400,000 Titles Published!

Rachel Donadio in The NYTimes book review section has an essay on the expansion of publishing. As she points out, if reading is generally going down hill this isn't stopping people from adopting self-publishing as a hobby. "Publishing" a book is like putting your photo collection on flickr now-a-days. It is so easy and the hurdles so low that anyone with a half baked idea is doing it. Not that there's anything wrong with that; I happen to believe that the creativity, the experiences and the expression evident in many of these books will become a reference point for our age. Just as letters between family members shone light on a family's history, future generations will browse the published output of family members. I want my parents to do this.

On the other hand, my view may be too prosaic; since many of these self-publishers still think their titles will become the next best seller. As mentioned in the article, the potential for iUniverse.com titles to be on display at B&N garners considerable attention and revenues from their legions of authors. So, there is some delusion but the self-publishing market is estimated to be worth over $1.3billion (although, regretably I can't recall the citation for this number) and deserves significant attention from all segments of the publishing community. As I have suggested before, one of the major publishing houses is going to get into this segment in a big way (Xlibris aside).

As for the number of titles published annually, the absolute number is meaningless without explanation as it grows by 35% from 2006-2007. In order to draw any analysis from this number of published titles the number would have to be broken down considerably. Impressive as the number is it is noted for effect only.

Reed Business to be Broken Up

PaidContent cites inside knowledge that the RBI sale will be broken into bite size pieces.

We have also learned that Reed Elsevier has changed its mind on how to sell it. Initially it did not want to sell off various pieces separately, but now at least the U.S. part, RBI-US, will be sold off separately, and multiple parties are aligning their arrows for when the process starts.

In my opinion, in the US we will see a group of PE partners join to buy the entire US segment and then carve this up subsequently into smaller chunks. The RBI media titles represent one such chunk which I have mentioned before.

The "Bankrupting Costs of Textbooks"

That is the conclusion of an editorial in this mornings NYTimes. The newspaper also notes a bill pending in Congress that would require publishers to sell "unbundled versions of textbooks minus the pricey add-ons." The editorial is short but makes some significant and spurious leaps in logic. As one example, Educators must,

embrace new methods of textbook development and distribution if they want to rein in runaway costs. That means using digital textbooks, which can often be presented online free of charge or in hard copies for as little as one-fifth the cost of traditional books. The digital books can also be easily customized and updated.

In conclusion, the newspaper suggests that institutions should take advantage of these new developments citing a tiny publisher offering textbooks for free and 'research' that suggests free geography material produces the same results as purchased materials.

Noting there is 'no reason' a textbook costs $140 is like saying there is no reason gas is $4/gallon. Higher education is like buying a car. You don't expect to get the gas for free and you shouldn't expect to get educational material for free. Legitimately, a student should expect to be treated fairly in respect to the materials they are asked to purchase for their course work but this is a complicated issue and to suggest 'publishers are calling the tune' is inaccurate and misleading.

Wolters Kluwer, Thomson Acquire Accounting Firms

Earlier this month, two of the big players in information publishing purchased accounting firms. Nonsensical? Not really, when you consider that both companies are in the business of offering a suite of products and services to their customers that encompass not only what we may traditionally think of as publishing products but also services and solutions that leverage or embed the information and expand the relationship with the customer. (I touched on this at a recent industry conference).

In the case of Wolters Kluwer, they have taken over the UK offices of Melbourne, Australia based accounting software firm MYOB (Mind Your Own Business). WK reportedly paid £35.5m earlier this month for MYOB. From AccountingWeb:

The MYOB Accountants Division product range includes PerTax and Viztopia accounts production and practice management programs acquired from MYOB's fellow Australian software Solution 6 in 2004. MYOB also produces the Singleview
knowledge management portal, plus corporation tax, trust and insolvency practice programs.

CCH's ProSystem portfolio includes many similar applications. In an email to customers CCH UK managing director Martin Casimir said the long term plan was to migrate all the solutions to a single range of best of breed products. "Please rest assured that this will be done in a considered and carefully controlled manner," he wrote.

CCH is WK existing software division.

