MediaWeek (Vol 2, No 11): Voyager Learning, ReedElsevier, CBS Radio, Libraries

Near Norwich, Bertrams were sold for £8.6mm and all 600 staff were kept on. A remarkable event given the state of UK bookselling. Smiths News is the purchaser. Reed is paying Pat Tierney a £2.4m bonus and The Times suggests shareholders will be pissed. Tierney ran the educational unit (Harcourt) which Reed sold for a large premium over what they purchased it for. In addition, Tierney deferred retirement to take care of the sale process. A good backgrounder on how legal publishing works from a taxonomy and text mining perspective. (Legal Technology). ReedElsevier's earning call transcript (SeekingAlpha).

As far as the 2008 financial performance, 15% earnings growth and that is our highest for many years, and I think in this market, it is an excellent performance. Good above-market revenue growth we’ve seen for Elsevier, LexisNexis, and Reed Exhibitions, our core businesses. All three of those businesses, I think, did very well in terms of organic revenue growth.

Our focus in the last two or three years on accelerating margin improvement is paying off with 110% basis point margin improvement. We had a record year in terms of cash conversion, 102% of operating profit into free cash flow, that’s just £1 billion, which is an extraordinary number of free cash flow. Return on capital employed rose for the fifth year in a row. It is now about 12% and obviously significantly ahead of our cost for capital, and I think after the 1.5 billion corporate bond issue in January and the renegotiation of the revolving credit facility, we are now financially in a good position and with well-spaced debt maturities going forward. - Sir Crispin Davis

A shareholder suit against the remaining parts of what was Proquest and is now Voyager Learning is going ahead. (Law360). Voyager also announced their full year 2008 results (Press Release):

• Net sales for 2008 were $98.5 million, a decrease of 10 percent from net sales for 2007 of $109.6 million.
• Gross profit decreased $10.8 million in fiscal 2008 to $62.6 million compared to $73.4 million in fiscal 2007. The gross profit margin also decreased to 63.5 percent in 2008 compared to 67.0 percent in fiscal 2007.
• Loss from continuing operations before interest, other income (expense) and income taxes was $83.3 million in fiscal 2008 compared to $104.4 million in fiscal 2007. The Company had adjusted EBITDA, reflecting ongoing business operations, of $15.8 million in 2008 compared to $28.7 million in 2007, where adjusted EBITDA excludes depreciation and amortization expense, goodwill impairment charges, costs to terminate leases in Ann Arbor, Michigan, and corporate overhead costs which were predominantly for restatement related activities in 2007 and 2008.

The good news is the company is 'all caught up' in their long running financial reporting saga. (PND) The company is still looking to be acquired. The Chronicle reports on belt tightening in the library world (this year and next will be tough for vendors).

Greg Doyle, electronic resources program manager of the Orbis Cascade Alliance, in Portland, Ore., describes his group as "a buying club" that represents 36 academic libraries at public and private institutions in Oregon and Washington. I buttonholed him after he made lengthy stops at the Oxford and Ebsco exhibits.

Mr. Doyle is not afraid to use the word "dire" to describe the economic situation that faces his alliance's members. "Right now everybody's budget is terrible," he said. Many don't yet know just how bad the cuts will be. To prepare for the worst, though, they "are actively identifying databases to cut."

HyperLinked data from Tim Berners-Lee (TED Video). There is also a related video from 2006 meeting about using data sets in new ways which is very interesting. (TED Video) The library of the future being built in Palo Alto? Not really but this is an interesting article on how (public) libraries will evolve from an unusual source. I liked this bit:

Loertscher teaches his library-science students to use the "learning common" tool, in which an information professional sits in on an online conversation, helping teachers and students who have created assignments and projects on iGoogle pages. The librarian in coming decades "will burrow right into the center of where the clients are now," commenting on assignments and offering reference and research materials that support projects, Loertscher predicted. In his model of the future, the librarian goes into the student's space, rather than the student coming to the building, he said. "It's very proactive and moving into the space where kids (are comfortable). You have to take their social-networking skills and bend them over into their learning skills," he said.

Some lessons to be learned in the way CBS is managing their radio stations and the seemingly misguided understanding of their key market. (CrunchGear).

