History of Electronic Transformation in the Story of the San Jose Mercury News

I think I tweeted this article several months ago but I was reminded of it again during a pre-conference session at Tools of Change this morning.  The article from the Columbia Journalism Review is a fascinating tale of how an established media outlet - one in many ways pre-disposed to change - struggled to make the right decisions, the right investments and do these at the right time.

Here are some snips (These are fairly deep in the article - CJR):

By the time William Glaberson of the New York Times came to visit in early 1994, some five thousand new AOL subscribers had signed up to receive Mercury Center. The number, Glaberson noted, represented less than 20 percent of AOL’s subscribers in the Bay Area and less than 2 percent of the Merc’s readers. But Glaberson’s report in the Times was all that Ingle, Mitchell, and their staff could have asked for. Even with new sites at the Chicago Tribune, Gannett’s Florida Today, and a handful of other papers, it had taken less than a year for Mercury Center to emerge as arguably the most ambitious experiment in how to weave the new technologies into an existing news operation.

It was not only the volume of services that set it apart, but the extent to which the electronic services so dramatically expanded the definition of what it meant to be in the news business. Mercury Center, Glaberson noted, had carried an online chat with San Jose’s mayor, offered its telephone-only subscribers recordings of Martin Luther King Jr.’s speeches, posted press releases (much to the newsroom’s consternation), and had also made available archives of all stories that had appeared in the newspaper since 1985. The archives, which came with an additional fee, had proven to be particularly popular. Ingle had thought their greatest appeal would be to schoolchildren working on reports. But the traffic was heaviest during the day, suggesting that the biggest users were business people eager for information about their industries and competitors.

Ingle told Glaberson that he was envisioning a new breed of journalist, dispatched with the sort of equipment that would allow filing in all sorts of ways, not merely for print. He called them “multimedia reporters.” Still, for the print side, the connection between the newspaper and Mercury Center involved little more than the addition of codes at the bottom of printed stories, so that readers could log on, or call in, for more. Some reporters had begun online conversations with their readers (everyone was asked to respond to reader e-mails). Others told Glaberson they saw the back and forth as peripheral to their work.
.....

Christensen, a devout Mormon, was staking out a position that bordered on business heresy. In the face of disruptive technology, he wrote, the wise course was not to react to the demands of existing customers. It was imperative to lower revenue expectations for the products spun off by those new technologies. And it was essential to accept the inevitability of failure. If sustaining technology brought reassurance, disruptive technology sowed doubt.

Yates had been with Knight Ridder long enough to recognize how much Christensen’s case mirrored what had taken place at her company. Knight Ridder, under Jim Batten, had ended the Viewtron experiment because the market was judged too small and the cost too high. But now Christensen was presenting an argument suggesting that, in essence, the company had had it all wrong—that because it had lost so much money it could not appreciate that Viewtron did, in fact, serve a market, albeit a small one that could, over time, develop into a far larger one, once the technology became cheaper, accessible, and efficient. Once the personal computer with a high-speed modem became a household fixture, the newspaper would cease being the best way to read, and more importantly, to search for jobs, employees, cars, and homes. That was the moment of disruption. And when it occurred, the companies that had been cultivating their shares of the emerging markets found themselves no longer at the periphery, but, like eBay, in a position to dominate a market that, not so long before, did not appear to exist.

As if by chance, Ingle had in 1990 come upon the very corrective in Mercury Center that Christensen would prescribe seven years later—a small, inexpensive laboratory for trying out those disruptive technologies, a place where modest successes could be celebrated and built upon, a “skunk works” operation that the company could keep running as it waited to see whether the new markets might emerge, or existing ones catch up.

Note: Christensen wrote The Innovators Dilemma which was also specifically referred to this morning.

11/15/97: Thomson, Simon&Schuster, KnightRidder, Amazon.com,

Summary:
Thomson Corp.: Publishing, Travel Units Help Boost Earnings 14%
Stephen King And Simon & Schuster In Book Deal
Knight-Ridder Sells Newspaper
Ziff-Davis And Warner Publisher Services Announce Revolutionary Magazine Distribution Agreement
Golden Books Family Entertainment
Avon Products, Inc. And Hachette Filipacchi
Idg Books Worldwide To Buy Mis: And M&T Computer Presses From Henry Holt
Oracle 8 Selected As Database To Fuel The Unisys Hermes Publishing System
Amazon.Com And @Home Network Sign Multi-Year Agreement To Sell Books Over The @Home Service
Oxford University Press And Imark Announce Electronic Publishing Agreement
CMP Media Expands Internet Management Team With The Addition Of Two New Positions
Princeton Media Group Inc. Announces New Chief Financial Officer

RECENT NEWS:

THOMSON CORP.: PUBLISHING, TRAVEL UNITS HELP BOOST EARNINGS 14%
Thomson Corp., buoyed by higher earnings from its publishing and travel operations, reported a 14% increase in third-quarter earnings and boosted its quarterly dividend by 6.9%. Thomson, Toronto, reported third-quarter earnings of US$342 million, or 56 cents a share, compared with $301 million, or 50 cents a share, a year earlier. Revenue was $2.74 billion, up 10% from $2.49 billion a year earlier. Thomson, which has interests in newspapers, publishing, databases and travel services, increased its quarterly dividend to 15.5 U.S. cents a share from 14.5 cents a share. Thomson rose 1.50 Canadian dollars (US$1.07) to C$35.50 in Toronto Stock Exchange trading.

