Wikert on E-Book Platforms

Joe Wikert reflects on the Sony E-Book Reader and the recent reports on the imminent launch of a Amazon E-Book reader.

Even if a killer device existed today there are far too many cons working against the ebook platform for it to succeed at print book pricing levels. In fact, if something doesn't change soon, the entire concept of a meaningful ebook sector (as opposed to the rounding error it is in the publishing world today) will be laughed at the same way we all chuckle when we think about the "paperless office.

Personnally, I don't see how any stand alone reader is going to succeed especially at the price Sony is looking for. As Exact Editions points out the i-Phone (or perhaps some equally multi-function device) is the best option for ebook (and e-periodical) content.

Then there is the pricing issue....

New York Times Online Education Initiative

As noted in Inside Higher Ed, the New York Times has launched an online initiative that will merge NYTimes content with course management software to enable faculty and scholars to build course content. From the press release:

Educators will now have the opportunity to select Times articles, archival content, graphics and multimedia content, including videos and Webcasts, gathered around specific subjects, and make them available to students online, along with other course materials. Students will benefit from access to thematic content that is drawn from the vast array of Times reporting on a countless number of issues.

This is an interesting initiative for NYTimes which has no doubt realized the extent to which their content is used in existing course management solutions such as Blackboard and via online sources from the likes of Proquest. The education market has always been an important one for NYT and the thrust to become a direct provider to this market is significant. (No word whether they will add content from other news sources but this would be an interesting natural extension of their platform).

The expansion will be implemented with Epsilen which is marketing a newly developed web based tool that supports a variety of scholar services such as:

ePortfolios, Global Learning System (courseware), group collaboration, object sharing, blogs, messaging, and social and professional networking. Users receive a lifelong identity on the Epsilen(TM) system, enabling them to maintain their academic and professional ePortfolios throughout their careers, regardless of their affiliation with individual institutions.

That last bit is especially interesting (assuming the platform is open) because it will enable a scholar to create an online library of material they have sourced, read, annotated, referenced and written about together with their own intellectual work. The utility that results from this could be fundamental for the development of the 'continuing education' of students as they graduate from universities and are [today] lost to both the universities and the publishers of educational material. (I have written a little about this before here and here).

From the press release:

"The Epsilen(TM) Environment is a new concept and technology framework allowing faculty and students continued access to their work after switching schools, entering the job market or retiring," said Dr. Jafari. "It is a prototype of the Web 2.0 concept built on the ePortfolio foundation and the power of social networking. The Epsilen(TM) concept suggests that every student and professional should own a lifelong ePortfolio enabling them to collaborate and exchange intellect in a global community."

The New York Times operates a business unit named The Knowledge Network where this initiative resides. They hope the collaboration between The Knowledge Network and Epsilen will bring about the development of a large social network of students, facility and administrators.

Knowledge Network will serve as a global networking and professional and academic development resource for faculty, students and alumnae. Users will be able to share work with colleagues, create their own academic or professional ePortfolios (digital repositories of a person's work), invite peer review and establish professional contact with people around the globe based on common academic pursuits and research.

If this develops as a real platform, as NYT hopes they could become a gatekeeper to students and faculty. Interestingly, the HighEd article notes that this tool could also take some of the burden away from faculty in the development of their course material. This is a vital point because course development can be a time consuming task and inertia sets in because of that difficulty. If tools free this process then it is conceivable that instructors will vary their content more frequently, provide better more resonant content and as a direct result rely heavily on the tool. As a data or information provider inserting yourself into the work flow is the nirvana because it makes it that much harder to cancel.

There are a lot of themes here and it will be interesting to keep a watch on the Knowledge Network.

(It is curious that there is no mention of this on the NY Times. com site).

