Ripplewood Gets Reader's Digestion

In November 1988, when Robert Maxwell's final offer for Macmillan, Inc was accepted, the bid priced the company at 19x earnings - a ridiculous multiple which made Macmillan management, the employee pension plan and shareholders wealthy but ultimately, brought down the successor company Maxwell Communications. Maxwell's financial arrogance didn't stop with the Macmillan, Inc win either as he had bankers and analysts chasing supposed take-over deals for McGraw-Hill and Paramount Communications (Simon & Schuster) into the early 1990s. Once the company came crashing down, Macmillan an expertly run $2.1billion publishing conglomerate, was broken up into innumerable pieces and sold off for far less than the multiple Maxwell originally paid.

Fast forward twenty years and the bankruptcy filing by Reader's Digest nicely bookends a period of media investment that is unlikely to be repeated. Media companies operating - to finance people - in a boring, slow-moving, but stable business segment, offered bankers a friendly place to put their money where they could be safe in the knowledge of stable earnings and small but incremental annual increases. This was true of banks and private equity funds that invested heavily in the publishing business over the past 5-10 years.

In comparing the Maxwell and Reader's Digest experiences, we don't appear to have learned enough. Maxwell was no manager and he surrounded himself with a cadre of sycophants and mediocre managers who effectively contributed to the company's demise. Maxwell was never going to out-skill the executive team that had re-built Macmillan during the 1980s, but no one understood that until it was too late. Similarly, Ripplewood has no background in media and chose to pay a significant premium for Reader's Digest which could only cripple the business if any one of their assumptions failed. At the time of the investment, Ripplewood was not investing in a stable management team that could compensate for their limited knowledge and perhaps provide some continuity; however, they did the next best thing and filled the RD executive suite with industry talent. Naturally, it took the team time to get settled.

As we now know, their timing couldn't have been worse as the global slump resulted in declining advertising revenues and a rate base cut. These macro issues effectively eliminated any time the company may have thought they had to sort out and understand a web-based ad model that could begin to compensate for the anticipated decline of the print magazine.

It is not as though Reader's Digest has stood still and some have wondered why CEO Mary Berner and her team are still in place. The most obvious reason would be that, operationally, Reader's Digest has made improvements and management's future plans and strategies not only make sense but represent a continuation of what has worked over the past two years. The company continues to add to their stable of impressive web properties which pre-date the acquisition, and management has also successfully launched new businesses and aligned themselves with new audiences around Rick Warren and Rachel Ray. It seems likely that more relationships are planned as the company attempts to migrate their audience both to a younger demographic and online.

Someone wanted to bet me a $1 that Reader's Digest would be back to the money trough within a year. I hope that is not the case and I won't take that bet. The company continues to have core strengths around their audience (sure, they are aging but they also continue to buy stuff), a wide array of web properties within which they can build communities and a revenue base that is more diverse than you might think. If they are successful and the group of banks can exit without taking any further write downs (I admit that's a horrible measure), the road will not have been easy to navigate. Here's hoping that Reader's Digest doesn't end up like Macmillan, Inc. and that perhaps private equity grasps some reality.

WSJ: Chapter 11 Is Next Page for Reader's Digest

PaidContent: Presentation to Bankers

MediaWeek (Vol 2, No 32): Google, Australia, Book Rights Registry

The Financial Times took a long look at the Google Book Settlement agreement. Here is a sample (FT):

That makes an effort by Google, to burrow deep into the leading US research libraries to make digital copies of all the works it can lay its hands on, seem both ambitious and quixotic. The project, begun nearly five years ago, has also started scanning out-of-copyright works from libraries in other countries. A digital archive of all extant books – even ones in which few people are these days likely to show much interest – is carrying the internet company’s mission to “organise the world’s information” to the extreme. .... The first concerns the exclusive right that Google would have to distribute digital books whose copyright holders cannot be traced. These so-called “orphan works” may make up a large portion of all out-of-print tomes: Paul Courant, head of the University of Michigan library, estimates that they amount to 1m-2.5m of his collection of 8m volumes. Congress has failed in its own efforts to free up these works so they can be sold without the risk of claims later from the copyright owners. It is a peculiarity of class action law in the US, though, that private legal action can achieve a result that has eluded Congress: since Google and the new books registry would be free to sell works whose owners did not actively opt out of the court-approved settlement, they would assume a right not available to anyone else.

