Barnes & Noble 3rd Quarter Financial Results

Barnes and Noble reported their 3rd quarter numbers today and they were widely discussed and classified as disappointing.  The following is from their press release today:

Third quarter consolidated revenues were $2.2 billion, a decrease of 8.8% as compared to the prior year.  Third quarter consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) were $55 million, as compared to $150 million a year ago. Third quarter consolidated net losses were $6.1 million, as compared to net earnings of $52 million a year ago.  Third quarter results were adversely impacted by NOOK inventory charges and promotional allowances discussed below in the NOOK section.  Third quarter net losses were $0.18 per share, which includes the impact of the dividend on redeemable preferred shares, as compared to net earnings of $0.71 per share a year ago.

On January 23, 2013, the company announced the completion of its strategic partnership with Pearson, which invested $89.5 million in NOOK Media LLC for preferred membership interests representing a 5% equity stake.  Following the closing of the transaction, Barnes & Noble now owns approximately 78.2% of the NOOK Media subsidiary and Microsoft, which also holds preferred membership interests, owns approximately 16.8%.

The company ended the third quarter with cash of $214 million and no borrowings under its $1 billion Revolving Credit facility, as compared to a net debt position of $74 million a year ago.

RetailThe Retail segment, which consists of the Barnes & Noble bookstores and BN.com businesses, had revenues of $1.5 billion for the quarter, decreasing 10.3% over the prior year.  This decrease was attributable to a 7.3% decline in comparable store sales, store closures and lower online sales.  Core comparable store sales, which exclude sales of NOOK products, decreased 2.2% as compared to the prior year.  Sales of NOOK products in the Retail segment declined during the quarter due to lower unit volume.

Despite the sales decline, Retail EBITDA increased 7.3%, from $198 million to $212 million during the third quarter, resulting from a higher sales mix of higher margin core products and expense management.

CollegeThe College segment, which consists of the Barnes & Noble College bookstores business, had revenues of $517 million, decreasing 1.6% as compared to a year ago.  Comparable College store sales decreased 5.2% for the third quarter as compared to the prior year period, as the back-to-school rush season extended past the close of the company’s third fiscal quarter.  Factoring in the two additional weeks in February that contributed to this year’s rush season, comparable store sales decreased 2.1% for the quarter.  College comparable store sales reflect the retail selling price of a new or used textbook when rented, rather than solely the rental fee received and amortized over the rental period.

College EBITDA decreased $1.3 million during the quarter as compared to a year ago to $34 million.  College’s product margins improved during the quarter on a higher mix of higher margin textbook rentals, while expenses increased due to new store growth and continued investments in digital education.

NOOKThe NOOK segment, which consists of the company's digital business (including devices, digital content and accessories), had revenues of $316 million for the quarter.  This represents a decline of 26% as compared to the same period a year ago, primarily as a result of lower device unit volume.  In addition, the company recorded $21 million of incremental channel partner returns given the holiday sales shortfall, as well as $15 million of promotional allowances to optimize future sales opportunities.  Digital content sales increased 6.8% for the third quarter over the prior year. 

NOOK EBITDA losses were $190 million for the third quarter, as compared to $83 million a year ago, primarily resulting from the previously noted sales shortfall, inventory charges, and higher operating expenses.  The company recorded $59 million of additional inventory charges during the third quarter, as the holiday sales shortfall resulted in higher than anticipated levels of finished and unfinished goods.  Operating expenses increased over the prior year on higher advertising costs.

In response to the device sales shortfall over the holiday season, NOOK is calibrating its business model and has implemented a cost reduction program that the company projects will significantly reduce NOOK’s expenses.

