Year in Stats & Popular Posts

By way of thanks to all my loyal readers I thought I would list some of the stats for the blog. I am not sure how 'auditable' these stats are but between google/analytics and feedburner there is some consistency. Currently I have nearly 800 subscribers via RSS and over 100 via email. During the year I had approximately 30,000 visits which resulted in 45,000 page views. On average, those who browsed the content spent 2.25 mins per page. Nearly all of this growth happened since May.

The top label (subject) was 'thomson'. Rounding out the top five were playboy, future of biblio, Harcourt and Educational Publishing. Seasonally, I had my heaviest traffic during the summer when the education publishers were in play. Thomson, Harcourt, Houghton, McGraw Hill and OCLC all provided the most traffic other than that delivered via commercial operators like Comcast, Roadrunner, etc. Top referring sites included the normal suspects: Google, Blogger, Technorati. Additionally, I thank Charblog, Eoin Purcell, Exact Editions, Schlagergroup, Bill Trippe, Lorcan Dempsey, Ed Champion, The Millions, Gladys Bembo , Teleread and PW for their support. (I don't do enough to return the favors and I hope to do better).

The most popular blog posts were:

Amazon & Self Publishing, Headline Guaranteed to Get Attention, Penguin Sued over Dot Parker, High Voltage: Australian Publishers Upset, Five Questions with Rosetta Solutions, Harpercollins reports Higher Revenues, .epub: What it means for Publishers, Endorsement for PND, Scholastic, the future, Five Questions with Lonely Planet.

Perusing my traffic reports, I always notice the 'Hilton hotel' or 'Marriott' network ids and think some poor shlepper is on the road and all they want to do is read my humble blog. Well, thanks to all of you stuck in some bland hotel getting your Personanondata fix. I appreciate it and I've been there myself.

The network addresses throw up other interesting items such as spelling mistakes. It always makes me smile when I see my friends from "Nielson" have come to visit. I always say, one thing you should always be able to do correctly is spell your name.

Search strings are another source of (my) amusement. Here is a sample of actual searches that landed on my site from the past 30 days:

“non german or non chinese customer who engage in electronic commerce”
"Motor Mouth barnsley”
"who is an actor"
"supply chain for a gym”
"2007 2008 email contact of chear holders in france @yahoo.com”
"Mr. Katz is in the widget business. He currently sells 2 million”
"escorting for dummies”
"Local news on the 7 October 1997 in London”

While for obvious reasons I hope these people left my site disappointed there is a reason I look at these queries because they often throw up leads for blog posts.

I hope next year is even bigger. Thanks for the support and please tell colleagues, friends and family members about the site.

HarperRandomCollins or RandomHarperCollinsHouse

Well why not? If Forbes and CNN Money have the same short note suggesting that Bertelsmann is going to buy Harpercollins for a $1.obillion then why not Personanondata? On the suggested deal itself, I am sure Hachette would have something to say about that. Or any media PE oriented group. Maybe CBS would carve off S&S for a combo with Harpercollins. Even the FTC would weigh in once all the booksellers reacted. Anyway, Harpercollins denies any discussions are taking place: But they would wouldn't they. Reuters.

This could make for an interesting new year. With Harpercollins' recent financial performance not comparing well with their own high standard and News Corp's expensive purchase of Dow Jones perhaps there is something to this. On the other hand, Bertelsmann already have a $1billion trade publisher and strategically would they want to invest a $1.obillion in a business with slow (if any) revenue growth and low margins. A better solution, would be to invest in an information business that in the right segment would see fast revenue growth and margins greater than 20%. We will see.

On a related note, Bertelsmann confirmed again that they have no intention of sell Gruner + Jahr. Bloomberg.

Scholastic Beat Estimates

Scholastic reported second-quarter profit above analysts' estimates, helped by revenue and profit growth in their International segment. The company also announced they are divesting the direct to home continuity business. From the press release;

Revenue in the second quarter was $746.2 million compared to $735.5 million in the prior year period, and net profit was $75.6 million versus $75.1 million. Earnings per diluted share rose to $1.93 from $1.75 in the prior year period, primarily reflecting accretion from the previously announced $200 million accelerated share repurchase. In the quarter, Direct-to-Home Continuities contributed revenue of $33.2 million and resulted in a pro forma net loss of $6.1 million or $0.16 per diluted share, based on the Company's normal effective tax rate of 37.0%; this is compared to revenue of $38.1 million and a pro forma net loss of $2.8 million or $0.06 per diluted share in the second quarter of fiscal 2007.

"In the second quarter, Scholastic's businesses, excluding Direct-to-Home, performed on plan, and the Company's operating income and margin improved year-over-year," commented Richard Robinson, Chairman, CEO and President. "Profits from School Book Fairs, Clubs and Trade Publishing all rose, while Scholastic Education made progress investing in a reorganized sales force, increased technical support and consulting services, and new technology products. In addition our International segment recorded double-digit revenue and profit growth."

The company has retained Greenhill & Co. and has begun the sales process and will also report direct to home as discontinued operations.

The company maintains their full year revenue forecast of $2.3 to $2.5 billion and earnings per diluted share of $2.35 to $2.85, noting that they expect the solid performance in their core businesses to offset the lower than expected results from Continuities. Full year net income may be impacted by write-downs associated with the sale of the business unit but there is no expectation that cash flow will be adversely impacted. The company also announced a modest stock repurchase plan and is authorized to purchase $20mm of its common stock.

Highlights:

• Harry Potter's boxed set helped the consumer segment to achieve flat revenue and profit
• In education, revenues were flat with prior but operating income was lower due to planned investments
• Large gains in international revenues and profits offset declines in other segments.
• Revenues were up 13% and profit up $4.5mm (22%)

Philadelphia Graphic

The Philadelphia Inquirer (philly.com) has an overview of the the growth of graphic novels and the accelerating relationship with movie productions from these works:

The genre's success has carved out new bookshelf space in bookstores, and caused Hollywood to come calling: In addition to Miller's Sin City and 300, recent movies such as V for Vendetta, Road to Perdition, and A History of Violence began as graphic novels. The holiday season brings the animated film version of Marjane Satrapi's Persepolis, about girlhood in Iran after the fall of the shah; Satrapi served as codirector. Satrapi lives in France, a nation where graphic novels have been a respected form for decades. In Japan, the bulky comics known as manga are read by businessmen on the subway. In many ways, America has embraced its graphic novelists a little late. Even so, the genre's success is due to its global appeal, Mahoney said. Graphics with straightforward dialogue enable the medium to simplify complex issues and cut through language and cultural barriers at the lightning speed of the Internet.

The article orients itself around an exhibit at the Norman Rockwell museum in Stockbridge MA. which is described as 'captivating'. I will do what they didn't which is to link to the exhibition which runs from November 10 - May 26, 2008.

LitGraphic: The World of the Graphic Novel
A burgeoning art form with roots planted firmly in history, graphic novels, or long-form comic books, have inspired the interest of the literary establishment and a growing number of readers. For today's aficionados, graphic novels, with their antiheroes and visual appeal, are positioned to usurp the role that the novel once played. Focused on subjects as diverse as the nature of relationships, the perils of war, and the meaning of life, graphic novels now comprise the fastest-growing sections of many bookstores‹an accessible, vernacular art form with mass appeal.

Reed Business Expect Slower Growth

Reed Business Chief Executive Gerard van de Aast spoke to Dutch daily De Telegraaf (via Reuters) and indicated that revenue growth in 2008 could slow due to continued weaker US dollar rates and a general economic slow down. He did confirm that results for 2007 show significant improvement over 2006 with internet revenues up 25-30%. Naturally, since the discussion was in the Netherlands he was asked about a proposed merger between Reed and Wolters Kluwer which he dismissed as pure speculation. He indicated that on paper it could make sense but culturally the two companies were not compatible.

Quebecor in Strife

Quebecor's CEO resigned on Monday in the wake of a failed recapitalization several weeks ago and on the heels of the collapse of their deal to sell their European printing operations. There is now heightened concern that the company could become insolvent in the short term unless their existing banks or primary shareholder provides some additional short term liquidity. There may be little expectation from the banking sector both because the company's access to revolving credit was reduced recently and analysts expectations that Quebecor will miss their liquidity covenants when they announce their next financial results.

