al-Mutanabi Street Book Market Re-opens

The NYT has a short piece on the re-opening of the al-Mutanabi Street book market in Baghdad. The market had been closed since the bombing and an imposed curfew. (I guess most curfews are imposed). From the article:

Mr. Shatry, like many Iraqis, also sought solace in words and the remembrance of sufferings overcome. He had begun his day with a group poetry reading on Mutanabi Street, a humble reopening for a market that has survived the Mongol hordes, Saddam Hussein and many other attackers. Around noon, between the deafening thwack of American military helicopter propellers overhead — twice in an hour — he recited the poem he read earlier, written by Ibn al-Utri.

Here is what I wrote in April:

al-Mutanabi Street: Baghdad Diary
I had not had the chance until recently to return to the diary of Dr. Saad Eskande, Director of the Iraq National Library and Archive . It makes pretty horrific reading and this passage from March 5th describes the scene of the car bomb attack on the well known al-Mutanabi Street Book market. The diary is hosted by the British Library and is well worth reading.

As we were talking, a huge explosion shook the INLA's building around 11.35. We, the three of us, ran to the nearest window, and we saw a big and thick grey smoke rising from the direction of al-Mutanabi Street, which is less than 500 meter away from the INLA. I learnt later that the explosion was a result of a car bomb attack. Tens of thousands of papers were flying high, as if the sky was raining books, tears and blood. The view was surreal. Some of the papers were burning in the sky. Many burning pieces of papers fell on the INLA's building. Al-Mutanabi Street is named after one of the greatest Arab poets, who lived in Iraq in the middle ages. The Street is one of well-known areas of Baghdad and where many publishing houses, printing companies and bookstores have their main offices and storages. Its old afes are the most favorite place for the impoverished intellectuals, who get their inspirations and ideas form this very old quarter of Baghdad. The Street is also amous for its Friday's book market, where secondhand, new and rear books are sold and purchased. The INLA purchases about 95% of new publications from al-Mutanabi Street. I also buy my own books from the same street. It was extremely sad to learn that a number of the publishers and book sellers, whom we knew very well, were among the dead, including Mr. Adnan, who was supposed to deliver a onsignment of new publications to the INLA. According to an early estimation, more than 30 people were killed and 100 more injured. Four brothers were killed in their office.

.epub: What it Means for Publishers

Nick Bogarty, who has been Executive Director of the International Digital Publishing Federation for the last five years sheds some additional light on the IDPF's recent announcement concerning the .epub format specification.

(Nick recently announced that he is leaving IDPF for a position with Adobe and in fact today is his last day and he is leaving on a high note).

This email was sent to me as well as a number of other interested industry types and Nick kindly allowed me to re-publish it here.

I received emails and calls with regard to the completion of the .epub format standard from the IDPF. I hope the below is somewhat helpful for clarification on what .epub means for the industry. The main question asked in the various correspondence was, "Does this mean that publishers can stop doing multiple conversions?".

For reflowable eBooks, the short answer is "yes". (I say "reflowable" because publishers will still do PDF for fixed-format books if that's what they want).

The long answer is the following:

Software companies who implement .epub handles files in one of two ways:

#1 - The software imports .epub and converts it to an end-user proprietary format. There are a bunch of reasons why a company might do this, the main one being they want their format to do things that aren't covered or possible in .epub.

#2 - The software simply reads (or renders) .epub files which a user can use, similar to how your ipod "reads" MP3 files.

There are many software companies who have publicly expressed support for the specifications. Some have already implemented it, some have implemented parts of it and are working on the rest, and some have said they will but haven't yet. I'm not totally in tune with everyone's development plans and release dates (some understandably don't want anyone to know), but this is roughly what I gather:

• Adobe Systems - full support for .epub in current release under #2
• eBook Technologies - full support for .epub in current release under #2
• OSoft - full support for .epub in current release under #2
• SONY - full support for .epub in next release (don't know which category, I assume #2)
• VitalSource - full support for .epub in current release under #1 - taking .epub as an input file from publishers in their repository
• LibreDigital - full support for .epub in current release under #1 - taking .epub as an input file from publishers in their repository
• iRex Technologies - future support for .epub (not sure which way they'll implement...assume #2)
• MobiPocket/Amazon - future support for .epub under Category #1 (I think) - I have no knowledge of Kindle development plans, hopefully they'll do this with the Kindle too - see: http://www.mobipocket.com/forum/viewtopic.php?t=6918. Some of .epub has already been implemented in Mobi 6.0.

