Thoughts on a Publishing Manifesto

Sara Lloyd of The Digitalist has a series on the future of publishing in the 21st century. The series sets some of publisher's challenges into context. She summarizes the first installment as follows:

The locked-in perception of the book as a unit or a product has also led to digital ‘strategies’ which largely consist of the digitisation of existing print texts in order to create eBooks. This in turn has led to an obsessive focus on the reading device and a perception that the emergence of a ‘killer device’ will be a key driver in unlocking a digital future for books in the way that the iPod was, say, for music. This is a flawed perspective in a number of ways, not least because it fails to recognise the enormous amount of online or digital ‘reading’ that already takes place on non-book-specific devices such as desktop PCs, laptops, PDAs and mobiles, but also because it fails to recognise that the very nature of books and reading is changing and will continue to change substantially. What is absolutely clear is that publishers need to become enablers for reading and its associated processes (discussion; research; note-taking; writing; reference following) to take place across a multitude of platforms and throughout all the varying modes of a readers’ activities and lifestyle.

Big BullyBoy Amazon

UK's Publishing News has a report on UK publishers increasing concern over Amazon's bullying tactics. From their report:

PUBLISHERS ARE REACTING angrily to what one senior executive described as a “crude” attempt by Amazon to increase its discount. “It is going from publisher to publisher with extortionate demands, and if it does manage to get a figure from one publisher it is then going back to the first house and saying x has agreed to such-and-such.”

Bloomsbury rec­ently had a terms dispute with the bookseller which resulted in Amazon removing the 'Buy Now' button from certain Bloomsbury titles on its site. But one CEO commented: “We are prepared to lose a year's sales with Amazon. They may try many things but we are not moving. We have been foolish enough to give in and grant generous terms in the past, but we're not giving any more.”

Book Launch 2.0

This is funny video about book promotion in the web 2.0 age. Sadly, the 1.0 world wasn't that great but it's only got worse.

Tip of the hat to Brantley

AAP Supports .ePub Standard

Last week (somewhat out of the blue) the AAP announced that on behalf of their members they were supporting the .ePub standard for electronic [book] texts. On the surface, this is a positive reflection of two industry groups working together in support of industry standards however, the commercial results of this letter of support will be minimal in the industry. Certainly, the largest US publishers who are the important members of AAP would need no encouragement to use the .ePub standard (and they are) if there were commercial advantage in doing so. The real background issue to this announcement is Amazon.com which typical of the company have spurned the standard approach and are not using the .ePub standard with the Kindle.

Adam Hodgkin at Exact Editions reports on the same announcement and captures the essence perfectly:

It is a mostly waffly and empty letter and will not carry weight in the tussle between Google (which should have minimal need for the EPUB format) and Amazon which is broadly on the books-are-a-file side of the fence and ought to be using EPUB for its Kindle, but is not. Whether digital books are citeable and searchable, page-fixed, digital resources; or electronic texts within a Kindle/Sony/Iliad reader will be clearer in a year or two. I doubt that it will be settled by October of this year.

Publishing In The Digital Age

A podcast is now available for a panel meeting I participated in. I posted the presentation that accompanies the panel discussion (here) and this new link is to the podcast. My session is in part four.

Informa In Play?

The Times is reporting that private equity groups including Carlyle and Apax are looking closely at Informa although no official bid has been made for the public company. From the article:

Carlyle and Apax are among those considering a bid for the group, which has a arket capitalisation of £1.64billion. No approaches are understood to have been made. Informa's shares have fallen almost 40 per cent since it announced the acquisition of Datamonitor for £502million in May last year amid widespread de-rating of Media stocks amid fears of an economic slowdown. Some analysts have raised concerns about Informa being hit by its high debt levels after the Datamonitor acquisition and partial dependence on the financial services sector.

Earlier this year, Informa has announced that David Gilbertson would resign as chief executive and from the board to take up the role of CEO at EMAP. EMAP has itself been purchased by a private equity group and the move by Gilbertson was a surprise. Together with now current CEO Peter Rigby they had built Informa into a the largest provider of Trade Shows in the world and a significant professional publishing company.

Tom Waits Press Conference

Say hi to your mother...

Is the World Watching Random House?

The FT speculates with the aggrandising title, All Eyes on Random that we are all on the edges of our seats wondering who will be the next CEO of Random House. The paper suggests that RH is set to be managed by someone outside the industry either from the services unit Arvato or the Direct Group. From the article:

People familiar with Random House’s parent Bertelsmann said that the German media group had decided against promoting Random House UK head Gail Rebuck or German chief Joerg Pfuhl in order to bring a fresh pair of eyes to the
business. In his first high-profile personnel decision, Bertelsmann chief executive Hartmut Ostrowski is expected to opt for a Germany-based executive from either media services division Arvato, the unit he once ran, or book-clubs unit Direct Group.