Predictably, the markets have identified parties that could be circling the sinking ship and these include Donnelly and Transnational (Transnational have said they may only want parts) with some private equity companies for good measure. Another option is for Quebecor's primary shareholder Quebecor Inc. (35% of shares and 84% of voting) to take the company private. Certainly, if Quebecor Inc, stepped in they would want some assurances but their shareholders may not be happy with any type of rescue. Quebecor Inc's shares also dropped on news of Quebecor's problems.

From The Globe and Mail:

The company was once a money-spinning jewel in Pierre Karl Péladeau's Quebecor Inc. media and printing empire. Now, it is viewed as a drag on Quebecor, which has to decide whether it wants to throw it a lifeline or cut it loose by selling it or letting it fend for itself. At this point, it appears less likely that Quebecor World's banks will want to extend credit lines after having recently lowered the credit facility to $750-million from $1-billion, National Bank Financial analyst Adam Shine said in a research note. There would have to be assurances of help from parent Quebecor, but coming to the printing subsidiary's rescue appears "increasingly burdensome and certainly wouldn't sit well with [Quebecor] shareholders," he wrote.

While the sale of the European operations would not have generated a significant (less than $50mm) gain it would have eliminated a loss making drain on the company's resources. Coupled with the loss of their CEO (sixth in four years) and the failed recapitalization, Quebecor shareholders have bailed. Quebecor was at one stage the worlds largest commercial printer but failed management and misguided strategic leadership has left it light years behind industry leader Donnelly.

Cancelled: Lynne Spears Parenting Book!

Is it really a surprise that Lynne Spears book on Parenting that was to be published in 2008 has been cancelled? Thomas Nelson is saying it has been delayed not cancelled. Perhaps she can rethink this as "Lynne Spears: Grand Parenting for Dummies."

Replacing Harry in 39 Steps

Scholastic will announce a new publishing program that they hope will replace the Harry Potter franchise. In this case, they will retain all rights to the intellectual content so while traditional published product may not reach the heights of success that Harry did, Scholastic will be able to leverage the content in a much broader fashion than the Potter series. Rowling retained most rights to negotiate directly with other third parties such as movie producers without having to pay Scholastic or Bloomsbury a percentage.

From the NYTimes:

The series, to be officially announced by Scholastic on Tuesday morning, will be aimed at readers 8 to 12 and offer mystery novels telling the story of a centuries-old family, the Cahills, who are supposed to be the world’s most powerful clan. According to the books, famous historical figures ranging from Benjamin Franklin to Mozart were members of the family. The plots will revolve around the race by two young Cahills, Amy, 14, and Dan, 11, against other branches of the family to be the first to find the 39 clues that will lead to ultimate power.

Scholastic intend to make non-print publishing a key component of this program recognizing that not only is print less appealing to younger readers but that the web related product could actually create a larger more compelling product.

As a side note, I thought it curious that NYT has chose not to place this story in the media & advertising section of the times but in the Arts section. Seems to me that this is both: Certainly from a business perspective, replacing Potter revenues at Scholastic will be of interest to the business community.

Reed Elsevier: How to Expand a Market

Professional publishing companies are leading the industry in the transformation from a print single volume paradigm to an integrated, unified platform approach to content delivery. This latter approach combines the integration of content across categories with third party content and the integration into/with client workflows. Leading the charge are companies such as Elsevier, Kluwer and West each of which are investing significant amounts in electronic delivery of content. This investment goes beyond simply digitizing and indexing their content to building applications, webservices and supplemental databases that materially improve the productivity of their clients work environments.

This weekend TimesOnline discussed the impact this strategy was having on Reed Elsevier with CEO Sir Crispin Davis:

Davis said that the shift, which has taken place in the past 18 months, was “a natural but important evolution from print to online and then from online to workflow solutions”, Where possible, Reed is linking its own online platforms with a firm’s intranet, joining them at the hip. It is no wonder, then, that contract retention has gone up from 88% to 97% in science and is almost as high in legal. To a certain extent, the shift maps Reuters’ move from selling share quotes and news to more graphical data and research. But Reed has gone even further. For small legal practices, it will more or less run the office, providing administrative software that can track billable hours and keep a diary of court appearances.

Integration and the corollary understanding of the clients workflow is only part of the story. Using their content as their spring board, these publishers have radically expanded their potential market. In the article, Davis notes that they could be limited to participating in a $18billion market but in adding applications and services their potential market could exceed $48billion. Interestingly, when we discuss the size of the publishing market in revenue terms the boundaries will start to be much less clear as integrated products take hold.

Elsevier's experience and strategy is no less important for other segments of the publishing community. Education is the next publishing segment to adopt a platform approach to learning and leading this transition is Pearson. As I have commented before, this company has systematically acquired companies that now enable it to supply a broad array of products and services to the education community. The lines between content supplier and solutions provider are blurred as Pearson can provide content, assessment, remediation, school management applications and community solutions to their clients. Admittedly the sales process is likely to be more complicated; however, the market for Pearson's products is now radically larger, seasonality can be mitigated and their products can now be embedded in workflow and infrastructure. Switching costs are raised for the customer as a direct result of 'embedded' solutions which, while an obvious benefit for the publisher, also enables the publisher to maintain a consistent level of customer directed investment.

While Pearson has led this move in education in the last several years, the privatization of Thomson and Houghton/Riverdeep will result in these companies rapidly making up for lost time in the development of similar solutions for education. Providers like Elsevier have already identified a large new market for their products/solutions which will enable them to post annual revenue gains as they deliver radical new productivity gains for their customers.

Mike Huckabee's Message to Iowa

Noted on Chris Matthews this morning. Too funny.

LA Times: A Dismal Year (or maybe not)

The LA Times takes a retrospective look at the year in publishing and concludes it was just like the year before the year before.

"Books are news that stay news," Freeman said. "And because there's so much published, they need to be sifted for the public, to see what matters."Overall, as the publishing world looks back on 2007, it's hard to reconcile the unease people feel about the business with the excitement they feel about the books themselves. When he goes to publishing dinners, bookseller Doug Dutton said, the conversation swings between lamenting the state of the business and exclaiming joy over a new novel or history."It's about as murky a picture as I've seen," said Dutton. Then he amended that slightly: "Sort of like last year and the year before."

The newspaper also manages to speak to a publisher other than Jane Friedman.

Louis XVI: Let them Pay Shipping

The court at Versailles has ruled that Amazon.com is not allowed to offer free shipping on book ordered by French shoppearrs. From the NYT:

The action, brought in January 2004 by the French Booksellers' Union (Syndicat de la librairie française), accused Amazon of offering illegal discounts on books and even of selling some books below cost.

Amazon.com had no comment but they will be required to pay a fine of $150,000 to the booksellers union and are also assessed a fine of $1500/day for each day they retain the free shipping. Now I'm thinking this is a rediculously low amount if the court really intends to penalize them and stop them from providing this service. One would think this is actually good and in the interests of French consumers, mais non.

Assuming they care, perhaps this will go to the European court. As the article notes, pricing is highly regulated in France especially on books.

Sony BMG: Demerge?

The European Court of Justice could be on the cusp of upholding a lower court ruling that the 2004 merger between Sony Music Group and BMG should have been rejected. Guardian

"The Court of First Instance rightly held that there had been a failure to state reasons and a manifest error of appraisal in the Commission's decision", said Juliane Kokott of Germany, an advocate general for the European Court of Justice.
There is no date set for the ruling by the court. It follows the advice of its advocate general in a majority of cases.

The merger has actually gained approval twice - Sony-BMG returned a second time and won approval again last October - and this ruling effects the first approval. It is unclear whether the Court will have any say over the subsequent 10/07 approval but the plaintiff (Impala) may decide to appeal this second ruling as well. Aside from taking up significant legal time and expense the impact of this process has not been felt on the business. It is unknown what potential remedies would be required if the merger is ruled uncompetitive and not in consumers interests.

The impact on the European competition commission maybe more profound since the court is likely to question the process and objectivity of the commission in evaluating mergers. The lower court noted that significant issues were raised by the commission in the early stages of their review but they approved the merger anyway and left unresolved some of the key issues they themselves had raised. Perhaps the court will request specific changes in the operations of the commission to ensure that this situation is not repeated although these requests are unlikely to be binding. The role of the commission is to uphold consumers interests but it is also to help ensure that deals like these don't end up in court.

Reed Complete Harcourt Sale

Reed outlined its plans for a special shareholder dividend to distribute the proceeds from the sale of the Harcourt education unit. From Reuters:

Reed Elsevier shareholders will receive 82 pence per share while Reed Elsevier NV shareholders will get 1.767 euros per share. This will be accompanied by a share consolidation, which has already been approved, on the basis of 58 new ordinary shares for every 67 existing ordinary shares.

