The Telegraph is reporting that Reed Elsevier is facing such a problem selling Reed business that they are organizing a consortium to provide funding for a potential purchase. Initially, the company said it would sell the entire division (excluding the Exhibitions Group) then they annouced that they would consider separating the UK and US operations. Outside appearences indicate the sale isn't going quite as well as planned. Ultimately, the division will be sold but Reed may have to give up on their price expectations or consider further break-up scenarios.
If the current approach is succesful it could limit or slow down a potential buyers ability to carve up the company and sell off the pieces they don't want. Any potential buyer is likely to want to sell several properties in an effort to focus the group on a number of core industry segments that have already shown potential for electronic publishing. Any buyer taking advantage of this financing model to be as flexible as if they had negotiated the terms themselves and whether this is possible remains to be seen.
Tuesday, June 03, 2008
Borders Axe Falls
Rumors were rife this weekend at BookExpo about the situation at Borders and the news was confirmed today regarding a significant headcount reduction. The company released a press statement that said in part,
Naturally, this news will only make publishers more nervous about extending credit to the company. A deal to sell the business can not come too soon.
As part of this expense reduction program, management reported that the company is today implementing a corporate payroll reduction that includes the elimination of 156 corporate positions spread across virtually all departments of its Ann Arbor headquarters. Employees at the company's headquarters were informed of the job eliminations this morning. In addition, Borders Group has eliminated 118 corporate posts that are based outside its headquarters, impacting primarily corporate employees in distribution centers, the field marketing organization, and the corporate sales division. These employees were informed yesterday. In total, the corporate payroll reduction eliminates approximately 20% of the company's corporate positions but less than 1% of its total workforce. The job elimination, with the exception of less than a handful of positions, is limited to corporate employees and does not involve store employees at the company's 547 Borders superstores and 475 Waldenbooks Specialty Retail stores worldwide.
Naturally, this news will only make publishers more nervous about extending credit to the company. A deal to sell the business can not come too soon.
Wednesday, May 28, 2008
Small Publishers and Foreword Magazine
Foreword Magazine is celebrating their 10th anniversity and they asked me to write something on the changes I have seen in the past 10yrs or so.
Many years ago I attended my first BookExpo conference in Miami. On subsequent visits ever since, the rows upon rows of independent publisher booths have both awed and discouraged me. I have frequently said to friends and colleagues that as a reality check anyone considering establishing a publishing company should attend a BookExpo before committing dollar one. For many (myself included), there is a romantic notion attached to publishing which isn’t entirely undeserved; however, a trip through the aisles will prove that the unique idea you thought you had for the ideal publishing house or list is represented multiple times perhaps even in the same aisle.
At Bowker I saw a relentless procession of new publishers adding their information to Books In Print. Each year we saw approximately 10,000 new applications for ISBN numbers and these applications were fairly constant between the mid-1990’s and 2002. At the turn of the century, the numbers of new applications began to grow inexorably and is most likely well over 12,000 by now. The growth in self-publishing and the democratization of the publishing process is to ‘blame’.
In 2005, (if I recollect correctly from my Bowker years) 18 publishers produced almost 40,000 titles and 13,000 publishers produced 77,000 titles. (Including all titles the number published in 2005 was 180,000 give or take). On average, each of the 13,000 publishers published less than 10 titles per year. While these numbers reflect one year (2005) the data was proportionate to the entire Books In Print database of 5mm titles and 165,000 publishers. To emphasize the breadth of suppliers, I have heard Barnes & Noble say they order at least one title from 45,000 publishers in any given year.
All new publishers and existing independent publishers publish in every niche imaginable with lists ranging from one title to several thousand. Each publisher knows their market is intensely competitive and that titles will never be successful unless they are supported by an intensive focus on marketing and promotion. Naturally, some do this better than others.
There are significant challenges that small and medium publishers must overcome; getting their titles noticed is the greatest. At Sourcebooks, the company has adapted traditional advertising and marketing principles and applied them to the book industry. The results are instructive (and impressive). At the core of their business model is the understanding that each new title is a ‘product’ which requires a specific marketing and promotion plan. (Marketing’s four ‘p’s: product, promotion, price and place). At Sourcebooks, the difficult questions regarding how the title will be marketed and promoted are asked at the adoption stage rather than applied by rote as the book is being printed. Sourcebooks is a proven example that publishing can be done successfully by approaching the business less as an avocation and more as a market driven business. In order to be successful, more small and medium sized publishers will need to adopt similar programs to support their publishing efforts.
