Wednesday, May 28, 2008
Many years ago I attended my first BookExpo conference in Miami. On subsequent visits ever since, the rows upon rows of independent publisher booths have both awed and discouraged me. I have frequently said to friends and colleagues that as a reality check anyone considering establishing a publishing company should attend a BookExpo before committing dollar one. For many (myself included), there is a romantic notion attached to publishing which isn’t entirely undeserved; however, a trip through the aisles will prove that the unique idea you thought you had for the ideal publishing house or list is represented multiple times perhaps even in the same aisle.
At Bowker I saw a relentless procession of new publishers adding their information to Books In Print. Each year we saw approximately 10,000 new applications for ISBN numbers and these applications were fairly constant between the mid-1990’s and 2002. At the turn of the century, the numbers of new applications began to grow inexorably and is most likely well over 12,000 by now. The growth in self-publishing and the democratization of the publishing process is to ‘blame’.
In 2005, (if I recollect correctly from my Bowker years) 18 publishers produced almost 40,000 titles and 13,000 publishers produced 77,000 titles. (Including all titles the number published in 2005 was 180,000 give or take). On average, each of the 13,000 publishers published less than 10 titles per year. While these numbers reflect one year (2005) the data was proportionate to the entire Books In Print database of 5mm titles and 165,000 publishers. To emphasize the breadth of suppliers, I have heard Barnes & Noble say they order at least one title from 45,000 publishers in any given year.
All new publishers and existing independent publishers publish in every niche imaginable with lists ranging from one title to several thousand. Each publisher knows their market is intensely competitive and that titles will never be successful unless they are supported by an intensive focus on marketing and promotion. Naturally, some do this better than others.
There are significant challenges that small and medium publishers must overcome; getting their titles noticed is the greatest. At Sourcebooks, the company has adapted traditional advertising and marketing principles and applied them to the book industry. The results are instructive (and impressive). At the core of their business model is the understanding that each new title is a ‘product’ which requires a specific marketing and promotion plan. (Marketing’s four ‘p’s: product, promotion, price and place). At Sourcebooks, the difficult questions regarding how the title will be marketed and promoted are asked at the adoption stage rather than applied by rote as the book is being printed. Sourcebooks is a proven example that publishing can be done successfully by approaching the business less as an avocation and more as a market driven business. In order to be successful, more small and medium sized publishers will need to adopt similar programs to support their publishing efforts.
Other challenges abound. For example, we may begin to see the self-publishing model begin to impact the available pool of authors. Many authors may come to realize they can produce and promote their own title(s) and make more money rather than work with a traditional publisher. It has long been the case that the success of any title was dependent on the level of self-promotion provided by the author: As manufacturing and editing become commoditized, the author may wonder what a publisher’s value add will be if the titles’ success resides entirely on their promotional abilities. More authors may decide to do it themselves.
All businesses evolve and publishing is no exception; I see more and more independent publishers begin to adopt better financial controls, better marketing and promotion and make more astute title selections. While some significant challenges have occurred over the past 20 years – publisher consolidation, retailer consolidation, a reduction of independent bookstores – there have also been some impressive positive improvements. Opportunities represented by more effective use of technology, digital distribution and online advertising should all be experimented with, embraced and adapted to the publishing model. I also believe we will see more small and independent publishers seek out and work with some of the self-publishing companies (Author House, Lulu) where each supports the other’s business model. There remain opportunities in the independent publisher market: Look for me in the aisles in Los Angeles.
Tuesday, May 27, 2008
Improvement in Cash Flow:
Cash flow from operations improved by $132.9 million for the quarter compared to a year ago due in large part to improved inventory management,which generated $88.9 million in cash in the first quarter. Inventory decreased by $188.4 million at cost from the same period a year ago. Debt was reduced by $130.9 million compared to the prior year, including the prior year debt of discontinued operations. Commenting on the results CEO George Jones said:
"As was the case with nearly every other retailer, the challenging overall consumer environment hampered sales performance in the first quarter. I am pleased, however, that even within this difficult retail climate, we were able to manage inventory well, begin to aggressively reduce expenses, and end the quarter with better bottom line results than would have been expected in this type of environment. In fact, we worked with a third party advisor to develop a plan to reduce our annual operating expenses by$120 million, giving Borders a new, more effective base operating model going forward. We expect to realize about half of these savings within the current fiscal year and the full amount in 2009. We also
substantially improved cash flow and reduced debt in the first quarter -- both of which are critical factors in achieving our long term financial goals -- and as we announced in March, we completed financing to support our short term goals. While we have seen an improvement in sales in recent weeks, we will continue to aggressively execute expense reductions and manage our business conservatively, putting us in a much better position for long term success."
