Harpercollins and IPhone Deal

Harpercollins announced they have built an application that will enable book excerpts to be made available on the iPhone. It is the only deal of its type between a publisher and Apple for this content and the excerpts will be available on the iPhone and the iTouch using the Safari browser or Apple's new web applications site. In addition to text excerpts readers will be able to hear audio excerpts and hear interviews with the authors. Apple has said it has no plans to extend this deal to other publishers (although that sounds more like "no one else has asked" to me). The Bookseller is saying this is exclusive.

The Harpercollins UK announcement coincides with today's UK/European launch of the iPhone.

"Victoria Barnsley, chief executive officer and publisher of HarperCollins UK, said of the iPhone: "With its large screen and tactile nature, I believe it could be the breakthrough device for consuming digital product on the go and brings us closer to the ultimate e-book dream."

According to the company, 15 books are being made immediately available for the UK launch of the iPhone including Lewis Hamilton: My Story (he drives cars) and Playing with Fire by Gordon Ramsey (he used to play football and now cooks for a living).

Each excerpt, which we represent about 5% of the total content will be free with the remaining 95% available for purchase and download.

Harpercollins Reports First Quarter

Harpercollins' 10 year long run of impressive results took another hit when they reported first quarter results which were materially short of the pace set in the corresponding quarter in 2006. From the press release:

"Book publisher HarperCollins owned by News Corp., reported first quarter operating income of $36 million and revenue of $330 million. This compares to operating income of $55 million and revenue of $368 million in the same quarter last year. The year-ago quarterly results benefited by the strong sales of Lemony Snicket's A Series of Unfortunate Events. Current quarter results were highlighted by strong sales of The Dangerous Book for Boys by Conn and Hal Iggulden, Motor Mouth by Janet Evanovich, Ana's Story by Jenna Bush and Deceptively Delicious by Jessica Seinfeld."

From The Bookseller:

"But HCUK c.e.o. and publisher Victoria Barnsley said that despite this, HCUK's volume growth "outstripped the rest of the market", while value grew by 5%. "If you strip out the effects of the new Harry Potter book in July, we held our market share steady at 8.9%, level with the same period last year," she said."

Speaking to Publisher's Lunch, Jane Friedman (CEO) said "I would say we've probably not had a quarter this bad during my tenure." On the flip side she went on to note that the second quarter is off to a good start and one suspects that this quarterly performance is nothing to be concerned about. Indeed on the NewsCorp conference call publishing wasn't even mentioned.

Wolters Kluwer Reports

Wolters Kluwer reported third quarter results inline with expectations and also announced the completion of their initial share buy back scheme and the launch of a second buy back. The company says it expects to buy back €175mm in shares over the next several months. Highlights from the press release are as follows:

Third-quarter 2007:

• Organic revenue growth of 4% (2006: 4%)
• Ordinary EBITA of €153 million, grew 18% and 24% in constant currencies (2006: €130 million)
• Ordinary EBITA margin improved to 19% (2006: 16%)
• Revenues of €799 million, grew 2% and 6% in constant currencies (2006: €786 million)
• Structural cost savings increased to €41 million (2006: €33 million)

Nine months ending September 30, 2007:

• Organic revenue growth of 3%, on track to meet the full-year guidance (2006: 2%)
• Ordinary EBITA of €457 million, grew 20% and 26% in constant currencies (2006: €381 million)
• Ordinary EBITA margin improved to 18% (2006: 16%)
• Revenues of €2,476 million, grew 2% and 6% in constant currencies (2006: €2,431 million)
• Structural cost savings increased to €117 million (2006: €91 million)
• Free cash flow of €194 million (2006: €232 million including €53 million one-time tax refund)
• Divestment of Education generated a sales price of €774 million, a book profit of €595 million and net proceeds of €665 million

Nancy McKinstry, CEO and Chairman of the Executive Board, commented on the company’s third-quarter performance:

“Wolters Kluwer continued to successfully execute our strategy of accelerating profitable growth during the third quarter of 2007. Our good organic growth was fueled by new products and strong growth in online and software solutions. Importantly, all divisions contributed to the significant increase in operating margins realized through revenue growth, operational improvements, and prior restructuring programs. We have a strong, balanced portfolio which enables us to continue our clear growth momentum. Our performance over the first nine months of 2007 has put us well on track to meet our full-year guidance.”

The Eagles Top Billboard Charts

In an update to my post yesterday Walmart has allowed Billboard to record the sales of the new Eagles Album and this has resulted in a number one ranking for the band. Billboard

This represents a policy change in the heady world of charting best sellers since previously Billboard did not record sales when titles were sold predominately through one vendor.

The Eagles' first new studio album in 28 years, "Long Road Out of Eden," takes a short route to No. 1 on The Billboard 200 after Billboard revised a significant chart policy today (Nov. 7).In consultation with Nielsen SoundScan, Billboard will now allow exclusive album titles that are only available through one retailer to appear on The Billboard 200 and other charts, effective with this week's charts. Prior to this, proprietary titles were not eligible to appear on most Billboard charts.

According to the numbers, Long Road Out of Eden sold 711,000 units ranking it second for the year in first week sales.

