Friday, October 31, 2008

Wikio Top Blogs

I don't know if this means much but I have as many above me as below me. Pressure is on to maintain my position. I have no idea what drives it although I am sure if I have more subscribers and more people linking to me then I should do OK. So, tell your friends and check out all these links. Wikio ranks blogs across a number of categories.
1 The Conscience of a Liberal
2 Calculated Risk
3 Seth Godin's Blog
4 Grasping Reality with Both Hands: Brad DeLong's Se
5 DealBook - New York Times blog
6 Greg Mankiw's Blog
7 Real Time Economics
8 naked capitalism
9 Law Blog -
10 A VC
11 Economist's View
12 Infectious Greed
13 DealBreaker
14 Market Movers
15 Robert Reich's Blog
16 Econbrowser
17 Vox
19 Mish's Global Economic Trend Analysis
20 MarketBeat
21 The Digerati Life
22 24/7 Wall St.
23 The Financial Page
24 Information Arbitrage
25 Global Neighbourhoods
26 BizzyBlog
27 Interfluidity
28 Adland
29 FoundRead
30 Brazen Careerist
31 Environmental Economics
32 Odd Numbers
33 Union Square Ventures: A New York Venture C
34 Common Tragedies
35 EconoSpeak
36 Small Business Trends
37 Chronicle of the Conspiracy
38 Kudlow's Money Politic$
39 Business Pundit
40 The Austrian Economists
41 Global Development: Views from the Center
42 Information Processing
43 Groundswell
44 Lightspeed Venture Partners Blog
45 Macro Man
46 Accrued Interest
47 The Marketing Minute
48 Organizations and Markets
49 Diva Marketing Blog
50 PersonaNonData
51 Macro and Other Market Musings
52 Dinocrat
53 ataxingmatter
54 Jaffe Juice
56 Who Has Time For This?
57 The Bonddad Blog
58 American Shareholders Association
59 Dr. Housing Bubble Blog
60 China Financial Markets
61 Sramana Mitra on Strategy
63 YouNotSneaky!
64 Cassandra Does Tokyo
65 Freelance Folder
66 Trends in the Living Networks
67 The HR Capitalist
68 Compensation Force
69 Economics and...
70 The Swine Line
71 The Bayesian Heresy
72 Economic Investigations
73 Joel Makower: Two Steps Forward
74 Fast Food News
75 Business Opportunities Weblog
76 Parisian Party
77 Venture Hacks
78 My Quiet Life
79 The Oregon Economics Blog
80 american copywriter
81 Advergirl
82 Entrepreneur's Journey
83 Ask a Manager
84 Futurelab
85 flyteblog
86 Boston VC Blog
87 Evil HR Lady
88 - Development Through Enterprise - Eradicating Poverty through Profit
89 The Entrepreneurial Mind
90 Branding Strategy Insider
91 Small Business Trends Radio
92 CityEconomist
93 Phil's Blogservations
94 The Constant Observer
95 Black in Business
96 Wake-Up Wal-Mart Blog
97 Ask The VC
98 Shaping Youth
99 Gannon On Investing
100 Business Blog Consulting

Costco: Top Five Bookseller?

Via Michael Cader's Publisher's Lunch, he notes the cover article in Costco's in-house magazine on the stores' book buyers and the corresponding importance Costco represents to today's publishers. Len Riggio railed on the discounts offered to big box retailers generally suggesting that they were unearned (relative to B&N's importance) but it would be difficult to argue that when in some cases Costco is buying up 20-25% of the first print run. Jeff Rogart, VP Sales at Harpercollins is quoted as saying Costco is frequently their number one or two retailer on certain selected titles.

Selection of titles is matched to the slightly upscale demographic of the Costco customer (clearly the reason I never saw this publication) and indeed like any good retailer they closely monitor which titles their customers gravitate to and believe they can spot buying trends much earlier than other book retailers. Also noted in the article, the buyers have had similar success with magazines.

Read the whole thing.

Edelweiss From Above the Treeline

Shelf Awareness is reporting on a new application from Above The Treeline that will integrate publisher's catalog information into a stores POS system as well as offering more expansive functionality:
Above the Treeline is beginning to test Edelweiss, an online, interactive product that offers the information of traditional print catalogues electronically and allows the material to be customized, updated, managed, enriched and more. In addition, orders and bibliographic material can be integrated into retailers' point-of-sale systems. Edelweiss will likely be a "freestanding online module," available at no charge to book buyers, regardless of whether they use Above the Treeline, as well as offered to other users of catalogues such as publicists, bloggers, agents and others.

Edelweiss allows sales reps to mark up their publishers' titles for specific retailers. Reps can either do so through Edelweiss or create their own printable pdf versions of the catalogue.

Book buyers can manage their catalogues in an online library and search the catalogue by category, custom tags, pub dates, etc. Additionally, users can customize what they want to see about titles in a manner similar to a My Yahoo or iGoogle home page, where widgets such as "illustrations," "publicity/marketing info" or "notes from reps" can be placed on the page.

McGraw-Hill Reports 3rd Quarter

MGH expect a 1-2% revenue decline in the performance of their education unit this year and a resulting erosion in the units operating margin. Typically the MGH press release summary contains a lot of detail and here is the relevant educational division explanation:

Education: "Revenue for this segment declined 3.8% to $1.1 billion in the third quarter compared to the same period last year. Reflecting a pre-tax restructuring charge of $5.4 million in the third quarter for a workforce reduction of approximately 90 positions and a $15.9 million decline in incentive compensation expense, operating profit decreased by 14.5% to $351.5 million. Foreign exchange rates had no material impact on revenue and operating profit for the third quarter.

"Revenue for the McGraw-Hill School Education Group declined by 9.1% to $623.5 million in the third quarter. Revenue for the McGraw-Hill Higher Education, Professional and International Group increased by 3.7% to $507.8 million.

"In the seasonally important third quarter for the elementary-high school market, the McGraw-Hill School Education Group captured 31% of the total available dollars in a robust state new adoption market. Strong performances in K-5 reading and math were key to our results in this year's state new adoption market, which is anticipated to be $925 to $950 million.

"In the Florida K-5 reading adoption, we expect to capture more than 70% of the market. We also expect to take more than 40% of the K-12 reading/literature state new adoption market, which includes Alabama, Indiana, Louisiana and Oklahoma. In math, we had solid results in Texas and California. We project a 31% capture rate in the K-5 math market in Texas and similar success in the first year of the K-8 math adoption in California, where purchasing will continue into 2009.