Other challenges abound. For example, we may begin to see the self-publishing model begin to impact the available pool of authors. Many authors may come to realize they can produce and promote their own title(s) and make more money rather than work with a traditional publisher. It has long been the case that the success of any title was dependent on the level of self-promotion provided by the author: As manufacturing and editing become commoditized, the author may wonder what a publisher’s value add will be if the titles’ success resides entirely on their promotional abilities. More authors may decide to do it themselves.
All businesses evolve and publishing is no exception; I see more and more independent publishers begin to adopt better financial controls, better marketing and promotion and make more astute title selections. While some significant challenges have occurred over the past 20 years – publisher consolidation, retailer consolidation, a reduction of independent bookstores – there have also been some impressive positive improvements. Opportunities represented by more effective use of technology, digital distribution and online advertising should all be experimented with, embraced and adapted to the publishing model. I also believe we will see more small and independent publishers seek out and work with some of the self-publishing companies (Author House, Lulu) where each supports the other’s business model. There remain opportunities in the independent publisher market: Look for me in the aisles in Los Angeles.
Many years ago I attended my first BookExpo conference in Miami. On subsequent visits ever since, the rows upon rows of independent publisher booths have both awed and discouraged me. I have frequently said to friends and colleagues that as a reality check anyone considering establishing a publishing company should attend a BookExpo before committing dollar one. For many (myself included), there is a romantic notion attached to publishing which isn’t entirely undeserved; however, a trip through the aisles will prove that the unique idea you thought you had for the ideal publishing house or list is represented multiple times perhaps even in the same aisle.
At Bowker I saw a relentless procession of new publishers adding their information to Books In Print. Each year we saw approximately 10,000 new applications for ISBN numbers and these applications were fairly constant between the mid-1990’s and 2002. At the turn of the century, the numbers of new applications began to grow inexorably and is most likely well over 12,000 by now. The growth in self-publishing and the democratization of the publishing process is to ‘blame’.
In 2005, (if I recollect correctly from my Bowker years) 18 publishers produced almost 40,000 titles and 13,000 publishers produced 77,000 titles. (Including all titles the number published in 2005 was 180,000 give or take). On average, each of the 13,000 publishers published less than 10 titles per year. While these numbers reflect one year (2005) the data was proportionate to the entire Books In Print database of 5mm titles and 165,000 publishers. To emphasize the breadth of suppliers, I have heard Barnes & Noble say they order at least one title from 45,000 publishers in any given year.
All new publishers and existing independent publishers publish in every niche imaginable with lists ranging from one title to several thousand. Each publisher knows their market is intensely competitive and that titles will never be successful unless they are supported by an intensive focus on marketing and promotion. Naturally, some do this better than others.
There are significant challenges that small and medium publishers must overcome; getting their titles noticed is the greatest. At Sourcebooks, the company has adapted traditional advertising and marketing principles and applied them to the book industry. The results are instructive (and impressive). At the core of their business model is the understanding that each new title is a ‘product’ which requires a specific marketing and promotion plan. (Marketing’s four ‘p’s: product, promotion, price and place). At Sourcebooks, the difficult questions regarding how the title will be marketed and promoted are asked at the adoption stage rather than applied by rote as the book is being printed. Sourcebooks is a proven example that publishing can be done successfully by approaching the business less as an avocation and more as a market driven business. In order to be successful, more small and medium sized publishers will need to adopt similar programs to support their publishing efforts.
Other challenges abound. For example, we may begin to see the self-publishing model begin to impact the available pool of authors. Many authors may come to realize they can produce and promote their own title(s) and make more money rather than work with a traditional publisher. It has long been the case that the success of any title was dependent on the level of self-promotion provided by the author: As manufacturing and editing become commoditized, the author may wonder what a publisher’s value add will be if the titles’ success resides entirely on their promotional abilities. More authors may decide to do it themselves.
All businesses evolve and publishing is no exception; I see more and more independent publishers begin to adopt better financial controls, better marketing and promotion and make more astute title selections. While some significant challenges have occurred over the past 20 years – publisher consolidation, retailer consolidation, a reduction of independent bookstores – there have also been some impressive positive improvements. Opportunities represented by more effective use of technology, digital distribution and online advertising should all be experimented with, embraced and adapted to the publishing model. I also believe we will see more small and independent publishers seek out and work with some of the self-publishing companies (Author House, Lulu) where each supports the other’s business model. There remain opportunities in the independent publisher market: Look for me in the aisles in Los Angeles.
