Christian Retail: Dead or Just Breathing Hard

Close readers of this blog will remember that in reporting about the Random House acquisition of Multnomah Publishing last week, I mentioned that the Christian bookselling marketplace has been struggling for years. While I was President of R.R. Bowker, we forged an agreement with the Evangelical Christian Publishers Association (ECPA) to provide the reporting mechanism for their point of sales reporting tool. During this time, I and a number of my staff attended meetings and events and heard of the issues that the Christian booksellers were having in the market.

Recently, in reporting on the Harpercollins results, Jane Friedman commented on the decline in their Christian imprints as one reason why their results were not better. These comments were reported at Publishers Marketplace. She commented that the segment was “seeing hard times”. Harpercollins has had impressive wins with Christian titles particularly The Purpose Driven Life and their acquisition of the publisher Zondervan a number of years ago was prescient. While all of this made sense to me, I wasn’t too surprised to see The Bookstandard release a story with the headline Is Religious Publishing in Trouble (although the use of the word Religious versus Christian should have been a give-away). The article promised to “investigate what is going on in religious publishing so far this year.” But is doesn’t; it is entirely superficial and I would have thought that a company with more resources than me could do a much better job.

Firstly, there are a few items wrong with this story. 1. There are no primary references. 2. There are no relevant stats quoted (Bookscan data is not relevant). 3. The Christian retail market is not homogeneous; in recent years there has been a close partnership between ECPA and Christian Booksellers Association (CBA). 4. Religious books don’t equal Christian books just ask any ECPA member. This simple error tells me the author is missing something fundamental.

So what is going on. ECPA publishes annual statistical data derived from their POS data and from industry market research. ECPA has not released recent sales numbers to the public but it is a good bet that book sales through the predominately Christian retail outlets have continued to increase in line with prior years. Additionally, as this press release reports Christian buyers buy more and buy more frequently. And look at the following quote from CBA:

"According to CBA, the international trade association for Christian
retail, sales of Christian products are on the rise. Sales of religious
books grew from $4 billion in 2000 to $4.34 billion in 2004, the CBA reports.
Christian retailers still sell a majority, about 53 percent, of the goods,
while warehouse clubs, big-box stores and national, general bookstores sold
31 percent."

Competition is a bigger deal with Christian retail than in years past, with more and more ‘mainstream’ retailers such as Borders, Barnes & Noble, Sam’s Club and Costco taking Christian publishing more seriously. This is taking volume from the Christian independents. Unfortunately, many industry participants believe there will be a reduction in the number of independents similar to what happened to the ABA stores during the 1990’s. Additionally, the two largest Christian chain stores Lifeway and Family Christian are growing more sophisticated and market savy which could have an impact on independents as well.

With over 2000 CBA stores, the reference to the Bookscan data in The BookStandard article is irrelevant because these stores don’t report to Bookscan. Their numbers maybe directional but in the manner in which they are used they could result in a wrong conclusion. Quoting the Bookscan manager makes no sense when they could have called ECPA and CBA directly for some relevant insight.

Lastly, aside from the Religious versus Christian semantics the product mix is very different for Christian retail. In addition to the traditional fiction/non-fiction, there are devotionals, music and gifts and other merchandise and published products which don’t fit the traditional bookselling model. For a true analysis of whether Christian retail is dead, some understanding and analysis of this issue and it’s impact should be discussed.

It seems there has been some interest in this topic whether driven by Jane Friedman or not and below are some links to other news reports. To understand what is really going on in Christian retail there is a report published by Simba in conjunction with ECPA if you are interested.

Nashua Telegraph
Ventura County Star

News Update: Google, Pearson, VNU

Google has formally announced that the University of California will be a partner in their library digitization project. The Google 5 are now the Google 6. UC isn't concerned about the copyright issues and they vow to continue to work within the law. They also add that they will continue to work with the Open Content Alliance which they joined last year. Brewster Kahle who founded the OPA was less than thrilled by the news.