Notable "I don't knows" include Microsoft and eReader (former Palm Digital Media), but .epub is an open, free and patent-unencumbered standard and I hope all software companies entering the market use .epub as their file format.

My advice to publishers would be to begin to work with their conversion partners to fully understand .epub and how .epub can be effectively produced. I would also have conversations with my distribution and software partners about their support for .epub. Frankly, since there are so many software companies already on board or soon to be on board with .epub, I think this is an excellent opportunity for publishers to begin to TELL their partners and vendors (or set some not too distant future date) that .epub will be the only file format for reflowable eBooks that they will produce and send through distribution. Obviously this is going to reduce conversion costs and, hopefully, increase selection for consumers. Something that time and again they say they want.

.epub provides everything publishers need (and many many software companies will support them) to demand that multiple conversions are a thing of the past.

-Nick

P.S. I thought this was a good write-up on .epub - here

Sylvan Learning and Random House Collaborate

Sylvan Learning centers will publish at least eight titles with the launch of a publishing collaboration with RH. Random House will manage an imprint Sylvan Learning Books, a newly created line of trade paperbacks and educational kits branded with the Sylvan Learning imprimatur. It is announced the first titles will be available in September 2008 and sold through booksellers and other retailers throughout North America. From the press release:

Sylvan Learning Books will launch with at least eight titles, each focusing on the elementary grades. The program will expand to offer titles aimed at students of all ages, as well as advice and tips for parents, shortly thereafter. An extension and expansion of Sylvan’s popular personalized tutoring programs, Sylvan Learning Books will provide students of all grade and skill levels with encouragement and coursework reinforcement to help boost classroom performance.

Sylvan was recently privatized and is undergoing a reorganization of its product lines and storefronts. Sylvan is known as a the leading brand in supplemental K-12 education and this imprint is both a natural brand extension and likely to gain rapid traction in the market place.

Chicken with Pears

Frequent readers of the NYT will know of Mark Bittman who writes a weekly column on Thursdays named the Minimalist. Each column describes a recipe that on the surface may seem complicated but is simplified significantly by Bittman. (Last week tomato paella). He also has several cookbooks all of which are quite good. Regrettably we can't afford an in house Chef here at PND and it being Thursday I thought I would nevertheless present the following video. Chris Walken the minimalist chef.

http://www.youtube.com/watch?v=43VjLCRqKNk

Pearson Selling Newspaper Interest

Pearson has been in the process of selling its French newspaper Les Echos for a few months now (Guardian) and recently Reuters reported that Pearson is also in negotiations to sell their 50% interest in a German version of the Financial Times. This is consistent with their reasoning expressed to justify the Les Echos deal which is that they want to concentrate on English language newspaper publishing. There has been significant speculation regarding their newspaper holdings in the wake of the Dow Jones/Newscorp deal particularly the potential impact on the FT. Newscorp has made it clear they want to overtake the FT in the non-us markets. Numerous analysts have suggested the company should sell the FT because the competition is expected to be intense and it looks like the FT has overcome some of its revenue and print legacy issues that analysts were focused on over the past two years.

Regardless, there is no indication - actually the opposite - that the company is about to ditch the FT. My guess is they are going to take on the challenge of the Newscorp/WSJ combination and they may well do better than analyst anticipate.

Hachette (Lagardere) Reports First Half Results

Lagardere is a €6.0billion company but the books division is big by our standards nevertheless. Their results have improved over the first quarter where there was some timing and softness in some markets. The US business continues to do well versus the prior period. Highlights from the press release:

• Lagardère Publishing (formerly the Books division) – The 2007 first-half revenue performance (€897m, up by 10.6% on a reported basis and by 1.7% on a like-for-like basis) was in line with our expectations. Like-for-like growth was driven by Hachette Book Group in the United States and by educational publishing in France.
• Recurring EBIT before associates up by 5.5% at €71m. The contributions from Education and Larousse in France, from Part-Works, and from Hachette Book Group in the United States (consolidated from April 2006) more than offset the drop in recurring EBIT from Literature in France and Orion in the United Kingdom.

