Borders Takes Drastic Action

Earlier today Border's announced a severe reduction in in-store staff by eliminating 742 customer facing positions across their stores. While the company notes this is ' less than' 3% of their staffing the move does look to be a dire prediction of where their retail operations are going. From their press release:

Borders Group announced the elimination of 742 positions throughout its 516 Borders superstores and in a number of its 385 Waldenbooks Specialty Retail locations nationwide, effective today. This represents less than 3% of the company's total workforce.

At Borders superstores, 679 jobs were eliminated, as the company focused on reducing the number of manager and supervisor positions in its superstores. No changes were made at the general manager level -- the top position in each store -- but in the majority of Borders locations, one or two other leadership positions, such as sales managers, inventory managers, training supervisors and merchandise supervisors, were eliminated as the company resets its superstore management structure to correspond to sales volume on a store-by-store basis.

In addition to the changes at Borders superstores, the company also eliminated 63 jobs within its Waldenbooks Specialty Retail segment. Again, all store managers remain in place, but a variety of other manager and supervisor positions, as well as additional roles in approximately 47 stores within the mall-based chain, were eliminated.

Borders Group will offer transition pay and severance to all affected employees.

"Every retailer operating today must manage their business prudently, including staffing stores to maintain strong customer service levels while also making sure that payroll investments align with the reality of sales," said Borders Group Chief Executive Officer Ron Marshall. "As we've said in the past, no one likes to eliminate jobs, but reducing the number of leadership positions in our stores was a necessary step as we streamline and focus our payroll investment on the sales floor, where we actively engage with customers and meet their needs -- that's what our business is all about."

Kindle: Not Much of an Impact

Julia Boorstin (SeekingAlpha) thinks the Kindle won't have much of an impact and lauds the Apple/Amazon 'partnership' as a possible savor of the publishing industry. "Previously, e-Books were only available to the small group of Kindle owners who shelled out $359 for the device." she wrongly enthuses. I just realized in writing my rebuttal in the comments that I missed the most obviously wrong part of that statement: "only available" WTF?

She goes on to gush "Sources in the publishing industry tell me they're really excited about the potential for e-Books." Humm. But this is all good because Amazon has such a hard time struggling to get customers that "This news is also huge for Amazon; bringing e-book capabilities to the iPhone should get millions of users to pay the $7-$10 price for each e-Book download."

It's going to be big, big, big.

The last comment about Kindle not having an impact is a killer.

Reader's Digest May Restructure

According to Bloomberg news, Reader's Digest may be considering a pre-packaged bankruptcy and have hired expert law firm Kirkland and Ellis to advise the company. Reader's Digest founded in 1922 and located north of New York city publishes magazines, books and audio products and operates numerous web sites. (The company is actually more web-savvy than most people probably give it credit for). The company was purchased for $2.4Billion by investor group Ripplewood Holdings in March 2007. Bloomberg also quotes a Moody's report from earlier this year that suggests the debt load of the company is unsustainable and also notes the lay-offs that Reader's Digest announced two weeks ago.

Moody’s said in a credit opinion Feb. 18 that Reader’s Digest’s capital structure appears “unsustainable” and may violate its covenants or restructure within the next year to 18 months. The company faces pressure on cash flow from declining demand for its print-based products and a drop in consumer spending, the ratings firm said. The company also has a high debt-to-EBITDA ratio, Moody’s said.

Reader’s Digest announced Jan. 28 it would eliminate about 8 percent of its 3,500 employees worldwide, citing a drop in consumer spending and magazine advertising in most markets. Reader’s Digest also said at the time it would require U.S. workers to take five days of unpaid time off in each of its 2009 and 2010 fiscal years, and suspend matching contributions to 401k retirement plans.

Restructurings, significant lay-offs and bankruptcies are coming fast and frequently in the media business, particularly newspapers and magazines. While many of these companies have few choices given their reliance on collapsing advertising revenues and their crushing debt loads, as a group, they do not appear to be addressing how their customers will interact with their content in three to four years time. Even if they get out of this immediate crisis by rearranging the deck chairs tomorrows customers may have moved on, content to interact and use content in fundamentally different ways.