Competitor Thomson has purchased tax software company Digita within the same time frame but after considerably wooing of the Digita founders. Thomson's UK and European market share is far smaller than their US position and they see Digita as enabling a rapid development of that market. As core markets mature, similar companies will be looking to the international market for growth performance. Additionally, in the case of both companies, the acquisitions will enable the companies to further expand the range of business solutions and services that they offer to their key markets.

Thomson will place Digita with Sweet & Maxwell.

Fictional Non Fictionists

Colson Whitehead had me. As I read this in New York magazine, I thought how could they have missed this story. But by the third paragraph, it struck me. This guy is lying!

Nevertheless a thoroughly entertaining satire - somewhat lost on some of the readers as noted in the comments - but then these are exactly the target audience so no matter. Here's a sample:

Average. That’s one thing Margaret most definitely is not. I broach this subject with her friend Misha Defonseca, author of Misha: A Mémoire of the Holocaust Years, which describes how she hid out in the forests of Europe to escape the Nazis and was taken in by a gang of wolves. Whenever Misha makes it out to the States for a visit, she and Margaret go shopping for Levi’s, which are difficult to come by in her native country. She resells them to aspiring hipsters in her village at a dreadful markup.

I visit her tiny cottage, a few kilometers outside a large Eastern European city. Misha is a little Cabbage Patch doll of a woman, with an energy beyond her years. It’s not hard to see her nestled in with the other cubs, fighting bravely for the teat of the she-bitch. I ask her if it’s harder to be adopted by black people or wolves. She chuckles at my question and sips her tea. “We tease each other, Margaret and I. She says, ‘At least we had cable and White Castle—you had to forage for nuts and berries.’ But the wolves, I tell her, the wolves have”—and here she turns her eyes to the ceiling—“they have La Vida Lobo. The Wolf Life!” It is a brief audience, and she soon dismisses me to return to work on the prequel of her memoir, about her time on the run from the Armenian genocide, when she was taken in by ferrets.

Ah, ferrets...

Net Galley Announce Digital Galley Early Adopters.

Earlier this year, NetGalley announced an important partnership with Publisher's Weekly as their first major step to implementing their digital workflow tool NetGalley. NetGalley is a tool that may transform the current paper based Galley workflow into a truly digital based process that will become both make the distribution and management of Galleys more efficient and effective. The product will be launched commercially at BookExpo, but they announce today that St.Martins, SourceBooks, Hachette Book Group and Bloomsbury US will be the first publishers to implement the tool.

From their press release:

"We are delighted to be here at the beginning of this terrific program," said Matt Baldacci, VP, director of marketing and publishing operations at St. Martin's Press. "NetGalley will make our interaction with Publishers Weekly more efficient, and has the potential to show cost, resource, and environmental efficiencies. These benefits are good for PW, the publishers that will join the full roll-out, and the industry in general.

During the pilot period, publishers will submit their title information—and optionally digital galleys—electronically to PW. In return, PW will provide visibility on review acceptance and status through NetGalley.com. Pilot publishers will also have the opportunity to invite other reviewers, media, and bloggers to join their community and view their “NetGalleys” online.

Ted Treanor, CEO of Rosetta Solutions, commented, “The response from publishers to support this initiative has been extraordinarily positive. NetGalley selected this group for their diversity of size and publishing type, and their willingness to innovate. We’re counting on these partners to help us continue to refine NetGalley.com.”

Earlier this year, I interviewed Mike Forney from RosettaSolutions.

Dilbert Mashups

It is here. Your opportunity to match wits and funny bone with office humor superstar Scott Adams. Publisher's pay attention, because here is a perfect example of a content owner embracing their audience and letting them interact in a meaningful way with their product. I have noted that travel publishers, cookbook publishers and some others are experimenting with this idea and I hope we will see more of it. Register with Dilbert.com and have some fun with it.

That is my submission at the top of the screen shot.

Copyright Clearence Center: Copyright Conference

THE FUTURE OF COPYRIGHT IS HERE. MAY 1st Event.

OnCopyright 2008 will bring thought leaders and change agents together to explore the evolving world of copyright. It’s a unique opportunity to share insights and exchange ideas on where copyright is headed, and how it will affect the future of written works, music and other forms of intellectual property. Register now to reserve your place. The $395 fee includes breakfast, lunch, cocktail reception and conference materials. For more information, contact the conference organizer at (978) 646-2691 or events@copyright.com.