"A solid performance in the growing state new adoption market, however, could not offset lower residual and supplemental sales in both adoption states and the open territory. The supplemental market has been soft all year, but the sudden decline in residual sales did not hit the market until August, normally a peak sales period each year for the school business. The decline in residual sales reflects budgetary pressures that school districts are facing due to higher energy and commodity costs, lower tax revenue and higher pension and salary requirements. These higher costs drain resources that otherwise would be used for discretionary purchases such as instructional materials.

"The worsening economic conditions were particularly acute for school districts in large urban markets. A significant factor for many of these districts was reduced funding for the federally supported Reading First program, which was cut from $1 billion in prior years to $383 million in 2008. A portion of the Reading First funding would have been used to provide materials such as workbooks.

"As indicated by the 16.6% decline in the market's sales for August followed by a 17.6% drop in September that was reported by the Association of American Publishers, the reduction in residual ordering is an industry-wide phenomenon. As a result of this unprecedented development, sales for the total Pre-K-12 market will probably decline by 3% to 4% in 2008.

"In testing, a decrease in custom contract work and legacy products offset growing sales from Acuity, our new formative testing program; LAS Links, our assessments for English-language learners; and TABE diagnostic assessments and instructional support for adult students.

"In the McGraw-Hill Higher Education, Professional and International Group, growth in international and U.S. college and university markets offset softness in professional markets.

"A surge in ordering in September was key to our improvement in the U.S. college and university market. We produced gains in each of our three main areas of academic focus: Business and Economics; Science, Engineering and Mathematics; Humanities, Social Sciences and Languages. Growth in our digital and custom career product lines was especially strong.

"Based on the performance of the U.S. college and university market so far this year, we still expect the industry to grow between 4% and 6% in 2008.

"In the international marketplace, our third quarter revenue increase was led by higher education products in Europe and the Middle East as well as the continuing success of the 17th edition of Harrison's Principles of Internal Medicine in India. In our Spanish-language markets, we benefited from back-to- school sales in Spain and Mexico together with the third quarter release of Harrison's Principles of Internal Medicine in Spanish.

"In professional markets, economically challenged retailers cut back on orders and reduced inventory, so even though six of our new titles appeared on best-seller lists during the third quarter, there was a decline in overall revenue. However, our digital subscription products for professional markets continue to produce solid growth.

Harlequin Another Stable Performance

Robert Prichard, Torstar’s President and Chief Executive Officer called out the performance of Harlequin in an otherwise bleak performance for Torstar, “Harlequin had a solid quarter and remains on course for a good year of growth. We also enjoyed strong revenue growth in our digital businesses which are performing well." He went on to cite rising news print costs, pension costs and lower ad revenues which continue to impact their core newspaper business.

From the press release:
Book Publishing revenue was $118.1 million in the third quarter, up $2.4 million from $115.7 million in the same period last year. Higher revenues in North America Retail were offset by declines in North America Direct-To-Consumer and Overseas. Approximately one-half of the increase came from the favourable impact of foreign exchange rates in the quarter.

Book Publishing operating profit was $15.6 million in the third quarter of 2008, down $0.7 million from $16.3 million in 2007. The decrease was due to the unfavourable impact of foreign exchange rates as underlying results were flat. Year to date Book Publishing operating profit was $50.3 million in 2008, up $2.4 million from $47.9 million in 2007.

Further details from the management report:

Book Publishing revenues were up $1.2 billion in the third quarter of 2008 excluding the impact of foreign exchange. North America Retail was up $4.5 million, North America Direct-To-Consumer was down $2.2 million and Overseas was down $1.1 million. Year to date, Book Publishing revenues were up $3.6 million excluding the impact of foreign exchange. North America Retail was up $7.8 million, North America Direct-To-Consumer was down $4.8 million and Overseas was up $0.6 million.

Book Publishing operating profits were flat in the third quarter of 2008 excluding the impact of foreign exchange. North America Retail was up $0.4 million, North America Direct-To-Consumer was down $0.7 million and Overseas was up $0.3 million. Year to date Book Publishing operating profits were up $6.2 million excluding the impact of foreign exchange. North America Retail was up $5.6 million, North America Direct-To-Consumer was down $0.1 million and Overseas was up $0.7 million.

North America Retail operating profits were up $0.4 million in the third quarter with the continuation of the improved net sales rates and positive adjustments to returns provisions. The revenue growth in the quarter was offset by higher product costs and increased promotional spending.

North America Direct-To-Consumer operating profits were down $0.7 million in the third quarter from lower revenues. Revenue continued to be down in the quarter and year to date as the revenue growth from Internet book and digital sales was not sufficient to offset the decrease from fewer books sold in the traditional direct mail business. Lower costs, primarily reduced advertising and promotion spending in the traditional direct mail business offset some of the lower revenues in both the quarter and year to date.

Overseas operating profits were up $0.3 million in the third quarter of 2008 with the contribution from the sales of digital manga (comics) content to SoftBank Creative Corp., (a division of Softbank Corp., one of the largest providers of cell phone services in Japan) more than offsetting lower sales in other overseas markets. The lower sales are in part due to the direct-to-consumer businesses in certain overseas markets facing the same revenue challenges as the North America Direct-To-Consumer division.
Unfortunately, while you could argue that in the current environment these results reflect stability the issues noted are consistent with earnings reports for almost the past 24 months. There digital expansion shows a lot of promise but any potential 'break-out' seems unlikely given the pressure that the performance of Torstar implies for this operating unit. (The forex impact both negative and positive on Harlequins performance makes the picture a little murky).

Simon & Schuster Report Higher Quarter

S&S saw revenues increase for the quarter by 5% over the same period last year although the performance was not enough to push them into positive growth for the year. Year to date revenues are $612mm vs $643mm in the period last year and Operating Income was $59.9 vs $67.7mm last year. Summary details from the CBS press release as follows:
Publishing revenues for the third quarter of 2008 increased 5% to $225.0 million from $214.2 million for the same prior-year period reflecting the success of best-selling titles in the third quarter of 2008, including The War Within by Bob Woodward and Real Life: Preparing For the 7 Most Challenging Days of Your Life by Dr. Phil McGraw. Publishing OIBDA and operating income both increased 8% to $25.8 million and $23.4 million, respectively, driven by the revenue growth partially offset by higher royalty expenses and selling and advertising costs. Publishing results included stock-based compensation expense of $1.2 million and
$.9 million for the third quarter of 2008 and 2007, respectively.