Stanley R. Greenfield

Sadly, I learned of the passing yesterday of a wonderful man and friend. All of us who knew Stanley will miss him dearly and our condolences to his wife Betty and their extended family.

Cards and condolences can be sent to:

Betty Greenfield
4439 Waldo Avenue
Riverdale, NY 10471
bg.dab@verizon.net

Services will be on Tuesday, 1:15PM
Riverside Memorial Chapel,
Amsterdam Ave & 76th Street
NYC

Eugene Schwartz forwarded a bio Stanley wrote himself a number of years ago. Typical of Stanley he fails to note the Harvard Class of 1949 is widely believed to be the most successful class of MBA's ever produced. And 'with Distinction'.


Early years: Born March 5, 1925. Attended Abraham Lincoln HighSchool, Brooklyn, NY.

Education: B.A. Physics, Johns Hopkins University, 1947. M.B.A.with Distinction, Harvard University Business School, 1949.

Career: I spent much of my career with Ziff-Davis Publishing Company, a leading publisher of consumer special-interest magazines. When Bill Ziff took over the company in 1955, I was the first executive he hired. I served for many years as senior vice president. I left Ziff-Davis to found Nicholas Publishing Company. At Nicholas, I created, edited, and produced seven directories, including two American Library Association “Outstanding Reference Book of the Year” designees. The first of these, the National Directory of Addresses and Telephone Numbers (first edition, Bantam Books, 1975) was the first hard-copy national telephone directory. More than a million copies of its annual editions have been sold. Other reference works were produced in cooperation with the United Nations and the AFL-CIO.

During the period 1975-79, Nicholas Publishing Company was sole representative of the People’s Republic of China for the acquisition of all scientific and technical bibliographic materials from the United States, including serials, monographs, indexing and abstracting services, patents, U.S. government documents, juridical materials, and commercial databases. This function was performed with the concurrence of the Departments of State and Commerce during this period prior to the establishment of diplomatic relations between the two nations.

I also served as president and publisher of Playbill, the Broadway theater magazine, and was founding publisher of The Corporate Board, the Journal of Corporate Governance. In 1982, I inaugurated the first course in the New York City area on the Information Industry, at New York University.

Family: Betty F. Greenfield, my wife of forty-four years, was a delegate from Wellesley College to the NSA Annual Convention in 1948. She received an M.P.A. from Harvard University’s Kennedy School of Government in 1985. We live in the Riverdale section of New York City. We have three children and four grandchildren. All of us live within twenty minutes of each other, which we consider to be one of our greatest blessings in a society where almost everything except family turns out to be transitory.

MediaWeek (Vol 2, No 8): ALA, Bloomberg, Christie, E-Textbooks

Library Journal publish a round up of ALA. Despite the decrease in traffic they still found things to report on: (LJ)

Indeed, in recent years we have seen a maddening proliferation of e-products, but if there was one thing to take away from Denver, it was that the database madness seems to have at least subsided. Instead, I saw more clarity in approach and simplicity in offerings. Publishers seem to be on a mission to reinvent what they already have instead of introducing another product that looks like something you've seen before.

Silicon Alley takes a look at the Bloomberg business and its competition with a much stronger Thomson/Reuters. Some interesting numbers:

At the same time that Bloomberg directs its resources towards news operations, the part of its business that actually makes money faces rough times. Bloomberg L.P. is almost entirely built on the back of its 290,000 data terminals that cost between $1,500 and $1,800 monthly. But with financial firms cutting head count, terminal sales will likely drop. There’s no point in keeping a data terminal if there’s nobody to man it. We saw an early indication of this last year. Between June 2007 and March 2008 there were 34,000 job cuts by Wall Street banks. By the end of the year Bloomberg saw a drop in net sales of 1,100. That equates to losing almost $20 million in revenue. While the company is still minting cash, this troubling trend won’t reverse anytime soon.

Scholastic has set up a web site that will inform about the impact on education of the Federal stimulus plan.

As a partner to America’s public schools for almost 90 years, Scholastic believes that the funding for education in the American Recovery and Reinvestment Act is good for schools and good for the country. We support Secretary of Education Arne Duncan’s call to “educate our way to a better economy.” Effective and efficient use of funds is a shared responsibility. We believe we have an important role to play in ensuring that this two-year increase in federal resources results in a permanent investment in our students’ futures. For your convenience, we’ve developed this information portal, which will be updated regularly.