Mr. Riggio criticizes returns practices as "expensive." Perhaps he means it’s become expensive for the chains now that publishers have been squeezed so ruthlessly they have nothing left to give. Has it begun to dawn on executives like Mr. Riggio that, as powerful as the chains may appear to be, they are just another brick and mortar operation doomed to disintermediation by the Digital Revolution? So, now you want to end the consignment model of book distribution? Sorry, Mr. Riggio. The monster created by bookstore chains has the industry by the throat and will not let go. Returnability may be archaic, wasteful, stupid and fraudulent but publishers, bookstores and consumers are addicted and nobody is going to give it up. Not now, not ever. You’re welcome to try to reform the old business, Mr. Riggio, but that’s no longer where the game is being played.
Monday, May 26, 2008
Feel free to contact me if you are attending BookExpo and would like to meet. (michael.cairns @ infomediapartners.com)
Here is the panel description and some background on the panelists.
Digital Bundling: Considerations, Combinations & Costs
1:00AM - 12:00PM (Thursday, May 29, 2008)
Most publishers are committed to allowing consumers access to electronic versions of their books whether on their own account or via programs such as the Google Book program. Some publishers are going a step further and are allowing consumers to interact with and create their own products using the publisher’s content. As publisher’s build their content databases, digital bundling will become a significant part of the product mix and will change the concept of the customer – from bookstore to consumer - and the concept of the product – from book to service. Rapid improvements in technology will enable ‘mass customization’ of publishing products and will fundamentally change the relationship with customers. While many publishers are still tentative in their e-book experiments others are already experimenting with digital bundling. As these publishers experiment, what are their experiences, what are the issues and what costs exist as these publishers engage their customers in new and revolutionary ways? Hear from publishers who are experimenting or are contemplating launching making their content available to consumers for new and exciting products.
Panelists and Bios:
Sheila Clover English – CEO of Circle of Seven Productions, Executive Producer of Reader’s Entertainment TV and author of the ebook entitled The Book Trailer Revolution Book Marketing and Promotion Through Digital Video
Mrs. English is a member of the Association for Downloadable Media where her video performance rating system has been a topic of conversation, shared at the ad-tech convention and now under review with the Internet Content Syndication Council where Circle of Seven Productions has joined the likes of CBS, Associated Press, Google, Reuters, Studio One, NBC and other top media companies that will help shape the future of online video syndication.
Mrs. English has been interviewed by NPR, Newsweek Magazine and most recently The Wall Street Journal regarding book trailers and will be featured on the Robert Scoble Show this July talking about book trailers and online distribution.
A multi-award winning copy writer and executive producer and a member of the International Academy of the Visual Arts, Mrs. English has pioneered many milestones for digital video in the publishing industry. Her company, Circle of Seven Productions created the first book trailer to play in a movie theater, mall screens and the first to win the prestigious Telly Award.
Tom Hall is a Senior Digital Product Manager at Lonely Planet in Melbourne, Australia. For the past 2 years, he's been responsible for the development and launch of Pick & Mix, a program which allows consumers to buy, download and print individual chapters from Lonely Planet guidebooks. Prior to this, he managed the http://www.lonelyplanet.com/ home page and the ThornTree travel forum.
Tom has a long and checkered background in leading software projects and products. Prior to joining Lonely Planet in 2003, he was an IT Consultant to the Egyptian Ministry of Health in Cairo, and a Supervising Producer at Ninth House, a San Francisco eLearning startup. He has degrees in American Literature and and Writing from the University of California, San Diego.
Laurie Petrycki is the General Manager of the Head First and Missing Manual divisions at O’Reilly Media, Inc., where she oversees the development and creation of all products and services. In the Head First division, she and her team shape content to cultivate passionate users by making learning easy and fun for the brain. With the unique Missing Manual format, the goal is to respect readers' intelligence and help them get stuff done. As part of the publishing community for almost 20 years, Laurie has expertise in all sides of the business-- including editorial, production, and manufacturing--and has published on various technological and educational subjects.
David Wilk is an independent consultant and marketer (Booktrix.com) with broad experience in publishing, book packaging, sales, distribution, e-commerce and marketing. He has the privilege of working with authors, publishers and their books, in all formats, at the intersecting points of creativity, technology and cultural change. All applied to the traditional matters of art and commerce.
He has lately been working as a publishing industry consultant to Shared Book, a “reverse publishing” technology that enables content rich websites to give their users a broad array of publishing tools. Shared Book is inherently a mass customization and personalization engine. It is also somewhat chameleon-like, insofar as its many features can be deployed in different configurations, depending on the specific market needs of its site partners.
For example, children’s book publishers are using Shared Book to create extremely simple (and highly profitable) personalized versions of some of their classic titles, printed one at a time, with no changes to the essential art and text of the original books. Random House was first with Poky Little Puppy, the success of which was sufficient for them to be adding another 50 titles to the program this month.