We now turn to Mr. Bouloukos’ comment, that young people—most of you guys are young people, I would guess!—are “using the radio to discover today’s most popular music.” First off, that wording is just wrong. If a song is already popular—remember, 92.3 Now will only only play “hit music”—then the odds are that people have already heard it before; in other words, hit music is already popular! A song becomes popular when a lot of people know it, and enjoy it. If a song is popular, then people aren’t, by definition, “discovering” it! (Amateur Hour at CBS Radio, apparently.) Even giving Mr. Bouloukos the benefit of the doubt, that what he meant to say is that people are using radio to discover new music… well, good luck bro. I’d like to find the last 17-year-old in America who is using commercial radio as his primary source of new music. I mean, it’s not like these kids are using THE INTERNET to find new music, right? MySpace Music, music blogs like Hype Machine, sites like Imeem and YouTube, etc. (Then these kids turn around and buy said music either directly from the band’s Web site, or use iTunes or, yes, download it “from BitTorrent.” (BitTorrent is an Internet protocol; you don’t download things “from it.”)

Playboy Archive Launched on the Web

If you are looking to read some really great articles, short stories and profiles, well your boat just came in.

My friends at Bondi Digital have launched the playboyarchive which covers the years 1954 to 2007 of one of the iconic brands in publishing and media. Each edition appears as it did when published, complete with articles and advertising and there's even some photography! The company behind this effort - Bondi Digital, has a growing track record in taking the archives of well-known magazines and creating a database and visual representation of the original verison. Launched under the Cover-to-Cover brand, the company has done this with The New Yorker, Playboy and Rolling Stone. Each of these titles was orginally published on DVD form and packaged together with a companion book. In the case of Playboy, the original idea had been to launch the Playboy collection by decade and Bondi began that process 2 years ago with the 1950s issues.

In addition to launching the Playboy web version they have also announced that they will launch a similar online archive using the Rolling Stone content. Currently access is free to the archive and they don't have current plans to charge.

I interviewed David Anthony one of the company founders just after they completed the first Playboy DVD - here.

Australian Parallel Importation

In a story line we have been following from a distance, the Australian government has been attempting to address the impact of their protected market for books. Does it help indigenous publishing or cause consumers to pay higher prices? The commission has taken testimony from all sectors of the market (submissions are published on their web site) and have now published their preliminary findings.

There is no formal policy change at this point but they appear to be recommending only minor changes to the existing policy.

Here are the summary findings: (Report)

Key points

• The Commission has been asked to assess the benefits and costs of Parallel Import Restrictions (PIRs) on the importation of books that are published in Australia, and to examine the merits of options for reform.

1. The PIRs are contained within the Copyright Act, although they are additional to its core protections.
2. Changes to the PIRs in 1991 have overcome previous concerns about the timely availability of books in Australia.

• PIRs, by restricting competition, place upwards pressure on book prices in parts of the market:

1. most of the benefits of these higher prices accrue to publishers and authors, with demand for local printing also increased most of the costs are met by consumers.

• While these benefits and costs are largely offsetting, there are some resource costs for Australia, including a leakage of income to overseas authors and publishers.
  
  
• At the same time, the PIRs help to support the ‘cultural externalities’ associated with Australian publishing. These are assessed as policy relevant, but unlikely to be large.
  
  
• An explicit subsidy to support the cultural externalities would avoid a leakage of support overseas, but the approach would have practical drawbacks.
  
  
• Abolition of the PIRs and reliance on consumer demand for Australian stories to deliver a sufficient level of local writing and publishing activity, while having some merit, would not be prudent at this time.
  
  
• Changes should be made to the current PIR regime to increase competition in those parts of the market where the restrictions put most upward pressure on book prices and/or where the cultural externalities are likely to be smallest. To this end:

1. PIR protection should only apply for 12 months from the date of first publication of a book in Australia (while retaining the 30 day release rule) the 7/90 day resupply rule should be abolished booksellers should be allowed to overtly offer an aggregation service for individual import orders under the single use provisions.

• A further review should be held five years after implementation of the changes arising from this study.

Find more information including the submission from Leading Edge which has some good background information here: Delicious Bookmarks

Chaney to Ghost Write Bush Decisions - Again?

