Colbert Report writers)

There has been a serious lack of humor in the PND household over the past two weeks. This goes a short way in alleviating the monotony of Nature and Antiques Roadshow. There really is nothing worth watching.

Monday, November 19, 2007

Five Questions on Global Data Synchronization

That's a title likely to induce a narcoleptic attack in all but the most ardent followers of bibliographic matters but it is nevertheless an important topic for all managers of book information. Industries other than publishing also battle data reliability and timeliness and, over the years led by umbrella groups such as UCC and EAN (now combined into one organization named GS1), they have developed programs to embrace supply chain efficiency and its' co-relation data integrity. Data Synchronisation (GDSN) is such a program which I have noted a few times in the past (Post). The objective of the GDSN is to ensure that all trading partners are working with the same set of product details that are simultaneously synchronized at a network level and in transaction details such as purchase orders and shipping details. The benefits of synchronised data can extend from 'simple' efficiency improvements in the ordering and receipt process to higher effectiveness in marketing and promotions programs.

As I mentioned earlier on this topic, BookNet Canada is embarking on a test of data synchronization and I asked Michael Tamblyn, President of BookNet Canada my five questions.

  1. Firstly tell us about how BookNet Canada got started and what you have achieved thus far. What are your current priorities?

    BookNet Canada came into being in 2003 when Canadian retailers, publishers and the federal government decided that there should be a central not-for-profit agency to coordinate technology and supply chain innovation for the Canadian book market. While that sounds about as thrilling as a three-day lecture on HVAC engineering, we have been able to move the industry very quickly in some very exciting directions. Canada benefits from relatively small size, a general tendency towards collaboration, being a cross-roads country with ties to the U.S., UK, and EU, and a community of quite forward-thinking retailers and system vendors. It lets us get things rolling quickly, gather feedback early and often, and push the envelope a bit more than larger markets.

    Some examples: from a somewhat stagnant state in '03, B2B e-commerce now accounts for 85-90% of all business documents; EDI invoices and ASNs are fully supported through the publishing community; even independent retailers do EDI-based receiving. BNC SalesData, our national sales tracking service, launched in 2005, tracks sales, stock position, orders outstanding on every title, without modeling or estimation, on 70% of the book market. In a nice mouse-eats-elephant story, our Canadian Bibliographic Standard was adopted more-or-less in its entirety as the BISG Metadata Best Practice Guideline for the U.S. market for both ONIX and Excel.

    Then there is the more forward-looking work: collaborative sales data mining for independents, backlist optimization and forecasting research, industry cost analysis on returns, digital publishing trends, our annual Technology Forum. And on it goes.

  2. You announced a Data Synchronization initiative in mid-summer. Can you give us some back-ground on this project, the status and where you see the initiative going over the next six months? What is your time table and what is your hoped for end result?

    We approached GDSN with a set of assumptions that looked something like this:

    1. Publishers already have a data sharing standard -- ONIX -- that they have embraced and invested in. They shouldn't have to learn another one. Make it simple!
    2. GDSN currently serves a small part of the retail sector, but if it became ubiquitous at some point in the future, how can we protect publishers from a price perspective?
    3. Think global, start local. The G in GDSN is there for a reason, so let's not assume that we're just making a Canadian service for Canadian publishers and retailers.

    Those first principles have guided our efforts over the past few months. We have been working with Commport, our GDSN data pool partner, on the construction of an ONIX-to-GDSN bridge that is now in testing. Timelines are very dependent on the retailers and wholesalers involved, but we hope to be well into the pilot six months from now. From our perspective, the "pilot" itself doesn't begin until we are moving active title data from a real publisher to a real retailer who is actually going to use that data in purchasing and POS systems. That's an important point: the challenge isn't getting the data into, or out of, the pool; it's getting that data into retailer systems so that it supplants the current mix of spreadsheets and paper forms. Until then, the conversation hasn't changed. Data conversion is easy, adoption is hard.

    In parallel, we are preparing a draft submission to GS1 regarding additions to the GDSN Global Data Dictionary to make it more relevant to the book trade. That will certainly spend some time in the loving embrace of the BISG Metadata Committee before heading to GS1.

    From a pricing standpoint, I think we've come up with the best possible model for publishers. A free 1-year pilot, unlimited upload and publishing to the global network, with the clock starting when the data goes into production with retailers (i.e. not when testing starts, but when it ends). Then very low per-SKU fees that are capped at a shockingly low rate, just in case this breaks out of the mass market and into the trade.

  3. What issues have you encountered that were unexpected? Given that the book industry is ‘fitting’ in to a set of standards that have been developed for other industries how much of an issue has it been trying to marry the existing data structures with our industry?

    Always lots to learn, which is part of the fun. Some highlights:
    * The extent to which GDSN stands to benefit independent wholesalers, many of whom have never really grasped ONIX in their relationship with publishers, and who have to serve a retail community who couldn't care less about book-industry-specific standards.
    * We've talked to several publishers who have, because of various retail relationships, been required to submit to GDSN data pools over the past five years. None of them have seen their data make it into production systems. It's safe to say that there are some data pools out there who have been less than candid about where GDSN data really gets used and by whom.
    * Current GDSN costs per SKU or ISBN have been absolutely egregious! $25 or more per SKU per year? That's great if you are in consumer packaged goods with 100 SKUs worth $50M each, not so great if you're a mid-sized publisher with a line of DIY books selling into general retail. Time to fix that, I think...

    In terms of fitting in, there are definitely some things that need to be improved in the Global Data Dictionary if books are going to find a happy home in GDSN. GPC Product Forms aren't perfect for books. You can't pass along an author, just a title. Things like that. It's workable for mass market applications, but I think the goal should be to get the Canadian/US standard fields well-represented and then build from there.