Content rich sites including magazines that have extensive digitized and tagged content sites are enabling newly developed quick tagging tools which allow their site visitors to assemble a customized book from any article or photograph that sits on their site. Allrecipes.com and several other cooking sites give their users the ability to create customized and personalized cookbooks using either site supplied materials, or user generated content or both.
And there are even more complex uses possible with Shared Book’s sophisticated annotation engine – academic publishers and social networking sites are looking at an application that will allow professors to create custom texts for small or large study groups.
The applications of the highly evolved electronic publishing platform that Shared Book has created will enable traditional and nontraditional publishers to serve customers with the content they want in easily created customized and personalized forms.
Sunday, May 25, 2008
The mind of Waugh the writer was stimulated at Madresfield. He not only drank in the medievalism of the house, but also savoured his encounters with the aristocracy, studying their habits and developing 'perfect pitch' in describing their jargon. He was fascinated to learn that his friend's father, the 7th Earl, considered it middle class not to decant champagne into jugs; how effectively nicknames and idiosyncratic jargon could exclude an outsider; how scruffily dressed the aristocrat could be at home. With his ear for dialogue and his eye for mannerisms, Waugh absorbed them well enough to be able to reproduce them faultlessly - even reverentially - in his novels.
Friday, May 23, 2008
Carla Cohen: We kept one step ahead of the competition. We opened a coffeehouse before Starbucks was on the scene. The model for us was Kramer Books. We’re a much better venue for authors so we’ve never competed with Barnes & Noble on that. We can always do a better job keeping in touch with our customers and keeping publicity out about the events, so we’ve never had to compete. I think our biggest competition is with Amazon.com. Amazon makes it easy when people are sitting at their desks — which most of us are during the day — and you read something and go online and order it. You have to be an old-fashioned book-lover to say ‘I’ll wait until the weekend.’ We do get a fair amount of Internet ordering on our Web site with people who are going to pick it up later.
I had to comment on the post which you can read if you follow the link above.
In other B&N news, the company saw a small increase in revenues to $1.16 billion in the first quarter, from $1.15 billion in the year-ago period. Earnings were significantly impacted by an $8mm pretax charge related to sales tax withholding. The company said it lost $2.22 million, or 4 cents per share, in the quarter ended May 3. That compares with a loss of $1.67 million, or 3 cents per share, in the year-ago period. Excluding the charge, the bookseller would have earned 5 cents per share. Same store sales declined slightly in the period.
B&N Conference Transcript: SeekingAlpha
Net sales for the 13-week period decreased 0.7% to $115.5 million from sales of $116.3 million in the year earlier period. Comparable store sales for the quarter decreased 3.4% when compared to the 13-week period for the prior year. At quarter end we were operating 207 total stores. During the quarter we opened one new superstore and closed two Booklands. Gross margin as a percent of sales was 29.3% compared to 29.0% last year. The increase as a percent of sales was partially due to lower discounts and markdowns versus last year. Operating expenses as a percent of sales increased to 24.6% for the quarter from 23.2% in fiscal 2008. The increase as a percent of tax is primarily due to a one-time charge of $406,000 ($241,000 net of taxes) for severance related to staff reduction at the company’s headquarters. Depreciation expense increased $114,000 to $3.5 million from $3.3 million.
Shares in BAM trade around $8 close to its 12mth low and the company has a market cap of $126mm. Their 52 week high is $20.70. There are 16mm shares outstanding and in recent months insiders have purchased 2.5mm shares (16%). Primary among this group are CEO Cochran and Chairman Anderson.
"It was a demanding year for many retailers as a result of the significant increase in the Canadian dollar. Booksellers in particular saw a meaningful decrease in book prices. Despite this downward pressure on our top line we are pleased with ourAt the end of 2007, Indigo operated 249 stores including 88 superstores under the banners Indigo, Chapters and the World's Biggest Bookstore, and 161 small format stores under the banners Coles, Indigo, Indigospirit, SmithBooks and The Book Company. Over the past year the company's share price has fallen from a high of $16 to its current $13. It had been below $12, but the company announced a buy-back program that may have aided its recent up tick.
From the press release:
Total revenue for the quarter increased 2.1% to $206.2 million. On a comparable store basis,Indigo and Chapters superstores posted 3.4% growth, while Coles small format stores were up 2.4%. Sales from Indigo's online channel, Chapters.indigo.ca,grew 1.0% to $24.7 million. The Company's net earnings for the fourth quarter were $3.1 million, up$7.3 million from the same quarter last year. Pre-tax earnings rose$6.1 million to $1.9 million. For the full year, total revenue increased 5.5% to $922.9 million while net earnings were up 76.0% to $52.8 million. Included in this year's results was a $8.8 million non-cash tax recovery. Pre-tax earnings rose $14.1 million to $44.1 million.