The opening to the public of Greenaway the home of Agatha Christie has prompted a number of articles on the author and the value of her legacy. (Independent)

Exact figures are difficult to come by but royalties from book sales alone are thought to be worth at least £5m a year. The company that benefits the most is Chorion Ltd, which paid £10m for a controlling share of the rights to Christie's work back in 1998. Chorion already owned the rights to several big-name children's titles including Enid Blyton's Noddy and Famous Five series, and Roger Hargreaves's Mr Men books. The company's relaunch of Christie's novels in 2002 was so successful that the author's most famous work, And Then There Were None, appeared once again on the US bestseller list and sold out its initial print run in just 10 weeks.

An article from a the Tyler Junior College student newspaper The Apache Pow Wow (yes, that's the real name) about the experiences of Northwest Missouri State University with a pilot electronic textbook program.

The pilot electronic textbook program began in the fall with four classes and about 200 students. This spring, roughly 4,000 of the school's 6,500 students will use electronic textbooks. "I think that it's the way the world is going," Dean L. Hubbard, Northwest's president, said. Textbook publishers say many colleges are moving toward using some electronic textbooks, but Northwest's plan to eventually eliminate all bound textbooks makes it a leader in the movement. "Right now, digital products account for a small percent of our higher education business, but it is growing at a rate that is breathtaking," Jeffrey Ho, a product manager for McGraw-Hill Education, said. But Northwest can only move toward a bookless campus as fast as the availability of e-books allows, Hubbard said. "Publishers don't have all textbooks online yet," he said. "But I would think as a realistic measure we could be totally out of the printed textbook business in three years." That idea pleases sophomore Mike Jenkins. "I think the whole concept is pretty cool," said Jenkins, 19, of Lee's Summit, Mo. Jenkins used e-books in his history class during the fall. "I would like it if we didn't have textbooks at all anymore," he said. "You wouldn't have the hassle of messing with books. The e-book is so convenient, and you don't have to carry all those books around." Plus, unlike printed textbooks, e-books have pop-up interactive quizzes and the ability to search the full text within seconds for key words. New electronic reader technology also will allow students to take notes in on-screen posted notes.

And for more stuff from the past week check out my Twitter stream (or it that 'stream of twits?')

Amazon's Lesser Known Character: Is it Really Self-Interest?

Amazon backed off on the Kindle audio noise and volunteered that publishers can effectively 'opt out' of the functionality. For those missing this mega (non) issue, the Kindle 2 allows content to be read aloud and this upset the Authors Guild who believe the functionality undermines audio book rights. Aside from the fact that using this functionality would be considered a 'private performance' and not subject to copyright protection the fact of offering the functionality is not a violation of anything - except may be bad execution.

More thoughts/reaction and thoughts on Audible over at Teleread.org.

Swets Launch iPhone Access for 11,000 Journals

An interesting announcement from Swets that the contents of their journals database are available via the Apple iPhone and iTouch. Swets is a subscriptions management company serving the library and academic communities. It is not completely clear from this press release what additional functionality exists versus accessing the content via a browser.

Swets is pleased to announce SwetsWise Online Content can be accessed through the Apple iPhone and Apple iPod Touch. Powered by SwetsWise Subscriptions, SwetsWise Online Content is a single point of contact to one of the most extensive collections of electronic journals currently available in the scholarly information market.

SwetsWise Online Content provides users with access to direct links for more than 11,000 journal titles − all from a seamless Web interface and through the convenience of their Personal Digital Assistant. Information users can search relevant online content, utilize multi-level linking, download subscription lists and much more.

“I am delighted SwetsWise Online Content is accessible through the iPhone and iPod Touch,” states Jose Luis Andrade, Swets North America President. “Now, SwetsWise Online Content users can effortlessly gain instant access to e-journals. This is one of the many ways Swets is in-sync to the world’s ever-changing technologies and supplying information users with innovative electronic solutions that help further support their organizations.”

SwetsWise Online Content offers over 25 million searchable references along with links to full-text articles through an intuitive Web interface. This service also provides informative usage statistics on each title, and includes fast access set-up for new electronic journal subscriptions.