Thursday, October 30, 2008

Dohle'n Out Some Change

Article in the New York Observer about Random House and Marcus Dohle. They contrast RH with the fortunes of the Hachette Book Group although this is done by illusion since the author seems to be saying just because Hachette is smaller they are better.

That would be between 600 and 700 titles per year, if you’re keeping score. Random House, which one rival publisher recently called “the biggest, fattest, most grotesquely obese company ever,” last year published more than 3,000.

Of course, the vast majority of those books were signed under Mr. Olson, whom Bertelsmann replaced late last spring with a much younger, more German man named Markus Dohle.

MR. DOHLE, who at 40 years old has never worked in publishing before but had previously managed a large printing company, has not yet ordered any major changes since moving to New York from his home in G├╝tersloh and taking up the frayed reins Mr. Olson left behind. There have been some adjustments, to be sure. For one thing, Mr. Dohle has hired several new people at the corporate level, including a director of human resources who, like his boss, is very young and comes from Germany (one editor said, half seriously, that “there do seem to be a lot more people speaking German in the elevators”). For another, some division heads have asked their employees to cut back on expenses such as lunch and travel.

Also, as an example of Dohle's impact they note (only) the elimination of 16 jobs at Doubleday. These apparently "stunned" the industry. Someone needs to point out to the Observer that we are in a recession and 16 jobs (with due respect to the people that held them) is small beans. Stunned is just silly.

Tuesday, October 28, 2008

Google Announces Settlement in AAP Lawsuit

Certainly the publishing environment has changed fundamentally since the AAP and Author's Guild filed a lawsuit to halt the Google Book digitization program. Fears that in-copyright material would be 'stolen' in the process of digitization has now been trumped by greater fears of a digital book future where publishers will only be cursory participants. Rapid expansion of eBook programs at Amazon, SONY, Apple, Google and Ingram have changed the landscape so that publishers are keen to open all avenues for digital distribution of their content. This agreement may make Google the eBook leader ahead of although we will not know this until the dust settles. That eventuality however, will be exactly what publishers will be looking for as they have become increasingly concerned about the position and power of the Amazon eBook (Kindle) offering.

With this agreement, Google will be opening up a vast digital archive of out of copyright books for preview, sale and lending either direct to consumers or via institutions. Additionally, publishers will allow this technology and distribution to be applied to in-copyright material - this is where much of the controversy focused. Google, it was assumed, were digitising materials regardless of copyright status. They placed a moratorium on this process but what content that has been digitized can now be made available and the digitization process can resume. Google has added functionality that enables the copyright owner to turn on or off certain capabilities such as preview or buy.

The agreement also calls for the creation of a rights registry which will create a bibliographic database of copyright ownership information. There will be motivation for publishers and authors to maintain their information in this database since this will be the mechanism used to ensure that they get compensated.

All around on the surface this looks like an excellent compromise. Indeed, it could represent a momentous shift in the way we interact with books and book content. Congratulations to all parties for getting this agreement completed without too much blood spent.

The agreement itself can be found here. It should be pointed out there is compensation to be paid by Google to the AAP and AG. This will fund a pool of money to be dividended to copyright holders whose content was digitized without permission, money to create the copyright registry and attorneys fees. (I wonder who will be doing the registry thing - will it be an RFP?)

UPdate: Other reaction summarized here. (TOC)

Window Shopping at Amazon has launched a new site app named WindowShop which is designed to enable you to do exactly that. Mimicking the concept of a store window, Amazon is trying to draw attention to those hot, new books, cds, games and dvds that a store manager might place up front to draw in customers. The application is fun to play with - you can move across categories as well as up and down. For example, if you navigate to a book title Fighter, The Fighters of the UFC (which is the first title in the version I am looking at), using the down arrow button you can view many more books merchandised. Grow tired of books and you can hit the right or left arrow keys to view another category.

By my count there are 10 books selected for inclusion. From the splash page for WindowShop I would rather have been able to chose which category to look at; however, as you use the app. it becomes easier to navigate and this is only a mild inconvenience. For example, if you zoom out so you see all the categories and products, you can hold the left cursor button and move your mouse around the screen to immediately navigate to a new title in any category.

Interestingly, the thing will just play itself and since everything is audio and visual rather than text - book blurbs are read aloud - you can leave it on in the background and come back to it if something gabs your interest.

Monday, October 27, 2008

EDItEUR Seeks New Director

EDItEUR, the international standards body for books and serials, announced important changes to both its management and governance structure at its meetings during the Frankfurt Book Fair Brian Green, the current Executive Director, is standing down from the post in 2009 in order to concentrate on his role as Executive Director of the International ISBN Agency, whose management is contracted to EDItEUR. EDItEUR is seeking both a new Executive Director (full or part-time) and a full time Associate Director who would be responsible for supporting the management of both the International ISBN Agency and EDItEUR. The location for these jobs is flexible.

In addition, a new management committee will be formed, consisting mainly of nominees of representative national and international trade bodies with interests in standards. This committee will work with the new Executive Director to propose new areas for standardisation and agree EDItEUR’s work plan and priorities.

“We discussed all possible options for the future of EDItEUR with the major stakeholders,” said EDItEUR’s Chairman, Friedemann Weigel of bookseller and subscription agent Otto Harrassowitz, “and there was one hundred percent agreement that the need for an international standards body for the book and journals sectors has never been greater than in the current digital environment”.

Expression of interest in the key industry roles of Director and Associate Director of EDItEUR should be made to Brian Green (, from whom further information is also available, by 14 November. The successful applicants are likely to have a background in the book or serials sectors, a commitment to the benefits of standards and excellent communication skills. In addition, basic management and business skills are important. The applicants should also be prepared to travel to conferences, seminars and book fairs.

About EDItEUR: EDItEUR is the international group coordinating development of the standards infrastructure for electronic commerce in the book and serials sectors. EDItEUR currently has 70 members from 17 countries, including Australia, Canada, Japan, Korea, Russia, United States and most of the European countries.
Contact: Brian Green,

Saturday, October 25, 2008

Oprah's Impact

I thought I would track the impact of the Oprah announcement on the sales of the title specifically mentioned in the 'endorsement'. The Kindle version of The Story of Edgar Sawtelle is being offered at 10% off the regular price. The book was previously an Oprah pick in print form.

