Thursday, January 31, 2008

Amazon Versus Apple: Is This A Cage Fight?

Amazon is buying for $300mm: This changes everything. Audible is already a destination site for Audio books (and content) what more appropriate gateway exists to boost the growing (e-)book content that Amazon is selling via their Kindle? As I speculated a few weeks ago, the Kindle will be a delivery platform for content (not just e-books), and it doesn't take too much imagination to see how Audible's content fits very nicely with the Kindle strategy. Audible has also taught their users about the benefits of subscribing to content and have proven that this model can be successful. So, not only does the Audible acquisition have the potential to bring new customers to the Kindle platform (on the basis of a subscription model for content), will also gain the expertise of staff at Audible who has built up this program. Extending a subscription model to content presages the resurrection of the Book Club model. Didn't we all know it would come back? (Well maybe not, but Bertelsmann were spied coming out of Madame Radzwilli's House of Fortunes just the other day).

Strategically, this acquisition makes fundamental sense at the product level alone. Coupled with an increasing need for Audio versions of text (what with our aging population) with the already loyal Audible customer base there is little to argue about. And I do believe, it will escalate a change in business model for trade (consumer) publishing content.

How publishers react to the news will be interesting to watch. Most will not see the significance and many will be happy at the increased exposure that audio books will get as part of the empire. Where there is concern, it will orient itself around the realization that even greater market power will be exerted (either overtly or not) by Amazon. Given my comments above, this acquisition could represent an end-run of the order of I-Tunes. Look how music publishers are now tied to the $0.99 cents per song model. It just snuck up on them. Will the same happen to book content?

Which brings me to my last comment: It is all out war with Apple. (In fact, I would not be surprised to see a competing offer for Audible. I know Apple are not in the content owning business but they might do it to be mischievous or to protect a budding position in the book market). There has been some speculation about whether Apple would develop an e-reader device as part of the I-Phone. Despite his comments to the contary, I believe Jobs was planning some development here and I speculate that Amazon thought so as well. Amazon will do everything they can to keep Apple out of the content distribution/platform business. Apple for their part don't want Amazon's movie and music distribution (or the Kindle) to challenge iTunes. How this rivalry plays out will be very interesting to watch. They both come at the issue from completely different starting points.


Traditional Marketing is 40% Less Important

The editors at Publishing Trends have annouced the results of their recent online marketing survey which indicates that 40% of book publicists believe traditional marketing makes less of an impact than two years ago. The Publishing Trends survey reveals that nearly all book publicists (70.9%) claim to devote up to half their resources to online marketing, but that the New York Times and Publishers Weekly still make the most impact when it comes to publicizing new titles.

Publishing Trends emailed the survey early in January to publicists at publishers, independent publicity firms, and agencies, and sent a companion survey to members of the book-related media, both online and off. Though most publicists polled say they devote up to 50% of their resources to online marketing, 90% of the publicists working at publishing houses say they should be doing more.

While their publicity counterparts did not reach a consensus, media respondents consider online marketing a “must” for Technology, Travel, Business, Sci-fi, and Health titles. When asked to describe in their own words what the online book marketing world will look like in five years respondents predicted “smarter, more targeted practices,” “all authors MUST blog and have scheduled chats,” and “huge increase in digital content.”

What are the obstacles keeping publicists from doing more online marketing? Not having enough time to explore it (67.1%), cost (52.9%), lack of technology know-how (31.4%), and luddite bosses (5.7%) rank the highest.

For further information or a copy of the article, go to Reports Full Year Up 39% announced strong fourth quarter and full year results yesterday. Full year net sales increased 39% to $14.84 billion (35% excluding the $0.40 billion favorable impact from changes in foreign exchange) versus net sales of $10.71 billion in 2006. Full year operating income increased 69% to $655 million (61% excluding the $29 million favorable forex impact) versus operating income of $389 million in 2006. Net income increased 150% to $476 million in 2007, or $1.12 per diluted share, compared with net income of $190 million, or $0.45 per diluted share, in 2006. Press release

Other highlights from the press release included the following:
  • The Company introduced Amazon Kindle, a revolutionary wireless portable reader that provides instant wireless downloads of more than 90,000 books, blogs, magazines and newspapers to a crisp, high-resolution electronic paper display. The Amazon Kindle team is scrambling to increase manufacturing, as demand remains higher than supply. Kindles are being delivered to customers on a first come, first served basis.
  • Amazon MP3 added DRM-free music downloads from Sony BMG Music Entertainment and Warner Music Group, making it the only retailer to offer DRM-free MP3 music downloads from all four major music labels as well as over 50,000 independent labels. The MP3 store now includes over 3.4 million songs from more than 270,000 artists. Pepsi will debut the Pepsi Stuff Amazon MP3 promotion, a massive collect-and-get program, during the upcoming Super Bowl.
  • Over 330,000 developers have registered to use Amazon Web Services (AWS), up more than 30,000 from last quarter.
  • Adoption of Amazon Elastic Compute Cloud (EC2) and Amazon Simple Storage Service (S3) continues to grow. As an indicator of adoption, bandwidth utilized by these services in fourth quarter 2007 was even greater than bandwidth utilized in the same period by all of's global websites combined.
  • AWS launched a limited beta of its SimpleDB Service, which allows queries to run on structured data in real time. This service works in conjunction with Amazon EC2 and Amazon S3, collectively providing the ability to store, process and query data sets in the cloud.
  • AWS launched European storage for Amazon S3, allowing software developers and businesses to store their data physically in Europe. Amazon S3 is a storage service in the cloud offering software developers and businesses low-cost access to the same scalable and reliable storage infrastructure Amazon uses to run its own global network of websites.
  • North America segment sales, representing the Company's U.S. and Canadian sites, were $3.08 billion, up 40% from fourth quarter 2006.
  • International segment sales, representing the Company's U.K., German, Japanese, French and Chinese sites, were $2.59 billion, up 46% from fourth quarter 2006. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, International sales grew 35%.
  • Worldwide Media sales grew 33% to $3.33 billion in fourth quarter 2007, compared with $2.50 billion in fourth quarter 2006.
  • Worldwide Electronics & Other General Merchandise sales grew 58% to $2.21 billion in fourth quarter 2007, compared with $1.40 billion in fourth quarter 2006, and increased to 39% of worldwide net sales compared with 35%.
  • A record number of customers took advantage of Amazon Prime, the Company's unlimited free-shipping program. Amazon Prime is now available in the U.K., Germany, Japan and the U.S.
  • shipped over half-a-million units in fourth quarter 2007 on behalf of sellers who utilized the Fulfillment by Amazon service.
Notable comments from the conference call transcript (SeekingAlpha):

On their outlook:
For calendar 2008, we expect net sales of between $18.75 bllion and $19.75 billion, a growth of between 26% and 33%. This guidance anticipates greater than 200 basis points of positive impact from foreign exchange. GAAP operating income to be between $785 million and $985 million, or between 20% growth and 50% growth. This includes approximately $240 million for stock-based compensation and amortization of intangible assets. We anticipate 2008 consolidated segment operating income, which excludes stock-based compensation and other operating expense to be between $1.025 billion and $1.225 billion, or between 21% growth and 44% growth.
Some interesting comments on the Kindle from Bezos:

Well, the Kindle has a few experimental features that are -- some of which are visible on the Kindle. It has something call a Now-Now, where you can type in any question and using the Mechanical Turk in the background, which is one of our web services, that question gets answered and the answer to the question gets displayed on the Kindle. There is an experimental web browser on the Kindle, which is actually, for a mobile device, a pretty good web browser, and of course is has the Whisper Net EVDO connectivity, which gives you broadband wireless access to that web browser.
So there are a number of experimental features and we’ve put those on there and made them accessible to customers so that these early Kindle users can tell us what they think of those features, whether we should continue to invest in them, continue to work on them and make them part of the product.

And answering a question on Kindle demand:
Yeah, Kindle is, in terms of demand, is outpacing our expectations, which is certainly something that we are very grateful for. It’s also on the manufacturing side causing us to scramble. We’re working very hard to increase the number of units that we can build and supply per week, so that we can get back -- our goal is to get into a situation as quickly as we can where when you order a Kindle, we ship it immediately. That’s the standard we want to hold ourselves to and we are working very hard to get there. We are super-excited by the very strong demand.