Wiley Reports First Quarter

Wiley reported first quarter revenue of $389 million an increase of 48% from $263 million in the previous year. The revenue growth included $116 million from Blackwell Publishing Ltd. (Blackwell), which Wiley acquired on February 2, 2007. Revenue excluding Blackwell increased 3% over last year's strong first quarter to $273 million, or 2% excluding favorable foreign exchange. Earnings per diluted share for the first quarter was $0.68 compared to $0.38 in the same period of fiscal year 2007. Earnings per diluted share excluding Blackwell and the aforementioned tax benefit was $0.37, flat with last year's strong first quarter, after adjusting for unfavorable foreign exchange

"The Blackwell acquisition exceeded our expectations in the first quarter. The integration process is proceeding smoothly and the business is performing well. Our global Professional /Trade business reported solid results. Revenue for global Scientific, Technical and Medical, excluding Blackwell, was up 4% from the prior year, including the favorable effect of foreign exchange. After a strong performance in fiscal year 2007, Higher Education reported soft sales in the first quarter, partially due to some conservative fall semester ordering by college bookstores," said William J. Pesce, Wiley's President and Chief Executive Officer. "Based on first quarter results and market conditions, we continue to anticipate revenue growth in the mid-to-high single digits and EPS growth in the low-double digits, excluding the Blackwell acquisition and the aforementioned tax benefit."

Other highlights:

• Professional/Trade (P/T): U.S. revenue advanced 7% to $90 million. First quarter performance led by sales in technology, finance and architecture. Globally, P/T revenue increased 6%
• Scientific, Technical, and Medical (STM): STM revenue of $56 million was flat versus last year due to the timing of journal, book and backfile releases
• U.S. Higher Education revenue of $44 million declined $4 million from last year’s strong first quarter. The negative comparison was also compounded by conservative college bookstores sales for the fall semester
• Wiley Europe’s revenue of $76 million was up 5% for first quarter all but 1% due to favorable foreign exchange
• Blackwell revenue and operating income for the first quarter fiscal year 2008 were $116 million and $15 million, respectively. Included in these results is $6 million of amortization charges for intangible assets related to the acquisition
• Wiley’s revenue in Asia, Australia, and Canada advanced 14% to $32 million, or 9% excluding favorable foreign currency. Strong sales across all businesses in Asia, Higher Education sales in Australia, and P/T results in Canada contributed to the first quarter growth. Direct contribution to profit as a percent of revenue increased slightly.
• India was a significant contributor to first quarter results in Asia. Through the acquisition of Wiley Dreamtech (India) Private Ltd. in fiscal year 2006, the Company established direct access to the retail higher education market in India

Status of the Blackwell Acquisition:

• During the quarter, the merger of Wiley’s STM business and Blackwell continued with particular emphasis on the integration of systems, processes, policies and procedures
• Since July 1st, all Blackwell books and reference works are being sold and promoted by Wiley’s sales forces throughout the Asia/Pacific and Europe, Middle East and Africa regions. We have also consolidated the institutional and corporate sales forces
• Critical decisions concerning publishing technology systems have been made and we are in the process of harmonizing financial management systems and reporting, content management, customer service and fulfillment and customer databases
• The company will shortly announce a plan and timeline for the integration of the Wiley and Blackwell online journals platforms

Peter Quandt Out at Haights Cross

After reporting increased revenues and the successful completion of a recapitalization, Haights Cross appears to have dismissed its chairman, CEO and President Peter Quandt. This is all the terse press release had to say on his contribution:

“The Company appreciates Peter’s many contributions to the company and wish him well,” Mr. Crecca said. “The Board of Directors looks forward to working with Paul as we move forward with a strategic review of the Haights Cross companies,” said Gene Davis, Chairman of the Board.