New data released by the IDPF shows accelerating increases in e-Book sales from the top US trade publishers (release). Many people suggest that authors can't do personal appearances so a changed model that depends on 'concerts' and merchandise will never work for authors; however, this article in the NYT shows that authors can do stand-up. (NYT):

Since they began in 1997, storytelling nights hosted by the Moth, a nonprofit, have helped aspiring writers try out new material in a nurturing environment. But lately, storytelling has exploded into a thriving genre all its own, a new avenue to prominence for writers and, increasingly, for actors and comedians. In a sense, storytelling has become the new stand-up — a way to be noticed by the literary agents, actors and directors who increasingly populate the audiences.

Andrew Wilkins discusses what he terms "Australia's most hated book" which is the report by the Productivity commission on Australia's publishing industry (Pub Perspectives)

The Australian book trade has been here before, you see. Rather like the indefatigable mole in that popular arcade game, Whac-a-Mole, the argument that books in Australia are too expensive and hard to get and that abolishing territorial copyright will make them cheaper and more available just keeps on popping up. It was the personal hobbyhorse of former Australian Competition and Consumer Commission Chairman Allan Fels and it was supposed to be addressed by reforms to the Copyright Act way back in 1991.

Those reforms put in place what most still regard as an eminently sensible compromise. Booksellers wanted to get the books from overseas that their customers wanted; publishers wanted to protect the licences under which they published and distributed overseas books in Australia. In a version of the old “use it or lose” principle, the Parallel Importation Restrictions made a publisher release an overseas book within 30 days of its first publication elsewhere or risk losing its territorial rights.

Book Business magazine interviews Michael Healy on the Book Rights Registry and managing very large data (BB):

One of the most important parts of this settlement document … is that it allows rights holders to exercise a very significant degree of control over what parts of their books are displayed, how they want the books priced, and so on. And, of course, rightsholders are entitled to remove their books entirely from the settlement if they wish.

So you can imagine [that] you start with a very large set of metadata about the books that Google has digitized; you then layer on top of that a complex data set about the rights holder; and then you layer on top of that again the ability for each rights holder to express their preferences about their books within the settlement framework. … I think, probably, my background as someone who managed very complex metadata sets for Nielsen was part of the profile that interested those who were looking for someone to head up this registry.



BISG Webcast on the Future of ISBN

Mark Bide of Editeur is hosting a BISG Webcast on the future of ISBN (BISG):

The book industry has had the ISBN for nearly 40 years; there has been little cause for excitement. Now, suddenly the whole subject of "identifiers" has become a hot topic, particularly when it comes to digital books and other online resources. This BISG Webcast will explore why the book industry has standard identifiers, and consider the future of the ISBN (International Standard Book Number), as well as the role of newer identification standards like ISTC (International Standard Text Code) and ISNI (International Standard Name Identifier). What do you need to know to make informed decisions about how -- and whether -- to use them? Register today to find out.

Register here: It is even FREE!

How timely.

Online Learning is Better?

Jonathan Kaplan in the Chronicle of Higher Ed notes a recent study that indicates that online education can be more effective than traditional forms of learning. In fact, the study based on 12 years of educational studies, shows that "online learning has clear advantages over face-to-face instruction."

He then goes on to wonder about the apparent lack of discussion and commentary about this report and suggests that would have been different if the report confirmed educators preconceived notions and bias' about how learning happens (Chron):

But imagine for a moment that the report came to the opposite conclusion. I’m sure that if the U.S. Department of Education had published a report showing that students in online learning environments performed worse, there would have been a major outcry in higher education with calls to shut down distance-learning programs and close virtual campuses.

I believe the reason that the recent study elicited so little commentary is due to the fact that it flies in the face of the biases held by some across the higher education landscape. Yet this study confirms what those of us working in distance education have witnessed for years: Good teaching helps students achieve, and good teaching comes in many forms.

