The Google Settlements Vast Supply of Content

For most public and academic institutions, amassing a collection of seven million volumes would be a pipe dream of extraordinary proportion and, while there are many legitimate concerns and arguments regarding the imminent resolution of the case between Google, The Authors Guild and the AAP, the benefit to the public (via libraries) is hard to ignore. Take an average cost of $10 per book purchased and add to that cost the costs of making it shelf ready, of checking it in and out and the capital expense of storing it, and there is simply no way libraries could afford to acquire a collection as comprehensive.

We don't know what the pricing will be to libraries (and Mike Shatzkin and I are attempting to make some estimates) but the methodology for pricing is unlikely to differ substantially from the way existing databases are offered to public and academic libraries. Allowance will be made for institution budgets, school enrollment, population served, etc. and both Google and the Book Rights Registry (AG & AAP) will be interested in maximizing penetration so that their revenues are optimized. There may be built in protection against extortionate pricing since both Google and the BBR want to maximize views which argues for pricing that achieves the widest potential audience for the database. Library penetration will not be 100% but it will be high since libraries - particularly academics and large publics - will feel compelled to purchase access to this content to support their patrons. In fact, not having it will cause more consternation and deliberation.

Many libraries will see licensing this content as an opportunity to put their research capabilities on par with the top order of academic libraries. After all, this content comes from a who's who of top flight public and academic institutions. A small agricultural college in west Texas may never have had the resources to purchase a deep repository of content supporting their core curriculum but here they have the opportunity to do just that.

Opposition to this agreement is building in advance of the early May decision and, while I personally support adoption of this agreement, I am troubled that the fact of the scanning of this material is now treated as a fait accompli and has thus become a starting point for establishing agreement. Resolution should have addressed the core issue of fair use and copyright but that has not been the case and, because those issues have not been addressed, it leaves Google with a certain (some may say excessive) market power and leaves non-participants to this agreement/resolution open to possible future copyright violation.

As has been pointed out (and openly supported by Google), Orphan works legislation is not precluded or superseded by the agreement between AG, AAP and Google. What strikes me as odd however is the lack of attention any member of Congress has paid to this particular issue. To my knowledge no Congressional representative has come out either in support of the Google settlement or become newly interested in Orphan works legislation. Given the intensity of the attention paid to this issue in the publishing and library community it would seem that if Congress is still not interested in addressing Orphan works legislation then they never will. That's the situation we effectively had before the parties agreed to the settlement (and for many years past). I hope Congress does take up Orphan works legislation but in the meantime I also hope a lot of students and researchers make extensive use of this vast supply of content.

MediaWeek (Vol 2, No 15): Kindle, McClatchy, Dawson, Springer

More remedial analysis and needless hype over sales numbers for the Amazon Kindle. What is somewhat irritating about this post by Michael Arrington at Techcrunch is the fawning responses from some of the commentators.

Mahaney’s most recent estimates are for more than 1 million Kindle 2s to sell this year, and the current sales numbers absolutely support that, based on how the economy goes. Amazon could easily increase production to satisfy a surge in demand.

Our sources on Kindle sales have proven extremely reliable in the past. Last August we nailed the number of Kindle 1 devices sold at that time. And we first broke the news of the Kindle 2 and the new large screen Kindle.

In actuality there is no reliability to his sources because nothing has been said publicly. Also, if these are the numbers now what will the numbers look like when (if) eBooks really take off and they constitute more than 5% of revenue? Publishing Technology (nee Vista & Ingenta) have announced trials with several publishers that enable e-Book sales directly off the publishers web site (Telegraph):

Publishing Technology is creating a new service which will allow publishers to sell their 'e-books' directly though their own websites.

The company has already been running trials with Random House, Harper Collins and Penguin in a move which could cut out the need for the big internet intermediaries.