WSJviaNewsEDGE Copyright (c) 1997 Dow Jones and Company, Inc. Received via NewsEDGE from Desktop Data, Inc.: 11/07/97 02:15:18

STEPHEN KING AND SIMON & SCHUSTER IN BOOK DEAL
Best-selling author Stephen King and Simon & Schuster struck a tentative deal Thursday to publish his novel ``Bag of Bones'' in an unconventional arrangement that will give the horror writer a share of nearly 50 percent of the profits. The negotiations came after King's highly unusual public search for a new company to replace Viking, his longtime publisher. His original $17 million asking price prompted much complaining in the publishing industry that such a conventional deal was a money-losing proposition. But Thursday, Simon & Schuster, a unit of Viacom Inc., announced a three-book ``co-publishing venture'' with King that will give him a share of the profits and of the risks and responsibilities for pricing, marketing and packaging his books. King, who was traveling to New York for a meeting with Simon & Schuster on the agreement, could not be reached for comment. According to a person close to the negotiations, King will share in almost 50 percent of the profits and will receive an advance that is small by his standards - almost $2 million a book. He will not receive bonuses or royalties. The three books are ``Bag of Bones,'' a collection of short stories and a work on the craft of writing.

NYTviaNewsEDGE Copyright (c) 1997 The New York Times Co.

KNIGHT-RIDDER SELLS NEWSPAPER
MIAMI – Knight-Ridder Inc. said it sold the Long Beach Press-Telegram to Garden State Newspapers Inc. for an undisclosed price. The sale completes Knight-Ridder's previously announced plan to sell five newspapers. Garden State Newspapers is a unit of Affiliated Newspapers Inc., Denver.

WSJviaNewsEDGE Copyright (c) 1997 Dow Jones and Company, Inc. Received via NewsEDGE from Desktop Data, Inc.: 11/10/97 02:08:13

ZIFF-DAVIS AND WARNER PUBLISHER SERVICES ANNOUNCE REVOLUTIONARY MAGAZINE DISTRIBUTION AGREEMENT
Entire Stable of Ziff-Davis Magazines to Receive Increased Distribution and Exposure at the Retail Level

NEW YORK, Nov. 11 /PRNewswire/ -- Ziff-Davis, a SOFTBANK Company, and Warner Publisher Services (WPS), a TimeWarner Company, announced today an agreement whereby the entire 13-title line of Ziff-Davis paid-circulation magazines in the U.S. will be distributed nationally by WPS. In announcing the new agreement, Claude Sheer, President, ZD Publishing, and Dan Rubin, President of WPS, emphasized the unique benefits of this new publishing partnership. Rubin said, "We're combining the strengths of three unique industry leaders: Ziff-Davis, the world's leading publisher of computer and video game magazines; the vast distribution capabilities of WPS; plus retail-level merchandising and marketing support from Time Distribution Services. We believe it's a fortuitous combination of resources that will help raise Ziff- Davis' already strong, newsstand sales to new heights." In discussing the agreement, James Gerth, ZD Single Copy Sales and Marketing Director, explained: "This new arrangement will allow us to more efficiently serve both the wholesaler and retailer communities. Given the big changes we've seen recently in the newsstand environment, we're especially pleased, and optimistic, now that this unique agreement is in place." Sheer added, "While Ziff-Davis has seen tremendous growth in its Internet business, growth for all ZD print products remains strong, including those for our flagship, PC Magazine, as well as for Computer Shopper, PC Computing, and Electronic Gaming Monthly." Sheer continued, "Magazines are a vital part of our business, and newsstand sales are integral to our publishing plans. We believe this new agreement will carry us to even greater growth in this important area. That's good news for us, and also for our readers, advertisers, and the wholesalers and retailers who handle our publications."

SOURCE Ziff Davis

Business Brief -- GOLDEN BOOKS FAMILY ENTERTAINMENT: Loss Narrows Amid Decline In Costs From Restructuring

Golden Books Family Entertainment Inc. reported that its third-quarter net loss narrowed, in part because of a decrease in costs related to a continuing restructuring program. The New York company posted a net loss of $17.9 million, or 76 cents a share, compared with a loss of $96.8 million, or $4.29 a share, a year earlier. Results for the latest quarter include a restructuring charge of $3.3 million, or 12 cents a share. Results for the year-earlier period include charges of $80.1 million, or $3.01 a share, largely for restructuring. Revenue decreased 21% to $53.3 million from $67.5 million. The company's main operations include children's publishing and entertainment products for children and families.

