Google Book Project

Thomas Rudin the associate general council for Microsoft lambasted Google’s approach to copyright protection characterizing it a ‘cavalier’ in comments delivered at the Association of American Publishers conference in New York. Those of us in publishing have a first hand understanding of this opinion and other segments of media are rapidly coming to a realization that even obvious content ownership isn’t enough to preclude Google from adopting and more importantly making money off content under copyright. Google is probably the only company that was willing to take the significant legal risks associated with the purchase of YouTube for example.

Publishers have elected to sue Google to protect their content rights and the content rights of their authors. At the same time, publishers have engaged with Google in participation in the Google Scholar program. Here publishers are equal partners and (I assume) negotiations for the acquisition of content by Google was negotiated in good faith and the results have been good to great for both parties. (Springer, Cambridge University). It is also no bad thing that Google’s content (digitization) programs have spurned other similar content initiatives particularly those of some of the larger trade and academic publishers.

The continued area of friction is the digitization project that Google initiated to scan all the books in as many libraries willing to participate. This is where publishers got upset. They were not consulted nor asked permission, they cannot approve the quality of the scanning, they will not participate in any revenue generated and they can not take for granted that the availability of the scanned book will not undercut any potential revenues they may generate on their own. The books in question are the majority of those published after 1925 or so (It's actually 1923: thanks to Shatzkin for noticing my error) and which are still likely to be under copyright protection of some sort.

Having said that, lets get one thing straight; having all books which exist in library stacks (or deep storage) available in electronic form so that they can be indexed, searched, reassembled, found at all and generally resourced in an easy way is a good thing and an important step forward and opportunity for libraries and library patrons. Ideally, it would lead to one platform (network) providing equal access to high quality, indexed e-book content which any library patron would be able to access via their local library. Sadly, while the vision is still viable the execution represented by the Google library program is not going to get us there.

Setting aside the copyright issue, the Google library program has been going on now for approximately 24mths and results and feedback is starting to show that the reality of the program is not living up to its promise. According to this post from Tim O’Reilly, the scans are not of high quality and importantly are not sufficient to support academic research. Assuming this is universally true (?), the program represents a fantastic opportunity lost for patrons, libraries and Google. BowerBird via O’Reilly states:

umichigan is putting up the o.c.r. from its google scans, for the public-domain books anyway, so the other search engines will be able to scrape that text with ease. what you will find, though, if you look at it (for even as little as a minute or two) is that the quality is so inferior it's almost worthless

Could Google suffer more embarrassment as disillusion grows over the program – perhaps, but I doubt it will force them to rethink their methodology. It would represent a huge act of humility for Google to ‘return to the table’ with publishers and libraries to work with them to rethink the project with the intention of agreeing to the copyright issues, and agreeing a better way to process and tag the content. To suggest that they become less a content repository and more a navigator or ‘switchboard’ which is how O’Reilly phases it is beyond expectation; however, were they to change course in this way they would immediately reap benefits with all segments of the publishing and library communities. O’Reilly – a strong supporter of the Google program – believes the search engines (Google, Yahoo, Others) will ‘lose’ if they continue to create content repositories that are not ‘open’.

Ironically, the lawsuit by the AAP could actually have a beneficial impact on the process of digitization. As some have noted, we may have underestimated the difficultly in finding relevant materials and resources once there is more content to search (this assuming full text is available for search). Initiatives are underway particularly by Library of Congress to address the bibliographic (metadata) requirements of a world with lots more content and perhaps the results of some of these bibliographic activities will result in a better approach to digitization of the more recent content (post 1923). Regrettably, some believe that since there may be only one opportunity to scan the materials in libraries that we may have lost the only opportunity to make these (older) materials accessible to users in an easy way.


Tomorrow, just what is the universe of titles in the post 1923 ‘bucket’? The supporters of the Google project speak about a universe of 30million books but deeper analysis suggests the number is wildly exaggerated.

Shaffer Announced as Chairman of Knovel

Dave Shaffer (and old boss of mine) has been named as Chairman of the Board of Knovel. Knovel is an information publishing company that focuses on Science and Engineering. The company is in the process of developing an integrated platform of information products and integration tools that enable users to integrate their use of Knovel products into their daily workflow. This is little different than what most information publishers are trying to do.

