Presentation at Book Publishing Conference

I presented the following deck as part of a keynote panel discussion on Publishing in the Digital Age. Others on the panel included Mike Shatzkin (IdeaLogical), Carolyn Pittis (Harpercollins) John Morse (Merriam Webster) and Peter Osnos (Public Affairs).

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There are comments on each slide but can only be seen if the file is downloaded.

A podcast is now available here and my section for which the above presentation refers is Publishing in the Digital Age Part Four.

The Future Of Touch Screens

Apropos of nothing, but at a conference this week someone showed a video that shows an impressive future for touch screen interfaces.

Here is the link.

Wiley Post Large Gain

From the John Wiley conference call (transcript) yesterday, CEO Will Pesce summarized their results as follows:

Year-to-date revenue of $1.2 billion increased 47% over prior year. Excluding Blackwell year-to-date revenue increased 6% or 4% excluding favorable foreign exchange. EPS for the nine months of $2, exceeded prior year by 36%, excluding certain one-time tax benefits and Blackwell, adjusted EPS increased 9% for the nine months. The Blackwell acquisition contributed revenue of $115 million in the quarter and $347 million in the year-to-date period. The acquisition was accretive to EPS by $0.9 per share in the quarter and $0.18 per share in the year-to-date period excluding certain tax benefits. Wiley's top line growth continues to be driven primarily by Blackwell, Professional/Trade revenue increased modestly in the quarter, but year-to-date results remain well ahead prior year and industry performance. US scientific, technical and medical revenue increased slightly in the quarter while global revenue advanced 5%. Higher Education showed signs of recovery in the quarter, bringing year-to-date revenue essentially on par with prior year.

Reuters

Borders Australia Sale Off

Apparently after proceeding through several rounds of regulatory review, Pacific Equity Partners the owner of New Zealand retailer Whitcoulls and Australian retailer A&R has backed out of the deal to buy the Borders stores in Australia. It seems that PEP shareholders aren't comfortable with the part cash part equity deal that would have had them partner with Borders in a potentially larger retailing group. This seems to be a strange turn-around for Borders that they would be even negotiating an equity/cash deal with a potential purchaser when they have seemed intent on running for the hills from any international entanglements. Perhaps, Borders has a much more expansive notion of the value and prospects for the Australian & NZ Borders stores and their pricing was not reflected in all cash offers. This could have set them down the road to consider an equity and cash deal.

The Age notes Whitcoulls as saying they were "comfortable negotiations had reached a natural conclusion." I doubt that is the same sentiment in Ann Arbor where they have made international retrenchment a focus. The company releases their full year numbers in a week but here is what they said about the international operations in their most recent (holiday period) release:

Total International segment sales from continuing operations for the period, at $109.3 million, increased by 36.3% compared to last year. Excluding the impact of foreign currency translation, total segment sales from continuing operations would have increased by 26.9% over the same period last year. Comparable store sales for International increased by 10.8% over the same period last year driven by strong performance in Australia.

So far no word from Borders.

Espresso Book Machine Perks Up in Canada

John Mutter at Shelf-awareness has a great 'real-life' article about the implementation of the Espresso Book machine at the University of Alberta bookstore. From his article:

Although the cost has been significant, the University of Alberta Bookstore, Edmonton, Alberta, which installed an Espresso Book Machine last November, has found the POD machine to more than meet expectations, according to Todd Anderson, director of the Alberta Bookstore, who spoke at a seminar at the CAMEX show and National Association of College Stores meeting in San Antonio, Tex., last week.The benefits of the Espresso machine have been both tangible and intangible. "The machine is a symbol of change for a lot of our professors and students," Anderson said. "They are very excited."At the same time, the store printed more than 50 titles in the first three months of operation, saved students buying some of the textbooks significant amounts of money and has kept the machine humming. The production model that the Alberta store has is "a workhorse and just what we need," Anderson said. "We are running flat out."

The article goes on to endorse the use of the machine as a tourist attraction but more importantly as an important new tool for the bookseller. They do suggest there are some issues with the work-flow particularly the binding process but the store appears convinced that the machine will be an important part of their customer service delivery.

BTW: Todd Anderson was head of the Canadian Booksellers Association and is one of the best advocates for the retail book industry and an all around good guy.

Just Excepting The Facts Ma'Am

The fake memoir crime wave in the publishing ghetto would have kept Sgt. Joe Friday in business for years. Sadly, the system is still broken, the system did not 'work' when the perp was caught after publication and sadly the whole thing will be repeated in weeks or months or years from now.