According to ABN AMRO analyst Paul Gooden (also quoted by Reuters) this is good news because some analysts were worried the deal could collapse. Post-sale, the consensus is that share performance will improve as the impact of Reed Elsevier's electronic publishing is more readily apparent. It was generally believed that Harcourt was a drag on the overall business.

Reuters

Borders Australia Decision Delayed

A few weeks ago the Australian competition commission asked for more feedback from the marketplace regarding the sale of Borders Australia. Given the length and specificity of the questions it is not surprising that they have now decided to give them selves extra time to review the responses. The anticipated delivery of their report is now January 30th rather than the previously announced December 19th.

Prior PND report

Reuters

Technology In Publishing: An Overview

I was asked to present an overview of current (and future) technology in the publishing industry of some visiting Chinese students participating in NYU's publishing executive management program. Bare in mind I only had 30mins! Naturally, without my riveting voice over the content may be difficult to follow but let me know your comments. If I forgot something remember it is an OVERVIEW.

NYU Publishing Program: Overview of Technology in Publishing from Michael Cairns

Thanks to Robert Baensch for asking.

Live Mocha: Social Language Learning

Live Mocha is a relatively new social networking web site that won 'best in show' at a recently innovators conference. The premise of their site is that people can learn a foreign language by being connected to native speakers and other learners. It is an interesting application of the social networking concept.

The founders of this product have done their homework and thought a great deal about features, content and the subscription model. Their adviser's include language learning experts to ensure that supplemental content is created with true pedagogical foundations but it is curious that they have elected to create educational material themselves rather than license it from an existing publisher. As their needs grow perhaps this will change but at the very least they should consider including dictionaries and learning aids such as games. (These could be used as premiums).

Established players such as Berlitz and Rosetta Stone don't appear to be playing in this segment. While Berlitz (and possibly Rosetta) have the financial resources they are both either conservative or strictly wedded to their existing content delivery models. As a result, competition is most likely to come from new entrants (Mango, italki.com, Virtualingo.com, Huitalk.com, Kantalk.com, Welang.com) but based research into these, there doesn’t appear to be any immediate direct competitor to LiveMocha that combines online delivery of language learning with all the benefits that social networking can offer.

In a research context some universities have experimented with learning using a social context but, as yet, these don’t appear to have become commercial operations. There is a great deal of interest in applying social networking in an education setting. It is likely that research will be ongoing and that eventually a commercial program will develop. Moodle.org is a course management platform on which an experimental pilot study was based to teach a five week German course at the Open University (search ‘language’). The University of Manchester (UK) used Macromedia Breeze to test voice, video, chat to teach Spanish (link). In my view, the LiveMocha model could be used as a platform for other subjects beyond language learning.

LiveMocha has not implemented a pricing model yet. Berlitz group lessons run about $250 for 10 sessions and Rosetta Stone's self-teaching products start around $200. I would anticipate LiveMocha using these price points as guides but LiveMocha may be considered a ‘supplemental’ approach to language learning which means consumers may not be willing to pay at this level. More importantly though, I think LiveMocha will want to encourage users to stay with them for an extended period because more users represent more of a community and therefore more of a learning environment. Effective pricing is an important element of that strategy. If the community is in constant flux: one week you have three friends and next week they are all different, this is will undercut one of the core advantages of learning language in a social network. Establishing a price mechanism that encourages users to stay with the service/community for 12-18mths could be more financially rewarding than having them come in for 3mths and leave. The social network will be more robust and stable thereby encouraging new community members and existing ones to stay longer.

This is an interesting social web site and it will be interesting to see how it develops and whether some of the more traditional players follow with their own applications.

(Thanks to the anon person for pointing out a major erroneous assumption in the earlier draft).

On the Hudson

EMAP Dispose of Consumer Titles

After a half year process that at times appeared confused, EMAP announced this morning that they have agreed to sell their consumer magazine and radio business to Heinrich Bauer Verlag KG for £1.14 billion in cash. It appears to represent an excellent deal for shareholders who will receive a special dividend of the proceeds. From the announcement:

Emap has entered into agreements with Heinrich Bauer Verlag KG ("Bauer") to sell Emap Consumer Media and Emap Radio for a total consideration of £1.14 billion on a cash free, debt free basis. This represents a multiple of 2.2x pro forma 2007 revenue and 11.2x pro forma 2007 operating profit and offers a compelling opportunity for Emap shareholders to crystallise value from the two divisions.

Following the sale, the company states that they will refocus intently on their B2B business as a stand alone business. The affirmed that they have terminated any on-going discussions they had with potential acquirers. Clearly, they were not seeing the value here from the prospective purchasers and have decided to carry the unit for the foreseeable time. Some analysts have suggested the advertising outlook for 2008 could be dim and therefore forward financial projections were probably muted.

While Bauer is already big - 166 magazines in 14 countries on three continents and nearly E2.0Billion in revenues - this represents an important expansion for the company. They will immediately gain a substantial position in broader consumer content and english language publishing.

Alun Cathcart, Executive Chairman of Emap, said:

“We are pleased to have achieved a successful outcome in the review of Emap’s Group structure. The price achieved for Emap Consumer Media and Emap Radio fully reflects the value of the two divisions. Emap will now be a focused B2B company with strong market positions, strong cash flow and a proven management team and track record in delivering value and growth.”

Press release

Kindle: An e-platform for the masses?

In mid 1998 I had an audience with Jeff Bezos together with several French publishers. During the meeting the conversation moved to a discussion about what Amazon.com was going to be when it grew up. The supposed genius in the group (me) volunteered that Amazon would remain true to its book retail focus and not become some type of on-line mall. At the time, Amazon remained very close mouthed about their plans but in retrospect it's my suspicion they had every intention of becoming the emporium we now know them to be; moreover, they knew exactly how they were going to get there. Since the launch of Kindle, I have thought a lot about this meeting in 1998 because I don't believe anyone has a clue what Amazon sees as the future of this device.

Tim O'Reilly blogs about the relationship between ebook pricing and attention. There is obviously more to the post than that and the comments are worth a read as well. His article argues a salient point: Because reading is an 'active' past-time there is only a certain amount we can read given the time we have available. Raising or lowering prices will not (de)increase the "supply of time" dedicated to reading. In other words, I can only read one book a week and even if book two were free it wouldn't mean I could somehow read two.

The price of the Kindle is approximately $300. I would argue, rather than reducing ebook prices to $5.99 (versus print prices of $20) the pricing for the device should be similar to the razor blade/razor model. Even then I am not sure the model would work. Why? Because most readers don't read that many books. Most of the readers of publishing blogs like this one, O'Reilly Radar and those with a publishing audience represent a skewed view of the appeal of reading. We all love it and we all do a lot of it. Regrettably, the rest of America is not like us and on average the average book buyer will read less than 3 books per year. (Research studies note that even 'book buyers' are a small group).

So aside from early adopters and techno-fadists who flocked to acquire the first Kindles who will buy the next batch? If the average reader buys three books a year for a total of $90-100, why would they buy an ebook reader for $300 even if those three books were free? Your average consumer is not a dummy and can do the math.

So what of Amazon? They absolutely have the best information available about purchases so perhaps they believe they can sell enough Kindles to the small segment that reads over 10 (or 'x') books per year: I wonder about that. It would seem to me that on the basis of ebook sales alone for use on the Kindle, the device will be a failure. I believe the Kindle represents the first generation e-platform rather than a pure ebook reader. Amazon has a much broader view of how and what content will migrate to the Kindle.

There has been much discussion, argument and commentary about the Kindle and what it means but one thing is clear to me. Amazon has a plan that most likely exceeds our expectation about the positioning of this device. What that is I can only speculate but I suspect as an e-platform they will aggressively start establishing content relationships with all kinds of publishers, content providers, service providers and broadcasters to build out this device beyond the book world. Just like Amazon.com, books may represent the strong footings of the business but it won't be all they do on the Kindle. Any discussion about pricing ebook versions of paper books likely misses the point in terms of their long term strategy.