Wednesday, January 30, 2008

Borders Australia

For those waiting for resolution of the review by the Australian Competition Commission, you will have to wait another week. No explanation given, although from the documentation on their web site it does look like they need more time to review additional material they have requested from A&R/Whitcoulls who are the likely purchasers. Feb 6th is now the expected date.

Tuesday, January 29, 2008

Executable ISBNs: Not As Dull As it Sounds

Exact Editions are doing some very cool things with magazines and they like to build technical solutions that solve interesting problems. They have been working with The Bookseller, and as a derivative of this work they came up with a way for ISBNs listed in some of The Bookseller publications to become executable. Why this is interesting is that the widget they have built effectively 'picks' up the ISBN of the static page and takes you to a web site which at this point is Google. (BTW, Exact Editions are using the same or similar tool to pick up things like phone numbers off the pages of the magazines in their e-Catalog).

The Bookseller produces a buyers guide which I liked so much we copied the whole thing for the US market when I was at Bowker. (Even down to the color coding). As a simple listing within subjects it always retained significant value for buyers. Enabling a user to click on an executable ISBN and create a list, learn more about the title, navigate to the publisher or a retailer makes this widget both really cool and really functional. And isn't that exactly what you want.

The application is still experimental and according to Adam Hodgkin at Exact Editions they showed The Bookseller staff the application and they liked it so much they put it up immediately; hence, they are likely to change how it works as they see how it is used. To see it click here and then go to the What's Hot nav bar and click on Buyers Guide. Chose one of the covers on the page. Once inside the guide, go to any pages and run your cursor over the page. Each ISBN will light up inside a green box. You are on your own from that point.

My thoughts expressed to Adam were as follows:
This bookseller thing is great. So easy. I think there should be a store front however instead of Google. I understand the agnosticism but if I am clicking on the isbn – effectively either looking for more information or wanting to buy – it could be an anti-climax getting steered to Google. What The Bookseller should do is build dynamic pages that once someone clicks on the Isbn they come to a retail outlet page where the user can see the book vended from four or five or six possible vendors. The Bookseller could sell each of these slots or storefronts. Perhaps also, the landing page could show more from that publisher which again would be potential ad sales
revenue for The Bookseller.
Booksellers and librarians who use these guides and who migrate their book browsing to the web will really enjoy using this application and it will be interesting to see how it evolves. The Exact Editions widget application could also be implemented at other publications - consumer magazines, newspapers, reviews publications for example - that will make it easier for consumers to create their own buy lists and shopping carts without having to scribble down titles or rip pages out of magazines.

Interestingly, the gap between The Bookseller site and Publisher's Weekly continues to grow to PW's disadvantage IMHO.

Haights Cross For Sale

Haights Cross, which went through a corporate recapitalization last year has announced that it is placing itself up for sale. From the press release on the company's web site:
Paul J. Crecca, HCC’s President and Chief Executive Officer, commented: “Upon the completion of our recapitalization in August 2007 and the constitution of our Board of Directors, we indicated we would evaluate all strategic alternatives, including the possible sale of all or substantially all of our assets. Throughout this process, the Haights Cross businesses and our committed employees have remained focused on providing customers with quality products and services, and thus strengthening their positions in the markets they serve. We believe that despite the current economic environment, these assets offer compelling value to prospective buyers.”

The company indicated that Evercore Partners would conduct the sale.

Monday, January 28, 2008

The Aussies aren't done with Beah

After last weeks rebuttal by Ishmael Beah regarding the points raised by The Australian newspaper, the journalists have come up with a point by point refutation of his argument. Essentially, they contend he still has not accounted for the fundamental inaccuracy in the book, and while the central element regarding his story is the length of time he served as a 'child soldier', other inaccuracies are also coming to light.

Commenting in their article The Australian says in part,

The Australian has believed that those inaccuracies were a result of Beah's memory being impaired by the trauma, drugs and extreme youth he describes in his book but the latest statement by Beah, who is now 27, and his publisher Sarah Crichton of Farrar, Straus & Giroux seriously misrepresent The Australian's reporting over the last week.

Beah is not going to change is story and perhaps there is a ready and acceptable notion in the minds of those familiar with the story that perhaps he suffered so much (and is a symbol of many other lost children) that we should therefore forgive some minor infraction. I was however, surprised at the view taken by Publisher's Weekly which effectively apologizes for every authors confusion with reality and fiction.
In this country, it's commonly known in the publishing industry that memoirs—even post–James Frey—are not stringently fact-checked; at most, they're submitted to legal departments looking for libel. Writers are responsible for their facts, and editors for probing their writers' hearts and souls and memories. In the case of A Long Way Gone, however, an excerpt (including the now-disputed dates) was fact-checked by the New York Times last January. “The fact-checking, as often happens, turned up a few discrepancies that were resolved without undermining the plausibility of his account,” Times spokesperson Diane C. McNulty said in an e-mail.
Apologizes but doesn't hold anyone accountable. PW goes on to say that in the memoir world no ones memory can be completely verified but in this case (and in countless others) just some basic fact checking might have raised a few flags. Note also, the incredible amounts paid for celebrity and political memoirs: Are we now to believe these might contain only a casual relationship to reality or are they true and close depictions of reality as the author knew it at the time. Possibly both. This book was sold as 'a truth' and in the pursuit of that truth it looks like anyone asking any pointed questions was patronized and rebuffed. Surely there are enough 'real' memoirs worth reading without embellishment and Long Way Gone is a case in point.

Hold on to your Sari

Reaction to the news that Mills & Boone are entering the Indian marketplace with a direct publishing operation could elicit a 'Duh!' especially, if you had any exposure to a Bollywood movie. Harlequin, owners of M&B has announced that they will be publishing locally produced romance titles in India later this year. The task looks slated for success on a number of fronts not least of which are the potential size of the Indian market and the veritable feast of potential story derivations. In fact, all they will need to do is copy the scripts of the 300 or so movies that are released each year and they will be on a winner.

From the TimesOnline:

“India is crazy about true romance,” Andrew Go, the head of the Indian operation, said. “Look at the basic Bollywood plot: boy meets girl; conflict; happy ending. We carry across that trend. We say we sell four books a second, Actually it’s 4.4. If I can take that to five, I’m a hero.”

India has the potential to hit Mr Go’s target: the popularity of the country’s lending libraries is declining as India’s burgeoning middle class opts to buy rather than borrow.

Interestingly, the expectation for success continues to rely on printed products. It will be interesting to see if Harlequin sees more rapid growth in their electronic products in this market where travel and access to products is still a challenge.

The company plans to follow formula similar to their developed markets which will include solicitation of local authors. They intend to offer some guideance to aspiring authors on the site. One thing they will change is to lower the hear somewhat which is unlikely to please Richard Gere.

Sunday, January 27, 2008

For the Reader Who Has Everything

Tom Stoppard in the NYTimes this morning about his book satchel by T. Anthony. So, if you are wondering what to buy that avid reader, or if you are like Mr & Mrs. PND who, when travelling on vacation distribute their travel reading material across several suit cases, this is the gift for you. Unfortunately, T Anthony stopped making the book satchel many years ago and so you may be SOL. I quick check on Ebay this afternoon proved fruitless.

Friday, January 25, 2008

McGraw Hill Results

McGraw Hill reported their full year results on Thursday with revenues and net income up versus 2007. Revenues for 2007 of $6.8Billion were 8.3% higher versus 2006 and 2007 net income of $1.0billion was 14.9% higher versus 2006. Their stock price also got a kick on their more encouraging outlook for 2008. The company said they expect revenue growth in 2008 of 6% to 8% at McGraw-Hill Education and Information & Media, and a 2% to 4% increase at Financial Services. This exceeded analysts expectations.
Shares rose as much as 12.5 percent. Chief Executive Harold McGraw said he expects the U.S. economy and capital markets to show signs of recovery in the
second half of 2008, though a "housing recession" will likely persist all year. McGraw-Hill also publishes school textbooks and magazines such as BusinessWeek,
and owns researcher J.D. Power & Associates.
Despite these full year numbers, the company's results were significantly impacted by a slow fourth quarter - mainly due to the slow-down in credit market - and net income was almost half the level the company recorded in 2006. Revenues were off 1.5% versus 2006.

