Bloomsbury Reports: Revenues up 36%

Bloomsbury reports this morning that revenues rose 36% for the first half 2007 boosted by Harry Potter and 37 other best sellers. The company also says that they expect the strong results to continue due to a good pipeline of new titles but that full year profit will be negatively impacted by an increased tax burden.

Reuters reports that the company's shares were trading down 0.6 percent at 170.5 pence at 0730 GMT, valuing the firm at 125.4 million pounds.

Reuters

Highlights from their press release:

• Six months Revenue up 36.5% to £51.41m (2006, £37.66m)
• Profit before investment income increased 7.6% to £3.25m (2006, £3.02m)
• Interim dividend up 6.1% to 0.70p (2006, 0.66p)
• Four electronic rights deals signed this year which included Bloomsbury ’s most important reference rights partnership to date for Finance: The Ultimate Resource with Qatar Financial Centre Authority
• Strong publishing lists for second half and into 2008
• Well positioned for further growth

Commenting on the results and prospects for Bloomsbury, Nigel Newton, Chairman, said: “This is a good set of results which puts us back on track following last year’s profit warning. Between April and June, Bloomsbury enjoyed one of the most sustained periods of publishing bestsellers in its history. Four major reference rights deals which had been in the pipeline have now been completed and will provide very important revenue streams going forward.We are also starting to see the benefits of the strategic approach which we outlined in my previous Chairman’s statement and our publishing programme for the second half of the year is very strong.”

Five Questions with Lonely Planet

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

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

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

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

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

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


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


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


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


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

Reed Elsevier Bid Speculation

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

al-Mutanabi Street Book Market Re-opens

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

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

Here is what I wrote in April:

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

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

.epub: What it Means for Publishers

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

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

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

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

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

The long answer is the following:

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

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

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

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

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

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

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

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

-Nick

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

Sylvan Learning and Random House Collaborate

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

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

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

Chicken with Pears

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

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

Pearson Selling Newspaper Interest

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

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

Hachette (Lagardere) Reports First Half Results

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

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

Wiley Reports First Quarter

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

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

Other highlights:

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

Status of the Blackwell Acquisition:

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

Peter Quandt Out at Haights Cross

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

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

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

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

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

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

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

Reed Elsevier Try Ad Supported Medical Information

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

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

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

Further from the NYT article an interesting last point,

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

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