Bertelsmann is famous for placing relatively young executives in positions of high responsibility and the paper goes on to mention one Marcus Dohle a 39 year old executive at Arvato.

Noting how Arvato under Ostrowski was able to expand the size of their competitive marketplace by expanding their business offering, the paper suggests that is how Ostrowski would like Random House to think. Other publishers in the professional and information segments have been doing this successfully for a number of years, but the strategy has yet to be proven in trade. Publishers such as Elsevier and West now compete in markets that are an order of magnitude larger than what could be considered traditional publishing. I believe something of the same model can be developed for trade and all of the major trade publishers will be thinking the same thing. Time will tell which publisher gets there first.


And there is more from New York Magazine:

A stronger personality might have disciplined Random, but there’s a good case to be made that the conglomerate was a victim of its own strategy. Size gave it strength against bookstores, but big-box outlets and Amazon provide sales velocity now. Random, and the rest of the industry, has little or no leverage with them. Were they really going to keep Grisham out of Costco? What would they get in return?
Meanwhile, Random’s size became a liability. Even with megahits like Bill Clinton’s memoir and The Da Vinci Code, the company’s annual revenue has been stagnant. To maintain its 20 percent share, the company has to publish around 2,000 titles, while more-efficient rivals like Hachette do under 500 titles for about 10 percent of the market. It’s a quarter of the work for half as much market share.

Personally, I find the construct of this article a little silly. It ends with the suggestion that Olson saw himself as 'last of the publishing moguls' - did he? I'm not too sure that one holds up.

Champions Again

Manchester United retained their Premier League title this afternoon with a tense win away to Wigan. Away to Wigan meant that most of the ground was filled with United supporters some of whom were paying $1000 a ticket to get into the ground. We are now one win away from an impressive double. The Champions league final against Chelsea is a week on Wednesday. The season didn't start so hot and the team went from this one off the bottom:






to the top having pushed aside the hated Arse but almost letting in Chelsea by the back door. You may wonder why I have this screen shot from the start of the season but I had faith the team would win.

I hear red is still the prevailing color choice in Moscow.

Bridge Tagged With ISBN

When I first became involved with ISBN's I heard and received a lot of grief about ISBN's applied to non-book items like rulers and teddy bears and so involved did I become with the ISBN agency that I sometimes joked that I would apply for my own number and have it tatooed on the back of my neck. Happily, that never happened. Tagging a bridge with an ISBN is something that few of us would have anticipated. This is doubly concerning because this is a clear re-use of an existing number which is a big no-no in ISBN land. From the Torontoist:

It seems that some Toronto taggers are no longer content to scrawl their own names on blank concrete canvases around the city and are trying instead to make more of a cultural statement. Last year, references to composer Gustav Mahler popped up in several places around town. This year, a more cryptic stencil has appeared on the Humber Bay Arch Bridge, boldly proclaiming "ISBN 486-28495-6" for all to see and ponder. This International Standard Book Number turns out to be a paperback edition of Henry David Thoreau's Walden; Or, Life in the Woods.

Bertelsmann Reports Improved Results

Random House corporate parent Bertelsmann reported improved quarterly operating profit performance and remains optimistic about the remainder of the year. From their press release:

Bertelsmann, the international media company, today reported strong first quarter fiscal 2008 results. First-quarter operating profits (Operating EBIT) were up by 9.6 percent compared with the previous year. Operating EBIT for the period under review amounted to €217 million (Q1/2007: €198 million). These developments were driven by the continuing positive performance of the major core businesses. Group net income improved to €35 million (Q1/2007: €-70 million). Meanwhile, revenues declined by 3.9 percent year-over-year to €4.2 billion. Adjusted for portfolio changes and foreign-exchange effects, revenue decreased 1.7 percent year-over-year. The revenue performance reflected negative foreign-exchange effects due to the Euro’s strength relative to the U.S. dollar and British pound. Revenues were also impacted by declines in sales of physical recordings and revenues at Direct Group in North America. Adjusted for portfolio changes and foreign-exchange effects, Bertelsmann expects a moderate rise in revenues for 2008. The Company expects operating results for 2008 will be on par or slightly above the high levels seen in 2007. Group net income will be well above 2007 due to fewer special items and lower interest expenditure.

The company announced earlier this month that they have hired Morgan Stanley to sell the Direct Business.