  4. Is there an on-going relationship with GS1 here? Do you anticipate the publishing industry will be exposed to best practices and perhaps learn from the GS1 community?
    If so, where do you see the greatest potential benefit?

    We'll be working with GS1 on the standards and data dictionary issues, but we have avoided a relationship with 1Sync, their data pool service provider. When we started watching this space, we realized that one of the great things about GDSN is that it's an open, certified standard, which makes the data pool game an excellent market for aggressive fast-followers. We selected a vendor with a strong track record in high-volume data processing who has made a name for themselves enabling whole industries on GDSN but who was also willing to toss out the rulebook on GDSN pricing to meet the needs of the book industry.

    In terms of who learns from who, I think that GS1 has a lot to learn from the book industry. "Industry-With-Lots-of-Low-Price-Point-SKUs" is still reasonably new for GDSN, and nobody does massive numbers of discrete, non-variant SKUs like the book industry. They are working with Music and DVD now, which should help, but Music and DVD aren't nearly as sophisticated as the book industry regarding product data (much to the dismay of any retailer who has ever sold both!) I'd argue that we have spent more time and effort working out the issues related to standardization of rich product description metadata than any other industry, so I think the conversation is going to be "Here's ONIX, which we know and love. Let's figure out how much realistically needs to be in GDSN." With any luck, we can extend the data dictionary accordingly.

  5. Will your Data Synchronization initiative influence similar initiatives in the US and UK.

    Will those markets make full use of your path finding or more to the point will they have to develop their own initiatives? Getting GDSN off the ground is going to require the concerted effort of several national markets. The GS1 data vetting process requires broad support to propose changes to the Global Data Dictionary. We are happy to lead the charge, but we want to make sure that this meets the needs of the larger book market as well, so plenty of collaboration is required.

Michael can be reached at BookNet Canada: mtamblyn(At)

Borders Loyalty Program

Mrs PND received a quite extraordinary promotional email from Borders Books this weekend which indicated that she had been selected to receive a package of substantial partner benefits just because she was a Borders Rewards member. Aside from the fact she has no recollection being a rewards member, the Borders Rewards Perks program offers substantial benefits to "rewards members like you" it says. If you go to the perks site linked to above you will find many many discount programs which regrettably seem to be perfectly targeted to Mr. & Mrs. PND's lavish lifestyle.

It is hard to understand what they are trying to achieve with this program. Perhaps they are attempting to mimic the 'retail emporium' that is in advance of launching their own web site. Or it could be a simple attempt to capture as many web consumers as possible so that they can promote the launch of the web site to an even broader base of customers.
Affiliations are often effective for merchandising and brand extension but the sheer number of bonus and discount offers seems excessive. Few if any of these appear to be 'for our Borders rewards customers only' and, as such the list of benefits may be a nice consolidation of existing discount and bonus programs. (Hey thanks!).
Some of these expire soon so hurry to your nearest Borders website so you can shop elsewhere.

Friday, November 16, 2007

Borders Australia

Speculation that the Borders Australian and New Zealand stores have been sold to Pacific Equity Partners are surfacing from a rather unique source. The India Times is reporting that industrial and services behemoth Tata Industries participated in the last round of bids for the Borders unit and also suggests the price agreed for the store operations will top A$125mm. There is speculation that PEP will also get the Singapore store and may have ascribed more deal value to the Borders brand which they may seek to extend into SE Asia. More details will follow.


CBS Outdoor Announce Times Square WiFi Hot Spot

Billboard owner CBS Outdoor is announcing a partnership with the MTA that will create a mid-town wide wi-fi hotspot covering most of Times Square.
CBS Corporation announced today that it will "light up" midtown Manhattan with the creation of the"CBS Mobile Zone," a wireless high-speed network enabling New Yorkers with Wi-Fi-enabled cell phones, laptops or other devices to access the Internet for free, and make voice over internet (VOI) calls. The Wi-Fi Hot Zone,which is available today in certain areas, will be fully operational on by month's end with a footprint of more than 20 city blocks from Times Square to Central Park South and from 6th Avenue to 8th Avenue. This initiative is part of a 6-month pilot program with the Metropolitan Transportation Authority and New York City Transit to test the potential communications capabilities of Wi-Fi technology.
Check it out. Just in time for the Kindle

Amazon Kindle to be Launched Monday

According to a report in CNet this morning there is to be a 'high-profile' launch party at the W hotel in Union Square to announce the long anticipated Kindle ebook reader. From the report,
The Kindle is equipped with a Wi-Fi connection that taps into an Amazon e-book store, which users can access to purchase new electronic books--and Amazon has reportedly signed onto a deal with Sprint for EVDO access. Additionally, the device comes with a headphone jack for audiobooks, as well as an e-mail address.
The devise is expected to sell for $399 and among its content deals the company has apparently negotiated partnerships with as many as 100 newspaper publishers. The company is also saying it will have from launch the largest inventory of all e-books available. The report also confirmed that the initial SONY e-book reader has been 'a bust' but SONY expects their second version with improved features to fair better.


Thursday, November 15, 2007

Virtual Felony

According to the BBC, a 17 year old Dutch boy was arrested for allegedly steeling $3500 of virtual furniture from the 'homes' of residents of the online community Habbo. According to website administrators, the real world threat of Id theft also exists in the virtual world and this perp and several co-conspirators convinced some Habbo players to fork over their passwords. Since the Habbo credits used to buy stuff players use in the game are purchased with real money, steeling someones couch is a 'real' crime. I wonder if they will do time in a real jail?