REGISTER NOW http://www.oncopyright2008.com

OnCopyright 2008
hosted by Copyright Clearance Center
May 1, 2008
Union League Club New York, NY
www.oncopyright2008.com

This one-day event will focus on four themes: Art, Society, Technology and Law. Speakers include:
SUZANNE VEGA Singer-songwriter
PAUL HOLDENGRABER Director, Public Programs The New York Public Library
GIGI SOHN President & Co-Founder Public Knowledge
STANLEY PIERRE-LOUIS VP and Associate General Counsel, IP & Content Protection Viacom Inc.
CLAY SHIRKY Author Here Comes Everybody
JIM GRIFFIN Warner Music
MARK TRIBE Assistant Professor, Modern Culture & Media Studies Brown University
PAUL FAKLER Partner Moses & Singer LLP
DOUGLAS RUSHKOFF Author, Teacher, Documentarian
TIM WUProfessor Columbia Law School
MICHAEL W. CARROLL Professor of Law Villanova University School of Law
JONATHAN LETHEM Bestselling Author, Novelist, Essayist
ALLAN ADLER VP, Legal & Governmental Affairs Association of American Publishers
KEVIN O’KANE President & Founder Red Lasso
MATT MASON Author The Pirate's Dilemma

Borders Stickers Books - Why?

As promised Mike Shatzkin for a second time this week.


I don't buy a lot of books in bookstores anymore -- I'm an ebook man -- and when I do, I generally patronize Barnes & Noble or an independent. So when a colleague a couple of days ago walked in with a couple of books he'd bought at Borders and pointed to the stickers on each book and said "hnh?", it recalled a bit of book retail history and some considerable irony.

It is obvious, or should be, that for a bookstore to be stickering every book is evidence of a pretty dumb supply chain. Every book has a bar code with a price extension. This is extra work that should just not have to be done.

It was the early 1970s when the B. Dalton chain introduced point-of-sale capture at the cash register. This was only a few moments after the invention of the ISBN and before there was any cash register technology for "reading" by scanning. So it was complicated to do this.

The way it worked is that each title Dalton bought was assigned an SKU number. When the buyer in Minneapolis made a purchase decision, stickers were generated for the books and sent to the store. When the books came in, they were stickered before they went to the sales floor. There were "holes" in the system, of course: when a store bought a book from a local wholesaler, they often would put a "dummy" sticker on that got them past the cash register but didn't record the specific book being sold. But the system delivered information that was light years ahead of what any chain retailer had ever had before and rapidly pushed B. Dalton ahead of their competition at the time, Waldenbooks, and particularly so in the sale of steady-but-slow backlist.

It was a revelation at the time to learn that the sale of six copies a week across all stores (in a multi-hundred store chain) was a "hot" title and that sales of six titles a month got you on the "warm" list. That introduced some real perspective to how books move. Or don't.

For a few years, Dalton operated with knowledge of what was selling and Walden didn't. Then, in the later 1970s, "machine-readable" typefaces were invented, which I think were called OCR-A and OCR-B. Harry Hoffman had taken over as head of Walden by then -- he who had introduced the microfiche reader at Ingram a few years before -- and he told publishers that, as of a certain date (I think this was about 1980), Walden would require that the ISBN be printed on the books in a readable font. And suddenly, Walden leapfrogged Dalton. Dalton had invested in a system that required a unique number (their SKU) and stickering and punching those numbers into the cash register. All of that was sidestepped by Walden, which only had to scan the readable ISBN (or punch in the ISBN if it weren't readable.) No stickering. No unique numbers.

The irony today is that Barnes & Noble, which owns (and is closing) B. Dalton, has a great supply chain that requires no stickering. And Borders, which owns (and is closing) Walden, has a poor supply chain which requires them to put their books into a "flow-through" warehouse to be stickered before they can go to the stores.