In addition to SwetsWise Online Content, SwetsWise Subscriptions is also available through the iPhone and iPod Touch. Information users can manage their subscriptions, view publication schedules, check the title status to thousands of print and electronic content and many other SwetsWise Subscriptions functions.

The Apple iPhone 3G also support WiFi, a standard wireless connection that allows SwetsWise Online Content and SwetsWise Subscriptions access using IP authentication. Customers can easily facilitate research and view e-content.

Torstar Reports Harlequin Performance

From Torstar's Quarterly report and reporting on the performance of Harlequin:

Book Publishing revenues were up $9.6 million in 2008 excluding the impact of foreign exchange.

• North America Retail was up $13.3 million,
• North America Direct-To- Consumer was down $6.4 million and
• Overseas was up $2.7 million.

Book Publishing operating profits were up $9.2 million in 2008 excluding the impact of foreign exchange.

• North America Retail was up $8.6 million,
• North America Direct-To- Consumer was down $0.6 million and
• Overseas was up $1.2 million. North America Retail operating profits were up $8.6 million in 2008.

The increase was driven by higher revenues, including the effect of positive adjustments to prior period returns provisions, with more books sold in both series and single title formats.

Significant progress has been made in improving the efficiency of the retail business resulting in a higher percentage of books sold relative to books distributed. Promotional spending was higher in 2008, supporting the higher revenues. North America Direct-To-Consumer operating profits were down $0.6 million in 2008.

The traditional direct-to-consumer business continued to face the challenge of a declining customer base which was reflected in the lower revenues. Offsetting the revenue decline from fewer direct mail customers were improved payment rates and lower promotional costs resulting from smaller, more effective, direct mail campaigns. Internet sales were higher in the year for both printed and digital books.

Harlequin continues to expand its digital book sales releasing all new North American titles, more than 100 each month, in digital format. Overseas operating profit was up $1.2 million in 2008 with growth in most markets.

In 2008, the Japanese operation entered into an agreement with SoftBank Creative Corp., (a division of Softbank Corp., one of the largest providers of cell phone services in Japan) to distribute digital manga (comic) content on cell phones and Internet distribution sites. Contribution from this business more than offset lower book sales in Japan. The U.K. business faced the challenge of increased printing costs as the Pound Sterling depreciated in value relative to the Euro as well as higher provisions for bad debts due to the bankruptcy of one of their distributors. The Nordic group continued their trend of the past two years with growth in their markets. Investment spending in India was up slightly in 2008 as the business was launched in the first quarter of the year.

Press Release

The Pirate Bay

For those of you who think The Pirate Bay is a department store in Toronto and not perhaps the biggest challenge to content owners since Napster may want to read this post at E-Reads which describes the way The Bay works and discusses the case now proceeding in Sweden against the founders of the company. Here is a sample:

The Pirate Bay's advocacy for unrestricted file sharing is one of the most confounding issues for modern publishers with digital distribution. Evangelists for piracy appeal for protection by evoking moral outrage at the injustice of governments policing private communication and hindering fair use. And they raise some difficult questions: does DRM curb our most basic liberties to communicate and creatively manipulate new ideas? Is copyright unlawful? Is copyright infringement fair retribution for inefficient corporate distribution practices? Should governments keep all internet traffic private? A grassroots movement to protect the opportunity to share pirated files says the answer to all of the above is an overwhelming "yes."

All the defendants (Fredrik Neij, Gottfrid Svartholm Warg, Peter Sunde and Carl Lundström) sincerely believe they've done no wrong in ignoring all the requests from copyright holders to prevent the copyright abuse rampant among the Pirate Bay users (see their page of dozens of spurned "takedown" notices and Pirate Bay retorts - "Legal Threats Against The Pirate Bay").

Michael at E-Reads concludes:

Ultimately, The Pirate Bay is quickly becoming more than just another famous example of how the internet offers temptations to transgress social taboos and ignore local authority. Its enormous scale indicates that it has become the latest spearhead of a generation's full-on war against copyrights and preventions against theft. And, what's worse is that today's court battles can't represent the best defense when the real fight takes place daily in the minds of millions of tempted, anonymous internet users in homes around the world.

In addition, Wired has an article regarding a change in the charges that (they think) may stand a better chance of resulting in a conviction.