Perhaps the dumbest thing said about the whole episode was that to fact check every book would cause no book to be profitable. If that's the case, the industry has some bigger issues.

There are several articles about fake memoirs this weekend. Here is a selection:

Mendelsohn in the NYTimes:

But then, we all like a good story. The cruelty of the fraudulent ones is that they will inevitably make us distrustful of the true ones — a result unbearable to think about when the Holocaust itself is increasingly dismissed by deniers as just another “amazing story.” Early on in my research for my book, another very old woman suddenly grew tired being interviewed. “Stories, stories,” she sighed wearily at the end of our time together. “There isn’t enough paper in the world to write the stories we can tell you.” She, of course, was talking about the true stories. How tragic if, because of the false ones, those amazing tales are never read — or believed.

Tim Martin in The Telegraph:

Mis lit is, after all, literature's largest growth industry: W H Smith recently added to its Fiction and Biography shelfmarks a new one bearing the legend Tragic Life Stories, and the temptation to creative writing students must be great. Who says there's no future in fiction? Fake memoirs of the less pernicious kind, however, belong to a literary tradition that goes back through Defoe to Mandeville and beyond. It also comprehends some astonishing characters, particularly when the fakers were forced to appear in person.

The Los Angeles Times:

It should have been obvious, perhaps, but it wasn't. Certainly it never occurred to her publisher, Riverhead Books, to make even the most rudimentary check into her background, which would have quickly revealed Margaret Jones to be a character created by one Margaret Seltzer. Seltzer, who as Jones claimed to have entered the foster system after a sexual assault at age 5 and went so far as to invent an ethnicity for herself -- half Native American and half white -- is in fact all white and grew up with her biological family in Sherman Oaks.

Almond in The Trib:

But Seltzer became convinced that only by presenting the story as autobiography would anyone "listen to it." The sad truth is she's probably right. Over the past few years, publishers have responded to declining readership by developing an insatiable hunger for books that come with "author survivors" attached.Why? Because they know that such books are about 100 times more likely to get reviewed and featured on National Public Radio and anointed by Oprah. It's not enough anymore simply to offer besieged publishers a nuanced work of imagination. They need an inspirational figure the marketing people can dangle as interview bait. They need a pitch dramatic enough to resonate within the frantic metabolism of our perpetual news cycle.

I'd be willing to bet that if Seltzer (like Frey) had shopped her book as fiction, editors would have taken a pass. They might have even complained that the plot twists felt clichéd or unrealistic. But presented as a work of nonfiction, her editors knew they'd struck gold. They wanted to believe her story, so they did.

Lastly this one from NYTimes suggesting Kafka was lying

In a telephone interview, Mr. Kafka was contrite and tearful. “I know what I did was wrong,” he said. “I’m very alienated from myself, but that’s no excuse to lie. I took someone’s life and selfishly turned it into an enigmatic literary parable.”

Reed Business Information Sale

Various private equity firms are believed to be actively interested in the Reed Business Information group which was put on the block several weeks ago. If you recall Reed Elsevier announced the acquisition of Choicepoint at the same time. The list of firms interested includes Apax, Permira, Guardian Media, Candover, Cinven and Providence Equity Partners. According to several sources the sale price could exceed $2.obillion; however, this valuation may be too much for the debt markets to support. With several operating companies ruling themselves out, including United Business Media as the most notable, there are several interesting scenarios that may emerge.

Clearly one of the equity companies can buy the entire offering and at $2bill+ this would be an ideal outcome for Reed Elsevier. If the recent sale of EMAP's b2b division is anything to go by then the chances of a single buyer and a big price seems unlikely.

Apax and Guardian Media could combine an offer and seek to integrate the RBI titles into the existing businesses that each currently owns. When these companies agreed to buy the Emap titles there was some discussion of consolidation within the existing properties they own but they seem to have cooled to this strategy. Why that is may have something to do with the chance that they end up acquiring the RBI titles. Strategically Apax/GM could have significant repercussions because they would be in a position to collectively own the top 1 or 2 (or both) titles in numerous segments. They could subsequently discard any titles that don't fit that positioning and end up with a formidable trade publisher. Opportunities to consolidate across several market segments don't come up in bulk like this very often.

Reed Elsevier, in holding out for a high valuation, may also opt to retain an ownership position in one of the outcomes. If the scenario above holds up for example, Reed could end up owning 10% of a business with far better prospects than the trade business they already have and also get to pocket a lot of cash from the proceeds.