Reed Explores Purchase of EMAP B2B

Is it a ruse to gain access to their financials or does Reed Business Information really want to purchase the Emap B2B titles. That is what a number of high profile private equity firms are considering after they were assured by the sellers that there were no commercial operators interesting in Emap. (Telegraph) Other observers have suggested that Reed may also decide to join one of the PE buyers (or wait on the sidelines until it is all over) and negotiate to cherry pick the best titles that fit with their current stable of publications. The company is especially interested in titles that have or could have strong electronic/online opportunities. Reed also has an interested in Harcourt/Riverdeep which they could trade with a PE firm for the (some) of the titles they would like to own.

The whole Emap sale has been convoluted and murky from the get-go, and with the public notification of Reed's interest the bid participants were given an additional opportunity to revise their bids. No bidder has ever appeared inclined to buy all of Emap which of course is what the sellers prefer (Guardian). The company also announced interim results earlier this week which indicated a profit decrease of 16% although the company maintained their full year guidance (Reuters). Emap consists of b2b, consumer magazines and radio.

In separate news, Reed also confirmed that the company is on track to achieve 10% growth in EPS this year with all segments of the business performing well. Hemscott

Hachette Vert

The Bookseller is reporting that Hachette livre UK is moving to firm sale on their back-list by the end of 2008. The company expects to consult with retailers on this implementation but Hachette is wielding the weapon of "Greenery"and thus have right on thier side. The Bookseller, calls the approach 'radical' and it is certainly unusual in the publishing world but in reality backlist sales are by nature far more stable than front list and the proposal shouldn't cause too much debate or controversy. (Expect to see other publishers follow suit).

The Bookseller went on to explain that this new proposal is only part of Hachette's Green policy,
Hachette has also commissioned the Carbon Trust to advise it on a long-term strategy to improve its energy emissions. It has already embarked on a range of initiatives, including persuading its head office landlords to re-engineer its office lighting system so that night-time lighting is restricted to areas occupied by members of staff; introducing dual fuel ‘hybrid’ cars into its company car fleet; and encouraging reduced use of cars.

Hachette are also revising their paper sourcing polices to follow accepted Green practices.

Pearson in Custom Textbook Test

Inside Higher Ed are reporting a program Pearson is launching with a community college in Arizona (Rio Salado College - heard of it?) that will enable academics to build custom textbooks including content from non-Pearson sources. According to IHE,
Professors can pick from among the books in Pearson’s library as well as outside sources in preparing their custom textbooks. For works not published by Pearson, there’s a limit of 10 percent of the contents, but the company will then handle copyright clearance. Freed said the ability to include journal articles and extra readings amounted to “a super-textbook, if you will.” A spokesman for the company, David Hakensen, said that the agreement with Rio Salado is unique for covering an entire college, but he noted that individual faculty at many colleges have used Pearson’s custom publishing services for their own classes.
Custom publishing has been part of the fabric of academic publishing for many years but this appears to be a twist on an old play. With easier rights clearance via CCC perhaps this program will expand rapidly particularly in disciplines where the content changes frequently due to world events. The Australian equivalent of CCC (CAL) was barnstorming the US a number of years ago selling the concept of an on-line rights clearance and custom publishing solution that enabled the creation of textbooks from multiple sources all with rights appropriately cleared, a index and toc created, pages reformatted and sequential page numbering. It was an interesting proposal which was tried and tested in Australia but didn't get any traction here. Interestingly, CCC didn't take the bait either.

Wednesday, November 14, 2007

Judy Does It

Forgive me for thinking that common sense would prevail but on the heals of admitting to NYDN that she 'wanted out of the spot light' Judith Regan has dropped a $100mm lawsuit on HarperCollins. Not your ordinary defamation/wrongful dismissal lawsuit she has gone to the thriller play book and selected 'political conspiracy' to add to the more prosaic "sex with a married police officer who happens to be the best mate of the mayor" Oh, and the mayor is now running for President. Sounds like a book contract to me! Get Patterson on the line maybe he could work up a treatment.

For most of us in NYC we know the details already but we can all expect the story to play like back-ground music in the elevator over the next 12 mths in the run up to the election. On cue, Judy will jump 'into the limelight' (like some momentous wind instrument in aforesaid elevator music) with something sensational that she thinks will help her case but will only serve to make herself look increasingly pathetic.

My guess, HarperCollins will not settle and Judy will implode on the witness stand.

Monday, November 12, 2007

Why digital galleys are not scary

I’m currently working with a product that has, among other features, the capability to send digital advance reading copies to media and reviewers—a concept that they are working diligently to under-emphasize because of the instinctive “that wouldn’t work for us” reaction they have received from media, reviewers and publishers alike.

This is unfortunate and short-sighted. Yes, of course, we aren’t at the point where digital galleys can replace the good, old-fashioned portability of the physical book---for a full read. But outright rejection of the digital underscores the many other ways reviewers and media use content.

Full-text digital galleys are searchable, for one, invaluable for fact checking of reviews and articles. And especially helpful because galleys often are sent without indexes. Publications could benefit from digital galleys when preparing roundups (Essential Cranberry Cooking for the Holidays—New Hot Recipes from 10 New Cookbooks and all). And let’s not forget that for certain types of media, reading the text isn’t essential—a colleague of mine gave me an example of a gossip columnist who might skim or search a text for a reference but whose need for speed would always usurp a full, critical read. Radio and television producers often mine upcoming books for content of interest to their audiences or host, and what better way to pass along a potential find than digitally? For large organizations with multiple levels of approval this is especially salient.

Finally, there is the green element, of some interest as evidenced by
BISG’s and Green Press Initiative’s recent U.S. Book Industry Climate Impacts and Environmental Benchmarking Study. What interests me about the green element is the potential for media to use digital galleys to read first chapters, often an essential step in deciding if a book will be reviewed or covered.