On the heals of the private equity purchase of VNU, the company has announced a high level executive change at VNU business media. Long time information and business publisher Robert Krakoff will join VNU to run their US publishing operation out of New York. Recently, Krakoff had his own consulting company but has spent long stints at Reed Elsevier and Advanstar. He replaces Mike Marchesano who is bumped upstairs to run a corporate wide efficiency initiative named Project Forward.

Pearson announced yesterday - first in error and then formally - that they have purchased Mergermarket for just less than $200mm. The acquisition will integrate with the FT group. The company has made no secret of adding new companies to each of their operating units and this is the second major acquisition for the FT group in six months.

News From The Library Side

There have been a number of interesting news items relating to the library business in recent weeks. I commented on the OCLC initiative to open their WorldCat database to openweb searching earlier this week. OCLC is also a partner in a new Amazon.com initiative to supply shelf ready books to libraries who order through the Amazon.com bookstore. It has long been the case that libraries have purchased some (meaningful) percentage of thier titles through the commercial online bookstores. It looks like this initiative will eliminate the often tedious process issues that resulted in librarians having to manually check in, catalog and make shelf ready the titles they purchased from these vendors. What with the vast second hand marketplace available through the Amazon site it is easy to see how reducing process costs (and time) will result in more purchases being directed away from full service providers like B&T, Brodart, etc. to Amazon who can supply like new titles for a much lower unit cost. Here is the news article from Information Today.

At the Library of Congress, management have been attepting to deal with two major problems they and the rest of the library community must address. These are the vast increase in the amount of information and 'published' product they need to catalog as part of their remit and secondly the decrease in qualified people to do the work. There have been a number of initiatives undertaken to deal with these issues and the library is looking at all types of things from outsourcing data entry tasks to radically changing how they catalog items and material. Clearly one of the more fundamental changes they have to accomodate is the growth of electronic products - where there is no longer a print version - which raises storage, versioning and access issues that they have never had to deal with before. Having said that, LOC has had multimedia collections for at least 100 years and recently created a digital archive in Virginia for their audio and film content. One of the best aspects of this - aside from preservation - is that access to this content is now so much better.

As will all change however, there are questions that need to be addressed by interested parties and as Library Journal reported recently ALA has recently raised some issues about changes the Library is proposing.

Lastly, Eric Hellman at Openly Informatics refered me to this podcast from Georgia Tech. The podcast tells of various intiatives Georgia Tech are attempting to improve the library experience.

Thomson Corporation Reports Strong Results

The Thomson Corporation reported their second quarter results on July 27th which reflected strong organic revenue growth and flow through profit. Among the highlights, revenues increased 7% (organic growth was 6%) and operating profit increased 15% versus the prior period. The operating profit improvement was both the result of higher revenues and also represented the results of a corporation wide cost improvement initiative. Earnings on an adjusted basis were $0.34 per share versus $0.23 per share in the period a year ago. Thomson also said the growth was broad based across all four business units.

Thomson President and CEO Richard J. Harrington commented on the results:

"We are pleased to report strong results for the second quarter. Our performance reflects our continued ability to execute against our three strategic priorities - driving organic growth as well as business and portfolio optimization. Notably, Thomson achieved another solid quarter of organic growth, up 6% over the prior-year period, with each market group contributing to the increase. Further, Thomson continued to translate revenues into profits, growing operating profit margin 100 basis points over the second quarter of last year.”

The company said their full year revenue estimate will be in line with their goal of 7-9% revenue growth. Full-year 2006 revenue growth will continue to be driven primarily by existing businesses, supplemented by tactical acquisitions. Thomson expects continued improvement in its operating profit margin in 2006. Thomson also expects to continue to generate strong free cash flow in 2006.