Once a deal is done (and my expectation is that there is no cherry picking to be had in advance of a sale), the acquirer will be looking to make some divestitures. Among the notable sales that could happen would be Variety which could gain a high price as a 'trophy' asset and the publishing titles Publisher's Weekly, LJ and SLJ. Bowker, Nielsen and several others would be interested in these titles so interest wouldn't be hard to find. New Scientist could also be considered a trophy title with Macmillan as a potential buyer.

Immediately after the announcement of the sale, there was some questions raised about the timing of the sale and whether anyone would be interested. It seems that these worries may have been pre-mature, but time will tell whether Reed Elsevier are as successful in selling these assets as they were selling their education division.

Sharing a Stage

Is it me or was it weird that B&N Chairman Len Riggio backed out of participating in yesterday's AAP annual meeting? Could it have had anything to do with Amazon's Steve Kessel also sharing the limelight? If there was something to this - and personally I never enjoyed participating in events with my competitors so I empathize - one wonders why the handlers didn't realize the possible problem and point it out a little further in advance of the meeting. No matter, George Jones, CEO of Borders seized the opportunity to speak to a room full (presumably) of publishers. According to Publisher's Lunch, he noted the initial success of the new store concept in Ann Arbor:

Borders CEO George Jones led off the APP's meeting this morning, saying that early indications from their new concept store are encouraging. Though the store carries twenty percent fewer titles than a typical superstore, "the number of titles selling has doubled" according to Jones, who calls the change "dramatic." The store has only been open two and half weeks, but Jones says "sales have been way better than expectations."

And according to people in attendance that was about it.

Laura Bush also spoke about the lack of reading in the US and specifically among the young. A particularly disingenuous speech given a) she said virtually the same thing in 2002, b) she was a librarian (of what level is suspiciously vague) and this shouldn't be a surprise and c) we are at a point where her administration can't do anything about it. (A little like Africa but on a smaller scale).

For the Supply Chain Guy Who Has Everything

So adaptable and cheap are RFID tags that supply chain gurus are mailing them to themselves. This is a pretty cool idea noted in Pop Science described as "mail that never gets lost". While the title is not entirely accurate - it can still get lost but you will eventually know where it has been - the use of this technology is really quite practical. Just slap one of these puppies in an envelop and you can analyze your entire supply chain. The chip enables analysts to trace the location and time spent at each step of your process thereby giving you valuable information about blockages and bottlenecks. It could become a standard management tool used to monitor supply chains.

From the article:

The technology lets users track a letter’s every move. A vibration- and tilt-sensitive motion detector determines whether the Logger was sitting idle, being sorted, or bumping along in a truck. This data syncs with the GPS locations via Google Earth, allowing officials to spot places where mail lingered too long.

Jones'n for Truth

At Least Bulworth Was Funny

Remember the Warren Beatty movie where his character ends up in South Central LA basking in some street cred as he attempts to avoid an assassination plot (which he instigated). Well that has nothing to do with the latest fiction posing as non-fiction but at least the fictional movie made some strong and resonate points about politics and media. If you read, as I did, the profile of author Margaret B. Jones in The NYTimes last week you will have been mesmerized by the story of her life as a human castaway adopted by a foster family in South Central, running drugs for the bloods, learning to sleep on the floor every night to dodge bullets and then emerging to actually complete college and then end up marrying an ex-gang member.

Turns out (and it's getting so that we will need to change the sections in the bookstore) it is all fake. She's but a simple, upper middle class 30 something writer, with a very vivid imagination. From the LATimes:

The author of "Love and Consequences," a critically acclaimed autobiography about growing up among gangbangers in South Los Angeles, acknowledged Monday that she made up everything in her just-published book."Jones" is actually Margaret Seltzer. Instead of being a half-white, half-Native American who grew up in a foster home and once sold drugs for the Bloods street gang, she is a white woman who was raised with her biological family in Sherman Oaks and graduated from Campbell Hall, an exclusive private school in the San Fernando Valley.

Even in the face of complete disaster and shame (perhaps she understands that redemption in America is always just around the corner), it is interesting that her reaction and that of her recent fact-starved compatriots blend self-righteousness and penance. At the outset these writers seemed to have weighed the consequences and decided that they'll make a name for themselves either way; they seem to know that any news is good news and that the notoriety is in itself valuable. From the NYTimes:

Ms. Seltzer, 33, who is known as Peggy, admitted that the personal story she told in the book was entirely fabricated. She insisted, though, that many of the details in the book were based on the experiences of close friends she had met over the years while working to reduce gang violence in Los Angeles. “For whatever reason, I was really torn and I thought it was my opportunity to put a voice to people who people don’t listen to,” Ms. Seltzer said. “I was in a position where at one point people said you should speak for us because nobody else is going to let us in to talk. Maybe it’s an ego thing — I don’t know. I just felt that there was good that I could do and there was no other way that someone would listen to it.”

