Wiley(ie) Beyond Print

Last week at the Frankfurt bookfair sponsored Contec digital conference, John Wiley & Sons CEO Steve Smith made it clear that not only is Wiley moving aggressively into digital content but the company is also moving beyond traditional educational publishing into services and data products. Smith mentioned the recent Wiley acquisition of education services provider Daltek and, in the process, he displayed and discussed a much expanded value chain that describes the current Wiley business.


Following the model of industry leader Pearson, Wiley is in the process of transforming its' business and this change has fundamental implications for the company. As Smith stated, "The old model with students was rather ephemeral and quick: they came in, we sold them a book. Now we are developing ongoing relationships with students that will last four years or more." Not only is this changing Wiley's approach to its' market but their total market opportunity is also growing.  This business strategy is a model we have seen content companies like Pearson and Lexis Nexis follow very successfully over the past ten years. Smith admitted during his speech that the market growth expectations for their new value chain are 'explosive' and far above the financial limitations which their traditional library market imposes on them.


In describing the strategy behind how Wiley is reinventing themselves he admitted that while the company is now digitally based, if they exited this phase of their reinvention as "a 100% digital publishing company, that is still not enough. We need to develop products and services that go beyond digital.”


As he outlined his company's tactics they seemed to fall into three focus areas: process, network and corporate development.


From a process stand point the company will need to,

• go deeper into the communities served to gain a deep knowledge of workflows
• invest in new solutions to solve pain points
• evolve content to include semantic enrichment and other enhancements facilitated by the web and social networking
• include a broader community of researchers, scientists, teachers, etc. and enable solutions for more job and task functions and purposes
• a focus on outcomes that can be proven to work as a result of the Wiley products and services

Attributing the benefits of a network and community approach to their community the company will:

• establish a mechanism for finding researchers, experts, authors and other key participants
• develop more education solutions for teachers and students
• leverage strengths and assets - particularly their content strengths - that support collaboration and community
• expand knowledge and links with communities served and support the development of creativity and innovation in communities

From a corporate development perspective, Smith admitted that the company needed to acquire companies in order to support the value chain proposition he described.  Notably, he spoke about the Daltek acquisition and how that business had filled out his value chain beyond the capabilities of the traditional Wiley business.  Wiley he said, would always be looking for "companies that can accelerate our transformation".

The Wiley Copyright Case Reaction

As you probably know, the case regarding re-importation into the US of books sold in another country which was brought by John Wiley & Sons against a Thai 'importer' was lost today when the Supreme Court decided to overturn the lower courts ruling in favor of Wiley. Instead, in a 6-3 decision the court sided with the defendant (Kirtsaeng).

The Wiley statement in response is terse but here is the AAP statement in reaction to the case:

Washington, DC; March 19, 2013 — The following statement was released today by Tom Allen, President and CEO, the Association of American Publishers, in response to the Supreme Court’s decision in Kirtsaeng v. John Wiley & Sons, Inc:

“We are disappointed that today’s copyright decision by the US Supreme Court ignores broader issues critical to America’s ability to compete in the global marketplace. To quote Justice Ginsburg’s dissenting opinion, the divided ruling is a ‘bold departure’ from Congress’ intention ‘to protect copyright owners against the unauthorized importation of low-priced, foreign made copies of their copyrighted works’ that is made ‘more stunning’ by its conflict with current US trade policy.

“The Court’s ruling on a narrow question of statutory construction revealed diverse views among the Justices on whether Congress, in enacting the importation prohibitions, intended to facilitate the ability of publishers and other US copyright owners to segment their foreign and domestic markets with different pricing strategies in order to compete effectively in global trade.

“The decision will have significant ramifications for Americans who produce the books, music, movies and other content consumed avidly around the world. The Court’s interpretation of the ‘first sale’ provision of US copyright law will discourage the active export of US copyrighted works. It will also reduce the ability of educators and students in foreign countries to have access to US-produced educational materials, widely considered the world’s gold standard.

“Despite their differences, all of the Justices acknowledged the increasingly critical importance of foreign markets to the well-being of the US economy and that the impact of US copyright law on the development and growth of American participation in global trade is ultimately a matter for Congress to decide. AAP expects that Congress will likely consider whether the impact of the Court’s divided ruling on the ability of US producers to effectively compete in global markets requires legislative clarification. AAP will be prepared to participate on behalf of publishers in whatever process Congress undertakes to consider and address these issues.”

Other reaction:

Publishers Weekly

Statement from John Wiley & Sons Inc.

Libraries appear excited:  This from the The Library Copyright Alliance (LCA) which consists of three major library associations — the American Library Association, the Association of Research Libraries, and the Association of College and Research Libraries:

Today the US Supreme Court announced its much anticipated decision in Kirtsaeng v. Wiley a lawsuit regarding the bedrock principle of the “first sale doctrine.”The 6-3opinion is a total victory for libraries and our users. It vindicates the foundational principle of the first sale doctrine—if you bought it, you own it. All who believe in that principle, and the certainty it provides to libraries and many other parts of our culture and economy, should join us in applauding the Court for correcting the legal ambiguity that led to this case in the first place. It is especially gratifying that Justice Breyer’s majority opinion focused on the considerable harm that the Second Circuit’s opinion would have caused libraries.

Selections from the opinion on FindLaw:

Wiley filed suit, claiming that Kirtsaeng's unauthorized importation and resale of its books was an infringement of Wiley's §106(3) exclusive right to distribute and §602's import prohibition. Kirtsaeng replied that because his books were "lawfully made" and acquired legitimately, §109(a)'s "first sale" doctrine permitted importation and resale without Wiley's further permission. The District Court held that Kirtsaeng could not assert this defense because the doctrine does not apply to goods manufactured abroad. The jury then found that Kirtsaeng had willfully infringed Wiley's American copyrights and assessed damages. The Second Circuit affirmed, concluding that §109(a)'s "lawfully made under this title" language indicated that the "first sale" doctrine does not apply to copies of American copyrighted works manufactured abroad.
...
Section 109(a) says nothing about geography. "Under" can logically mean "in accordance with." And a nongeographical interpretation provides each word in the phrase "lawfully made under this title" with a distinct purpose: "lawfully made" suggests an effort to distinguish copies that were made lawfully from those that were not, and "under this title" sets forth the standard of "lawful[ness]" (i.e., the U. S. Copyright Act). This simple reading promotes the traditional copyright objective of combatting piracy and makes word-by-word linguistic sense.

In contrast, the geographical interpretation bristles with linguistic difficulties. Wiley first reads "under" to mean "in conformance with the Copyright Act where the Copyright Act is applicable." Wiley then argues that the Act "is applicable" only in the United States. However, neither "under" nor any other word in "lawfully made under this title" means "where." Nor can a geographical limitation be read into the word "applicable." The fact that the Act does not instantly protect an American copyright holder from unauthorized piracy taking place abroad does not mean the Act is inapplicable to copies made abroad. Indeed, §602(a)(2) makes foreign-printed pirated copies subject to the Copyright Act. And §104 says that works "subject to protection" include unpublished works "without regard to the [author's] nationality or domicile," and works "first published" in any of the nearly 180 nations that have signed a copyright treaty with the
United States. Pp. 8-12.
....
A nongeographical interpretation is also supported by other provisions of the present statute. For example, the "manufacturing clause," which limited importation of many copies printed outside the United States, was phased out in an effort to equalize treatment of copies made in America and copies made abroad. But that "equal treatment" principle is difficult to square with a geographical interpretation that would grant an American copyright holder permanent control over the American distribution chain in respect to copies printed abroad but not those printed in America. Finally, the Court normally presumes that the words "lawfully made under this title" carry the same meaning when they appear in different but related sections, and it is unlikely that Congress would have intended the consequences produced by a geographical interpretation.
....
But the law has not been settled for so long in Wiley's favor. The Second Circuit in this case was the first Court of Appeals to adopt a purely geographical interpretation. Reliance on the "first sale" doctrine is also deeply embedded in the practices of booksellers, libraries, museums, and retailers, who have long relied on its protection. And the fact that harm has proved limited so far may simply reflect the reluctance of copyright holders to assert geographically based resale rights. Thus, the practical problems described by petitioner and his amici are too serious, extensive, and likely to come about to be dismissed as insignificant--particularly in light of the ever-growing importance of foreign trade to America.

