Amazon Buys ABE Books

In a deal likely to further infuriate publishers, Amazon.com The Bookseller is reporting that Amazon has agreed to by ABE books a second hand and rare book seller.

Russell Grandinetti, vice president of books for Amazon.com, said that the acquisition would add "breadth and expanded selection" to the company's customers. "AbeBooks provides a wide range of services to both sellers and
customers, and we look forward to working with them to further grow their business. We're excited to present all of our customers with the widest selection of books available any place on Earth."

Hannes Blum, AbeBooks' chief executive, said he was "very excited" about the acquisition. "This deal brings together book sellers and book lovers from around the world, and offers both types of customers a great experience," he said.

Many of the retailers that participate in the ABE network may already participate in the Amazon network nevertheless this will solidify the persistent mingling of new and second hand titles that publishers have grown to loath. Amazon purchased another second hand and antiquarian book network (may have been more of a search tool) name biblio(something - can't recall) which established their early position in this segment but the acquisition of ABE will radically broaden their reach. Where this leaves Alibris is also of interest. Will they see a need to merge with a larger retailer. We all know Steve Riggio likes old books....

Librarything notes the deal as well and points out Amazon will have a stake in their company.

Hat tip: Brantley (again)

Archives Are Good to Have

Encyclopedia Britannica announced they are making their visual content archives, including photos, maps, illustrations, natural science drawings, slides and animations, available for distribution and stock licensing.

Details are sparse but I found the notification on abouttheimage.com.

Virtual Picture Desk the third party organization that is managing the licensing is a, Management Services and Consultancy Business providing content management advice, global & international syndication of picture libraries for distribution and the assistance in the mergers & acquisitions of photographic and illustrative collections.

Forrester Buys Jupiter

Forrester Research (Nasdaq: FORR) (http://www.forrester.com/) has acquired JupiterResearch, LLC (http://www.jupiterresearch.com/) and its parent company, JUPR Holdings, Inc., from MCG Capital Corporation (Nasdaq: MCGC) (http://www.mcgcapital.com/) for $23 million in cash plus assumed liabilities, subject to post-closing adjustments. (JEGI reports).

JupiterResearch has 83 employees and 2007 revenues of approximately $14 million. Forrester, with 2007 revenues of $212 million, now has more than 1,000 employees. This strategic purchase complements Forrester’s syndicated business model, as JupiterResearch joins Forrester’s Marketing & Strategy Client Group, which contributed $46.4 million to Forrester’s total revenue in 2007.

“Uniting JupiterResearch and Forrester brings together the two leading research brands used by marketing and strategy executives,” said George F. Colony, Forrester’s Chairman of the Board and CEO.

Reed Shares Up 5% on Buoyant News

From the Reed Elsevier press release:

• Strong business momentum and financial performance
• Restructuring programme on track to deliver further margin improvement
• Sale of Harcourt Education fully completed; net proceeds of £2.0bn/€2.7bn returned to shareholders
• Divestment of Reed Business Information in progress
• Agreed £2.1bn/€2.7bn acquisition of ChoicePoint, Inc. expected to close in H2

Reed Elsevier's Chief Executive Officer, Sir Crispin Davis, commented:

"We have seen a strong performance across our businesses in the first half despite a more challenging economic backdrop and we remain on track to deliver on our goals this year of good revenue growth, meaningful margin improvement and accelerated earnings growth. We have made good progress in implementing our plans announced in February to accelerate growth: the planned divestment of Reed Business Information is progressing and we are seeing strong buyer interest in the business; the agreed £2.1bn/€2.7bn acquisition of ChoicePoint, Inc. in the fast growing risk information and analytics markets is moving through US regulatory review and is expected to complete in the second half; our major restructuring programme to deliver £245m/€310m of cost savings over the next four years is on track with the initial targeted £15m/€19m of savings to be delivered this year. Whilst the professional markets we serve are not immune to economic cycle effects, they are more resilient than most. This, together with the changes we are making in the business and the growing demand for our online information and workflow solutions with the customer productivity they provide, gives us confidence in the outlook.”