Other highlights from the press release:
Education: "Revenue for this segment in 2007 increased 7.2% to $2.7 billion compared to 2006. Operating profit in 2007 grew by 21.5% to $400 million. Included in the segment's 2007 operating profit is a pre-tax restructuring charge of $16.3 million in the fourth quarter for severance relating to a workforce reduction of 304 positions. In 2006, there were pre- tax restructuring charges of $5.6 million in the third quarter and $10.4 million in the fourth quarter.

Financial Services: "Revenue for this segment in 2007 increased by 10.9% to $3.0 billion compared to last year. Operating profit grew by 13.1% to $1.4 billion. Included in the segment's operating profit is a pre-tax gain of $17.3 million on the divestiture of a mutual fund data business in the first quarter and an $18.8 million pre-tax restructuring charge in the fourth quarter consisting mostly of severance relating to a workforce reduction of 172 positions, driven by the current business environment, as well as the consolidation of business support functions.

Information & Media: "Revenue for this segment in 2007 increased 3.6% to $1.0 billion compared to last year. Operating profit grew 27.2% to $63.5 million. Included in the segment's 2007 operating profit is a pre-tax restructuring charge of $6.7 million in the fourth quarter for severance relating to a workforce reduction of 114 positions. In 2006, there were pre- tax restructuring charges of $5.7 million in the third quarter and $3.0 million in the fourth quarter. The operating margin for 2007 was 6.2% versus 5.1% in 2006. Foreign exchange rates did not have a material effect on revenue, but reduced operating profit growth by $4.6 million.

Pearson Get Merger Clearance with Divestitures

Pearson received clearance from the US Justice department for the completion of their $950million acquisition of Harcourt Assessment which they purchased from Reed Elsevier. The court required that they divest a number of products which on the surface appear inconsequential to the entire deal. From PRnewswire:
"Without the divestitures obtained by the department, purchasers of clinical tests for adaptive behavior, speech and language, and adult abnormal personality likely would have faced higher prices and reduced innovation as a result of this transaction," said Thomas O. Barnett, assistant attorney general for antitrust, in a statement.
Under the terms of the proposed settlement, Pearson and Harcourt must divest: Harcourt's adaptive behavior clinical test, the Adaptive Behavior Assessment System; Harcourt's adult abnormal personality clinical test, the Emotional Assessment System, which is under development; and in the speech and language clinical test market, either Pearson's Comprehensive Assessment of Spoken Language and the Oral and Written Language Scales or Harcourt's Clinical Evaluation of Language Fundamentals. Under the proposed settlement, the Department's Antitrust Division must approve the buyer of each of the divested assets.
Given the breadth of the Harcourt and Pearson assessment offerings this resolution looks inconsequential; the subject areas are fairly narrow and specialized. Also, the release doesn't indicate whether Pearson is precluded from competing in these segments at some point in the future. There is likely to be any number of potential buyers - Reed Elsevier may buy them back, Wolters Kluwer may also be interested given their existing health titles.

Thursday, January 24, 2008

A Marathon

My friend and one-time collaborator is running the London Marathon and is looking for sponsors. Here is his note:

After my 37 years in the business, I'm running the 2008 London Marathon for the UK book trade's welfare charity, BTBS. You can make a contribution at [or see below if you don't like using a card online.] Since I did my last Marathon aged 50 (and before that, at age 40), 2008 - at 60 - is appropriate, I guess. As you will know, BTBS is a very small charity and every little bit helps proportionately much more!Best as ever - and thanks in advance for anything you care to contribute. Michael

So as my mother in law would say 'take the rubber-band off your wallet' and give him and the charity some help. If nothing else wish him well. Last year it was very hot.

Shared Book And Random House

In what I expect with be the first of many similar relationships, SharedBook has formed an alliance with Random House to create personalized versions of Children's books. The Pokey Little Puppy will be the first title in this new venture.
Utilizing SharedBook's Reverse Publishing Platform, consumers can now create a unique, personalized version of The Poky Little Puppy by using an online book-making template. Consumers can create their own version of The Poky Little Puppy complete with a custom dedication and also upload a personal photo to the front of the book. The book is then purchased and sent to the printer for on-demand output in laminated hardcover format.
I saw a sample of this product several weeks ago and other than the personalization the book is indistinguishable from a book found on the shelves of any bookstore. The binding, boards, ink and color qualities are all of a high level as you would expect from a product from Random House.
The price for a unique, personalized edition of The Poky Little Puppy is $25 in laminated hardcover format, which includes standard domestic shipping. Completed books arrive in 10-14 business days. Expedited shipping options are available for an additional charge.

I interviewed Caroline Vanderlip, CEO of SharedBook a few months ago and here is her interview.

Wednesday, January 23, 2008

Beah Strongly Denies Any "Poetic License"

Ishmael Beah strongly denies any of the assertions raised in The Weekend Australian's about the accuracy of his memoir/autobio A Long Way Gone. Here is the text of his statement released yesterday on his website.

19 Union Square West
New York,
NY 10003
January 22, 2008
For immediate release

For months I told Bob Lloyd and The Australian’s reporter, Shelley Gare, through my publisher, my agent, and my adoptive mother, that unfortunately they were wrong, that the man they claimed was my father was not my father, and that my mother and brothers were not alive, as Lloyd claimed. Last week, when The Australian sent reporters to my home in Sierra Leone, they were forced to cknowledge that this has been a hoax.

Now The Australian’s reporters are trying to raise questions about the dates in my book, A Long Way Gone, regarding when the war came to my village. They offer as "proof" a man named Mr. Barry who claims to have been the head of the school I attended when I was young. I have never heard of a Mr. Barry. The principal of my school was Mr. Sidiki Brahima.

The war in Sierra Leone began in 1991. My story, as I remember it and wrote it, began in 1993 when rebels “attacked the mining areas” (my words from the book) in my village while I was away with friends. I never saw my family again. The Australian, presumably, is basing their defamation of me on reports that the Sierra Rutile Mine was closed down by rebels in 1995. But there were rebels in my region, my village, and my life in 1993. They attacked throughout 1993 and 1994 before closing down the mine.

Others from Sierra Leone can bear witness to the truth of my story.

Leslie Mboka, National Chairman of the Campaign for Just Mining in Freetown, was a counselor at Benin Home, the rehabilitation center in Freetown, Sierra Leone, which I entered in January 1996. He told this to my publisher, Sarah Crichton, on the telephone today:

“A gentleman named Wilson was here investigating regarding Ishmael Beah’s book, and I told him emphatically - emphatically- that Ishmael’s accounts are accurate and correct. Wilson was going to Mogbwemo to find out if Ishmael Beah’s family was alive. When he came back to Freetown, he said he couldn’t find anyone alive, and the man who said he was Ishmael’s father was actually just a relative. But then he asked, what about confusion with the dates? And I said, there is no problem with the dates.

The rebels made sporadic attacks on the mining communities between ’93 and ’94, leading up to and in preparation for the major assault in ’95. In fact, military personnel were deployed to the area because there were these sporadic raids. Ishmael was caught in one of the earlier attacks. I told all this to Peter Wilson. I told him everything that Ishmael wrote is accurate and completely factual, and I explained to him what was confusing him. I do not understand what his paper’s agenda is. I do not understand why they are trying to blackmail this brilliant and honest young man.”

Mboka was contacted by The New York Times when they fact-checked the excerpts of my book which they published. His testimony did not appear in The Australian’s reporting.

Tuesday, January 22, 2008

Beah and Publisher Sticking to it

As noted on Saturday, The Australian newspaper is asking some very pointed questions about material facts in the A Long Way Gone memoir/autobiography written by Ishmael Beah. Reports today in Publishers Lunch and Publisher's Weekly have not shed anymore light on the issue. Beah has written to the editor of The Australian (but it hasn't been printed) and the author, publisher and agent all stand by the story.

This article takes the questions minutely forward from the earlier two articles noted in the post below and also contains a quote from the creative writing professor who helped Beah write the book:
Creative writing professor Dan Chaon, who helped Beah produce the book, told The
Australian: "If it turns out there are factual errors, I wouldn't necessarily be all that concerned about it."

In his book, Beah says his home town, the mine where his father worked and his mother's town were all attacked in January 1993. He and a group of friends were then waiting in Mattru Jong for news when a Catholic priest was ordered by the rebels to deliver a message telling people in the town to co-operate with the rebels. Many people fled immediately; two weeks later, the rebels attacked from a surprise inland route, leaving only one unanticipated escape route on a footpath through a nearby swamp.

That is exactly what happened in 1995, according to the adult witnesses, internal records at the mine and numerous published sources.

