Five Questions with Lonely Planet

Recently I mentioned the effort by DK (Penguin) that allows consumers to build their own travel guides using the DK content. Lonely Planet recently launched a program that allows consumers to download (in PDF) only the parts of travel guides they are most interested in. The option to download the entire guide exists, but in many cases a consumer only visits a part of a country and much of a country wide guide is irrelevant. This program solves this issue.

Currently under trial, the content covers guides for Latin and South America and represents 350 chapters from 35 individual guides. The site is impressively easy to use and the prices for the chapter content are reasonably priced. Most chapters cost between $2 and $4 and users gain a discount from the purchase of multiple chapters. Lonely Planet says that the feedback from this trial will be incorporated into the next release that should also include more guide book content. As an additional feature, consumers can also view new guides before they are available in stores.

Commenting on this initiative Product Manager Tom Hall said "Over the years we've received countless letters and emails from travelers telling us they'd like to take just the parts of our book that match their travel. Pick & Mix enables this and is perfect for people traveling to multiple destinations not covered by one or two individual guidebooks, or those looking for very specific information. It’s also handy when plans change or you can’t get to a book store.”
Lonely Planet has long been a leader in the independent travel guide market after their first title Across Asia on the Cheap was written 30 years ago. The guides immediately appealed to travelers who wanted to get off the beaten track and gain the real essence of a location.

The guides and the company - perhaps as a direct result of the characteristics of the target consumers - engender significant loyalty. There are over 400,000 registered members of their travel community (Thorn Tree) who share inside knowledge, read and contribute to blogs and read about reports from authors in the field. Undoubtedly, Lonely Planet will be looking to expand the community and social networking aspects of their interactions with consumers and it will be interesting to see how their feature set develops.

I recently asked Tom Hall five questions about the Lonely Planet strategy and future plans.

1. Tell us about the thinking behind the build your own model.
   
   For years travellers have been asking to take just the parts of our books they need. I was one of them. In 2001 (before I worked for Lonely Planet), I took a round-the-world trip to 7 countries across three continents. I couldn’t carry guidebooks for all of them, and ended up scouring Kathmandu trying and failing to find a book on Tanzania. So I arrived in Africa with no information whatsoever, and was incredibly frustrated – the information I really needed was out there, but no one would sell it to me when and where I needed it. Many travellers tell us they tear entire sections from guidebooks, or photocopy pages from other travellers or from the library. The thinking is really just that there seems to be a clear need, and Pick & Mix is a way to meet it.That’s the key point, but here are a couple more. One of our first purchasers was someone in Norway who bought a chapter on Martinique. I like to imagine the person in a snug little cabin with icicles hanging off the roof, downloading a chapter about a balmy tropical island. The point is that Pick & Mix makes us truly global – our content is accessible anywhere with an internet connection, so it’s available to more travellers. It makes possible sales we’d never get otherwise. Another point is sustainability – quite a few people have written to say they appreciate being able to save paper, ink, the energy from shipping, or to go entirely paperless by storing our content on an iPod, memory stick, phone or laptop.
   
   


2. Has demand developed as expected and has there been any impact on sales of the full titles? How do your retailers view the effort?
   
   We believe Pick & Mix is complementary to our guidebooks, rather than a substitute. So far, results have confirmed that view. We just launched two months ago, though, and obviously it’s something we’re monitoring carefully. Demand to this point has been higher than projected, and even better, the feedback from travellers has been fantastic.
   
   Retailers face similar challenges to publishers when it comes to digital content, and we're committed to finding ways forward together. We see Pick & Mix as an opportunity to reach out to retail partners with digital content and meet the needs of both new and existing customers in new formats. In the future, this may include retailers offering digital products to customers either in-store or online.
   
   


3. There are similar efforts by other publishers – this is not a new and unique effort. How does your project differ? How are you measuring success?
   
   Pick & Mix is a simple concept - it offers chapters pulled straight from our guidebooks. It’s easy to use - you go online and find the parts our books you need, download them, and print them if you want – a five-minute process. Also, Pick & Mix covers an entire region, rather than a grab-bag of destinations. This complete coverage makes it useful for many types of trips: a long-term trip to multiple destinations, business trips or short city breaks, even when you’re on the road and plans change.
   We’re measuring success in terms of sales, whether we’re growing our market overall, and direct feedback from travelers.
   
   


4. You have used the PDF format for this initiative. Was there any discussion about allowing a non-proprietary download? Do you envision a situation where a consumer could choose not to use the PDF and receive it in text format? Do you see for example, the ability for users to integrate content into their own self-produced content
   
   We launched with the PDF format because travellers told us it’s the most useful right now. Our intention is to make Pick & Mix format-agnostic - in the long-term travellers should be able to get whatever content they want (including information from other travellers, like ThornTree or Bluelist), where they want it, in whatever format they want it. Pick & Mix is the first step towards that goal, and we’ll take our lead from travellers on the subsequent steps.
   
   


5. What’s next for Lonely Planet? You appear to have a loyal fan base and cadre of users/consumer who interact with some frequency with LP. Can you tell us a little about your social networking plans?
   
   Simon Westcott, LP Global Publisher responds: “We have great loyalty and interaction from users of our Thorn Tree community. Every month we break new records for membership and participation. But there's so much more for us to do: group functionality, tagging, more types of user content generation, opening our infrastructure to 3rd-party development, allowing people to create their own trip pages. Watch this space....”
   

Reed Elsevier Bid Speculation

There has been some movement in the share price of Reed Elsevier over the past several days due to renewed speculation the company would make a revived bid for Wolters Kluwer. On Friday the stock was up 6 1/2p to 608 and this morning the stock is up further. Today (Monday) citibank raised their recommendation from hold to buy referencing Reed's market position in legal, medical and the european market.

al-Mutanabi Street Book Market Re-opens

The NYT has a short piece on the re-opening of the al-Mutanabi Street book market in Baghdad. The market had been closed since the bombing and an imposed curfew. (I guess most curfews are imposed). From the article:

Mr. Shatry, like many Iraqis, also sought solace in words and the remembrance of sufferings overcome. He had begun his day with a group poetry reading on Mutanabi Street, a humble reopening for a market that has survived the Mongol hordes, Saddam Hussein and many other attackers. Around noon, between the deafening thwack of American military helicopter propellers overhead — twice in an hour — he recited the poem he read earlier, written by Ibn al-Utri.

Here is what I wrote in April:

al-Mutanabi Street: Baghdad Diary
I had not had the chance until recently to return to the diary of Dr. Saad Eskande, Director of the Iraq National Library and Archive . It makes pretty horrific reading and this passage from March 5th describes the scene of the car bomb attack on the well known al-Mutanabi Street Book market. The diary is hosted by the British Library and is well worth reading.

As we were talking, a huge explosion shook the INLA's building around 11.35. We, the three of us, ran to the nearest window, and we saw a big and thick grey smoke rising from the direction of al-Mutanabi Street, which is less than 500 meter away from the INLA. I learnt later that the explosion was a result of a car bomb attack. Tens of thousands of papers were flying high, as if the sky was raining books, tears and blood. The view was surreal. Some of the papers were burning in the sky. Many burning pieces of papers fell on the INLA's building. Al-Mutanabi Street is named after one of the greatest Arab poets, who lived in Iraq in the middle ages. The Street is one of well-known areas of Baghdad and where many publishing houses, printing companies and bookstores have their main offices and storages. Its old afes are the most favorite place for the impoverished intellectuals, who get their inspirations and ideas form this very old quarter of Baghdad. The Street is also amous for its Friday's book market, where secondhand, new and rear books are sold and purchased. The INLA purchases about 95% of new publications from al-Mutanabi Street. I also buy my own books from the same street. It was extremely sad to learn that a number of the publishers and book sellers, whom we knew very well, were among the dead, including Mr. Adnan, who was supposed to deliver a onsignment of new publications to the INLA. According to an early estimation, more than 30 people were killed and 100 more injured. Four brothers were killed in their office.

