Simon & Schuster Report Higher Quarter

S&S saw revenues increase for the quarter by 5% over the same period last year although the performance was not enough to push them into positive growth for the year. Year to date revenues are $612mm vs $643mm in the period last year and Operating Income was $59.9 vs $67.7mm last year. Summary details from the CBS press release as follows:

Publishing revenues for the third quarter of 2008 increased 5% to $225.0 million from $214.2 million for the same prior-year period reflecting the success of best-selling titles in the third quarter of 2008, including The War Within by Bob Woodward and Real Life: Preparing For the 7 Most Challenging Days of Your Life by Dr. Phil McGraw. Publishing OIBDA and operating income both increased 8% to $25.8 million and $23.4 million, respectively, driven by the revenue growth partially offset by higher royalty expenses and selling and advertising costs. Publishing results included stock-based compensation expense of $1.2 million and
$.9 million for the third quarter of 2008 and 2007, respectively.

Dohle'n Out Some Change

Article in the New York Observer about Random House and Marcus Dohle. They contrast RH with the fortunes of the Hachette Book Group although this is done by illusion since the author seems to be saying just because Hachette is smaller they are better.

That would be between 600 and 700 titles per year, if you’re keeping score. Random House, which one rival publisher recently called “the biggest, fattest, most grotesquely obese company ever,” last year published more than 3,000.

Of course, the vast majority of those books were signed under Mr. Olson, whom Bertelsmann replaced late last spring with a much younger, more German man named Markus Dohle.

MR. DOHLE, who at 40 years old has never worked in publishing before but had previously managed a large printing company, has not yet ordered any major changes since moving to New York from his home in Gütersloh and taking up the frayed reins Mr. Olson left behind. There have been some adjustments, to be sure. For one thing, Mr. Dohle has hired several new people at the corporate level, including a director of human resources who, like his boss, is very young and comes from Germany (one editor said, half seriously, that “there do seem to be a lot more people speaking German in the elevators”). For another, some division heads have asked their employees to cut back on expenses such as lunch and travel.

Also, as an example of Dohle's impact they note (only) the elimination of 16 jobs at Doubleday. These apparently "stunned" the industry. Someone needs to point out to the Observer that we are in a recession and 16 jobs (with due respect to the people that held them) is small beans. Stunned is just silly.

Google Announces Settlement in AAP Lawsuit

Certainly the publishing environment has changed fundamentally since the AAP and Author's Guild filed a lawsuit to halt the Google Book digitization program. Fears that in-copyright material would be 'stolen' in the process of digitization has now been trumped by greater fears of a digital book future where publishers will only be cursory participants. Rapid expansion of eBook programs at Amazon, SONY, Apple, Google and Ingram have changed the landscape so that publishers are keen to open all avenues for digital distribution of their content. This agreement may make Google the eBook leader ahead of Amazon.com although we will not know this until the dust settles. That eventuality however, will be exactly what publishers will be looking for as they have become increasingly concerned about the position and power of the Amazon eBook (Kindle) offering.

With this agreement, Google will be opening up a vast digital archive of out of copyright books for preview, sale and lending either direct to consumers or via institutions. Additionally, publishers will allow this technology and distribution to be applied to in-copyright material - this is where much of the controversy focused. Google, it was assumed, were digitising materials regardless of copyright status. They placed a moratorium on this process but what content that has been digitized can now be made available and the digitization process can resume. Google has added functionality that enables the copyright owner to turn on or off certain capabilities such as preview or buy.

The agreement also calls for the creation of a rights registry which will create a bibliographic database of copyright ownership information. There will be motivation for publishers and authors to maintain their information in this database since this will be the mechanism used to ensure that they get compensated.

All around on the surface this looks like an excellent compromise. Indeed, it could represent a momentous shift in the way we interact with books and book content. Congratulations to all parties for getting this agreement completed without too much blood spent.