Further notes from their presentation:

• Online revenues growing at 10+%
• Online revenues exceed 50% of total revenues.
• Aggressive program of infrastructure cost management including outsourcing and real estate
• RBI: staple financing in place, strong interest, divestiture expected in second half, good operating performance despite difficult environment
• Choicepoint integration well advanced. Synergies on track
• Outlook: Strong across the board with Elsevier book program, LN online solutions, Exhibitions cycling all noted as positive drivers for H2
• RBI H1 Revenues up 3% and Op Income up 7%. Online growth up 20% to 34% of total RBI revenues. 4% print decline.

Meredith Reports Continued Negative Impact from Book Program

Meredith Corporation reported a significant decrease in fourth quarter revenues. Revenues were $385mm versus $428 for the prior period. Earnings per share were $0.41 in 2008 versus $1.05 in the fourth quarter Fiscal 2007. Full year EPS were $2.83 versus $3.31. While the company adjusted these numbers for their 'special charge' associated with business realignment the investment community hit the company hard with their stock price down 6%.

From thier press release:

Meredith recorded an after-tax special charge of $16 million in the fourth fiscal quarter, related primarily to the further repositioning of its book publishing business and selected reductions in force. The special charge included adjusting certain book royalties, art and editorial, and inventory accounts, as well as severance for eliminated positions in book and elsewhere in the Company.

In particular the following line items were noted: Increase in book sales return allowance, a write-down of book inventory and editorial prepaid expenses and severance expense, write-down of book royalty, and bad debt reserve for Home Interiors Group receivable.

Simon & Schuster Reports

CBS released their half year results with top line revenues and operating income up 1%. The company is re-evaluating their assets portfolio given the general economic environment and has announced the sale of 50 mid-sized radio stations. They are also aggressively managing expenses. How all this impacts Simon & Schuster if at all was not mentioned. Here is the relevant section from the press release on S&S:

Publishing (Simon & Schuster) Publishing revenues for the second quarter of 2008 declined 7% to$186.0 million from $200.3 million for the same prior-year period, as best-selling titles in the second quarter of 2008, including The Broken Window by Jeffery Deaver and Chasing Harry Winston by Lauren Weisberger,did not match contributions from prior year titles which included Blaze by Stephen King writing as Richard Bachman, and The Secret by Rhonda Byrne. Publishing OIBDA and operating income decreased 15% to $17.0 million and 19% to $14.6 million, respectively, with lower revenues partially offset by lower royalty expenses. Publishing results included stock-based compensation expense of $1.2 million and $.9 million for the second quarter of 2008 and 2007, respectively.

Wolters Kluwer Reports

Half yearly results at Wolters Kluwer were mixed with organic revenue growth up 1% and revenues at constant currency rates up 4%. Overall reported revenues were down 4%. Operating expenses held constant with the prior period resulting in a slight reduction in operating margin.

Total half year revenues were $1,608mm versus 1,677mm and EBITA was $288mm versus $304mm.

Highlights from the company's press release are as follows:

Double-digit earnings growth, stable profit margin, and solid cash flow performance give confidence for achieving the full-year targets. With its diversified and defensive portfolio, Wolters Kluwer has the foundation in place for sustained profitability and long-term growth.

• 20% diluted ordinary earnings per share growth in constant currencies
• 4% revenue growth in constant currencies (1% organic revenue growth)
• 8% growth in higher margin electronic products in constant currencies
• Resilient profit margins despite weaker market conditions
• Solid free cash flow underpins strong balance sheet and liquidity
• Reiterate progressive dividend policy

Under the hood: The company has to be worried about the results in its Health segment which industry wide has been one of information publishing's more vibrant sectors. For the half year revenues are down 14% (2% CC) and EBITA down 51% (49% CC). On $305mm in revenue the Health segment is almost a breakeven business which must be a concern. The company's Tax and Regulatory business was a highlight and helped mitigate some of the reduction in Health. Overall, the company remains confident of hitting its full-year growth targets between 3-4% despite the retraction in Health and their other slow segment Corportate & Financial Services.