.epub: What it Means for Publishers

Nick Bogarty, who has been Executive Director of the International Digital Publishing Federation for the last five years sheds some additional light on the IDPF's recent announcement concerning the .epub format specification.

(Nick recently announced that he is leaving IDPF for a position with Adobe and in fact today is his last day and he is leaving on a high note).

This email was sent to me as well as a number of other interested industry types and Nick kindly allowed me to re-publish it here.

I received emails and calls with regard to the completion of the .epub format standard from the IDPF. I hope the below is somewhat helpful for clarification on what .epub means for the industry. The main question asked in the various correspondence was, "Does this mean that publishers can stop doing multiple conversions?".

For reflowable eBooks, the short answer is "yes". (I say "reflowable" because publishers will still do PDF for fixed-format books if that's what they want).

The long answer is the following:

Software companies who implement .epub handles files in one of two ways:

#1 - The software imports .epub and converts it to an end-user proprietary format. There are a bunch of reasons why a company might do this, the main one being they want their format to do things that aren't covered or possible in .epub.

#2 - The software simply reads (or renders) .epub files which a user can use, similar to how your ipod "reads" MP3 files.

There are many software companies who have publicly expressed support for the specifications. Some have already implemented it, some have implemented parts of it and are working on the rest, and some have said they will but haven't yet. I'm not totally in tune with everyone's development plans and release dates (some understandably don't want anyone to know), but this is roughly what I gather:

• Adobe Systems - full support for .epub in current release under #2
• eBook Technologies - full support for .epub in current release under #2
• OSoft - full support for .epub in current release under #2
• SONY - full support for .epub in next release (don't know which category, I assume #2)
• VitalSource - full support for .epub in current release under #1 - taking .epub as an input file from publishers in their repository
• LibreDigital - full support for .epub in current release under #1 - taking .epub as an input file from publishers in their repository
• iRex Technologies - future support for .epub (not sure which way they'll implement...assume #2)
• MobiPocket/Amazon - future support for .epub under Category #1 (I think) - I have no knowledge of Kindle development plans, hopefully they'll do this with the Kindle too - see: http://www.mobipocket.com/forum/viewtopic.php?t=6918. Some of .epub has already been implemented in Mobi 6.0.

Notable "I don't knows" include Microsoft and eReader (former Palm Digital Media), but .epub is an open, free and patent-unencumbered standard and I hope all software companies entering the market use .epub as their file format.

My advice to publishers would be to begin to work with their conversion partners to fully understand .epub and how .epub can be effectively produced. I would also have conversations with my distribution and software partners about their support for .epub. Frankly, since there are so many software companies already on board or soon to be on board with .epub, I think this is an excellent opportunity for publishers to begin to TELL their partners and vendors (or set some not too distant future date) that .epub will be the only file format for reflowable eBooks that they will produce and send through distribution. Obviously this is going to reduce conversion costs and, hopefully, increase selection for consumers. Something that time and again they say they want.

.epub provides everything publishers need (and many many software companies will support them) to demand that multiple conversions are a thing of the past.

-Nick

P.S. I thought this was a good write-up on .epub - here

Sylvan Learning and Random House Collaborate

Sylvan Learning centers will publish at least eight titles with the launch of a publishing collaboration with RH. Random House will manage an imprint Sylvan Learning Books, a newly created line of trade paperbacks and educational kits branded with the Sylvan Learning imprimatur. It is announced the first titles will be available in September 2008 and sold through booksellers and other retailers throughout North America. From the press release:

Sylvan Learning Books will launch with at least eight titles, each focusing on the elementary grades. The program will expand to offer titles aimed at students of all ages, as well as advice and tips for parents, shortly thereafter. An extension and expansion of Sylvan’s popular personalized tutoring programs, Sylvan Learning Books will provide students of all grade and skill levels with encouragement and coursework reinforcement to help boost classroom performance.

Sylvan was recently privatized and is undergoing a reorganization of its product lines and storefronts. Sylvan is known as a the leading brand in supplemental K-12 education and this imprint is both a natural brand extension and likely to gain rapid traction in the market place.

Chicken with Pears

Frequent readers of the NYT will know of Mark Bittman who writes a weekly column on Thursdays named the Minimalist. Each column describes a recipe that on the surface may seem complicated but is simplified significantly by Bittman. (Last week tomato paella). He also has several cookbooks all of which are quite good. Regrettably we can't afford an in house Chef here at PND and it being Thursday I thought I would nevertheless present the following video. Chris Walken the minimalist chef.

http://www.youtube.com/watch?v=43VjLCRqKNk

Pearson Selling Newspaper Interest

Pearson has been in the process of selling its French newspaper Les Echos for a few months now (Guardian) and recently Reuters reported that Pearson is also in negotiations to sell their 50% interest in a German version of the Financial Times. This is consistent with their reasoning expressed to justify the Les Echos deal which is that they want to concentrate on English language newspaper publishing. There has been significant speculation regarding their newspaper holdings in the wake of the Dow Jones/Newscorp deal particularly the potential impact on the FT. Newscorp has made it clear they want to overtake the FT in the non-us markets. Numerous analysts have suggested the company should sell the FT because the competition is expected to be intense and it looks like the FT has overcome some of its revenue and print legacy issues that analysts were focused on over the past two years.

Regardless, there is no indication - actually the opposite - that the company is about to ditch the FT. My guess is they are going to take on the challenge of the Newscorp/WSJ combination and they may well do better than analyst anticipate.

Hachette (Lagardere) Reports First Half Results

Lagardere is a €6.0billion company but the books division is big by our standards nevertheless. Their results have improved over the first quarter where there was some timing and softness in some markets. The US business continues to do well versus the prior period. Highlights from the press release:

• Lagardère Publishing (formerly the Books division) – The 2007 first-half revenue performance (€897m, up by 10.6% on a reported basis and by 1.7% on a like-for-like basis) was in line with our expectations. Like-for-like growth was driven by Hachette Book Group in the United States and by educational publishing in France.
• Recurring EBIT before associates up by 5.5% at €71m. The contributions from Education and Larousse in France, from Part-Works, and from Hachette Book Group in the United States (consolidated from April 2006) more than offset the drop in recurring EBIT from Literature in France and Orion in the United Kingdom.

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

Peter Quandt Out at Haights Cross

After reporting increased revenues and the successful completion of a recapitalization, Haights Cross appears to have dismissed its chairman, CEO and President Peter Quandt. This is all the terse press release had to say on his contribution:

“The Company appreciates Peter’s many contributions to the company and wish him well,” Mr. Crecca said. “The Board of Directors looks forward to working with Paul as we move forward with a strategic review of the Haights Cross companies,” said Gene Davis, Chairman of the Board.

Quandt had been Chairman, CEO and President since founding HCC in 1997. His position will be filled by Davis (above) and Paul J. Crecca, the Company’s current Executive Vice President and Chief Financial Officer, who will assume the role of Interim-Chief Executive Officer and Interim-President.

Last week the company had announced six month results that showed a 2.2% top line increase to $110mm. The company also had a $20million turn-around on profit to $11million. All segments showed improvement except k-12 supplemental which was down 22%. This latter segment contributed to the flat top line revenue growth. Also announced was the recapitalization that saw the combination of class A and B shares.