Some of Us are not Plugged In

It's hard not to think big about all the ways digital content can be used; there's more than enough news to fill many, many blogs like this one. Yet two recent examples reminded me of the digital divide that still needs to be bridged for many (in America alone, even). One example was personal—my mother, a seasoned high school teacher, told me about a young new supervisor she has who is changing things up so much, she exclaimed, that "now I have to learn how to send attachments via email!" A second was the recent announcement by Random House of their $1 million contribution (over five years) to First Book, a non-profit organization that gives children from low-income families the opportunity to read and own their first new books. Since 1992, First Book has distributed more than 50 million books in over 1300 communities around the country.

According to the Pew Internet project report released in early July 2007, 71% of Americans have access to the Internet, 47% of those with broadband access. That includes access at home, work, school or other places. The two examples above reminded me that as evolutions in electronic content turn over more and more quickly, those without the access, financial means or savvy to take advantage of those innovations are left farther and farther behind. It's a worthy point and a call to action for those of us who couldn't imagine a life without incessant reading. If you are doing good works in this area, as many are, please let us know.

In ways overt and subtle, literacy used to delineate the haves from the have nots, or maybe the "could-haves" from the "could-never-haves." Will digital literacy create the same delineation?

Susan Ruszala

iUniverse.com and Author House Form Alliance

In an annoucement today, iUniverse.com and Author House announced that the companies agreed to terms that will add iUniverse to the Author Solutions, Inc. family of brands. The transaction was announced jointly by Bryan Smith, president and CEO of Author Solutions and AuthorHouse, and Susan Driscoll, president and CEO of iUniverse.

From the press release;

“There’s no question that publishing is increasingly becoming more author-centric,” said Susan Driscoll, president and CEO of iUniverse. “We have always been focused on providing authors with the publishing expertise required for professional results. Now, through Author Solutions, we have a terrific opportunity to provide all authors—both self-published and traditionally published—with the broadest range of services to help them achieve their individual goals for success.”

“At AuthorHouse, we have built our brand by making service to the author our first priority,” said Bryan Smith, president and CEO of Author Solutions and AuthorHouse, “and iUniverse has done a great job leveraging their traditional publishing experience to make authors successful. By bringing the two biggest forces in self-publishing together, we will draw on the unique strengths of both brands and offer an even better suite of publishing services for authors.”

The popularity of 'self-publishing' programs and tools is exploding (by accounts Lulu.com is the market leader) and the market spans providers of book publishing tools for the individual like Blurb.com through publishing services companies to quasi-traditional publishing operations.

Amazon.com has added print on demand and self-publishing capabilities over the past two years to become a real player and competitive threat to the incumbant companies. A deal like this was expected and there may be more consolidations on the way. By some estimates the 'self-publishing' market is estimated to be over $1.obillion. Besides Amazon other big companies such as Hewlett Packard, Xerox, Microsoft and Kodak are potential and likely competitors.

In my view, this is the area where fundamental change will come in publishing industry not at the top of the pile: There is too much in-bred desire to maintain the status quo at those heady heights for real change to happen with any great alacrity.

Amazon E-Book & Google Bookstore

NY Times has an article this morning on Amazon's $400 e-Book reader. It will be wireless and will come with some free content.

Several people who have seen the Kindle say this is where the device’s central innovation lies — in its ability to download books and periodicals, and browse the Web, without connecting to a computer. They also say Amazon will pack some free offerings onto the device, like reference books, and offer customers a choice of subscriptions to feeds from major newspapers like The New York Times, The Wall Street Journal and the French newspaper Le Monde. The device also has a keyboard, so its users can take notes when reading or navigate the Web to look something up. A scroll wheel and a progress indicator next to the main screen, will help users navigate Web pages and texts on the device.

Also as has been rumored for a while, Google plans to sell full access to some of the book titles in its Book Search product.

For its part, Google has no plans to introduce an electronic device for reading books. Its new offering will allow users to pay some portion of a book’s cover price to read its text online. For the last two years, as part of the Google Book Search Partner Program, some publishers have been contributing electronic versions of their books to the Google database, with the promise that the future revenue would be shared.