More than likely there is more to come of this and there is more news expected today from the publisher.

Post: A Thousand Little Pieces?

Pearson Full Year Above Expectations

Pearson announced this morning in their routine trading update that the company continues to perform well and that they expect to produce record profits for the full year (2007). The elaborate that the company has seen both sales growth and margin improvement leading to strong case generation and improvements in capital employeed.

Management has noted that education is having continues to perform well competitively and that they will have their best year ever in this segment. Their other groups, FT Group, FT Publishing and Penguin also performed well due to growth in advertising, subscriptions and publishing program.

As a result of this operating performance they expect to report at or above the top end of market expectations even taking into account the weakened US dollar.

"This is another excellent performance across all our businesses and on all our financial measures. We have produced another record year and our third consecutive year of underlying earnings growth in the mid-teens or higher. Over this period we have changed the shape of Pearson, invested in our future growth and made the company more efficient and more resilient. Those moves make us confident that we will sustain our financial and competitive progress in 2008."

Press Release

Monday, January 21, 2008

Quebecor Fails - Update

The banks have stepped in after the Quebecor was placed in receivership early Monday. The Globe and Mail says it best:
A rescue financing backed by parent Quebecor, run by Mr. Peladeau, and restructuring fund Tricap Partners was just too cute by a half for banks that had, until August, been willing lenders. Quebecor World carries $2.5-billion of debt. Mr. Peladeau misread the sea change in sentiment among lenders that has come with the credit crunch.
It is likely that the company will be sold up in the short term as soon as the existing lenders can get as much as they think possible for the debt they own. Existing shareholds - primarily Mr Pelaseau's holding company may get nothing.

A Canadian judge has agreed to allow the company to seek protection and the company is likely to receive the same protection this morning in New York.

An update and more background from The Toronto Star. Sees Huge Self-Publishing Growth

I am a big fan of's publishing solution. I have used it a number of times to produce high quality photo books and I currently have three more elaborate projects I am working on. Not only is the software easy to use, it provides a powerful set of tools that enable a wide variety of layouts and customization. I recently recommended Blurb to someone who have completed a safari in Africa and I have been trying to get Mrs PND to include the product in her Interior Design business. Other products exist in this segment including and but I have found Blurb to be the easiest to use. has released impressive figures on the number of titles they published during 2007. Approximately 80,000 titles were produced by this publisher during the past year which dwarfs the numbers of new titles published each year by traditional publishing houses.
“Blurb is redefining how success is measured in publishing,” said Eileen Gittins, Blurb’s founder and CEO. “For some, success is creating a book that helps raise money for a foundation, for others it might be selling 25 copies of one’s own book, and for still others it might be a marketing piece like an event book or portfolio. Unlike traditional publishers whose economics drive a focus on the best-seller, Blurb is expanding the book market to include books for millions of very small, niche markets.”
The market for these titles extends from people like me who produce one or two printed titles to others who may print several hundred to support a business or seminar program. The flexibility and variety enable all kinds of applications and it is entirely possible that the market is yet only partially satisfied. Driven by the continued growth in digital camera sales and the adoption of images into a much broader array of applications - from facebook to phones to blogs is likely that Blurb and other companies like it will continue to see rapid increases in usage. More people are taking more photos and using the photos in more places.

My family has boxes of slides from 40 yrs of travels; I am looking forward at some point to scan these and reinvigorate this family history. Over Christmas I went in search of this collection and found them somewhat discarded in a box in the attic. Not only are products like Blurb for current collections but with a little application they can be applied to older collections of images as well. Working with Blurb becomes a new type of hobby and since you can also add text as well is an increasing number of sophisticated self-publishers out there.

Other posts
Blurb and Self-Publishing
Blurb USAToday

Sunday, January 20, 2008

Ten Things About Cormac McCarthy

The London Times has a profile of Cormac McCarthy which lists ten things you may (probably) don't know about 'America's greatest living writer'.


Saturday, January 19, 2008

Is A Long Way Gone Just A Thousand Little Pieces?

An investigation into some of the key facts underlying Ishmael Beah's autobiography A Long Way Gone suggests that his experiences in war torn Sierra Leone may not have happened the way they are described in the book. Among the assertions that The Weekend Australia raises are that Beah was two years older when he went to war than he states in the book (15 versus 13) and instead of being in the army for 2 years it may have been only 2-3mths. There are other factual details that on investigation by The Weekend Australian tend to undercut critical and important facets of Beah's story.

Thus far, there has been no response from Farrar, Straus and Giroux the US publisher and I hope there is some reasonable explanation for the identified problems in this book. Beah has gone on to become a United Nations advocate for children affected by war as well as a frequent spokes person in support of his book. This is important work and it would be horrible if this work were impacted. The Australian is an important news organization in Australia so they will not have taken this story lightly.

The disparities in Beah's account came about through some very elemental research by someone who had just read the book and then found themselves working in Sierra Leone. It doesn't appear that it took too much effort to find these errors. It remains to be seen if this escalates into a Frey type melt down or the record is corrected in some minor inconsequential way.

More from The Australian: Here

Monday Update: Here

Friday, January 18, 2008

Quebecor Update

A report in the Canadian Financial Post suggests Quebecor's stock may be delisted if the company isn't able to comply with listing requirements that have been specified in a 'terse' letter to the company. Truthfully, this could be the least of their problems since the article believes that existing investors in Quebecor are unlikely to accept the recently announced rescue plan. The existing debtors may be unwilling to allow the company to collapse and will seek to negotiate a better deal for themselves - at least given the circumstances.

Failing the Test

Pauline Vu of takes a look at the impact and variation in federally mandated testing programs (Article). This is an interesting report for anyone involved in education and specifically testing as she documents how different are the approaches to testing undertaken by different states. Perhaps no news to education publishers, but she notes that the testing market has grown from $400mm to over $1.1bill in the years since the passage of no child left behind (2001). It follows then that the largest publishers have invested heavily in this segment and that the business is dominated by the top five education publishers. From her article:

Much of the work is done by five giants: CTB/McGraw-Hill, Educational Testing Service, Harcourt Assessment, Pearson Educational Measurement and Riverside Publishing. Together, the companies own about 90 percent of the state-testing business, which has become a $1.1 billion industry since passage of the federal No child Left Behind Act in 2001. The law, which took effect in January 2002, requires states to give annual reading and math tests to third- through eighth-graders, and to test students in those subjects once again in high school
The absence of both Federal guidelines and consistency from state to state has also created significant disparity in testing approaches and effectiveness. This coupled with a tendency to manipulate the test outcomes - thereby making the educators look more effective - has some worried that the objectives in the testing program are compromised.
“States are not putting any more resources into the testing infrastructure, and as a result, we are getting testing on the cheap, and that is working against No Child Left Behind’s efforts to produce high-quality assessments that promote higher standards,” said Thomas Toch, the co-director of Education Sector, a nonpartisan think tank. “If we’re going to make tests the driver of quality in public education, then we need to invest to ensure that we get tests that are up to that task.”
There is little doubt that the testing business will continue to grow. In the absence of 'no child left behind' teachers and administrators have now 'drunk the cool aid' and understand that they can use testing to their own advantage. Ironically, without uniform objectives, practices and policies it is the students who will be left disadvantaged. There is much more in the article.

One Man's Trash...

I admit it, I have been known to pick up a discarded book from the sidewalk on occasion. The Times this morning tells us how books have become the new 'recyclables' for some of the city's homeless and down and outs. No suggestion that these budding entrepreneurs are reading the books they collect from rubbish and recycling, but they do trot down to The Strand and cash them in. Sometimes they get lucky, and relationships count in this game: One resourceful chap received $600 for a set of leather bound books.

Courier Struggles

Courier corporation was the latest printer to forecast lower results. In a statement yesterday, the company said its first quarter profit declined on slow textbook orders and low Creative Homeowner book sales. The company lowered its fiscal year 2008 outlook and as a result the stock price was hammered (but then so were a lot of them). The company reported first quarter net income of $1.4mm versus $4.0mm in the same period last year.

From the press release:
"We were hit by simultaneous challenges on both sides of our business this quarter," said Courier Chairman and Chief Executive Officer James F. Conway III. "In book manufacturing, despite all indications pointing to another full year of strong sales in education, textbook reprint orders were unexpectedly slow this fall, sharply reducing the segment's capacity utilization and profitability even as we continued to gain share. Normally, publishers order textbook reprints during the fall to spread manufacturing workloads throughout the year, but this year a variety of industry factors significantly reduced that order flow. In publishing, Creative Homeowner sales continued to be held back by reduced consumer traffic at home improvement centers, its most important sales channel.