In the press release announcing the results and the recap was this statement:

Also on August 10, 2007, upon the closing of the recapitalization, HCC and certain former Series B holders entered into a release agreement, pursuant to which, among other things, such holders would dismiss a pending legal action against HCC filed by certain former Series B holders, in which they have asserted claims under 8 Del. Code. § 220 and under a certain Investors Agreement, dated December 10, 1999, seeking access to HCC’s books and records.

As part of the recap a six member Board of Directors composed of Peter Quandt and five persons designated by various former Series B and Series A holders was (to be) formed and it looks like this group had at least one significant meeting.

Reed Elsevier Try Ad Supported Medical Information

Reed Elsevier has launched an experimental web site for medical practitioners that will be wholly supported by advertising revenues. The company is betting that oncologystat will encourage as many as 150,000 targeted doctors to sign-up and browse the latest articles from several Elsevier titles. As reported in the New York Times;

Mainstream publishers have wrestled for years with the question of how to charge for online content in a way that neither alienates potential readers nor cannibalizes their print properties. So far, few definitive answers have emerged. Reed Elsevier, which is based in London, is taking a risk that its readers will drop their paid subscriptions and switch allegiance to the new Web site, which will offer searches and full texts of the same content from the moment of publication.

Company executives believe that advertisers are chopping at the bit to get direct access to practitioners via subject specific web sites like (they hope) oncologystat. In support of this, the company sees advertising growing at double digit rates and could be over $1bill in several years. Historically, these journals did not contain advertising and subscribers pay very high subscription fees to gain access to the content and information. Elsevier is betting that the substitution that will occur (advertising revenues for subscription fees) will enable journal revenues to grow over time. Questions of bias are likely to come up assuming this experiment is successful; however, delineating the gap between editorial content and advertising has been achieved for years in the magazine world and is unlikely to become a major issue. No doubt the company has established policies in this regard.

Further from the NYT article an interesting last point,

Getting the relevant answers promptly may be more important to doctors than not having to pay for them, said Elizabeth W. Boehm, a principal analyst at Forrester Research. “Anything that is going to save the physician time, without losing the certainty that they have seen everything that they need to see, is potentially valuable,” she said. “The question is, can they give them the information in a way that is more valuable, more easily searchable.”

Giving practitioners access to reams of valuable and potentially useful information is of little use if they can't locate at the point of need what they are looking for. As Reed has done with legal in developing a platform approach to legal research and usability they are likely to adopt in medical information and this may be a first step in that direction. Medical information is available from other sources but integrating this information (articles) into a solution that is fast, relevant and deep provides real value for users. Workflow integration is a powerful thing and while publishers have been challenged in migrating print revenues to web, everyone recognises the inherent potential benefits for users in doing so. If this advertising model shows even a glimmer of the potential they expect then there will be a rapid acceleration of similar products.

Who Will Play Jane?

What caught my eye about this story was that the home of a fictional TV character played by Parker Posey is a 'brownstone' in Hoboken. Her character has a 'cushy job' as a children's editor at Harpercollins. Are there such things because believe me I've looked and I keep coming up empty handed. The reality of the real estate market is such that the ability for a single mid-level editor to own a brownstone in Hoboken transcends fiction just like the outrageously large NYC apartment seen on Friends. Actually, there are a lot of publishing expats living in Hoboken and I recently found out a head of a large trade house moved over from Manhattan recently. So we are on the map and perhaps Parker can contribute to the continued increase in real estate prices. No word on who will play the Jane Friedman character (maybe she will be a walk on) but of all publishing houses it is not surprising that Harpercollins would be the named house in the show.

Hoboken is the global corporate headquarters location for Personanondata and Information Media Partners.

Wikert on E-Book Platforms

Joe Wikert reflects on the Sony E-Book Reader and the recent reports on the imminent launch of a Amazon E-Book reader.

Even if a killer device existed today there are far too many cons working against the ebook platform for it to succeed at print book pricing levels. In fact, if something doesn't change soon, the entire concept of a meaningful ebook sector (as opposed to the rounding error it is in the publishing world today) will be laughed at the same way we all chuckle when we think about the "paperless office.

Personnally, I don't see how any stand alone reader is going to succeed especially at the price Sony is looking for. As Exact Editions points out the i-Phone (or perhaps some equally multi-function device) is the best option for ebook (and e-periodical) content.

Then there is the pricing issue....

New York Times Online Education Initiative

As noted in Inside Higher Ed, the New York Times has launched an online initiative that will merge NYTimes content with course management software to enable faculty and scholars to build course content. From the press release:

Educators will now have the opportunity to select Times articles, archival content, graphics and multimedia content, including videos and Webcasts, gathered around specific subjects, and make them available to students online, along with other course materials. Students will benefit from access to thematic content that is drawn from the vast array of Times reporting on a countless number of issues.

This is an interesting initiative for NYTimes which has no doubt realized the extent to which their content is used in existing course management solutions such as Blackboard and via online sources from the likes of Proquest. The education market has always been an important one for NYT and the thrust to become a direct provider to this market is significant. (No word whether they will add content from other news sources but this would be an interesting natural extension of their platform).

The expansion will be implemented with Epsilen which is marketing a newly developed web based tool that supports a variety of scholar services such as:

ePortfolios, Global Learning System (courseware), group collaboration, object sharing, blogs, messaging, and social and professional networking. Users receive a lifelong identity on the Epsilen(TM) system, enabling them to maintain their academic and professional ePortfolios throughout their careers, regardless of their affiliation with individual institutions.

That last bit is especially interesting (assuming the platform is open) because it will enable a scholar to create an online library of material they have sourced, read, annotated, referenced and written about together with their own intellectual work. The utility that results from this could be fundamental for the development of the 'continuing education' of students as they graduate from universities and are [today] lost to both the universities and the publishers of educational material. (I have written a little about this before here and here).

From the press release:

"The Epsilen(TM) Environment is a new concept and technology framework allowing faculty and students continued access to their work after switching schools, entering the job market or retiring," said Dr. Jafari. "It is a prototype of the Web 2.0 concept built on the ePortfolio foundation and the power of social networking. The Epsilen(TM) concept suggests that every student and professional should own a lifelong ePortfolio enabling them to collaborate and exchange intellect in a global community."

The New York Times operates a business unit named The Knowledge Network where this initiative resides. They hope the collaboration between The Knowledge Network and Epsilen will bring about the development of a large social network of students, facility and administrators.

Knowledge Network will serve as a global networking and professional and academic development resource for faculty, students and alumnae. Users will be able to share work with colleagues, create their own academic or professional ePortfolios (digital repositories of a person's work), invite peer review and establish professional contact with people around the globe based on common academic pursuits and research.

If this develops as a real platform, as NYT hopes they could become a gatekeeper to students and faculty. Interestingly, the HighEd article notes that this tool could also take some of the burden away from faculty in the development of their course material. This is a vital point because course development can be a time consuming task and inertia sets in because of that difficulty. If tools free this process then it is conceivable that instructors will vary their content more frequently, provide better more resonant content and as a direct result rely heavily on the tool. As a data or information provider inserting yourself into the work flow is the nirvana because it makes it that much harder to cancel.

There are a lot of themes here and it will be interesting to keep a watch on the Knowledge Network.

(It is curious that there is no mention of this on the NY Times. com site).