Overall, publicity is about selling. Even reviewing, albeit more high-brow, is about recommending worthy reads. Why wouldn’t publishers and media want to share their content faster and more accurately? A production soldier at a major publisher told me that many authors, agents and editors lament the inaccuracy of galleys, since the text often changes between the time the galley goes into print production and is mailed. Digital means capturing a timelier version of the text, and aren’t we all happier for that?

I am not advocating a truly paperless advance publication workflow; that time has not yet come. But as an industry we could be braver about trying digital galleys as a supplement to print. I think the results would be surprising.

Do it Yourself Cookbooks

This morning The NY Times also has a short note on which allows cooks to create their own printed recipe book by downloading up to 100 recipes from
For $34.95, a cooking enthusiast can select up to 100 recipes, which come encased in a ring-binder with a customized cover. Although TasteBook will not put the customer’s photo on the cover, it does offer a choice of images (a pie, a bowl of cherries, peas in a pod, corn on the cob) and naming rights to the cookbook (like “Emily’s Holiday Recipes”). The site also accommodates those who want to fill a volume with their own recipes or with recipes from sites other than Epicurious.
As I noted last week, SharedBook also launched a similar product with (Readers Digest) and it is disappointing that the Times didn't look at their product as well.

Regretfully, while the product concept in both applications will be popular the execution in the TasteBook example is less than ideal. For example, the customer has to assemble the product themselves when it arrives in the mail which immediately removes a valuable sense of ownership and customization. Secondly the cover title which you select yourself is stuck on mailing label-like (on the spine as well) and lastly the heavy card binder is likely to come off second best the minute it is set on a wet counter. (Which of course happens all the time). The book does lie flat however which the SharedBook does not; however, I suspect SharedBook will be correcting that soon.

Borders Television

The NYT notes the adoption by Borders of in-store television which will provide book related content and advertising direct to the stores. The provider, Ripple already provides similar services to stores such as Jiffy-Lube and Jack-in-the-Box 'restaurants'. The company notes that the broadcast service is now in 60 stores and will be in 250 by the end of February.

CEO George Jones comments:
Borders customers tend to be “highly educated, more affluent” and spend an average of an hour in the store, making them catnip to many advertisers. “It’s becoming more and more difficult to reach people,” Mr. Jones said. “Newspapers are not as effective as they used to be. Television is not as easily reachable as it used to be. This becomes an attractive option.”
Flat screen video screens in retail are all the rage. Visiting a local Starbucks in the last few months, you will have noted the installation of video screens in their stores. Currently these support the integration with their music content which enables free downloads via iTunes. The video screens are not intrusive but mainly because the content is static: If they begin to offer video content as Borders are suggesting perhaps the vibe of the stores changes to one where you can hold a quiet meeting or take a leisurely break to one where you will be bombarded by advertising messages: The faster pace and the noise causing you to move out of the store faster. It could be unsettling. On the other hand the effort by Borders is an experiment in merchandising that should help the company develop new revenue streams and direct customer awareness of particular products. Jones was asked about the perception that screens could be counter to the store vibe and said,
The screens are “not designed to be intrusive,” Mr. Jones said. Rather, he said, they are “part of a master plan to create content that will do several things for us,” like directing traffic to the Borders Web site and paving the way to more cross-promotional deals with large media companies.

Stay tuned for more changes and experimentation from Borders.

Sunday, November 11, 2007

Radiohead: Creepy Stats

Reuters reports that the CD version of the new Radiohead album In Rainbows will be released December 31st. Sometime between then and now they will eliminate the download site so that this option no longer remains although they are likely to use data from the site to promote the purchase of the physical disc. Options being discussed may include allowing a credit against the purchase of the CD based on what was paid for the download to a simple web coupon (10% off for ordering direct) to nothing. If nothing else, the experimentation will continue.

The band also commented to Reuters that the recent speculation regarding how many people visited the site and either did or did not pay was "wholly inaccurate." Furthermore the Band said that the reports "in no way reflect definitive market intelligence or, indeed, the true success of the project."

Saturday, November 10, 2007

Stephen Fry Is An Actor

Stephen Fry is as about as likely to be writing a blog about consumerist technology as I am about Opera. Which is pretty unlikely, but one of us is going against presumed character (and it isn't an act and it isn't me).

Stephen Fry has started writing a blog for the Guardian newspaper and the posts are very entertaining. Apparently, it didn't start that way. He initially launched the blog by himself with a 6,000 word (I think) post about his love of all things digital. The Guardian came calling and by the third post he was writing for them as well under the title "Welcome to Dork Talk." How's that for the power of digital media! At times his proselytising for Apple may come across as a cry for help; but, I suspect once the excitement over the launch in Europe of the IPhone dies off he will move on to other matters. (I wonder what he would think of Tivo?)

Here is how he described his viewpoint:

Digital devices rock my world. This might be looked on by some as a tragic admission. Not ballet, opera, the natural world, Stephen? Not literature, theatre or global politics? Even sport would be less mournfully inward and dismally unsociable. Well, people can be dippy about all things digital and still read books, they can go to the opera and watch a cricket match and apply for Led Zeppelin tickets without splitting themselves asunder.

My sentiments exactly. And he is certainly not without an opinion. Here he is reviewing a new mp3 player from Philips:

But that’s of no importance compared with the cheap, clumsy and dreadful nature of the device itself. I wanted to throw it in the ocean after five minutes (I am in America right now), but instead gave it to a friend who threw it away after 10. One knows the instant one plays the bundled video content, a truly pathetic and dated home movie of some dudes skiing, that we are dealing with a dog. The blocky, pixelated images are so poor as to beggar belief (220 x 176 pixels) - and this is the footage that’s meant to show it off!

