Live Academic: Crank Up The Volume

Few publishers would limit themselves to selling or distributing through one outlet when there were multiple routes to customers on offer at zero incremental cost. Microsoft, as the second guest to the party, recognizes this and is at pains to present that they will accept digital files from publishers or scan titles in a manner that creates no additional costs to publishers.

With their nascent book program, Microsoft – the big bully of yore - is defined relative to the incumbent but doesn’t court that comparison to their advantage. Microsoft has attempted a stealth approach in gaining publishers’ attention and cooperation via direct communication and visits and presentations rather than a more aggressive marketing and public relations program. At least that’s my explanation for their rather meek entrée into the digital book space. It will be interesting to see the level of interest in their presentations at BookExpo later this month. If the meeting I attended at London Bookfair is any indication where there were less than 30 people in attendance this could be another missed opportunity for Microsoft.

Microsoft need to court some controversy in order to draw attention to themselves. They also need to exhibit deeper knowledge and understanding of the publishing industry: Both the simple mechanics of the industry and the quixotic issues such as the inter-house struggles over international rights which are particularly relevant with respect to electronic content.

The Microsoft personnel involved in the Live Academic program all need to understand this material rather than just the front man. Google also took a long time to learn this lesson believing that their people were so smart they could fake it but this attitude was taken for arrogance and things got off to a bad start. The improvement was evident at London where the 60 min overview presentation of Google Book placed the program in the context of the industry and with the issues the industry faces. A second panel discussion leaned heavily on publisher experiences and Google barely needed to speak to get the positive point across. In contrast, the Microsoft presentation seemed to run out of gas after 15mins or so. The features are impressive but the delivery isn’t emphatic. In answer to a question about upcoming features, Microsoft diverged into a 10min presentation of the NYT e-reader product – interesting - but not on point.

Microsoft Live Search has over 30,000 titles available (once it officially launches) and the titles are displayed in a two pane system. The page layout is functionally more appealing than GBS. Moreover the user is easily able to export segments of highlighted text, link to abstracting and index products and citation services such as bibtext.

Microsoft is also emphasizing that the program is conducted with the full cooperation with publishers: Meaning they are not scanning books where the copyright is ‘in transition’ (in the words of Google). To support this emphasis on the publisher, the company designed what amounts to a publisher platform to manage the content in the Live product. Via this ‘platform’ publishers can set the level of preview rights in three ways: 1) percent viewable, 2) pages forward and back, or 3) contextual snippets. The publisher can also set territorial rights as well – geographic locations – all of which are assignable on a per-book basis. Not foregoing my earlier comment about understanding the industry, Microsoft seems to have recognized that the book is a unit of component parts and have made the permissions process so flexible that the publisher can even set rights for an image or table in a specific book.

The publisher also gets marketing and promotional options that enable branding (logos), promotional programs (links, coupons), commerce applications for ‘buy the book’ activities and links to online retailers. An appreciation of the importance of metadata to discovery also percolates and the company decided to license bibliographic data from a leading source and also capture the book text in multiple ways to ensure the rendition of the book was accurate and that the text was indexed appropriately. Scans are held in hi and low res images and the text is fully indexed and sits ‘behind’ the image. Current OCR technology is not sophisticated enough to replicate complicated page layouts that incorporate call outs, high lighted text, block quotes and the like. All of this gets scrambled via OCR. (The text of the title is captured in reflowable xml).

Microsoft suggest they want consumers to find books in places they wouldn’t ordinarily find them which is in search results and have made the point to publishers that the Microsoft program is another outlet for promotion and perhaps sale of their content. Regardless of the sound of this pleasant and appealing message it is far too quiet and what Microsoft should do is raise the volume. Google is bound to release a version 2.0(beta) of GBS shortly and would look to incorporate some of the best features of Live Academic. What will the message from Microsoft be then? My suggestion is to open up the content and allow web service and api access to the book content (with publisher approval of course). After all, who really wants a second closed content platform comprising similar if not duplicative stuff? Courting ‘controversy’ may be another way of gaining attention but I think that’s what Microsoft Live needs.