More information as follows for each of the business units:

Legal & Regulatory
- Revenues increased 9%, to $923 million, and segment operating profit grew 13%, to $277 million. Organic revenue grew 8% and growth from acquisitions was 1%.
- Organic revenue growth was largely driven by strong double-digit global online solutions, software and services, as well as the timing of certain bar review courses that were recognized this quarter versus the third quarter in 2005.

Learning
- Revenues were $456 million, a 5% increase over the prior-year period. Excluding the effects of currency exchange, revenues grew 4%, virtually all of which was organic.
- Revenue growth was driven by a 6% increase in the global higher education businesses, particularly custom publishing services, and Arts & Sciences and Business & Economics textbook sales.

Financial
- Revenues increased 6%, to $499 million, and segment operating profit increased 23%, to $92 million. Organic revenue growth was 5% and growth from acquisitions was 1%.

Scientific & Healthcare
- Revenues were $229 million, up 6% from 2005, and segment operating profit increased 9%, to $47 million. Organic revenues grew 5% and growth from acquisitions was 1%.

Here is a link to their webcast details.

Open World Cat Database Access

You will notice on the side bar a link to the Worldcat database. Worldcat is the bibliographic database of OCLC which represents the book, music, document, etc. collections of over 18,000 libraries around the world. After much debate the nonprofit library cooperative has created a method for individuals to search library collections over the open web. It is a great step forward in opening up these collections and it will also have the effect of encouraging all of the collective's libraries to improve and speed the exposure of their collections. It will in turn drive traffic to their libraries. OCLC is all about improving the discovery and access to their library's collections.

Also, on the side bar is a link to Lorcan Dempsey's blog at OCLC. He is the chief brianiac over there and routinely links to all kinds of important happenings in library land.

News Update: Random House, Bertelsman, Smithsonian, Indigo Books

Random House purchased Multnomah an evangelical Christian publishing company located in Oregon. The US Christian publishing market is a growing market despite the fact that the Christian book retail market has been struggling for a number of years. Driving the growth is the increasing distribution of Christian titles through big box retail and traditional B&N, Borders and Books A Million stores. Titles such as the Left Behind series and The Purpose Driven Life have also drawn Christian titles into the mainstream. Random House now joins Harpercollins with the strongest stable of Christian imprints. Look for more acquisitions over the next few years.

Bertelsmann have said this week that they are closer to selling their music publishing business which they need to do to enable them to pay for the 25% equity stake owned by Groupe Bruxelles. It doesn't hurt that they will get a great price for the publishing catalog.

Smithsonian announced that it is consolidating and expanding their web presence.

Indigo Books And Music of Canadian fame reported this week. Characterize these results (and that stock chart) with the results from Borders recently. Indigo have some great looking stores - great open layouts, coffee bars - which makes the experience fun. OK, they also have the benefit of being the only large chain book retailer in Canada but in all Canadian cities there are many great independent booksellers for competition. For many years, there have been rumors that Indigo was being prepared for sale to a big book retailer across the border. In the case of Borders, perhaps the acquisition should be the other way. Heather Riesman is now a successful book retailer and perhaps she could do a lot more with Borders than their new inexperienced management.

Related to Jesus and The Holy Grail

A recent novel received a seven figure advance for a book that revolves around the descendents of Jesus and Mary Magdalene. The author apparently has seen ancient family documents (presumably scrolls) that form the basis for the novels ideas.

The story reminded me of Monty Python:

The lady of the lake, her arms clad in the sheerest shimmering schamite (?), held aloft Excaliber, to exclaim that I Arthur shall become King of the Britons.

Eh, strange wimmin lying in ponds distributing swords is no basis for a system
of government..... Listen, if I said I was an emperor just because
some moistened bint lobbed a scimitar at me they'd lock me away.....

It is interesting that the author was "laughed out of New York" a few years ago. Post DaVinci she is getting a better audience. Here is the title on Amazon just in case you want to improve its sales rank. I liked the review from PW "...unadorned facts numbingly narrated.." OK, so the quote might not be on point but it is still funny.