“In terms of the NOOK Media business, we’ve taken significant actions to begin to right size our cost structure in the NOOK segment, while also taking a large markdown on NOOK devices in order to enhance our ability to achieve our estimated sales plans in subsequent quarters,” said William Lynch, Chief Executive Officer of Barnes & Noble.  “NOOK Media has been financing itself since October of 2012 due to the strong investment partners we've been able to attract in Microsoft and Pearson.  Coming off the holiday shortfall, we're in the process of making some adjustments to our strategy as we continue to pursue the exciting growth opportunities ahead for us in the consumer and digital education content markets.”  Mr. Lynch also said that going forward NOOK Media still remains committed to its Tablet and e-Reader business.  And, he reiterated that NOOK and Barnes & Noble bookstores will continue to have a close relationship.  “Without question, our bookstores have made a significant contribution to NOOK’s success over the past three years.  And, in turn, our award-winning line of NOOK products have proven to be a strong driver of traffic to our stores.”  

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Pearson Reports Financial Results

From their press release:

Pearson accelerates global education strategy:
Restructuring and investment in digital, services and emerging markets for faster growth, larger market opportunity and greater impact on learning outcomes 

Financial highlights*

• Sales up 5% at CER to £6.1bn (with digital and services businesses contributing 50% of sales)
• Adjusted operating profit 1% higher at £936m
• Adjusted EPS of 84.2p (86.5p in 2011)
• Operating cash flow of £788m (£983m in 2011)
• Return on invested capital of 9.1% (9.1% in 2011)
• Dividend raised 7% to 45.0p.

Market conditions and industry change  

Market conditions generally weak in developed world and for print publishing businesses; generally strong in emerging economies and for digital and services businesses.  Continuing structural change in education funding, retail channels, consumer behaviour and content business models.  Considerable growth opportunity in education driven by rapidly-growing global middle class, adoption of learning technologies, the connection between education and career prospects and increasing consumer spend, especially in emerging economies.  

Strong competitive performance

• North American Education revenues up 2% in a year when US School and Higher Education publishing revenues declined by 10% for the industry as a whole.
• International Education revenues up 13% with emerging market revenues up 25%.
• FT Group revenues up 4% with the Financial Times’ total paid print and online circulation up to 602,000; digital subscriptions exceed print circulation for the first time.
• Penguin revenues up 1%, with strong publishing performance and eBooks now 17% of sales.
• Accelerated shift to digital & services and to fast-growing economies
• Pearson announces gross restructuring costs of approximately £150m in 2013 (£100m net of cost savings achieved in the year), focused on:

1. significantly accelerating the shift of Pearson’s education businesses towards fast-growing economies and digital and services businesses;
2. separating Penguin activities from Pearson central services and operations in preparation for the merger of Penguin and Random House.

Restructuring expected to generate annual cost savings of approximately £100m in 2014.
In 2014, £100m of cost savings to be reinvested in organic development of fast-growing education markets and categories and further restructuring, including the Penguin Random House integration. 

From 2015, restructuring programme expected to produce faster growth, improving margins and stronger cash generation. 

Outlook

Pearson expects tough trading conditions and structural industry change to continue in 2013.
Excluding restructuring costs and including Penguin for the full year, Pearson expects to achieve 2013 operating profit and adjusted EPS broadly level with 2012.

Investor presentation slides (pdf)

Also,

Pearson's Penguin Must Participate in E-Book Fixing Trial (Businessweek)
Pearson Launches EdTech Incubator for Startups (Mashable)
Pearson CEO says Financial Times is not for sale (FT)
Pearson Plans Shake-Up (WSJ)
EU to decide on Bertelsmann, Pearson publisher deal by April 5 (4Traders)

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Report on Use of eBooks in Libraries

An interesting set of research data from Primary Research Group on the penetration and use of eBooks in libraries. The sample size is small and also not focused on one library segment. According to OCLC (hat tip) the study queried corporate, public, academic and government libraries both in the US and overseas.  A total of 68 libraries. 

There is a sample of the data (here) to look at which does throw up some interesting results non-the-less. I am sure the full report provides more information but I noticed in many instances a wide disparity between the median and the mean in some of the results for example:

"What is the spending on eBooks in 2013?: Mean $130K and median $15K.