Wiley Copyright on Colbert Nation

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
Judge, Jury & Executioner - Copyright Law
www.colbertnation.com
Colbert Report Full Episodes Political Humor & Satire Blog Video Archive

Changes in Educational Publishing: The Textbook in the 21st Century

A repost from July 13, 2006.  A still relevant post regarding the evolution of the textbook. 

As I have mentioned before, I believe educational publishing - particularly in College - to be an industry ripe with opportunity and therefore very interesting. Challenges obviously exist but educational publishers have an opportunity, facilitated by the internet, to build a virtuous circle connecting the publisher/author, student, educator, advisor and institution. (Even the parent could be part of this grouping). Traditional publishing content remains the 'glue' within this grouping but publishers are also building 'platforms' adding sophisticated testing and evaluative modules, administrative modules and ultimately a social networking component that will further facilitate a level of communication among the groups heretofore unheard of. I have spoken a little about this in an earlier post.

There will be many changes resulting from this different publishing paradigm not least of which the content itself. I doubt many publishers would contest the notion that the existing construct of the traditional published text book will remain the same for much longer. In the not too distant future the course textbook is going to have more in common with an online newspaper that it will with a physical print product encased in board. Editorial and authorship may become more important than it currently is since the product will become dynamic and subject to on-going news events, reinterpretations and the feedback from users. Incorporation of audio and video, blogging and chat also add a 'real time' component that will require monitoring and management.

What is interesting about this article in the NYT today is that it highlights the significant fallibility of the textbook unit when viewed from today’s 'instant update' environment. The article points out a number of things including the surprising similarity across texts, the apparent lack of motivation to change - evidenced by continuing to publish 'name' authors in updated editions even after they were decreased and the clear lack of feedback from user to publisher/author that allowed continued publication of the same material year after year.

In many ways the article makes publishers out to be dummies but there may have been important reasons to leverage a known author for many years. Profits. Institutions, Professors, etc. act conservatively and go with what they know. Rebuilding around a new author increases the risk that the customer may go to a competitor. In addition, from a publisher point of view it is easier to tweak an existing text than start over with a new one. (Although in reading this article you may gain the impression that none of them ever start from scratch).

All the big educational publishers - Wiley, Pearson, Harcourt, McGraw Hill are building online educational content that is - or will represent - a fully interactive educational product. For publishers to gain direct access to a student that enables the student to build an online bookshelf of educational material that they can carry with them forever, and furthermore to establish a relationship with the student after they leave college, is what these publishers are really looking for. Exciting stuff if you are a publisher. And great benefits for students and educators as well.

MediaWeek (Vol 5, No 34): Copyright, Digital Public Library, Colleges & Big Data + More

University of California at Berkeley professor Dr. Pamela Samuelson in The Chronicle from a few weeks ago on Copyright reform and the creation of a comprehensive digital library (Chron):

The failure of the Google Book settlement, however, has not killed the dream of a comprehensive digital library accessible to the public. Indeed, it has inspired an alternative that would avoid the risks of monopoly control. A coalition of nonprofit libraries, archives, and universities has formed to create a Digital Public Library of America, which is scheduled to launch its services in April 2013. The San Francisco Public Library recently sponsored a second major planning session for the DPLA, which drew 400 participants. Major foundations, as well as private donors, are providing financial support. The DPLA aims to be a portal through which the public can access vast stores of knowledge online. Free, forever.

Initially the DPLA will focus only on making digitized copies of millions of public-domain works available online. These include works published in the United States before 1923, those published between 1923 and 1963 whose copyrights were not renewed, as well as those published before 1989 without proper copyright notices, and virtually all U.S.-government works. If a way can be found to overcome copyright obstacles, many millions of additional works could be made available.

It's no secret that copyright law needs a significant overhaul to adapt to today's complex information ecosystem. Unfortunately the near-term prospects for comprehensive reform are dim. However, participants at a conference last spring at Berkeley Law School on "Orphan Works and Mass Digitization: Obstacles and Opportunities" believe that modest but still meaningful reforms are possible.

Her comment about the institutional license for the Google database reminded me of the analysis I completed in 2010.

The Atlantic takes a more detailed look at the Digital Public Library (of America):

The DPLA is the most ambitious entrant on the digital library scene precisely because it claims to recognize this need for scale, and to be marshaling its resources and preparing its infrastructure accordingly. With hundreds of librarians, technologists, and academics attending its meetings (and over a thousand people on its email listserv), the DPLA has performed the singular feat of convening into one room the best minds in digital and library sciences. It has endorsement: The Smithsonian Institution, National Archives, Library of Congress, and Council on Library and Information Resources are just some of the big names on board. It has funding: The Sloan Foundation put up hundreds of thousands of dollars in support. It has pedigree: The decorated historian Darnton has the pages of major publications at his disposal; Palfrey is widely known for his scholarship on intellectual property and the Internet; the staging of the first meeting on Harvard's hallowed campus is not insignificant. Ideally, the consolidation of resources—specialized expertise, raw manpower, institutional backing and funding—means that the DPLA can expand its clout within the community, attract better financial support, and direct large-scale digitization projects to move toward a national resource of unparalleled scope and functionality. "We believe that no one entity—not the Library of Congress, not Harvard, not the local public library—could create this system on its own," Palfrey says. "We believe strongly that by working together, we will build something greater."

The Economist takes a look at an exhibition at the British Library on the life of Shakespeare (Econ):

Shakespeare is such a global brand that the man himself almost disappears. The aim of “Shakespeare: Staging the World”, at the BM until November 25th, is to make the playwright specific and particular, to root him in his time, 400 years ago. The exhibition summons his physical world with an array of culturally evocative objects, many of which were used in “Shakespeare’s Restless World”, a splendid BBC radio series presented by the BM’s director, Neil MacGregor, earlier this year.

The show unfolds in a dark circular space, with curving rooms that wind from one to the next, each subtly lit and discreetly atmospheric of its contents: arrow slits in the room about the history plays, a hint of trees to suggest Warwickshire and the Forest of Arden, a touch of charring on black walls for the gunpowder and witchcraft of James I’s reign (when Shakespeare wrote “Macbeth”), and finally a pale dawn for the Americas, the “brave new world” of “The Tempest”. All this sits within the embrace of the old Reading Room, its shelves and dome dimly glimpsed through gaps here and there. This globe within a globe, as it were—one full of artefacts, the other of books—glances at the play between word and object that underlies the exhibition.

Fascinating (potentially spooky) article at the NYT on how colleges are beginning to use "big data" to manage student performance and even play match maker (NYT):

Data diggers hope to improve an education system in which professors often fly blind. That’s a particular problem in introductory-level courses, says Carol A. Twigg, president of the National Center for Academic Transformation. “The typical class, the professor rattles on in front of the class,” she says. “They give a midterm exam. Half the kids fail. Half the kids drop out. And they have no idea what’s going on with their students.”