The prosecutor removed one sentence from the part of his summons where the purported crimes are described. Until Tuesday, it read:

"The Pirate Bay consists of three sub-components: an index portal in the form of a website with search functionality, a database with related directory containing the torrent files, and a tracker feature. The tracker feature creates a 'peer-to-peer' network of users who want to share the same file. All components are necessary for the users of the service to share files between them."

In the altered version, he removed the concluding sentence starting with "All components."

BISG Making Information Pay: May 7, 2009

The Book Industry Study Group is pleased to announce that the sixth annual Making Information Pay Conference will be held on Thursday, May 7, 2009, at the McGraw- Hill Auditorium in New York City.

The event will be preceded with an online survey that’s available now at BISG MIP 2009 Survey. The theme of this year’s conference is especially timely and topical—“Shifting Sales Channels.” The landscape for book publishing is changing rapidly; trading conditions have never been tougher and many traditional sales channels are shrinking or disappearing completely.

New sales channels and business models are emerging and many publishers are experimenting and reorganizing to capitalize on them. Making Information Pay 2009 will feature a lineup of book industry leaders sharing their insights into how they are responding to fading markets and emerging opportunities, and will provide practical advice on how companies are dealing with the far-reaching changes impacting the book business. Speakers and a full agenda will be announced at a later date.

All employees at publishers large and small are invited to participate in a nationwide survey to provide their experiences and opinions about the changing sales channels in our industry today. Survey questions cover a range of topics: which of today’s sales channels are trending up or down; what new channels are emerging that look particularly strong or promising; and how are publishers responding to the changes they see around them. Making Information Pay has become one of the leading events in the book industry’s calendar and is attended every year by hundreds of senior professionals eager to hear about new developments in our industry and about practical steps to benefit from them.

This year’s program is being organized in collaboration with The Idea Logical Company, and sponsored with the generous support of several known innovators in the book industry, including Copyright Clearance Center, Ingram Book Group, Klopotek, and R.R. Bowker. The Book Industry Study Group, Inc. (BISG) is the U.S. publishing industry’s leading trade association for policy, standards, and research.

The mission of BISG is to create a more informed, empowered and efficient book industry. Membership consists of publishers, manufacturers, suppliers, wholesalers, retailers, librarians and others engaged in the business of print and electronic media. Learn more about BISG at www.bisg.org.

Roy Blount Jr. and Text to Audio

In an Op/Ed in yesterday's NY Times Roy Blount Jr. current President of The Authors Guild comments on the text to audio functionality of the Kindle 2.

What the guild is asserting is that authors have a right to a fair share of the value that audio adds to Kindle 2’s version of books. For this, the guild is being assailed. On the National Federation of the Blind’s Web site, the guild is accused of arguing that it is illegal for blind people to use “readers, either human or machine, to access books that are not available in alternative formats like Braille or audio.”

In fact, publishers, authors and American copyright laws have long provided for free audio availability to the blind and the guild is all for technologies that expand that availability. (The federation, though, points out that blind readers can’t independently use the Kindle 2’s visual, on-screen controls.) But that doesn’t mean Amazon should be able, without copyright-holders’ participation, to pass that service on to everyone.

Funny, he didn't mention how changing the font size might destroy the market for large print books. I wonder why no one is arguing "hey, you think that mechanized voice was good, how about buying the version read by Jim Dale"

Publishing And Out of Work

Publishers Weekly has put together a long (and possibly growing list) of contact details for people recently laid off from publishing companies. This is quite nice of them.

LINK

Jonathan Galassi Interviewed By Haaretz

Want to know more about Jonathan Galassi and the Macmillan/FSG company then read this article published in Haaretz

"It's really about cutting through the miasma of information to grab the reader's attention. And that is getting harder and harder to do."

Galassi bemoans the way nearly all American papers have cut back their coverage of books. This past Sunday, The Washington Post published the last edition of its Book World as a stand-alone section, leaving The New York Times and the San Francisco Chronicle as two of the few remaining U.S. papers printing separate book-review sections. (In Israel, Haaretz publishes a weekly book review in its Hebrew edition, and the monthly Books supplement in the English edition.)