Voyager to Take $45mm Charge

Voyager Learning will take a $35-45mm non-cash charge against its 2006 operating results as a result of the sale of Proquest Information and Learning. PQIL was sold in 2007 to Cambridge Information Group for $222mm. The write down represents 20% of the value of the business unit and in retrospect it is hard to understand how that purchase price could have been effectively negotiated given the current accounting disclosures. On the earnings call last week, Mr. Richard Surratt, Voyager Company's President and CEO noted that they will also take a non-cash charge against goodwill for the purchase of Voyager. In November, Mr. Surrat noted that they expected to have their 2006 10-Qs and 10-K competed by the end of the first quarter 2008; however, they are six weeks behind and do not expect to have that work completed until mid-May. They do expect to have their financial reports for 2007 completed by July.

Mr. Surratt went on to note the status of several lawsuit against the company but there is little change here since the last update in November. He was joined on the call by Ron Klausner, President, and Brad Almond, CFO, of Voyager Expanded Learning.

On an operating basis the company appears to be performing consistently and is stable given a challenging operating environment. Mr. Almond commented on the full year results:

For the fiscal year ending December 29, 2007, the Voyager operating business had preliminary revenue of $110 million, earnings before interest and taxes, or EBIT, of $8 million and earnings before interest, taxes, depreciation and amortization, or EBITDA, of $30 million. These three results each fall within the guidance we gave in November. This compares to 2006 preliminary revenue of $ 115 million, EBIT of $ 6 million and EBITDA of $ 30 million.

In his comments, Mr Klausner concluded the call with a number of comments about the operating environment faced by the company.

We have a terrific track record in developing capabilities that address very difficult problems. While some of our competitors are creating uncertainty and doubt about us as a result of the board's decision to consider strategic alternatives, we are encouraged by how well these new capabilities have been received in the market. Based on the explosive growth in usage of Ticket to Read and the early feedback on the redesign of Passport, we continue to be optimistic that our focus on researched based curriculum, high levels of implementation support, embedded professional development, and web based practice will be rewarded.

The company expects to continue their gradual operating improvement with anticipated 2008 revenue in the range of $111 to $119 million, EBIT between $6 and $10 million, and EBITDA between $28 and $32 million.

Call Transcript

Amazon.com and Book Pricing

Mike Shatzkin of The Idea Logical Company asked if I would like to post the following article. He also has another in the wings which I will put up on Wednesday.

Amazon stirred two controversies in the past couple of weeks. A lot of attention was paid to the one concerning print-on-demand, where they did an arm-twist to get publishers who use the capability to set their books up at BookSurge, even if they were already set up someplace else, most likely Lightning. I have expressed my concern on behalf of publishers about that policy which, although characterized as a mere attempt to be customer-friendly, should be a matter of great concern to Amazon's suppliers.

The second controversy, however, is a bit more complicated and, to my way of thinking, Amazon's position is considerably more justifiable. That was Amazon's suggestion that they will interpret the price at which a publisher sells directly as the "real" retail price, on which discounts to them should be based. This recalled for me a 10-year old industry conversation and, in doing so, showed me the sense in Amazon's position.

In the 1990s, the suggestion that retail prices should come off the books became pretty vociferous. Bernie Rath, then the pioneering (and publishers and big retailers would say, "troublemaking") Executive Director of the American Booksellers Association was among those making the case. In a nutshell, Rath and some very sophisticated and successful booksellers made the argument that it was a mistake to "cap" the retailer's margin with a printed price, above which they then obviously could not charge. The argument was that retailers in every other field adjusted their prices to the neighborhood, reflecting both the cost of real estate and the local community's ability to pay. By limiting booksellers' margins, publishers were, in effect, limiting the number of outlets that could sell their books.

At that time, there were two "most popular" arguments against the idea. One was that booksellers, by and large, benefited from the prices being on the books. It saved them the effort and cost of stickering prices themselves; it relieved them of the responsibility for prices in the eyes of their customers, who could clearly see the price was printed before the bookseller got the book; and it dramatized any discounting the bookseller cared to do. Because book clubs were a more important component of a publisher's sales at that time, they represented another constituency that supported the printed price because it emphasized their own cut-price offers. And booksellers could live with that discounting because book club membership was constricting; it was not about buying what you want when you wanted it.