It's in the HuffPo so it must be true. Or not. Link

But according to sources close to the former president, Mr. Cheney was his second choice to write the memoir after Mr. Bush was turned down by his first choice, author James Frey.

Mr. Bush, who reportedly "likes the way he makes things up," had asked Mr. Frey to pen the memoir under the title A Million Little Decision Points.

I actually think that kid from Brown might have done a better job with this.

Shatzkin with Agents and FiledBy

Mike Shatzkin who needs no introduction nor help from me for that matter had an interesting post today about a panel discussion he participated in on the future of publishing. Importantly, however he also announced that his new business FiledByAuthor is now live:

This is the same phenomenon that has made it harder for new bands to break out for years: a kid today can still “discover” the Beatles or Bob Dylan and have dozens of songs to listen to and learn without any regard to what is “new”, because the Beatles and Dylan are new to them! We haven’t (yet) had the situation where a multi-book novelist from the 1880s or the 1930s becomes a new addiction, but we’re bound to eventually. And in the meantime, all those Long Tail units are just making the slope to success a little steeper for every new book.

I also told the agents (and, because I did, I want to tell you) about a brand new business I’m involved in called Filedby which, I’m happy to say, is addressing the Long Tail question from another direction. Filedby is now live with a web page for 1.8 million authors — every single one with a live ISBN in the US or Canada. The pages, already mounted, are “claimable” by the authors, providing a big head start on a personalized web page that Filedby has provided largely through automation. We see an enormous opportunity in helping authors help themselves. There are a lot of them not getting much help from their publishers. Frankly, except for Morgan Entrekin — who explictly spoke about working the internet finding the audiences for books that would sell between 6,000 and 25,000 copies — nobody was offering much hope that the publishers would be doing more for the authors in the days to come. Everybody seems to be looking to authors to do more for themselves. I think my co-founder Peter Clifton and I picked a very good time to be starting this business.

Six Things to Change Publishing But with Video!

Here is the link to the post earlier in the week with the powerpoint presentation:
(Link)

Amazon Sued By Discovery Communications

In what is likely to cause great consternation and discussion on the web here is the Discovery Communications statement:

Discovery Communications Files Patent Infringement Suit Against Amazon.com

March 17, 2009

(Silver Spring, Md.) Discovery Communications, Inc. (Nasdaq: DISCA, DISCB, DISCK) today filed a patent infringement suit against Amazon.com, Inc. in the United States District Court for the District of Delaware, alleging infringement of a patent issued to Discovery Communications for electronic book technology. Discovery Communications alleges that Amazon's sale of the Kindle and Kindle 2 products and its electronic book delivery system infringe U.S. Patent Number 7,298,851, "Electronic Book Security and Copyright Protection System." A copy of the filing can be found on Discovery's web site: www.discoverycommunications.com.

Discovery Communications and John S. Hendricks were significant players in the development of digital content and delivery services in the 1990's. Hendricks' work included inventions of a secure, encrypted system for the selection, transmission, and sale of electronic books.

Joseph A. LaSala, Jr., General Counsel of Discovery Communications, said: "The Kindle and Kindle 2 are important and popular content delivery systems. We believe they infringe our intellectual property rights, and that we are entitled to fair compensation. Legal action is not something Discovery takes lightly. Our tradition as an inventive company has produced considerable intellectual property assets for our shareholders, and today's infringement litigation is part of our effort to protect and defend those assets."

Discovery Communications is represented in the action against Amazon.com, Inc. by Morrison & Foerster and Young Conaway Stargatt & Taylor.

PLEASE CLICK HERE TO VIEW:

Stop Making Sense: RISD Students Visit Random House

Apparently, RISD students have been all the rage at corporations ranging from The Gap to Bank of America and they recently visited Random House. This has to be fake, right? From The Brown Daily Herald.

Last month, a team of RISD students made a consulting trip to the headquarters of Random House, the venerable New York publishing house whose widely-publicized financial troubles earlier this year required company-wide layoffs. Random House CEO Markus Dohle extended a personal invitation to the students, who were paid a six-figure consulting fee and tasked with "re-energizing Random House's artistic mission by challenging our notions of creativity in business settings."