There are other results like this in the sample. (Again, the full report, which I have not read, may elucidate these results). One other set of data I thought interesting was the amount of duplication of e and p formats. It happens a little in public libraries but hardly at all in academic libraries. Where e is purchased there is not a corresponding print version purchased as well.

The report is $89 and here is more information:

This report looks closely at how libraries use eBooks. It is based on a survey of 68 academic, public, corporate, legal and other special libraries and covers licensing, collection planning, use of consortiums for purchasing, number and type of suppliers used, spending levels, spending plans, use of tablets, eReaders and other technologies, use of eTextbooks, eDirectories and related spending plans, preferences for licenses from individual publishers or aggregators, and plans for license renewals. The study gives details of use of and spending on a broad range of vendors and distributors including Amazon and Barnes & Noble, among many others.

The study also covers: use of eBooks for course reserves, eBook issues in interlibrary loan, and the emergence of dedicated endowments for eBook purchases. The study also covers the types of eBook models preferred by libraries of different types, and how librarians view likely developments in the eBook industry.

Primary Research Group has published Library Use of eBooks, 2013 Edition, ISBN 978-1-57440-223-0.

This 103-page study is based on data from 68 public, academic, corporate, legal and government libraries, with data broken out by type of library, size of library and other criteria. The study paints a portrait of how libraries are using eBooks and covers spending, budgets, contracts, licensing, number of licenses maintained, and aggregator and publisher preferences and aggregator vs publisher sales as a percentage of total eBook spending. The report also presents detailed data on library spending on particular retail vendors such as Amazon, Barnes & Noble and all other online book vendors. The report also presents data on e-audio books, use of consortium purchasing arrangements for eBooks, the impact of eBooks on interlibrary loan, range of titles typically available for eBook rental at libraries, the impact of tablets and other eBook reading devices, the impact of eBooks on course reserves for higher education libraries, the evolving state of dedicated endowments for eBooks, use of and spending on eDirectories, trends in eBook pricing as experienced by libraries, trends in eBook collection planning, use of eTextbooks and more.

Just a few of the report's many findings are that:

• Spending on e-textbooks will increase from a mean of $1,042 in 2012 to approximately $1,528 in 2013 for the libraries in the sample
• Public libraries have spent a mean of $8,750 on electronic and internet versions of directories
• Libraries in the sample spent a mean of $118,676 on e-books in 2012
• 32.86 percent of libraries in the sample have a contract with Ebrary, including 19.23 percent of libraries with a total budget of less than $500,000
• Libraries in the sample expect to renew almost 75 percent of their current e=book contracts upon completion
• 37.13 percent of e-book orders made by libraries in the sample are placed with e-book divisions of traditional book jobbers or distributors
• On average, libraries in the sample have experienced a mean increase of 17.93 percent in the price of e-books in the last year

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MediaWeek (V7, N8): TV Serials, Data Profiling, MOOCs. Wood + More

Serialization - Megan Garber in The Atlantic.

The cliffhanger has an obvious narrative value, but it also has a significant social one. And this is part of the debt television now owes to the Internet: services like Facebook and Twitter and their counterparts—not to mention couch-friendly devices like smartphones and tablets—make watching television an increasingly collaborative experience. Trendrr.TV, which tracks TV viewers’ use of social media, reports a whopping 800 percent growth in commentary about first-run TV shows from 2011 to 2012. Social viewing rewards synchronicity: it’s much more fun to tweet about True Blood when your friends are tweeting about it at the same time. Even with our ability to watch a show after it’s aired, using DVRs or online streaming, 43 percent of all time-shifted viewing still occurs on the day of a show’s original broadcast—suggesting once more that, whatever flexibility technology allows, we still prefer to consume our stories as a group.

Why, though? Why choose to be constrained by programming schedules when so much digital life can be lived on demand, shifted to fit our needs rightthisminute? Part of it, certainly, is social: simultaneous viewing gives us something to talk about. Schedules are one of the compromises we make for community.