Galassi suggests that the move is "short-sighted": It may be that book publishers have reduced their newspaper advertising, lowering the profitability of book sections for newspaper publishers, "but you know, a book review is not just about books, it's a forum for discussing ideas, for discussing culture in a different kind of way than you do in other pages." He notes that consumers these days turn to newspapers less for hard news, because they have other sources for immediate news delivery. So newspapers "are much more about context and interpretation." Which is what a good book review section has to offer.

The Shatzkin Files

No not some espionage novel, but Mike Shatzkin who has written here once or twice has joined the blogging community. His blog address is: http://www.idealog.com/blog/ and we will all be look forward to reading his views on the industry. (And it was nice of him to give me a call out).

Here are two of his past posts at Personanondata:

Borders Stickers Books, Why? (Perhaps a coincidence but this got a comment today).

Amazon and Book Pricing.

MediaWeek (Vol 2, No 7): OCLC, Slate, EBook Pricing

For those with a bibliographic bent, ARL has published a short document on the proposed changes OCLC wanted to make to their data use. (Link) A sample:

“Band’s explanation indicates that both are intended as contracts, and describes the various forms and gradations that can characterize a contract as “bilateral” or “unilateral.” The new Policy is clearly intended as a unilateral contract, unilaterally imposed on any entity using records from the WorldCat database, including member libraries. While the 1987 guidelines have also served as a unilateral contract—and have much substance in common with the new Policy—the OCLC-member community has not perceived them as such. The guidelines are both less “unilateral,” in that they grew from a known and more open process of debate, and less “legalistic” in language. With the enormous environmental and technological changes that have occurred in the 22 years (a generation) since the guidelines were introduced, the major differences in tone and language between the guidelines and the new Policy, and a number of significant differences in substance between the two documents, the new Policy cannot be viewed as a mere update describing already accepted practices. The member community has seen the introduction of the new Policy as a fundamental change in the nature of the relationship between OCLC and its member libraries. In the eyes of the community, the guidelines expressed a mutual social contract, and the new Policy represents an authoritarian, unilaterally imposed legal restriction.”

The writers of the report also indicate that the manner and method of OCLC’s policy making needs a revision in thinking. (See when you screw up sometimes the consequences are even bigger than you might anticipate).

The task force applauds OCLC’s recent announcement of delayed policy implementation and the creation of a Review Board on Principles of Shared Data creation and Stewardship. We hope that the Review Board will consider its timeline and process, as well as its recommendations on policy issues, in light of the analyses and findings of this report. We believe that, using as a base the work done to date on the proposed policy and the issues it raises, a fresh start to policy determination and articulation is desirable.

Peter Brantley has a more expansive reaction to the report and its implications. (Link)

And it is there that I feel more caution must be exercised. The research library community, particularly, has now smitten OCLC forcefully upon its head with the flat of Library's sword and advised that it must go back to the schoolhouse. There is a danger of over-reaction in this. It is one thing to tell OCLC that the community believes its licensing policy was a mistake, its tone too “unilateral” and not conversational, and its process (essentially) pig-headed. It is another to envelop OCLC’s management in restrictive committee-based decision-making over matters that are vital to its survival; the times demand effective leadership and far-sighted vision; libraries have too long emphasized diplomacy.

Read Slate's article Not all Information Wants to be Free (Link). It raises and interesting question in my mind: Is Apple iTunes platform a precursor to the Kindle platform?

That iTunes is a free-standing application and not contained inside a browser, as is the Amazon music store, is not accidental, and I reckon that its "outside the browser" design has played some role in its success. Consumers have been conditioned to think that content delivered by a browser is supposed to be free. They get annoyed when they encounter a pay wall on a browser but are more psychologically open to the nonbrowser Web interface.

By thinking outside the browser, Apple answers to nobody but itself when it wants to add features, such as movies and TV show sales and rentals—or when subtracting them. If the browser window is the commons, the iTunes application is Apple's castle, where you're expected to do as you're told.