In response to recent inquiries, Borders Group, Inc. (NYSE: BGP) today reported that the company is in the midst of the strategic alternatives process and has not engaged in substantive discussions regarding any specific transaction to date. The company does not intend to make any further comment while the process is ongoing.There has also been an inordinate amount of interest in the reports of B&N taking a look at the Borders business. Few reports seem to offer any kind of analysis on the merits of any type of combination and even fewer seem interested in a wondering who the 40 or so other companies/entities are that have indicated some level of interest.
At the meeting, Jones was quoted as saying: "The investments that we've made during the past year ... certainly affected our financial performance in 2007... We feel that this is the year when we'll start reaping some of those benefits." (FreePress) It has always been a wonder to me that this company continues to invest in an expensive 'bet the company' revamp of its retail presence (off and on-line) while management is claiming they are cash strapped. As an investor, you would expect to reap all those benefits but not only could their timing not be worse but management don't appear to know when to both change course or ratchet back on the spending throttle.
In the UK, high street retailer WH Smiths have been linked with a bid for Paperchase. Reports suggest a value of $100mm (some say higher some say lower). The best thing that could happen for Borders is for PE to buy the whole thing. Only months ago, Paperchase was viewed as a key component of the company's future business strategy but having needlessly mortgaged the business, Jones and co have backed themselves into a corner where selling assets that should be supporting them in a downturn is considered as viable solution to their problems. Rest in peace.
Thursday, May 22, 2008
"I hate media stocks."...."The world got changed by two companies," he says. "Apple is taking away the profitability of TV, and Google is taking it away in print. And it's never going to reverse." In the near term, Google is the bigger villain."It's just a parasite," he says. "It doesn't create content, it steals it, borrows it, shares it. It's no secret that print media is in trouble. It's why Gannett has gone from $80 a share in 2001 to less than $30 nowadays and why the New York Times has gone from $50 to less than $19 in the same time frame.Time Warner, too, is saddled with print by way of a huge magazine business. Time Warner is a content company for old people," Cramer says. "I try to get my kids to read magazines and newspapers, but no kids do. It's a tragedy."
He doesn't care too much for book retail either.
The following is a description of the patent application which has apparently been approved by the US Patent Office.
A method (Figure 3) for creating and managing customized print media through an enhanced content management process is disclosed. A print media customer, which may be an individual or organization, is profiled to determine content preferences (step 122). Profiling may be based on face-to-face or electronic surveys, Internet usage patterns, buying patterns, or other criteria. Content associated with the preferences is obtained and analyzed (step 124). Content affinities, or relationships between the content and other content in a content network, are determined, and may influence the print media produced (steps 128 and 130). A history of the content is maintained, to ensure content is not duplicated (step 126). Both substantive and non-substantive content, such as advertising content, is used. Both the content and layout of the print media can be customized (step 132).The "steps" refer to a diagram. Further details of the above appear here. The description of the patent includes the following:
And then lastly,
This invention provides a comprehensive method for effectively creating and managing customized print media through an enhanced content management process.
Summary of the Invention: In accordance with the embodiments described herein, method comprises customizing print media for organizations and individuals. The information for customization may derive from computer-based applications, internet-based sources, or more traditional, non-electronic survey techniques.
While the invention has been described with respect to a limited number of embodiments, those skilled in the art will appreciate numerous modifications and variations therefrom. It is intended that the appended claims cover all such modifications and variations as fall within the true spirit and scope of the invention.Is this yet another example of the USPO inability to guage real innovation versus patenting "processes." Or is PND over reacting?
Wednesday, May 21, 2008
Barnes and Noble has put together a team of executives and advisers to look
into the possible acquisition, the Journal said, citing a person familiar with the situation. Borders said in March that it might sell itself as it has struggled with liquidity and economic issues that have cut into customers' discretionary spending.
Time will tell if this amounts to much.
And while you are there, check out his "what I have learned in four years of blogging"
Tuesday, May 20, 2008
(Also, looks like his name is spelled with a K and not a c: Markus).