It gets worse. It has touch controls, but not touch screen. In the desire to jump on Apple’s multitouch bandwagon, Philips have come up with something worse than an old-fashioned knob. The Streamium offers fiddly controls with terrible delay, so you’re always pressing them too often and reversing their function. The sound level is poor and the phones inadequate. The whole thing’s a gift to Apple.

It should prove entertaining reading from a very unlikely source.

Friday, November 09, 2007

Penguin sued Over Dorothy Parker - Update

By way of update, Mr Silverstein has not won the lottery and according to this mornings Telegraph his suit against Penguin has been dismissed. Under the hugely creative headline Poetic Justice, the Telegraph reports that Pearson prevailed in this six year battle. I suspect that Mr. Silverstein is going to have some significant legal expenses to pay.

This is my original post from September:

Mild embarassment could ensue if Penguin were to loose a copyright suit over a compilation of poems the publisher produced in 1999. The wheels of justice appear to move slowly but the story is as follows. One Stewart Silverman took a project to Penguin which they turned down because they didn't agree to Silverman's format choice. Silverman went ahead and published it with Scribner. Three years later Penguin published its own selection of 'lost' Parker poems which Silverman believes was a verbatim version of his own work. Final deliberations are supposed to begin on October 9th in New York.

Penguin's argument hangs on the belief that they owe Silverman nothing for the material they published since all the Parker works were in the public domain. As such, the works are not covered by copyright. The Silverman camp suggests that he asserted copyright to the compilation and that this fact was clearly noted when he originally went to Penguin with the project. The judge will decide the result, but on the witness stand John Makinson, Penguin CEO did admit:

''I think it would have been more appropriate to have given some attribution to Mr Silverstein for those poems; it's just a personal opinion that I have based on my reading of the situation subsequent to my deposition in the initial case here."

Silverstein is looking for $1,00,000 in punitive damages.


A Future of Publishing

There is an interesting series of posts on MJ Rose's Buzz, Balls & Hype site about the (a) future of publishing. The series of three guest posts are written by Barry Eisler who is an author but despite that has some very interesting ideas about how the business will change and evolve. I suspect he will have something to say about my comments as well.

Here is a taste from Barry's first post:
I don't think the abandonment of record labels by two of pop's biggest stars is an aberration. And I don't think the implications of this development will be confined to the music biz. Look a little more closely, and you'll see a common element among media companies -- that is, record labels, movie studios, the newspaper business, and book publishers -- and a common dynamic.

My retort on post one:

With respect to the movie industry you haven't taken the example far enough. About ten years ago all movie distribution companies were gung ho about satellite distribution to movie houses. It would avoid shipping film reels, errors and delays and importantly enabled better accounting so houses could no longer cheat on showings. It failed because the houses saw nothing in it for them against the significant capital improvements they would have to make. Move ahead 10 years and we are again talking about digital distribution but the landscape is significantly different. As consumers we can all get new 50in flat screen TVs in our homes and we don't need a movie house any longer. (And there aren't enough of them any way). It is only a matter of time before first run movies are distributed direct to consumers together with consumer (behavioral) ad placement. Ergo: very flat distribution.

With respect to books/publishing, in my view we won't even remember the espresso machine in three years. Led by the iPhone, consumers will consume more and more books on these handheld platforms and 'vending' locations will be ubiquitous (including B&N etc.) E-books will not replace hardcopy books in total. They may replace trade paper in dramatic fashion over the next five years. (I will make another point on your next post about retail). The Espresso machine is impressive technology and will retain a place in libraries and academia but I see us the typical high street consumer skipping over the on-demand opportunity of printed works to simply e-content on a handheld.

And all this from someone who only buys hardcover titles and collects first editions!

Barry from post two:
B&N and Borders both publish their own books. True, the titles in question are mostly self-help, public domain, and other perennially-selling categories. But in June, Borders published Slip and Fall, a hardback novel by Nick Santora that's available nowhere else. Slip and Fall is a classic case of middleman elimination. I don't know the financial details, but I know the dynamic that drove the deal: Santora gets to keep more than the 15% of the price of each book he would have received from a traditional publisher, and Borders keeps more than the 40% it would have kept after paying a traditional publisher 60% of the retail price.

My retort:

The 'success of Slip and Fall' has more to do with consumers entering Border's with no clue what they are going to purchase (and research bares this out) than it does with a new found business model. In fact, as seller of anything I want to be in as any appropriate retail outlets as possible and while it may be seductive to have an exclusive with B&N or Walmart ultimately I believe revenues will be lower than if the product is distributed to the largest umber of outlets. Border's also sold that book by 'A-listing' its merchandising with in-store events, front of store displays, discounts, etc. In the process they not only for-go publisher paid merchandising revenues but that type of activity can only be done sparingly otherwise it creates too much noise for consumers. In other words if they extend their publishing program for first run titles to say 10/quarter (which isn't a lot) how will they find the space to merchandise them in the stores? And remember they have a much bigger financial stake in these titles - author advance, printing, can't return them, warehousing, etc. than if they bought them from the publisher.

Ultimately, you will see some major name authors experiment with direct to consumer but it will not represent a big trend.

Lastly, admittedly we haven't seen a huge amount of dynamism from mainstream publishers but I do think you treat them as too static relative to the change going on around them. I do believe publishers will react faster and in (perhaps) revolutionary ways but I can understand your skepticism

Barry in post three:
What about booksellers? Pretty interchangeable, too, I'd argue. The big box stores, if they stand for anything, are only about prices (not a coincidence that Wal-Mart's slogan is "Everyday Low Prices"). Amazon does have a brand, mostly about the customer experience -- the links to related products, the comments, the recommendations, the ease of use, the immediate gratification. Independents don't really have a collective brand (or if they do, it's not terribly relevant to their success). But they do, or at least should have a brand in their community, a reflection of their individuality, you could say, related to expertise, enthusiasm, and personal knowledge of customer tastes, that should continue to offer them certain advantages in a flat distribution world.