From the press release:

Chris Forbes, CEO of Knovel said: "David brings Knovel years ofexperience in managing companies that have successfully delivered highvalue information and productivity solutions to end users. We look forwardto his guidance as Knovel takes the next steps to dominate the engineeringinformation market." David Shaffer continued: "I am excited to join acompany that is a passionate leader in driving value for end users in thislarge and important market. This new role is a natural extension of mycareer at Thomson."

Bear Sterns Media Conference

For those interested in the publishing company participants for the current (Mon/Thur) Bear Sterns media conference at the Breakers in Palm Beach here is the approximate schedule:

Monday 3/5
Moodys - 10am. Webinar
Meridith - 11.00am. Webinar
CBS - 12.20pm. Webinar
Thomson - 2.40pm. Webinar
McGraw Hill - 3.20pm. Webinar

Tuesday 3/6
NYTimes - 9.25am. Webinar
Primedia - 10:05am Webinar
Dow Jones - 10:40am Webinar
Scripps - 2:40om Webinar

Reader's Digest Closes Sale

RD announced over the weekend that they had closed the sale of the company to Ripplewood Holdings and announced that Mary Berner has been appointed President and CEO of the company. She had previously been at Conde Nast and Fairchild.

Press Releases: Berner, Deal

Social BookMarking

Many of you are more than familiar with Librarything and the similar sites that enable cataloging of book titles with tags that are meaningful and useful to the user. Tucked away in the 'Your Money' section of The NY Times was another puff piece about how great Librarything is for people like us who like books and reading. The likely origin of this article is a blog post by Tim at Librarything which looked at the comparison between tags of books at LT and tags of books on Amazon.com.

Amazon visitors have not taken to tagging Amazon's books in significant numbers. With thousands of times the traffic, Amazon produced a tenth as many tags as LibraryThing. What's going on?

He goes on to talk about the power of numbers that inevitably feeds on itself; as more people tag more people find it useful which leads to a larger community. Passion also plays a part because the overwhelming number of active 'taggers' also have more books. Those that have less than 200 titles rarely tag books. (Since fees kick in over this number the users are also more financially committed to librarything).

Critical mass is important, even if we can't pinpoint the line. Ten tags are never enough; a thousand almost always is. Unfortunately, Amazon's low numbers translate into a broader failure to reach critical mass. With ten times as many tags overall, LibraryThing has fifteen times as many books with 100 tags, and 35 times as many with over 200 tags.

It is a very interesting article on the power of community and worth a read.

Lorcan Dempsey suggests these types of sites also represent examples of the 'Network effect':

Regular readers of this blog will not be surprised to hear me say that they also highlight a structural issue for libraries, how to provide services at the network level. These new services are network level services. They are aimed at the general user, not an audience circumscribed by region, or funding or institution. And, additionally, they provide an integrated service, moving the user quickly through whatever steps are needed to complete a task.

The other component of interest to me is that sites like librarything are becoming sources of viable bibliographic information and indeed the NY times article suggests that Librarything maybe selling or licensing some of its tagging data:

For example, he is in the process of selling some of his recommendations data, which is based in part on tagging statistics, to other sites that sell books and book information.

At Bowker one of our most important and costly editorial tasks was to assign subject classification to titles so that they could be found either in our own products or in the products of our customers. With well over 200,000 titles per year this is an expensive excercise and while it can be automated (and was) the process suffers from obvious limitations. Firstly, the subject classification methodology is quite rigid and is not always intuitive. Secondly, subjects change over time and books previously categorized could benefit from additional or changed subjects. Thirdly, the application of subjects is subjective and can pose a limitation on the subjects applied to the title. A subject expert wants to be as accurate as possible in applying the subject classification for relevancy and integrity. In BooksinPrint, we had an average of slightly more than two subjects per title over approximately five million records. Many had more and a few had more than 15 but the average was two. Many users of Librarything, myself included, have placed more than two tags against most titles.

The ability of a community to supply a range of subjects that reflect the work, what's important about the book and what becomes important in the wider world may provide a vast addition to traditional bibliographic database work. I believe the social network applications and the structured approaches will work in concert but increasingly it is the social aspect that needs to be actively solicited for inclusion into the traditional bibliographic databases.