WSJviaNewsEDGE Copyright (c) 1997 Dow Jones and Company, Inc. Received via NewsEDGE from Desktop Data, Inc.: 11/12/97 02:15:53

AVON PRODUCTS, INC. AND HACHETTE FILIPACCHI JOIN TO LAUNCH NEW MAGAZINE DISTRIBUTION THROUGH AVON REPRESENTATIVES AND NEWSSTAND

NEW YORK, Nov. 14 /PRNewswire/ -- Avon Products, Inc. (NYSE: AVP) and Hachette Filipacchi Magazines today announced that they will launch a new magazine for women. The two companies -- global leaders in their respective fields -- will together publish Athena: Common Sense, Uncommon Style, designed to provide insightful information about beauty, well-being, and lifestyle for women. "Athena represents a new dimension in publishing," explains David Pecker, President and Chief Executive Officer, Hachette Filipacchi Magazines. "The magazine will deliver the spirit of beauty and high fashion along with accessible information and service. We are thrilled to be in this unique joint publishing venture with Avon."
Debuting in the U.S. with the May/June launch issue in April 1998, Athena is set for a bimonthly schedule. The publication will be initially distributed through the 440,000 U.S. Avon Sales Representatives, as well as newsstands. Cover price will be $3.50, with special pricing for Avon Representatives and their customers. Future global opportunities will be explored to bring Athena to other markets around the world, tapping the powerful distribution network of more than 2 million Avon Sales Representatives worldwide. In both domestic and global markets, Avon's key objective for Athena is to strengthen the company's image and role as a beauty authority. Avon will be the exclusive beauty advertiser in Athena, but the publication will be open to all advertisers in non-competitive categories, such as consumer packaged goods, travel, and automotive, who wish to reach the Athena reader.
Hachette Filipacchi Magazines currently publishes 29 consumer titles reaching over 47 million readers, including American Photo, Audio, Best Selling Home Plans, Boating, Car and Driver, Car Stereo Review, Cycle World, ELLE, ELLE Decor, Family Life, Flying, George, HOME, Metropolitan Home, Popular Photography, Premiers, Road & Track, Showboats International, Stereo review, TopModel, Travel Holiday, Video, Woman's Day, and Eating Well, as well as a number of quarterlies and special publications. HFM is a wholly-owned subsidiary of Hachette Filipacchi Medias, the world's largest magazine publisher, with diverse holdings in printing, newspaper, film production, and outdoor advertising.

IDG BOOKS WORLDWIDE TO BUY MIS: AND M&T COMPUTER PRESSES FROM HENRY HOLT

FOSTER CITY, Calif., Nov. 12 /PRNewswire/ -- IDG Books Worldwide, Inc. has signed a letter of intent to purchase MIS: Press and M&T Books from Henry Holt Publishers in New York for an undisclosed sum. The deal takes Holt out of trade computer book publishing and reinforces IDG Books Worldwide's leadership in technology publishing. IDG Books Worldwide, Inc., founded in 1990, is the number two computer book publisher with total FY1997 gross revenues in excess of $150 million. Final terms of the agreement are expected by the end of this month.
IDG Books Worldwide President and Publisher Steven Berkowitz characterized the acquisition as a strategic move in an industry that is seeing more consolidation. "MIS: Press and M&T Books produce well-written books and series that are in keeping with our commitment to publishing high quality editorial content. Our strengths in building and marketing brands will help us to expand our market share in the tightening book publishing arena."
IDG Books Worldwide, best known for its 40 million selling ... For Dummies(R) series, has made branding a phenomenon in book publishing. The company has created highly identifiable, successful brands for users ranging from beginners using the ...Simplified (R) 4-color illustrated books to high- end professionals using the certification series for Novell and Microsoft engineers and system administrators. IDG Books Worldwide, Inc. is a subsidiary of IDG, the world's leading IT media, research and exposition company. IDG publishes more than 285 computer magazines and newspapers and 500 book titles and offers the largest network of technology specific sites around the world, located at http://www.idg.net, which comprises more than 170 targeted Web sites in 45 countries. IDG is also a leading producer of 110 computer-related expositions worldwide, and provides IT market analysis through 49 offices in 41 countries worldwide. Company information is available at http://www.idg.com. Information about IDG Books is available at http://www.idgbooks.com. SOURCE IDG Books Worldwide, Inc.