Long article in The Nation about data profiling (The Nation):

Big Salesman is engineering a far grosser violation of our privacy than most people suspect—not a single incident, but a slow, unstoppable process of profiling who we are and what we do, to be sold to advertisers and marketing companies. Information that we reveal about ourselves constantly every day in our online and offline actions has become valuable to those who collect and amass it. Because the value does not lie in any one piece of data but in its unification and aggregation, the data in sum is worth far more than its individual parts. Ticketmaster may know which concerts I’ve attended and Amazon may know which albums I’ve bought, but each company would benefit if it had the other’s file on me. It’s a slow death by a thousand clicks: thousands of people see you on the street every day and it does not feel like an invasion of privacy, but if one person follows you everywhere as you work, read, watch movies and do myriad other things, it becomes stalking. And so we are stalked in the pursuit of marketing optimization.

Experimenting with the MOOC business model (Chronicle):

The first, called the "university self-service model," essentially allows a participating university to use edX's platform as a free learning-management system for a course on the condition that part of any revenue generated by the course flow to edX.

The courses developed under that model will be created by "individual faculty members without course-production assistance from edX," and will be branded separately in the edX catalog as "edge" courses until they pass a quality-review process, according to a standard agreement provided to The Chronicle by edX.

Once a self-service course goes live on the edX Web site, edX will collect the first $50,000 generated by the course, or $10,000 for each recurring course. The organization and the university partner will each get 50 percent of all revenue beyond that threshold.

The second model, called the "edX-supported model," casts the organization in the role of consultant and design partner, offering "production assistance" to universities for their MOOCs. The organization charges a base rate of $250,000 for each new course, plus $50,000 for each time a course is offered for an additional term, according to the standard agreement.

Norwegian Wood isn't just a Beatles song it's also a TV show (NYT). Isn't it good?

“My first thought was, ‘Well, why not make a TV series about firewood?’” Mr. Moeklebust said in an interview. “And that eventually cut down to a 12-hour show, with four hours of ordinary produced television, and then eight hours of showing a fireplace live.”

There is no question that it is a popular topic. “Solid Wood” spent more than a year on the nonfiction best-seller list in Norway. Sales so far have exceeded 150,000 copies — the equivalent, as a percentage of the population, to 9.5 million in the United States — not far below the figures for E. L. James’s Norwegian hit “Fifty Shades Fanget,” proof that thrills come in many forms.

“National Firewood Night,” as Friday’s program was called, opened with the host, Rebecca Nedregotten Strand, promising to “try to get to the core of Norwegian firewood culture — because firewood is the foundation of our lives.” Various people discussed its historical and personal significance. “We’ll be sawing, we’ll be splitting, we’ll be stacking and we’ll be burning,” Ms. Nedregotten Strand said.

From my twitter feed this week:

Why Do Publishers Hate Us? | American Libraries Magazine AmLib
David Bowie and Me. Guardian
Coursera Adds 29 Schools, 90 Courses And 4 New Languages To Its Online Learning Platform Techcrunch
An academic press sues a librarian, raising issues of academic freedom | Inside Higher Ed InsideHigherEd

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Wrigley Field 1988

After I graduated from Georgetown my friend and I drove the car of one of our classmates across to Los Angeles.  I then spent the summer in Beverly Hills which has to be one of the best summer vacations ever.  We drove virtually straight across and did the trip in about 2 weeks.  Here we passed by Wrigley field but we didn't actually see a game here.  We ended up going to a white socks game that night.  Unfortunately, on the whole trip I must have been short of cash because I didn't take too many photos much to my regret.

I don't really care for baseball.  One or two games a year is my max.

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Duke University's MOOC Experience

Duke has released a report on what they learned from their Bioelectricity MOOC course they offered in the fall. The full report is here(pdf) but the executive summary is as follows:

After only three months for planning and development, Duke University and Dr. Roger Barr successfully delivered a challenging open online course via Coursera to thousands of students around the world. Lessons learned from this experience have contributed to the strategic goals of Duke’s Online Initiatives.