The agreement itself can be found here. It should be pointed out there is compensation to be paid by Google to the AAP and AG. This will fund a pool of money to be dividended to copyright holders whose content was digitized without permission, money to create the copyright registry and attorneys fees. (I wonder who will be doing the registry thing - will it be an RFP?)

UPdate: Other reaction summarized here. (TOC)

Window Shopping at Amazon

Amazon.com has launched a new site app named WindowShop which is designed to enable you to do exactly that. Mimicking the concept of a store window, Amazon is trying to draw attention to those hot, new books, cds, games and dvds that a store manager might place up front to draw in customers. The application is fun to play with - you can move across categories as well as up and down. For example, if you navigate to a book title Fighter, The Fighters of the UFC (which is the first title in the version I am looking at), using the down arrow button you can view many more books merchandised. Grow tired of books and you can hit the right or left arrow keys to view another category.

By my count there are 10 books selected for inclusion. From the splash page for WindowShop I would rather have been able to chose which category to look at; however, as you use the app. it becomes easier to navigate and this is only a mild inconvenience. For example, if you zoom out so you see all the categories and products, you can hold the left cursor button and move your mouse around the screen to immediately navigate to a new title in any category.

Interestingly, the thing will just play itself and since everything is audio and visual rather than text - book blurbs are read aloud - you can leave it on in the background and come back to it if something gabs your interest.

EDItEUR Seeks New Director

EDItEUR, the international standards body for books and serials, announced important changes to both its management and governance structure at its meetings during the Frankfurt Book Fair Brian Green, the current Executive Director, is standing down from the post in 2009 in order to concentrate on his role as Executive Director of the International ISBN Agency, whose management is contracted to EDItEUR. EDItEUR is seeking both a new Executive Director (full or part-time) and a full time Associate Director who would be responsible for supporting the management of both the International ISBN Agency and EDItEUR. The location for these jobs is flexible.

In addition, a new management committee will be formed, consisting mainly of nominees of representative national and international trade bodies with interests in standards. This committee will work with the new Executive Director to propose new areas for standardisation and agree EDItEUR’s work plan and priorities.

“We discussed all possible options for the future of EDItEUR with the major stakeholders,” said EDItEUR’s Chairman, Friedemann Weigel of bookseller and subscription agent Otto Harrassowitz, “and there was one hundred percent agreement that the need for an international standards body for the book and journals sectors has never been greater than in the current digital environment”.

Expression of interest in the key industry roles of Director and Associate Director of EDItEUR should be made to Brian Green (brian@editeur.org), from whom further information is also available, by 14 November. The successful applicants are likely to have a background in the book or serials sectors, a commitment to the benefits of standards and excellent communication skills. In addition, basic management and business skills are important. The applicants should also be prepared to travel to conferences, seminars and book fairs.

About EDItEUR: EDItEUR is the international group coordinating development of the standards infrastructure for electronic commerce in the book and serials sectors. EDItEUR currently has 70 members from 17 countries, including Australia, Canada, Japan, Korea, Russia, United States and most of the European countries.
Contact: Brian Green, brian@editeur.org

Oprah's Impact

I thought I would track the impact of the Oprah announcement on the sales of the title specifically mentioned in the 'endorsement'. The Kindle version of The Story of Edgar Sawtelle is being offered at 10% off the regular price. The book was previously an Oprah pick in print form.

So just prior to the show airing on the east coast the Kindle version was ranked at 136 in the Kindle store. Now approximately 24hrs later it holds the 16th spot.



Here is a chart:

In isolation, it is hard to understand what it means in terms of units to move from 136th to 16th. It might be interesting to see what the respective print and kindle curves look like for future Oprah picks.

(I should have looked at the rank for the print version as well).

Looted Books

Der Spiegel has an interesting two part article about books looted in the run up to and during the Second World War. LINK

The records indicate that the city library purchased "more than 40,000 volumes from the private libraries of evacuated Jews" through this office. And, this being Germany, the librarians maintained meticulous record books to keep track of their purchases -- even though parts of the German capital were already in ruins. As always, preserving order was paramount. The librarians signed each volume and gave it an accession number, beginning with the letter J.