Reading Stutters

Some time contributor to this blog Andrew Grabois writes about the recent reports on reading over at beneaththecover.com. He discusses the results of the recent National Endowment for the Arts study and the Progress in International Reading study:

Now, on the heels of the NEA’s gloomy assessment, comes the Progress in International Reading Literacy Study (PIRLS). Based on tests given to 215,000 10-year-olds from 45 countries and provinces, and data gleaned from background surveys of pupils, their parents and teachers, the findings tell the same sad story. Since 2001, the U.S. dropped from 4th place to 18th place; the U.K., from 3rd to 19th. The average scores for U.S. and U.K. students did not drop as much as their places on the new list would suggest, but they didn’t make any progress compared with the spectacular improvement shown by 10-year-olds in Russia, some Canadian provinces, Hong Kong, and Singapore. The best that can be said is that the average scores for children from the world’s two largest book markets were above the international mean. So far, there’s been no official response to our relatively poor showing.

Here is the link.

Beware: Your truck may not fit!

With the advent of Amazon.com, the publishing community rapidly understood the value of deeper descriptive information necessary to merchandise products in the virtual world. Initially, we were concerned with provision of cover images and marketing blurbs, then author bios and tables of content and on everafter. Our experience is not unique and in all industries and product segments deeper more descriptive information is now being sought to enable web browsers, service providers and consumers to make better more informed decisions.

There are many examples but I was immediately struck in this article about satellite navigation and driving instructions in the UK. The article (NYTimes) focuses on the negative impact of computerized driving instructions and how they can sometimes be too literal. It is no longer a matter of simply providing a geographic description and route map between two points. As more and more people and vehicles rely on these systems, the data elements required to build a viable route that doesn't create some of the issues mentioned in this article will need to include items such as road width, (tight) turnings, bridge weight limits, speed limits, hill length, season variations - like snow or ice conditions - and the list could go on and on. From the article:

“Foreign drivers very much depend on sat nav systems when they’re coming to a different country, and they are following them rather more blindly than they ought to,” Mr. Dossetter said. Last month, a Slovakian truck driver arrived in Dover, bound for Wales with 22 tons of paper. But, directed off the highway and onto increasingly narrow roads by his navigation system, he ended up wedged on a tiny lane between two houses in Mereworth, a village in Kent, whereupon he had a panic attack, jumped out of his truck, and burst into tears. “He got back in his lorry and tried to maneuver his way out, but he was starting to scrape against the front walls,” Mark Siggers, a resident, told a local newspaper. He also knocked down the village’s power cables, cutting off the electricity. It took the authorities several days to remove his mangled truck.

Imagine the poor guy having to report back to head office that he got their truck wedged between two buildings. Just exactly how these navigation systems will incorporate this deeper (metagraphic?) data into their systems so mistakes like these don't happen could represent a monumental task. It is a problem perhaps perfectly placed for the application of social networking. The truck driver above should be able to wipe away the tears and document his experience in some manner that will improve the navigation for the next European truck driver.

The lesson of Amazon.com is that the development of better descriptive information is an on going struggle; Amazon hasn't stopped improving merchandising and has always recognized the more data elements the better. I suspect that many other industries are and will embark on data collection efforts (and seek data from their vendors and customers) that improves the service or products they provide.

Cengage Swoop on HM College Division

Cengage announced they have reached a definitive agreement to acquire the College publishing assets of Houghton Mifflin for $750mm in cash. The companies also announced that on closing they would work together to expand the distribution of Cengage’s college textbooks and related materials into the U.S. high school market, with particular emphasis on Advanced Placement and Honors programs. From the press release:

“We’re very pleased to acquire the well-respected assets of HM College, which are highly complementary to our existing business,” said Ronald Dunn, President and CEO of Cengage Learning. “We look forward to combining the people, products and publishing programs of HM College and Cengage Learning to expand and enhance our range of services for students, instructors and institutions in the higher education market.”

The divestiture will enable Houghton Mifflin to focus on its K-12 education products but it will undoubtedly strengthen Cengage's position in College. How valuable the marketing agreement will be is unknown although selling College text into the high school market has been growing over the past five years.

Importantly, Cengage has demonstrated that despite the huge price paid for the business they are able to go back to the well (bankers) to make this acquisition. Their investors recognise that the base business is doing well and this acquisition represents an opportunity to strengthen their market position. Perhaps this is at the expense of Houghton Mifflin whos banks announced last week that they could not sell their loan syndication.

On a related note, Cengage presented a brief overview of their first quarter performance and they reported consolidated revenues of $650.1mm up 5.1% versus the same period last year. Operating Income of $247.1mm was up 10% (before allocations and amortization). Higher ed and International delivered strong performance with revenues up 7% and 13% respectively. The library division (Gale) under performed with revenues and operating income off 5.9%. During the conference call CEO Ron Dunn listed several areas where the company is focusing their attention. These include establishing their new leadership team, driving revenue growth, reorganization of international and merging higher ed and professional publishing.

ACAP is Implemented

At a conference in New York yesterday, World Association of Newspapers President Gavin O'Reilly updated the content community on the status of the ACAP initiative. ACAP is a technology that updates the manner in which web search robots search and index material on the web. The ACAP protocol aims to create a more balanced approach to gathering web content and enabling content owners to 'publish' specific rights information applicable to their content which can then be read by the search tool. Rather than limit the amount of free content available to web users, content owners participating in this initiative believe the ultimate outcome will be to make more content available by bringing content from behind subscription walls.

All content owners are being encouraged to implement version 1 of the protocol and Times Online announced that they have implemented ACAP on their site. From the Associated Press:

The proposal, unveiled by a consortium of publishers at the global headquarters of The Associated Press, seeks to have those extra commands — and more — apply across the board. Sites, for instance, could try to limit how long search engines may retain copies in their indexes, or tell the crawler not to follow any of the links that appear within a Web page. The current system doesn't give sites "enough flexibility to express our terms and conditions on access and use of content," said Angela Mills Wade, executive director of the European Publishers Council, one of the organizations behind the proposal. "That is not surprising. It was invented in the 1990s and things move on."

Personally, I was initially skeptical about this initiative but they have delivered on their time table, retained their broad support and even have some in the search community actively supporting the initiative.

ACAP organizers tested their system with French search engine Exalead Inc. but had only informal discussions with others. Google, Yahoo and Microsoft Corp. sent representatives to the announcement, and O'Reilly said their "lack of public endorsement has not meant any lack of involvement by them." Danny Sullivan, editor in chief of the industry Web site Search Engine Land, said robots.txt "certainly is long overdue for some improvements."

Associated Press

Riverdeep Syndication Gone Awry

As mentioned a few weeks ago, Riverdeeps banks (Credit Suisse, Lehman Brothers and Citigroup) conducted a roadshow to sell the debt associated with the Riverdeep acquisition of Harcourt. According to the Irish Times, the banks have suspended this process and will hang on tooth and nail to the debt themselves until the markets improve.

This will have limited impact on the operations of Riverdeep/Houghton Mifflin and while this is not positive news it could only reflect a desire for the banks to maintain a decent margin on the syndication rather than judgements about the risk of the underlying loans. At least that's what I would be saying if I were Riverdeep.

Books A Million Reports

BAM reported comp store revenues up 2% for the quarter and up 6.3% to $117.7mm over all. The Company reported a net loss of $0.5mm, or $0.03 per diluted share, for the third quarter of fiscal 2008, compared with a net loss of $0.2mm. YTD revenues are up 6% to $366.8mm and net income of $4.7mm is up $0.9mm versus the same period last year.

From the press release commenting on the results, Sandra B. Cochran, President and Chief Executive Officer, said,

“We were very pleased with our sales results for the quarter; however, operating costs for the period, driven primarily by an increase in heath care expense, exceeded our plan. Looking forward, our fourth quarter best seller lineup is solid, and we are focused on executing our merchandising and marketing plans for the holiday season.”

The closely held company also announced that its Board of directors approved a quarterly cash dividend of $0.09 per share. The quarterly dividend is payable on December 26, 2007, to stockholders of record at the close of business on December 11, 2007.

Borders Australia

The Australian Competition Commission anticipates making a final decision on the merger between Angus & Robertson and Borders Australia by December 19. In the meantime they have requested additional comments and specific requests related to several items.

The commission suggests that the reduction in competition could result in decreased discounting and notes that Borders promotions are 'particularly innovative' with 'weekly discounts' and 3/2 offers. (Gosh!) The ACC invites comments that counter or support its' contention that a reduction in competitive tension would reduce discounting to a wide range of titles.(The commisson is also asking to what degree loyalty programs are important in supporting discounts.)

The merged entity will concentrate more than 25% of all retail revenue for the industry and they are looking for comment regarding how A&R/Borders may weild this power. Principally will the retailer be able to negotiate more agressively for better discounts and will this influence publication plans by publishers? With respect to this item the commission is interested in consumer research regarding purchasing behavior. (Good luck.)