Steve Riggio is quoted at the end of the article say in part that B&N will increase the number of e-Book titles they sell and will consider the sale of a B&N reader only when the unit price comes down to a reasonable level. Horray for that.

Truth Sometimes Is Fiction

News reports out of Poland (not often I get to say that) are noting the sentencing of one Krystian Bala in the murder of Dariusz Janiszewski. Apparently young Krys thought Dariusz was having an affair with his wife but was never considered a suspect in the murder that went unsolved. Unsolved that is until young Krys got the writer's bug and felt compelled to write about it. (Now who does that remind you of?) Long story short, a diligent police officer read said published book and after a quick investigation arrested Krys for Murder. The court agreed there was no If about it and that he indeed did it.

BBC

Borders Earnings Call

Following on from last weeks earnings annoucement, Seeking Alpha posted the transcript of the earnings call held on the same day. Some highlights:

George Jones on execution at the store level:

Our progress on execution has been reached through a combination of efforts including an ongoing focus on improvement in retailing basics such as effective use of key items, impulse items, feature tables, end caps and so on -- you've heard me talk about this before and it's really showing it's working -- merchandise presentation, effectiveness of marketing and promotions, and consistency of execution. We've also made significant process in changing the culture of our stores organization in that they are dramatically increasing their focus on driving sales within their individual stores

Jones on the improvement in comp store sales:

We're particularly encouraged by the improvement in comparable store sales cross all business segments. Of course, record sales of Harry Potter and the Deathly Hallows led these results, but even without sales of Harry Potter -- this is important -- we improved our comp store sales in each operating segment. This is an important shift in the trend for us.

Jones on the impact of Borders Rewards in driving traffic to stores:

our unique mix of promotional offers and compelling content delivered via email to these over 20 million Borders Rewards members is really helping drive traffic to our stores. In fact, our transaction count at domestic Borders stores increased by .5% in Q2 and notably improved in ten of the 13 weeks of the period; the three that didn't were the first three weeks of the quarter so we had ten in a row where it mproved. Of course, Harry Potter was a big part of driving that traffic but only during the final two weeks and one day of the quarter.

Jones on the improvement at the Walden stores:

frankly, had been sort of treated like a stepchild for a while. In addition, we focused merchant team on the unique aspects of the mall business. Breaking this business out and focusing on its opportunities has greatly improved this operations and helped drive positive results.

Wilhelm on the sale of the international operations:

This process is moving forward as planned in both the U.K. and Australia-New
Zealand, yet it is more advanced for Borders U.K. as we started there a bit earlier.

Without identifying the specific issues, Wilhelm noted that they are "we're spending the necessary money to fix the merchandising systems." The merch system has been problematic for Borders over the past two years. He later noted that continued higher SG&A costs would be attributable in part to continued spending to fix the merchandising systems.

Jones in response to a question about supply chain efficiencies:

...it wasn't as much of bad decisions that Borders made in terms of things they did wrong as it was things that we didn't do that perhaps our competitors did do more effectively. Distribution and supply chain and systems and things like that are good examples of these.

...in terms of managing our inventory from the whole supply chain factor, part of the distribution centers, and as Ed said, I think they've made investments and we've done good things on those. The other part of it comes back to the systems which is I've certainly talked a lot about. We clearly still have deficiencies there on that. We don't have, if you look at versus what a normal retailer I would expect would have in terms of automated replenishment or what our competitors have, we've got a ways to go there.We still believe we have big, big opportunities in terms of managing our inventory levels more effectively with this type of efforts as well as systems. We have the distribution centers now in place and we expect as we get the systems in place we'll start catching up to where we really should be on our inventory turns.

Wilhelm: Well, improving turns from 1.6 which we've been at historically to 2 generates about $200 million of cash for us. So that's the proxy of what would come out of inventories.