ORACLE 8 SELECTED AS DATABASE TO FUEL THE UNISYS HERMES PUBLISHING SYSTEM

REDWOOD SHORES, Calif., Nov. 12 /PRNewswire/ -- Oracle Corp. (Nasdaq: ORCL) and Unisys (NYSE: UIS), a leading newspaper-system supplier, today announced they will deliver an integrated system, based on Sun Microsystem's Solaris platform, that answers the increasingly complex information technology needs of the publishing industry. Unisys has chosen Oracle8(TM) to power the Unix-Based version of Hermes, its global, integrated publishing system. Hermes will meet user requirements for scalability, reliability and tight-system integration in order to redefine workflow, reduce costs and help in the migration to electronic publishing. This combination will enable publishers to streamline their business from editorial, production and archiving processes to management of all news information electronically to support for hundreds of concurrent users.
"The core competencies of Oracle8 -- the ability to handle more data, support more users, deliver results faster and at a lower price - directly address the needs being expressed in the publishing industry today," said Polly Sumner, senior vice president of Communications Industry, Oracle Corp. "Unisys' Hermes system with Oracle8 as the database backbone provides publishers with the ability to globally manage and deliver information for both traditional and electronic publishing mediums."
"For publishing groups that are looking to reengineer their publishing systems and to reengineer their productions processes, the Unisys Publishing Solutions offer global, scaleable, integrated applications," said Franco Giglio, director of Publishing Center of Excellence Systems, Unisys. "Oracle8 provides the database engine needed to support the scalability and reliability requirements of our customers." The Hermes publishing system, a major component of the Unisys Publishing Solutions, has been expressly designed for metropolitan newspapers which face large organizational issues and complex production processes in highly mission-critical environments. Hermes is applicable for both text-driven and layout-driven publications, as it can support several editorial organizations' needs for design layout, text and headline editing, image processing, ad display creation, page planning, production tracking and full-page output.

ONLINE/INTERNET NEWS:

AMAZON.COM AND @HOME NETWORK SIGN MULTI-YEAR AGREEMENT TO SELL BOOKS OVER THE @HOME SERVICE

SEATTLE, and REDWOOD CITY, Calif., Nov. 10 /PRNewswire/ -- Amazon.com, Inc. (Nasdaq: AMZN), the leading online book retailer, and @Home Network (Nasdaq: ATHM), the leader in high-speed Internet services via the cable infrastructure, today announced a multi-year agreement whereby Amazon.com (www.amazon.com) will be the premier bookseller throughout the @Home service. @Home users will have high-speed, direct access to browse and purchase books from Amazon.com's catalog of more than 2.5 million books. These services are expected to be integrated into @Home's service by the end of the year. This agreement marks the first time Amazon.com has formed a strategic alliance with a cable Internet service provider.
Based in Redwood City, California, @Home Network (http://www.home.net) distributes high-speed interactive services to residences and businesses using its own network architecture and a variety of transport options including the cable industry's hybrid-fiber coaxial infrastructure. The cable connection provides users significant increases in speed over conventional Internet services. Leveraging the "always on" attributes of cable, @Home allows for unique multimedia applications that go beyond current Web experiences. Since its founding in May 1995, @Home Network has reached affiliate agreements with eight leading cable companies in North America, including Tele-Communications Inc., Cablevision Systems Corp., Comcast Corporation , Cox Communications, InterMedia Partners, Marcus Cable, Rogers Cablesystems Limited, and Shaw Communications

OXFORD UNIVERSITY PRESS AND IMARK ANNOUNCE ELECTRONIC PUBLISHING AGREEMENT

RESTON, Va.--(BUSINESS WIRE)--Nov. 6, 1997--Imark Technologies Inc. (NASDAQ: MAXX) a leading provider of electronic commerce solutions to the information industry, announces an agreement with Oxford University Press USA (OUP) to develop an e-commerce version of "The Computational Intelligence Library" to be available commercially in 1998. Through this collaboration, OUP will employ Imark's award winning NET-MAX(TM) Internet billing system, which enables information providers to outsource the complete development and maintenance of all electronic commerce functions. Imark's NET-MAX metering and billing system is the winner of the 1997 Information Industry Association Award for the Best Enabling Technology of the Year.
The Computational Intelligence Library, a joint publication of OUP and the Institute of Physics Publishing, is a comprehensive reference tool for computer scientists, engineers, psychologists, mathematicians, and physicists, providing a continuously updated overview of the dynamic field of Computational Intelligence. The Computational Library is positioned as an all-encompassing reference that collates research findings from various sources into one authoritative work. Imark will assist OUP in optimizing the online version of the library, designing an online customer registration system with tracking and reporting of customer usage, and advising on possible future enhancements to the pricing model. "We are very pleased to enter into this exciting new relationship with Imark Technologies. What Imark offers Oxford University Press is the ability to bring a niche product to market quickly and cost-effectively with an award winning e-commerce system to back it up" said Royalynn O'Connor, Online product director at Oxford University Press-USA.

PEOPLE ON THE MOVE:

CMP MEDIA EXPANDS INTERNET MANAGEMENT TEAM WITH THE ADDITION OF TWO NEW POSITIONS

MANHASSET, N.Y.--(BUSINESS WIRE)--Nov. 11, 1997-- CMP Media's (Nasdaq: CMPX) rapidly-growing CMPnet, the technology network at http://www.CMPnet.com, has created two new management positions and concurrently named a new Associate Publisher for sales and a new Director of Marketing. Chris Tice, most recently CMPnet's Associate Publisher, Sales and Marketing, has assumed the new position of Associate Publisher, Business Development and will retain responsibility for marketing and research. Meryl Otis, previously Associate Publisher for NetGuide Magazine, has been named Associate Publisher, Sales for CMPnet. Aimee Levine joins CMPnet from Time Warner as Director of Marketing. Helen Flaum, formerly a Director of Information Technology in CMP's corporate IT department, has moved over to the Internet Media Group as Director of Operations for the group, which produces CMPnet. In announcing the staffing changes, Rebecca S. Barna, Vice President/Group Publisher of the Internet Media Group, said: "These management moves reflect our commitment to bring users the best information and advertisers the most targeted and cost-effective buy in technology online."