At the time, I often made a third argument, which I believed was the most important even if it wasn't the most ubiquitous. Publishers have always been willing to sell any book they publish to any consumer who asks for it. At the time, it was absolutely routine that those sales would be made at the full publisher's retail price, plus some charge for postage and handling. In that way, publishers respected the reality that some of their books might not be widely available (remember, even after there was an Amazon, there was a period before most people had regular internet access and a comfort level about using it), but avoided "competing" with their retailers.

I pointed out that this practice meant there really IS a publisher's price, so the question narrowed to whether it would be revealed to the consumer on the book, or not. And the retailer who decided to sell the book at a price higher than the publisher's price -- which, even at the time seemed more of an imaginary than real opportunity -- would be taking the risk that his/her customers would soon know they had been gouged because either they or somebody else might let them know what the publisher's price actually was.

How times have changed. And two aspects of this equation have really changed with it.

First of all, no bookseller today would anticipate being able to sell a book at higher than the publisher's retail price. There are already consumers walking around bookstores with handheld computers checking prices online while they shop in the store. And, as we all know, prices online are never going to be higher than publisher's suggested retail, whether printed on the book or not.

But, secondly, many publishers now sell to consumers aggressively through their web sites, and price offers are part of the effort. So while the old bookseller arguments for taking the prices off the books are no longer valid, neither is my rejoinder. Time has passed both arguments by.

But Amazon is making a good argument here, and it is one that B&N and other retailers, and, by extension, all wholesalers, will likely join them in pressing on publishers. The price printed on the book really means nothing if the publisher doesn't sell at that price. All it becomes, then, is a basis on which to establish prices to intermediary customers; it is no longer a meaningful price to the consumer, "suggested" or otherwise. And if the longtime industry convention that prices to intermediary customers is pegged to the price charged (presumably by the publisher) to the consumer, then the discounts should be calculated from the publisher's consumer selling price.

We have not heard the last of this argument. Publishers selling direct to consumers better be thinking this through very carefully.


Mike can be reached at mike (at) idealog.com.

Sunday Links: London, Sex and Origami

At the NYTimes Sarah Lyall takes a literary tour of London in 36hrs. She missed Dickens' house. And if you are there for 48hrs visit Sir John Soane's house (it's free) and it is an incredible house and collection. He was an architect by profession but a patron, etc.
From Lyall's article:

But it is better to visit, if only for the joy of seeing the landscape of your imagination come to life. How thrilling to happen upon Pudding Lane, where a bakery mishap led to the Great Fire of 1666, after reading Pepys’s account in his diaries. Or to wander along Baker Street, where Sherlock Holmes once fictionally solved the unsolvable. Walk across London Bridge and gaze down, toward Southwark Bridge: this is the stretch of the Thames where Dickens’s sinister characters dredged up corpses in “Our Mutual Friend.”

In my early fun-filled days at Bowker (contrasted with the later years) we used to joke about publishing a BIP/sex & erotica edition since a) there were many titles in the database under those subjects and b) we knew it would sell. It's probably a good idea it remained a joke but Rupert Smith in the LATimes reflects on his experience writing and selling titles in this active publishing segment.

The fact that erotica sells so much, and so widely, suggests that it's really just like any other type of genre fiction -- doing a job for an audience that knows what it wants and where to get it. Crime, horror, sci-fi and romance authors set out their stalls in very similar fashions, offering a mystery, or a fright or a flight into fantasy. The porn writer's offer is just as simple: I'll deliver two good orgasms per chapter (or one, for readers over 40), along with a rattling good plot that will get you to the next sex scene, some likable characters and a big dollop of humor.

I found it interesting that two traditional print based travel map publishers are battling over who owns the rights to maps that use the ancient art of Origami. Am I going to have to consider how I fold my mapquest printout? Link.

Compass, which produced the official map for the Athens Olympics and is hoping to produce the official one for Beijing, was recently granted European patents for the maps. The case comes amid concerns about the growing cost of commercial litigation.

So, Compass (who are fighting Langensheidt) got a patent for an origami technique...?


Things aren't going so well for the owner of Harlequin. Torstar announces they are cutting 160 jobs and taking a restructuring charge of $21mm. These reductions will all be in the newspaper division (as you might expect). Link