The stock is trading at $26.01 which is a 52week low.

Thursday, January 17, 2008

George Wins Lottery

I once went to a George Michael concert. It really wasn't my fault. The seats were free and Mrs PND really wanted to go. It was horrible. In fact, it was so bad I can still recall it vividly even though this was 1990.

Despite me, George went on to build a huge solo career and release popular albums during the 1990s. He hasn't done much recently unless you count arrests for recreational drug use, driving while intoxicated and performance of lewd acts in public. Some might say he was better at those than singing. Certainly more consistent. George was in the last episode of Extra's where he basically owned up to all of those 'errors of judgement' in a very hilarious way. Well done George.

Yesterday his autobiography became another in a long list of expensively purchased celebrity blather. I am sure everyone is all a twitter about whether George is going to name names and that can really be the only reason why any publisher would consider this a potential commercial success. According to Harpercollins, George is one of the most popular pop figures in the world and has an 'extraordinary story' to tell. They forgot to add the bit about 'humble upbringings' and his 'life of adversity'. HC has paid 'millions' and the deal is 'one of the biggest ever concluded in British publishing'

Will the book soar into the stratosphere or plummet like a stone. One thing is certain, I did my part back in 1990 and the book is not getting into the PND household. What more could he have to say that we don't already know?

Press Association

Wednesday, January 16, 2008

Jobs Kicks the Kindle

In the bits blog on the NYTimes Steve Jobs gets it right for the Kindle but for all the wrong reasons:

Mr. Jobs can be like that when he assesses the competition.

Today he had a wide range of observations on the industry, including the Amazon Kindle book reader, which he said would go nowhere largely because Americans have stopped reading.

“It doesn’t matter how good or bad the product is, the fact is that people don’t read anymore,” he said. “Forty percent of the people in the U.S. read one book or less last year. The whole conception is flawed at the top because people don’t read anymore.”

Unfortunately, that's hard to take seriously and I would have expected better. I would always have given Apple and Jobs more credit in understanding market dynamics and trends. On the surface his comment is partly accurate, but there is no cause and effect here.

Does this mean we aren't about to see books on the iPhone in quantity? Of course, it could be misinformation.

From another perspective, it has been the media industry and the publishing community specifically that has kept this company (Apple) relevant for the past 15years (at least) via their loyal devotion to the Mac platform. To all those dedicated authors, marketing and design professionals in the publishing industry locked into the Apple mystique this comment should come as a kick in the processor.

Future of Bibliographic Control

Biblio data providers will be beating a path to the Library of Congress site in the next few days in their collective effort to foresee the future of bibliographic data. The Report is now available for review and certainly the commercial providers, who did not participate in the development of the report, will be anxious to know what the library community sees in their crystal ball.

Here is a sample from their executive summary:

The Working Group envisions a future for bibliographic control that will be collaborative, decentralized, international in scope, and Web-based. The realization of this future will occur in cooperation with the private sector and with the active collaboration of library users. Data will be gathered from multiple sources; change will happen quickly; and bibliographic control will be dynamic, not static.

The Report is based on the key premise that the community is at a critical juncture in the evolution of bibliographic control and information access/provision. It is time to take stock of past practices, to look at today’s trends, and to project a future path consistent with the goals of bibliographic control: to facilitate discovery, management, identification, and access of and to library materials and other information products. Libraries must work in the most efficient and cooperative manner to minimize where possible the costs of bibliographic control, but both the Library of Congress and library administrators generally must recognize that they need to identify and allocate (or, as appropriate, reallocate) sufficient funding if they are serious about attaining the goals of improved and expanded bibliographic

The report also states that they want the report to generate a wider discussion - a "call to action" that will lead to more specific plans and recommendations.

Cruising for a Lawsuit

Readers in Australia, UK and New Zealand will not be able to read the new Tom Cruise bio written by Andrew Morton. Fearing a threatened $100mm lawsuit, the Pan Macmillan business units in those countries are backing off. According to the book, Cruise is not gay, is second in command of the church of Scientology and (more bizarrely) his current wife was impregnated with the sperm of Scientology founder L. Ron Hubbard. Through a combination of web reports and Youtube, readers in the UK, Australia and New Zealand will be able to get the essential elements of the book without actually having to buy it. In that respect, they might have an advantage. Having said that, there is so much 'leakage' in the antipodean market that booksellers will continue to import the title direct from the US. The Dymock chain said earlier this week that they would not stock the title but many other retailers are likely to order it.


Edge Boston (Where they name the author 'Thomas' Morton).

Pearson Near Sale of FT Deutchland

Pearson invested in a German language version of the FT in 2000. The company reports that the edition has had some success but remains steadfastly unprofitable and for the past year they have been trying to off load it. Late last year, the company appeared to have a sale (Spiegel) but that deal fell through. German newspaper Frankfurter Allgemeine Zeitung is reporting that the German partner in this deal with Pearson will buy them out. According to reports Gruner + Jahr will pay next to nothing for the deal. Reuters.

Bloomsbury Guidance

Bucking the trend in yesterdays stock melt-down, shares of Bloomsbury Publishing rose on the back of a report from the company that operating results would be better than anticipated. The company is the publisher of Harry Potter but has invested broadly over the past 12 months in advancement of the series' denouement. The company reports that several specific titles, investments in the US and Germany and a number of key rights sales have contributed to the expected full year performance.

Full year results will be released on April 1st.


Tuesday, January 15, 2008

LiveMocha Update

I wrote recently on a social networking approach to language learning which I thought we quite innovative. LiveMocha, the site I looked at had launched at an innovators conference in September last year and the company just announced they have received over $5mm in equity funding to expand the business. Noted in the announcement is that the lead investor is Maverson which is the vc firm of Starbucks founder Howard Schultz.

Seattle Post

Prior Post

(I am personally interested in this due to my work at Berlitz many years ago).

Amazon: The law est un idiot

Per expectation, Amazon's operations in France have elected to pay the silly amount of $1500/day as a fine for continuing to provide free shipping to French customers. You know, this is how revolutions get started...

As the Trib notes, this fine will be reviewed after 30 days and if the government(court) really wants to penalize them the fine will be raised substantially and so will end this symbolic effort. However, perhaps the court will recognize the ground swell of support (after all who wants to pay for something they could get for free - even the French agree that) and take the view that this is a archaic rule. Perhaps they will be enlightened and lower the fine.

From the Trib:
The 1981 Lang law was passed at a time when booksellers were losing sales to supermarkets and other new competitors. It was meant to assure that the French public had equal access to a wide variety of books, both high-brow and low-brow, not just heavily marked-down publications. The law has twice come before the European Court of Justice and both times it has been affirmed. The law is not considered anti competitive because all book retailers are held to the same standard, Manara said. In the Amazon case, a union of French bookstores won its lawsuit against the company last month over the free-shipping offer, which applies only to deliveries within France on book orders of more than €20.

Stay tuned to this riveting story.

Quebecor Gains Lifeline

Predictably, the Canadian printing giant Quebecor World has received a life line from their corporate owner Queborcor Inc and private equity firm Tricap Partners. Quebecor will receive $400mm in funding which will enable the company to focus on an operating and financial reorganization. Quebecor is by no means out of the woods as they are carrying an estimated $2.5billion in debt and they have some significant operating issues to address.

Some analysts had suggested that declaring bankruptcy would have been both a better course of action and a recognition of the inevitable. Management and the primary owner believed bankruptcy to be the worse possible option. According to The Canadian Press, Tricap has been involved in a similar rescue in Canada when they stepped in to provide funds for Steelco which was in administration at the time.

Globe and Mail - Updated

Other posts

Sunday, January 13, 2008

Queen Victoria On The Hudson

Interupted by the persisent whine of the helicopters, I looked up from my newspaper around 7am to see this thing sliding up the Hudson on its maiden visit to NYC. It is quite a monster.

Serves 8 to 10

I have often said that caramel is the desert equivalent of bacon but I never thought you could put the two together. Apparently, this is a dish that can't be ruined. You got that right! From The New York Times magazine:

Caramelized Bacon
You can make this up to 3 days in advance. Keep in a tightly sealed container at room temperature. This is a dish that can’t be ruined. You can freeze the leftovers. But why are there leftovers?