And,

The book thieves were able to expand their range of operations considerably after the war began. German occupiers in Eastern Europe raided 375 archives, 957 libraries, 402 museums and 531 research and educational institutions. They were also active in France, as the odyssey of sheet music once owned by the pianist Arthur Rubinstein shows. The history of the copies and prints of these works of various composers, some with personal dedications, mirrors the catastrophes of the 20th century.

Worth reading the whole thing just to keep things in perspective.

Oprah Endorses Kindle

Earlier this week, I visited the Amazon site for what I don't recall and on their front page was a video with Oprah's smiling face. In my ignorance, I thought she had already endorsed the Kindle and I had somehow missed it. Silly me. On her show today she announced the gadget has changed her life. Will the endorsement change the sales curve for the product? Probably.

Here is the blurb from the show: (Link)

This summer, Oprah received a gift that she says changed her life. "I'm telling you, it is absolutely my new favorite thing in the world," she says.Meet the Amazon Kindle™, a wireless portable reading device with instant access to more than 190,000 books, blogs, newspapers and magazines. Whether you're in bed or on the train, Kindle lets you think of a book and get it in less than a minute.As a special offer for Oprah viewers, Amazon.com is giving $50 off the price of Kindle. Enter the promotional code OPRAHWINFREY during the checkout process at Amazon.com to receive the discount. This offer is valid through November 1, 2008.Code for $50 off the price of Kindle: OPRAHWINFREY

Go to Amazon.com to learn more and order your Kindle today! Plus, you will receive an additional 10% off the price of The Story of Edgar Sawtelle (regularly $9.99 Kindle/$17.63 Hardcover.) No promotional code is necessary. Come back later today for more from this show.

And in shameless merchandising you can visit my bookstore to make your purchase: HERE.

Rolling Stone Revamps

I recently subscribed to a free year of Rolling Stone magazine and this is the first time I have really looked at it since a girl friend bought me a sub when I was 18. They just revamped the format of the print edition and I must say I really like it. Gone is the newprint larger format version and in comes a more refined, mature dare I say 'professional' version.

Here is Wenner on the change:

The large format was one of Rolling Stone's trademarks — and it became a physical reminder of our roots in San Francisco and of a vital time in our cultural history. That's a lot of history, and it is not without a wistful feeling of sweet memories of those days that we make this change.

It was not a decision we made lightly. We felt this was the right move but remained a little uncertain, knowing this was not just up to us but also in the hands of the large number of passionate and longtime Rolling Stone readers (there are nearly 13 million of you, when you count the number of people who share their copy).

Thus, a few months ago, while putting together our annual summer double issue, we produced a version of that edition in the size and style of the one you now hold and mailed it to 3,000 subscribers to get their thoughts. The response was a major surprise: Readers loved it. We realized that the only reason to resist change was nostalgia.

Listen to Authors

The BBC is reporting the release by the British library of a trove of recorded interviews with authors. They discuss their work and issues pertinent to the times in which they are interviewed. It's good stuff. BBC.

Raymond Chandler is interviewed by James Bond author Ian Fleming, John Steinbeck discusses his reasons for writing The Grapes of Wrath, and Arthur Miller talks about his marriage to actress Marilyn Monroe.

Mr Fairman said: "These two new British Library audio collections form the largest survey of historic recordings by English-language authors and playwrights ever published.

"With many previously unpublished BBC recordings selected from the extensive collections of the British Library Sound Archive, these compilations will offer a fascinating insight into the lives and work of these great authors".

Amazon.com Shares Pummeled

Amazon reported their quarterly numbers yesterday and while those results just about met expectations it was their forecast that has thrown everyone into a tizzy. The company has brought their full year forecast (made in July) down from $20.10billion to between $18.46 - $19.46 billion. (This in itself is a ridiculously wide spread).