Jones: Longer-term if we were able to get it, say, to 2.6 which is where our major competitor is now, it'd be $500 million

The Times E-Reader

My approximately $9 per week that I used to spend for the New York Times is down to $3.50 as I have migrated the majority of my reading to the web site. On Sundays, the Times remains a fundamental part of the day but I wonder how long I am going to continue to buy the paper version when my perception grows that the news is out of date and the content is less substantial. Perhaps it is a function of the summer but the newspaper appears thinner when I pick it up on Sunday's, and I don't immediately believe it has the heft to keep my attention for more than 2 hours.

The insert promoting the Times Reader caught my eye this month and I decided to give the free trial a try. There is a lot of speculation about The Times' intentions regarding Times Select which requires a payment to see added content on the NYTimes website. They do have (to me) a surprising number of subscribers to this content but in the face of expected heated competition from NewsCorp/Dow Jones there is speculation that they will shut down Times Select. In my view they should consider doing the same with the E-Reader.

On a positive note, the Reader is great if you want a version on your laptop and you can't by a paper at the airport or train station. During the month I had free access I used it several times on the train and it was excellent but it wasn't better than the paper version. I found the navigation less than intuitive and I repeatedly found myself in a story I had no interest in because I couldn't tell from the headline what the story was about. In contrast on NYTimes.com and in the paper you can glance at the slug and immediately get a sense of the subject. That same functionality seemed to be lacking on the Reader.

In my experience there seemed to be less opportunity for engagement with the Reader than with the paper version. I am not sure why I felt this - perhaps it is a tactile thing - but I found myself preferring to buy the paper. I found it frustrating that I couldn't permalink to articles as can be done on the (NYT) web site and attempting to jump to the article on the NYTimes.com is not possible. Obviously, the reader is designed for use when you are not on-line but this was still frustrating. When I was online, my attempt to check the NY weather was laughably complex.

As wi/fi becomes more prevalent the e-reader is going to look increasingly like a relic. There is so much more content on the NYT web site but little of this audio and video content is available via the reader. If they want this product to succeed they will need to do far more with the product. Instead of trying to develop a rendition of the print, they should be thinking of developing a consumer news "platform" that equates to a LexisNexis type news product for consumers. It would be interesting if the New York Times built this platform approach in conjunction with Yahoo.com (or Microsoft) such that NYT brands the Yahoo news service with NYTimes. In this model NYTimes would continue to leverage their news gathering and analysis strength but could also regain some of the classified, listings and ad revenue that has disappeared in print.

Since I wrote the post last week, Google announced that they are to 'publish' the full feeds from the Associated Press, the Press Association and others. This is a huge and perhaps seismic issue for news sites such as NY Times who rely on traffic from Google to boost exposure to their content. In the case of NYTimes they have much more direct traffic than most news sites but the battle is joined and I see a need for the Times to do something far more fundamental with MyTimes, The Times Reader or NYTimes.com in order to maintain readership and not become some has been news service.


(On two related notes, it was curious to me that as part of the free trial to the Times Reader that the Times Select content wasn't included - I find this odd. Secondly, I have not been contacted at all to actually pay for a subscription for the Reader. Isn't conversion to a paying subscription the purpose of the free trial? Very lazy approach I think).

Endorsement for PersonaNonData

It is always gratifying to receive an endorsement but in this particular case the effort is highly creative. Ann Michael lists a number of useful and interesting blogs she considers great sources of information about publishing and media. I agree.

Thanks!

UK Borders Sale

The Bookseller is reporting that Pizza Express founder Luke Johnson is backing a management buy-out of Borders led by CEO David Roche. They further suggest the chain may go for as little as £25mm with little competition from WH Smith to push the price up. Smiths are looking for a fire sale deal and would likely shut numerous stores and concentrate only on the most profitable locations.

Ebsco Acquire 10 Sage Databases

EBSCO Publishing one of the world's premier database aggregators, has acquired ten renowned indexes from SAGE. The deal will bring the leading print indexes in their fields to users electronically through the EBSCOhost® platform, one of the most-used interfaces available for scholarly research.