As more of this technology comes online, it raises new tensions. What role does a professor play when an algorithm recommends the next lesson? If colleges can predict failure, should they steer students away from challenges? When paths are so tailored, do campuses cease to be places of exploration?

“We don’t want to turn into just eHarmony,” says Michael Zimmer, assistant professor in the School of Information Studies at the University of Wisconsin, Milwaukee, where he studies ethical dimensions of new technology. “I’m worried that we’re taking both the richness and the serendipitous aspect of courses and professors and majors — and all the things that are supposed to be university life — and instead translating it into 18 variables that spit out, ‘This is your best fit. So go over here.’ ”

From the Twitter this week:

ALA Releases Report on Library E-book Business Models Publishers Weekly

Media Decoder: Google to Buy Frommer's From Wiley Publishing New York Times

MediaWeek Report (Vol 5, No 22a): Pearson Buys Global English + McGraw-Hill, Cengage, Wiley Education News

Getting to be a recurring story: Pearson buys a language learning company this time Global English located in California.  Pearson paid $90 million.  From the press release:

Founded in 1997 in California, GlobalEnglish is a leading provider of cloud-based, on-demand Business English learning, assessment and performance support software. It serves more than 450 corporate customers, including 20 per cent of the Forbes Global 2000 companies, including General Electric, HSBC, Tata Consultancy Services and Unilever. Its product suite is uniquely suited to serve the needs of global professionals with a comprehensive offering - formal Business English learning coursework, informal and social learning capabilities, performance support tools, an enterprise collaboration platform, a mobile app, assessments and a premium one-on-one coaching service. GlobalEnglish’s Business English content is also entirely focused on the application of Business English to real life business situations such as composing emails and participating in conference calls, and its efficacy is highly rated by global companies and their employees. Approximately 75 per cent of GlobalEnglish’s more than 200,000 active subscribers are in fast growing economies in Latin America and Asia

McGraw Hill announced some executive changes in advance of their Education spin-off (Press Release):

To continue the process of building a world-class team to lead the new education company, the Corporation is appointing Patrick Milano, currently Executive Vice President and Director of the Program Management Office of the Corporation's Growth and Value Plan, to the new position of Chief Financial Officer and Chief Administrative Officer of McGraw-Hill Education.  Mr. Milano, a multi-year veteran of McGraw-Hill, including in the education segment, has successfully led the separation phase of the Growth and Value Plan since last year.  In this new role, he will be responsible for Finance, Manufacturing, Distribution and IT, reporting to Jack Callahan, Chief Financial Officer of The McGraw-Hill Companies, until the new Chief Executive Officer of McGraw-Hill Education is appointed.  Joe Micallef, currently Senior Vice President, Finance and Operations, will work closely with Mr. Milano on standing up McGraw-Hill Education before retiring following a very successful career at the company.  (More)

Cengage announced their Q3 results last month (Press Release)

Revenue for the third quarter 2012 is estimated to be between $335 million and $340 million as compared to $319 million for the same period in the prior year. Excluding National Geographic School Publishing (“NGSP”), acquired on August 1, 2011, revenue for the third quarter 2012 is estimated to be between $325 million and $330 million driven by growth in the higher education market. Domestic Learning revenue, excluding NGSP, is estimated to be $205 million to $210 million, as compared to $194 million for the same period in the prior year.
Adjusted EBITDA for the third quarter 2012 is estimated to be between $67 million and $72 million. The prior year third quarter Adjusted EBITDA of $89.7 million did not include an accrual for incentive compensation, but did include a credit related to a reversal of an accrual for incentive compensation accrued during the first half of fiscal 2011. On a comparable basis to this year‟s third quarter, Adjusted EBITDA for the third quarter of the prior year would have been $65 million.
Excluding NGSP, Adjusted EBITDA for the third quarter 2012 is estimated to be between $70 million and $75 million. Adjusted EBITDA for NGSP is negative for the quarter primarily due to seasonality as well as one-time costs related to achieving synergies from the integration of NGSP into Cengage Learning.

Here is the full 3Q report

In their investor presentation Cengage also provided this update to their debt refinancing effort:

We completed the previously announced amendment and extension of our Credit Agreement whereby we:

• Extended the maturity of $1.3 billion of our existing Term Loan, net of a partial pay down, to July 2017
• Provided for new commitments to maintain the existing $300 million of revolving credit facility availability until April 2017 resulting in a total extended and non-extended revolving credit facility of up to $525 million until July 2013, $300 million thereafter. We also completed our previously announced private placement of $725 million senior secured notes due in April 2020. These notes bear interest at a coupon rate of 11.5% and were issued at par. We used a portion of the proceeds from these notes to pay down $489 million of the extended term loan.

Anyone interested in how the education business is doing will be disappointed in the deck.

In case you missed it Harcourt's "Official Statement" on their bankruptcy (Press Release):

Today, Houghton Mifflin Harcourt filed a “pre-packaged” comprehensive financial restructuring plan that will strengthen the Company financially so we can continue to invest in our business and ensure we are well positioned for the future. This plan, which is supported by the vast majority of our key financial stakeholders, will eliminate $3.1 billion of debt through a debt to equity transaction, and reduce our annual cash interest costs. The Company today lodged voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York. With a more appropriate capital structure to support our strategic plan and business objectives, we will have greater financial flexibility to pursue growth opportunities.

John Wiley released their 3Q results earlier in the month (Press Release):

John Wiley and Sons, Inc. (NYSE: JWA and JWB), a global provider of content and workflow solutions in areas of scientific, technical, medical, and scholarly research; professional and personal development; and education today announced results for the third quarter of fiscal year 2012:

• Revenue growth of 1% including and excluding foreign exchange (or "FX")
• Revenue by segment, including FX:  STMS +3%, P/T -6% and Education +2%
• Adjusted EPS grew 8% to $0.91, or 6% excluding FX.  Growth was driven by top-line results, prudent expense management and lower interest expense and income taxes.
• Shared Services and Administrative Costs excluding FX, were up 3% to $91 million, driven principally by technology spending to support investments in digital products and infrastructure.   
• Outlook:  Reaffirming FY12 revenue guidance of low single-digit growth excluding FX and EPS guidance in a range from $3.15 to $3.20 including the effect of FX and excluding the unusual tax benefits.  
• Acquisition:  In February, Wiley acquired Inscape Holdings, a leading global provider of workplace learning solutions, for $85 million in cash. Inscape will be integrated into Wiley's Professional/Trade business where it will combine Wiley's extensive reservoir of valuable content and its global reach in leadership and training with Inscape's technology, distribution network, and talent expertise, including the innovative EPIC online assessment-delivery platform and an elite network of nearly 1,700 independent consultants, trainers, and coaches. Annually, Inscape generates approximately $20 million in revenue.
• Divestment:  On March 7, 2012, Wiley announced that it intends to explore opportunities to sell a number of its consumer print and digital publishing assets in its Professional/Trade business as they no longer align with the company's long-term business strategy.  Fiscal Year 2011 revenue associated with the assets to be sold was approximately $85 million with a direct contribution to profit, before shared-service expenses, of approximately $6 million.  Assets include travel (including the well-known Frommer's brand), culinary, general interest, nautical, pets, crafts, Webster's New World, and CliffsNotes.  Wiley will re-deploy resources in its Professional/Trade business to build on its global market-leading positions in business, finance, accounting, leadership, technology, architecture, psychology, education, and through the For Dummies brand. 
• Share Repurchases: Wiley repurchased 520,000 shares this quarter at a cost of $23 million.  The Company has 2.9 million authorized shares remaining in its program.