UPDATE FROM BERTELSMANN CORPORATE:
Hartmut Ostrowski, Chairman and CEO of Bertelsmann AG, announced today that Peter Olson, 58, will step down at his own initiative from his positions as Chairman and Chief Executive Officer of Random House and as a member of the Executive Board of Bertelsmann AG, effective May 31. Olson will pursue an academic career. Markus Dohle, 39, will become the new Chairman and CEO of Random House. He was appointed by the Supervisory Board of Bertelsmann AG and will succeed Mr. Olson on the Bertelsmann Executive Board as of June 1. Mr. Dohle is presently member of the Arvato AG Executive Board and CEO of Arvato Print. Dohle’s successor at Arvato will be announced shortly. The Direct Group North America reporting line will shift from Peter Olson to Bertelsmann’s Chief Financial Officer Thomas Rabe.In addition to the above announcement, Ostrowski also announced that
Richard Sarnoff, President of Bertelsmann Digital Media Investments and a member of the Supervisory Board of Bertelsmann AG, will take on the additional role of Co-Chairman of Bertelsmann, Inc., reporting to Bertelsmann CFO Thomas Rabe, effective immediately. In this new position, Mr. Sarnoff will play a key role in Bertelsmann's strategic and corporate development activities in the US, where he will work in close cooperation with executives from the divisions and the Corporate Center. Hartmut Ostrowski stated: “The US market is the world's largest and most dynamic in media as well as services, and as Bertelsmann both refines and expands our portfolio of activities in the US, we are fortunate to have an executive of Richard Sarnoff's caliber, profile, expertise, and background to take on the Co-Chairman role at Bertelsmann, Inc.”
Academic and Professional:
Revenues for the quarter up 17.3% to $157.6mm with EBITDA up sharply to $13.6mm
YTD Revenues up 6.8% to $948.9mm with EBITDA up 6.2% to $414.2mm
Revenues for the quarter were down 5.5% to $61.9mm with EBITDA down 11.7% to $21.1mm
YTD Revenues down 4.4% to $229.3mm with EBITDA up 4.8% to $102.6mm
Revenues for the quarter were up 9.4% to $67.3mm with EBITDA up 87.9% to $(0.7)mm
YTD Revenues were up 7.7% to $259.3mm with EBITDA up 18% to $35.4mm
Sunday, May 18, 2008
The locked-in perception of the book as a unit or a product has also led to digital ‘strategies’ which largely consist of the digitisation of existing print texts in order to create eBooks. This in turn has led to an obsessive focus on the reading device and a perception that the emergence of a ‘killer device’ will be a key driver in unlocking a digital future for books in the way that the iPod was, say, for music. This is a flawed perspective in a number of ways, not least because it fails to recognise the enormous amount of online or digital ‘reading’ that already takes place on non-book-specific devices such as desktop PCs, laptops, PDAs and mobiles, but also because it fails to recognise that the very nature of books and reading is changing and will continue to change substantially. What is absolutely clear is that publishers need to become enablers for reading and its associated processes (discussion; research; note-taking; writing; reference following) to take place across a multitude of platforms and throughout all the varying modes of a readers’ activities and lifestyle.
Saturday, May 17, 2008
PUBLISHERS ARE REACTING angrily to what one senior executive described as a “crude” attempt by Amazon to increase its discount. “It is going from publisher to publisher with extortionate demands, and if it does manage to get a figure from one publisher it is then going back to the first house and saying x has agreed to such-and-such.”
Bloomsbury recently had a terms dispute with the bookseller which resulted in Amazon removing the 'Buy Now' button from certain Bloomsbury titles on its site. But one CEO commented: “We are prepared to lose a year's sales with Amazon. They may try many things but we are not moving. We have been foolish enough to give in and grant generous terms in the past, but we're not giving any more.”
Friday, May 16, 2008
Adam Hodgkin at Exact Editions reports on the same announcement and captures the essence perfectly:
It is a mostly waffly and empty letter and will not carry weight in the tussle between Google (which should have minimal need for the EPUB format) and Amazon which is broadly on the books-are-a-file side of the fence and ought to be using EPUB for its Kindle, but is not. Whether digital books are citeable and searchable, page-fixed, digital resources; or electronic texts within a Kindle/Sony/Iliad reader will be clearer in a year or two. I doubt that it will be settled by October of this year.
Thursday, May 15, 2008
Wednesday, May 14, 2008
Carlyle and Apax are among those considering a bid for the group, which has a arket capitalisation of £1.64billion. No approaches are understood to have been made. Informa's shares have fallen almost 40 per cent since it announced the acquisition of Datamonitor for £502million in May last year amid widespread de-rating of Media stocks amid fears of an economic slowdown. Some analysts have raised concerns about Informa being hit by its high debt levels after the Datamonitor acquisition and partial dependence on the financial services sector.Earlier this year, Informa has announced that David Gilbertson would resign as chief executive and from the board to take up the role of CEO at EMAP. EMAP has itself been purchased by a private equity group and the move by Gilbertson was a surprise. Together with now current CEO Peter Rigby they had built Informa into a the largest provider of Trade Shows in the world and a significant professional publishing company.