According to Bloomberg, over 40% of Amazon's operating profit comes in the Christmas quarter and they like other retailers are expecting a lackluster season.

Shares after trading are down 15%. Shares closed at $49.99 but are expected to open around $42.

Google Chart.

As an aside, Barnes & Noble has slipped below a market cap of $1billion.

Here is the transcript from Seeking Alpha. Those curious about why those supposed hundreds of thousands of Kindle units sold aren't impacting the numbers will remain frustrated.

Kindle selection continues to grow. Since inception, we have more than doubled the number of books, magazines, newspapers, and blogs available to be delivered wirelessly in less than one minute. Kindle titles already account for more than 10% of unit sales for books that are available in both digital and print formats. We’ve ramped up manufacturing capacity over the past 10 months and Kindles are in stock and available for immediate shipment. Kindle sales since launch have significantly exceeded our expectations. We will not introduce the new version of the Kindle until next year at the earliest.

And this: They plan to make it up in volume:

And then on the Kindle? How do you see that affecting your long-term profitability in the book segment?

Jeffrey P. Bezos Well, one thing that I think you could imagine happening over the long-term there is that the prices of books will be cheaper, so most of the books that we are offering on Kindle today are $9.99, even if they are $20 or $25 in print form. And so you can see that -- I think that probably the best way to answer your question is we would hope to sell many more units and make less money per unit but all in, have a very strong business.

So, as we are coming to believe Amazon controls pricing in the e-book world! Consumers will expect an e-Book to cost $9.99 and publishers will not be able to do any thing about it.

Reed Business Sale and Choicepoint

The Financial Times reports that the price Reed may get for the sale of RBI will be far below their original expectation of £1.25Bill. In the article they quote someone suggesting a sale price of £750mm with the expectation that a sale would go ahead regardless.

The deal's financing is now in place but the sticking point is the deterioration in trading at RBI into 2009 as the economy weakens. Reed would not comment on a lowest acceptable price.

One analyst said: "I think it is worth Reed's while to sell low. If RBI went for £750m rather than £1bn, all they lose is £250m of cash. While it is helpful to have that on the balance sheet, at the end of the day it is only £10m of extra interest.

"The alternative is that . . . the market automatically values RBI in the sum of parts at £750m-£800m anyway and you get left with a cyclical business that will see downgrades and will be under pressure for a couple of years."

There are three groups with a serious interest but the article does not indicate when a sale will be announced. Reed will be pressing for a resolution as soon as possible.

In other related news, the Federal Trade Commission is requiring that Reed divest some part of Choicepoint in order for approval of the acquisition to proceed. The FTC believes that the combination of the Reed and Choicepoint public record business would diminish competition significantly and as a result Reed is being required to sell a part of this business to Thomson West. (Link: From September press release)

To eliminate the anticompetitive effects of the proposed acquisition, the FTC will require Reed Elsevier to divest assets related to ChoicePoint’s AutoTrackXP and Consolidated Lead Evaluation and Reporting (CLEAR) electronic public records services to Thomson Reuters Legal Inc., within 15 days after the proposed acquisition is consummated.

Through its LexisNexis division, Reed Elsevier provides electronic public records services to law enforcement customers in direct competition with ChoicePoint’s AutoTrackXP and recently, ChoicePoint’s CLEAR, a new and advanced electronic public records service. Together, the two firms account for over 80 percent of the approximately $60 million U.S. market for the sale of electronic public records services to law enforcement customers.

“The proposed acquisition would have eliminated the intense head-to-head competition between LexisNexis and ChoicePoint that has lowered prices and led to product innovations for a critical law enforcement tool,” said David P. Wales, Acting Director of the FTC’s Bureau of Competition. “The action announced today ensures that law enforcement customers will continue to benefit from this competition as they attempt to keep pace with increasingly sophisticated criminal activity.”