Lastly, the commission requests information about local market competition even explicitly asking what the impact has been of the entry of Borders into the Australian market. They remain interested in the impact of smaller local markets of the entry of 'large format' retail stores.

There doesn't appear to be too much consideration on the impact of international web retailing such as amazon.com or b&n.com. Both of these retailers are well known to book buyers in this market. (While they note the merged entity will represent more than 25% of the market it is unlikely that they have any idea how much retail business is off-shore, and it is likely to be considerable especially given territory rights issues that can limit selection and the weak US dollar).

It looks like this merger will be approved: Whether there will be any constraints placed on the merged entity remains to be seen.

Broadcasters Unite!

What if CBS, NBC and ABC launched a joint web-based broadcast portal? Highly unlikely you say? Well, in the UK pundits might also have dismissed out of hand the notion that the BBC, ITV and Channel 4 could ever agree on anything let alone jointly developing a web portal for distribution of their content. Today these three companies announced they would launch such a web site in the early part of 2008. All three have existing web content portals and both BBC and ITV intend to keep theirs going in the short term. Earlier in 2007, the BBC launched their i-player client which has not been as successful as the hype that presaged its launch would have suggested. Residents outside the UK are unable to use the i-player and it is assumed the tri-company web site will be off-limits to non-UK users.

The web activities of BBC and ITV place them significantly ahead of the network broadcasters in the US. One aspect of their business model which has made their experimentation with web distribution possible is that the UK companies generally own the content they broadcast. This is not the case in the US although in recent years the networks have built production capability.

The collaboration in the UK will be watched closely and while it may be spun as a consumer bonus - having one location to access the content from the nations' primary broadcasters - the reality could be more prosaic. The costs of building and maintaining a portal for this content could be extreme and each would ultimately be in a race to augment their content with content from other providers. Why not join forces, pool resources and reduce the market for third (fourth) party content? It makes a lot of sense especially in a market that isn't that large to begin with.

In the early 1990's Sky beat the traditional broadcasters into new distribution territory and the broadcasters had no solution. As a result, they lost out on a vast expansion of the consumer broadcast market (satellite). In developing this new collective content portal they could be setting themselves up to be meaningful players in a potentially much larger market place for distributed content.

When Newscorp launched Sky these players were warming the bench but this announcement may enable them to have a role in the future of television.

Not OK Computer

My trusty laptop committed suicide over the weekend. There will be a brief interruption to our service as I decide what my options are. Sadly my life seems to revolve around the machine and with its loss I seem at times to be entirely untethered to temporal life. The machine holds my calendar of course but the daily rhythm of email - and there is one - has been disrupted as well and as a result I feel I like a prisoner on being suddenly set free finds the lack of regimentation impossible to deal with. This is a very sad situation and the sooner I get a replacement the better. Help.

Quebecor Share Debacle

Quebecor the big printing rival to RH Donnelly cancelled a $250mm share sale and a related $500mm debt issue yesterday after the offers received less than full participation from the markets. From the Globe and Mail:

Shares dropped from $5.10 to $2.80 in the past seven days - this was a $40 stock five short years ago. Much of the drop over the past week can be traced to short sellers who sold, with the intention of buying back Quebecor World shares by participating in the equity or debenture sale. If these same short sellers own the convertible preferred shares, they have even more to gain from a lower stock price, as they will get more equity when they swap the preferred shares for common. Long-time Quebecor World shareholders seemed unwilling to step in and support the stock over the past seven days, which should be a cause for some soul-searching at head office.

According to the newspaper, the company will now have to completely rethink how they refinance this company which is debt ridden despite selling their loss making European operations earlier this year. The performance of Quebcor compares unfavorably with the performance of RH Donnelly who appear to have weathered fundamental changes in the printing industry and intense competition from Asia to post consistently good results. Donnelly has also spent the summer successfully recapitalizing the company.

Barnes & Noble Report 3rd Quarter

Barnes & Noble reported a solid same store sales increase of 2.6% and a 14.5% increase in dot com revenues for the third quarter. Gross revenues exceeded $1.2billion which reflected a 5.7% increase over the same period last year. Net income for the period was $4.4million or $0.07 per share but reflected an after tax benefit of $6.2million ($0.09/share). Excluding the one time effect, the company had a third quarter loss of $1.8milion or $0.03/share which was was "better than guidance of a loss of $0.06 to $0.10 per share."

From the press release:

“The company’s sales continued to perform at the higher end of expectations, due in part to strong sales of new releases and bestsellers, which combined with a better than expected gross margin rate enabled the company to outperform its third quarter earnings expectations,” said Steve Riggio, chief executive officer of Barnes & Noble, Inc. “In addition, we are encouraged by the sales trends at Barnes & Noble.com that began earlier this year and continued through the third quarter, in which we launched a newly designed website.”

The company also raised guidance for the full year (which should be anticipated given this and the second quarter performance). The company now expects full-year GAAP earnings per share to be in a range of $1.91 to $2.09, compared to previous guidance of $1.69 to $1.87.

B&N's stock price has fluctuated over the past six months from a mid-year high of $43 to its current $36. On the basis of these reported results the share price jumped on Tuesday. In contrast to Borders share performance and market cap ($715million), B&N has a market cap of over $2.4billion. Looking at that comparison with Borders may well make some private equity bankers sweat in anticipation.

Press release

Not Your Ordinary Publishing Contest

There has been a veritable explosion of publishing contests in the past two years, all with the intention of seeking that needle in the hay barn, the next great book. In contrast this contest announced by Scholastic and Coldwell Banker of all people seems to have little point -at least as far as its relevance to publishing. Perhaps I am missing something but it does seem to stretch the logic of strategic alliances very thin.

Coldwell Banker Real Estate Llc Announces The Launch Of Its Third "my Home: The American Dream" Contest. In Collaboration With Scholastic, The Global Children's Publishing, Education And Media Company, Coldwell Banker® Invites Students In Kindergarten Through Eighth Grade To Tell Their Personal Stories, Through Images And Words, About How Their Houses, Apartments, Or Condominiums Are Not Just Places They Live, But Homes Where Dreams Are Shared And Memories Are Made.

(Mrs PND would be going crazy with all the caps in that press release).

I'm not really a fan of similar competitions but this one appears to be pure publicity stunt and the advantage for Scholastic escapes me.

Borders Reports Improvement

While the sale of their Australia and New Zealand operations is still unconfirmed despite spurious reports to the contary, their most likely acquirer has cleared regulatory approval in New Zealand. Pacific Equity Partners has recieved clearance from the Commerce Commission indicating that they do not believe a combination of Whitcoulls and Borders would decrease competition in the NZ book market. Next up is Australia's Competition commission which may rule in early December. An announcement on the sale is expected any day.

Borders announced third-quarter results after the market close yesterday reporting a revenue increase of 5.3% to $805.2 million from $771 million a year earlier. Analysts' consensus estimates were expecting higher revenues ($831million) and better operating performance so we will see how the stock does on Wednesday. Their net income loss for the period included the previously announced one time charge for the sale of their UK operations ($116.5million) and thus the loss for the quarter was $161.1million or $2.74 per share. This compares with a loss in the same period last year of $32.9million or $0.54 per share. Excluding the one-time charge, the company reported an operating loss of $39.1million or $0.66 per share.

Comparable store sales increased in all business segments for the second consecutive quarter. At Borders domestic superstores, same-store sales increased by 1.1% driven largely by a continued increase in traffic as the company further leveraged its 22-million-member Borders Rewards database, among other initiatives. Comparable store sales increased by 3.6% in the Waldenbooks Specialty Retail segment led by growth in traffic and transaction size. In the International segment, comparable store sales increased by 7.8% as a result of strong performance in Asia Pacific stores

Borders' gross margin is eroding as they expand their Border's Reward program. More customers are visiting the stores but they are also recieving discounts and these redemptions are exceeding rate (by design) that occured last year. For the quarter, the company lost almost 1% on gross margin and this on top of the actual expense for promoting and expanding the new rewards plan. Clearly the company needs to invest in new customer acqusition and retention programs but Analysts will watching this program closely for its effectiveness in driving store metrics closer to those achieved by B&N.