Some interesting data points in the discussions between Youtube and Music publishers over revenue sharing: (Guardian)

To understand the implications of these terms for closing deals, consider the penny per-stream component. It amounts to $10 per 1,000 streams, or a $10 clicks per-thousand. This means that before the digital company makes any money on advertising it would have to pay the first $10 of the ultimate CPM to the labels, then split what's left 50/50. So, if YouTube were to sell a $20 CPM pre-roll on a music video, it would give the first $10 to the label then keep $5 of the remaining money. That's $15 to the label and $5 to YouTube, or an effective CPM of $5 on a pre-roll ad. That's not going to leave YouTube rolling in revenue, never mind profits. Throw in the fact that it has to pay millions of dollars upfront, and you can see why these talks are so strained.

A very interesting discussion at HarperStudio over eBook pricing. It is the comments that are most interesting. (26thStory) Here is Shatzkin:

Decisions about price aren’t about fairness or equity, they’re about the market. I want to read books on my device. I choose a) from what’s available, b) what I like, and c) considering the price. I remember when I first got this ebook habit nearly 10 years ago, I paid $28 for an ebook bio of Grover Cleveland because (a) was very limited, so (b) got down near zero, and I was wanted to read something so I yielded on (c).

The ebook world is going to change enormously over the next several years. We’re still in a great period of proliferation: of formats, titles, concepts for the books, retailers, retailing “styles”, readers and devices. The Kindle and iPhone have a kind of dominance in the tiny market we have now; they may or may not be number one in what will be a much larger market three or five years from now.

Swan Song for Sir Crispin

Reed Elsevier presented a robust end to 2008 with the presentation of their end of year numbers yesterday. In constant currencies, RE revenues were up 7% over 2007 and operating income was up 12%. Underlying results were slightly less at 4% and 9% respectively.

Reed Elsevier revenues finished the year at £5.3billion and earning per share were up 15% in constant currencies and the press release points out this is their highest growth in 10 yrs. As expected Elsevier, Lexis and Exhibitions all drove revenue and operating income growth and while Reed Business Information was the laggard the business hardly fell off a cliff during 2008.

From the press release:

“Reed Elsevier has had a very successful year with major progress in developing the business, and the strongest constant currency adjusted eps growth in a decade. Good revenue growth was seen across most of the business driven by the growing demand for online information and workflow solutions. The revenue growth and a strong focus on restructuring and cost management delivered meaningful margin improvement and the operating cash generation was excellent. Whilst the economic environment has become progressively more challenging, our business is more resilient than most and we are in a strong financial position.

The year saw demonstrable progress across the business from our continued investment in new content and online product development. In Elsevier, subscription renewals reached record levels whilst other online solutions for the scientific and healthcare communities grew rapidly. Online legal information solutions have continued to expand, and there is growing demand for information analytics in the risk market. In legal research we see significant opportunities for more intuitive and interoperable offerings to enhance customer productivity and are stepping up our investment to reflect this. Reed Exhibitions had an exceptional year including the benefit of non annual shows cycling in. Reed Business Information held up well for most of the year, helped by the strong growth of its significant online franchises. In the last quarter, however, the business increasingly felt the impact on advertising markets of the global downturn.

The year has also seen a major reshaping of our business with completion of the sale of the remaining Harcourt Education businesses and the acquisition of ChoicePoint. ChoicePoint transforms our position in the risk information and analytics sector and the strategic and financial benefits are very attractive. The business has performed well with the insurance data and services business, which accounts for the substantial majority of ChoicePoint’s operating profits, delivering 10% year-on-year organic revenue growth. The integration with our existing risk business is progressing well and we are confident of achieving our savings and returns targets. We were disappointed not to be able to sell Reed Business Information but the macro-economic environment and poor credit market conditions made it too difficult to structure a transaction on acceptable terms. Whilst the short term outlook for RBI is very challenging, RBI is a high quality business, with a strong management team and a record of success in developing online services. It remains our intention to divest RBI in the medium term when conditions are more favourable.

Buried in the report was also the expected news that RE have reduced what was a $300mm (€230mm) investment in Harcourt parent Education Media and Publishing Group (EMPG) to just €15m. The equity stake that RE was forced to take in Harcourt when the business was sold represented just less than 12%. Companies do use their own judgment (there are FASB rules) when re-evaluating the value of third party investments like this one however, this action isn't likely to impress the bankers who lent $7Billion to EMPG for their acquisition spree.

Management Powerpoint Presentation

Source Interlink Expands!