Tuesday, May 27, 2008
Borders First Quarter: Sales Down Cash UP
Borders Group, Inc first fiscal quarter, total consolidated sales, at $784.7 million, were down 1.0% over a year ago. Borders domestic superstores comp sales for the period decreased by 4.1%. Excluding music, same-store sales at Borders domestic superstores decreased by 1.7% for the quarter. Waldenbooks comp store sales decreased by 0.8% over the same period a year ago. International segment increased by 3.1% in the first quarter.
Improvement in Cash Flow:
Cash flow from operations improved by $132.9 million for the quarter compared to a year ago due in large part to improved inventory management,which generated $88.9 million in cash in the first quarter. Inventory decreased by $188.4 million at cost from the same period a year ago. Debt was reduced by $130.9 million compared to the prior year, including the prior year debt of discontinued operations. Commenting on the results CEO George Jones said:
Improvement in Cash Flow:
Cash flow from operations improved by $132.9 million for the quarter compared to a year ago due in large part to improved inventory management,which generated $88.9 million in cash in the first quarter. Inventory decreased by $188.4 million at cost from the same period a year ago. Debt was reduced by $130.9 million compared to the prior year, including the prior year debt of discontinued operations. Commenting on the results CEO George Jones said:
"As was the case with nearly every other retailer, the challenging overall consumer environment hampered sales performance in the first quarter. I am pleased, however, that even within this difficult retail climate, we were able to manage inventory well, begin to aggressively reduce expenses, and end the quarter with better bottom line results than would have been expected in this type of environment. In fact, we worked with a third party advisor to develop a plan to reduce our annual operating expenses by$120 million, giving Borders a new, more effective base operating model going forward. We expect to realize about half of these savings within the current fiscal year and the full amount in 2009. We also
substantially improved cash flow and reduced debt in the first quarter -- both of which are critical factors in achieving our long term financial goals -- and as we announced in March, we completed financing to support our short term goals. While we have seen an improvement in sales in recent weeks, we will continue to aggressively execute expense reductions and manage our business conservatively, putting us in a much better position for long term success."
To Return or Not to Return
An interesting discourse on the Publisher's Weekly web site about comments made by Barnes & Noble (specifically Steve Riggio) on ending returns policies. Naturally, this would only come about when it is of advantage to the retailer and this is a point not lost on those commenting. Here is a sample from Richard Curtis:
Mr. Riggio criticizes returns practices as "expensive." Perhaps he means it’s become expensive for the chains now that publishers have been squeezed so ruthlessly they have nothing left to give. Has it begun to dawn on executives like Mr. Riggio that, as powerful as the chains may appear to be, they are just another brick and mortar operation doomed to disintermediation by the Digital Revolution? So, now you want to end the consignment model of book distribution? Sorry, Mr. Riggio. The monster created by bookstore chains has the industry by the throat and will not let go. Returnability may be archaic, wasteful, stupid and fraudulent but publishers, bookstores and consumers are addicted and nobody is going to give it up. Not now, not ever. You’re welcome to try to reform the old business, Mr. Riggio, but that’s no longer where the game is being played.
Monday, May 26, 2008
Book Expo Session
I am hosting a Panel discussion at BookExpo this week. Please join us for an interesting look at digital content and how publishers are learning to experiment with social networking and consumer interaction.
Feel free to contact me if you are attending BookExpo and would like to meet. (michael.cairns @ infomediapartners.com)
Here is the panel description and some background on the panelists.
Digital Bundling: Considerations, Combinations & Costs
1:00AM - 12:00PM (Thursday, May 29, 2008)
Most publishers are committed to allowing consumers access to electronic versions of their books whether on their own account or via programs such as the Google Book program. Some publishers are going a step further and are allowing consumers to interact with and create their own products using the publisher’s content. As publisher’s build their content databases, digital bundling will become a significant part of the product mix and will change the concept of the customer – from bookstore to consumer - and the concept of the product – from book to service. Rapid improvements in technology will enable ‘mass customization’ of publishing products and will fundamentally change the relationship with customers. While many publishers are still tentative in their e-book experiments others are already experimenting with digital bundling. As these publishers experiment, what are their experiences, what are the issues and what costs exist as these publishers engage their customers in new and revolutionary ways? Hear from publishers who are experimenting or are contemplating launching making their content available to consumers for new and exciting products.