The following indexes are now owned by EBSCO and will be available electronically via EBSCOhost:

• Abstracts in Social Gerontology™
• Educational Administration Abstracts™
• Human Resources Abstracts™
• Peace Research Abstracts Journal™ (Now called Peace Research Abstracts™)
• Sage Family Studies Abstracts™ (Now called Family Studies Abstracts™)
• Sage Public Administration Abstracts™ (Now called Public Administration Abstracts™)
• Sage Race Relations Abstracts™ (Now called Race Relations Abstracts™)
• Sage Urban Studies Abstracts™ (Now called Urban Studies Abstracts™)
• The Shock & Vibration Digest™
• Violence & Abuse Abstracts™

These are highly-refined, specialized collections in their subject areas. Currently, each index is available in print-only. Online versions, including backfiles and other benefits, such as unlimited use, remote accessibility, multi-database searching, links to full-text, etc. are expected to be available by October 2007.

EBSCO offers a suite of more than 200 full-text and secondary research databases. Through a library of tens of thousands of full-text journals, magazines, books, monographs, reports and various other publication types from renowned publishers, EBSCO serves the content needs of all researchers.

Press Release

Informa Post Strong Results

The Telegraph reports that Informa has raised its half year dividend by 70% as the company consolidates its purchase of Datamonitor. The company said underlying profits rose 24% and revenues grew 10% adjusted for currency movements. In their press release the company said their efforts to establish a stable revenue platform that wasn't subject to economic variables is succeeding with more than 3/4 of their revenues 'visible and renewing' from subscriptions and book sales.

Earlier in the year, analysts suggested that the company had over paid for Datamonitor however management were convinced that price was right and that better management of the company would improve results. Informa noted that Datamonitor revenues were up 62% (with organic growth up 22%) and operating income up 51%. Furthermore, growth on the top line and bottom line is expected to improve further as product sales are integrated further and final cost cutting programs are put in place.

Borders Reports Comp Stores Flat

Borders reported second quarter revenues of $945.1 which were up 10.4% over the same period last year. Superstore comp sales were up 4.6% but the Harry Potter book accounted for virtually all of this gain. The company reported a loss of .43 cents per share or .23 per share excluding non-operating charges. The street had been expecting .34cents a share on revenue of $916mm. In expectation of the results, which were released after the market closed the stock was down $.90.

"Progress is clearly being made at Borders Group as we continue to execute our strategic plan and are beginning to see improved performance," said Chief Executive Officer George Jones. "Harry Potter certainly gave us a big boost in sales across all businesses, yet even without it, we achieved positive same-stores sales results that are directly attributable to our focus on execution and more effective use of the Borders Rewards loyalty program to drive increased traffic to our stores. We have significantly more work to do, and we remain committed to staying on-track to deliver sales and earnings growth consistent with the long-term financial goals we set forth in our strategic plan."

Other items of note:

• 2nd Q net loss of $25.1mm versus $18.4 last year. On an operating basis the loss of $15.3mm ($.26/share) compares with $14.5mm ($.23/share) last year
• Gross margin increased by 1%
• SG&A increased .9% due to non-operating charges: legal settlement expenses, promo discounts, higher expenses for 'strategic initiatives'
• Debt net of cash was $662.9mm versus $476.7 in the same period last year
• Comp Superstore sales were up 4.6% with HP; 0.4% without HP
• Operating Income: On an operating basis superstores contributed $2.4mm in the quarter versus $10.4mm a year ago
• Walden comp sales were flat excluding the Harry effect. Jones dangerously suggested that the improvement versus the last seven quarters was likely to continue.
• Walden operating income was slightly better than last year which represents significantly better performance than the superstores.
• Non Operating items included $3.5mm to settle a legal case in CA, severance costs for execs, store closure and relocation costs and professional fees.
• The company also said it had adjusted some of its loan covenants to enable the sale of the international business and to potentially enable some refinancing options. The company also formally terminated the previously (surprising) announcement about seeking term financing of $150-200mm.