(He also speaks about publisher's brand which I will address next week).

To find my retort go to Barry's post.

Harpercollins and IPhone Deal

Harpercollins announced they have built an application that will enable book excerpts to be made available on the iPhone. It is the only deal of its type between a publisher and Apple for this content and the excerpts will be available on the iPhone and the iTouch using the Safari browser or Apple's new web applications site. In addition to text excerpts readers will be able to hear audio excerpts and hear interviews with the authors. Apple has said it has no plans to extend this deal to other publishers (although that sounds more like "no one else has asked" to me). The Bookseller is saying this is exclusive.

The Harpercollins UK announcement coincides with today's UK/European launch of the iPhone.

"Victoria Barnsley, chief executive officer and publisher of HarperCollins UK, said of the iPhone: "With its large screen and tactile nature, I believe it could be the breakthrough device for consuming digital product on the go and brings us closer to the ultimate e-book dream."

According to the company, 15 books are being made immediately available for the UK launch of the iPhone including Lewis Hamilton: My Story (he drives cars) and Playing with Fire by Gordon Ramsey (he used to play football and now cooks for a living).

Each excerpt, which we represent about 5% of the total content will be free with the remaining 95% available for purchase and download.

Harpercollins Reports First Quarter

Harpercollins' 10 year long run of impressive results took another hit when they reported first quarter results which were materially short of the pace set in the corresponding quarter in 2006. From the press release:
"Book publisher HarperCollins owned by News Corp., reported first quarter operating income of $36 million and revenue of $330 million. This compares to operating income of $55 million and revenue of $368 million in the same quarter last year. The year-ago quarterly results benefited by the strong sales of Lemony Snicket's A Series of Unfortunate Events. Current quarter results were highlighted by strong sales of The Dangerous Book for Boys by Conn and Hal Iggulden, Motor Mouth by Janet Evanovich, Ana's Story by Jenna Bush and Deceptively Delicious by Jessica Seinfeld."

From The Bookseller:

"But HCUK c.e.o. and publisher Victoria Barnsley said that despite this, HCUK's volume growth "outstripped the rest of the market", while value grew by 5%. "If you strip out the effects of the new Harry Potter book in July, we held our market share steady at 8.9%, level with the same period last year," she said."

Speaking to Publisher's Lunch, Jane Friedman (CEO) said "I would say we've probably not had a quarter this bad during my tenure." On the flip side she went on to note that the second quarter is off to a good start and one suspects that this quarterly performance is nothing to be concerned about. Indeed on the NewsCorp conference call publishing wasn't even mentioned.

Thursday, November 08, 2007

Wolters Kluwer Reports

Wolters Kluwer reported third quarter results inline with expectations and also announced the completion of their initial share buy back scheme and the launch of a second buy back. The company says it expects to buy back €175mm in shares over the next several months. Highlights from the press release are as follows:

Third-quarter 2007:
  • Organic revenue growth of 4% (2006: 4%)
  • Ordinary EBITA of €153 million, grew 18% and 24% in constant currencies (2006: €130 million)
  • Ordinary EBITA margin improved to 19% (2006: 16%)
  • Revenues of €799 million, grew 2% and 6% in constant currencies (2006: €786 million)
  • Structural cost savings increased to €41 million (2006: €33 million)

Nine months ending September 30, 2007:

  • Organic revenue growth of 3%, on track to meet the full-year guidance (2006: 2%)
  • Ordinary EBITA of €457 million, grew 20% and 26% in constant currencies (2006: €381 million)
  • Ordinary EBITA margin improved to 18% (2006: 16%)
  • Revenues of €2,476 million, grew 2% and 6% in constant currencies (2006: €2,431 million)
  • Structural cost savings increased to €117 million (2006: €91 million)
  • Free cash flow of €194 million (2006: €232 million including €53 million one-time tax refund)
  • Divestment of Education generated a sales price of €774 million, a book profit of €595 million and net proceeds of €665 million

Nancy McKinstry, CEO and Chairman of the Executive Board, commented on the company’s third-quarter performance:

“Wolters Kluwer continued to successfully execute our strategy of accelerating profitable growth during the third quarter of 2007. Our good organic growth was fueled by new products and strong growth in online and software solutions. Importantly, all divisions contributed to the significant increase in operating margins realized through revenue growth, operational improvements, and prior restructuring programs. We have a strong, balanced portfolio which enables us to continue our clear growth momentum. Our performance over the first nine months of 2007 has put us well on track to meet our full-year guidance.”

Wednesday, November 07, 2007

The Eagles Top Billboard Charts

In an update to my post yesterday Walmart has allowed Billboard to record the sales of the new Eagles Album and this has resulted in a number one ranking for the band. Billboard

This represents a policy change in the heady world of charting best sellers since previously Billboard did not record sales when titles were sold predominately through one vendor.

The Eagles' first new studio album in 28 years, "Long Road Out of Eden," takes a short route to No. 1 on The Billboard 200 after Billboard revised a significant chart policy today (Nov. 7).In consultation with Nielsen SoundScan, Billboard will now allow exclusive album titles that are only available through one retailer to appear on The Billboard 200 and other charts, effective with this week's charts. Prior to this, proprietary titles were not eligible to appear on most Billboard charts.

According to the numbers, Long Road Out of Eden sold 711,000 units ranking it second for the year in first week sales.