• Over 600 hours of effort were required to build and deliver the course, including more than 420 hours of effort by the instructor.
• The course launched on schedule and was successfully completed by hundreds of students. Many hundreds more continued to participate in other ways. The number of students actively participating plateaued at around 1000 per week.
• Over 12,000 students enrolled, representing more than 100 countries. Approximately 8,000 of these students logged in during the first week.
• At the time of enrollment, one-third of enrolled students held less than a four year degree, one-third held a Bachelors or equivalent, and one-third held an advanced degree.
• 25% of students who took both Week 1 quizzes successfully completed the course, including 313 students from at least 37 countries. Course completers typically held a Bachelor’s degree or higher; however, at least 10 pre-college students were among those who successfully completed this challenging upper level undergraduate course.
• Students who did not complete all requirements cited a lack of time, insufficient math background or having intended to only view the lectures from the outset. Regardless of completion status, many students were primarily seeking enjoyment or educational enrichment.
• Most students reported a positive learning experience and rated the course highly, including ones who did not complete all requirements
• The Coursera platform met the needs of the course in spite of being continuously under development while the course was live. Technical issues reported by the students and instructor were generally minor, of short duration and/or quickly resolved.
• Patience, flexibility and resilience on the part of instructor, Coursera students, CIT staff, and Duke University Office of Information Technology media services staff were key elements in the success of this course.

Hat tip to Edsurge

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MediaWeek (V6, N7): NY Public Library, Chinese Textbook Prices, Obligatory Downton, Nielsen's Problem + more

New York Times Interview with Julian Fellows (Fitzwilly to me).

Q. This season, in particular, it felt like American viewers were much more aware that “Downton” was showing first in Britain, and were having plot details spoiled months in advance. You may not be able to control this, but would you like the series be shown simultaneously in both regions?

A. Well, I would love them to be simultaneous. And my own feeling is that the thinking behind different screenings belongs to a different era. The Internet has shrunk the world. We’re the two English-speaking countries that enjoy each other’s entertainment, it seems to me, as much as any linked countries in the world. I would vastly prefer that we all saw it together. The world is much more global. And so I look forward to the day when it changes, as I’m sure it will.

What to do about the rear end (of a building). NYTimes on the back of the New York Public Library:

The New York Public Library presents a unique situation. Its rear facade, facing Bryant Park, is almost as prominent as the Fifth Avenue front. Public opinion in 1911 would have been harsh had the library saved money by covering the park side in simple vanilla or tan brick.

So the architects, Carrère & Hastings, used marble on that side, too, but with a difference. Instead of repeating the sculpture-heavy Beaux-Arts designs of the front, they gave the back a near-industrial look, albeit with a luscious dose of Vermont marble. Behind that is a dense cage of bookstacks manufactured by Snead and Company.

The Snead-type book stack represents a late 19th-century shift in the conception of the library. The earlier model was that of a rich man’s house or private club, with expansive alcoves where reader and book could plop into a leather chair. 

But the increasing numbers of books dictated more compact storage, and volumes were relegated to tight, dark little storage areas distant from where they were actually used, the library now permanently bifurcated.

To some librarians separate book stacks, which could be closed to the public, were a prison for books, and the narrow vertical strip windows of the library do give off a whiff of the penitentiary. But the demands of storage kept this prison open for good, followed by microfilming, off-site storage and, in our time, the electronic book.

Rarely does the back of a structure receive critical notice, but the Bryant Park facade has attracted appreciative remarks over the years, especially from modernists. “Perhaps the origin of straight-line architecture in America,” mused American Builder in 1930, and in 1952, Lewis Mumford called it “the most successful” of the four facades, even though he thought that Thomas Hastings had “little appreciated this fact."