So just prior to the show airing on the east coast the Kindle version was ranked at 136 in the Kindle store. Now approximately 24hrs later it holds the 16th spot.

Here is a chart:

In isolation, it is hard to understand what it means in terms of units to move from 136th to 16th. It might be interesting to see what the respective print and kindle curves look like for future Oprah picks.

(I should have looked at the rank for the print version as well).

Friday, October 24, 2008

Looted Books

Der Spiegel has an interesting two part article about books looted in the run up to and during the Second World War. LINK
The records indicate that the city library purchased "more than 40,000 volumes from the private libraries of evacuated Jews" through this office. And, this being Germany, the librarians maintained meticulous record books to keep track of their purchases -- even though parts of the German capital were already in ruins. As always, preserving order was paramount. The librarians signed each volume and gave it an accession number, beginning with the letter J.
The book thieves were able to expand their range of operations considerably after the war began. German occupiers in Eastern Europe raided 375 archives, 957 libraries, 402 museums and 531 research and educational institutions. They were also active in France, as the odyssey of sheet music once owned by the pianist Arthur Rubinstein shows. The history of the copies and prints of these works of various composers, some with personal dedications, mirrors the catastrophes of the 20th century.
Worth reading the whole thing just to keep things in perspective.

Oprah Endorses Kindle

Earlier this week, I visited the Amazon site for what I don't recall and on their front page was a video with Oprah's smiling face. In my ignorance, I thought she had already endorsed the Kindle and I had somehow missed it. Silly me. On her show today she announced the gadget has changed her life. Will the endorsement change the sales curve for the product? Probably.

Here is the blurb from the show: (Link)

This summer, Oprah received a gift that she says changed her life. "I'm telling you, it is absolutely my new favorite thing in the world," she says.Meet the Amazon Kindle™, a wireless portable reading device with instant access to more than 190,000 books, blogs, newspapers and magazines. Whether you're in bed or on the train, Kindle lets you think of a book and get it in less than a minute.As a special offer for Oprah viewers, is giving $50 off the price of Kindle. Enter the promotional code OPRAHWINFREY during the checkout process at to receive the discount. This offer is valid through November 1, 2008.Code for $50 off the price of Kindle: OPRAHWINFREY

Go to to learn more and order your Kindle today! Plus, you will receive an additional 10% off the price of The Story of Edgar Sawtelle (regularly $9.99 Kindle/$17.63 Hardcover.) No promotional code is necessary. Come back later today for more from this show.

And in shameless merchandising you can visit my bookstore to make your purchase: HERE.

Rolling Stone Revamps

I recently subscribed to a free year of Rolling Stone magazine and this is the first time I have really looked at it since a girl friend bought me a sub when I was 18. They just revamped the format of the print edition and I must say I really like it. Gone is the newprint larger format version and in comes a more refined, mature dare I say 'professional' version.

Here is Wenner on the change:

The large format was one of Rolling Stone's trademarks — and it became a physical reminder of our roots in San Francisco and of a vital time in our cultural history. That's a lot of history, and it is not without a wistful feeling of sweet memories of those days that we make this change.

It was not a decision we made lightly. We felt this was the right move but remained a little uncertain, knowing this was not just up to us but also in the hands of the large number of passionate and longtime Rolling Stone readers (there are nearly 13 million of you, when you count the number of people who share their copy).

Thus, a few months ago, while putting together our annual summer double issue, we produced a version of that edition in the size and style of the one you now hold and mailed it to 3,000 subscribers to get their thoughts. The response was a major surprise: Readers loved it. We realized that the only reason to resist change was nostalgia.

Thursday, October 23, 2008

Listen to Authors

The BBC is reporting the release by the British library of a trove of recorded interviews with authors. They discuss their work and issues pertinent to the times in which they are interviewed. It's good stuff. BBC.

Raymond Chandler is interviewed by James Bond author Ian Fleming, John Steinbeck discusses his reasons for writing The Grapes of Wrath, and Arthur Miller talks about his marriage to actress Marilyn Monroe.

Mr Fairman said: "These two new British Library audio collections form the largest survey of historic recordings by English-language authors and playwrights ever published.

"With many previously unpublished BBC recordings selected from the extensive collections of the British Library Sound Archive, these compilations will offer a fascinating insight into the lives and work of these great authors". Shares Pummeled

Amazon reported their quarterly numbers yesterday and while those results just about met expectations it was their forecast that has thrown everyone into a tizzy. The company has brought their full year forecast (made in July) down from $20.10billion to between $18.46 - $19.46 billion. (This in itself is a ridiculously wide spread).

According to Bloomberg, over 40% of Amazon's operating profit comes in the Christmas quarter and they like other retailers are expecting a lackluster season.

Shares after trading are down 15%. Shares closed at $49.99 but are expected to open around $42.

Google Chart.

As an aside, Barnes & Noble has slipped below a market cap of $1billion.

Here is the transcript from Seeking Alpha. Those curious about why those supposed hundreds of thousands of Kindle units sold aren't impacting the numbers will remain frustrated.
Kindle selection continues to grow. Since inception, we have more than doubled the number of books, magazines, newspapers, and blogs available to be delivered wirelessly in less than one minute. Kindle titles already account for more than 10% of unit sales for books that are available in both digital and print formats. We’ve ramped up manufacturing capacity over the past 10 months and Kindles are in stock and available for immediate shipment. Kindle sales since launch have significantly exceeded our expectations. We will not introduce the new version of the Kindle until next year at the earliest.
And this: They plan to make it up in volume:

And then on the Kindle? How do you see that affecting your long-term profitability in the book segment?

Jeffrey P. Bezos Well, one thing that I think you could imagine happening over the long-term there is that the prices of books will be cheaper, so most of the books that we are offering on Kindle today are $9.99, even if they are $20 or $25 in print form. And so you can see that -- I think that probably the best way to answer your question is we would hope to sell many more units and make less money per unit but all in, have a very strong business.

So, as we are coming to believe Amazon controls pricing in the e-book world! Consumers will expect an e-Book to cost $9.99 and publishers will not be able to do any thing about it.