Some of Us are not Plugged In

It's hard not to think big about all the ways digital content can be used; there's more than enough news to fill many, many blogs like this one. Yet two recent examples reminded me of the digital divide that still needs to be bridged for many (in America alone, even). One example was personal—my mother, a seasoned high school teacher, told me about a young new supervisor she has who is changing things up so much, she exclaimed, that "now I have to learn how to send attachments via email!" A second was the recent announcement by Random House of their $1 million contribution (over five years) to First Book, a non-profit organization that gives children from low-income families the opportunity to read and own their first new books. Since 1992, First Book has distributed more than 50 million books in over 1300 communities around the country.

According to the Pew Internet project report released in early July 2007, 71% of Americans have access to the Internet, 47% of those with broadband access. That includes access at home, work, school or other places. The two examples above reminded me that as evolutions in electronic content turn over more and more quickly, those without the access, financial means or savvy to take advantage of those innovations are left farther and farther behind. It's a worthy point and a call to action for those of us who couldn't imagine a life without incessant reading. If you are doing good works in this area, as many are, please let us know.

In ways overt and subtle, literacy used to delineate the haves from the have nots, or maybe the "could-haves" from the "could-never-haves." Will digital literacy create the same delineation?

Susan Ruszala

iUniverse.com and Author House Form Alliance

In an annoucement today, iUniverse.com and Author House announced that the companies agreed to terms that will add iUniverse to the Author Solutions, Inc. family of brands. The transaction was announced jointly by Bryan Smith, president and CEO of Author Solutions and AuthorHouse, and Susan Driscoll, president and CEO of iUniverse.

From the press release;

“There’s no question that publishing is increasingly becoming more author-centric,” said Susan Driscoll, president and CEO of iUniverse. “We have always been focused on providing authors with the publishing expertise required for professional results. Now, through Author Solutions, we have a terrific opportunity to provide all authors—both self-published and traditionally published—with the broadest range of services to help them achieve their individual goals for success.”

“At AuthorHouse, we have built our brand by making service to the author our first priority,” said Bryan Smith, president and CEO of Author Solutions and AuthorHouse, “and iUniverse has done a great job leveraging their traditional publishing experience to make authors successful. By bringing the two biggest forces in self-publishing together, we will draw on the unique strengths of both brands and offer an even better suite of publishing services for authors.”

The popularity of 'self-publishing' programs and tools is exploding (by accounts Lulu.com is the market leader) and the market spans providers of book publishing tools for the individual like Blurb.com through publishing services companies to quasi-traditional publishing operations.

Amazon.com has added print on demand and self-publishing capabilities over the past two years to become a real player and competitive threat to the incumbant companies. A deal like this was expected and there may be more consolidations on the way. By some estimates the 'self-publishing' market is estimated to be over $1.obillion. Besides Amazon other big companies such as Hewlett Packard, Xerox, Microsoft and Kodak are potential and likely competitors.

In my view, this is the area where fundamental change will come in publishing industry not at the top of the pile: There is too much in-bred desire to maintain the status quo at those heady heights for real change to happen with any great alacrity.

Amazon E-Book & Google Bookstore

NY Times has an article this morning on Amazon's $400 e-Book reader. It will be wireless and will come with some free content.

Several people who have seen the Kindle say this is where the device’s central innovation lies — in its ability to download books and periodicals, and browse the Web, without connecting to a computer. They also say Amazon will pack some free offerings onto the device, like reference books, and offer customers a choice of subscriptions to feeds from major newspapers like The New York Times, The Wall Street Journal and the French newspaper Le Monde. The device also has a keyboard, so its users can take notes when reading or navigate the Web to look something up. A scroll wheel and a progress indicator next to the main screen, will help users navigate Web pages and texts on the device.

Also as has been rumored for a while, Google plans to sell full access to some of the book titles in its Book Search product.

For its part, Google has no plans to introduce an electronic device for reading books. Its new offering will allow users to pay some portion of a book’s cover price to read its text online. For the last two years, as part of the Google Book Search Partner Program, some publishers have been contributing electronic versions of their books to the Google database, with the promise that the future revenue would be shared.

Steve Riggio is quoted at the end of the article say in part that B&N will increase the number of e-Book titles they sell and will consider the sale of a B&N reader only when the unit price comes down to a reasonable level. Horray for that.

Truth Sometimes Is Fiction

News reports out of Poland (not often I get to say that) are noting the sentencing of one Krystian Bala in the murder of Dariusz Janiszewski. Apparently young Krys thought Dariusz was having an affair with his wife but was never considered a suspect in the murder that went unsolved. Unsolved that is until young Krys got the writer's bug and felt compelled to write about it. (Now who does that remind you of?) Long story short, a diligent police officer read said published book and after a quick investigation arrested Krys for Murder. The court agreed there was no If about it and that he indeed did it.

BBC

Borders Earnings Call

Following on from last weeks earnings annoucement, Seeking Alpha posted the transcript of the earnings call held on the same day. Some highlights:

George Jones on execution at the store level:

Our progress on execution has been reached through a combination of efforts including an ongoing focus on improvement in retailing basics such as effective use of key items, impulse items, feature tables, end caps and so on -- you've heard me talk about this before and it's really showing it's working -- merchandise presentation, effectiveness of marketing and promotions, and consistency of execution. We've also made significant process in changing the culture of our stores organization in that they are dramatically increasing their focus on driving sales within their individual stores

Jones on the improvement in comp store sales:

We're particularly encouraged by the improvement in comparable store sales cross all business segments. Of course, record sales of Harry Potter and the Deathly Hallows led these results, but even without sales of Harry Potter -- this is important -- we improved our comp store sales in each operating segment. This is an important shift in the trend for us.

Jones on the impact of Borders Rewards in driving traffic to stores:

our unique mix of promotional offers and compelling content delivered via email to these over 20 million Borders Rewards members is really helping drive traffic to our stores. In fact, our transaction count at domestic Borders stores increased by .5% in Q2 and notably improved in ten of the 13 weeks of the period; the three that didn't were the first three weeks of the quarter so we had ten in a row where it mproved. Of course, Harry Potter was a big part of driving that traffic but only during the final two weeks and one day of the quarter.

Jones on the improvement at the Walden stores:

frankly, had been sort of treated like a stepchild for a while. In addition, we focused merchant team on the unique aspects of the mall business. Breaking this business out and focusing on its opportunities has greatly improved this operations and helped drive positive results.

Wilhelm on the sale of the international operations:

This process is moving forward as planned in both the U.K. and Australia-New
Zealand, yet it is more advanced for Borders U.K. as we started there a bit earlier.

Without identifying the specific issues, Wilhelm noted that they are "we're spending the necessary money to fix the merchandising systems." The merch system has been problematic for Borders over the past two years. He later noted that continued higher SG&A costs would be attributable in part to continued spending to fix the merchandising systems.

Jones in response to a question about supply chain efficiencies:

...it wasn't as much of bad decisions that Borders made in terms of things they did wrong as it was things that we didn't do that perhaps our competitors did do more effectively. Distribution and supply chain and systems and things like that are good examples of these.

...in terms of managing our inventory from the whole supply chain factor, part of the distribution centers, and as Ed said, I think they've made investments and we've done good things on those. The other part of it comes back to the systems which is I've certainly talked a lot about. We clearly still have deficiencies there on that. We don't have, if you look at versus what a normal retailer I would expect would have in terms of automated replenishment or what our competitors have, we've got a ways to go there.We still believe we have big, big opportunities in terms of managing our inventory levels more effectively with this type of efforts as well as systems. We have the distribution centers now in place and we expect as we get the systems in place we'll start catching up to where we really should be on our inventory turns.

Wilhelm: Well, improving turns from 1.6 which we've been at historically to 2 generates about $200 million of cash for us. So that's the proxy of what would come out of inventories.