On their first day at Random House, the RISD team - who arrived in Manhattan on blue bicycles, wearing plaid pants and one-shouldered leotards - spent the morning examining the artwork in the offices of several Random House employees. Upon seeing a framed print of Thomas Kinkade's "The Christmas Cottage" hanging above the desk of senior editor Robert Littrell, RISD senior Megan Lafleur-Ramirez pronounced it "beyond tragic," and replaced the Kinkade print with "Awareness of Self and Non-Self Entities," a sculpture consisting of a bag of Cooler Ranch Doritos dipped in honey and tied to a Betamax player. RISD junior David Harrison spent the afternoon replacing many of the Dell computers in the office with cardboard signs reading "COMPUTER + COMP-YOU-TER = THE SIGNIFIED (???)" and sophomore Hannah Benton joined senior Rachel de Compt in the accounts division, where they spent several hours dropping long green threads onto pieces of canvas, attaching them to glass slides and putting the slides in a toaster. The project, de Compt said, was inspired by French surrealist Marcel Duchamp's "Trois Stoppages Etalon," and was meant to represent the plight of America's poor.

Do I label this "business strategy" or maybe comedy.

Kevin Roose has a book coming out: The Unlikely Disciple: A Sinner's Semester at America's Holiest University Amazon. (Hat tip Ron Hogan).

Judging Clarity: The AAP, Google, AG Settlement

There has been an increasing amount of discussion – mainly on the Interwebs and via list serves, etc. — about the proposed settlement between Google, AAP and AG. The agreement is set to be approved by the presiding judge in mid-year and there are no indications that the judge will fail to approve the agreement. The agreement itself is so complex that this complexity may be resulting in a lack of coherence to the objections that some parties have; but, as I see it there are several themes to the objections and some of these came out during an open meeting I attended at Columbia University Law School on Friday.

Firstly, at the core of this agreement, is a provision to set up a Book Registry (BR) that will manage bibliographic information, document copyright holder details, as well as enable sophisticated opt out/in functionality and provide for collect and pay. The Registry is being funded initially by Google and will have a board of directors chosen equally between the parties (ex-Google).There is some concern about how this operation will function since the details are not laid out in the document (only its obligations). For example, the Registry will arbitrate between potentially conflicting parties regarding copyright ownership. The exact mechanics of this remain cloudy and so some believe this lack of clarity is cause for concern. Unclear also is how this organization will be constructed, although AAP and AG are among those involved in the upcoming naming of an Executive Director of the Registry. Articles of incorporation will be filed with the State of New York in the next week which assumes the establishment of bi-laws and a board of directors for the BR. A question was asked about the eventual representational breadth of the board beyond members of AAP and AG to which the response was ‘we hope to represent as many groups as possible without it becoming cumbersome.’

Secondly, there is concern about the sales process and the mechanism for determining who pays what. This question was not addressed in full although it is Google who will be selling the books database product to libraries and other institutions. The scope of the customer base is not clear; e.g., it is not clear whether the Library of Congress would be an eligible institutional subscriber. Since this is not Google’s (natural) business, it is assumed the company will find a third party (or more than one) to sell this database for them into this market. One panel member expressed strong concern that monopolistic factors could develop in the sales of the product particularly a monopoly of the content for sale. Even if Google commissioned multiple sales agents, pricing could not diverge from that established by the BR, which would receive input from Google. (There was some under-current of belief that this database of out-of- print, old, ‘orphan’ works is a public good and should, therefore, be open to all).

The pricing formula seems to be susceptible to black box determination and isn’t clear. In the document specific prices per title are noted (in the context that x number should be priced at y price and z number priced at w price, etc). It would seem logical that there will be an all in price per some recognized measure (such as enrollment or population served). Having said that, there may need to be some type of sliding scale resulting in some of the larger universities and institutions paying a proportionately larger amount than smaller schools but how (or if) this will develop may have more to do with experimentation that anything. Any customer is going to want some clarity regarding the price they are being offered and how their price compares with another similar institution. There is also the question of what types of libraries are eligible for subscription; e.g., would libraries within hospitals qualify? The mechanic's library? It may come down to anyone with cash.