Reed Business Sale and Choicepoint

The Financial Times reports that the price Reed may get for the sale of RBI will be far below their original expectation of £1.25Bill. In the article they quote someone suggesting a sale price of £750mm with the expectation that a sale would go ahead regardless.

The deal's financing is now in place but the sticking point is the deterioration in trading at RBI into 2009 as the economy weakens. Reed would not comment on a lowest acceptable price.

One analyst said: "I think it is worth Reed's while to sell low. If RBI went for £750m rather than £1bn, all they lose is £250m of cash. While it is helpful to have that on the balance sheet, at the end of the day it is only £10m of extra interest.

"The alternative is that . . . the market automatically values RBI in the sum of parts at £750m-£800m anyway and you get left with a cyclical business that will see downgrades and will be under pressure for a couple of years."

There are three groups with a serious interest but the article does not indicate when a sale will be announced. Reed will be pressing for a resolution as soon as possible.

In other related news, the Federal Trade Commission is requiring that Reed divest some part of Choicepoint in order for approval of the acquisition to proceed. The FTC believes that the combination of the Reed and Choicepoint public record business would diminish competition significantly and as a result Reed is being required to sell a part of this business to Thomson West. (Link: From September press release)

To eliminate the anticompetitive effects of the proposed acquisition, the FTC will require Reed Elsevier to divest assets related to ChoicePoint’s AutoTrackXP and Consolidated Lead Evaluation and Reporting (CLEAR) electronic public records services to Thomson Reuters Legal Inc., within 15 days after the proposed acquisition is consummated.

Through its LexisNexis division, Reed Elsevier provides electronic public records services to law enforcement customers in direct competition with ChoicePoint’s AutoTrackXP and recently, ChoicePoint’s CLEAR, a new and advanced electronic public records service. Together, the two firms account for over 80 percent of the approximately $60 million U.S. market for the sale of electronic public records services to law enforcement customers.

“The proposed acquisition would have eliminated the intense head-to-head competition between LexisNexis and ChoicePoint that has lowered prices and led to product innovations for a critical law enforcement tool,” said David P. Wales, Acting Director of the FTC’s Bureau of Competition. “The action announced today ensures that law enforcement customers will continue to benefit from this competition as they attempt to keep pace with increasingly sophisticated criminal activity.”

Wednesday, October 22, 2008

Thoughts on Orphans

Peter Brantley has a thoughtful piece on digitization and orphan works. The essay is a prelude to a series of articles he edited for the journal Library Trends (Link).

Here is a sample from his introductory essay:
Like many, I’ve recently been thinking a lot about the availability of books in online searchable repositories, and the likely outcomes for publishers, libraries, and the public. I have even been considering the impact of a rapprochement between publishers, authors, and Google over books whose availability is most savagely contested, largely because their legal status has been brought into a hazy dawn of uncertainty by the startling recent shifts in availability that catch them stranded between public goods and private property.

A significant portion of these implicated works are likely to be out-of-print, of uncertain copyright status, and no longer present in any publisher’s archive—available only in the less-visited shelves of the largest research libraries. This substantial category, numbering in the millions of books, would undoubtedly incorporate a large number of what are called “orphan works,” where the presence of any identifiable copyright owner in the work, or its constituent parts, is not known, and resilient to easy resolution as a result of poorly recorded mergers and acquisitions, lost archival contracts, publisher insolvency, and myriad other reasons. In turn, some of this orphan material is almost certainly public domain; the original copyright never renewed, and long since expired.

Crisis What Crisis

John Bird and John Fortune on the banking and subprime crisis broadcast a year ago.

Sunday, October 19, 2008

MediaWeek 42

Numerous articles on the Frankfurt Bookfair. Mokoto Rich in the NYTimes has two articles on translating foreign works. Looking for foreign titles for the US market: (link)

It is a commonly held assumption that Americans don’t like to read authors who write in languages they don’t understand. That belief persists here in Frankfurt, where publishers from 100 countries show off a smorgasbord of their best — or at least best-selling — books.

By and large, the American publishers spend most of the week in Hall 8, the enormous exhibit space where English-language publishers hold court.

Although there are exceptions among the big publishing houses, the editors from the United States are generally more likely to bid on other hyped American or British titles than to look for new literature in the international halls.
And another article about translations from English to foreign languages: (link)

A 20-year veteran of the fair who publishes many North American authors, including Malcolm Gladwell, Jeffrey Eugenides and Colson Whitehead, Ms. van der Pluijm, 46, promised to read the stories that night.

After the scout moved on, Ms. van der Pluijm (pronounced VAN der ploom) said it was a personal rule never to buy anything in Frankfurt. But she admitted that it was difficult sometimes not to get caught up in the frenzy. “It is so much more easy to buy something here than not to buy,” she said. Too many of the sales in Frankfurt, she said, were dictated by “too much excitement, not enough sleep and a big hangover.”
Talking about the elusive killer e-Book device (link):

Some believe they could galvanize the market for digital text in the way Apple's iPod did for digital music.

Penguin publishers Chief Executive John Makinson told Reuters: "They have become mainstream in the sense that they are a genuine consumer product for which there is real appetite, so this is not the province of geeks any longer."

Makinson said Penguin was now publishing all new titles both as printed books and e-books and was digitalizing its backlist.
Alison Flood at the Guardian takes a look at what books are selling at Frankfurt (link):
The publishing deals struck at the Frankfurt Book Fair set the tone for the books trade all around the world, and half way through the fair they are coming thick and fast. Publishers may still be bullish about their prospects, but the credit crunch is already driving big deals for books with a financial flavour.
Pearson reported strong 3rd quarter results last week. (Link):
  • Sales up 8% and operating profit up 11% at constant exchange rates
  • 2008 adjusted EPS expected to be toward the top end of current market estimates
Pearson, the international education and information company, is today providing an update on trading in the first nine months of 2008. Pearson continued to perform well in the third quarter. For the first nine months, sales are up 8% and operating profit up 11% at constant exchange rates. We are trading in line with our expectations, and we remain on track to make further progress on our financial goals in 2008. If the recent strengthening of the US dollar against sterling is maintained, we expect full-year adjusted earnings per share to be toward the top end of current market estimates*.