Jones: Longer-term if we were able to get it, say, to 2.6 which is where our major competitor is now, it'd be $500 million

The Times E-Reader

My approximately $9 per week that I used to spend for the New York Times is down to $3.50 as I have migrated the majority of my reading to the web site. On Sundays, the Times remains a fundamental part of the day but I wonder how long I am going to continue to buy the paper version when my perception grows that the news is out of date and the content is less substantial. Perhaps it is a function of the summer but the newspaper appears thinner when I pick it up on Sunday's, and I don't immediately believe it has the heft to keep my attention for more than 2 hours.

The insert promoting the Times Reader caught my eye this month and I decided to give the free trial a try. There is a lot of speculation about The Times' intentions regarding Times Select which requires a payment to see added content on the NYTimes website. They do have (to me) a surprising number of subscribers to this content but in the face of expected heated competition from NewsCorp/Dow Jones there is speculation that they will shut down Times Select. In my view they should consider doing the same with the E-Reader.

On a positive note, the Reader is great if you want a version on your laptop and you can't by a paper at the airport or train station. During the month I had free access I used it several times on the train and it was excellent but it wasn't better than the paper version. I found the navigation less than intuitive and I repeatedly found myself in a story I had no interest in because I couldn't tell from the headline what the story was about. In contrast on NYTimes.com and in the paper you can glance at the slug and immediately get a sense of the subject. That same functionality seemed to be lacking on the Reader.

In my experience there seemed to be less opportunity for engagement with the Reader than with the paper version. I am not sure why I felt this - perhaps it is a tactile thing - but I found myself preferring to buy the paper. I found it frustrating that I couldn't permalink to articles as can be done on the (NYT) web site and attempting to jump to the article on the NYTimes.com is not possible. Obviously, the reader is designed for use when you are not on-line but this was still frustrating. When I was online, my attempt to check the NY weather was laughably complex.

As wi/fi becomes more prevalent the e-reader is going to look increasingly like a relic. There is so much more content on the NYT web site but little of this audio and video content is available via the reader. If they want this product to succeed they will need to do far more with the product. Instead of trying to develop a rendition of the print, they should be thinking of developing a consumer news "platform" that equates to a LexisNexis type news product for consumers. It would be interesting if the New York Times built this platform approach in conjunction with Yahoo.com (or Microsoft) such that NYT brands the Yahoo news service with NYTimes. In this model NYTimes would continue to leverage their news gathering and analysis strength but could also regain some of the classified, listings and ad revenue that has disappeared in print.

Since I wrote the post last week, Google announced that they are to 'publish' the full feeds from the Associated Press, the Press Association and others. This is a huge and perhaps seismic issue for news sites such as NY Times who rely on traffic from Google to boost exposure to their content. In the case of NYTimes they have much more direct traffic than most news sites but the battle is joined and I see a need for the Times to do something far more fundamental with MyTimes, The Times Reader or NYTimes.com in order to maintain readership and not become some has been news service.


(On two related notes, it was curious to me that as part of the free trial to the Times Reader that the Times Select content wasn't included - I find this odd. Secondly, I have not been contacted at all to actually pay for a subscription for the Reader. Isn't conversion to a paying subscription the purpose of the free trial? Very lazy approach I think).

Endorsement for PersonaNonData

It is always gratifying to receive an endorsement but in this particular case the effort is highly creative. Ann Michael lists a number of useful and interesting blogs she considers great sources of information about publishing and media. I agree.

Thanks!

UK Borders Sale

The Bookseller is reporting that Pizza Express founder Luke Johnson is backing a management buy-out of Borders led by CEO David Roche. They further suggest the chain may go for as little as £25mm with little competition from WH Smith to push the price up. Smiths are looking for a fire sale deal and would likely shut numerous stores and concentrate only on the most profitable locations.

Ebsco Acquire 10 Sage Databases

EBSCO Publishing one of the world's premier database aggregators, has acquired ten renowned indexes from SAGE. The deal will bring the leading print indexes in their fields to users electronically through the EBSCOhost® platform, one of the most-used interfaces available for scholarly research.

The following indexes are now owned by EBSCO and will be available electronically via EBSCOhost:

• Abstracts in Social Gerontology™
• Educational Administration Abstracts™
• Human Resources Abstracts™
• Peace Research Abstracts Journal™ (Now called Peace Research Abstracts™)
• Sage Family Studies Abstracts™ (Now called Family Studies Abstracts™)
• Sage Public Administration Abstracts™ (Now called Public Administration Abstracts™)
• Sage Race Relations Abstracts™ (Now called Race Relations Abstracts™)
• Sage Urban Studies Abstracts™ (Now called Urban Studies Abstracts™)
• The Shock & Vibration Digest™
• Violence & Abuse Abstracts™

These are highly-refined, specialized collections in their subject areas. Currently, each index is available in print-only. Online versions, including backfiles and other benefits, such as unlimited use, remote accessibility, multi-database searching, links to full-text, etc. are expected to be available by October 2007.

EBSCO offers a suite of more than 200 full-text and secondary research databases. Through a library of tens of thousands of full-text journals, magazines, books, monographs, reports and various other publication types from renowned publishers, EBSCO serves the content needs of all researchers.

Press Release

Informa Post Strong Results

The Telegraph reports that Informa has raised its half year dividend by 70% as the company consolidates its purchase of Datamonitor. The company said underlying profits rose 24% and revenues grew 10% adjusted for currency movements. In their press release the company said their efforts to establish a stable revenue platform that wasn't subject to economic variables is succeeding with more than 3/4 of their revenues 'visible and renewing' from subscriptions and book sales.

Earlier in the year, analysts suggested that the company had over paid for Datamonitor however management were convinced that price was right and that better management of the company would improve results. Informa noted that Datamonitor revenues were up 62% (with organic growth up 22%) and operating income up 51%. Furthermore, growth on the top line and bottom line is expected to improve further as product sales are integrated further and final cost cutting programs are put in place.

Borders Reports Comp Stores Flat

Borders reported second quarter revenues of $945.1 which were up 10.4% over the same period last year. Superstore comp sales were up 4.6% but the Harry Potter book accounted for virtually all of this gain. The company reported a loss of .43 cents per share or .23 per share excluding non-operating charges. The street had been expecting .34cents a share on revenue of $916mm. In expectation of the results, which were released after the market closed the stock was down $.90.

"Progress is clearly being made at Borders Group as we continue to execute our strategic plan and are beginning to see improved performance," said Chief Executive Officer George Jones. "Harry Potter certainly gave us a big boost in sales across all businesses, yet even without it, we achieved positive same-stores sales results that are directly attributable to our focus on execution and more effective use of the Borders Rewards loyalty program to drive increased traffic to our stores. We have significantly more work to do, and we remain committed to staying on-track to deliver sales and earnings growth consistent with the long-term financial goals we set forth in our strategic plan."

Other items of note:

• 2nd Q net loss of $25.1mm versus $18.4 last year. On an operating basis the loss of $15.3mm ($.26/share) compares with $14.5mm ($.23/share) last year
• Gross margin increased by 1%
• SG&A increased .9% due to non-operating charges: legal settlement expenses, promo discounts, higher expenses for 'strategic initiatives'
• Debt net of cash was $662.9mm versus $476.7 in the same period last year
• Comp Superstore sales were up 4.6% with HP; 0.4% without HP
• Operating Income: On an operating basis superstores contributed $2.4mm in the quarter versus $10.4mm a year ago
• Walden comp sales were flat excluding the Harry effect. Jones dangerously suggested that the improvement versus the last seven quarters was likely to continue.
• Walden operating income was slightly better than last year which represents significantly better performance than the superstores.
• Non Operating items included $3.5mm to settle a legal case in CA, severance costs for execs, store closure and relocation costs and professional fees.
• The company also said it had adjusted some of its loan covenants to enable the sale of the international business and to potentially enable some refinancing options. The company also formally terminated the previously (surprising) announcement about seeking term financing of $150-200mm.