Radiohead: 2 out of 5 Ain't Bad

Comscore has released a study that suggests that two out of every five downloaders of Radiohead's In Rainbows release were willing to pay something. From the press release:

During the first 29 days of October, 1.2 million people worldwide visited the “In Rainbows” site, with a significant percentage of visitors ultimately downloading the album. The study showed that 38 percent of global downloaders of the album willingly paid to do so, with the remaining 62 percent choosing to pay nothing. The percent downloading for free in the U.S. (60 percent) is only marginally lower than in the rest of the world (64 percent)

Comscore has a 'panel' of 2mm users that allow Comscore to track their internet use. The full press release makes for interesting reading but we don't know how many actually downloaded the album other than a 'significant' percentage. In my back of the envelop calculation, if only 10% of downloaders paid the average $6 then Radiohead nets about $275K. If 25% of downloaders paid the amount would be approximately $650K. If Radiohead receive approximately $1.50 per CD (avg retail $12.95) this would mean they would need to sell 450,000 CDs (in the month) to generate $650K in royalty. My numbers may be fuzzy but if they did sell to 25% of downloaders I don't think those numbers may not be bad at all.

On note that is confusing to me is that the comscore numbers are all in dollars and with the weak US dollar it is surprising that the average paid by non-US residents is lower than the US price. In the UK the typical CD sells for £10-12 (which is $20 - 24). Since their average price paid is lower than the US price that means the typical European has a much lower view of the value of music than the absolute numbers might suggest.

(Tip of the hat to Lorraine Shanley at Market Partners).

Tuesday, November 06, 2007

Building the Imperfect Beast

“We’re looking for a new paradigm” is how Don Henley put it when discussing The Eagles’ choice of WalMart as an exclusive distributor of the band’s first studio album in 27 years. The comment is laughably patronizing - as though we just aren’t smart enough to see his new commercial nirvana. They own the biggest-selling album of all time; just what “new paradigm” could they be looking for? Speaking of that album (and the more recent Greatest Hits 2), you could bet a large fortune that Eagles fans everywhere would harken for the old stuff anyway.

In July, Prince placed his new album with The Mail on Sunday (UK) for free. He then sold out at least five huge shows later that summer in London. That’s a new paradigm. Radiohead’s new album is available for download at whatever price you think it is worth and Neil Young’s Chrome Dreams II was sent to me free as part of the ticket package for his upcoming shows in New York. New paradigm indeed.

Contrast the minimal attention that this release seems to have garnered with those of other current releases. In the UK, it is being reported that The Eagles will top the Billboard charts and edge out Britney. Now, you might be thinking, is that any competition? But, in fact, her album has been well received over there and broadly here as well. In the US, The Eagles album may not debut in the top three; moreover, because distribution is not widely seen, it may end up dropping like a stone soon after. Since Walmart doesn’t report sales at an item level, you won’t see any of the usual excitement that ensues when a new album moves up the charts. Ergo, ignominious mediocrity. If you contrast the lack of hype around this album – remember, the first in 27 years! - from one of the biggest bands ever and the reaction to Radiohead’s new paradigm; it is comical by comparison.

As a result, fans showing up on the concert tour which is bound to follow aren’t likely to have heard the new stuff. Perhaps, if The Eagles had been more innovative, they could have created broad anticipation for the new stuff. As it is, concert-goers will hit the head when the group launches into those unrecognizable ‘hits’.

Aside from the silliness (or ignorance) of Henley’s comment, there is also a perception issue. Millions of people travel to NYC to shop on 57th Street. Why? Because the experience is evocative of exclusivity. It is unique and the stores are attractions in and of themselves. If something is sold on 57th Street, the consumer characterizes that product in a very particular way. This is no less the case with a big-box retailer like WalMart. Your association with the products sold at Walmart has everything to do with how you perceive WalMart. So, if you have a negative view of Walmart (and not everyone does) will that transfer to The Eagles? It does for me. Mrs PND has an emotive reaction to WalMart, believing the shopping environment to be soulless and barren. I, on the other hand, think of their intolerance and their overarching belief that they can influence culture by limiting or manipulating choice.

When you think about it The Long Road Out of Eden is a rather unfortunate choice of title for this album when you remember that Walmart has a history of locking up employees, dissuading employees from their legitimate right to union representation and engaging in an active effort to deflate employee wages. Clearly, for some Walmart employees there is no “road out of Eden”

Henley said they got some grief for the Walmart deal but I am simply baffled by the fact that they needed to consider this option at all. Indeed, if they were truly looking for a new paradigm, they only needed to poll some of their ‘friends’ from MySpace who could have given them any number of ideas. And I will bet none would have included Walmart.

Friday, November 02, 2007

Center of Her Own Attention

Americans remain blissfully unaware of the talent of Manchester United and England football player Wayne Rooney. On the football pitch, Wayne has few rivals and he is a sports personality whose talent transcends sport to media superstardom. Even as a better player than David Beckham, he will never rival him as a star: He doesn’t have the looks, but he will be big. On the other hand, his girlfriend/fiancee may become bigger than Victoria Beckham and the glow of Wayne’s stardom has reflected on her since they were engaged when she was 17. You see, 21-year-old Colleen McLoughlin has reportedly just signed a five-book deal with Harpercollins. Admittedly this is on the back of her successful autobiography Welcome to My World (Oopps, I almost typed “Wayne” there…) but, without Wayne would there have been an autobiography at 20 years old?

Read the rest of this post on Foreword: Here.