Measuring an audience is getting next to impossible. Not like the old days (Economist)

Measurement is the “number one issue for television right now”, says Philippe Dauman, the boss of Viacom, a big media company. Executives battle as hard for Nielsen’s ratings as footballers do for Super Bowl rings. These ratings determine where advertisers put the $75 billion they spend on TV in America every year. Recently, however, consumers’ media-viewing habits have changed too fast for Nielsen to keep up. “Everyone is unhappy,” says Alan Wurtzel, president of research for NBCUniversal, a media giant. “If you can’t measure it, you can’t sell it.”

There are two separate problems with counting couch potatoes, one more pressing than the other. The first has to do with “time-shifted” viewing, which means that people are watching fewer programmes live. When the DVR became mainstream, advertisers and networks agreed to count eyeballs only if they watched live or within three days of the programme airing. If adverts are skipped by DVR (as around 72% are, according to Bernstein Research), then they are not counted. However, because viewers sometimes watch recorded shows long after they air, media networks protest that three days is too narrow a window. They want to move to “live plus seven” days. Advertisers, especially those with time-sensitive messages, are not keen.

The second, bigger problem is how to track fragmented audiences. This is a particular worry in America, where people watch TV on countless websites and on multiple devices. Nielsen, a 90-year-old company, had revenues of $5.5 billion in 2011 from measuring the viewing and buying habits of consumers around the world. The largest content companies pay Nielsen $100m-200m a year for its services; advertisers pay it, too.

Why can textbooks be cheap in China? It's not what you think (Chronicle)

These textbooks are mostly published by universities. They may not pay much attention to paper and binding, but they make efforts with the contents of textbooks and with efficiency of publication. Unlike commercial publishers, a university press’s publications can be adapted by faculty members and students faster, and a university press can also publish books that are fitted both for the students’ need and the university’s academic goals. So the university press can have a better balance between financial and quality concerns. Further, publishing textbooks not only benefits their students, but also gives the universities more of an impact on academia. In fact, universities and faculty members in mainland China have a great influence on students in social science in Taiwan by publishing and translating good textbooks. Therefore, the universities should be more involved in publishing textbooks.

In addition, these universities usually recognize and reward their faculty members’ devotion to writing and translating textbooks. In Taiwan, promotion is based on publishing in journals, but not on writing textbooks. Professors seek good materials, but because of the stress of promotion and evaluation, they can only write some handouts by themselves. Also, since the price of books is relatively low and commercial publishers give authors only modest compensation, there is not much incentive for professors to write textbooks. However, professors in mainland China are encouraged to write and translate textbooks; they can also make reputations for themselves by doing so. If colleges want their faculty members to devote themselves to writing good textbooks, even open-source texts, they should be encouraged with practical rewards in both finance and career.

And from my twitter feed this week:

Reader’s Digest Is Bankrupt as Iconic Magazine Falters Bloomberg
An academic press sues a librarian, raising issues of academic freedom InsideHigherEd
Quarter of adults 'have barely read a book in past six months' Bookseller 

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FASTR and Slower?: Proposed Open Access Bill

Yesterday the Fair Access to Science and Technology Research Act (FASTR) bill was introduced in Congress by U.S. Representatives Zoe Lofgren (D-CA), Mike Doyle (D-PA), and Kevin Yoder (R-KS) and the sponsors say the bill is designed to increase the openness, transparency, and accessibility of publicly funded research results. The bill would require public publication/access to all federally funded research to be provided if the federal agency has a research budget of more that $100million. From Rep Lofgren's press release:

Specifically, the Fair Access to Science and Technology Research Act (Text:pdf) would:

• Require federal departments and agencies with an annual extramural research budget of $100 million or more, whether funded totally or partially by a government department or agency, to submit an electronic copy of the final manuscript that has been accepted for publication in a peer-reviewed journal.
• Ensure that the manuscript is preserved in a stable digital repository maintained by that agency or in another suitable repository that permits free public access, interoperability, and long-term preservation.
• Require that each taxpayer-funded manuscript be made available to the public online and without cost, no later than six months after the article has been published in a peer-reviewed journal.
• Require agencies to examine whether introducing open licensing options for research papers they make publicly available as a result of the public access policy would promote productive reuse and computational analysis of those research papers.