Bertelsmann investor presentation reflecting the full year results from all divisions. Here. (RH revenue of $1.8bill and op income $172mm for 2007).

Harpercollins Reports Static Results. Releases Authonomy.com

Harpercollins produced revenues of $302mm in their 3rd quarter ended March 31st which compared favorably with the same period last year ($291mm). For the nine months, revenues continue to lag the performance in 2007. 2008 YTD revenues of $1,038mm are marginally lower by $14mm.

Operating income as described in NewsCorp's press release was as follows:

HarperCollins reported third quarter operating income of $29 million, in-line with the same period a year ago. The current quarter included strong sales of Naughty Neighbor by Janet Evanovich, Stop Whining, Start Living by Dr. Laura Schlessinger, Lady Killer by Lisa Scottoline, Fancy Nancy, Bonjour Butterfly by Jane O.Connor and The Chronicles of Narnia: Prince Caspian by C.S. Lewis. During the quarter, HarperCollins had 54 books on The New York Times bestseller list, including 4 titles that reached the #1 spot.

Again, no mention of the performance of Harpercollins on the earnings call.

On another note, Harpercollins UK announced last year that they were establishing a site for authors which they named authonomy. The site is now in private beta and is covered by fellow traveller James Bridle at Booktwo.org.

The real challenge, of course, is to persuade wannabe writers to post their work at all - in my own personal experience, unpublished writers are terrified of their work being ’stolen’, enough to be suspicious of publishers themselves, let alone your average web surfer. The Front List, a previous attempt at a “YouTube for books”/”crowdsourcing the slushfile”-type site, solved this by hiding everything from non-members; one approach certainly, but not one likely to bring in the crowds.

James is also an author.

Amazon The CD Manufacturer

An article in Information Week (I'm more likely to read Cosmo) bubbled up in my alerts this week about Amazon working with Sony BMG and EMI to bring 'out of print' recordings back into circulation. From the article,

Amazon, Sony BMG, and EMI Music said that they will make hundreds of out-of-print albums available on Amazon's Web site through CreateSpace's Disc on demand service. Some of the titles that have been restored to availability include Hatari Soundtrack by Henry Mancini, Earthquake Weather by Joe Strummer, Motorcade of Generosity by Cake, Telepathy by Bill Stewart, Foreign Intrigue by Tony Williams, and Carryin' On by Grant Green. A few of the recordings being made available through Disc on Demand are new releases rather than reissues, such as the upcoming title in KCRW's Sounds Eclectic series. The arrival of brand-name, major-label content should enhance the credibility of CreateSpace's media on-demand service, which has yet to shake of the stigma associated with self-publishing. CreateSpace was born last August. It used to be called CustomFlix, which Amazon acquired in July 2005.

Just another example of how Amazon is willing to move up and down the supply chain. Interestingly, the author of the article does note the controversy around the BookSurge situation but perhaps the more interesting point is about how Amazon will use their own demand analysis to determine which recordings to produce. Perhaps not so obvious is the impact on all the Amazon affiliates who have businesses supplying rare and hard to find recordings. Are they doomed?

Nielsen BookData NZ Sets Milestone

Good news from New Zealand, all nine New Zealand booksellers voted in Nielsen BookData's NZ Booksellers Choice Award for book of the year. As they note, "For the first time in the history of the Nielsen BookData New Zealand Booksellers' Choice Award, several titles received precisely the same number of nominations, making it impossible to create a shortlist of four titles." The seeming statistical impossibility was left unexplained by the data aggregator/market researcher. As a solution, the company decided to create a "long short list" of possible winners. The list amounts to eight titles and the sheer enormity of the task required of Booksellers to make the actual selection is likely to induce rioting.

In fairness, here is the list:

- A Nest of singing Birds: One Hundred Years of the New Zealand School Journal by Gregory O'Brien, published by Learning Media
- Bill Hammond: Jingle Jangle Morning by Jennifer Hay, published by the Christchurch Art Gallery
- Edwin and Matilda: An Unlikely Love Story by Laurence Fearnley, published by Penguin Books NZ Ltd
- Mau Moko: The World of Maori Moko by Ngahuia Te Awekotuku, published by Penguin Books NZ Ltd
- New New Zealand Houses by Patrick Reynolds and John Walsh, published by Random House New Zealand Ltd
- New Zealand's Wilderness Heritage by Les Molloy and Craig Potton, published by Craig Potton Publishing
- Ribbons of Grace by Maxine Alterio, published by Penguin Books NZ Ltd
- Soundtrack: 118 Great New Zealand Albums by Grant Smithies, published by Craig Potton Publishing
- The Road to Castle Hill by Christine Fernyhough with Louise Callan, published by Random House New Zealand Ltd

(At least they are books and not rulers - which is an inside joke that only my past colleagues will get).