Chris Andersen's Booktour company which is identifies when and where authors have events has received $350K in seed money. Dawson holdings which distributes into the newsagent marketplace in the UK continues to loose clients and it's becoming clear they will have to exit this market (Telegraph):

Dawson Holdings, which distributes magazine and newspaper titles to newsagents, retailers and airlines, said in a trading update today that it expected Telegraph Media Group to "terminate" its deal in the autumn.

Last month Associated Newspapers, publisher of the Daily Mail, and Comag, the joint venture between Condé Naste and the National Magazine Company, announced they would not be renewing contracts with Dawson when they expire in 2010. The two deals accounted for £139m in revenue for Dawson last year.

Dawson also has a library supply business that to-date appears unaffected. McClatchy newspapers reported that they expect to make $225mm in digital revenue this year which translates to 15% of total revenues. (Reuters)

At McClatchy, 15% of our advertising revenue today comes from online. McClatchy, a company founded before the advent of electric lights, will generate nearly $200 million dollars in digital revenue this year at a higher profit margin than our print business.

What significance is this?

• Fifteen percent is above the average newspaper publisher’s take from digital
• $200 million would be almost enough to run The New York Times’s newsroom operations for a year. Not bad.

Higher profit margins than print? We know Gary is a big fan of pop music to highlight his industry presentations, and that he likes the Rolling Stones in particular. Maybe “Time Is on My Side” would be a decent choice for those kinds of numbers.

Qualification from Springer & Candover that the investors are looking for a $500mm partial sale not a sale of the business. Take that with a grain of salt when viewed in the context of the fact that their entire portfolio is under review. (Hedgeweek)

CCC Holds Online Google Settlement Seminar: Recording

I mentioned several weeks ago that CCC were to hold an online webinar to explain some of the details of the Google Settlement agreement. The webinar was last Tuesday but they have made the archive of the seminar available here.

Google Windfall

Mike Shatzkin and I have been thinking hard about the commercial aspects of the Google Book search settlement (IdeaLog Blog):

Here is a sample of Mike's post:

We believe it is unfortunate that the attention has been focused there because there are some very real commercial questions that we think need answers to fully appreciate the practical implications of the settlement. We’ve been doing our best to build a model of what revenue will be and where it will go. Trying to do that makes it very clear how much important detail has been omitted from the debate we’ve heard so far (and we’ve both heard a lot of it.) Here’s a starter list of questions that need answers to forecast this business which we hope that people more familiar with the terms of the settlement than we are might be able to answer for us.

Bloomsbury Launch Library Online

Adam Hodgkin has a post about a new and interesting initiative by Bloomsbury (UK) to tackle the library market.

Bloomsbury have held steady to their target of developing a service for libraries, initially primarily in the UK. It has turned out to be pretty much the project that they explained to us before Christmas. A shelf for libraries of some of the best books, from contemporary authors, which will grow and which will also serve to promote sales of the print books and public awareness of the authors selected. I suppose that there is, in this chosen vehicle, an element of quasi-political support for public libraries - a resource which publishers rightly hold to be key to the flourishing of a literary culture. Nevertheless it is interesting that one of London's leading Trade publishers should set such a priority on the support of public libraries, and that they should fashion such a service for a market which must be a tiny fraction of the market for their print publications.

Here is the Bloomsbury release:

Bloomsbury is set to transform the relationship between publishers and libraries, and between libraries and readers, with an innovative development in public lending: The Bloomsbury Library Online.

At a time when the British library system is under pressure to reach larger audiences with tighter budgets, and when the reading public is feeling the pinch, Bloomsbury is launching a unique, affordable and user-friendly online initiative.

In association with www.exacteditions.com and using existing technology in libraries across the country, Bloomsbury is rolling out a groundbreaking e-lending strategy which will allow readers toread collections of bestselling books at local library terminals or with the use of a library card on home computers and internet enabled devices.