Pricing assumes there is value in this database and, in the aggregate this is probable. And perhaps as the books are progressively interlinked (assuming this will form some of their development), then value will increase. In the final analysis, academic libraries are going to view this as a must-have database and will be pressured by their faculties and researchers to subscribe. Publishers with many titles in the database will make some money but the average author is unlikely to make much at all. (This doesn’t negate the benefit that their intellectual work will now be far more easily accessible). As an aside, in pricing this database, I believe the emphasis will be to price it as high as possible in case usage proves the product is only marginally useful.

No one at this meeting mentioned the Elsevier complaint that purchases are often “all or nothing” deals: In this case, it would be interesting if Google provided access to anyone wanting the database and then charged only for usage. The students at the small agricultural college in Texas are not going to access too many of the political science titles from Michigan and maybe they shouldn’t have to pay for them. (There is language in the agreement about domain-specific compilations — e.g., "biology" or perhaps "biological sciences" - but it is not spelled out how that would be implemented).

This is only a US deal and there will be no international access to this database. International publishers (particularly) have felt disenfranchised, since many books published overseas have been scanned as part of this process.

Regardless, Google and AAP emphasize the points that they have made every effort to enable copyright holders to participate in or opt out of the database. They have promised functionality that will enable wide flexibility from expunging the content to free access – with significant gradations with respect to access and pricing between these two points.

Google says they have spent $10-15mm (by their own declaration more than in any other class action suit) to educate the potential rights holders of this agreement. Even so, there haven’t been too many ‘reclassifications’ of books once considered “orphan”.

This will not be the last of this discussion.

Note: Thanks to Peter Brantley for his help and here are his thoughts (and the Twitter Stream) on the same meeting.

Six Things to Change Publishing

Michael Tamblyn's presentation on change in publishing is excellent. Each one is great, but I especially like number one and in number six he touches on some of the innovation concepts I noted in my presentation at Frankfurt last year. In comparison, I was far more heavy handed than his elegant delivery.

Michael Tamblyn - 6 Projects That Could Change Publishing for the Better

View more presentations from booknetcanada.

Related: Presuming No Book

Related: Edelweiss: Above the Treeline

Related: Future of Bibliographic Databases

No 1 Detectives

I saw the poster in Times Square and she saw it in the subway. I thought, "Crap, we are going to have to get HBO". Casually, over dinner, I mention: "I'm thinking we might want to get HBO." She says, "Oh really, I think so to." I say "Why would you agree?" She says "You know why."

Oh, well at least there's Bill Maher.

UK Retail Magazine Distribution Upheaval

The Guardian reports (and Dawson confirms) that Frontline a joint venture of three magazine publishers has decided not to renew their distribution agreement with Dawson Holdings. The agreement that covered approximately 1,000 magazine titles that were distributed to newstands, agents and stores across the UK will be split between Smith News and Menzies. While the change will not happen for 12mths some observers are suggesting a duopoly may not be in the best interests of the market.

Dawson Holdings provides distribution for various types of media content including distribution into the UK library market. The company indicated that this contract is worth £116 million and compares to total revenues for Dawson News of £690 million. Since the contract still has 12mths to run the company is in the process of determining its options.

Publishers in many markets are looking for improved efficiency and this situation in the UK is another example of that. As the Guardian writes:

The move is part of an efficiency drive by Frontline, jointly owned by Bauer Media, the FHM publisher, Haymarket, whose titles include the advertising industry bible Campaign, and BBC Magazines. In common with other publishers, they are trying to cut costs by reducing the number of local and regional wholesalers used to deliver titles to the 55,000 retailers in the UK that stock them.

Frontline and its competitors, which include Comag and Seymour, deliver from their printing presses to regional warehouses owned by distributors. The industry used to be dominated by a network of local and regional distributors, many of which had monopolies in certain parts of the country, but in recent years the big magazine companies have tried to rationalise their distribution operations.

In the US, readers will be aware of a similar set of circumstances involving Anderson News and Source Interlink which sought to extract more money from publishers for distribution. With a declining marketplace and increasing costs publishers and distributors are aggressively looking for efficiencies and consolidation -thereby spreading costs across more publications - is a viable option. Whether this places too much market power in the hands of SmithNews and Menzies remains to be seen.