Quandt had been Chairman, CEO and President since founding HCC in 1997. His position will be filled by Davis (above) and Paul J. Crecca, the Company’s current Executive Vice President and Chief Financial Officer, who will assume the role of Interim-Chief Executive Officer and Interim-President.

Last week the company had announced six month results that showed a 2.2% top line increase to $110mm. The company also had a $20million turn-around on profit to $11million. All segments showed improvement except k-12 supplemental which was down 22%. This latter segment contributed to the flat top line revenue growth. Also announced was the recapitalization that saw the combination of class A and B shares.

In the press release announcing the results and the recap was this statement:

Also on August 10, 2007, upon the closing of the recapitalization, HCC and certain former Series B holders entered into a release agreement, pursuant to which, among other things, such holders would dismiss a pending legal action against HCC filed by certain former Series B holders, in which they have asserted claims under 8 Del. Code. § 220 and under a certain Investors Agreement, dated December 10, 1999, seeking access to HCC’s books and records.

As part of the recap a six member Board of Directors composed of Peter Quandt and five persons designated by various former Series B and Series A holders was (to be) formed and it looks like this group had at least one significant meeting.

Reed Elsevier Try Ad Supported Medical Information

Reed Elsevier has launched an experimental web site for medical practitioners that will be wholly supported by advertising revenues. The company is betting that oncologystat will encourage as many as 150,000 targeted doctors to sign-up and browse the latest articles from several Elsevier titles. As reported in the New York Times;

Mainstream publishers have wrestled for years with the question of how to charge for online content in a way that neither alienates potential readers nor cannibalizes their print properties. So far, few definitive answers have emerged. Reed Elsevier, which is based in London, is taking a risk that its readers will drop their paid subscriptions and switch allegiance to the new Web site, which will offer searches and full texts of the same content from the moment of publication.

Company executives believe that advertisers are chopping at the bit to get direct access to practitioners via subject specific web sites like (they hope) oncologystat. In support of this, the company sees advertising growing at double digit rates and could be over $1bill in several years. Historically, these journals did not contain advertising and subscribers pay very high subscription fees to gain access to the content and information. Elsevier is betting that the substitution that will occur (advertising revenues for subscription fees) will enable journal revenues to grow over time. Questions of bias are likely to come up assuming this experiment is successful; however, delineating the gap between editorial content and advertising has been achieved for years in the magazine world and is unlikely to become a major issue. No doubt the company has established policies in this regard.

Further from the NYT article an interesting last point,

Getting the relevant answers promptly may be more important to doctors than not having to pay for them, said Elizabeth W. Boehm, a principal analyst at Forrester Research. “Anything that is going to save the physician time, without losing the certainty that they have seen everything that they need to see, is potentially valuable,” she said. “The question is, can they give them the information in a way that is more valuable, more easily searchable.”

Giving practitioners access to reams of valuable and potentially useful information is of little use if they can't locate at the point of need what they are looking for. As Reed has done with legal in developing a platform approach to legal research and usability they are likely to adopt in medical information and this may be a first step in that direction. Medical information is available from other sources but integrating this information (articles) into a solution that is fast, relevant and deep provides real value for users. Workflow integration is a powerful thing and while publishers have been challenged in migrating print revenues to web, everyone recognises the inherent potential benefits for users in doing so. If this advertising model shows even a glimmer of the potential they expect then there will be a rapid acceleration of similar products.

Who Will Play Jane?

What caught my eye about this story was that the home of a fictional TV character played by Parker Posey is a 'brownstone' in Hoboken. Her character has a 'cushy job' as a children's editor at Harpercollins. Are there such things because believe me I've looked and I keep coming up empty handed. The reality of the real estate market is such that the ability for a single mid-level editor to own a brownstone in Hoboken transcends fiction just like the outrageously large NYC apartment seen on Friends. Actually, there are a lot of publishing expats living in Hoboken and I recently found out a head of a large trade house moved over from Manhattan recently. So we are on the map and perhaps Parker can contribute to the continued increase in real estate prices. No word on who will play the Jane Friedman character (maybe she will be a walk on) but of all publishing houses it is not surprising that Harpercollins would be the named house in the show.

Hoboken is the global corporate headquarters location for Personanondata and Information Media Partners.

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.