Thomson Reuters Update

Some say discussions have been going on for years and some say they only got serious in the past few months but nevertheless Thomson and Reuters have admitted that Thomson will acquire Reuters in an $18billion deal. Strategically important for Thomson in competition with Bloomberg, the deal should pass the requisite government inquiries. Tom Glocer maybe the big winner having been inserted into the CEO role of Reuters when the company's future was far from guaranteed. He will now assume the CEO role of combined entity when Richard Harrington retires when the deal is completed. From the press release:

Under the terms of the proposed deal, Reuters CEO Tom Glocer would become chief executive of a dual-listed group to be called Thomson-Reuters, the companies said in a joint statement.

Thomson will have a slightly higher market share as a result of this deal; however, the developing market is international and the 'pie' is growing larger by the day. Reuters is a far stronger name internationally than 'Thomson financial' or Bloomberg' and from this stand point Thomson will be in a strong position to further leverage the brand internationally as internationally markets grow and develop and thereby need more sophisticated information and workflow products.

Weekly Update

Deal News:
When Opportunity Knocks Pearson Goes Shopping: Harcourt Assessment. Independent Forbes
£8.0 Billion Thomson bid for Reuters: Independent
Discussion of possible Thomson bid for Reuters: Toronto Star The National Post
Private Equity Threeway for EMI: Reuters
Douglas and McIntyre Publishing (Canada) Acquired by PE: PR Web
Riverdeep Refinances: RTE

Publishing:
Lonely Planet Unsure: Seek Investor(s): The Age
Torstar (Harlequin) report improved Results: Global & Mail
PR Newswire to offer Blog Measurement Tool: PRNewswire
Simon & Schuster Doing Well: The Bookstandard

Other News:
Application of FAST search Technology to Newspapers: Reuters
Shareholder Opposition to Murdoch Dow Deal: Reuters

Sports:
Champions: BBC
Clemens Back with the Yankees. NYTimes.

Bid Rumors: Reuters & Thomson

The markets are in a tizzy this morning with rumors of PE bids and or approches for AOL, Time Publishing, EMI and Reuters. Even in Australia where media deregulation has just occured media stocks prices are up and will Microsoft buy Yahoo?

Reuters has confirmed that they have been approached by an unnamed third party about a bid for the company which they say may or may not lead to a bid. The most likely 'third-party' is Thomson which would like to add the news and information provider to their existing information (Legal & Regulatory, Financial) platforms. Given the sale of the Learning division - and some announcement about finalists should be imminent - Thomson is itching to spend the money and have been more than forthright about investing in expanding businesses that fit with their long term goals. Reuters does that and more importantly after a troubling effort early in the decade to harness the web and migrate their products to a new platform, Reuters appears to be in an upswing. This must be good news to Thomson.

Reuters shares were up sharply this morning placing a market valuation of over $15bill. While Thomson is expected to get $5.5bill for the Learning division their balance sheet is more than strong enough to complete this acqusisition with relative ease. It is a good job that Reuters CEO Tom Glocer was able to spend some time at Singita recently since he is going to be busy for the next six months.

Help, My Book Won't Open

New technology hits the monastery and the monks appear baffled. The trust worthy and reliable help desk support team arrive to sort it all out.

Thanks to Martyn Daniels for the link.

Google Lending Books

I attended two of the very well attended Google sessions at London Bookfair last week and in the second of these Jason Hanley from Google gave a full overview of the Google book program. He also gave a very short overview of some of the new initiatives that Google is working on and one of these caught my attention.

Google propose to roll out a book 'rental' and 'retail' program sometime before the end of the year. The program will enable customers to either have lifetime access to a title if purchased or to rent a title in weekly increments. Details of the financial arrangements are being discussed with the content owners at the moment but there is no reason to believe that both of these programs will not be launched by the end of the year. The program will be optional for publishers but represents just another of the expansion of options that publishers will have to distribute, market and/or sell their content.