Bill Reilly Dies

Folio is reporting that William F Reilly died at his home on Friday. Bill was CEO of Macmillan when I (and Mrs PND) started my career after business school. To one of his staff members, he was an intimidating presence in the board room on the monthly occasions when we presented business results to him. He frequently made clear he knew more about the business than we did (as staff business analysts) but in doing so he imparted a clear perspective on what was important to understanding the true performance of the business. When Reilly joined Macmillan in the early 1980s, the company was on its knees loosing something like $100K a week. The share price was around $2. By the end of the decade, Robert Maxwell had purchased the company for over $90/share and Reilly and several of his management team were very rich. I joined after the Maxwell purchase and worked for Reilly for about a year before he went to join his team at K-III. K-III became Primedia.

Folio reports that services will be held as follows:
A wake is scheduled for October 21 in New York at the Frank E. Campbell funeral home from 2:00 p.m. to 4:00 p.m. and 7:00 p.m. to 9:00 p.m. The funeral will be held Wednesday, Oct. 22 at St. Ignatius Loyola Church in New York at 10:00 a.m.

Thursday, October 16, 2008

QE II Leaves NYC for the Last Time

The luxury liner Queen Elizabeth II sails past the Empire State Building for the last time. I would have missed this as I was on a call, but three long blasts of her horn had me rushing to the window. Since I wasn't ready this was the only shot I got.

The ship is to be retired and will become a floating hotel in Dubai. Her predecessor, the QE was similarly retired to become a floating university but after an extensive refit in Hong Kong the ship caught fire in a spectacular inferno. Somewhere in the PND family archive, is a photo of that ship lying on its side in HK harbor. I hope nothing untoward happens to this one.

Tuesday, October 14, 2008

That Big Database in the Sky

Are we getting ever closer to that large digital repository in the sky that enables any library patron to access the collections of their own and all other libraries from their computer? Perhaps. I believe this concept will come to represent a major element in the changed definition of 'library.' We are many years off that eventuality however, this new initiative may provide a glimpse of the opportunity.

Something named the HathiTrust has announced a large scale digital repository initiative in collaboration with 13 charter member research libraries. From the press release,

A group of the nation’s largest research libraries are collaborating to create a repository of their vast digital collections, including millions of books, organizers announced today. These holdings will be archived and preserved in a single repository called the HathiTrust. Materials in the public domain will be available for reading online.

Launched jointly by the 12-university consortium known as the Committee on Institutional Cooperation (CIC) and the 11 university libraries of the University of California system, the HathiTrust leverages the time-honored commitment to preservation and access to information that university libraries have valued for centuries. UC’s participation will be coordinated by the California Digital Library (CDL), which brings its deep and innovative experience in digital curation and online scholarship to the HathiTrust.

“This effort combines the expertise and resources of some of the nation’s foremost research libraries and holds even greater promise as it seeks to grow beyond the initial partners,” says John Wilkin, associate university librarian of the University of Michigan and the newly named executive director of HathiTrust. Hathi (pronounced hah-TEE), the Hindi word for elephant incorporated into the repository’s name, underscores the immensity of this undertaking, Wilkin says. Elephants also evoke memory, wisdom, and strength.

As of today, HathiTrust contains more than 2 million volumes and approximately ¾ of a billion pages, about 16 percent of which are in the public domain. Public domain materials will be available for reading online. Materials protected by copyright, although not available for reading online, are given the full range of digital archiving services, thereby offering member libraries a reliable means to preserve their collections. Organizers also expect to use those materials in the research and development of the Trust.

Volumes are added to the repository daily, and content will grow rapidly as the University of California, CIC member libraries, and other prospective partners contribute their digitized content. Also today, the founding partners announce that the University of Virginia is joining the initiative.

Each of the founding partners brings extensive and highly regarded expertise in the areas of information technology, digital libraries, and project management to this endeavor. Creation of the HathiTrust supports the digitization efforts of the CIC and the University of California, each of which has entered into collective agreements with Google to digitize portions of the collections of their libraries, more than 10 million volumes in total, as part of the Google Book Search project. Materials digitized through other means will also be made available through HathiTrust.

HathiTrust provides libraries a means to archive and provide access to their digital content, whether scanned volumes, special collections, or born-digital materials. Preserving materials for the long term has long been a mission and driving force of leading research libraries. Their collections, accumulated over centuries, represent a treasury of cultural heritage and investment in the broad public good of promoting scholarship and advancing knowledge. The representation of these resources in digital form provides expanded opportunities for innovative use in research, teaching, and learning, but must be done with careful attention to effective solutions for the curation and long-term preservation of digital assets.

This is an initiative worth following closely. The collaboration between libraries looks like the single most important differentiator compared with other digital initiatives particularly the Google digitization program. Hathi's application to the in-copyright world should be closely watched. As this program matures I expect the Trust will seek licencing terms that enable on-line viewing for in-copyright materials. Currently, the application is for preservation only.

Ingram: Downloads Strong. Prichard Interview

A little bit of a puff piece from Ingram Digital announcing that digital downloads from their retail solutions unit had enjoyed record third quarter growth with downloads more than double the same quarter last year. No numbers noted. Ingram Digital includes solutions for digital content management, distribution and promotion.

The press release does give me the opportunity to link to an interview Skip Prichard did last week as part of the SIIA brown bag interview series. It is 60mins.

Monday, October 13, 2008

College Networks Protect Music Rights

Frankfurt Bookfair is this week October 15-18th

Ars Technica reports on the trend on Campus networks to offer music download services so that students actually pay for music. This is a transparent effort by educational institutions to avoid being named in any potential lawsuits placed by Music publishers. Music publishers could claim that as a network owner, the Universities facilitated and did nothing to prevent students from illegally downloading content. Interesting that they don't seem to have the same issue with Students and Academics illegally unloading college course material.
Isolated stories about this trend have appeared in the tech press for the last few years as schools have tried to convince students (often with little success) to use sponsored solutions instead of peer-to-peer file-sharing. Early music solutions were often Windows-only and used DRM that was incompatible with the iPod, which generally led to failing grades for legal alternatives. Such services have also proved controversial at schools where student fees were used to fund them; the non-eyepatch-wearing landlubbers among the student body tended to object to this use of their money.