Self-Serving List Of Best Blog

Eoin Purcell has been kind enough to include me on his list of best Blogs. I hope I can keep up with the expectations. The list was also nicely picked up by Richard Charkin. I owe someone a Guinness....

Check Prices and Get Recommendations by Phone

If you are like me then you often find yourself in a bookstore looking at a selection of books wondering which to buy. Sure you have a list but perhaps the list is slightly out of date and doesn't reflect the most recent releases, or maybe you are in the basement of the Strand innundated with potentially fantastic books but confused for choice.

This little application enables you to access pricing information (if you see second hand titles at a yard sale that you think you can sell on Alibris) and customer recommedations using your phone. It iwll be even better if you could scan the bar code.

Rowling Suing EBAY

News from The Times via Richard Charkin that J.K. Rowling has initiated a suit against Ebay in India for selling pirated copies of her work. From The Times article:

Neil Blair, Rowling’s legal adviser at the Christopher Little Literary Agency, said that she welcomed the court order. “Over the years eBay has appeared to be unwilling to control sellers on their site offering pirated or forged Harry Potter items for sale to innocent fans,” he said. “We have asked eBay on numerous occasions to assist by taking preventative steps to avoid these sales – steps that we are aware they can introduce. As these requests were not heeded we had no choice but to seek judicial intervention.

Ebay has played the innocent in other similar cases - Tiffany in NYC and Dior in Paris - suggesting that it isn't partical for them to monitor every sale to ensure that the goods are legitmate. They just don't want to do the work.

Harlequin (Torstar) Reports

Things aren't going well for the Torstar Group publisher of The Toronto Star newspaper and owner of Harlequin Books. Reuters eloquently states that profit has slumped and attribute this to the decline in fortunes at The Star and also to restructuring charges. Things don't look too good at Harlequin either but results look worse than they may be because of exchange rate issues.

On full year revenue:

Book Publishing revenue was $471.8 million in 2006, down $49.3 million from $521.1 million in 2005. Underlying revenue growth of $9.4 million was more than offset by a $30.0 million decline from the strengthening of the Canadian dollar during the year and $28.7 million from lower gains on U.S. dollar hedges year over year.

and on Operating Profit:

Book Publishing reported operating profit was $56.3 million in 2006, down $39.1 million from $95.4 million in 2005. Underlying operating profit was down only $2.5 million in the year while the strengthening Canadian dollar decreased profits by $7.9 million and lower gains on the U.S. dollar hedges decreased profits by $28.7 million year over year. Underlying results were up for North America Retail and Overseas but were more than offset by lower North America Direct-To-Consumer results.

It is difficult to discern the true impact here as there may have been some currency impact in the operating profit in 2005. Nevertheless, taking the numbers at face value, underlying revenues were up $9.4mm versus 2005 but operating profit was down $2.5mm.

Here is the short version and the long version of the press releases.

Further detail on the publishing units performance is summarized as follows:

• North America Retail increased book sales in 2006 after stabilizing in 2005. Significant efficiency improvements were made to the series business in 2006 as fewer books were printed and distributed and more books were sold.
• The North America Direct-To-Consumer revenue decline in 2006 was due to both fewer shipments of a children’s direct-to-home continuity program and from shipping disruptions experienced early in the year associated with the bankruptcy of a key supplier. Improved sales through the Internet channel partially offset this decline.
• Overseas markets had mixed results in 2006 with improvements in the United Kingdom and the Nordic Group offset by lower results in Germany. Brazil, a joint venture launched in 2005, showed improvement in 2006 selling more books and making progress towards break-even.

As far as an outlook for the Harlequin business the company says the following:

• The outlook for 2007 is for stability. Harlequin has stabilized the total number of books sold over the past three years despite difficult trends in its direct-to-consumer operations.
• Investment will continue in innovation and new products including digital initiatives in 2007.
• Cost savings of approximately $3.0 million are expected from the restructuring undertaken in late 2006.
• Harlequin will continue to be subject to the impact of changes in the value of the Canadian dollar relative to the U.S. dollar and other currencies.

Regretably, that is hardly a glowing endorsement and one would hope that the business is able to do much better during 2007 than the above statement seems to indicate. I have said it before this brand, is so strong I can't understand why they are having so much difficulty: perhaps it's the owner

Wolters Kluwer Posts Full Year

Dutch publisher Wolters Kluwer posted a top line increase of 9% (0rganic growth of 3%) and an EBITA increase of 16% to €618million for the full year.