MediaWeek (Vol 2, No 31): Education, Oxfam, e-Readers, Journals

Some of these were on the twitter (@personanondata) this week.

The NYTimes looks at digital content in schools and recognise it is going to come faster to college level than school. (NYT):

Whenever it comes, the online onslaught — and the competition from open-source materials — poses a real threat to traditional textbook publishers.
Most of the digital texts submitted for review in California came from a nonprofit group, CK-12 Foundation, that develops free “flexbooks” that can be customized to meet state standards, and added to by teachers. Its physics flexbook, a Web-based, open-content compilation, was introduced in Virginia in March.
“The good part of our flexbooks is that they can be anything you want,” said Neeru Khosla, a founder of the group. “You can use them online, you can download them onto a disk, you can print them, you can customize them, you can embed video. When people get over the mind-set issue, they’ll see that there’s no reason to pay $100 a pop for a textbook, when you can have the content you want free.”

Publishing sales into the California educational market are way off given the state's budgeting issues (LAT):

California school districts spent at least $633 million on new books in 2007, according to the Assn. of American Publishers. More recent numbers are not available, but a representative of one publishing house who asked not to be named because of proprietary concerns said sales in the state -- the nation's biggest textbook market -- are off by 50% or more.

"We're all seeing a precipitous drop," said John Sipe Jr., vice president of K-12 sales in California for Houghton Mifflin Harcourt.

Fewer than 200 California districts have bought reading/literature texts this year, compared with publishers' typical expectation of 600 to 700, he said.

"This is a staggering difference for our industry," Sipe said.

Long running controversy over high street bookshops run by Oxfam which receive their stock for free. The business also has antiquarian experts on staff who identify the gems that are unknowingly donated to the shops (Telegraph)

It has been estimated that 15 years ago, there were about 3,000 second-hand and antiquarian bookshops in Britain. By 2004, there were only about 1,500 left. Everyone in the trade knows someone who has had to close. In contrast, Oxfam opened its first bookshop in St Giles, Oxford, in 1987. Today, it has 130 outlets in Britain, which make an average of 21 per cent more than the regular Oxfam charity shops.
Working in a second-hand bookshop, it is hard not to be at least a little envious. Last year, Oxfam made £19 million from selling books. Its website boasts that it is the largest retailer of second-hand books in Europe, selling around 11 million books a year. As a charity, it gets an 80 per cent reduction in business rates. It has a slick PR team, it doesn't have to pay for stock and it attracts thousands of volunteers – some of them even celebrities. It can even afford to open shops in prime retail locations: it is common to see bookshops snuggled next to major high street brands, on the Royal Mile in Edinburgh, or in Marylebone in London. The rest of us usually have to make do with less glittering locations.

Video interview with Larry Kirshbaum and Jane Friedman (GalleyCat):

Publishing giants Jane Friedman and Larry Kirshbaum shared a long, candid web video interview with Samantha Ettus--taking a blunt look at the future of publishing.
On the web show, Obsessed with Samantha Ettus, both publishing executives were frank about their leadership. "The truth is I always thought bigger was better. That was one of my mantras. Now what's happened is publishers have a bottom line to protect," explained Friedman, the former CEO of HarperCollins Publishers Worldwide. "And to protect that, they have to publish more and more books just to get that top-line revenue. That is so unhealthy."

Mediapost notes an NPD study on e-Readers:

The study found that 40% of those surveyed were only "somewhat interested" or "not interested at all" in buying an e-reader. How come? Of those who don't want one, 70% said it was because they prefer the feel of an actual book.
Among the 37% who were either "very" or "somewhat" interested in obtaining an e-reader, one of the main factors was the ability to buy and store multiple books, magazines, and newspapers. More than half of consumers were interested in features already offered in current devices like the Kindle's wireless capability and the Sony's Reader's touchscreen.
"Today's e-reader offerings are delivering capabilities that are in demand by consumers," said Ross Rubin, director of industry analysis at NPD, in a statement. "However, some features that could enhance the appeal of more popular content, such as color, remain on the drawing board."