Sunday, October 12, 2008

MediaWeek 41

Library Journal reports that the lawsuit between Google and the AAP may be on the cusp of being settled:
Nearly three years after its initial filing, it appears a settlement may finally be near in publishers’ lawsuit over Google’s controversial program to scan books from library shelves. Although rumors of a settlement have flared up and died down intermittently over the years, sources wishing to remain anonymous this week told the LJ Academic Newswire and Publishers Weekly that talk of a final agreement has indeed heated up, with one publishing insider confirming that a settlement was “imminent,” although no solid time frame was known. is cutting some staff. Link

Continued negative news on the sale of Reed Business Information. If it happens at all the price looks like being much lower than expected. Bloomberg

NYTimes looks at how video games could spur reading in those who don't.

Tuesday, October 07, 2008

Springer Buys BioMed Central

Just announced from their press release. Looking forward, Springer may be the perfect (only?) partner to continue the experiment with Open Access and ensure BioMed remains true to its purpose.
Springer Science+Business Media has reached an agreement to acquire BioMed Central Group, the leading global open access publisher.

BioMed Central was launched in May 2000 as an independent publishing house committed to providing free access to peer-reviewed research in the biological and medical sciences. BMC is the largest open access provider in the world with over 180 peer-reviewed journals.

BioMed Central’s flagship journals include Journal of Biology, BMC Biology, BMC Medicine, Malaria Journal, BMC Bioinformatics and Genome Biology. BioMed Central has revenues of approximately EUR 15 million per year. The company is based in London, with a second office in Liverpool, and has approximately 150 employees.

Derk Haank, CEO of Springer Science+Business Media said: “This acquisition reinforces the fact that we see open access publishing as a sustainable part of STM publishing, and not an ideological crusade. We have gained considerable positive experience since starting Springer Open Choice in 2004, and BioMed Central’s activities are complementary to what we are doing. Additionally, this acquisition strengthens Springer’s position in the life sciences and biomedicine, and will allow us to offer societies a greater range of publishing options.”

Matthew Cockerill, Publisher of BioMed Central said: “We are very excited about this new phase of BioMed Central's growth and development. Springer has been notable among the major STM publishers for its willingness to experiment with open access publishing. BioMed Central has demonstrated that the open access business model can work, and we look forward to continued rapid growth as part of Springer. The support of our authors, journal editors and institutional customers has been vital to BioMed Central's success and we will continue to focus on offering the best possible service to these groups."

Peter Suber of Open Access News as more thoughts: Link

Frankfurt Next Week

The annual Frankfurt Bookfair starts next Wednesday and it is preceded by the annual International Supply Chain Specialists meeting where I have been asked to speak. My topic is Publishing in the Digital Age for which I have been allotted 20 minutes.

I will be posting the presentation here subsequent to or immediately after the event on Tuesday.

Also, please tell me if you are attending either the Supply Chain meeting or the Fair and would like to meet.

email: michael.cairns @

Greenwood To Close

On the heals of the deal by Harcourt to sell perpetual rights to the Greenwood list, the company will vacate its offices in Westport CT by year end. According to WestportNow, a company source has told them that approximately 150 positions will be lost when the pink slips go out in December.

Saturday, October 04, 2008


The UK publishing market is bracing for potential credit issues with the wholesaler Bertrams. Bertrams were acquired by Woolworths which appears to be in financial difficulties. Publishers are working with Bertrams to ensure supply to the market but also to protect their receivables and stock. As this article indicates, Bertrams are on very short terms. (Telegraph):
Tim Hely Hutchinson, UK chief executive of Hachette Livre publishing group, confirmed told trade magazine that Bookseller that he was in talks with Bertrams about new credit terms. "Following the sudden removal of credit insurance cover from the Woolworths group wholesalers, we have proposed new credit arrangements that will allow us to continue trading together," he said. Bertrams, which is run by Woolworths' entertainment division EUK, is understood to have been in negotiations with publishers for several weeks over demands for quicker payments to compensate for the lack of insurance cover. Woolworths strongly denied reports that major suppliers have temporarily halted trading through Bertrams, while negotiations over credit terms continued. Trade was continuing "as normal" insisted the spokesman.
From Lambeth (and its not often you say that), apparently the desire to pull the sheep over the eyes of taxpayers is alive and florishing (This is London)
Lambeth Council has been accused of inventing “ghost libraries” to con government inspectors and protect its position as London’s most improved local authority in a scandal dubbed “librarygate”. The accusation is based on the mysterious opening of three book-lending, cultural information hubs, the week before a vital inspection into the quality of the council’s cultural services. The centres - one which lent out no books at all - issued only 25 library books before being closed after six weeks but were still used to bolster figures about library opening times in the audit commission inspection, according to an email sent from a cultural services officer and seen by the Streatham Guardian.
Another bone-headed missive from Forbes' Sramana Mitra on Hardly an objective view of services available to the spectrum of authors and publishers. I didn't bother commenting on the first article she wrote and I am not sure I know why I bother with this one, only, it's FORBES! She signs off with the obligatory blinded me with science (numbers).

What does this mean for the book publishing business going forward? Are we about to see a degree of vertical integration, at least in certain nonfiction genres that have large Web presences? How big a role will Amazon play as it morphs its various on-demand offerings to recruit authors who are also entrepreneurs and Web-savvy marketers? And what about Kindle? While there are no publicly announced numbers about how many Kindle e-book readers have been sold, I know that many early-adopter techies have already standardized on Kindle.

The Techcrunch blog estimates the number of Kindles sold so far to be 240,000. Citigroup analyst Mark Mahaney is among the most bullish, calling Kindle Amazon's iPod. In an August report, Mahaney estimated that Amazon will sell 378,000 units this year and that Kindle will be a $1.1 billion business that accounts for 4% of Amazon's revenue in 2009. Pacific Crest's Steven Weinstein believes Amazon can sell more than $2.5 billion in e-books for the Kindle by 2012.

Thursday, October 02, 2008

USS Intrepid Goes and Comes Along the Hudson

This morning the Museum ship USS Intrepid returned from its refurbishment in Bayonne. It is all newly painted and the rust you could see on the waterline on the way south is now all gone. Back at the dock they have also made a lot of improvements. This is apparently one of the most popular tourist attraction in NYC.

ABC-Clio Acquires Greenwood Publishing Rights

In a deal announced this morning, Houghton Harcourt Mifflin has agreed to grant ABC-Clio a perpetual license to use the imprints and publish the titles of Greenwood Publishing Group, including Greenwood Press, Praeger Publishers, Praeger Security International and Libraries Unlimited. The announcement goes on to say HHM will transfer certain intellectual property, contracts and assets to ABC-CLIO and that the agreement is effective immediately. Terms have not been announced.