Troubling will be the doubling of the operating loss at the US Borders super stores where the company reported a $30.8million loss compared to a loss of $16.7million. This negative performance was blamed on the member program and rapidly declining DVD/Music sales. Books were up 3% but clearly considerably less than the revenue required to cover the investment. George Jones commented on these results:

"Profitability in the Borders domestic superstore segment was negatively impacted by investments we are making now -- in efforts such as our upcoming e-commerce site and concept store development -- that are currently not providing returns, but will drive contributions in the long term," Jones said. "We have also been experimenting with our promotions and discount structure to gain a solid understanding of the levers that drive traffic and sales in our stores. Our Borders Rewards program has proven that it clearly and consistently works to achieve both. Now, we need to fine-tune our approach further so that we better balance the bottom-line impact with our top-line growth," he added.

The Borders share price has fallen from a mid-year high of $24 to its current $12. Correspondingly, the company's market cap is now below $715mm which in my estimation makes it a cheap acquisition candidate.

Full press release

Kindle

I was contemplating listing some of the articles and posts related to the Amazon news this week but thankfully Eoin Purcell has done it for me.

Here.

In some strange way I feel some appear to be rooting for Kindle versus Sony (or Apple) as if it is a contest that in earlier years would have pitted Donnelly against Quebecor.

Videologblog: Writers Strike (Colbert Report writers)

There has been a serious lack of humor in the PND household over the past two weeks. This goes a short way in alleviating the monotony of Nature and Antiques Roadshow. There really is nothing worth watching.

Five Questions on Global Data Synchronization

That's a title likely to induce a narcoleptic attack in all but the most ardent followers of bibliographic matters but it is nevertheless an important topic for all managers of book information. Industries other than publishing also battle data reliability and timeliness and, over the years led by umbrella groups such as UCC and EAN (now combined into one organization named GS1), they have developed programs to embrace supply chain efficiency and its' co-relation data integrity. Data Synchronisation (GDSN) is such a program which I have noted a few times in the past (Post). The objective of the GDSN is to ensure that all trading partners are working with the same set of product details that are simultaneously synchronized at a network level and in transaction details such as purchase orders and shipping details. The benefits of synchronised data can extend from 'simple' efficiency improvements in the ordering and receipt process to higher effectiveness in marketing and promotions programs.

As I mentioned earlier on this topic, BookNet Canada is embarking on a test of data synchronization and I asked Michael Tamblyn, President of BookNet Canada my five questions.

1. Firstly tell us about how BookNet Canada got started and what you have achieved thus far. What are your current priorities?
   
   BookNet Canada came into being in 2003 when Canadian retailers, publishers and the federal government decided that there should be a central not-for-profit agency to coordinate technology and supply chain innovation for the Canadian book market. While that sounds about as thrilling as a three-day lecture on HVAC engineering, we have been able to move the industry very quickly in some very exciting directions. Canada benefits from relatively small size, a general tendency towards collaboration, being a cross-roads country with ties to the U.S., UK, and EU, and a community of quite forward-thinking retailers and system vendors. It lets us get things rolling quickly, gather feedback early and often, and push the envelope a bit more than larger markets.
   
   Some examples: from a somewhat stagnant state in '03, B2B e-commerce now accounts for 85-90% of all business documents; EDI invoices and ASNs are fully supported through the publishing community; even independent retailers do EDI-based receiving. BNC SalesData, our national sales tracking service, launched in 2005, tracks sales, stock position, orders outstanding on every title, without modeling or estimation, on 70% of the book market. In a nice mouse-eats-elephant story, our Canadian Bibliographic Standard was adopted more-or-less in its entirety as the BISG Metadata Best Practice Guideline for the U.S. market for both ONIX and Excel.
   
   Then there is the more forward-looking work: collaborative sales data mining for independents, backlist optimization and forecasting research, industry cost analysis on returns, digital publishing trends, our annual Technology Forum. And on it goes.
   
   
2. You announced a Data Synchronization initiative in mid-summer. Can you give us some back-ground on this project, the status and where you see the initiative going over the next six months? What is your time table and what is your hoped for end result?
   
   We approached GDSN with a set of assumptions that looked something like this:
   
   1. Publishers already have a data sharing standard -- ONIX -- that they have embraced and invested in. They shouldn't have to learn another one. Make it simple!
   2. GDSN currently serves a small part of the retail sector, but if it became ubiquitous at some point in the future, how can we protect publishers from a price perspective?
   3. Think global, start local. The G in GDSN is there for a reason, so let's not assume that we're just making a Canadian service for Canadian publishers and retailers.
   
   Those first principles have guided our efforts over the past few months. We have been working with Commport, our GDSN data pool partner, on the construction of an ONIX-to-GDSN bridge that is now in testing. Timelines are very dependent on the retailers and wholesalers involved, but we hope to be well into the pilot six months from now. From our perspective, the "pilot" itself doesn't begin until we are moving active title data from a real publisher to a real retailer who is actually going to use that data in purchasing and POS systems. That's an important point: the challenge isn't getting the data into, or out of, the pool; it's getting that data into retailer systems so that it supplants the current mix of spreadsheets and paper forms. Until then, the conversation hasn't changed. Data conversion is easy, adoption is hard.
   
   In parallel, we are preparing a draft submission to GS1 regarding additions to the GDSN Global Data Dictionary to make it more relevant to the book trade. That will certainly spend some time in the loving embrace of the BISG Metadata Committee before heading to GS1.
   
   From a pricing standpoint, I think we've come up with the best possible model for publishers. A free 1-year pilot, unlimited upload and publishing to the global network, with the clock starting when the data goes into production with retailers (i.e. not when testing starts, but when it ends). Then very low per-SKU fees that are capped at a shockingly low rate, just in case this breaks out of the mass market and into the trade.
   
   
3. What issues have you encountered that were unexpected? Given that the book industry is ‘fitting’ in to a set of standards that have been developed for other industries how much of an issue has it been trying to marry the existing data structures with our industry?
   
   Always lots to learn, which is part of the fun. Some highlights:
   * The extent to which GDSN stands to benefit independent wholesalers, many of whom have never really grasped ONIX in their relationship with publishers, and who have to serve a retail community who couldn't care less about book-industry-specific standards.
   * We've talked to several publishers who have, because of various retail relationships, been required to submit to GDSN data pools over the past five years. None of them have seen their data make it into production systems. It's safe to say that there are some data pools out there who have been less than candid about where GDSN data really gets used and by whom.
   * Current GDSN costs per SKU or ISBN have been absolutely egregious! $25 or more per SKU per year? That's great if you are in consumer packaged goods with 100 SKUs worth $50M each, not so great if you're a mid-sized publisher with a line of DIY books selling into general retail. Time to fix that, I think...
   
   In terms of fitting in, there are definitely some things that need to be improved in the Global Data Dictionary if books are going to find a happy home in GDSN. GPC Product Forms aren't perfect for books. You can't pass along an author, just a title. Things like that. It's workable for mass market applications, but I think the goal should be to get the Canadian/US standard fields well-represented and then build from there.
   
   
4. Is there an on-going relationship with GS1 here? Do you anticipate the publishing industry will be exposed to best practices and perhaps learn from the GS1 community?
   If so, where do you see the greatest potential benefit?
   
   We'll be working with GS1 on the standards and data dictionary issues, but we have avoided a relationship with 1Sync, their data pool service provider. When we started watching this space, we realized that one of the great things about GDSN is that it's an open, certified standard, which makes the data pool game an excellent market for aggressive fast-followers. We selected a vendor with a strong track record in high-volume data processing who has made a name for themselves enabling whole industries on GDSN but who was also willing to toss out the rulebook on GDSN pricing to meet the needs of the book industry.
   
   In terms of who learns from who, I think that GS1 has a lot to learn from the book industry. "Industry-With-Lots-of-Low-Price-Point-SKUs" is still reasonably new for GDSN, and nobody does massive numbers of discrete, non-variant SKUs like the book industry. They are working with Music and DVD now, which should help, but Music and DVD aren't nearly as sophisticated as the book industry regarding product data (much to the dismay of any retailer who has ever sold both!) I'd argue that we have spent more time and effort working out the issues related to standardization of rich product description metadata than any other industry, so I think the conversation is going to be "Here's ONIX, which we know and love. Let's figure out how much realistically needs to be in GDSN." With any luck, we can extend the data dictionary accordingly.
   
   
5. Will your Data Synchronization initiative influence similar initiatives in the US and UK.
   
   Will those markets make full use of your path finding or more to the point will they have to develop their own initiatives? Getting GDSN off the ground is going to require the concerted effort of several national markets. The GS1 data vetting process requires broad support to propose changes to the Global Data Dictionary. We are happy to lead the charge, but we want to make sure that this meets the needs of the larger book market as well, so plenty of collaboration is required.