Monday, May 12, 2008
People familiar with Random House’s parent Bertelsmann said that the German media group had decided against promoting Random House UK head Gail Rebuck or German chief Joerg Pfuhl in order to bring a fresh pair of eyes to theBertelsmann is famous for placing relatively young executives in positions of high responsibility and the paper goes on to mention one Marcus Dohle a 39 year old executive at Arvato.
business. In his first high-profile personnel decision, Bertelsmann chief executive Hartmut Ostrowski is expected to opt for a Germany-based executive from either media services division Arvato, the unit he once ran, or book-clubs unit Direct Group.
Noting how Arvato under Ostrowski was able to expand the size of their competitive marketplace by expanding their business offering, the paper suggests that is how Ostrowski would like Random House to think. Other publishers in the professional and information segments have been doing this successfully for a number of years, but the strategy has yet to be proven in trade. Publishers such as Elsevier and West now compete in markets that are an order of magnitude larger than what could be considered traditional publishing. I believe something of the same model can be developed for trade and all of the major trade publishers will be thinking the same thing. Time will tell which publisher gets there first.
And there is more from New York Magazine:
A stronger personality might have disciplined Random, but there’s a good case to be made that the conglomerate was a victim of its own strategy. Size gave it strength against bookstores, but big-box outlets and Amazon provide sales velocity now. Random, and the rest of the industry, has little or no leverage with them. Were they really going to keep Grisham out of Costco? What would they get in return?
Meanwhile, Random’s size became a liability. Even with megahits like Bill Clinton’s memoir and The Da Vinci Code, the company’s annual revenue has been stagnant. To maintain its 20 percent share, the company has to publish around 2,000 titles, while more-efficient rivals like Hachette do under 500 titles for about 10 percent of the market. It’s a quarter of the work for half as much market share.
Personally, I find the construct of this article a little silly. It ends with the suggestion that Olson saw himself as 'last of the publishing moguls' - did he? I'm not too sure that one holds up.
Sunday, May 11, 2008
to the top having pushed aside the hated Arse but almost letting in Chelsea by the back door. You may wonder why I have this screen shot from the start of the season but I had faith the team would win.
I hear red is still the prevailing color choice in Moscow.
Saturday, May 10, 2008
It seems that some Toronto taggers are no longer content to scrawl their own names on blank concrete canvases around the city and are trying instead to make more of a cultural statement. Last year, references to composer Gustav Mahler popped up in several places around town. This year, a more cryptic stencil has appeared on the Humber Bay Arch Bridge, boldly proclaiming "ISBN 486-28495-6" for all to see and ponder. This International Standard Book Number turns out to be a paperback edition of Henry David Thoreau's Walden; Or, Life in the Woods.
Thursday, May 08, 2008
Bertelsmann, the international media company, today reported strong first quarter fiscal 2008 results. First-quarter operating profits (Operating EBIT) were up by 9.6 percent compared with the previous year. Operating EBIT for the period under review amounted to €217 million (Q1/2007: €198 million). These developments were driven by the continuing positive performance of the major core businesses. Group net income improved to €35 million (Q1/2007: €-70 million). Meanwhile, revenues declined by 3.9 percent year-over-year to €4.2 billion. Adjusted for portfolio changes and foreign-exchange effects, revenue decreased 1.7 percent year-over-year. The revenue performance reflected negative foreign-exchange effects due to the Euro’s strength relative to the U.S. dollar and British pound. Revenues were also impacted by declines in sales of physical recordings and revenues at Direct Group in North America. Adjusted for portfolio changes and foreign-exchange effects, Bertelsmann expects a moderate rise in revenues for 2008. The Company expects operating results for 2008 will be on par or slightly above the high levels seen in 2007. Group net income will be well above 2007 due to fewer special items and lower interest expenditure.
The company announced earlier this month that they have hired Morgan Stanley to sell the Direct Business.
Bertelsmann investor presentation reflecting the full year results from all divisions. Here. (RH revenue of $1.8bill and op income $172mm for 2007).
Operating income as described in NewsCorp's press release was as follows:
HarperCollins reported third quarter operating income of $29 million, in-line with the same period a year ago. The current quarter included strong sales of Naughty Neighbor by Janet Evanovich, Stop Whining, Start Living by Dr. Laura Schlessinger, Lady Killer by Lisa Scottoline, Fancy Nancy, Bonjour Butterfly by Jane O.Connor and The Chronicles of Narnia: Prince Caspian by C.S. Lewis. During the quarter, HarperCollins had 54 books on The New York Times bestseller list, including 4 titles that reached the #1 spot.
Again, no mention of the performance of Harpercollins on the earnings call.
On another note, Harpercollins UK announced last year that they were establishing a site for authors which they named authonomy. The site is now in private beta and is covered by fellow traveller James Bridle at Booktwo.org.