1 pound bacon
1 1-pound box light brown sugar (about 2 ¼ cups).

1. Go to a butcher and spend as much money as you have on very good bacon. Cut it into medium-thick slices, say, 3\16 of an inch.
2. Preheat the oven to 400 degrees. Line a large, rimmed cookie sheet with parchment paper. Dump a box of brown sugar into a big bowl. Light brown sugar is best, but if you want to use dark brown, I won’t stop you. Add ¼ cup of water, so that the sugar becomes more than damp but less than soupy. Some bacon caramelizers add a dash of cayenne pepper, but I think this makes the dish too nutritious.
3. Dredge the bacon in the sugar, one slice at a time. If the sugar isn’t sticking to the bacon, add some more water a teaspoon at a time until it sticks. (By the way, you won’t use all of the sugar, but it’s good to have extra.) Place the bacon strips on the paper. I then smear some sugar on top of the bacon, on the theory that if a little sweet is good, more is better.
4. Place the bacon in the oven. It’s impossible for me to tell you how long to cook the bacon because it depends on whether you like it chewy or crispy. Some recipes tell you to keep it in the oven for 8 to 13 minutes per side, depending on the thickness of the bacon. I keep it in on the longer side. You should take yours out when it resembles the kind of bacon you would like to eat. Cut it into roughly 1 1/2-inch triangles. Serve at room temperature. Serves 8 to 10.

Of course, had I been more inspired I would have pictures; but it is just a matter of time.

Friday, January 11, 2008

Borders Reports Holiday Sales

Borders reported consolidated sales increased 3.9% for the nine week holiday period versus the same period last year. Domestic superstores sales increased 6.5% and same store sales increased 2.4%. Books increased a "solid" 3.4% on a comp basis and the company saw large increases in Seattle Coffee and Paperchase revenues. Compatible with the holiday results reported by B&N, Borders also saw a significant drop in Music. Same stores sales at Walden were essentially flat but the group was significantly lower in total due to an aggressive program of store closures. The company has 136 fewer Walden outlets than at the same time last year.

These results reflected 'continuing operations' and the company included international operations in the press release. International revenues increased 36% including currency gains. Sames store comps were driven by strong performance in Australia. (It makes one wonder why they need to sell up down-under but I've already made that observation).

The real crux of these results is the impact they have on operating margin and as B&N were sanguine about their full year results and adjusted eps accordingly, this is what George Jones had to say about Borders results:
Still, the overall holiday shopping environment was intensely promotional and impacted the bottom line more than we anticipated. As a result, we anticipate fourth quarter consolidated operating earnings per share from continuing operations (excluding non- operating charges and discontinued operations) to be flat to down slightly compared to last year's $1.45 per share (excluding non-operating charges and discontinued operations). Overall, we continue to move forward with confidence in our strategic plan for a turnaround of the company and are encouraged by the progress we are making."

Borders will report in March.

The Riverdeep Deal

The Irish Independent takes a look at the Riverdeep deal and concludes that if all the pieces fall into place Barry O'Callaghan's stake in the business could soar to $2.2bn. Davy, which is the broker for Riverdeep, comments in their offering document that "equity investors could potentially double their investment over the next two years". They go on to explain how this may occur via various an exit strategy options:
While the broker said it is too early to discuss how investors will realise gains, potential exit strategies over the next two to five years include a stock market flotation in America or a trade sale "to a large international publishing company such as Newscorp or Viacom". It said a third option of refinancing the group is the least likely route, given the current state of the debt markets and EMPG's relatively high existing debt.
In the Independent article all so notes the potential for cost and efficiency gains that are assumed in the combination of HM and Riverdeep.

Thursday, January 10, 2008

BISG Wants Your Comment on Digital Content

Michael Healy, Executive Director of BISG has announced the publication of a discussion paper on the Identification of Digital Content. The paper was written by Michael Holdsworth who is working as a consultant in the UK and was with Cambridge University Press.

Here is the executive summary and I encourage you to contact BISG with comments. (Report)
The identification of digital book content A discussion paper commissioned by the Book Industry Study Group and Book Industry Communication and prepared by Michael Holdsworth.Executive summary Although there are strong similarities between the identification needs of physical books and of digital book content in the supply chain, new business models and new delivery channels challenge existing practice. There is a pressing need for clarity on the use of standards for the identification and description of digital products.The International Standard Book Number (ISBN) is considered fit for purpose for trading,discovery and reporting of digital products within the supply chain.Every digital manifestation traded separately should be assigned an individual ISBN and publishers should adopt the principle that products should be separately identified to the extent that they need to be so identified.The Digital Object Identifier (DOI), though not in any way a substitute for an ISBN, is a valuable additional identifier which enables content to be “discovered” on the Web.Publishers and others should explore the possible opportunities for using the International Standard Text Code (ISTC) as a means of collocating different manifestations of the same textual work.Publishers should review their practices relating to the assignment of identifiers, particularly where a digital product is traded through an intermediary and accurate reporting of sales is required for royalty payments or management information.The practice of using a single ISBN for all digital manifestations of the same work is strongly discouraged.The use of “ISBN‐like” 13 digit identifiers other than those properly assigned by the ISBN agencies is strongly discouraged in all circumstances.

Trading Update from B&N

B&N's aggressive sales year ran into choppy waters over the holiday period and as a result they have reduced their full year eps guidence. They do note however the full year eps target is still higher than the target they set at the beginning of their fiscal year. Full year results will be released on March 20, 2008. From the press release:
Barnes & Noble store sales for the nine-week holiday period from November 4, 2007 to January 5, 2008. were $1.2 billion, a 4.1% increase over the same period in fiscal 2006. For the 48 weeks ended January 5, 2008, Barnes & Noble store sales rose 4.8% to $4.3 billion, while comparable store sales increased 2.0%.

Barnes & comparable sales increased 10.9% for the holiday selling season and totaled $129.4 million. For the 48 weeks ended January 5, 2008, Barnes & sales were $428.8 million, representing a comparable sales increase of 12.8%.

Based on holiday sales results and January sales trends to date, the company is reducing its earnings per share guidance to $1.57 to $1.76 and $1.81 to $1.99 for the fourth quarter and full year, respectively. The company’s previous earnings per share guidance was $1.67 to $1.86 and $1.91 to $2.09, for the fourth quarter and the full-year, respectively.

Wednesday, January 09, 2008

Supreme Court Says No to Copyright Law Review

From MediaPost:

The Supreme court has refused to review a case that may have resulted in declaring an element of copyright law unconstitutional. (Lots of 'ifs' there). From the article:
In the case, Internet Archive founder Brewster Kahle challenged the copyright protection given to so-called "orphan" works, or material for which the owner can't be found. Currently, if Kahle or other Web companies post such material, but the owner later steps forward and sues, the companies can't defend themselves on the grounds that they couldn't locate the owner. Kahle, represented by the Center for Internet and Society at Stanford, had hoped to change that by arguing that the law protecting orphan works--passed before widespread Internet access--violated the First Amendment.

News From England: New Fairy Tales

The UK produces a number of great newspapers. In recent years, the larger national newspapers have produced their respective big versions on Saturday rather than Sunday. This allows readers to meander over the paper through the entire weekend. All continue to publish on Sunday but it is the Saturday version that is my preference. Leaving London on Saturday after spending two weeks with the family, Mrs PND and I loaded up on three of the big dailies.

There is a lot of publishing industry and book related news in these newspapers. This weekend The Times reported on the ranking of the top 50 best post war British writers. Philip Larkin was ranked at the top of the list for those who care. Personnally, I only have a casual interest in lists like these. I think the composition of these lists is subject to whim and justification is hard to fathom. Here is how they put it: "Because there is no scientific method for making such a list in the correct order, we applied no scientific method. But we considered a number of factors — sheer quality of writing, longevity, lasting impact and, naturally, commercial success." The Times asked a number of current authors to write some of the profiles which is an interesting twist.