PRINCETON MEDIA GROUP INC. ANNOUNCES NEW CHIEF FINANCIAL OFFICER

PALM BEACH, Fla.--(BUSINESS WIRE)--Nov. 10, 1997--Princeton Media Group Inc. (Nasdaq:PMGIF) announced Monday that Hugo Barreca has been named the new chief financial officer for the company. Robert F. Kendall, formerly CFO, has become senior vice president of Finance. Barreca, who joined the company in September 1997, brings over 20 years of experience in the publishing industry, including senior positions with Time Inc., The New York Times Magazine Group and Gruner+Jahr USA Publishing. His responsibilities have included strategic business planning, financial planning and management, contract negotiations and purchasing, and computer systems development, including inventory database systems, financial management systems, logistic models and telecommunications systems. Barreca received an M.B.A. from New York University and a J.D. from Fordham School of Law, as well as other academic degrees and professional honors. Barreca will be responsible for the company's overall financial planning and management. He will also direct the company-wide consolidation of current operations and implement the company's expansion program through continued acquisitions of related business operations in publishing, advertising, websites and other related media.

11/1/97: Harpercollins, KnightRidder, SimonShuster, Amazon.com, Readers Digest,

Summary:
New Head Of Harpercollins Publishers
A.H. Belo Corp.: Net Income Declines 21% But Beats Analyst Forecast
Apple Begins Program To Support Position In Education Market
Reader's Digest Posts $56.4 Million Loss, Citing Weak Mailings
Knight Ridder Sells Newspapers
Harpercollins Signs Jewel
Bookwire Offers Redesign
Bookpages - Another Internet Bookstore
Harpercollins Gets Mystery Web Site
Simon & Schuster Recognized For Having Best Commercial Web Site
Amazon Marches On

RECENT NEWS:

NEW HEAD OF HARPERCOLLINS PUBLISHERS
News Corp. named Jane Friedman, one of the publishing industry's best-regarded executives, to lead HarperCollins Publishers, its troubled book publishing unit.

Ms. Friedman, currently a senior executive at Advance Publications Inc.'s Random House unit, will assume her new position next month. She will succeed Anthea Disney, who last month was elevated to the post of chairman of News America Publishing Group, a newly formed News Corp. unit that includes both HarperCollins and TV Guide magazine. Ms. Friedman will report to Ms. Disney.

HarperCollins has had a variety of problems in recent months. In August, the company said it would take a $270 million charge -- the biggest in the history of book publishing -- to cover write-downs for losses on author advances and unsold books as well as other restructuring costs. Some of News Corp.'s major investors have encouraged Rupert Murdoch to unload the unit, and there have been repeated rumors that he might do so, unsettling the publisher's employees. Ms. Friedman went to Los Angeles to meet with Mr. Murdoch in late September, and she says she came away believing that "he is in it for the long term." She also said HarperCollins's difficulties didn't cause her to hesitate joining the publisher. "They have had some tough knocks," Ms. Friedman said. "But I believe the company has turned the corner, and it now has a pretty clean slate."

The Wall Street Journal via Dow Jones
Copyright (c) 1997 Dow Jones and Company, Inc.

A.H. BELO CORP.: NET INCOME DECLINES 21% BUT BEATS ANALYST FORECAST
A.H. Belo Corp. said third-quarter net income decreased 21% to $15 million, or 24 cents a share, from $18.9 million, or 42 cents a share, in the year-earlier period. Earnings per-share were affected by the issuance of about 25 million common shares, related to an acquisition. The Dallas television and newspaper concern said sales increased 58% to $319.1 million. The company also said a 51% revenue increase in its newspaper publishing division, combined with strong advertising demand in all of its broadcasting markets, contributed to the earnings results. A survey of analysts by First Call had estimated Belo would report net of 18 cents a share.

Copyright (c) 1997 Dow Jones and Company, Inc.
Received via NewsEDGE from Desktop Data, Inc.: 10/29/97 02:22:31

APPLE BEGINS PROGRAM TO SUPPORT POSITION IN EDUCATION MARKET
Apple Computer Inc., seeking to shore up its sagging U.S. education stronghold, has launched a special promotion to credit schools with 10% of the purchase price of computers bought by students' parents.

Under the "Power of 10" program, which began Oct. 15 and is to run through Jan. 31, the schools will be able to use those credits towards purchase of their new Apple computers. The program was conceived by Apple interim Chief Executive Officer Steve Jobs, and is designed to strengthen the company's presence in a market that has been beset by competitors allied around the industry's dominant standard of Microsoft Corp. software and Intel Corp. microprocessors.
Under the promotion's terms, parents can buy directly from Apple any of 10 computer models, including some which previously had been offered only to schools. They can then designate the 10% credit to the K-12 school of their choice. If a school receives 10 of those credits, it can apply those to a free computer.