Shatzkin Speeches Posted

Mike Shatzkin informs me he has just posted on his website four talks delivered this year (three of them somewhat belatedly). Mike noted, "There is definitely a good deal of repetition here, but there is also a distinct slant to each piece. For those of you who are not gluttons for punishment, I'd suggest the one, delivered on Wednesday, May 7, 2008 in Copenhagen. The one titled The End of General Trade Publishing Houses is a completely rewritten version of an earlier version some of you may have read. The other two are described sufficiently below."

May 7, 2008 to Danish publishers and booksellers in Copenhagen on the Future for Publishers and Booksellers: Here

April 16, 2008 to UK publishers at London Book Fair, summarizing US state of affairs reporting on "The State of Digitization in the US": Here

March 10, 2008, "Publishing in the Digital Age" panel participant remarks at Book Business Conference and Expo: Here

January 22, 2008, rewritten reprise of "The End of General Trade Publishing Houses", to Random House's "Digital Day": Here

Barnes & Noble Sells Magazine Subscriptions

Didn't Prodigy do this once? No matter, B&N announced yesterday that they are offering magazine subscriptions and will offer a digital service that enables users to buy old single copy editions. B&N is partnering with Zinio to offer the service which is the same service B&N has used to offer digital book content for preview on the B&N website. From their press release:

BN.com will sell subscriptions to over 1,000 magazine titles, available in both digital and print formats, at prices up to ninety percent off newsstand cover
prices. Digital subscriptions will be available within minutes of purchase for viewing on desktops and laptops. In addition, more than 12,000 back issues of hundreds of magazine titles will be available digitally for purchase as single copies.

A digital Cosmo (first one I saw, not one of my usual reading sources) is on sale on Zinio's site for $12.00 and on the B&N.com site for $12.00 or $10.80 with a membership card. So, some advantage at B&N. Selling magazines is a natural combination made especially clear given the amount of store space given to magazines in a typical B&N superstore. One wonders why this has taken so long. B&N is betting on the electronic delivery as the future play here rather than the print subscriptions. Print is a logistics nightmare where margins are razor thin which is why none of the big book web retailers have pushed print magazine subscriptions in the past. (Admittedly, fulfillment could have been done by third parties but it is still the B&N brand that goes on the package).

B&N will allow users to use the same Zinio "see inside" feature with the magazine content (probably not Playboy since they say only 'certain' magazines). Marie Toulantis, CEO of B&N noted the following:

Our magazine offering gives our customers the ultimate flexibility to consume their favorite magazines both digitally and/or in the more traditional print form via a subscription. By growing our relationship with Zinio, and introducing a partnership with M2 Media Group, we will be the only retailer to offer both options in an integrated shopping experience.

The Zinio relationship may be symptomatic of a larger strategic play that B&N may be engaged in that is, the evolution to the digital superstore. They will have watched the morphing of Newsstand.com with some concern. Under the LibreDigital brand, this company is in the process of expanding their digital delivery and content management tools to publishers and have notable deals with Harpercollins and Harlequin. B&N may be slightly aggrieved that this seller of newspapers and magazines has now inserted themselves into the publishing supply chain where B&N believes they should have reign. Adopting digital magazine distribution is only a skirmish in what may be a protracted battle for supremacy in the digital content supply chain.

Transition: Print to Online

Many publishers (myself included) have made the transition from print orientation to web and seen their business and not least their revenue model completely transform. I've refered to this as the 'valley of death' which is what the top line can look like as you make this transition and others have referred to it as "trading dollars for dimes". Industry luminaries such as Tim O'Reilly have noted some fundamental problems in trading subscription and print based ad models for web only ad models: Basically the numbers can fail to add up. (Read the article and follow some of the links).

There are some success stories and there are likely to be more as publishers willingly and generally otherwise, look to the web for revenue growth. The NYTimes discusses how magazine publisher International Data Group which is the biggest publisher of technology magazines has successfully made this transition. From the article:

Advertisers and readers of high-tech publications have moved online more swiftly than other audiences, so I.D.G. may offer a glimpse of the future of publishing. Yet the transition at I.D.G. came only after years of investment, upheaval and changes in its practice of journalism. “The excellent thing, and good news, for publishers is that there is life after print — in fact, a better life after print,” said Patrick J. McGovern, the founder and chairman of I.D.G.