Livemocha and Pearson Announce Partnership for Online Language Learning

I covered Livemocha just after they made a launch/investment presentation at a west coast developers conference in 2007. That blog post is here.

Pearson, the world’s leading education company, and Livemocha, the world’s largest online language learning community, announced today a strategic agreement to co-develop a new, direct-to-consumer, conversational English language learning experience available on Livemocha’s online platform with a global community of over two million members.

MediaWeek (Vol 2, No 9): Alternative Reality, Brewster Kahle, Reviews, McGraw-Hill, Kaplan

In this quarter's technology report The Economist had three articles of general interest and relevance to publishers. Firstly, an article about alternative reality games and it would seem to me that some of the important elements that go into the creation of an ARG could (should) be delivered or supported by a 'traditional' publisher. (Economist is paid access - Sorry).

It was back in 2001 that the first commercial ARG, “The Beast”, a promotional campaign for Steven Spielberg’s film “A.I.: Artificial Intelligence”, began blurring the line between reality and fiction. Instead of formally announcing the start of a game, ARGs merely leave clues for potential players to follow: a subtle image on a poster, perhaps, or a cryptic message on a website. Fans must piece together the narrative—that’s the “alternate reality”—on their own. ARGs are characterised by their reliance on technology and teamwork, and are often shrouded in mystery until they end, weeks or even months later. Only then is the full story (and the product being promoted) revealed.

In the second article, the newspaper wonders do reviews really help and how many is too many? Apparently they do and maybe there is a limitless appetite for them:

The sheer volume of reviews makes far more difference, according to Google’s analysis of clicks and sales referrals. “Single digits didn’t seem to move the needle at all,” says Mr McAteer. “It wasn’t enough to get people comfortable with making that purchase decision.” But after about 20 reviews of a product are posted, “We start to see more reviews—it starts to accelerate,” says Sam Decker, the chief marketing officer of Bazaarvoice, a firm that powers review systems for online retailers.

His company’s research shows that visitors are more reluctant to buy until a product attracts a reasonable number of reviews and picks up momentum. In a test with Kingston, a maker of computer memory, Bazaarvoice collected reviews of Kingston products from the firm’s website and syndicated them to the website of Office Depot, a retailer. As a result there were more than ten reviews per product, compared with one or two for competitors’ offerings. The result was a “drastically” higher conversion rate, which extended even to other Kingston products that lacked the additional reviews.

Lastly, The Economist profiles Brewster Kahle the founder of the Open Internet Archive.

But all these things are steps towards Mr Kahle’s wider goal: to build the world’s largest digital library. He has recruited 135 libraries worldwide to openlibrary.org, the aim of which is to create a catalogue of every book ever published, with links to its full text where available. To that end, the Internet Archive is also digitising books on a large scale on behalf of its library partners. It scans more than 1,000 books every day, for which the libraries pay about $30 each. (The digital copy can then be made available by both parties.)

Some 200 people work for the Internet Archive, which has an annual budget of $10m-14m. Initially funded by Mr Kahle, the archive now gets much of its income from grants made by foundations and from libraries that pay it to digitise their books. It also runs a variety of one-off projects, such as a collaboration with America’s space agency, NASA, to make available photos and films relating to the history of the space programme, and a “print on demand” system to turn digital files into physical books in minutes.

BusinessWeek suggests that the Android Mobile operating system will overtake the IPhone by 2012.

The iPhone's lead over smartphone upstart Android is set to be short-lived, according to new research.

Android smartphone sales will outstrip iPhone sales by 2012, a report by industry watchers Informa Telecoms & Media has predicted.

Last month, O2's parent Telefónica Europe revealed sales of the iPhone topped one million in the UK. While T-mobile UK – the exclusive carrier of the first Android device, the G1 – wouldn't put a figure on how many of the devices have been sold, it did say the handset now accounts for 20 per cent of its contract sales.

McGraw Hill is in the second phase of an e-Book experiment at Northwestern Missouri State:

One of the largest public university e-text research trials is currently being conducted by Northwest Missouri State University and McGraw-Hill. The alliance is testing the potential of replacing students' printed textbooks with the electronic, fully interactive versions that offer promising cost savings.