Michael can be reached at BookNet Canada: mtamblyn(At)booknetcanada.com

Borders Loyalty Program

Mrs PND received a quite extraordinary promotional email from Borders Books this weekend which indicated that she had been selected to receive a package of substantial partner benefits just because she was a Borders Rewards member. Aside from the fact she has no recollection being a rewards member, the Borders Rewards Perks program offers substantial benefits to "rewards members like you" it says. If you go to the perks site linked to above you will find many many discount programs which regrettably seem to be perfectly targeted to Mr. & Mrs. PND's lavish lifestyle.

It is hard to understand what they are trying to achieve with this program. Perhaps they are attempting to mimic the 'retail emporium' that is Amazon.com in advance of launching their own web site. Or it could be a simple attempt to capture as many web consumers as possible so that they can promote the launch of the web site to an even broader base of customers.

Affiliations are often effective for merchandising and brand extension but the sheer number of bonus and discount offers seems excessive. Few if any of these appear to be 'for our Borders rewards customers only' and, as such the list of benefits may be a nice consolidation of existing discount and bonus programs. (Hey thanks!).

Some of these expire soon so hurry to your nearest Borders website so you can shop elsewhere.

Borders Australia

Speculation that the Borders Australian and New Zealand stores have been sold to Pacific Equity Partners are surfacing from a rather unique source. The India Times is reporting that industrial and services behemoth Tata Industries participated in the last round of bids for the Borders unit and also suggests the price agreed for the store operations will top A$125mm. There is speculation that PEP will also get the Singapore store and may have ascribed more deal value to the Borders brand which they may seek to extend into SE Asia. More details will follow.

IndiaTimes

CBS Outdoor Announce Times Square WiFi Hot Spot

Billboard owner CBS Outdoor is announcing a partnership with the MTA that will create a mid-town wide wi-fi hotspot covering most of Times Square.

CBS Corporation announced today that it will "light up" midtown Manhattan with the creation of the"CBS Mobile Zone," a wireless high-speed network enabling New Yorkers with Wi-Fi-enabled cell phones, laptops or other devices to access the Internet for free, and make voice over internet (VOI) calls. The Wi-Fi Hot Zone,which is available today in certain areas, will be fully operational on by month's end with a footprint of more than 20 city blocks from Times Square to Central Park South and from 6th Avenue to 8th Avenue. This initiative is part of a 6-month pilot program with the Metropolitan Transportation Authority and New York City Transit to test the potential communications capabilities of Wi-Fi technology.

Check it out. Just in time for the Kindle

Amazon Kindle to be Launched Monday

According to a report in CNet this morning there is to be a 'high-profile' launch party at the W hotel in Union Square to announce the long anticipated Kindle ebook reader. From the report,

The Kindle is equipped with a Wi-Fi connection that taps into an Amazon e-book store, which users can access to purchase new electronic books--and Amazon has reportedly signed onto a deal with Sprint for EVDO access. Additionally, the device comes with a headphone jack for audiobooks, as well as an e-mail address.

The devise is expected to sell for $399 and among its content deals the company has apparently negotiated partnerships with as many as 100 newspaper publishers. The company is also saying it will have from launch the largest inventory of all e-books available. The report also confirmed that the initial SONY e-book reader has been 'a bust' but SONY expects their second version with improved features to fair better.

CNET

Virtual Felony

According to the BBC, a 17 year old Dutch boy was arrested for allegedly steeling $3500 of virtual furniture from the 'homes' of residents of the online community Habbo. According to website administrators, the real world threat of Id theft also exists in the virtual world and this perp and several co-conspirators convinced some Habbo players to fork over their passwords. Since the Habbo credits used to buy stuff players use in the game are purchased with real money, steeling someones couch is a 'real' crime. I wonder if they will do time in a real jail?

Reed Explores Purchase of EMAP B2B

Is it a ruse to gain access to their financials or does Reed Business Information really want to purchase the Emap B2B titles. That is what a number of high profile private equity firms are considering after they were assured by the sellers that there were no commercial operators interesting in Emap. (Telegraph) Other observers have suggested that Reed may also decide to join one of the PE buyers (or wait on the sidelines until it is all over) and negotiate to cherry pick the best titles that fit with their current stable of publications. The company is especially interested in titles that have or could have strong electronic/online opportunities. Reed also has an interested in Harcourt/Riverdeep which they could trade with a PE firm for the (some) of the titles they would like to own.

The whole Emap sale has been convoluted and murky from the get-go, and with the public notification of Reed's interest the bid participants were given an additional opportunity to revise their bids. No bidder has ever appeared inclined to buy all of Emap which of course is what the sellers prefer (Guardian). The company also announced interim results earlier this week which indicated a profit decrease of 16% although the company maintained their full year guidance (Reuters). Emap consists of b2b, consumer magazines and radio.

In separate news, Reed also confirmed that the company is on track to achieve 10% growth in EPS this year with all segments of the business performing well. Hemscott

Hachette Vert

The Bookseller is reporting that Hachette livre UK is moving to firm sale on their back-list by the end of 2008. The company expects to consult with retailers on this implementation but Hachette is wielding the weapon of "Greenery"and thus have right on thier side. The Bookseller, calls the approach 'radical' and it is certainly unusual in the publishing world but in reality backlist sales are by nature far more stable than front list and the proposal shouldn't cause too much debate or controversy. (Expect to see other publishers follow suit).

The Bookseller went on to explain that this new proposal is only part of Hachette's Green policy,

Hachette has also commissioned the Carbon Trust to advise it on a long-term strategy to improve its energy emissions. It has already embarked on a range of initiatives, including persuading its head office landlords to re-engineer its office lighting system so that night-time lighting is restricted to areas occupied by members of staff; introducing dual fuel ‘hybrid’ cars into its company car fleet; and encouraging reduced use of cars.

Hachette are also revising their paper sourcing polices to follow accepted Green practices.

Pearson in Custom Textbook Test

Inside Higher Ed are reporting a program Pearson is launching with a community college in Arizona (Rio Salado College - heard of it?) that will enable academics to build custom textbooks including content from non-Pearson sources. According to IHE,

Professors can pick from among the books in Pearson’s library as well as outside sources in preparing their custom textbooks. For works not published by Pearson, there’s a limit of 10 percent of the contents, but the company will then handle copyright clearance. Freed said the ability to include journal articles and extra readings amounted to “a super-textbook, if you will.” A spokesman for the company, David Hakensen, said that the agreement with Rio Salado is unique for covering an entire college, but he noted that individual faculty at many colleges have used Pearson’s custom publishing services for their own classes.

Custom publishing has been part of the fabric of academic publishing for many years but this appears to be a twist on an old play. With easier rights clearance via CCC perhaps this program will expand rapidly particularly in disciplines where the content changes frequently due to world events. The Australian equivalent of CCC (CAL) was barnstorming the US a number of years ago selling the concept of an on-line rights clearance and custom publishing solution that enabled the creation of textbooks from multiple sources all with rights appropriately cleared, a index and toc created, pages reformatted and sequential page numbering. It was an interesting proposal which was tried and tested in Australia but didn't get any traction here. Interestingly, CCC didn't take the bait either.

Judy Does It

Forgive me for thinking that common sense would prevail but on the heals of admitting to NYDN that she 'wanted out of the spot light' Judith Regan has dropped a $100mm lawsuit on HarperCollins. Not your ordinary defamation/wrongful dismissal lawsuit she has gone to the thriller play book and selected 'political conspiracy' to add to the more prosaic "sex with a married police officer who happens to be the best mate of the mayor" Oh, and the mayor is now running for President. Sounds like a book contract to me! Get Patterson on the line maybe he could work up a treatment.

For most of us in NYC we know the details already but we can all expect the story to play like back-ground music in the elevator over the next 12 mths in the run up to the election. On cue, Judy will jump 'into the limelight' (like some momentous wind instrument in aforesaid elevator music) with something sensational that she thinks will help her case but will only serve to make herself look increasingly pathetic.

My guess, HarperCollins will not settle and Judy will implode on the witness stand.

Why digital galleys are not scary

I’m currently working with a product that has, among other features, the capability to send digital advance reading copies to media and reviewers—a concept that they are working diligently to under-emphasize because of the instinctive “that wouldn’t work for us” reaction they have received from media, reviewers and publishers alike.

This is unfortunate and short-sighted. Yes, of course, we aren’t at the point where digital galleys can replace the good, old-fashioned portability of the physical book---for a full read. But outright rejection of the digital underscores the many other ways reviewers and media use content.