CNN

Press Release

GalleyCat Rants: We Are Reading Dammit

The recent report regarding reading habits provoked a lot of discussion - most of it pointless - but this related comment on GalleyCat is spot on. I also saw this Guardian article and continue to wonder why people who should know better continue to generalize and draw dopey conclusions.

22 hours in Las Vegas is either too long or too short depending on your view point but either way what on earth was John Freeman doing spending his possibly limited waking hours looking for a bookstore? In short, the strip is not all Vegas has too offer and perhaps if he spent less time at the pool and perhaps doing some real research he wouldn't have written the article at all.

Barnes & Noble's Potter Quarter (Updated)

B&N CEO Steve Riggio commented that “Record breaking sales from J.K. Rowling’s Harry Potter and the Deathly Hallows was the principal driver behind our comparable store sales growth in the quarter,” which grew 4.4% versus the same period last year. Comparable on-line sales grew 18%. Total store revenues grew 7.3% for the period. Negating the impressive results was the revenue impact without Harry: Store sales only grew 1% and online 7.3%.

Financial markets have been noting any softness in any large retailer's results over the past several weeks and while Harry was an important factor in B&N's results, the 1% gain is an important indicator that B&N continues to make the right moves in a challenging marketplace. It will be interesting to see how Borders reports on Monday. Attention may be focused on the Harry effect and commentators may seek to eliminate these sales as an anomaly. The Harry phenom is an unnatural occurrence but in the process B&N were able to sell 1.7mm copies - they got the consumers into the store and while details are sketchy these consumers did in fact buy other titles. Riggio said the title continues to sell well.

The company also said they are confident that they will achieve their stated financial goals for the year.

For the quarter operating income of $13mm was half the amount in the same quarter 2006. The margin was 1% versus 2% last year. For the six months, operating income was $5mm versus $41mm last year. The company's gross margin was lower by a full percentage point and selling and marketing expenses for the six months were $40mm. Both line items contributed to the margin erosion.

B&N was trading up on the day.

Press Release
8K

Update:
Some follow-up comments from the B&N conference call (Transcript from SeekingAlpha):

Riggio on the loyalty card and discounting:
We've got a strong balance sheet, good cash flow, and we thought it was the right time to take a piece of our profits and put it in the hands of the customers, and we're very pleased with the results since the launch last year. Customers love the card. They like the extra discount and we're seeing extra growth

Klipper on store growth:
Every year we say 30 to 40 stores, and it's really depending on the timing and when the development happens across America. We could clearly turn that up and open more stores if we so choose, but our criteria is extremely high. We're opening best location, not best available location, as we have in the last seven or eight years. The opening pace, we're very comfortable with it. I think there's a lot of business out there.

Riggio on Potter 'attachment'
The attachment rate is the same as it always was. It's a little more difficult to determine, frankly, because people spend two, three, four hours in the store and buy product and check out. Then at midnight, all they want is the one book. So our sense of it was that it drove sales in some categories more than others, I think especially in our cafe. But it's all behind us now. We think it was great for business, and we don't think it's over, because the book continues to sell well. All the other volumes are really doing well.

Riggio on the publishing year
I guess the thing that we try to point out most often is that while the business tends not to have lots of peaks other than Harry Potter, it also doesn't have many valleys and it's a relatively stable industry. On balance, we think this year was a bit better in the publishing season than last year, but so much is dependent on the second half of the year. September looks like a good release schedule, but we'll have to see what the customers say about all these books.

Toulantis on the on-line growth:
No. I think that while it's true if you exclude the actual sales from the Harry Potter book itself, the comparable online sales increase of 7.3% is obviously higher than recent trends, but the effect of the Harry Potter sale was to drive perhaps more interest, more traffic, and I think that drove to some more conversion. So we saw more traffic and more conversion in the quarter Again, I think a lot of it was around Harry Potter, so people coming to buy that book also when they come online, were buying some additional items.