CNN

Press Release

GalleyCat Rants: We Are Reading Dammit

The recent report regarding reading habits provoked a lot of discussion - most of it pointless - but this related comment on GalleyCat is spot on. I also saw this Guardian article and continue to wonder why people who should know better continue to generalize and draw dopey conclusions.

22 hours in Las Vegas is either too long or too short depending on your view point but either way what on earth was John Freeman doing spending his possibly limited waking hours looking for a bookstore? In short, the strip is not all Vegas has too offer and perhaps if he spent less time at the pool and perhaps doing some real research he wouldn't have written the article at all.

Barnes & Noble's Potter Quarter (Updated)

B&N CEO Steve Riggio commented that “Record breaking sales from J.K. Rowling’s Harry Potter and the Deathly Hallows was the principal driver behind our comparable store sales growth in the quarter,” which grew 4.4% versus the same period last year. Comparable on-line sales grew 18%. Total store revenues grew 7.3% for the period. Negating the impressive results was the revenue impact without Harry: Store sales only grew 1% and online 7.3%.

Financial markets have been noting any softness in any large retailer's results over the past several weeks and while Harry was an important factor in B&N's results, the 1% gain is an important indicator that B&N continues to make the right moves in a challenging marketplace. It will be interesting to see how Borders reports on Monday. Attention may be focused on the Harry effect and commentators may seek to eliminate these sales as an anomaly. The Harry phenom is an unnatural occurrence but in the process B&N were able to sell 1.7mm copies - they got the consumers into the store and while details are sketchy these consumers did in fact buy other titles. Riggio said the title continues to sell well.

The company also said they are confident that they will achieve their stated financial goals for the year.

For the quarter operating income of $13mm was half the amount in the same quarter 2006. The margin was 1% versus 2% last year. For the six months, operating income was $5mm versus $41mm last year. The company's gross margin was lower by a full percentage point and selling and marketing expenses for the six months were $40mm. Both line items contributed to the margin erosion.

B&N was trading up on the day.

Press Release
8K

Update:
Some follow-up comments from the B&N conference call (Transcript from SeekingAlpha):

Riggio on the loyalty card and discounting:
We've got a strong balance sheet, good cash flow, and we thought it was the right time to take a piece of our profits and put it in the hands of the customers, and we're very pleased with the results since the launch last year. Customers love the card. They like the extra discount and we're seeing extra growth

Klipper on store growth:
Every year we say 30 to 40 stores, and it's really depending on the timing and when the development happens across America. We could clearly turn that up and open more stores if we so choose, but our criteria is extremely high. We're opening best location, not best available location, as we have in the last seven or eight years. The opening pace, we're very comfortable with it. I think there's a lot of business out there.

Riggio on Potter 'attachment'
The attachment rate is the same as it always was. It's a little more difficult to determine, frankly, because people spend two, three, four hours in the store and buy product and check out. Then at midnight, all they want is the one book. So our sense of it was that it drove sales in some categories more than others, I think especially in our cafe. But it's all behind us now. We think it was great for business, and we don't think it's over, because the book continues to sell well. All the other volumes are really doing well.

Riggio on the publishing year
I guess the thing that we try to point out most often is that while the business tends not to have lots of peaks other than Harry Potter, it also doesn't have many valleys and it's a relatively stable industry. On balance, we think this year was a bit better in the publishing season than last year, but so much is dependent on the second half of the year. September looks like a good release schedule, but we'll have to see what the customers say about all these books.

Toulantis on the on-line growth:
No. I think that while it's true if you exclude the actual sales from the Harry Potter book itself, the comparable online sales increase of 7.3% is obviously higher than recent trends, but the effect of the Harry Potter sale was to drive perhaps more interest, more traffic, and I think that drove to some more conversion. So we saw more traffic and more conversion in the quarter Again, I think a lot of it was around Harry Potter, so people coming to buy that book also when they come online, were buying some additional items.

Agatha Christie's Poirot in Comics

The BBC reports (and has some pictures) from four new Agatha Christie titles that are being reproduced as comics. Sounds like a new and innovative way to bring attention to old mystery classics. I had a great deal of difficulty finding these titles on any web site but eventually was able to find them on Amazon.co.uk by using the name of the editor. Here is the list.

Apparently there is a Christie festival coming up in September.

Update: IHT covers the same story this morning. And I am sure the others will catch up later in the day.

Headline Guaranteed to Get Attention

It is the silly season and there is no less evidence of that in a report from the New York Post's page6 which noted that a new title from S&S will document the required etiquette for orgies and sex games.

"Be accompanied by a trusted boyfriend, girlfriend or friend; bring protection," she advises about orgies. "As a general rule, it is the uglier men who perform the best, simply because they have more to prove." She also recommends three New York City sex clubs.

(I don't have the addresses).

Curiously, in the title description on Amazon.com there is no mention of the above chapter.

Twenty-first-century women are called upon to perform any manner of tasks, recall even the most random bits of information, and all the while carry on a charming conversation. Thankfully, from historian and British television personality Francesca Beauman comes this indispensable and authoritative survival guide that will allow women to tackle any problem and work any party with ease, style, and grace. Everything But the Kitchen Sink is a compendium of delightfully witty facts, figures, diagrams, lists, charts, quotes, and practical advice. True, you may not ever need to know how to roast a hedgehog, treat a shark bite, or say "No, thank you. Please leave me alone" in Russian. But isn't it good to know you can?

Looks like anyone buying this book is in for a surprise.

Poll: Those who never attend church read twice as much.

According to an associated press IPOS survey those who consider themselves liberals read more - but only slightly. The bible and other religious books were the largest category with 2/3rd responding that they read this type of content. Further details from Boston.com:

There was even some political variety evident, with Democrats and liberals typically reading slightly more books than Republicans and conservatives. The Bible and religious works were read by two-thirds in the survey, more than all other categories. Popular fiction, histories, biographies and mysteries were all cited by about half, while one in five read romance novels. Every other genre -- including politics, poetry and classical literature -- were named by fewer than five percent of readers. More women than men read every major category of books except for history and biography. Industry experts said that confirms their observation that men tend to prefer nonfiction.

As the title of this post suggests, the poll also confirmed that organized religion is the enemy of publishers. I’m not sure how this jells with the above noted religion readers, but those who responded that they never attended religious services read twice as much compared with those who attended frequently.

Those likeliest to read religious books included older and married women, lower earners, minorities, lesser educated people, Southerners, rural residents, Republicans and conservatives.

Twenty five percent of the respondents said they had not read a book in the past year. One respondent would rather sit in his pool (evidently not one of the people Kassia vacations with) than read. While the article describes Americans has hardly ravenous readers, I wonder who we are compared with. Personally, I am well on my way to reading 15+ books this year and I am rapidly clearing out my inventory.

(Not sure what Pat Schroeder is on about...)

Trip Advisor Buys Facebook Application

I'm not much of a joiner but I grudgingly set up a Facebook page when I got several invites and I am still not convinced it is up to much. All the cool kids are doing it so why not me? Facebook is an open application platform (and if I were remotely technical this would really excite me), which enables a multitude of developers to build mini applications that Facebook users can 'load' to their page and use. These applications cover any number of uses and I have loaded one for books, questions and a travel application named 'where I've been'.