The real challenge, of course, is to persuade wannabe writers to post their work at all - in my own personal experience, unpublished writers are terrified of their work being ’stolen’, enough to be suspicious of publishers themselves, let alone your average web surfer. The Front List, a previous attempt at a “YouTube for books”/”crowdsourcing the slushfile”-type site, solved this by hiding everything from non-members; one approach certainly, but not one likely to bring in the crowds.
James is also an author.
Just another example of how Amazon is willing to move up and down the supply chain. Interestingly, the author of the article does note the controversy around the BookSurge situation but perhaps the more interesting point is about how Amazon will use their own demand analysis to determine which recordings to produce. Perhaps not so obvious is the impact on all the Amazon affiliates who have businesses supplying rare and hard to find recordings. Are they doomed?
Amazon, Sony BMG, and EMI Music said that they will make hundreds of out-of-print albums available on Amazon's Web site through CreateSpace's Disc on demand service. Some of the titles that have been restored to availability include Hatari Soundtrack by Henry Mancini, Earthquake Weather by Joe Strummer, Motorcade of Generosity by Cake, Telepathy by Bill Stewart, Foreign Intrigue by Tony Williams, and Carryin' On by Grant Green. A few of the recordings being made available through Disc on Demand are new releases rather than reissues, such as the upcoming title in KCRW's Sounds Eclectic series. The arrival of brand-name, major-label content should enhance the credibility of CreateSpace's media on-demand service, which has yet to shake of the stigma associated with self-publishing. CreateSpace was born last August. It used to be called CustomFlix, which Amazon acquired in July 2005.
Wednesday, May 07, 2008
In fairness, here is the list:
- A Nest of singing Birds: One Hundred Years of the New Zealand School Journal by Gregory O'Brien, published by Learning Media
- Bill Hammond: Jingle Jangle Morning by Jennifer Hay, published by the Christchurch Art Gallery
- Edwin and Matilda: An Unlikely Love Story by Laurence Fearnley, published by Penguin Books NZ Ltd
- Mau Moko: The World of Maori Moko by Ngahuia Te Awekotuku, published by Penguin Books NZ Ltd
- New New Zealand Houses by Patrick Reynolds and John Walsh, published by Random House New Zealand Ltd
- New Zealand's Wilderness Heritage by Les Molloy and Craig Potton, published by Craig Potton Publishing
- Ribbons of Grace by Maxine Alterio, published by Penguin Books NZ Ltd
- Soundtrack: 118 Great New Zealand Albums by Grant Smithies, published by Craig Potton Publishing
- The Road to Castle Hill by Christine Fernyhough with Louise Callan, published by Random House New Zealand Ltd
(At least they are books and not rulers - which is an inside joke that only my past colleagues will get).
May 7, 2008 to Danish publishers and booksellers in Copenhagen on the Future for Publishers and Booksellers: Here
April 16, 2008 to UK publishers at London Book Fair, summarizing US state of affairs reporting on "The State of Digitization in the US": Here
March 10, 2008, "Publishing in the Digital Age" panel participant remarks at Book Business Conference and Expo: Here
January 22, 2008, rewritten reprise of "The End of General Trade Publishing Houses", to Random House's "Digital Day": Here
BN.com will sell subscriptions to over 1,000 magazine titles, available in both digital and print formats, at prices up to ninety percent off newsstand cover
prices. Digital subscriptions will be available within minutes of purchase for viewing on desktops and laptops. In addition, more than 12,000 back issues of hundreds of magazine titles will be available digitally for purchase as single copies.
A digital Cosmo (first one I saw, not one of my usual reading sources) is on sale on Zinio's site for $12.00 and on the B&N.com site for $12.00 or $10.80 with a membership card. So, some advantage at B&N. Selling magazines is a natural combination made especially clear given the amount of store space given to magazines in a typical B&N superstore. One wonders why this has taken so long. B&N is betting on the electronic delivery as the future play here rather than the print subscriptions. Print is a logistics nightmare where margins are razor thin which is why none of the big book web retailers have pushed print magazine subscriptions in the past. (Admittedly, fulfillment could have been done by third parties but it is still the B&N brand that goes on the package).
B&N will allow users to use the same Zinio "see inside" feature with the magazine content (probably not Playboy since they say only 'certain' magazines). Marie Toulantis, CEO of B&N noted the following:
Our magazine offering gives our customers the ultimate flexibility to consume their favorite magazines both digitally and/or in the more traditional print form via a subscription. By growing our relationship with Zinio, and introducing a partnership with M2 Media Group, we will be the only retailer to offer both options in an integrated shopping experience.The Zinio relationship may be symptomatic of a larger strategic play that B&N may be engaged in that is, the evolution to the digital superstore. They will have watched the morphing of Newsstand.com with some concern. Under the LibreDigital brand, this company is in the process of expanding their digital delivery and content management tools to publishers and have notable deals with Harpercollins and Harlequin. B&N may be slightly aggrieved that this seller of newspapers and magazines has now inserted themselves into the publishing supply chain where B&N believes they should have reign. Adopting digital magazine distribution is only a skirmish in what may be a protracted battle for supremacy in the digital content supply chain.