Agatha Christie's Poirot in Comics

The BBC reports (and has some pictures) from four new Agatha Christie titles that are being reproduced as comics. Sounds like a new and innovative way to bring attention to old mystery classics. I had a great deal of difficulty finding these titles on any web site but eventually was able to find them on Amazon.co.uk by using the name of the editor. Here is the list.

Apparently there is a Christie festival coming up in September.

Update: IHT covers the same story this morning. And I am sure the others will catch up later in the day.

Headline Guaranteed to Get Attention

It is the silly season and there is no less evidence of that in a report from the New York Post's page6 which noted that a new title from S&S will document the required etiquette for orgies and sex games.

"Be accompanied by a trusted boyfriend, girlfriend or friend; bring protection," she advises about orgies. "As a general rule, it is the uglier men who perform the best, simply because they have more to prove." She also recommends three New York City sex clubs.

(I don't have the addresses).

Curiously, in the title description on Amazon.com there is no mention of the above chapter.

Twenty-first-century women are called upon to perform any manner of tasks, recall even the most random bits of information, and all the while carry on a charming conversation. Thankfully, from historian and British television personality Francesca Beauman comes this indispensable and authoritative survival guide that will allow women to tackle any problem and work any party with ease, style, and grace. Everything But the Kitchen Sink is a compendium of delightfully witty facts, figures, diagrams, lists, charts, quotes, and practical advice. True, you may not ever need to know how to roast a hedgehog, treat a shark bite, or say "No, thank you. Please leave me alone" in Russian. But isn't it good to know you can?

Looks like anyone buying this book is in for a surprise.

Poll: Those who never attend church read twice as much.

According to an associated press IPOS survey those who consider themselves liberals read more - but only slightly. The bible and other religious books were the largest category with 2/3rd responding that they read this type of content. Further details from Boston.com:

There was even some political variety evident, with Democrats and liberals typically reading slightly more books than Republicans and conservatives. The Bible and religious works were read by two-thirds in the survey, more than all other categories. Popular fiction, histories, biographies and mysteries were all cited by about half, while one in five read romance novels. Every other genre -- including politics, poetry and classical literature -- were named by fewer than five percent of readers. More women than men read every major category of books except for history and biography. Industry experts said that confirms their observation that men tend to prefer nonfiction.

As the title of this post suggests, the poll also confirmed that organized religion is the enemy of publishers. I’m not sure how this jells with the above noted religion readers, but those who responded that they never attended religious services read twice as much compared with those who attended frequently.

Those likeliest to read religious books included older and married women, lower earners, minorities, lesser educated people, Southerners, rural residents, Republicans and conservatives.

Twenty five percent of the respondents said they had not read a book in the past year. One respondent would rather sit in his pool (evidently not one of the people Kassia vacations with) than read. While the article describes Americans has hardly ravenous readers, I wonder who we are compared with. Personally, I am well on my way to reading 15+ books this year and I am rapidly clearing out my inventory.

(Not sure what Pat Schroeder is on about...)

Trip Advisor Buys Facebook Application

I'm not much of a joiner but I grudgingly set up a Facebook page when I got several invites and I am still not convinced it is up to much. All the cool kids are doing it so why not me? Facebook is an open application platform (and if I were remotely technical this would really excite me), which enables a multitude of developers to build mini applications that Facebook users can 'load' to their page and use. These applications cover any number of uses and I have loaded one for books, questions and a travel application named 'where I've been'.

Here is my 'map':



















According to the NYT the developer of this application is now $3.0mm richer via Trip Advisor. Trip Advisor is itself a fun site to browse if you are looking to find out what other travelers have said about airlines, hotels, destinations that you may be thinking about visiting. What they will do with this application is any one's guess. Perhaps I am cynical but the application as it exists is akin to notches on a bedstead - more bragging rights perhaps than anything useful.