Are all the books fakes? I'm going to start my memoir: In it I'm Howard Hughes, mixed with Archie Leach, Basil Fawlty, Biggles and Roy of the Rovers.

Barnes & Noble Launches Studio

Barnes & Noble announced the launch of a multimedia site on B&N.com that will feature a range of original content about books, readers and writers, and showcase web video series and other multimedia content about varied aspects of literature, complemented by user-generated material. Barnes & Noble Studio will launch with Barnes & Noble Tagged! and Book Obsessed as the first in a series of original productions and content initiatives.

From the press release:

Barnes & Noble Tagged!, hosted by Molly Pesce, is a magazine-style weekly web series that takes an upbeat look at what’s happening in the book world. The five-minute weekly show will let book-loving viewers know what new titles to look out for and will reveal the stories behind recent book news. The show will also feature an interactive poll where viewers can cast their vote on the chosen topic of the week. Ms. Pesce is a book lover herself with a penchant for real-life adventure books. She is currently writing her own account of modern motherhood and will be familiar to viewers from her role as the host of shows on Animal Planet and NBC’s iVillage Live. The program is produced for Barnes & Noble by Allen/Nee Productions.

Book Obsessed takes a five-minute look at passionate readers and their world through the books they love. The first episode in the weekly documentary-style series spends a day at the home of Laurie Gold of Dallas, Texas, who loves romance novels – and only romance novels. The second episode features Joe Perlman, a man who has a mere 35,000 books in his Long Island home. The third features a married couple that met at a mystery novel convention. To complement these portraits of book aficionados, Barnes & Noble Studio will invite viewers to upload short videos about their own book obsessions for inclusion into the Book Obsessed channel. Submissions can be made starting March 10. Book Obsessed is produced for Barnes & Noble by City Lights Media and is shot on location around the USA.

The company states that at launch there will be approximately 700 video and audio pieces on the site and that the new slate of programming will join the already considerable content on the B&N site. This existing content includes interviews and live in-store presentations from stores around the country.

Pearson Post Record Results

Pearson shares fell this morning despite posting financial gains across the board. The company increased top line revenues by 6% to £4.2bn and adjusted operating profit by 14% to a record £634m. The profit increase was supported by all segments of the Pearson group with Pearson Education up 9%, Penguin up 20% and the FT Group up 30%. Press release.

Investors are concerned that Pearson's results are weighted to reliance on the US market both in education and advertising revenues and as a result the company's share price fell despite the results. Pearson is generally conservative about forecasting their full year revenues and profits and underplay the impact of their acquisitions. If past year's performance is any indication the underlying businesses will continue to drive growth in excess of competition and the recently acquired companies/operations will further support growth. This is particularly the case in Education where the company has spent heavily in recent years. Additionally, across the company, management continues to transform revenues from annual one-off sales to subscription (i.e. recurring) based models. This supports annual revenue, profit and cash generation growth.

Typically (in recent years), the company sets aside £500m for acquisitions which enables them to acquire without dilution. With markets depressed it will be interesting to see how they are able to stretch this number during 2008.

Other highlights:

• The company spent £472m for 2007 acquisitions which added £90m of sales and £13m of operating profit to 2007 results
• The Government Solutions business was sold to Veritas Capital for $560m in cash, $40m in preferred stock and a 10% interest in the company
• The newspaper Les Echos was sold to LVMH for €240m in cash
• A 50% stake in FT Deutschland to Gruner + Jahr was sold (no terms noted)
• The Data Management (Scanners) business to M & F Worldwide Corp for $225m in early 2008

Their outlook for 2008.

• Penguin (20% of sales; 12% of operating profit) expects to improve margins further and into double digits. Penguin's good publishing and trading performance has continued into the early part of 2008.
• Higher Ed will continue to build on operating efficiencies and beneficial recent acquisitions. As in recent years they expect to grow 1-2% better than the industry
• In School the company expects the integration of Harcourt to progressively build margin improvement with material benefit to show in 2009
• At the FT, the company expects to continue to broaden their revenue base and continue to reduce the reliance of advertising revenues. Ad revenue is 30% of group revenues versus 52% in 2000.

Marjorie Scardino, chief executive, said: "This is another record set of results and an excellent performance from every part of Pearson. We continue to reshape Pearson into a more digital, more international and more efficient company, and those changes make us confident that 2008 will be another good year."