MediaWeek (Vol 5, No 18): Cloud Education, Navigating LBF, NYPL Rennovations, Pottermore + More

Is the cloud the future to revolutionizing education?  Gordon Freedman in the Chronicle proposes some interesting ideas (Chron):

The problem with many academic systems is that they are "dumb" to who their users are, what they are doing, and what other systems they are using. This is largely because colleges have different buyers for different functions—learning management, student-information systems, digital-content management, campus analytics, and e-mail systems.
While there are single sign-on systems to get to all of these systems with one log-on, that does not make them "smart." A smart system integrates all of these functions to do two things: serve the end user (students, faculty, administrators) and interpret the data to improve performance.
At the moment there is no clear path to smart systems in higher education. The big data and identity engines of Silicon Valley are not idling, however. They are starting to accelerate, with the higher-education market squarely in their sights. While private equity is rearranging many of the traditional education-technology and content players, mostly on the East Coast, a new breed of venture-backed education start-ups are taking what their founders learned at Google, Facebook, Zynga, and Twitter and focusing on education.

How goes the London Book Fair?  Mark Medley from Canada's National Post follows Canadian publisher House of Anansi Press around the fair (NatPo):

There isn’t much trembling at the fair, at least on the surface. The London Book Fair makes you forget about the paper-thin profit margins, closing bookstores, and falling advances. Walking through Earls Court’s cavernous main hall, one is transported to an alternate-universe where the popularity of books is at an all-time high. It is a circus atmosphere: a man on stilts distributes leaflets; pirates welcome visitors to the L. Ron Hubbard display; a half-naked man hands out copies of 50 Shades of Grey. While there are plenty of smaller displays, the larger publishing houses have all built lavish shrines to the printed page. Wiley’s booth is equipped with 23 individual meeting desks and looks more like a stock market trading floor than a book fair display; Hachette’s multi-tiered mansion rises two storeys in the air, like a middle finger, and Little, Brown, part of the Hachette empire, flaunts an oversized photo of J.K. Rowling, as if to remind other publishers that they, and not you, are publishing her upcoming novel.
“We keep it in the basement, I guess, and wheel it out for every London Book Fair,” says Stuart Williams, an editor at The Bodley Head, an imprint of Random House UK, when I ask where the booths come from.
Over in Earls Court Two, which opened in 1991, adding 17,000 square metres of floor space, the Chinese contingent dominates the centre of the mammoth hall. Nearby is the sleek and minimalist Digital Zone, where attendees wait for the day they take over the main space. Dozens of individual countries are present, from Romania to Saudi Arabia to Turkey, next year’s market focus. The Sultanate of Oman is housed in a castle. There are also booksellers, textbook and university publishers, business books, children’s publishers, travel guides, accessories for e-readers. There are even booths advertising other book fairs, such as the Sharjah International Book Fair, which takes place in the U.A.E.

The debate over the New York public library's house cleaning continues (IHE):

Efforts to spin the news are to be expected. Much more of a problem with the proposed changes is the lack of transparency. The actual Central Library Plan itself had not been made public last year, when The Nation published Scott Sherman’s long report on the proposed changes. Four months later, it still isn’t. Nor are officials responsive to serious questions. When the New York writer Caleb Crain was invited to join an advisory panel concerning the Central Library Plan, he assumed it meant the administration would be forthcoming about details. At least he cleared up that misunderstanding pretty quickly. “I don't think anyone should expect this advisory panel to have much investigative authority or capacity,” Crain wrote on his blog two weeks ago. “I've pressed as hard as is consonant with civility, and I'm afraid I don't have much to show for it publicly. I've been given private answers to some of my questions, but I worry that unless the answers are offered to the public, there's no way to recruit outsiders to help fact-check them, and no way to hold the library accountable later for promises implicit in its reassurances.”

 The Economist on Pottermore and the power of Rowling.  I continue to believe Pottermore is a storefront and platform for a lot more than the Potter franchise. (Econ):

“With great power comes great responsibility,” is a lesson learned by Harry Potter, Frodo Baggins and Peter Parker. High expectations are the price of Pottermore’s guaranteed success. Ms Rowling knows full well that she, like The Boy Who Lived, does not abide by ordinary rules. Already she has changed the e-book retailing model. By retaining her own e-book rights, and then forcing Amazon and others to sell them via Pottermore, as well as offering vastly extended access to libraries and schools, she is evening the playing field. Fans responded by buying $1.5m in e-books in the first three days, particularly the seven-book set. The sales are fundamental, Mr Redmayne says, to financing the free Pottermore platform, which can be accessed in a variety of languages.
Whether Ms Rowling and her team can bring this same disruptive innovation to the Pottermore world itself, and sustain the momentum of the original series remains to be seen. How fast, and how creatively, the site builds out will determine the answer. An entire world of linking interactivity between the digital books and the online universe of Pottermore is possible. The medium is in its infancy. One thing is certain: if there’s anyone who can turn an e-reader into a device that “apparates” from the everyday into the truly magical, it will be Harry Potter.

Thinking about NetFlix and their changed business model that generated so much aggro (S&B):

In October 2011, one of the great backflips in the annals of business strategy took place. Netflix Inc., the most prominent video rental service company in the world, had begun to charge separately for its DVD-by-mail service and its streaming service in July, which in effect had increased prices by 60 percent for customers who used both services. Then, in September, Netflix had gone further, announcing it would split those services into two separate businesses, renaming the DVD-by-mail operation Qwikster. Consumer protests, conducted largely over the Internet, forced the retraction in October; Netflix announced it would revert to providing a combined service under one brand. By November, the company’s market cap had dropped by 70 percent and more than 800,000 subscribers had fled. The online mea culpa that CEO Reed Hastings wrote to customers only added fuel to the flames. In January 2012, a group of investors sued the company for loss of profits. Clearly, a bit of the company’s luster as a Silicon Valley darling has been lost, and Reed Hastings’s reputation as a strategically adept CEO has been damaged.

From the twitter this week (PND):

Flipboard is ‘head-on competitor’ on Economist’s road to all-digital Paidcontent

Apple's iBooks Author: the iTunes of self-publishing apps? Arstechnica

The digital world has invigorated publishing, not doomed it Guardian 

If Harvard Can’t Afford Academic Journal Subscriptions, Maybe It’s Time for an Open Access Model Time

Pearson says first-half profits will dip - FT

Fight heats up between John Wiley and patent lawyers over journals Paidcontent

U of M opens up to open source textbooks MINN Public Radio

MediaWeek (Vol 5, No 17): Academic Publishing, Canadian Copyright, Linked Data + More

I was in London all week where I had a terrific London Book Fair and met many new publishers and partners which accounts for the lack of posts this week - even missed my weekly photo image.

Academic and Scientific publishing is still hitting the main stream news with little or no real counter pr campaign mounted by the publishers in question.  Elsevier is taking the brunt of the attention as in this article from the Observer on Sunday:

The most astonishing thing about this is not so much that it goes on, but that people have put up with it for so long. Talk to university librarians about extortionist journal subscriptions and mostly all you will get is a pained shrug. The librarians know it's a racket, but they feel powerless to act because if they refused to pay the monopoly rents then their academics – who, after all, are under the cosh of publish-or-perish mandates – would react furiously (and vituperatively). 

And as you might imagine there are many comments.