Full-text digital galleys are searchable, for one, invaluable for fact checking of reviews and articles. And especially helpful because galleys often are sent without indexes. Publications could benefit from digital galleys when preparing roundups (Essential Cranberry Cooking for the Holidays—New Hot Recipes from 10 New Cookbooks and all). And let’s not forget that for certain types of media, reading the text isn’t essential—a colleague of mine gave me an example of a gossip columnist who might skim or search a text for a reference but whose need for speed would always usurp a full, critical read. Radio and television producers often mine upcoming books for content of interest to their audiences or host, and what better way to pass along a potential find than digitally? For large organizations with multiple levels of approval this is especially salient.

Finally, there is the green element, of some interest as evidenced by BISG’s and Green Press Initiative’s recent U.S. Book Industry Climate Impacts and Environmental Benchmarking Study. What interests me about the green element is the potential for media to use digital galleys to read first chapters, often an essential step in deciding if a book will be reviewed or covered.

Overall, publicity is about selling. Even reviewing, albeit more high-brow, is about recommending worthy reads. Why wouldn’t publishers and media want to share their content faster and more accurately? A production soldier at a major publisher told me that many authors, agents and editors lament the inaccuracy of galleys, since the text often changes between the time the galley goes into print production and is mailed. Digital means capturing a timelier version of the text, and aren’t we all happier for that?

I am not advocating a truly paperless advance publication workflow; that time has not yet come. But as an industry we could be braver about trying digital galleys as a supplement to print. I think the results would be surprising.

Do it Yourself Cookbooks

This morning The NY Times also has a short note on tastebook.com which allows cooks to create their own printed recipe book by downloading up to 100 recipes from epicurious.com.

For $34.95, a cooking enthusiast can select up to 100 recipes, which come encased in a ring-binder with a customized cover. Although TasteBook will not put the customer’s photo on the cover, it does offer a choice of images (a pie, a bowl of cherries, peas in a pod, corn on the cob) and naming rights to the cookbook (like “Emily’s Holiday Recipes”). The site also accommodates those who want to fill a volume with their own recipes or with recipes from sites other than Epicurious.

As I noted last week, SharedBook also launched a similar product with allrecipies.com (Readers Digest) and it is disappointing that the Times didn't look at their product as well.

Regretfully, while the product concept in both applications will be popular the execution in the TasteBook example is less than ideal. For example, the customer has to assemble the product themselves when it arrives in the mail which immediately removes a valuable sense of ownership and customization. Secondly the cover title which you select yourself is stuck on mailing label-like (on the spine as well) and lastly the heavy card binder is likely to come off second best the minute it is set on a wet counter. (Which of course happens all the time). The book does lie flat however which the SharedBook does not; however, I suspect SharedBook will be correcting that soon.

Borders Television

The NYT notes the adoption by Borders of in-store television which will provide book related content and advertising direct to the stores. The provider, Ripple already provides similar services to stores such as Jiffy-Lube and Jack-in-the-Box 'restaurants'. The company notes that the broadcast service is now in 60 stores and will be in 250 by the end of February.

CEO George Jones comments:

Borders customers tend to be “highly educated, more affluent” and spend an average of an hour in the store, making them catnip to many advertisers. “It’s becoming more and more difficult to reach people,” Mr. Jones said. “Newspapers are not as effective as they used to be. Television is not as easily reachable as it used to be. This becomes an attractive option.”

Flat screen video screens in retail are all the rage. Visiting a local Starbucks in the last few months, you will have noted the installation of video screens in their stores. Currently these support the integration with their music content which enables free downloads via iTunes. The video screens are not intrusive but mainly because the content is static: If they begin to offer video content as Borders are suggesting perhaps the vibe of the stores changes to one where you can hold a quiet meeting or take a leisurely break to one where you will be bombarded by advertising messages: The faster pace and the noise causing you to move out of the store faster. It could be unsettling. On the other hand the effort by Borders is an experiment in merchandising that should help the company develop new revenue streams and direct customer awareness of particular products. Jones was asked about the perception that screens could be counter to the store vibe and said,

The screens are “not designed to be intrusive,” Mr. Jones said. Rather, he said, they are “part of a master plan to create content that will do several things for us,” like directing traffic to the Borders Web site and paving the way to more cross-promotional deals with large media companies.

Stay tuned for more changes and experimentation from Borders.

Radiohead: Creepy Stats

Reuters reports that the CD version of the new Radiohead album In Rainbows will be released December 31st. Sometime between then and now they will eliminate the download site so that this option no longer remains although they are likely to use data from the site to promote the purchase of the physical disc. Options being discussed may include allowing a credit against the purchase of the CD based on what was paid for the download to a simple web coupon (10% off for ordering direct) to nothing. If nothing else, the experimentation will continue.

The band also commented to Reuters that the recent speculation regarding how many people visited the site and either did or did not pay was "wholly inaccurate." Furthermore the Band said that the reports "in no way reflect definitive market intelligence or, indeed, the true success of the project."

Stephen Fry Is An Actor

Stephen Fry is as about as likely to be writing a blog about consumerist technology as I am about Opera. Which is pretty unlikely, but one of us is going against presumed character (and it isn't an act and it isn't me).

Stephen Fry has started writing a blog for the Guardian newspaper and the posts are very entertaining. Apparently, it didn't start that way. He initially launched the blog by himself with a 6,000 word (I think) post about his love of all things digital. The Guardian came calling and by the third post he was writing for them as well under the title "Welcome to Dork Talk." How's that for the power of digital media! At times his proselytising for Apple may come across as a cry for help; but, I suspect once the excitement over the launch in Europe of the IPhone dies off he will move on to other matters. (I wonder what he would think of Tivo?)

Here is how he described his viewpoint:

Digital devices rock my world. This might be looked on by some as a tragic admission. Not ballet, opera, the natural world, Stephen? Not literature, theatre or global politics? Even sport would be less mournfully inward and dismally unsociable. Well, people can be dippy about all things digital and still read books, they can go to the opera and watch a cricket match and apply for Led Zeppelin tickets without splitting themselves asunder.

My sentiments exactly. And he is certainly not without an opinion. Here he is reviewing a new mp3 player from Philips:

But that’s of no importance compared with the cheap, clumsy and dreadful nature of the device itself. I wanted to throw it in the ocean after five minutes (I am in America right now), but instead gave it to a friend who threw it away after 10. One knows the instant one plays the bundled video content, a truly pathetic and dated home movie of some dudes skiing, that we are dealing with a dog. The blocky, pixelated images are so poor as to beggar belief (220 x 176 pixels) - and this is the footage that’s meant to show it off!

It gets worse. It has touch controls, but not touch screen. In the desire to jump on Apple’s multitouch bandwagon, Philips have come up with something worse than an old-fashioned knob. The Streamium offers fiddly controls with terrible delay, so you’re always pressing them too often and reversing their function. The sound level is poor and the phones inadequate. The whole thing’s a gift to Apple.

It should prove entertaining reading from a very unlikely source.

Penguin sued Over Dorothy Parker - Update

By way of update, Mr Silverstein has not won the lottery and according to this mornings Telegraph his suit against Penguin has been dismissed. Under the hugely creative headline Poetic Justice, the Telegraph reports that Pearson prevailed in this six year battle. I suspect that Mr. Silverstein is going to have some significant legal expenses to pay.

This is my original post from September:

Mild embarassment could ensue if Penguin were to loose a copyright suit over a compilation of poems the publisher produced in 1999. The wheels of justice appear to move slowly but the story is as follows. One Stewart Silverman took a project to Penguin which they turned down because they didn't agree to Silverman's format choice. Silverman went ahead and published it with Scribner. Three years later Penguin published its own selection of 'lost' Parker poems which Silverman believes was a verbatim version of his own work. Final deliberations are supposed to begin on October 9th in New York.

Penguin's argument hangs on the belief that they owe Silverman nothing for the material they published since all the Parker works were in the public domain. As such, the works are not covered by copyright. The Silverman camp suggests that he asserted copyright to the compilation and that this fact was clearly noted when he originally went to Penguin with the project. The judge will decide the result, but on the witness stand John Makinson, Penguin CEO did admit:

''I think it would have been more appropriate to have given some attribution to Mr Silverstein for those poems; it's just a personal opinion that I have based on my reading of the situation subsequent to my deposition in the initial case here."

Silverstein is looking for $1,00,000 in punitive damages.

Telegraph