Here is my 'map':



















According to the NYT the developer of this application is now $3.0mm richer via Trip Advisor. Trip Advisor is itself a fun site to browse if you are looking to find out what other travelers have said about airlines, hotels, destinations that you may be thinking about visiting. What they will do with this application is any one's guess. Perhaps I am cynical but the application as it exists is akin to notches on a bedstead - more bragging rights perhaps than anything useful.

Harlequin is Torstar's Waking Beauty

The McClatchy’s, the Chandler’s, the Bancroft’s: Is the family that owns Canada’s largest newspaper by circulation The Toronto Star the next to evacuate the newspaper business? Cash cows with seeming locked-in revenue growth for decades, these businesses provided expansive income for the growing web of family members over the years, and they also enabled particular social and political agendas to comfort their sense of responsibility.

Revenues have stagnated, and perhaps some bad decisions can’t be so readily ignored nor radical changes in business models experimented with since revenue growth is no longer a luxury they can take for granted. Younger members of the family don’t share a cohesive sense of mission and grow skittish at any suggestion the nest egg some may have yet to get may be waning. Quarter by quarter management runs out of ways to describe their ‘difficult’ business environment as circulation drops, display ads decrease and classified ads migrate to craigslist and monster.com.

Torstar is controlled by five families who own ‘A’ shares in the Torstar two share structure. 'A' shares hold all voting rights. B shares have none. Only a member of one of the five families can own A shares meaning that if A shares are sold and are purchased by someone other than a family member they become B shares with no voting rights. Torstar owns The Toronto Star, a stable of community newspapers in Ontario, a percentage in a Canadian broadcaster and the publisher Harlequin. The company is not reported to be for sale even though there has been a natural increase in interest in the company given the churn in newspaper properties south of the border.

On their earnings call last week, the company warned against investors believing the company could sell-up: "I would never counsel someone to acquire Torstar shares on the assumption that there will be a transformational transaction with respect to the ownership of the company," Torstar chief executive officer Rob Prichard said while discussing the second quarter.

Nevertheless, rumors circulate within the company especially as a result of an investment by Fairfax Financial Holdings Ltd. which bought 5.4 million non-voting shares earlier this year. Fairfax owns over 18% of class B shares but has said this represents a long term investment and they are not looking to influence the board. Torstar shares have traded in the low C$20 range but some analysts have suggested it could be valued at C$30+ per share.

Harlequin was founded in 1949 as a general trade publisher and morphed into the romance publisher we know today by acquiring publishing rights to Mills and Boone titles during the 1950s. As the popularity of these titles grew they began publishing their own romance titles and eventually acquired Mills and Boone. Torstar purchased 52% of the company in 1975 and until recently Harlequin has been a strong financial performer for Torstar.

In my view, Harlequin is a lost jewel of the publishing industry in the sense that no major publisher has set its sights on acquiring the company. Some have attempted it and difficulties exist particularly with the Canadian ownership requirements that preclude a foreign company from buying a Canadian company; however, with the recent acquisition of Thomson Learning which was (is) also a Canadian company a deal could be constructed that satisfies the legal requirements. Unfortunately, from a Torstar perspective selling Harlequin may not be in their interests because as the Harlequin business improves – and recent results indicate they will – then Harlequin may be responsible for a significant amount of the earnings growth the company can be assured of as their core newspaper business continues to falter.

On projected 2007 revenues of CN$475mm and projected operating profit of CN$65mm the company could be worth CN$500mm. They could generate a higher multiple since they have been able to push margins over 18%. The current Torstar market cap is C$1.3billion which might indicate that the current share price does not reflect a realistic valuation for Harlequin (or the valuation on the newspaper is depressing the share price which seems more likely). It remains to be seen if there is any action here, but on a positive note, Harlequin seems to be improving financially and broadening their revenue base to include the Internet and e-book publishing.

Some of the Torstar family members may be casting about for their own ‘Murdoch-like’ acquirer. Coincidentally, Independent News and Media which owns newspapers in the UK, Ireland, New Zealand and elsewhere could be a candidate. The company is controlled by Sir Anthony O’Reilly who could be more than interested in adding The Toronto Star to the portfolio.

I’m With Him

In an Associated Press article posted in early June, “Publishers Testing e-books for Young People” (MSNBC), Jon Yaged, U.S. publisher of the Disney Book Group, expressed his reluctance to use the term e-book, instead preferring “digital books.” His quote: “There hasn't been enough success with the e-book. We believe it's better to call it something different."I’ve had it with the term e-book too (or is it eBook? ebook? What if it starts a sentence? Is it EBook?). It’s messy, it’s inconsistently spelled, and it conveys the entirely wrong message. I have a hope that changing the terminology around the e-book might help to spark some new thinking on the subject. There has to be a better argument for digital books than “you can read in bed with the light on” (frequently cited, see this NY Times article from August 9 ).

If the goal of the e-book isn’t to replicate the reading experience online but change it fundamentally, what new business models could ensue? This is not to criticize the worthy efforts and significant technology and standards hurdles overcome by those working in this area—just a shout out to the sales and marketing strategists who might capitalize on what is indeed a growing market by changing things up a bit.

Susan Ruszala who is a freelance marketing consultant to publishing technology companies and was formerly responsible for international marketing activities for VISTA (now Publishing Technology Plc). She is an avid reader. You can contact Susan at sruszala@gmail.com.

Metadata and Google Booksearch

Peter Brantley (on O'Reilly) blogs about a journal article by Paul Duguid on the quality (representation) of Google Book Search. It is not good. Peter's blog is worth reading in its entirety but I was interested in what he said about metadata:

However, Duguid's analysis of Google Book Search is far deeper than a consideration of the cosmetic defects of the books' electronic skin. Rather, he
recognizes that faults lurk so visibly because Google is throwing away information that are fundamentally characteristic of books -- metadata that describe and even determine what books are, as simple and trivial as volume numbers, or artifacts of type design, editing, and artistic production. Books are not, in other words, mere bags of words, but vehicles in which ride a wide sundry of other passengers -- metadata, artistic expression, whimsy, and error.

I have long believed that the sheer explosion of information makes consistently constructed bibliographic databases like WorldCat more valuable than less. What I don't understand in the Google Book Search production process is where the connection between the call number and the book broke down. Surely, detailed metadata exists for these titles in the library catalogues from which the books emanate. Admittedly not all the physical characteristics that Peter notes but perhaps the catalog record is a starting point. How hard will fixing the broken synapse be? Ironic to think the full text exists in an electronic database but can't be recognized.

Queensland: A History for A$900,000

The Courier Mail in Queensland is reporting that one lucky University Professor has won a no bid contract for A$900,000 to write a history of the State of Queensland. Sounds like a plum assignment given that he has already written a two volume history of the state up to 1980. How much more work can there be?

Henry Rosenbloom, publisher of the highly respected independent Scribe, Australia's small publisher of the year in 2006, was astonished at the figure. "I've never heard of anything like it," he said. "It's the sort of advance you would give a major sporting celebrity like Steve Waugh for a biography that you could be certain of selling hundreds of thousands of copies." The history will be published in 2009 to coincide with sesqui-centenary celebrations as Queensland turns 150, with its funding coming from the State Government body Q150 Celebrations.

This conincidentally (or comically) occurs at the same time as Angus & Robertson are being lambasted for trying to run a profitabe retailing operation and being charged with not supporting the small publisher and indigenous author. Wouldn't it be nice if that A$900,000 went to support publishing in Queensland across the board rather than one lucky fellow who's end product won't even be commercial. It certainly won't win any awards.