The anti-trust suit that Source Interlink bought against Time and several other publishers two weeks ago has been dropped - although the press release only refers to Time. Readers may recall that SI received a preliminary injunction that forced SI's existing customers to continue shipping product to them. According to the press release the company's used the strength of their long standing relationship to reach an agreement on a multi-year contract. No comment about whether SI has been successful in imposing any additional fee on Time Warner as part of this agreement. Speculation would be that if they have it will not be as high per unit ($0.07 per copy)and it will not kick in immediately. If this improves the magazine supply chain at all it will be a good thing.

From their press release:

"I am happy to make this announcement because it means the continuation of what has been a mutually beneficial relationship. We have enjoyed working with our partners at Time and plan to keep working with them for many years to come," declared Greg Mays, Chairman and CEO of Source. "This agreement is effective immediately and assures that we can continue to supply all our mainstream, specialty and international customers with the popular Time titles."

In addition (and hence the post title) SI appears to have picked up a number of important distribution clients out of the rubble that was Anderson News' magazine distribution business. From the press release:

In a separate story, Source Interlink Companies today reported that its magazine distribution unit, Source Interlink Distribution (SID), has been awarded important new business from Wal-Mart Stores, Kroger / Fry's Companies and Basha's Supermarkets. This additional business increases SID's store count by 662 stores in 9 states.

Borders Reduces Corporate Staffing

Here is the corporate announcement from Borders. We sincerely hope it doesn't go any further.

Borders Group today announced that it has reduced its corporate workforce by another 136 positions, which were eliminated effective today. The majority of the jobs, which represent about 12% of the corporate workforce but less than 1% of the company’s total workforce, are based at the company’s headquarters in Ann Arbor. The workforce reduction was spread across virtually all business areas, including marketing, human resources, field management and corporate sales. The reductions were made at various ranks, ranging from entry level to middle management. Affected employees are being offered transition pay, severance and job placement assistance.

Today’s changes follow the company’s announcement just over two weeks ago that several top-level corporate positions had been eliminated to reduce management layers and help drive expense reductions. “While reducing payroll is never easy and we respect the impact it has on employees and their families, it is one of the necessary steps we must take along with other non-payroll expense reductions to help get this company back on track financially,” said Chief Executive Officer Ron Marshall. “In this time of transition, I greatly admire the tenacity and focus that employees at all levels here have shown as we drive to significantly reduce expenses and bring other key financial measures in line. We will continue to move forward with deliberate speed to make the changes required to get Borders back on firm financial footing.”

Teleread on Amazon's Long Play

An excellent and enjoyable look at Amazon's strategy from Aaron Miller writing on the Teleread.org blog:

Interestingly enough, the Online Reader is also what authors can use to preview Kindle publications on the Digital Text Platform, Amazon’s foray into the self-publishing market. But it has all the appearances of a parallel project, something to enable reading on devices other than the Kindle. Clicking on the "Your online books" button exposes a "Media Library" and CoverFlow-like book list, which you can populate with books you’ve already purchased. Provided you’ve purchased the upgrade and the print version of the book AND the book is eligible for online access (up to publishers probably), you can read it in the Online Reader for less than $9.99, with highlighting and social annotations and bookmarking.

The Reader, DTP, Search Inside and Amazon Upgrade all have a rudimentary, R & D feel, even though some of them have been around for awhile. They’re loosely connected when used as free services, and yet as revenue generators, they’re dependent on each other in a baroque way that creates barriers to consumer adoption. This stifling of adoption on the part of a giant like Amazon seems deliberate, the equivalent of throttling certain latent channels in order to allow another to flow more primarily. The undeniable truth of all of them together which would steal the Kindle’s thunder is that they do indeed allow you to read your Amazon purchases in digital form, without purchasing a Kindle. It’s easy to overlook this capability given the lack of content and promotion for these peripheral products Amazon has. But it seems clear that they each figure into a longer-term strategy. They could easily be brought together and streamlined into a huge force in the digital book market if the right circumstances were first created and nurtured by the Kindle. Thus the name.

Thoughts on Tools of Change

At The Digitalist James Long summarizes very nicely some of the themes from the conference. They echo some of my thoughts on my "Presuming" blog post (and I wasn't even at TOC).

Link