In an opinion piece the Economist also weighs in:

There are some hopeful signs. The British government plans to mandate open access to state-funded research. The Wellcome Trust, a medical charity that pumps more than £600m ($950m) a year into research, already requires open access within six months of publication, but the compliance rate is only 55%. The charity says it will “get tough” on scientists who publish in journals that restrict access, for example by withholding future grants, and is also launching its own open-access journal. In America, a recent attempt (backed by journal publishers) to strike down the existing requirement that research funded by the National Institutes of Health should be made available to all online has failed. That is good news, but the same requirement should now be extended to all federally funded research.

A little hysteria in the run up to London Book Fair from the Guardian:

It's not only new names commanding attention at this year's London Book Fair, a three-day event attended by over 24,000 publishing professionals from around the world, where rights in the hottest new books are bought and sold. Literary novelist William Boyd's take on the James Bond legend, announced last week, has already been sold to publishers in Germany and France, while agent Deborah Rogers has been signing deals left, right and centre for McEwan's latest. Set in 1972, Sweet Tooth is the story of Serena Frome, the daughter of an Anglican bishop, as she enters the intelligence service and falls for a promising young writer while on a mission. Out in the UK this summer, Rogers has already sold it to 14 other countries and promises this is "just the beginning". "It's only just come in and it's moving very quickly," she said. "A new Ian is always a very exciting moment."

There's been a copyright wrangle in Canada for the past 12 months or so which keeps percolating nicely (Canada.com):

The deal between the Association of Universities and Colleges Canada and Access Copyright, which collects money for copyright holders from such institutions as schools, libraries and businesses for the right to photocopy and distribute copyrighted works.
Under terms of a deal announced earlier this week, students could pay more than $25 per semester to access copyrighted materials. That's up from less than $4 a semester in 2010.
Under the former agreement, students were charged 10 cents per page for printed readings and similar works.

Nature have launched a linked data platform to aid searching over their 450,000 journal articles (Folio):

Essentially, this linked data platform connects publication dates and other features within manuscripts like institutions, journal titles, volumes, issues and authors. That creates what Wilde refers to as triples.
“A triple is an object, an assertion and a destination,” he says. “A subject, a predicate and an object are the official way of describing it. Many believe linked data itself is the next generation of the Internet and semantic Web—being able to understand and create links between information that may not necessarily be directly linked. For example you can say an article is written by me and via linked data you can find out what else I’ve done—you’re starting to create connections of information by how they relate to each other.”

In the Economist I found this interesting in how behavioral economics are being used in public policy

All this experimentation is yielding insights into which nudges give the biggest shove. One question is whether nudges can be designed to harness existing social norms. In Copenhagen Pelle Guldborg Hansen, founder of the Danish Nudging Network, a non-profit organisation, tested two potential “social nudges” in partnership with the local government, both using symbols to try to influence choices. In one trial, green arrows pointing to stairs were put next to railway-station escalators, in the hope of encouraging people to take the healthier option. This had almost no effect. The other experiment had a series of green footprints leading to rubbish bins. These signs reduced littering by 46% during a controlled experiment in which wrapped sweets were handed out. “There are no social norms about taking the stairs but there are about littering,” says Mr Hansen.

John Wiley is working with Blackboard to make the Wiley content available to Blackboard users as an integrated option (Press Release):

The field trial involves students, faculty and campus administrators across 42 courses at two and four-year higher education institutions in the U.S. and Canada. More than 50 instructors and 2,900 students have been providing ongoing feedback on their experience with the integration that significantly enhances the use of Wiley’s content within the Blackboard Learn™ platform.  Instructors have expressed great satisfaction with the integration, which lets them easily add digital content to their courses in Blackboard Learn and synchronize grades and other data from Wiley’s research-based, online teaching-and-learning-environment, WileyPLUS.  “I can set up my Blackboard class and integrate WileyPLUS assignment links with Blackboard tools, like discussion boards,” said Julie Porterfield, an Anatomy and Physiology instructor at Tulsa Community College. “Students can easily tell in what order they need to complete certain tasks and assignments. I have been using WileyPLUS for four years and so far, this semester is even more successful in terms of student use and tracking data.”

From Twitter:

Supreme Court to rule on “grey market” goods in books case PaidContent

Not a good weekend in sports (and I was there to make it worse) MEM.

MediaWeek (Vol 5, No 11); Wiley Results + More

John Wiley released their annual results this week.  From their press release:

Management Commentary
"Growth in STMS and Global Education was partially offset by weakness in our Professional/Trade business.  Unfavorable comparables to the prior year as a result of the bankruptcy of Borders in December 2010 weighed heavily on our Professional/Trade results this quarter," said Stephen M. Smith, President and CEO. 

Mr. Smith continued, "After conducting a strategic review of the Professional/Trade business, we have decided to explore opportunities to divest several consumer print and digital publishing assets to focus on information and solutions for professionals and lifelong learners. To that end we recently acquired Inscape Holdings, a leading provider of workplace learning and assessment solutions.  The acquisition will combine Wiley's valuable content and global reach in leadership and training with Inscape’s online assessment-delivery platforms, talent expertise and network of 1,700 independent consultants, trainers, and coaches."

"In STMS, we are encouraged by calendar year 2012 journal renewals, which are proceeding slightly better than expected.  Book sales have been softer than we expected but most of our leading indicators are positive, including our society wins and online usage.  Global Education showed modest growth this quarter."

"While the global economic environment remains difficult, we are very optimistic about the opportunities we see in research, professional development, and education.  We are excited with our recent acquisition, which will allow us to provide content-enabled services in leadership and training, globally.  And we are focused on reducing costs and improving efficiencies across the business."

Outlook
Mr. Smith concluded, "Based on results for the first nine months and other leading indicators, we are maintaining our full year revenue guidance of low single-digit growth, excluding FX and our EPS guidance of $3.15 to $3.20, including FX and excluding the unusual tax benefits."

• Revenue growth of 1% including and excluding foreign exchange (or "FX")
• Revenue by segment, including FX:  STMS +3%, P/T -6% and Education +2%
• Adjusted EPS grew 8% to $0.91, or 6% excluding FX.  Growth was driven by top-line results, prudent expense management and lower interest expense and income taxes.
• Shared Services and Administrative Costs excluding FX, were up 3% to $91 million, driven principally by technology spending to support investments in digital products and infrastructure.   
• Outlook:  Reaffirming FY12 revenue guidance of low single-digit growth excluding FX and EPS guidance in a range from $3.15 to $3.20 including the effect of FX and excluding the unusual tax benefits.  
• Acquisition:  In February, Wiley acquired Inscape Holdings, a leading global provider of workplace learning solutions, for $85 million in cash. Inscape will be integrated into Wiley's Professional/Trade business where it will combine Wiley's extensive reservoir of valuable content and its global reach in leadership and training with Inscape's technology, distribution network, and talent expertise, including the innovative EPIC online assessment-delivery platform and an elite network of nearly 1,700 independent consultants, trainers, and coaches. Annually, Inscape generates approximately $20 million in revenue.
• Divestment:  On March 7, 2012, Wiley announced that it intends to explore opportunities to sell a number of its consumer print and digital publishing assets in its Professional/Trade business as they no longer align with the company's long-term business strategy.  Fiscal Year 2011 revenue associated with the assets to be sold was approximately $85 million with a direct contribution to profit, before shared-service expenses, of approximately $6 million.  Assets include travel (including the well-known Frommer's brand), culinary, general interest, nautical, pets, crafts, Webster's New World, and CliffsNotes.  Wiley will re-deploy resources in its Professional/Trade business to build on its global market-leading positions in business, finance, accounting, leadership, technology, architecture, psychology, education, and through the For Dummies brand. 
• Share Repurchases: Wiley repurchased 520,000 shares this quarter at a cost of $23 million.  The Company has 2.9 million authorized shares remaining in its program.
  