Following is are highlights from the company press release:

• Revenues increased 9% to €3,693 million (2005: €3,374 million)
• Organic revenue growth of 3%, in line with full-year outlook
• Ordinary EBITA increased 16% to €618 million (2005: €533 million)
• Ordinary EBITA margin of 17% (2005: 16%)
• Investment in product development reached €272 million (an increase of 9% over 2005)
• Structural cost savings of €128 million (an increase of 28% over 2005)
• Strong free cash flow of €443 million (2005: €351 million)
• Ordinary diluted EPS increased 16% to €1.23 (an increase of 15% at constant currencies)
• Selective acquisitions to strengthen leading positions and enter high-growth adjacent markets

Fourth-Quarter 2006:

• Revenues increased 8% to €1,003 million (2005: €932 million)
• Organic revenue growth of 6% (2005: 3%) Ordinary EBITA increased 17% to €173 million (2005: €148 million)
• Ordinary EBITA margin of 17% (2005: 16%)
• Investment in product development reached €74 million (an increase of 7% over same period 2005)
• Structural cost savings of €37 million (an increase of 32% over same period 2005)
• Strong free cash flow of €204 million (2005: €208 million)
• Ordinary diluted EPS increased 9% to €0.34 (an increase of 15% at constant currencies)

A more detailed review is in the press release. Most of the business units are doing OK with Corporate and Financial Services showing the largest percentage revenue growth. Of Education they say the following:

Organic revenue growth of 2% with particularly strong performance in the United Kingdom following new product introductions. The review of strategic alternatives for Education announced in 2006 is expected to be completed in the first half of 2007.

The company has announced that this group may be sold and the statement seems to indicate that will be completed by the middle of the year.

The company is looking to build on the gains they have made over the past two years to migrate revenue to online, attack their cost structure and reinvigorate product development. Margin improvement was seem 2006 vs 2007 - of 1.0pt - but they are suggesting their EBITA margin will grow from 17% to closer to 20% which is significant progress.

Another Day another Deal: Springer Science

According to sources Springer Science has hired Goldman Sachs and others to prepare the company for an IPO valued at over 2.0bill Euros. Springer Science is the result of a prior combination of Bertelsmann Springer and Kluwer Academic. The company publishes of over 1400 journals and 5000 academic book titles per year. The main subject areas for both are science, medical and technology.

Simon & Schuster Strong Finish

CBS reported fourth quarter and and full year numbers this morning with the publishing unit (Simon & Schuster) up 6% over last year and as a result helping to cover some of the decline in radio at CBS.

The publishing unit revenues were $252.5 and $807mm for the quarter and year respectively and operating profit was $38.9 and $78.0mm. A full year operating margin of just short of 10% is good going in the consumer market and is virtually unchanged from last years margin performance. Penguin reported yesterday (with Pearson) and their operating marging was slightly lower than S&S at 7.8% on higher sales.

Here is more detail from the CBS press release:

For the quarter, Publishing revenues increased 7% to $252.5 million from $237.0
million, reflecting sales from top-selling fourth quarter 2006 titles, including YOU: On a Diet by Michael F. Roizen and Mehmet C. Oz, Lisey's Story by Stephen King and Joy of Cooking: 75th Anniversary Editionby Irma S. Rombauer, Marion Rombauer Becker and Ethan Becker. OIBDA increased 8% to $38.9 million from $36.1 million, and operating income increased 7% to $36.3 million from $33.9 million, reflecting the revenue increase partially offset by an increase in bad debt
expense.

For the year, Publishing revenues increased 6% to $807.0 million from $763.6 million in 2005 due to sales of top-selling titles as well as higher distribution fee income. OIBDA increased 5% to $78.0 million and operating income increased 4% to $68.5 million, reflecting the revenue increase partially offset by higher expenses, primarily resulting from an increase in bad debt expense and higher production, employee-related and selling and marketing costs. Publishing results included stock-based compensation of$1.9 million and $.5 million for 2006 and 2005, respectively.

Sounds like the AMS situation had some impact but on the other hand it looks like the bonus' this year were relatively better than last year.