Simon & Schuster Reports

Jack Romanos' final year in charge at S&S continues to go well as the company posted third quarter revenues of $214.2 million up 9% from $197.4 million for the same period last year. Top-selling titles included Become A Better You by Joel Osteen and the continued success of The Secret by Rhonda Byrne. Operating income of $21.6 million was up 6% from $20.3 million versus last year, and which reflected the revenue increase and lower bad debt expense partially offset by higher royalty expenses, employee-related costs, volume-driven advertising and selling expenses and digital archive costs. Year to date company revenues are up 16% to $643.8mm and operating income is up a dramatic 73% to $67.7mm. A better than 10% margin is tremendous work in trade publishing.

Full CBS press release: Here

Seeking Alpha Transcript: Here

Comments from the earnings call:

The company has also made steady progress in the digital warehouse project. This is new storage distribution and transactional system that will digitize and house all Simon & Schuster content and manage license of our intellectual property. By year-end we expect to have 13,000 titles incorporated into the system.

During the quarter we also announced the promotion of Carolyn Reidy to the role of President and CEO of Simon & Schuster effective January 1, 2008, after Jack Romanos retires at year end. Carolyn previously ran Simon & Schuster's Dell publishing division which accounts for the lion share of the division's revenue and as you recall Simon & Schuster had its best year ever last year. Particularly gratifying when you have a deep management bench that allows you to replace one top tier executive with an internal candidate of Carolyn caliber. She is extremely well regarded not only in the industry but, also inside Simon & Schuster as well. We think she will do great things here.

Thursday, November 01, 2007

Open Access: Free or Not to Be

The Washington Post reports on the status of a bill in Congress that will require any research papers that are produced/published as a result of government funded research to be made freely available one year after initial publication.

At issue is whether scientists funded by the National Institutes of Health should be required to publish the results of their research solely in journals that promise to make the articles available free within a year after publication.

The idea is that consumers should not have to buy expensive scientific journal subscriptions -- or be subject to pricey per-page charges for non subscribers -- to see the results of research they have already paid for with their taxes. Until now, repeated efforts to legislate such a mandate have failed under pressure from the well-heeled journal publishing industry and some nonprofit scientific societies whose educational activities are supported by the profits from journals that they publish.

The language supporting this legislative requirement is part of an appropriations bill and thus has not been subject to the type of open debate that publishers would like - regardless as to how difficult it is to support the argument. Typically for the government they are jumping on a hobby horse which on the surface looks like an easy win (a 'mom and apple pie' issue) without fully understanding the commercial, academic and cultural issues involved. There are in my view many more egregious and expensive abuses of public trust such as commercial mining or oil drilling on public land where the accrual to private enterprise far outstrips the perceived tax injustice that publishing research is supposed to generate. But that is not necessarily the point: Two 'bads' don't equal a good.

In publishing research and academic papers the publishing industry has created an efficient and effective distribution mechanism that enables the broadest possible access to this material. Under the aegis of legislative dictate it would be entirely probable that the access to this material would deteriorate not improve as our would-be business people (Congress) envision. Having said that, the publishing business is too entrenched in their position and could do with a kick up the bum: Better this comes from a commercial reality than the legislature IMHO.

Harlequin (Torstar) Reports

The revival at Harlequin continues as the company posted slightly improved underlying revenue growth and improved operating margins versus the same period last year. For the parent company Torstar, revenue was stable with prior year (up $3mm on revenues of $369mm). The company will be pleased that revenues improved in their Metroland Media Group and Digital properties. Operating profit for Torstar improved by $14.1mm for the quarter.

A significant proportion of Harlequin revenues are booked in US $ and as a result their underlying revenue improvement of $0.7mm was offset by more than $3.8mm in unfavorable foreign exchange impact. Operating profit for publishing improved 13% to $16.3mm for the quarter. Underlying profit without the impact of foreign exchange was slightly better.

Harlequin management expect the division to continue the improvements they have seen this year; however, underlying results will continue to be adversely impacted by the weak US $. The company also noted that the fourth quarter North America Retail publishing schedule is not expected to be as strong as compared with 2006. Possibly of deeper worry to the company is how to improve results in their Overseas markets particularly the UK where the company owns Mills and Boone.

Harlequin’s publishing operations are composed of three divisions: North America Retail, North America Direct-To-Consumer and Overseas.


Book Publishing operating profits were up $2.5 million in the third quarter of 2007 excluding the impact of foreign exchange.

  • North America Retail was up $2.6 million
  • North America Direct-To-Consumer was up $0.5 million
  • Overseas was down $0.6 million

Year to date, Book Publishing revenues were up $2.1 million excluding the impact of foreign exchange.

  • North America Retail was up $4.9 million
  • North America Direct-To-Consumer was down $4.9 million
  • Overseas was up $2.1 million

Year to date, Book Publishing operating profits were up $8.0 million excluding the impact of foreign exchange.

  • North America Retail was up $6.8 million
  • North America Direct-To-Consumer was up $1.2 million
  • Overseas was flat.

Year to date, EBITDA was up $6.3 million excluding the impact of foreign exchange.

North America Retail had a strong third quarter with price increases on selected series product lines, a strong publishing program and cost savings. The number of books sold was down slightly in the quarter. Cost savings included lower advertising and promotional costs and $0.5 million of lower depreciation and amortization.North America Direct-To-Consumer revenue was down in the third quarter of2007 primarily from declines in a children’s direct-to-home continuity program.

In the core Direct-To-Consumer business, revenue was flat in the quarter as the series price increase offset lower volumes. Lower advertising and promotion costs associated with the fall 2007 mailing provided the third quarter profit improvement.

The Overseas markets continued with mixed results during the third quarter.Year to date the Nordic group is up 30%, the U.K. is flat and Japan is down with challenges in the core series book market more than offsetting growth in single titles and digital products.

Five Questions with Harlequin