Harlequin is Torstar's Waking Beauty

The McClatchy’s, the Chandler’s, the Bancroft’s: Is the family that owns Canada’s largest newspaper by circulation The Toronto Star the next to evacuate the newspaper business? Cash cows with seeming locked-in revenue growth for decades, these businesses provided expansive income for the growing web of family members over the years, and they also enabled particular social and political agendas to comfort their sense of responsibility.

Revenues have stagnated, and perhaps some bad decisions can’t be so readily ignored nor radical changes in business models experimented with since revenue growth is no longer a luxury they can take for granted. Younger members of the family don’t share a cohesive sense of mission and grow skittish at any suggestion the nest egg some may have yet to get may be waning. Quarter by quarter management runs out of ways to describe their ‘difficult’ business environment as circulation drops, display ads decrease and classified ads migrate to craigslist and monster.com.

Torstar is controlled by five families who own ‘A’ shares in the Torstar two share structure. 'A' shares hold all voting rights. B shares have none. Only a member of one of the five families can own A shares meaning that if A shares are sold and are purchased by someone other than a family member they become B shares with no voting rights. Torstar owns The Toronto Star, a stable of community newspapers in Ontario, a percentage in a Canadian broadcaster and the publisher Harlequin. The company is not reported to be for sale even though there has been a natural increase in interest in the company given the churn in newspaper properties south of the border.

On their earnings call last week, the company warned against investors believing the company could sell-up: "I would never counsel someone to acquire Torstar shares on the assumption that there will be a transformational transaction with respect to the ownership of the company," Torstar chief executive officer Rob Prichard said while discussing the second quarter.

Nevertheless, rumors circulate within the company especially as a result of an investment by Fairfax Financial Holdings Ltd. which bought 5.4 million non-voting shares earlier this year. Fairfax owns over 18% of class B shares but has said this represents a long term investment and they are not looking to influence the board. Torstar shares have traded in the low C$20 range but some analysts have suggested it could be valued at C$30+ per share.

Harlequin was founded in 1949 as a general trade publisher and morphed into the romance publisher we know today by acquiring publishing rights to Mills and Boone titles during the 1950s. As the popularity of these titles grew they began publishing their own romance titles and eventually acquired Mills and Boone. Torstar purchased 52% of the company in 1975 and until recently Harlequin has been a strong financial performer for Torstar.

In my view, Harlequin is a lost jewel of the publishing industry in the sense that no major publisher has set its sights on acquiring the company. Some have attempted it and difficulties exist particularly with the Canadian ownership requirements that preclude a foreign company from buying a Canadian company; however, with the recent acquisition of Thomson Learning which was (is) also a Canadian company a deal could be constructed that satisfies the legal requirements. Unfortunately, from a Torstar perspective selling Harlequin may not be in their interests because as the Harlequin business improves – and recent results indicate they will – then Harlequin may be responsible for a significant amount of the earnings growth the company can be assured of as their core newspaper business continues to falter.

On projected 2007 revenues of CN$475mm and projected operating profit of CN$65mm the company could be worth CN$500mm. They could generate a higher multiple since they have been able to push margins over 18%. The current Torstar market cap is C$1.3billion which might indicate that the current share price does not reflect a realistic valuation for Harlequin (or the valuation on the newspaper is depressing the share price which seems more likely). It remains to be seen if there is any action here, but on a positive note, Harlequin seems to be improving financially and broadening their revenue base to include the Internet and e-book publishing.

Some of the Torstar family members may be casting about for their own ‘Murdoch-like’ acquirer. Coincidentally, Independent News and Media which owns newspapers in the UK, Ireland, New Zealand and elsewhere could be a candidate. The company is controlled by Sir Anthony O’Reilly who could be more than interested in adding The Toronto Star to the portfolio.