Pearson Reports

From their press release:

• Sales up 14%* to £1.965bn;
• Adjusted operating profit up 38% to £124m;
• Adjusted EPS up to 5.6p (from 3.1p in H107);
• Interim dividend raised 6.3% to 11.8p.
• Long-term investment strategy paying off
• Education sales up 17% and first-half profit of £14m with rapid growth in digital learning services and continued international expansion;
• FT Group sales up 11% and profits up 21%, benefiting from shift towards subscription and digital revenues and focus on global businesses;
• Penguin sales up 9% and profits up 22%, with strong publishing and innovation in all markets.
• Healthy outlook: Full-year guidance confirmed; on track for further progress in all businesses.

Marjorie Scardino, chief executive, said: "Our momentum is strong, even in these tough economic conditions. We have leadership positions in good markets and an effective growth strategy based on quality content, digital innovation and international expansion. That strategy makes us confident that 2008 will be another record year, and that we will continue to grow."

For the year:
The company expects Eduction to be up 10% in constant terms for the year. The company is also reorganizing education into three groups: US Domestic, International, and Professional. Margins will be constant despite 'harcourt integration expenses' and will grow by 1pp per year beginning in 2009.

Penguin has made 'an excellent start to the year' and Pearson expects them to achieve double digit operating margins for the year.

FT is showing growth in subscription, circulation and advertising revenues (up 2%) in the first half. Pearson expects to increase profit at FT Publishing even without any growth in advertising revenue. Guardian reports FT added 350,000 new subscribers in six months.

Brand Presence

Most people in our industry recognise the irony inherent in discussing brand management in the publishing industry. Every aspiring author and agent seeks the validation that being published by a major publisher brings, yet most consumers have only a passing awareness of the publishers' brand. There are exceptions--Harlequin, Hungry Minds, O'Reilly- but across the panoply of publishers, brand strength is only partially monetised.

This recognised fact has not stopped publishers from investing heavily in branded web sites that cocoon their authors in an experience that generally is not relevant to the consumers they are attempting to attract. That is not to say that the content and applications available on the websites of most large publishers are inadequate or unsophisticated, but they are misappropriated. I especially like the websites of Harpercollins and Penguin, who have both taken up the challenge of community building, widgets and e-Content. And it is difficult to be critical of these attempts, given the aggressive level of experimentation undertaken.

What seems to be lacking in all publisher websites, though, is a strong sense of engagement. And engagement that is resilient. Just as consumers return to their favorite booksellers, publishers need to believe they can engage their consumer base to such an extent that they return each time they are interested in purchasing a book. And that's any book.

Publishers are best placed to build author-centric and subject/theme-oriented websites--not sites oriented around a "brand" that isn't relevant, but those that focus attention on segments of the business that remain relevant to consumers. Envision the Spiritual segment at a site supported by Harpercollins which has a unique, appropriate and relevant focus far apart from the current 'corporate' approach. All segments are valid candidates for more of a silo approach to marketing publishers' products. And I would go further in recommending that publishers consider marketing within these silos all titles available, rather than just those produced by the publisher. What better way to condense a market segment and become a destination site for Self-Help, Spirituality, Mysteries, Computer and any number of other book-publishing segments. Consumers aren't dumb. Amazon's main attraction is that all the titles in any one segment are available in one place. As long as publishers continue to ignore this fact, they will under-serve the market and under-perform given the investment in their sites.