SharedBook Launches Partnership with Carepages

I have mentioned Sharedbook a few times recently and they announced today the launch of a partnership with Carepages, Inc. From the press release:

SharedBook Inc., the Reverse Publishing Platform provider, and CarePages, Inc., the leading Internet service for building online health communities, launched the CarePages Keepsake Book today in response to member requests to publish the health updates, photographs and encouraging messages posted in their online CarePages communities in professionally-printed book format.

CarePages.com offers free, personal, private Web pages that help family and friends communicate when someone is hospitalized or receiving care. CarePages.com builds communities of support where families and friends can access resources, tools and guidance to learn what to do and say – and how to communicate and care with compassion and sensitivity.

“We hear from hundreds of families each day regarding how CarePages.com has helped them during a time of need,” said Eric Langshur, Chief Executive Officer, CarePages, Inc. “We value our members’ feedback and are pleased to introduce a feature they requested – the ability to preserve their user-generated content in book format.”

Earlier this month ShareBook also announced an enhanced version of their Blog2Print widget which enables easy production of blog content into book form. From the press release"

Blog2Print now automatically flows photographs and other images into blog book format along with the appropriate text, similar to the way content appears online. Additional enhancements include the ability to format more complex blogs. All updates will seamlessly apply to the Blog2Print widgets that have been placed on blogs to date. "Since we first introduced Blog2Print in beta form, bloggers from around the world have been telling us what works, what doesn't and which features they would like to see," said Caroline Vanderlip, Chief Executive Officer, SharedBook Inc. "The feedback we've received from the user community has been invaluable to date, and we hope to learn more as the public beta program continues."

Seeing how SharedBook can turn your blog into book form is incredibly easy. Anyone constructing publishing a blog for a specific event or commemoration requires very little technical skill (if any) to go the next step to produce a book.

Outsourced Future for Newspapers?

Is page proofing and editing a value added function for newspapers? Evidently the New Zealand Herald has decided that it is not and are outsourcing these functions to a third party.
According to news reports (Forbes):

Starting Sunday, 20 sub editors will work full time at contractor Pagemasters New Zealand at a site 20 minutes from the paper's editorial offices. By year end, Pagemasters will employ about 45 editing staff at their site to edit the seven newspapers - nearly 30 fewer than the newspapers employed.

If all goes according to plan, by year end five daily and three weekly papers will enjoy the benefits of this outsourced program. Among those benefits are better use of content across all the papers, lower expenses and more efficient use of production and editorial technology.

Naturally journalism groups don't approve of this measure (Seven Network)

"This is a panic measure to save money, but in the end it is crazy economics because it will only further reduce the quality of journalism and accelerate circulation decline," IFJ general secretary Aidan White said in a statement. When APN's outsourcing was originally announced earlier this year the IFJ said it had never before been attempted on such a large scale and represented a threat to news around the world.

This could be just the tip of the proverbial iceberg since the Herald is part owned by Independent News and Media which also announced a similar program for newspapers in Ireland. INM owns over 170 newspapers around the world including The Independent and The Irish Independent. If this program works it will be rolled out to many more newspapers.

I am however reminded of Bill Keller's (NYT Executive Editor) recent comments that in the age of Internet reporting, perhaps journalists will be required to edit themselves more than they have ever been because the inherent need to publish quicker doesn't allow for edit and revision cycles found at traditional newspapers. He also said editorial standards may fall because of this evolution. How much then is this move to outsource only a weigh station in the elimination of the process of editing itself?

Japan Bought 331% More Books on Phones in 2006

New publishing models abound if you just look hard enough for them. We have mentioned before the success that e-book producers have had in Japan selling e-books segment by segment on phones and here is some proof of the success:

Mobile phone sales of electronic books, including manga, grew 331.3% from 1.6billion yen (about US$14 million) to 6.9 billion yen (US$58 million) in 2006. The non-phone Internet sales of electronic books grew 69.7% from 4.8 billion yen (US$41 million) to 8.1 billion yen (US$68 million).

The Digital Content Association that reported the results expect sales to reach $100mm by year end. Not too shabby.

Tip of the Hat to Nick Bogaty.

Textbook Pricing: Any New Ideas?

In an op-ed piece for the New York Times this weekend Michael Granof proposes a subscription based financial model while debasing the recent Congressional "Advisory Committee on Student Financial Assistance."

Unfortunately though, the committee has proposed a remedy that would only worsen the problem. The committee’s report, released in May, mainly proposes strengthening the market for used textbooks — by encouraging college bookstores to guarantee that they will buy back textbooks, establishing online book swaps
among students and urging faculty to avoid switching textbooks from one semester to the next. The fatal flaw in that proposal (and similar ones made by many State Legislatures) is that used books are the cause of, not the cure for, high textbook prices.

His model is similar to the software license model and it is a model I have suggested is inevitable in educational publishing. Interestingly, all the major educational publishers are completely familiar and at ease with subscription models because they are used universally for their information products and in certain market segments.

The financial constraints are such that implementing a subscription model for educational texts is almost impossible to imagine unless, as the adage goes, 'they make it up in volume.' Just do the math: a $150 text book is now a five year subscription for $15 per year. So annual revenues are 1/10 of what they would be if the publisher is able to sell copies at 'full price.' As the publisher is able to progressively eliminate all second hand texts and the fee is made a requirement of each student in each class then perhaps by year five their income statements resemble those before the change. This is how Mr. Granof puts it:

Here’s how it would work: A teacher would pick a textbook, and the college would pay a negotiated fee to the publisher based on the number of students enrolled in the class. If there were 50 students in the class, for example, the fee might be $15 per student, or $750 for the semester. If the text were used for 10 semesters, the publisher would ultimately receive a total of $150 ($15 x 10) for each student enrolled in the course, or as much as $7,500.

My numbers may be slightly out of date (please challenge if so) but currently only about 25% of enrolled students buy a new textbook each semester. Something like 25% buy used and the rest get away with none. So if only 25% of the 50 students above by a $150 textbook that is $1,850 per class versus the one year $750 calculated above. So with the high price point but low penetration the publisher has no incentive to change to a subscription model. The potential benefit for publishers here could only be to their advantage if the sales penetration declines over time (perhaps first year they sell in 50% but as more copies are in circulation penetration of new titles drops significantly). But it does seem unlikely that the model would produce revenues at a similar level as currently enjoyed.

I may be missing something, but Mr Granof is also missing the intermediaries that are also making money both out of sales of new titles (wholesalers, bookstore) and sales of used titles. The used book market is a very large and profitable industry for the likes of Barnes & Noble and Follett. Both these companies manage college bookstores and run wholesale systems that buy used books at college stores, warehouse them and distribute them as needed. The sophisticated businesses generate significant profits and they would not be keen on a change in business model. So for now, there are too many disincentives for a change to happen. A more likely driver for business model change will be a change in the educational product itself and the way it is delivered. As there is a more discernable (and material) difference between the print and online product then the publishers may also experiment more with different price models.

WH Smiths Interested in Borders

The Manchester Evening News is reporting that WH Smiths may be considering a bid for the UK operations of Borders which were placed on the block as part of the company's restructuring.

However, a bid from WH Smith could face a number of hurdles, including competition issues, with objections from the books industry and smaller retailers if a bid for Borders in the UK was successful. Borders employs around 2,000 people in the UK and operates 71 stores - consisting of 41 Borders stores, 27 Books etc stores and three Borders express sites.It is thought the sale could generate bids of around £50 million. WH Smith is estimated to hold a 16 per cent share of the British books market, while Borders' share is thought to stand at around seven per cent.

Smith's has also faced a tough retail environment over the past several years but under the direction of CEO Kate Swann the company has rebuilt their store merchandise and redesigned their stores to positive effect.