Writing in the Guardian, Frederick Filloux doesn't quite "defend the agency model" more like the status quo:

Pricing an item should be left to the one who produces it. The case of the book publishing industry is not as simple as, say, that of an appliance maker looking for the most potent retail channel for its hairdryers or toasters. The book sector is entering a painful transition: first, it needs to respond to consumers who want a large catalogue of inexpensive ebooks; second, there is a plateauing but still strong print market ($73bn worldwide). Managing a smooth decline for this segment is key to the industry's health, especially as the ebook market yields thinner margins. Legacy publishers are culturally ill-equipped for such a difficult transition; they now find themselves competing with the agile, cash-rich, data- and technology-driven players of the digital world.

From Twitter:

The Amazon Paradox: Coming to Terms With Publishing's Colossus,by Peter Osnos | The Atlantic  

Librarians Feel Sticker Shock as Prices for Random House Ebooks Rise 300 Percent - http://goo.gl/2vYex

MediaWeek (Vol 4, No 52): Year in Review

Looks like I only missed three editions this year:

Week 51: ChromeBooks, Durrell eBooks, Hitchens & Dogs, Unbound & Vogue

Week 50: Khan Academy, Academic Libraries, Harvard Business School, Consumer Reports + More

Week 49: Revamping GED, HS Corporate Marketing, Book Blogging, Pretty Books + More

Week 48: Orwell on Police Actions, Dickens and Economist Book Festival + More

Week 47: Lobbying for On Line Learning, Loan Bubble + More

Week 46: WW I Archive Goes Online, Mrs Beeton's 150, Silicon Valley's Daily, Cookbook Aps +More

Week 45: The New A&R, Problem Biographies, Scan your Books, Education, Libraroes + More

Week 44: Books in Browsers, Photography, Drivel + More

Week 43: Tom Waits, Children's Books, The Booker, "Close the Libraries", Textbooks & Education + More

Week 42: Frankfurt, CS Forester, Martin Amis + More

Week 41: Frankfurt 2011, Indian Authors, Digital Rights,

Week 40: Scholarly Models, Literary Translations, Library usage Data, Fading Creative Class +More.

Week 39: Robert Harris, Dickens, Cultural Decline (or not), Colm Toibin + More

Week 37: Scholarly Publishing, Project Gutenberg, Literary Festivals, Lawsuits, + More

Week 36: Amazon Digital Library, Piracy, Newspaper Disruption, Private Blackboard + More

Week 35: Distance Learning, Libraries and E-Books, Digital Textbooks + More

Week 34: Content Management Systems, Student Knowledge, Textbook Rentals, Archives + More

Week 33: The Chronicle of Higher Ed on the 10th Anniversary of 9/11

Week 32: Digital Storytelling, Report on Graduate Earning Power, Citation of Wikipedia, Forsyth's Jackal + More

Week 31: Financial resutls: Pearson, Wiley, Wolters Kluwer, Reed Elsevier

Week 30: Arundhati Roy, JSTORE Illegal Downloads, Kaplan's $1.6mm Bill, High Journal Prices, Three Rules of Reviewing + More

Week 29: Library of Congress, Bertelsmann, Michelin Guides, Bookstores, P.G. Wodehouse, Education Funding Report + More

Week 28: Hacking May Cost $100mm, Potter's Last-Not so Fast, Blackboard, Harvard & Social Hot water, Catch22 + More

Week 27: ProPublica's Newspaper Apps, Hemingway, EMI + More

Week 26: Books In Print, Journal Publishing, Joyce, Education and Technology, Area 51 and more.

Week 24: Georgia Copyright Case, Blackboard, HW Wilson, David Mamet's PR Campaign + More

Week 23: Romance or Not, Grief in The Killing, The Value of College, Nordic Crimewave + More

Week 22: Patriot Act, ALA Preview, Revolution Writing + More

Week 21: End of World Edition - An Essay on Privacy, Books & Marketing, Libraries + More

Week 20: Ebooks in the Classroom, Writers Life, Libraries Matter, Bob Marley

Week 19: EBooks on Campus, Jeffrey Archer, LexisNexis Sued, Archiving the Web

Week 18: Higher Ed, Author Promotion, Harper Lee, Libraries + Others.

Week 17: Morrissey, King James, Big Content, Sneering at Genres, Hitch, + More

Week 16: Alberto Vitale, Arab Market eBooks, B2B Magazines.

Week 15: Borders, Indigo

Week 14: Long Distance Learning, OpenSource Textbooks, CCC, Harpercollins

Week 13: Bookclub for the Homeless, Plagiarism or "Creative Reuse", Hollywood, Gallimard, Jean Auel

Week 12: Hay Festival, Reviewers, Heart of Darkness, Alice in NYC,

Week 11: UK Copyright, The Killing, History in the UK.

Week 10: Spy Magazine, Hiaasen, Casino Royale, Curious George and Ryan Giggs

Week 9: Information Concierge, Future of Education Publishing, Blackboard, The $16K/mth Sideline, Blurbs,  Marilyn Monroe

Week 8: Demise of Research Libraries, Online Education, Sir John Soane, Cuban Bookfair

Week 7: Underused eBook features, UK Tuition, Mills&Boone, Coin Art

Week 5: Eadweard Muybridge, Open Courseware, Education Aps, Lexis, Mother Russia, Taschen

Week 4: Changing Higher Ed. Book Awards, Pippi, 007, Forecasting Technology, Michael Lewis

Week 3: UK Libraries, Perceptions of US Libraries, Pearson Acquires, Wolters Kluwer Partner, Libraries in the Cloud

Week 2: ISBN Identification, UK Libraries under threat, Historian Hobsbawm, The Internet and Authors

Week 1: Digital Media Experiments, Murakami, Literary Illusion and Political Correction, Predictions, Cliche

Is the college bookstore doomed?

Rehash originally published August 30th, 2006:

Some recent examples suggest that print books continue to be the format of choice for college students but is this because they like the format or because the tangible item can be resold at the end of the semester? Is the problem really that no demonstrably better alternatives yet exist to replace the print version; i.e., electronic titles that offer a better learning experience? Clearly, e-books garner a lot of attention and investment from publishers and as I have discussed in an earlier post the opportunities in e-Content for publishers, students and administrators are potentially significant yet no one appears to have cracked the content code.

Electronic delivery of content will materially change the business model for students, institutions and publishers. In my view, the main reason this has not happened yet is that publishers and institutions are dealing with legacy issues that preclude a (willing) change in their business practices. Content creation in all but a few subject areas is an iterative process; meaning that few titles are created from scratch for each new edition. Indeed for some subject areas many have suggested that new editions are only created to mitigate the used book issue. While publishers recognize that the creation of e-books is critical, with few exceptions, they are not willing to start over and create a true e-book course product but are satisfied to convert existing titles to e-book format.

The institution on the other hand receives revenues from the sale of textbooks either directly or via trade agreements with store managers such as Follett and Barnes & Noble. As such, they have remained paradoxically disassociated from the annual chorus of criticism regarding textbook pricing. Assuming e-books become fundamental to course content, where will the bookstore fit in the relationship between publisher and institution?