Other interesting news in The Times was the news that the BBC is developing several bo0k derived projects. Unknown in the US, Arthur Ransom wrote a series of adventure titles for boys and girls refered to as Swallows and Amazons. I found these titles when I was eight or nine and loved them. The BBC is close to gaining options on all 12 titles. From the article:

Inspired by the success of The Dangerous Book for Boys, the BBC is betting that camping, fishing and messing about in dinghies will seem as thrillingly exotic to modern children as any special-effects-laden superhero movie. The producers believe that the resourceful young heroes of Swallows and Amazons and the book’s idyllic Lake District setting possess an allure that they did not have when the tale was last filmed in 1974, before childhood hobbies became as sedentary, solitary and technology-driven as they are today.
Unknown to me until I read this article was that Ransom married Trotsky's secretary and spied for the Bolsheviks. Who knew?

The BBC is also broadcasting new versions of old fairytales. This effort is similar to their ShakespeaRe-Told series which ran on BBC American early last year. The BBC will broadcast Rapunzel on Thursday in the UK and I suspect it will be here soon. From The Times tv guide:

After the success of their updated Chaucer and Shakespeare dramas, the BBC have set their cross hairs on the fairy tails of the Brothers Grimm, Han Christian Andersen and Charles Perrault. Fairy tales work on subconscious levels, quite unlike normal stories and plays. Their plots are weird and the characters are symbolic rather than human. For Rapunzel, the writer Ed Roe has concocted a farcical little fantasy about a useless Eastern European tennis player who pretends to be a woman in the hope of beating Rapunzel the long haired woman's champion.
All told an interesting weekend in the British press for publishing. Rent the Shakespeare titles if you can find them.

McGraw Hill Job Cuts

MGH announced yesterday that it will cut 3% of their workforce (about 600 jobs) and take a charge for the upcoming quarter. From Reuters:
The cuts will result in a $43.7 million pretax restructuring charge and reduce fourth-quarter earnings by $27.3 million after taxes, or 8 cents per share, McGraw said.
"For 2007, we still expect double-digit earnings per share growth" excluding the restructuring costs and other charges, McGraw said.
Also of note, MGH shares have fallen 39% over the past 12 mths in part because of what some have seen as faulty advice from its S&P unit with respect to the sub-prime banking crisis. While McGraw attributed the restructuring to the financial market issues the largest cuts look to be in their education unit. Given the amounts being invested by the other large players this seems counter intuitive.


Tuesday, January 08, 2008

Macmillan Acquisition

The NYTimes reports that Macmillan has acquired a custom educational textbook publisher named Hayden-McNeil Publishing for an undisclosed sum.
Brian Napack, president of Macmillan, said that custom publishing was the fastest-growing arm of the textbook market. He said that while Hayden-McNeil was “not huge at this point,” its revenue had been growing by double-digit percentages in the last five years.

Some of the larger educational publishers have established custom publishing operations already having built them organically. They have also reported similar growth percentages in revenues. Author Central

The San Francisco Chronicle reports on the launch of a new author/publisher/reader community site named which went live December 21. Redroom is founded by
Ivory Madison who wants to create a site that is "...a household name, where people start when they're looking for an author, a book or what people are saying about current ideas or events...Because we have the writers, we have the potential to be the smartest conversation on the Web."

The site is starting off with a number of well known authors including Amy Tan and Salman Rushdie and Madison expects as many as 400 to establish their web presence in the short term. From the article:
All writers join the Web site for free, and soon readers will be able to have their own free pages, too. Publishers also will be invited to have free Web pages on, with Chronicle Books serving as the Web site's first test case. Madison has collected $1.25 million in venture capital for the business and has hired a staff of 15, and anticipates raising $2 million more in the coming months. She said she expects to break even in 2008 and make $15 million in gross revenue in 2009.
Revenues will be generated by ad revenues and tranaction fee and a portion of revenues will be designated for charity.

Whether this will succeed is any ones guess. It does seems a long shot to me that this will develop into a sizable web presence that a significant number of consumers will be interested in. I am of the belief that the market for author sites or book sites is fairly narrow. Witness the long list of consumer oriented magazines about books and authors that have failed over the years. These outlets failed both because ad dollars were sparse and subscritions were minimal.

On the other hand, the initiative is worth attempting and it is worth noting that potentially 'natural' developers of a site like this such as Publisher's Weekly or Kirkus (or even Bowker) continue to be non-players. Innovative projects like and possibly Redroom fill gaps that for some reason the existing players don't see or can't react to. Redroom may be worth keeping track of and I do like the design and navigation of the site: It is very well done.

Monday, January 07, 2008

Raincoast Gives Up On Canadian Publishing

Raincoast announced today that it was abandoning its domestic publishing operations which it set up in 1995. According to management the operations have remained unprofitable. The operation has published between 20-30 titles per year and will finish this year with 15.

Raincoast is the Canadian partner of Bloomsbury and has published and distributed the Harry Potter series. It is on the back of the success of these titles that the company has built their distribution business into the "preeminent distributor in Canada" (Globe&Mail).
As a result, yesterday's announcement should be seen as a
back-to-the-basics move, and a return to Raincoast's core competency, as a distributor that represents an estimated 50 domestic and foreign-owned publishers, including Bloomsbury U.K., Bloomsbury U.S., Chronicle Books, Lonely Planet, Grove Atlantic and Harcourt/Houghton Mifflin.
Whether this will have a material impact on Canadian publishing is doubtful although some commentators will be all doom and gloom. The domestic Canadian publishing industry is a strange beast with significant amounts of government money distributed to small publishers on the basis of maintaining cultural heritage who wouldn't survive commercially without the funding. In fairness, this active nurturing does produce some great Canadian titles but no doubt most are less than commercially viable.

More ominously the article also contains a veiled suggestion that Raincoast may be planning to rightsize some of their distribution clients as well. More news on that "in the next several weeks".

George Macdonald Fraser

Tom Brown's School Days is a famous book set in the context of Tom's experience at an English boys boarding school. In that book, a boy named Flashman makes a minor appearance as a bully and cad. Forward to 1968 and Flashman makes his literary debut as a self-penned chronicler of some of the epic events of English and World history during the 19th century. Flashman is everywhere from the Crimea to the American Civil War, apparently saving the day and playing a material role in the events in question. At the same time he manages to bed over 400 women (while also maintaining a marriage to a nymphomaniac), is routinely captured, tortured (in some unlikely ways) and escapes. Through complete incompetence and cowardice he always manages to end up looking like the hero.

The entire series of books was based on G M Fraser finding a collection of memoirs at a house sale and it written in the first person narrated by Flashman. They are all hilarious and historically accurate but with respect to Flashman entirely fiction. Fraser made up the entire story of Flashman's travels through British History but what a ride it was. Each book included a sizable addendum that noted the significance of the events, places and people mentioned in each episode. As someone interested in history, these sections were almost as interesting as the fictional work that preceded.

At 82, Fraser died this week after a year long battle with Cancer. As the Times puts it "There will be no more Flashman books chronicling the the life of Brigadier-General Sir Harry Paget Flashman, VC, outstanding Victorian soldier, coward, bully, womaniser, cad, bounder and hugely admired all-round bad egg." Times

Friday, January 04, 2008

Informa: Buy Rating

Following the apparent sale of Emap's businesses over the past month, analysts have cast a look over the rest of the industry for potential upside (Reuters). Analysts at Bear Sterns and Panmure Gordon have rated Informa as 'out perform' and 'buy' respectively. Informa's share price surged 7% in trading following the recommendations. In mid December, Informa gave the following trading update:
The Board is confident that the 2007 performance will be in line with our significant growth expectations. Organic revenue on a constant currency basis* is projected to increase by 9%. All three of Informa's divisions: Academic & Scientific, Professional and Commercial, are contributing well to the year on year increase. Commercial is having a particularly strong 2007 of double digit growth. Trading within each of the divisions is good across all of Informa's business activities: events, performance improvement and publishing.

Shares in Informa have under performed the UK market by 22% and are currently trading at 466p. Panmure is targeting a price between 530 and 550p. Over the past six months the stock has traded over 550 but has fallen recently.

CafeScribe: e-Textbooks are working

Interesting article from Inside Higher Ed on the recent success of CafeScribe and CourseSmart. From the article:

Like iTunes, the model features a type of digital rights management that allows users to download individually purchased e-textbooks to three separate computers or laptops. But like Apple’s digital music service, the success of ventures like CafĂ©Scribe depend on the availability of content. Johnson estimated that the company would have some 15 publishers on board in the first quarter of 2008, including more content from Oxford. Still, he conceded, he receives hundreds of requests for titles each day. “Content is our biggest obstacle right now,” he said.