An archived version of a PW hosted discussion on the Google Book Settlement is available (PW):

In a webinar first, the leaders involved with the crafting of the Google Library Project Settlement will share with the publishing industry the benefits of the agreement for publishers and authors. If approved by the Court in October, the agreement will create one of the most far-reaching intellectual, cultural, and commercial platforms for access to digital books for the reading public, while granting publishers unprecedented opportunities and protections. Presented in collaboration with Google, The Association of American Publishers, and Publishers Weekly, the web session is a must-attend event for publishers everywhere.

Ghostwritten scholarly 'research' papers may be a larger issue than first thought. Afterall, its not something you would promote (NYT):

The ghostwritten papers were typically review articles, in which an author weighs a large body of medical research and offers a bottom-line judgment about how to treat a particular ailment. The articles appeared in 18 medical journals, including The American Journal of Obstetrics and Gynecology and The International Journal of Cardiology.
The articles did not disclose Wyeth’s role in initiating and paying for the work.
Elsevier, the publisher of some of the journals, said it was disturbed by the allegations of ghostwriting and would investigate.The documents on ghostwriting were uncovered by lawyers suing Wyeth and were made public after a request in court from PLoS Medicine, a medical journal from the Public Library of Science, and The New York Times.

CrossRef Sees Increase in DOI's For Books

CrossRef.org the membership organization supporting academic publishing content recently reported that DOI's assigned to books has continued to increase year over year:

As of July 2009, more than 1.8 million CrossRef Digital Object Identifiers (DOIs) have been assigned for books. Each CrossRef DOI represents a citable book title, chapter, or reference entry that can be used to link references from scholarly content. Book deposits range from monographs with a single CrossRef DOI to massive reference works with tens of thousands of individual entries.

To encourage publishers to ramp up reference linking for scholarly books, and to explain how CrossRef DOIs for books work, CrossRef has published two documents. The first, Best Practices for Books, was created by CrossRef’s Book Working Group. The second is a Frequently Asked Questions (FAQ) document explaining the relationship between CrossRef DOIs and other DOI applications, such as the ISBN-A.

“We are very encouraged at the growth of books being used in CrossRef reference linking,” said Michael Forster, Chair of CrossRef’s Book Working Group, and Vice President and Associate Publishing Director, Physical Sciences, Scientific, Technical, Medical, and Scholarly Publishing, John Wiley & Sons, Inc. “We solicited feedback from the entire CrossRef membership before finalizing these guidelines. Our goal is to encourage reference linking among books, proceedings, and journal content, and to enhance the discoverability of professional, reference, technical, and scholarly books.”

The best practices document, available at http://www.crossref.org/06members/best_practices_for_books.html, includes suggestions for improving reference matching results. It identifies minimum and recommended book metadata for deposits and queries in the CrossRef system. Ways to handle editions and other types of versions, so important in book publishing, are also addressed.

Catcher in the Rye Sequel has Friends

Four of the countries largest news organizations have filed an Amicus Brief in support of publication of the "Catcher in the Rye sequel". The NYTco, AP, Gannett and Tribune filed the brief earlier this week and it follows one also filed by the ARL, ACRL, Organization for Transformative works and The Write Fund. American Law Daily (Law.com) has all the details:

"Amici publish copyrighted material every day, and depend on the copyright law to protect their writings," the brief states. "Indeed, their need for copyright protection is today more intense than ever as digital technologies make it ever easier for third parties to seize and repurpose the fruits of their costly newsgathering efforts."

All that notwithstanding, the lawyers argued that they "fiercely believe that the availability of a preliminary injunction under the copyright law cannot trump the prerogatives of the First Amendment, and that a book banning of at least arguably transformative work cannot be countenanced."

In their brief, the news organizations argued that Rosenthal's fair use claim has merit.

"While the district court determined that the fair use defense was not decisive, it certainly is the case that the literal reincarnation of Holden as a senior and his interaction with Mr. Salinger, who is trying to kill him, forms tranformative commentary on the book which--as opposed to sheer piracy--brings it into the realm of fair use."

No publication date has been set yet but stay tuned.