Tuesday, May 06, 2008
There are some success stories and there are likely to be more as publishers willingly and generally otherwise, look to the web for revenue growth. The NYTimes discusses how magazine publisher International Data Group which is the biggest publisher of technology magazines has successfully made this transition. From the article:
Advertisers and readers of high-tech publications have moved online more swiftly than other audiences, so I.D.G. may offer a glimpse of the future of publishing. Yet the transition at I.D.G. came only after years of investment, upheaval and changes in its practice of journalism. “The excellent thing, and good news, for publishers is that there is life after print — in fact, a better life after print,” said Patrick J. McGovern, the founder and chairman of I.D.G.
The article goes on to note that InfoWorld is now generating ad revenue of $1.6mm per month with an operating margin of 37% whereas the combination print and web product of a year ago was a break-even operation. Since their market is technology they have some advantage over other types of magazines; however, their navigation of this transition is instructive and predictive of the manner in which publishers will ultimately become successful.
In IDG's case they have remained faithful to the mission of providing content their core market wants, aggressively managing the performance of their titles and shutting down those that don't perform and they have combined staff into cohesive and focused groups. Companies that make this transition early and successfully will establish difficult to surmount positions relative to their competitors; thus it becomes harder for the second, third and fourth players to garner the ad revenue and secure transaction revenues and fees necessary to become successful.
Monday, May 05, 2008
Surely not a non-american!
Mr. Olson, who has run Random House, the world’s largest consumer publisher, since 1998, has come under mounting pressure in recent months as Bertelsmann’s financial results have been damaged by lower profits at Random House and steep losses in its American book clubs, which he also oversees.
It was not yet clear who will replace Mr. Olson, although these executives said it would not necessarily be a prominent figure from New York publishing, and maybe not even an American.
On a related note, Thomas Middelhoff took exception to comments The Economist made in an article on Bertelsmann under incoming CEO Ostrowski. Among them the following:
His rebuttle in the letters to the editor was as follows:
Perhaps because he has Arvato up his sleeve as a source of future growth, Mr Ostrowski appears to be far less interested in the internet than other media bosses. Losses made by Mr Middelhoff's internet ventures may also contribute to his caution. “I will not put a bet on one or two big internet investments; we must build an online presence organically,”
SIR – I do not agree with the statements in your recent article (Face value, March 22nd) concerning my term as chief executive of Bertelsmann. The development of the company between 1998 and 2002—ie, the creation of the RTL Group, the acquisition of Random House, etc—have not “strained” Bertelsm€ann's finances in any way. At the time of my retirement its debt amounted to €334m (with revenues of €20 billion). RTL Group today contributes more than 50% towards Bertelsmann's profit.
I also do not agree that my “internet ventures” were costly in general. Selling the company's AOL shares and its 50% stake in AOL Europe and the sale of mediaWays, an internet-service provider, generated a profit of €10 billion.
In the three-and-a-half-years of my leadership Bertelsmann doubled its revenue, tripled its operative profit and quintupled its net equity. Not a bad result compared
with the company's present situation, almost six years after my resignation.
€10 billion profit isn't too bad now is it?
The FTSE-100 media group is near to finalising a deal to buy LEC, a group of 15 Shanghai private schools, The Sunday Telegraph has learned. The deal, likely to be announced this week, underlines Pearson's aim to expand its Chinese operations as the country's economic growth presents opportunities for foreign companies. Demand for English language tuition is at an all-time high in mainland China as a result of the country's continuing integration into the global.Pearson has been buying educational assets aggressively in the US for several years; however, they have not purchased schools per se. In China, they may be considering a more expansive expansion across the entire education value chain from content creation to delivery. In other developed Asian markets such as Korea and Japan, private education plays a significant role in the education of Children and a similar structure is developing in China. For Pearson to participate in that market development only makes sense.
Friday, May 02, 2008
On came the choir first to do several song on their own and then to join Crowded House on the first few songs of their 2 hour plus set. It was magical. The kids were great, their joy was transparent and they showed no stage fright with a couple of the kids doing solos.
As you watch the video (which is the first song of the Crowded House set), look at the faces of the kids and think about the breadth of the backgrounds, experiences and ethnicity that they represent. It is quite incredible and it's what New York is all about.
Needless to say, it was a great night out.