Any number of publishers and vendors have or are developing models for direct delivery of content to students. Two vendors, Missouri Book Service (MBS) and Vitalsource have developed platforms which involve publishers and bookstores in the process. Intuitively, as a publisher, you might be encouraged to engage students directly and publishers are doing just that via services such as SafariX and Primus+ (McGraw Hill). MBS has been testing their program which integrates the sale of e-books into the retail bookstore for the past three seasons and has seen steady increases in the number of publishers and the amount of adoption of the content. In working with MBS, a publisher will not have to deal with certain college store issues such as returns and exchanges, campus debit cards and student financial aid. Centralized order process operations at publishers would find these issues difficult to deal with. E-Content in the MBS Universal Digital Textbook program is discounted 30% below the print price. The restrictions associated with this content have drawn some negative reactions particularly because the password expires at the end of the semester and the student has nothing of value to resell or reuse. As suggested above, the additional value for the user in this example may be more related to ease of use (weight) than much else because the e-content is a replica of the print version.

In the MBS solution, they protect their franchise and maintain a revenue stream for the bookstores. MBS is also creating a digital platform so that many publishers can make their titles available to students which in turn could create a competitive advantage for MBS in the provision of e-Content to students. Assuming a competitor wanted to challenge MBS for a store contract the challenger would have to match the platform capability and the content.

Vitalsource has taken a different approach to distributing e-Content to students and offer content creation through distribution help to reach students. They have had some success and are working with Wiley, Thomson West, Elsevier and others to deliver content. Their tools allow integration of ‘local’ content, unbundling of content and linking to related reference products. It isn’t clear what their relationships with bookstores is in the institutions where the product is sold; however, MBS recently added the Vitalsource format to their delivery platform.

MBS, Vitalsource, SafariX and others are generally offering discounts for the purchase of e-Content versions of the course material. There is tremendous hesitation to offer unlimited use of the e-Content because publishers believe they will create a problem greater than the used book issue. Not surprisingly, students have been slow to adopt these offerings. In my view a risk to publishers is that new entrants to the market will create new and innovate publishing products that rely on new but dynamic content that creates a profoundly different experience for students than an e-Content version of a textbook. Some of these new approaches are starting to find their way into general use and it is services like Blackboard/webCT that have created a platform for delivery of some of this content. Blackboard has an agreement with Merlot where you can find some interesting course material.

In the long run, publishers and or e-Content platform providers will have to pay to gain access to students at Higher Ed institutions. Institutions will either create their own open platforms or license from a vendor but this platform will become the store front. There may be a physical store on campus but it will not be the focus of textbook sales. As much as gaining knowledge of student purchasers is important to publishers in their drive to form long term learning relationships, institutions also realize the value of this information and will not be interested in stepping out of the chain.

Wiley Reports Blackwell Benefits

Wiley released their fourth quarter and full year results yesterday. From their press release:

Revenue for the fiscal year 2008 increased 36% over the previous year to $1.7 billion. Blackwell Publishing Ltd. (Blackwell), which was acquired in February 2007, contributed approximately $485 million of revenue to Wiley's fiscal year 2008 results. Excluding Blackwell, revenue for fiscal year 2008 increased 5%. Favorable foreign exchange contributed two percentage points to the year-on-year growth excluding Blackwell. On a U.S. GAAP basis, earnings per diluted share for fiscal year 2008 was $2.49, compared to $1.71 in fiscal year 2007. Excluding Blackwell and various tax benefits, adjusted earnings per diluted share improved 15% to $1.89. Blackwell’s performance was accretive to fiscal year 2008 earnings per dilutive share by approximately $0.29, excluding non-recurring tax benefits.
Revenue for the fourth quarter increased 11% to $433 million from $390 million in the same period of the previous year, or 8% excluding foreign exchange. Blackwell's performance was included in the fourth quarter of both years. Earnings per diluted share for the quarter was $0.49 compared to $0.25 in the prior year.

More details here.

Wiley Post Large Gain

From the John Wiley conference call (transcript) yesterday, CEO Will Pesce summarized their results as follows:

Year-to-date revenue of $1.2 billion increased 47% over prior year. Excluding Blackwell year-to-date revenue increased 6% or 4% excluding favorable foreign exchange. EPS for the nine months of $2, exceeded prior year by 36%, excluding certain one-time tax benefits and Blackwell, adjusted EPS increased 9% for the nine months. The Blackwell acquisition contributed revenue of $115 million in the quarter and $347 million in the year-to-date period. The acquisition was accretive to EPS by $0.9 per share in the quarter and $0.18 per share in the year-to-date period excluding certain tax benefits. Wiley's top line growth continues to be driven primarily by Blackwell, Professional/Trade revenue increased modestly in the quarter, but year-to-date results remain well ahead prior year and industry performance. US scientific, technical and medical revenue increased slightly in the quarter while global revenue advanced 5%. Higher Education showed signs of recovery in the quarter, bringing year-to-date revenue essentially on par with prior year.

Reuters

Olivieri Resigns From Wiley Blackwell

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

Wiley Reports First Quarter

Wiley reported first quarter revenue of $389 million an increase of 48% from $263 million in the previous year. The revenue growth included $116 million from Blackwell Publishing Ltd. (Blackwell), which Wiley acquired on February 2, 2007. Revenue excluding Blackwell increased 3% over last year's strong first quarter to $273 million, or 2% excluding favorable foreign exchange. Earnings per diluted share for the first quarter was $0.68 compared to $0.38 in the same period of fiscal year 2007. Earnings per diluted share excluding Blackwell and the aforementioned tax benefit was $0.37, flat with last year's strong first quarter, after adjusting for unfavorable foreign exchange

"The Blackwell acquisition exceeded our expectations in the first quarter. The integration process is proceeding smoothly and the business is performing well. Our global Professional /Trade business reported solid results. Revenue for global Scientific, Technical and Medical, excluding Blackwell, was up 4% from the prior year, including the favorable effect of foreign exchange. After a strong performance in fiscal year 2007, Higher Education reported soft sales in the first quarter, partially due to some conservative fall semester ordering by college bookstores," said William J. Pesce, Wiley's President and Chief Executive Officer. "Based on first quarter results and market conditions, we continue to anticipate revenue growth in the mid-to-high single digits and EPS growth in the low-double digits, excluding the Blackwell acquisition and the aforementioned tax benefit."

Other highlights:

• Professional/Trade (P/T): U.S. revenue advanced 7% to $90 million. First quarter performance led by sales in technology, finance and architecture. Globally, P/T revenue increased 6%
• Scientific, Technical, and Medical (STM): STM revenue of $56 million was flat versus last year due to the timing of journal, book and backfile releases
• U.S. Higher Education revenue of $44 million declined $4 million from last year’s strong first quarter. The negative comparison was also compounded by conservative college bookstores sales for the fall semester
• Wiley Europe’s revenue of $76 million was up 5% for first quarter all but 1% due to favorable foreign exchange
• Blackwell revenue and operating income for the first quarter fiscal year 2008 were $116 million and $15 million, respectively. Included in these results is $6 million of amortization charges for intangible assets related to the acquisition
• Wiley’s revenue in Asia, Australia, and Canada advanced 14% to $32 million, or 9% excluding favorable foreign currency. Strong sales across all businesses in Asia, Higher Education sales in Australia, and P/T results in Canada contributed to the first quarter growth. Direct contribution to profit as a percent of revenue increased slightly.
• India was a significant contributor to first quarter results in Asia. Through the acquisition of Wiley Dreamtech (India) Private Ltd. in fiscal year 2006, the Company established direct access to the retail higher education market in India

Status of the Blackwell Acquisition:

• During the quarter, the merger of Wiley’s STM business and Blackwell continued with particular emphasis on the integration of systems, processes, policies and procedures
• Since July 1st, all Blackwell books and reference works are being sold and promoted by Wiley’s sales forces throughout the Asia/Pacific and Europe, Middle East and Africa regions. We have also consolidated the institutional and corporate sales forces
• Critical decisions concerning publishing technology systems have been made and we are in the process of harmonizing financial management systems and reporting, content management, customer service and fulfillment and customer databases
• The company will shortly announce a plan and timeline for the integration of the Wiley and Blackwell online journals platforms

Weekly Update

Deal News:
Thomson Learning Sale said to Encourge Share Buy-Back: Globe

Publishing:
About Book Reviews Sections: HuffPo
One Billion E-Books From Ingram: PR
LexisNexis Teams with Elsevier: PR
SilverChair and MGH announce Pharmacy Platform: PR
Elsevier Extends ScienceDirect ArticleChoice: PR
Elsevier Selects Rightslink: PR
McGraw Hill report first Quarter: PR
Edgar Award Winners: PR
Wiley in India: IHT

Other News:
Swets/Muze Glabal Announcement on Fed Search: PR
Generate, Inc. Announce tool For in Context Content Distribution: PR
OCLC Announce WorldCat Local: OCLC

Sports:
Whinging Cry Baby: BBC

Private Equity Deals

If you have the cash to invest in publishing company why not go for the best one. Which in my opinion would be Pearson.