So, which publisher will be the first to license a "Books in Print" database (as B&N, Google, Borders and many others have already done)? That would be an excellent start; moreover, the publisher is best placed to augment this data with more details, content and community- building applications that will draw in consumers. A quick search for Doris Lessing and George Pelecanos shows that Books.Google.com and Wikipedia are more likely to be the initial reference points for consumers. On their respective publisher's sites, these authors retain a significant presence, but that presence does not appear to be adequately monetized. Many publishers will argue that they are there to support the retail sale and as long as a book gets sold-- based on their effort-- they have done their job. There is something to this argument but the age-old paradigm on which it is based--multiple retail channels, limited retailer power--is long behind us and getting worse for the publisher.

Web presence for many companies (including publishers) remains a fluid engagement. The inherent benefit of the web is that you can try and fail repeatedly, with limited downside, assuming you monitor closely. In the publishers' case, it is important they not attempt use the web to build brand awareness around their trade-marks which continue to be removed from consumers' experience, Internet or not. What their focus should be is building a discernable alternative to the predominant web retailers by segmenting their offerings around logical categories and building their brand around those segments as they use their content knowledge, author relationships and technical expertise to build something powerful for the future.

Pearson Post Strong H1 Results

Pearson reported strong revenue increases (up 14% to £1.965bn) and adjusted operating profit up 38% to £124m versus the same period last year. Additionally, their adjusted EPS is up to 5.6p (from 3.1p in H107) and the company's interim dividend has been raised 6.3% to 11.8p. (Press Release).

According to the company this is evidence that their long-term investment strategy is paying off as evidenced by,

• Education sales up 17% and first-half profit of £14m with rapid growth in digital learning services and continued international expansion;
• FT Group sales up 11% and profits up 21%, benefiting from shift towards subscription and digital revenues and focus on global businesses;
• Penguin sales up 9% and profits up 22%, with strong publishing and innovation in all markets.

Marjorie Scardino, chief executive, said: "Our momentum is strong, even in these tough economic conditions. We have leadership positions in good markets and an effective growth strategy based on quality content, digital innovation and international expansion. That strategy makes us confident that 2008 will be another record year, and that we will continue to grow."

By segment the company notes its full year 2008 prospects:

Pearson Education (63% of 2007 sales and operating profit). Our education business is trading in line with expectations. As previously announced, we have begun a reorganisation of our education company, which we are now managing and reporting as three segments: North America, International and Professional. Our expectations provided at the full-year results under the previous segmental analysis (worldwide School, Higher Education and Professional) are unchanged.

In North American Education, we have a strong market leadership position and demand for our products remains healthy. We expect our North American Education business to increase sales by around 10% at constant exchange rates (or by 2-4% in underlying terms).
In International Education, we are well placed to benefit from the growing demand for materials, assessment, technology and related services at all stages of learning. We expect our International Education business to grow sales by around 10% at constant exchange rates (or in the low single digits in underlying terms). These growth rates include the impact of the completion of the UK key stage testing contract in 2007.

In Professional Education we continue to expect sales to increase in the low single digits at constant exchange rates.

For Education as a whole, we expect 2008 margins to be similar to the 2007 level of approximately 15%, in spite of significant integration costs relating to the Harcourt businesses (which we include in our operating results). In 2009, we expect to increase Education margins by around one percentage point as we begin to realise the financial benefit of the acquisitions. Beyond 2009, we see further opportunities to increase margins in Education as we continue to consolidate our businesses.

Penguin (20% of 2007 sales, 12% of operating profit). Penguin has made an excellent start to the year, with a particularly strong first-half publishing schedule. It is on track to reach its goal of double digit margins for the full year.

Financial Times Group (17% of 2007 sales, 25% of operating profit). The FT Group is on track to achieve continued profit growth this year. FT Publishing has shown sustained growth in subscription, circulation and advertising revenues (up 2%) in the first half. Future advertising revenues remain difficult to predict, but we continue to expect to increase profit at FT Publishing even without any growth in advertising revenue. Interactive Data has raised its guidance and now expects to achieve full-year revenue growth in the 8-10% range and operating profit growth within the 11-13% range (headline growth under US GAAP).