Panelists and Bios:
Sheila Clover English – CEO of Circle of Seven Productions, Executive Producer of Reader’s Entertainment TV and author of the ebook entitled The Book Trailer Revolution Book Marketing and Promotion Through Digital Video
Mrs. English is a member of the Association for Downloadable Media where her video performance rating system has been a topic of conversation, shared at the ad-tech convention and now under review with the Internet Content Syndication Council where Circle of Seven Productions has joined the likes of CBS, Associated Press, Google, Reuters, Studio One, NBC and other top media companies that will help shape the future of online video syndication.
Mrs. English has been interviewed by NPR, Newsweek Magazine and most recently The Wall Street Journal regarding book trailers and will be featured on the Robert Scoble Show this July talking about book trailers and online distribution.
A multi-award winning copy writer and executive producer and a member of the International Academy of the Visual Arts, Mrs. English has pioneered many milestones for digital video in the publishing industry. Her company, Circle of Seven Productions created the first book trailer to play in a movie theater, mall screens and the first to win the prestigious Telly Award.
Tom Hall is a Senior Digital Product Manager at Lonely Planet in Melbourne, Australia. For the past 2 years, he's been responsible for the development and launch of Pick & Mix, a program which allows consumers to buy, download and print individual chapters from Lonely Planet guidebooks. Prior to this, he managed the http://www.lonelyplanet.com/ home page and the ThornTree travel forum.
Tom has a long and checkered background in leading software projects and products. Prior to joining Lonely Planet in 2003, he was an IT Consultant to the Egyptian Ministry of Health in Cairo, and a Supervising Producer at Ninth House, a San Francisco eLearning startup. He has degrees in American Literature and and Writing from the University of California, San Diego.
Laurie Petrycki is the General Manager of the Head First and Missing Manual divisions at O’Reilly Media, Inc., where she oversees the development and creation of all products and services. In the Head First division, she and her team shape content to cultivate passionate users by making learning easy and fun for the brain. With the unique Missing Manual format, the goal is to respect readers' intelligence and help them get stuff done. As part of the publishing community for almost 20 years, Laurie has expertise in all sides of the business-- including editorial, production, and manufacturing--and has published on various technological and educational subjects.
David Wilk is an independent consultant and marketer (Booktrix.com) with broad experience in publishing, book packaging, sales, distribution, e-commerce and marketing. He has the privilege of working with authors, publishers and their books, in all formats, at the intersecting points of creativity, technology and cultural change. All applied to the traditional matters of art and commerce.
He has lately been working as a publishing industry consultant to Shared Book, a “reverse publishing” technology that enables content rich websites to give their users a broad array of publishing tools. Shared Book is inherently a mass customization and personalization engine. It is also somewhat chameleon-like, insofar as its many features can be deployed in different configurations, depending on the specific market needs of its site partners.
For example, children’s book publishers are using Shared Book to create extremely simple (and highly profitable) personalized versions of some of their classic titles, printed one at a time, with no changes to the essential art and text of the original books. Random House was first with Poky Little Puppy, the success of which was sufficient for them to be adding another 50 titles to the program this month.
Content rich sites including magazines that have extensive digitized and tagged content sites are enabling newly developed quick tagging tools which allow their site visitors to assemble a customized book from any article or photograph that sits on their site. Allrecipes.com and several other cooking sites give their users the ability to create customized and personalized cookbooks using either site supplied materials, or user generated content or both.
And there are even more complex uses possible with Shared Book’s sophisticated annotation engine – academic publishers and social networking sites are looking at an application that will allow professors to create custom texts for small or large study groups.
The applications of the highly evolved electronic publishing platform that Shared Book has created will enable traditional and nontraditional publishers to serve customers with the content they want in easily created customized and personalized forms.
Feel free to contact me if you are attending BookExpo and would like to meet. (michael.cairns @ infomediapartners.com)
Here is the panel description and some background on the panelists.
Digital Bundling: Considerations, Combinations & Costs
1:00AM - 12:00PM (Thursday, May 29, 2008)
Most publishers are committed to allowing consumers access to electronic versions of their books whether on their own account or via programs such as the Google Book program. Some publishers are going a step further and are allowing consumers to interact with and create their own products using the publisher’s content. As publisher’s build their content databases, digital bundling will become a significant part of the product mix and will change the concept of the customer – from bookstore to consumer - and the concept of the product – from book to service. Rapid improvements in technology will enable ‘mass customization’ of publishing products and will fundamentally change the relationship with customers. While many publishers are still tentative in their e-book experiments others are already experimenting with digital bundling. As these publishers experiment, what are their experiences, what are the issues and what costs exist as these publishers engage their customers in new and revolutionary ways? Hear from publishers who are experimenting or are contemplating launching making their content available to consumers for new and exciting products.