Details at the presentation were sketchy so I emailed Jason the following:

Jason,

I attended your session at LBF last week and I was interested to learn a little more about the Book “Lending” program you touched on in New Initiatives. I would like to write something about it for my blog which is read by a fair number of librarians who would be interested in knowing more about this initiative.

Here are the brief notes I took:

• Borrowers will have the ability to ‘rent’ or ‘borrow’ a book for a week. · Full content of the book will be available
• This is not an ‘e-book’ program
• It will be launched by the end of the year (together with a purchase option which you also discussed)
• Final details are being discussed with content owners

Could you elaborate on the above by answering the following questions:

1. Is this a lending program or a rental program?
2. What do you mean when you describe this as not an e-book program?
3. What will the financial model look like for publishers?
4. Do you think the financial arrangements you arrange with publishers cascade into the current financial relationship between Libraries and Publishers? Typically publishers sell titles to libraries at a ‘short’ discount and do not receive additional payments no matter how frequently the title circulates. Presumably, in your arrangements with Publishers there will be some remittance to publishers each time a book is ‘lent’
5. Is this an ‘add-on’ benefit to publishers of the Google Book program and as such voluntary?
6. Is there any anticipated connection with libraries: could libraries act as intermediaries between their patrons and the Google “Lending” program or is there no practical need for this?
7. Any other information my readers may find interesting.

Thanks and if you don’t want to say anything about the above please let me know so that I can go ahead and make it all up in my blog article.

OK so the last bit is slightly irreverant but I hope it didn't cause him not to respond because so far no response. (He did open my email).

This will be interesting to watch and I think perhaps one of the more revolutionary changes that may evolve from a program like this could be a significant change in the financial relationship between libraries and publishers. In my view the current one time fee paid to publishers by libraries has to (and will) change to a per use fee. Libraries will pay fees based on circulation of the titles - both print and e-book versions. There are a few ways this may happen and none are mutually exclusive particularly as publishers and libraries experiment. For example,

• Calculate a unit fee per title and remit to publishers each time a title is circulated
• Each title is 'sold' in circulation increments - perhaps they expire - so a title is sold with 10 circulation 'units' and the library pays each time the book is circulated 10 times. (Perhaps the base level - in this case 10 - values the book at the retail price)
• Publisher agrees a site license for their titles at an institution which would be an annual fee covering all circulation for e-books and print titles. Each year the fee would be negotiated. Clearly in this case e-books are easily managed and this is a model already in place for database products but for print titles the solution would be trickier but not impossible.

In truth, evolution is coming to the relationship between publishers and libraries driven by Google and e-books and ultimately these changes will result in libraries becoming more relevant to publishers not less. As libraries are networked and catalogs indexed their collections are more accessible which means that publishers may want a bigger slice of revenue but it may also mean that they want to ensure that this avenue to consumers that libraries represent presents all their products in the best possible manner. That will mean that libraries get more attention and possibly are able to lend more content. Change is good.

Murdoch Seeks Dow Jones

Harpercollins owner News Corp has made an unsolicited bid for Wall Street Journal publisher Dow Jones (Reuters). The bid is priced at $60/share and Jim Cramer (crazy guy) on CNBC (which broke the story) suggests that this may jump higher if others get involved. Currently the offer price is 50% higher than yesterdays share price close so News is going for broke. This deal has been on the cards for years; however, Cramer noted today that the two or three executives and board members opposed to the deal are no longer part of the organization. He also speculates that members of the Bancroft family are already in his camp which could make approval of the acqusition easier.

Others may jump at the opportunity to own a prime name in financial reporting but so far Bloomberg for one has issued a denial. It would be a stretch to see Thomson Financial anti-up for the property because their entire focus is on electronic delivery. Thomson sold the bulk of its newspapers years ago. Private equity could be an option as well. Cramer also frequently mentioned his audience with the Digger back in 1996 when Murdoch was willing to offer $73/share for the company but was rebuffed. What discouraged Murdoch the last time was the suggestion that the Bancrofts would not approve the deal but this time that doesn't seem to be the case.

Related:
Reuters: Pearson shares up 5%
Forbes
Predictions 2007: Noted at the bottom of the page.