The Wall Street Journal via Dow Jones
Copyright (c) 1997 Dow Jones and Company, Inc.

READER'S DIGEST POSTS $56.4 MILLION LOSS, CITING WEAK MAILINGS
Reader's Digest Association Inc. reported a loss of $56.4 million, or 53 cents a share, for the fiscal first quarter, reflecting weak customer response to mailings and costs related to a corporate realignment of operations.

The loss for the quarter ended Sept. 30 compares with year-earlier net income of $34.6 million, or 32 cents a share. Revenue fell 13% to $561 million from $644 million. The latest results included a pretax charge of $70 million, or 49 cents a share, reflecting severance costs for staff reductions in Europe, the U.S. and at the corporate level, as well as a discontinuation of certain businesses.

The results reflected increased spending in product development and direct-marketing operations, the company said. George V. Grune, chairman and chief executive, said revenue in the quarter reflected lower customer response to company mailings and fewer mail solicitations sent out in major markets.

Revenue from the U.S.-based special-interest magazines and Reader's Digest magazine were higher than last year, reflecting gains in both circulation and advertising.

Copyright (c) 1997 Dow Jones and Company, Inc.

KNIGHT RIDDER SELLS NEWSPAPERS
MIAMI -- Knight-Ridder Inc. said it agreed to sell three newspapers that it had previously put on the block -- the Boca Raton News, Florida; the Union-Recorder, in Milledgeville, Ga.; and the suburban Newberry Observer, in South Carolina -- to Community Newspaper Holdings Inc., Louisville, Ky. Terms weren't disclosed, but media giant Knight-Ridder said the transaction includes the transfer to Knight-Ridder of the Daily Sun in Warner Robins, Ga.; the Byron Gazette, a Georgia weekly, and a shopper, also in Georgia. The transaction is expected to close by Thanksgiving.

Copyright (c) 1997 Dow Jones and Company, Inc.

HARPERCOLLINS SIGNS JEWEL
HarperCollins was very busy this week and they topped off their activity by contributing to one of the major problems in the publishing industry. HarperCollins bid and won -for $2MM- a book of poetry and a memoir from Jewel, the 23-year-old photogenic folk singer whose debut album Pieces of You has been on the charts for two years and sold six million copies to date. Regardless, many analysts have bemoaned the tendency by publishers for overpaying for book rights for ‘media stars’ who’s celebrity it turns out is fleeting.

Jewel's poetry book, which had been shopped around last year and was rumored to have received offers at that time of up to $1.5 million, is now expected to be published in June, followed by a memoir (she’s 23!) in fall 1998.

ONLINE PUBLISHING NEWS:

BOOKWIRE OFFERS REDESIGN
BookWire -- www.bookwire.com -- Wednesday offered a redesign featuring daily news, original reviews and features, and a new "behind-the-scenes" column from industry insiders. FLAP, a daily column covering insider news and behind the scenes intrigue about the book business is part of the redesign. Other new original BookWire content includes Soapbox, a place where people in and around the book business can talk about everything from their favorite books to hot trends in book selling, and Publisher's Spotlight, a sponsored feature where publishers and authors put their titles in the spotlight, and readers can see the cover, read flap copy, excerpts, testimonials, and more.

BOOKPAGES - ANOTHER INTERNET BOOKSTORE
For busy executives, preparing for Christmas can often be a nightmare. New U.K. Internet bookstore Bookpages, however, is hoping to lend a helping hand. A recent addition to the bloody Internet book wars, Bookpages is looking to capture an audience by offering snazzy new services to its site. Top of the list are new features for hurried Christmas shoppers.

First, swing by Bookpages' gift-selector service. The Bookpages staff have sifted through their 1.2 million titles and put together a list of books for specific friends and relations. Need something quick for a nine-year-old niece? Bookpages suggests the Roald Dahl Treasury or the Dorling Kindersley World Atlas. Prices are reasonable: Because it can cut out overhead costs, Bookpages manages to offer most wares at a discount below traditional bookstores.

Buyers, for their part, also get a present. Hoping to attract more customers, Bookpages offers a loyalty program. Once registered, buyers receive one Bookpoint for every 20 pence spent. Members with more than 500 points can redeem them against Bookpages books. Christmas gift recommendations however, earn buyers 50 points a shot.
http://www.bookpages.co.uk/

Copyright (c) 1997 Dow Jones and Company, Inc.

HARPERCOLLINS GETS MYSTERY WEB SITE
Following a trend that is becoming increasingly familiar, HarperCollins has entered a co-marketing agreement with online mystery publisher Newfront of San Francisco to have advertising and HarperCollins content featured on The Online Mystery Network (http://www.mysterynet.com). “The HarperCollins Mystery Corner” will be incorporated into the Newfront site, and will highlight popular novelists Tony Hillerman, Virginia Lanier and others by providing exclusive peeks at first chapters. MysteryNet.com will also host banner advertising for the book publisher and run special book promotions.