With Thomson Education on the market, Houghton Mifflin sold, Wiley purchasing Blackwell Publishing, Wolters Kluwer Education for sale, there is a lot on offer and this week the rumors were flying around Pearson. Pearson has made no public comments regarding selling any of the company yet the PE bankers and the equity analysts think something is a foot. The Pearson stock closed at a four year high today (CNN). No doubt this is very pleasing to all the management options holders.

Last week, Reed Elsevier was also touted as a non-too-obvious PE candidate and it would seem you are not worth your salt as an equity analyst in the media industry if you don't declare one of these conglomerates as an ideal candidate for Private Equity players. Reed have a complicated ownership structure which, while simpler than when Reed and Elsevier were put together, seems to be a concern. When (or if) it comes down to it I doubt this will be an issue. As with Pearson, I suspect that the managers with options will be very happy with the stock price escalation. Last week the stock was at 600p now it is at 611p. When I was at Reed in 2000, the stock was over 700p and this was before they purchased Harcourt and the significant slump in advertising revenues that hit their trade publications business. Point is, I wonder if a valuation will push the share price up a lot higher?

In recent years Pearson has been chastised for under-managing a collection of valuable publishing assets but this died down a little over the past 12 months. Their financial results and forecasts have been on target and results in the Education group have been particularly strong. This is especially true when Pearson education is compared to Thomson in terms of acquisitions made, growth rate and operating margin. In Thomson's defence, I am sure that it has been difficult operating in within the Thomson corporate environment when reservations may have been expressed about Education for a while. Thomson relative to Pearson has probably lost momentum which a sale will quickly fix and we will see a renewed Thomson Education as a result.

Currently, the PE bankers see an opportunity to buy a large 'holding company' put some lipstick on it and sell parts off in short order. In selling the parts - The Financial Times, Pearson Education - they would expect to make a killing. (Pearson Education could be split into College and School). Management is clearly not happy with the current debate but if an offer is made then they obviously need to consider it. What may result is some appeasement resulting in the sale of one of the tastier chunks. As I predicted for 2007: Murdoch will buy The Financial Times.

Friday Update: Deals, Deals, Deals

Given all the hype about private equity interest in publishing and media it is interesting that two huge deals come somewhat out of the blue. Wiley has purchased Blackwell which will fit very well with that company and both will be able to leverage their collective expertise around the world. Both Wiley and Blackwell have strong positions in the UK and International markets but Blackwell will definitely get a boost in the US and Australia/New Zealand. This combination will also better support their growth into the Asian and Indian markets. I think it is a perfect deal for both. Obviously, the fact that Blackwell were for sale is not as much a surprise as hearing of the Reader's Digest sale. In the case of Blackwell they have suffered through some family issues and had reorganized about a year ago with new management directed to get the company into shape.

Reader's Digest has been under pressure for a number of years with a declining market and reduced direct marketing effectiveness. In the past five years or so they have restructured and infused the organization with new management and new thinking which has started to bear some fruit. No telling where this company would have been if it remained on the same path it was seven or eight years ago. The wonder now will be whether RD embarks on an acquisition process to further strengthen its revenue base.

Wiley: Press Release
Blackwell: Oxford Mail
Readers Digest: New York Times

Cybersex, Secondlife and Myspace

In the office this week we got on a discussion about how books are represented on social sites like myspace and game sites like secondlife. I hate games but I have been interested in the secondlife phonom where you can literally create a new you and there exists a trading network that includes everything from real estate to clothes. So I signed up for secondlife to try to see how books were represented in the game.

Anyone for CyberSex? Predictably, sex plays some part in the content available. Derivations of the For Dummies series include CyberSex for Dummies and Escorting for Dummies. I have no idea whether these are official Wiley titles - what are the chances? A search on bookstores and books found a few store locations and navigating to them was relatively easy. Content including the above was not significant in choice. Some other titles covered topics specific to creating an identify within the game and some additional sex titles. One store was selling e-books which were on 'display' enabling the ability to page turn and review the content. In all the book stores were underwhelming but I expect the customers were engaged elsewhere in the game and within this context books aren't particularly interesting. I suspect some enterprising person will think up a unique application connected to the game.

On Myspace there are many bookstores represented with profiles with their ranking determined by the number of friends. Atomic books is typical of the stores that have profiles. It is difficult to say how many there are but clearly this is a viable method of advertising/PR to a very targeted group of consumers to whom it can be hard to introduce to books. Leftbank books located in Seattle is also similarly edgy; they describe themselves as 'anarchist' booksellers. Some stores look like they do more to promote retail than others.

Searching 'groups' for 'books' and 'mystery books' results in a few groups dedicated to reading but the result set is also 'polluted' with results that clearly have little if anything to do with books. There are over 5000 profiles returned for 'books' but only eleven for 'mystery books'. Lastly, I searched for library and I was unexpectedly surprised. Librarians have seen the virtues of setting up a myspace profile for their libraries and they use it to engage the young adult community. This is exciting because it shows that some libraries are willing to experiment and engage a target audience on their terms. Hannepin County Library in MN is representative of the libraries on myspace. Central Falls Public library (a Hannepin friend) is also a great site. Myspace definitely represents an opportunity to engage. Here is their note for the summer reading program:

Summer Reading Program Current mood: excited.
Our Summer Reading Program has officially begun! So if you're a kid (or the parent of a kid) between 6 and 12 years old stop by and sign up to read and win prizes! To kick off our program, Katie Latimer (check out http://www.katielatimer.com/) will be here Wednesday, June 28th at 2p.m. to tell stories. She's a native Rhode Islander who's been telling stories since she was thirteen. In 1998 she won the National Youth Storytelling Olympics and has been captivating audiences throughout New England every since!

Hannepin allows myspace creators to add the a script to their web pages that provides a search box on their web page:

Need to find a book or other library materials but are busy on your MySpace page and don't want to leave? Don't worry you can now add the Hennepin County Library catalog search box right to your MySpace. It's fun, it's easy and you can have the convenience of the library on your own MySpace page. Instructions for adding the library search box:
http://www.hclib.org/teens/MySpace/AddCatalogsearch.cfm

As I mentioned on another post it will be interesting to see if the influence of Harpercollins will result in any changes on the myspace site that effects more support for books and reading. The viral nature of some of the video advertising Harpercollins is experiementing with is perfect for the myspace environment and I can't believe they are not looking at how to take advantage.

Laslty, to bring this full circle, a number of enterprising individuals have established a Secondlife library. It is still a work in progress but it will be interesting to see how this evolves. Will content vendors make their content available via database license to the Secondlife Library?