MediaWeek (Vol 1 No 30):

NY Times looks at textbook piracy:

The transition has already begun, even while publishers continue to sell print editions. They are pitching ancillary services that instructors can require students to purchase, just like textbooks, but which are available only online on a subscription basis. Cengage Learning, the publisher of Professor McMurry’s “Organic Chemistry,” packages the new book with a two-semester “access card” to a Cengage site that provides instructors with canned quizzes and students with interactive tutorials.

A lengthy article in The NY Times showing the battle to win over younger readers to books.

Books are not Nadia Konyk’s thing. Her mother, hoping to entice her, brings them home from the library, but Nadia rarely shows an interest.

Reuters suggests that a deal for Informa could be imminent. The Observer writes about the biggest website you have probably never heard of:

The invisible hand behind many memes, apparently including the googled swastika, is a website called 4chan. From semi-literate cats to the 'ironic' comeback of singer Rick Astley, this online community is building a reputation as a nursery of all that is weird and wacky and likely to be landing in your inbox tomorrow.

NYTimes on the growing instance of product placement in broadcast news.

In recent weeks, anchors on the Fox affiliate in Las Vegas, KVVU, sit with cups of McDonald’s iced coffee on their desks during the news-and-lifestyle portion of their morning show. The anchors rarely touch the cups. Executives at the station, one of 12 owned by Meredith Corporation, say the six-month promotion is meant to shore up advertising revenue and, as they told the news staff, will not influence content.

S&P (Yes,the same folks that missed the credit crisis) have placed the NYTimes on negative credit watch.

The CreditWatch listing reflects an accelerating pace of total revenue decline and a rate of decline in EBITDA in the first half of 2008 that indicates the company may have difficulty achieving our expectations for the current rating.

The Telegraph notes that Thomson Reuters will launch news channel to compete with Bloomberg, Fox and CNBC.

The Daily Telegraph understands that the plan is for the channel to appear on both the internet and some form of cable or digital platform. The launch could be as early as January but may be pushed back as the company is conscious of Reuters' earlier unsuccessful foray into television.

MediaPost has a round-up of a very bad 10days for newspapers and magazines.

While all three mainstays of the traditional media have scrambled to adapt to the digital age with more online features and services, their Internet businesses still contribute just a small fraction of total revenues. Even more ominous, the rate of growth in online revenues is slowing, making it unlikely that they will ever be able to offset losses in the core business.

On the other-hand, MediaPost also reports on the rise of newspaper-distributed magazines.

It's one of the weird paradoxes in current media trends: While newspapers and consumer magazines are both taking it on the chin in 2008, some magazines distributed via newspapers are doing quite well. Among the leaders are American Profile and Relish, from the Publishing Group of America--which have seen year-to-date ad pages increase 12.58% and 19.69%, respectively, according to MIN Online.

The Independent looks at E-books as retail items and assesses whether they are threats or favors.

The long-term danger for publishers is if they don't invest in digital technology for their content. They could also lose out if they just make classics available for e-book readers and not the most recent popular titles. Henry Volans, head of digital publishing at Faber, said: "There is no reason whey people who have e-books should suddenly only be interested in Dickens. They will want the big new titles as well."

Giles Coren on Editing

Spoiler alert: There is some very colorful language in the attached article written by food critic and writer Giles Coren. Giles has taken exception to what might appear to a disinterested party as a fairly minor editorial change to one of his recent restaurant reviews. As Mrs PND notes he is quite elegant in the manner in which he abuses the parties responsible. Giles and Gordon Ramsey are said to be good mates and it is clear after reading this where the common affection resides.

Consider yourself forewarned. There is no way anything like this would ever be published in a major US newspaper.

The Guardian.