Newfront believes this alliance will be just the first of many as publishers realize how powerful Internet distribution can be for niche markets.

Cowles/Simba Media Daily 10/31/97
Copyright 1997 Cowles Business Media. All rights reserved.

SIMON & SCHUSTER RECOGNIZED FOR HAVING BEST COMMERCIAL WEB SITE
Technology Managers Forum has named Simon & Schuster's College NewsLink Web Site the "Best Vehicle For Conducting Commerce."

College NewsLink is a unique educational service that brings the leading newspapers of the world to the college campus via the World Wide Web. For the first time, these stories are organized by academic discipline and linked to other Web sites as well as to print information in textbooks. These links make Simon & Schuster's textbooks are current as today's newspaper. Topics in the news are linked to relevant university Web sites, textbooks, government sites,
political organizations, world leaders and more.

College Newslink is the first time a publisher has created an electronic product sold directly to colleges, and not through bookstores to students.

Recognition for the site was part of The Best Practice Awards, co-sponsored by PC Week and Technology Managers Forum International, a professional organization comprised of IT executives from large organizations. Technology Managers Forum is the only organization in the industry that has an awards program that is designed to establish Best Practices for IT Management

AMAZON MARCHES ON
Amazon.com reports another quarterly sales increase. For the third quarter that ended Sept. 30, 1997, sales were $37.9 million, a 36% increase over second-quarter sales and an 808% gain over the $4.2 million reported in the 1996 third quarter. For the first nine months of the year, Amazon reported sales of $81.7 million, it appears likely going into the Christmas buying season they could achieve full year sales of $120MM. For the first nine months of 1996, Amazon had sales of $7.3 million.

Net (Loss) income was higher than prior year periods reflecting increased marketing and sales expenses. For the quarter Amazon had a net loss of $8.5 million, compared to a loss of $2.4 million in the same quarter last year. The loss for the first nine months was $18.2 million, up from $3.5 million.

Amazon noted that cumulative customer accounts increased to over 940,000 by the end of September, compared to 610,000 at the close of June. Repeat customers represented 55% of sales in the period.

DID YOU KNOW:

There Are More Than 7 Million North American Children With Internet Accounts.

According to Teenage Research Unlimited (TRU), the percentage of teens who say that it is ``in'' to be on-line has jumped from 50 percent in 1994 to 74 percent in 1996 to 88 percent in 1997. It's now on par with dating and partying!

65%of all Book printing jobs are for less than 5,000 units.

18% all of New Yorkers are on line.

8/30/97: KnightRidder, ReedElsevier, John Wiley, Pearson, Thomson, SimonShuster,

Summary:
Petersen Publishing Opens Trading With Strong Day
Knight Ridder sells Dialog:
Reed Travel Launches Probe Into Circulation Overstatements
JOHN WILEY & SONS INC.: Announcing Wiley InterScience
Pearson Appoints Peter Jovanovich to Head Addison Wesley Longman
Anthea Disney named Chairman and CEO of News America Publishing Group
THOMSON Corp
Simon & Schuster
Digital Object Identifier (DOI)

Recent News:
Petersen Publishing Opens Trading With Strong Day:
(Folio: First Day) In its first day of trading as a public company, Petersen Publishing Co.'s stock
closed Thursday at $20.25 per share after opening at $17.50 and hitting a high of $20.625 on the
New York Stock Exchange.

The opening price was barely half the original filing price floated by Claeys Bahrenburg and his fellow investors, who purchased the Los Angeles-based consumer magazine publisher last year for $400 million-plus (Bahrenburg was a former president of Hearst Magazines.) Registration papers filed with the Securities and Exchange Commission underline the 78-title publisher's reliance on its three top publications: For the 12 months ended Dec. 31, 1996, the 1-million circulation Motor Trend, 1.8-million circulation Teen and 800,000-circulation Hot Rod, brought in $32.5 million, $25.8 million and $19.3 million respectively -- combining for 50.1% of Petersen's operating "contribution."

Knight Ridder sells Dialog:
(Media Daily) Knight-Ridder has agreed to sell its database unit, Knight-Ridder Information Inc. (KRII), to London business information publisher M.A.I.D. for $420 million. The sale, expected to be completed in November, would create the world's largest online information service.

KRII's final price tag turned out to be 15% lower than the $500M the unit had been expected to go for (MD, 8/25/97). "This is a business we did not want to lose, but in light of our recent acquisition of four newspapers from the Walt Disney Co., the sale is necessary," said Tony Ridder, chairman and CEO of Knight-Ridder Inc. The Disney newspaper deals had reportedly cost the company a total of $1.65 billion.

Reed Travel Launches Probe Into Circulation Overstatements:
(Folio: First Day) Reed Travel Group company announced that it had detected "irregularities" in RTG circulation statements -- overstatements to advertisers -- dating back to 1991 for its hotel and airline directories, and that this discovery has moved the company to begin "a full investigation."