The preliminary phase of this study ended this past December and involved four classes and approximately 200 students. This second phase involves 10 departments and more than 500 students. Initial results are expected by mid-April 2009.

"As we look ahead to the University's ever-growing operational costs, especially in today's challenging economic environment, we see eBooks as a proactive solution to address the considerable expense associated with higher education," said Dr. Dean L. Hubbard, Northwest's president. EBooks typically cost about half as much as traditional printed textbooks.

In the second phase of the pilot program, the students download the McGraw-Hill eBooks using VitalSource Bookshelf(R) a software application for reading, managing and interacting with digital content.

Online Universities Kaplan and University of Phoenix are given failing grades by Consumers Digest:

For-profit online universities represent a $6.2 billion industry with some 620,000 students as of fall 2008. Because of questionable oversight by the federal government, some of these "institutions," such as Kaplan University and University of Phoenix, are able to skirt requirements of the Title IV student-assistance program that is part of the Higher Education Opportunity Act, and thus, mostly taxpayer money is filling the coffers of these companies. The transgressors often use high-pressure tactics to mislead individuals regarding the value of a degree and the costs involved in working toward that degree. Many potential students are deceived about the transferability of credits earned elsewhere. Allegedly, instructors are pressured to inflate students' grades to keep them enrolled and the financial aid flowing in -- and are rewarded for doing so. For students, all of this can result in subpar coursework, insufficient job training and a degree that is devalued by employers -- a complete waste of a student's time and money.

In the course of producing the investigative report, "Degrees of Difficulty: The Truth About Online Universities," in the April issue of Consumers Digest (on sale March 3), interviews with 26 former employees and students from the biggest for-profit online universities brought to light the questionable role of admissions "advisers" who know little about academia but a lot about sales; the existence of giant call centers adorned with large wallboards that track applicants and enrollment numbers; and bonus- and commission-based enrollment practices -- even though federal law prohibits schools that are eligible for federal funding from using these practices.

Newscaster Bloopers

Katie Couric on Letterman last Monday night told a story about some mid west news station that reported on an impending snow storm. (It snowed in NYC last Monday so this was partially relevant). Katie explained that one evening the weatherman was warning of a heavy snow storm the next day. When the team returned the next day for the evening newscast the snow had not materialized, and in passing over to the weatherman for his report, the blond newscaster asked "So, Joe what happened to the 8 to 10 inches you promised me last night."

Which reminded me about a news story about a fast ball pitcher who it was said could throw a ball through a car wash so fast the ball wouldn't get wet. When they came back to the news desk one of them said "well, I guess he must have the cleanest balls in baseball".

I think in both cases they had to go to commercial. We'll be right back.

Skittles

Skittles have been all the rage on Twitter the past day or so since the company relaunched their website by merging social media content from Wikipedia, Youtube, twitter, flickr and other sites. Some more savy web users have been able to cobble together a version of this concept by tying together sites like linkedin, slideshare, blogger, flickr, etc to establish a web profile or presence (and all for free without the expense of web development or hosting); however, this commercial extention appears to be unique. Whether unique or not this effort has tapped into the phenomenon of web-based social interaction to such an extent that twitter users were blaming skittles for the service disruptions on twitter yesterday.

Visit www.skittles.com and here is a take from the LA TImes:

The updated website is little more than a small overlay that links to user-submitted information about the candy on various social media sites: photos of candy wrappers on Flickr, videos from the company's YouTube channel, the Facebook fan page, its Wikipedia entry and real-time conversation on Twitter.

Upon loading Skittles.com, the visitor is asked to enter a date of birth as an agreement to the no-holds-barred information flow. A Twitter search for "skittles" is the default landing page, displayed in the background.

Putting the micro-blogging website at the forefront has apparently paid off. "Skittles" has topped Twitter's list of trending topics since last night.

Stewart Eviscerates CNBC.

Remember when McCain bailed on Letterman and how Letterman milked that for weeks. This is better. A lot better. What I found interesting about this is that the audience was hardly laughing. There was a lot of unease as he went through the examples.

The Daily Show With Jon StewartM - Th 11p / 10c

CNBC Gives Financial Advice

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Joke of the Day

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.