Thursday, January 03, 2008

Quebecor in Strife: More News

Quebecor has been given a reprieve of sorts in that lending banks have lifted some of their loan covenants for the company's fourth quarter. It may be all for naught however because in the short term the company must come up with $125mm in short term financing and refinance $500mm in debt. Failure in either case could force the company into bankruptcy. From The Toronto Star:
Quebecor World said it agreed to a requirement to obtain $125-million in new financing by Jan. 15, and also agreed to complete a "refinancing transaction" by Jan. 31. That transaction will require the company to reduce its current credit facility to $500-million by Feb. 29. In addition, the company said it must repay the full borrowing facility and terminate its North American securitization program by June 30. The company said it is in "active discussions" with financial institutions, but no firm commitments have been obtained so far "and there can be no assurance that such financing commitments will be obtained."
It is probable that the company will cover the $125mm if for no other reason than this will give their primary shareholder some breathing room to review their alternatives. Regardless, the amounts in question - quoted in the article an analyst says 'it is a lot of money' - and the present difficult market for financing Quebecor is certainly in a lot of difficulty.

How Literary Reading is like the Dodo

Publishers received the literary equivalent of coal in their stocking over Christmas courtesy of Caleb Crain at The New Yorker. His article Twilight of the Books presented a depressing synopis of the state of reading in the US. It has long been the case that few people read more than a few books per year. Many read none; however, as Crian points out in his introduction to his essay, that so concerned where pollsters that they began changing the questions in order to make the results seem less bad. From ‘are you reading a book’in 1933 to ‘have you read anything in the past 12 months’ in 2007.

To those in the publishing industry the recent confirmation of the decline in book and newspaper reading merits significant concern and reaction. Most of us recognize that reading is still being conducted but not of ‘publishing’ material as we know it. In his article however, Crain takes the stats a step further and suggests that the impact of the decline in formal reading that helps readers develop and hone their ability to evaluate character, argument, plot and perspective is leading to a population of dumber readers.

More alarming are indications that Americans are losing not just the will to read but even the ability. According to the Department of Education, between 1992 and 2003 the average adult’s skill in reading prose slipped one point on a five-hundred-point scale, and the proportion who were proficient—capable of such tasks as “comparing viewpoints in two editorials”—declined from fifteen per cent to thirteen. The Department of Education found that reading skills have improved moderately among fourth and eighth graders in the past decade and a half, with the largest jump occurring just before the No Child Left Behind Act took effect, but twelfth graders seem to be taking after their elders. Their reading scores fell an average of six points between 1992 and 2005, and the share of proficient twelfth-grade readers dropped from forty per cent to thirty-five per cent. The steepest declines were in “reading for literary experience”—the kind that involves “exploring themes, events, characters, settings, and the language of literary works,” in the words of the department’s test-makers. In 1992, fifty-four per cent of twelfth graders told the Department of Education that they talked about their reading with friends at least once a week. By 2005, only thirty-seven per cent said they did.
Reading for pleasure is a relatively recent phenomenon in human history. It is possible (and maybe a Phd project) that the development of mass market reading also wrought massive hand wringing and consternation from those who controlled media in the 18th and 19th century. No doubt these owners and social and political leaders believed that society was being eroded and undermined and that the youth (and/or the lower classes) of the day were dooming the traditional publishing business to ignominious death. Whether the comparison with the drivers of change we currently see – social networking, gaming, television, etc. – represents a similar transition I do not know. What is certain however, it that publishing and reading will not disappear but will change and adapt to suit the market and perhaps evolution.

Why evolution? Read the article to understand how the brain develops based on external stimuli. This discussion might lead you to conclude that ‘new media’ could lead future generations to develop different cognitive powers than we currently possess.

Wednesday, January 02, 2008

Emap Break-up

Earlier in December, I noted the sale of Emap consumer publications to Bauer. At the time (mid December) Emap announced they would keep their business to business publications as presumably the offers were not high enough. It was always the intention of the Emap board to sell all the businesses completely if they could.

On Christmas Eve, it was announced by Emap and Apax that Apax and Guardian Media Group had presented Emap with an offer to buy the outstanding shares of Emap for just over £1billion. Apax/GMG already own b2b publisher Incisive Media and hope to merge the two businesses together to produce a £2.0billion publisher.

Despite the announcement there is some speculation that a rival bid may emerge and the Emap share price has traded above the 931p offer price. Apax/GMG have already purchases a 19& holding in Emap.


Tuesday, January 01, 2008

Predictions 2008

This is the time of year when prognosticators attempt to handicap the future while, at the same time, trying to explain why they were so horribly wrong with respect to the prior year. I am no different. 2007 saw some stunning developments in the publishing and media space--particularly in mergers & acquisitions—and, broadly speaking, I see several trends emerging. First, I expect more change driven by M & A activity in 2008. Second, as more companies bound by traditional publishing models migrate online and join those already there, the application of technology in our industry will accelerate. Third, we will see a ‘squeezing’ of the value-chain (from author to publisher to consumer) driven by publishers looking to build community models around content and authors.

Associated media markets, such as broadcasting, newspapers and games, also influence our industry in interesting ways. We are starting to see our traditional segment descriptors – publishing, newspaper, broadcasting, information – become meaningless as content becomes ubiquitous and network access (or distribution) becomes universal. Publishers and information providers must expand their capabilities beyond traditional market segments if they want to remain competitive. On a related note, there is an escalating ‘compacting of media’ taking place, where the interests of all media players are converging on issues like rights, piracy, market concentration and access to markets or even consumer attention. (Text) book content, broadcast TV programs, movies, music, games and news can all be delivered via Xbox or Ipod: In this environment, where does the power lie? Who “owns” the customer? And how are content-selection decisions made? A publisher can no longer be one-dimensional and hope to survive, which is why companies like Lexis, West and Pearson are building delivery ‘platforms’ where (traditional) content is only a part of the offering.

In the not-too-distant future, we may look back on 2007 as a significant transition year for the media business. In education, a number of large companies were taken private and will reemerge five years from now as fundamentally different, platform-based companies. The Hollywood writers strike will redefine how content producers are compensated as content distribution expands to the Internet. Journal publishers will trace the history of their ad-based revenue models back to Reed Elsevier’s experiment with oncologyonline. And in the news & information segment, NewsCorp’s purchase of Dow Jones and Thomson’s acquisition of Reuters will radically change the model of information delivery. Even the self-publishing market showed a level of maturity with the consolidation of AuthorHouse and Outside our immediate universe (but no less relevant as advertising becomes a more important revenue stream) is the purchase by Google of adserver Doubleclick.

Here are my predictions for 2008:


  • Recognizing the potential for aggressive competition, McGraw-Hill will reorganize its business much as Thomson has done. MGH education could be sold to private equity.
    Cengage will spend aggressively to round out its content and assessment products with course management and school resource planning tools.


  • We will see at least one mega-deal involving, perhaps, D&B, the information assets of McGraw (S&P) or Bloomberg. Following closely on the heels of past investments in tax, legal, financial information, the insurance segment will become a focus of aggressive new investment for information providers.


  • It also seems inevitable that there will be some additional consolidation in trade and this could result in a higher profile for Hachette, Bloomsbury and/or Macmillan. One publisher may get out of the self-publishing market but another will jump in with both feet. A company like or the AuthorHouse/iUniverse combination could be targeted by a trade publisher seeking to expand its market and build an author community. More trade publishers will eliminate imprints in favor of theme-specific content.


  • The ongoing rumors of a Barnes&Noble/Borders combination will continue until one of these retailers purchases a third. This new combination will not materially change the book retail market, but the combination of the two companies will result in a financially stronger retailer.


  • Broadcasters will have a strong advertising year due to the political calendar and the Olympics. (A three-party race for President will be an added boost).
  • Facebook and Linkedin will join forces, but we will also see the development of more ‘by invitation only’ social networks. (Potentially, these could be administered by the current incumbents but they are more likely to be new entrants).
  • As many as ten brand-name magazines will cease publication or reduce their frequency due to ad-base declines and the rise of specialty web sites.
  • News sites (either branded or not) will ramp up efforts to harness niche bloggers and online publishers (either by acquisition or association) in an effort to boost traffic, broaden audience and develop more relevant op/ed and reportage. Incumbent news providers are realizing that acquiring an established online presence with a built-in audience represents a path to growth and they will begin to employ this tactic during 2008.

As always, it looks like the coming year will be an exciting one in media. At least according to me.