Panelists and Bios:
Sheila Clover English – CEO of Circle of Seven Productions, Executive Producer of Reader’s Entertainment TV and author of the ebook entitled The Book Trailer Revolution Book Marketing and Promotion Through Digital Video
Mrs. English is a member of the Association for Downloadable Media where her video performance rating system has been a topic of conversation, shared at the ad-tech convention and now under review with the Internet Content Syndication Council where Circle of Seven Productions has joined the likes of CBS, Associated Press, Google, Reuters, Studio One, NBC and other top media companies that will help shape the future of online video syndication.
Mrs. English has been interviewed by NPR, Newsweek Magazine and most recently The Wall Street Journal regarding book trailers and will be featured on the Robert Scoble Show this July talking about book trailers and online distribution.
A multi-award winning copy writer and executive producer and a member of the International Academy of the Visual Arts, Mrs. English has pioneered many milestones for digital video in the publishing industry. Her company, Circle of Seven Productions created the first book trailer to play in a movie theater, mall screens and the first to win the prestigious Telly Award.
Tom Hall is a Senior Digital Product Manager at Lonely Planet in Melbourne, Australia. For the past 2 years, he's been responsible for the development and launch of Pick & Mix, a program which allows consumers to buy, download and print individual chapters from Lonely Planet guidebooks. Prior to this, he managed the http://www.lonelyplanet.com/ home page and the ThornTree travel forum.
Tom has a long and checkered background in leading software projects and products. Prior to joining Lonely Planet in 2003, he was an IT Consultant to the Egyptian Ministry of Health in Cairo, and a Supervising Producer at Ninth House, a San Francisco eLearning startup. He has degrees in American Literature and and Writing from the University of California, San Diego.
Laurie Petrycki is the General Manager of the Head First and Missing Manual divisions at O’Reilly Media, Inc., where she oversees the development and creation of all products and services. In the Head First division, she and her team shape content to cultivate passionate users by making learning easy and fun for the brain. With the unique Missing Manual format, the goal is to respect readers' intelligence and help them get stuff done. As part of the publishing community for almost 20 years, Laurie has expertise in all sides of the business-- including editorial, production, and manufacturing--and has published on various technological and educational subjects.
David Wilk is an independent consultant and marketer (Booktrix.com) with broad experience in publishing, book packaging, sales, distribution, e-commerce and marketing. He has the privilege of working with authors, publishers and their books, in all formats, at the intersecting points of creativity, technology and cultural change. All applied to the traditional matters of art and commerce.
He has lately been working as a publishing industry consultant to Shared Book, a “reverse publishing” technology that enables content rich websites to give their users a broad array of publishing tools. Shared Book is inherently a mass customization and personalization engine. It is also somewhat chameleon-like, insofar as its many features can be deployed in different configurations, depending on the specific market needs of its site partners.
For example, children’s book publishers are using Shared Book to create extremely simple (and highly profitable) personalized versions of some of their classic titles, printed one at a time, with no changes to the essential art and text of the original books. Random House was first with Poky Little Puppy, the success of which was sufficient for them to be adding another 50 titles to the program this month.
Content rich sites including magazines that have extensive digitized and tagged content sites are enabling newly developed quick tagging tools which allow their site visitors to assemble a customized book from any article or photograph that sits on their site. Allrecipes.com and several other cooking sites give their users the ability to create customized and personalized cookbooks using either site supplied materials, or user generated content or both.
And there are even more complex uses possible with Shared Book’s sophisticated annotation engine – academic publishers and social networking sites are looking at an application that will allow professors to create custom texts for small or large study groups.
The applications of the highly evolved electronic publishing platform that Shared Book has created will enable traditional and nontraditional publishers to serve customers with the content they want in easily created customized and personalized forms.
Sunday, May 25, 2008
Brideshead Visited
An interesting article on the background to Waugh's Marchmain House.
The mind of Waugh the writer was stimulated at Madresfield. He not only drank in the medievalism of the house, but also savoured his encounters with the aristocracy, studying their habits and developing 'perfect pitch' in describing their jargon. He was fascinated to learn that his friend's father, the 7th Earl, considered it middle class not to decant champagne into jugs; how effectively nicknames and idiosyncratic jargon could exclude an outsider; how scruffily dressed the aristocrat could be at home. With his ear for dialogue and his eye for mannerisms, Waugh absorbed them well enough to be able to reproduce them faultlessly - even reverentially - in his novels.
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