The Bloomsbury Library Online will consist of a number of themed shelves: children’s books, sports titles, international fiction, Shakespeare plays, reference books and more. They will launch with a shelf of Book Group titles including Galaxy Book of the Year, The Suspicions of Mr Whicher, by Kate Summerscale, Orange Prize longlisted Burnt Shadows, by Kamila Shamsie, word-of-mouth phenomenon The Guernsey Literary and Potato Peel Pie Society, by Mary Ann Shaffer, and international bestseller The Death of Vishnu by Manil Suri. Embracing the advantages of the online format, users will be able to read the book, search the text, access author interviews, reviews, press features, and links to specially commissioned reading group guides.

How will it work?
• The Bloomsbury Library Online will be sold on subscription – libraries will subscribe to a bookshelf for a year at a time and will pay according to the size of population served.
• New titles will be added on a continuous basis – free of charge within the subscription year.
• Users will click through from the Library terminals or through an online portal accessible via any web browser (including those found on iPhone and Blackberry) anytime, anywhere in the UK.
• Text accessible through screen readers and therefore available to blind and partially-sighted users.

Macrovision Buys Muze

Muze, a company that supplies data information products supporting entertainment products such as music, video, books and games has been acquired by Macrovision for $16.5mm (all cash). Macrovision has been acquiring data companies (notibly TVGuide) and building its data products portfolio to support its business of "connected middleware, media recognition, interactive programming guides, copy protection and rich media, data and metadata on music, games, movies and television programming." From the press release:

Consumers' options are increasing as entertainment becomes digital. They can now enjoy their movies, music or other digital content in more ways, including numerous options online and on portable devices. All of these choices lead to an increased need for enhanced search and discovery capabilities to help consumers find entertainment content that matches their personal preferences. This process is powered by entertainment metadata.

"Macrovision believes that professional entertainment metadata is required for our customers to provide best in class consumer facing products," said Fred Amoroso, President and CEO of Macrovision. "The addition of the Muze assets will complement Macrovision's data solutions. It represents continued execution on our vision of delivering solutions that power a uniquely simple home entertainment experience."

Muze, which has been around since 1991 and is headquartered in NYC, has had a troubled history and was purchased in 2005 by a a private equity company that sought to establish more strategic focus, better cost containment and more professional management. In the years since 2005, Muze has acquired or allied with several companies and purchased the the assets of Loudeye for $11mm in cash in 2006.

In 2005, there was some excitement around the financial prospects for companies like Muze and AMG (another data supplier) and the multiples asked in sales prospectus' were relatively high. While terms were not disclosed on the 2005 Muze sale, some in the industry put the number at north of $30mm.

London Calling (and a Theft.)

I will be in London for the Bookfair next week and if you are also there please let me know and we can get together. For those interested I can expand on what we are doing at Mywire.com. For now a little LBF story. 

Several fairs ago, I was returning to our booth, which was on the upstairs balcony at Olympia from a meeting and I noticed two individuals walking behind the row of publisher stands. This immediately struck me as odd and I even said to the person I was with. "I wonder what those guys are doing". 

Ordinarily our booth was closed at the back however, one of our senior executives (we'll call him CH) had been horsing around and had pushed one of the panels out of the back wall of the stand. As a result, our storage area was completely open. As I continued towards the stand, I saw one of the guys come from behind our booth with a shopping bag which he had not had with him before. Smelling a fish, I moved towards him and started following him down the long stairway that joined the balcony with the main floor. The gent was now alone as his friend had gone off in another direction. As I came up next to him I looked in the bag he was carrying and there was a handbag. So I said to him, "that's a lovely handbag is it yours? I don't think he understood English but he did realize he needed to make a run for it. So he took off down the stairs with me in pursuit through the main floor of the fair towards the back. He dropped the shopping bag mid-way which I grabbed and continued to follow him. 

I was of two minds about stopping him; I was very worried he had a knife (and I have some experience in that area) so I let him escape out the back door. As I was running through Olympia in pursuit, people politely stepped out of our way which I thought was quite gracious. But no one offered to help nor did anyone ask me what the fuss was about. 

When I got back to the stand, our staff were in some agitation. Apparently, someone had lost their handbag with their wallet, passport, house keys and probably some make-up, so I calmly returned the bag to an eternally grateful Canadian.