From the announcement:
"By combining Greenwood Publishings impressive and extensive list of titles with our experience in publishing widely respected databases, reference books and eBooks, ABC-CLIO is expanding its role as a leader in the publishing industry, said Ron Boehm, CEO, ABC-CLIO. We believe that we will launch the next generation of high-quality reference, professional development and other resources for education and libraries.
This looks like a good deal for ABC-CLIO. They gain a strong list of reference titles, a reputable publisher with a history of stable consistent operations and a reliable brand particularly in the library and educational community. Greenwood was part of Reed Elsevier for many years and was incorporated into the Harcourt business unit after Harcourt was purchased by Reed. That business was sold and Greenwood ended up at HHM.

Perhaps this is how deals will be done in the short term to compensate for the lack of credit.

Voyager Learning Company First Half 2008 Update

No SEC filing for the first half which is becoming something of a broken record for Voyager. The company held a conference call for investors which did motivate some analysts to participate in contrast to some prior calls.

Read it in full here.

Following are some selected quotes and those about the potential sale and valuation of the business are interesting.
Brad Almond

With that said, when we last provided an update via our July 22 press release, we anticipated that we would file our 2006 10-K by July, 31, 2008. We have obviously slipped from that target. We are in the final stages of preparation for the release of the 2006 10-K and expect to have it filed before the end of this month. We expect to file our 2007 10-K approximately four to six weeks after the filing of the 2006 10-K. We have been preparing the 2007 results and audit work in parallel with 2006 efforts and such work has been progressing very well to date.


Doug Asiello – Invesco

Hoping you would help me through what the implied free cash flow for your – for the firm will be, so let me just show – let me walk through my math and you can tell me where I am off. So that $19 million your current cash, $45 million from the tax refund, $25 million in operating cash flow, gives you about $89 million, less the uses of cash $5 million from the settlement, $4 million from the wrap-up of the legacy corporate, $3 million from the shut down of the headquarters. So if you expect to have $70 million at year-end, by my math you are generating about $20 million in free cash flow. Is that wrong?

Brad Almond

You are essentially right. We’ve – the math you’ve done, you add up all the pieces and our range would be – these are actually out at the highs and lows, all those ranges that I gave, you probably see something more in the $73 million to $83 million—

Doug Asiello – Invesco


Brad Almond

But however to account for any unknowns out there and therefore I gave a range of $70 million to $80 million.

Doug Asiello – Invesco

Alright. Okay, so let me ask a followup then. My enterprise value for your firm is roughly $100 million and you are generating $20 million in free cash flow. That’s five times free cash flow. And then I guess if you layer in SG&A cost and corporate overhead, I have a hard time believing there is not some strategic buyer out there that hasn’t thought that this is – this would be very easy to wrap – to roll up into their existing franchise and sales force at – and then kind of wipe out a good chunk of SG&A and corporate overhead at a extremely inexpensive valuation. What’s wrong with my analysis?

Wednesday, October 01, 2008

Chark Blog is Back

Richard Charkin's blog is back but in print form. Pan Macmillan has announced that they are selling a POD version of some of his posts from is highly popular blog. No word on when/if he is going to get back to blogging. Here is a summary from The Bookseller:
Chark in print: Pan Macmillan has released a p.o.d. version of former chief executive Richard Charkin's blog. According, to the publisher it translates into a pleasingly weighty tome, a wide-ranging collection of observations, views and reminscences about the state of publishing (and sometimes cricket) during a particularly interesting time in the industry's history. Orders can be placed here, and will take three working days to be despatched.

Borders Group Issues Warrants to Pershing Square Consistent with Previously Announced Agreement

From their Press Release this morning. No more details as yet regarding what this will mean for the management of the company. The implications of this must have been anticipated given the lack of success in reorganizing their assets but it remains to be seen whether Pershing Square will seek more influence than they already have. This result does place them squarely in the drivers seat regarding Borders future.

ANN ARBOR, Mich., Oct. 1 /PRNewswire-FirstCall/ -- Consistent with a previously announced agreement, Borders Group, Inc.(NYSE: BGP) today issued warrants to Pershing Square Capital Management, L.P. to purchase an additional 5.15 million shares of the company's common stock exercisable at$7.00 per share, subject to anti-dilution adjustments. The warrants are exercisable until October 9, 2014. The agreement, dated April 9, 2008, is detailed in Borders Group's 8-K filing dated April 11, 2008.

Gale Launches Content Syndication

Gale has long been an aggregator of news and information content but have recently announced a new program that allows users to visit and register on a web site, chose their content from over 500 subject areas, create a collection of content that is specific to their needs and requirements and then submit this to Gale for quote.
This is an interesting idea and they have had it in beta for several months. (I haven't tried it). What Gale appears to have done is push the content selection process closer to the consumer and away from the internal or sales staff that would have been intensely involved with customers in building content packages. This idea is very similar in concept to the airline reservation sites: Give the customer appropriate and powerful tools and they will do the work for you and possibly be far more satisfied.

The site is named and according to Information Today offers more than 10,000 titles (LINK).

Promoting Clean Data Health

BISG has announced the publication of a new best practices document: Product Metadata Best Practices for Data Recipients. This publication was prepared over several months by the BISAC Metadata Committee, led by Richard Stark of Barnes & Noble, and was contributed to by a large and diverse group of BISG members including publishers, booksellers, wholesalers and bibliographic agencies. The document is freely available from the BISG website (

Aimed at improving the accuracy, comprehensiveness and timeliness of data throughout the book supply chain, the publication establishes 14 points of best practice for recipients of product information, including standards for acknowledging receipt of data, best practices for making changes and notifying customers, guidelines for displaying the data, and a basis for helpful and timely communication between data recipients and suppliers. It also includes a glossary of common terms and definitions.

Michael Healy, Executive Director of BISG, noted,
“The prominent role played by BISG and BISAC in promoting high-quality product information in our industry has been established over many years in our work on the ONIX standard, best practice guidelines and more recently data certification. This new document, however, represents a change of focus. For the first time we are highlighting the vital role played by those who receive product information—booksellers, wholesalers and bibliographic agencies—in the overall effort to raise standards. Good product information is a collaboration and this new document sets out clearly what data recipients can do to help our industry sell more books through the provision of good data.”