Radiohead: 2 out of 5 Ain't Bad

Comscore has released a study that suggests that two out of every five downloaders of Radiohead's In Rainbows release were willing to pay something. From the press release:

During the first 29 days of October, 1.2 million people worldwide visited the “In Rainbows” site, with a significant percentage of visitors ultimately downloading the album. The study showed that 38 percent of global downloaders of the album willingly paid to do so, with the remaining 62 percent choosing to pay nothing. The percent downloading for free in the U.S. (60 percent) is only marginally lower than in the rest of the world (64 percent)

Comscore has a 'panel' of 2mm users that allow Comscore to track their internet use. The full press release makes for interesting reading but we don't know how many actually downloaded the album other than a 'significant' percentage. In my back of the envelop calculation, if only 10% of downloaders paid the average $6 then Radiohead nets about $275K. If 25% of downloaders paid the amount would be approximately $650K. If Radiohead receive approximately $1.50 per CD (avg retail $12.95) this would mean they would need to sell 450,000 CDs (in the month) to generate $650K in royalty. My numbers may be fuzzy but if they did sell to 25% of downloaders I don't think those numbers may not be bad at all.

On note that is confusing to me is that the comscore numbers are all in dollars and with the weak US dollar it is surprising that the average paid by non-US residents is lower than the US price. In the UK the typical CD sells for £10-12 (which is $20 - 24). Since their average price paid is lower than the US price that means the typical European has a much lower view of the value of music than the absolute numbers might suggest.

(Tip of the hat to Lorraine Shanley at Market Partners).

Building the Imperfect Beast

“We’re looking for a new paradigm” is how Don Henley put it when discussing The Eagles’ choice of WalMart as an exclusive distributor of the band’s first studio album in 27 years. The comment is laughably patronizing - as though we just aren’t smart enough to see his new commercial nirvana. They own the biggest-selling album of all time; just what “new paradigm” could they be looking for? Speaking of that album (and the more recent Greatest Hits 2), you could bet a large fortune that Eagles fans everywhere would harken for the old stuff anyway.

In July, Prince placed his new album with The Mail on Sunday (UK) for free. He then sold out at least five huge shows later that summer in London. That’s a new paradigm. Radiohead’s new album is available for download at whatever price you think it is worth and Neil Young’s Chrome Dreams II was sent to me free as part of the ticket package for his upcoming shows in New York. New paradigm indeed.

Contrast the minimal attention that this release seems to have garnered with those of other current releases. In the UK, it is being reported that The Eagles will top the Billboard charts and edge out Britney. Now, you might be thinking, is that any competition? But, in fact, her album has been well received over there and broadly here as well. In the US, The Eagles album may not debut in the top three; moreover, because distribution is not widely seen, it may end up dropping like a stone soon after. Since Walmart doesn’t report sales at an item level, you won’t see any of the usual excitement that ensues when a new album moves up the charts. Ergo, ignominious mediocrity. If you contrast the lack of hype around this album – remember, the first in 27 years! - from one of the biggest bands ever and the reaction to Radiohead’s new paradigm; it is comical by comparison.

As a result, fans showing up on the concert tour which is bound to follow aren’t likely to have heard the new stuff. Perhaps, if The Eagles had been more innovative, they could have created broad anticipation for the new stuff. As it is, concert-goers will hit the head when the group launches into those unrecognizable ‘hits’.

Aside from the silliness (or ignorance) of Henley’s comment, there is also a perception issue. Millions of people travel to NYC to shop on 57th Street. Why? Because the experience is evocative of exclusivity. It is unique and the stores are attractions in and of themselves. If something is sold on 57th Street, the consumer characterizes that product in a very particular way. This is no less the case with a big-box retailer like WalMart. Your association with the products sold at Walmart has everything to do with how you perceive WalMart. So, if you have a negative view of Walmart (and not everyone does) will that transfer to The Eagles? It does for me. Mrs PND has an emotive reaction to WalMart, believing the shopping environment to be soulless and barren. I, on the other hand, think of their intolerance and their overarching belief that they can influence culture by limiting or manipulating choice.

When you think about it The Long Road Out of Eden is a rather unfortunate choice of title for this album when you remember that Walmart has a history of locking up employees, dissuading employees from their legitimate right to union representation and engaging in an active effort to deflate employee wages. Clearly, for some Walmart employees there is no “road out of Eden”

Henley said they got some grief for the Walmart deal but I am simply baffled by the fact that they needed to consider this option at all. Indeed, if they were truly looking for a new paradigm, they only needed to poll some of their ‘friends’ from MySpace who could have given them any number of ideas. And I will bet none would have included Walmart.

Center of Her Own Attention

Americans remain blissfully unaware of the talent of Manchester United and England football player Wayne Rooney. On the football pitch, Wayne has few rivals and he is a sports personality whose talent transcends sport to media superstardom. Even as a better player than David Beckham, he will never rival him as a star: He doesn’t have the looks, but he will be big. On the other hand, his girlfriend/fiancee may become bigger than Victoria Beckham and the glow of Wayne’s stardom has reflected on her since they were engaged when she was 17. You see, 21-year-old Colleen McLoughlin has reportedly just signed a five-book deal with Harpercollins. Admittedly this is on the back of her successful autobiography Welcome to My World (Oopps, I almost typed “Wayne” there…) but, without Wayne would there have been an autobiography at 20 years old?

Read the rest of this post on Foreword: Here.