LONDON (AP-Dow Jones)--Reed Elsevier PLC has appointed Freshfields to lead the team investigating the irregularities at Reed Travel Group. The company had said it discovered irregularities in circulation statements at its Reed Travel Group unit that affect some 500 million GBP ($800MM) in advertising revenues between 1991 and 1996. The Anglo/Dutch publishing company said it will make an unspecified charge against 1997 earnings to meet the cost of compensating advertisers in the affected Reed Travel Group publications.

It will also make a 'substantial' write down of intangible asset values at Reed Travel group.

ONline/New Media News:

JOHN WILEY & SONS INC.: Announcing Wiley InterScience:
(Wall Street Journal) New York, N.Y., September 9, 1997. Charles R. Ellis, President and Chief Executive Officer of John Wiley & Sons, Inc. (NYSE: JW.A and JW.B), the global publishing company, today announced the launch of Wiley InterScience, a service which will provide access to nearly all of the company's more than 400 scientific, technical, medical, and professional journals over the World Wide Web. Searchable contents listings, abstracts, and informative Web sites for the majority of Wiley's journal program, together with open access to the full-text electronic files of 50 journals, are scheduled to go online October 1 in the pilot phase of this initiative. Other journals will have full-text presentation phased in through 1997 and 1998. The company will continue to publish its journals in print as well, and is embarking on this electronic publishing initiative to augment its strengths in scientific, technical, and medical publishing.

Wiley has been collaborating with Zuno, a Mitsubishi Electric Company based in London and Boston, which developed the innovative software application Wiley has used to create Wiley InterScience. Zuno Digital Publisher (ZDP) is a component-based software system for organizing, managing, and publishing information and journals over the Web and gives publishers tools to create new and dynamic electronic products and services for their customers. ZDP is customizable, meaning Wiley has developed its own "look and feel" for the service and has implemented numerous business models for different types of customers and content.

Executive Changes:

Pearson Appoints Peter Jovanovich to Head Addison Wesley Longman:
Pearson plc, today announced the appointment of Peter Jovanovich as chairman and chief executive of Addison Wesley Longman, Pearson' s educational publishing business. He will succeed J. Larry Jones, who is stepping down from the post after 30 years with the company.

Since 1995, Mr. Jovanovich, 48, has been president of McGraw-Hill's Educational and Professional Publishing Group, which comprises all of the company's book publishing worldwide. Under his leadership the company has grown rapidly to become the largest school and college publisher in the world, with a 29% increase in operating profit in the second quarter of 1997.

Anthea Disney named Chairman and CEO of News America Publishing Group
New York, N.Y. -- September 23, 1997 News Corporation has formed a new U.S. publishing entity called News America Publishing Group that will combine HarperCollins Publishers and the Companys U.S. magazine and on-line publishing divisions and has promoted Anthea Disney as its Chairman and Chief Executive Officer, it was announced today by Rupert Murdoch, News Corporations Chairman & Chief Executive, and Peter Chernin, President & Chief Operating Officer.

Disney will oversee the Companys U.S. print and on-line publishing operations, including HarperCollins; TV Guide, the countrys highest circulation weekly magazine; the opinion-leading highly influential political magazine The Weekly Standard; the electronic publishing business including TV Guide Entertainment Network; and new business development in all of these areas.

THOMSON Corp. (Toronto) -- Richard Harrington, 50 years old, was named president and chief executive officer of this publishing and travel-services concern, three months ahead of schedule. Mr. Harrington was expected to assume the new positions Jan. 1, but the appointments were pushed ahead because of Mr. Harrington's success in the temporary position of chief operating officer, a job created in July specifically to groom him for the positions of president and chief executive. The job of chief operating officer no longer exists. Mr. Harrington, who has held several executive positions with Thomson since 1982, succeeds Michael Brown, 62, who becomes deputy chairman at Thomson. Mr. Brown will hold this new position jointly with John Tory, 67, through the end of December, when Mr. Tory will step down. Mr. Tory will remain on Thomson's board after Dec. 31.

Did You Know....

Simon & Schuster is the world's largest English-language, educational and computer book publisher, distributing products to more than 150 countries through an international 25,000-title catalogue handled by sales offices and subsidiaries in 43 countries. Simon & Schuster has international operations in Europe, Asia, Australia, South Africa and Latin America.

The Digital Object Identifier (DOI) is a digital 'License plate number' for intellectual material proposed by the Association of American Publishers. Use of this identifying number will help users track down who owns an item and access whatever further information the owner (publisher) would like to provide. Customers can them purchase the requested information on-line. The DOI consists of three parts:
1. Two part identifying number identifying the publisher and the document
2. An automated directory composed of a computer system that will accurately link an object, be it a book, picture, etc to whomever owns it
3. The databases maintained by the publisher that provide further information (meta data) for the user.
The goal is to create a global internet based system in which publishers and other owners of copyright(s) will regularly tag their peices of intellectual property with DOIs in the way that publishers now use ISBN numbers. The AAP will be presenting their recommendations on the proposed adoption of the DOI standard at the Frankfurt Book Fair in late October. Simon & Schuster among others are expected to trial these recommendations.

End of Newsletter.