The article goes on to note that InfoWorld is now generating ad revenue of $1.6mm per month with an operating margin of 37% whereas the combination print and web product of a year ago was a break-even operation. Since their market is technology they have some advantage over other types of magazines; however, their navigation of this transition is instructive and predictive of the manner in which publishers will ultimately become successful.

In IDG's case they have remained faithful to the mission of providing content their core market wants, aggressively managing the performance of their titles and shutting down those that don't perform and they have combined staff into cohesive and focused groups. Companies that make this transition early and successfully will establish difficult to surmount positions relative to their competitors; thus it becomes harder for the second, third and fourth players to garner the ad revenue and secure transaction revenues and fees necessary to become successful.

Olson to Leave Random House (+ Middelhoff News)

The NYTimes has confirmed via two executives at Random House corporate owner Bertelsmann that Peter Olson will be leaving his position as CEO of Random House in the next few weeks.

Mr. Olson, who has run Random House, the world’s largest consumer publisher, since 1998, has come under mounting pressure in recent months as Bertelsmann’s financial results have been damaged by lower profits at Random House and steep losses in its American book clubs, which he also oversees.

It was not yet clear who will replace Mr. Olson, although these executives said it would not necessarily be a prominent figure from New York publishing, and maybe not even an American.

Surely not a non-american!

On a related note, Thomas Middelhoff took exception to comments The Economist made in an article on Bertelsmann under incoming CEO Ostrowski. Among them the following:

Perhaps because he has Arvato up his sleeve as a source of future growth, Mr Ostrowski appears to be far less interested in the internet than other media bosses. Losses made by Mr Middelhoff's internet ventures may also contribute to his caution. “I will not put a bet on one or two big internet investments; we must build an online presence organically,”

His rebuttle in the letters to the editor was as follows:

Bertelsmann's performance
SIR – I do not agree with the statements in your recent article (Face value, March 22nd) concerning my term as chief executive of Bertelsmann. The development of the company between 1998 and 2002—ie, the creation of the RTL Group, the acquisition of Random House, etc—have not “strained” Bertelsm€ann's finances in any way. At the time of my retirement its debt amounted to €334m (with revenues of €20 billion). RTL Group today contributes more than 50% towards Bertelsmann's profit.

I also do not agree that my “internet ventures” were costly in general. Selling the company's AOL shares and its 50% stake in AOL Europe and the sale of mediaWays, an internet-service provider, generated a profit of €10 billion.

In the three-and-a-half-years of my leadership Bertelsmann doubled its revenue, tripled its operative profit and quintupled its net equity. Not a bad result compared
with the company's present situation, almost six years after my resignation.

Thomas Middelhoff
Chief executive
Arcandor
Essen, Germany

€10 billion profit isn't too bad now is it?

Pearson Buying Language School

Only 1% of Pearson's revenue is generated in China and they like many other companies hope to improve on that percentage in one of the fastest growing markets in the world. The company is in the process of acquiring a chain of private language centers in Shanghai which will leverage some of the language teaching product the company publishes through Longman. Several newspapers are reporting on the acquisition (which isn't completed). From The Telegraph:

The FTSE-100 media group is near to finalising a deal to buy LEC, a group of 15 Shanghai private schools, The Sunday Telegraph has learned. The deal, likely to be announced this week, underlines Pearson's aim to expand its Chinese operations as the country's economic growth presents opportunities for foreign companies. Demand for English language tuition is at an all-time high in mainland China as a result of the country's continuing integration into the global.

Pearson has been buying educational assets aggressively in the US for several years; however, they have not purchased schools per se. In China, they may be considering a more expansive expansion across the entire education value chain from content creation to delivery. In other developed Asian markets such as Korea and Japan, private education plays a significant role in the education of Children and a similar structure is developing in China. For Pearson to participate in that market development only makes sense.

Crowded House and PS22

New York's vast social patchwork was on vibrant display last week when Neil Finn of the band Crowded House started their set with the choir of PS 22 from Staten Island. Normally, when a band launches into their set they do so with gusto, but on Wednesday night Finn, wandered casually out to the microphone and announced we were in for something special. He commented that someone had forwarded a Youtube video of the PS 22 choir doing high justice to one of the bands signature songs and he was going to bring them on stage.

On came the choir first to do several song on their own and then to join Crowded House on the first few songs of their 2 hour plus set. It was magical. The kids were great, their joy was transparent and they showed no stage fright with a couple of the kids doing solos.

As you watch the video (which is the first song of the Crowded House set), look at the faces of the kids and think about the breadth of the backgrounds, experiences and ethnicity that they represent. It is quite incredible and it's what New York is all about.





Needless to say, it was a great night out.