An identical Senate counterpart of this legislation is also being introduced today by Senators John Cornyn (R-TX) and Ron Wyden (D-OR).

The federal government spends over $37Billion on federally funded research with most of this money spent by Department of Defense, Department of Energy, Department of Health and Human Services, National Aeronautics and Space Administration, National Aeronautics and Space Administration, National Science Foundation and U.S. Department of Agriculture. According to Lofgren:

"FASTR represents a giant step forward in making sure that the crucial information contained in these articles can be freely accessed and fully used by all members of the public," said Heather Joseph, Executive Director of the Scholarly Publishing Academic Research Coalition (SPARC). "It has the potential to truly revolutionize the scientific research process."

This legislation would unlock unclassified research funded by agencies like the Department of Agriculture, the Department of Commerce, the Department of Defense, the Department of Education, the Department of Energy, the Department of Health and Human Services, the Department of Homeland Security, the Department of Transportation, the Environmental Protection Agency, the National Aeronautics and Space Administration, the National Endowment for the Humanities, and the National Science Foundation.

The bill builds on the success of the first U.S. mandate for public access to the published results of publicly funded research at the National Institutes of Health (NIH). In 2008, the National Institutes of Health (NIH) implemented their public access policy. It is estimated that approximately 80,000 papers are published each year from NIH funds.

This is the fourth go-around for an open access bill but this one may have a better chance of getting to an eventual vote given the changing views on open access and therefore, more acceptance by members of Congress that this is something worth pursuing.

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Time Warner & Meredith - Match made in 1997?

I had an interesting breakfast recently with someone from one of the largest magazine publishers in the world and naturally we spent most of our time talking about digital.  This company had begun to see really interesting data come back on the behavior of their digital subscribers and as the usage data grew larger and larger it was clearly showing that subscriber behavior is not what we thought.  Funny how real data undermines our long held assumptions which are often based on 'experience' or 'intuition'.  We all know now that the digital world can give us a view into the behavior and motivations of consumers in a way that print never could.  In the print world many media companies had no direct relationship with the consumer but as more and more media companies - magazines a prime example - reach customers directly these publishers begin to gain the insight they never had before.  Some of that insight can be unsettling.

Over the past 20 years media has consolidated and one of the factors in that consolidation (among many) was audience consolidation.  The idea that a publisher or broadcaster could aggregate an audience by pulling together sets of publications or media brands across related segments and then cross sell their audience.  This strategy was based on the not unintelligent idea that audiences could be segmented into groups and these groups would be defined by their mutual interests and therefore might purchase or subscribe to a variety of publications based on these interests.  A lot of media companies have been rolled up motivated by this assumption.

What made my breakfast interesting that day was that their data showed that their subscribers did not 'cross pollinate' even-though the publisher held multiple titles in the same genre and many titles that one could assume would appeal to the same subscriber across genres.  Think of trying to tie Men'sHealth, Road&Track and FastCompany as an offer to a current subscriber of one of these titles and it apparently fails emphatically.  (By way way, I made that grouping up for illustrative purposes).   This example of data analysis - and the ability to really capture key behavior analysis - suggests that we know little about the motivations and interests of our consumers and that the assumptions we may have built our business on could be completely errant.

The combination of Time Warner and Meredith could be seen in two ways:  Time Warner is doubling down on the aggregation model or they understand that the underpinnings of their aggregation strategy for the past 20 years wasn't what they assumed.  I have no idea but, if it is the latter then they will realize as digital becomes a far greater part of their delivery they can't take for granted that the aggregation of their customer base is going to be a significant driver of their top line.   In fact they might find that annual subscriptions across the board decline as subscribers pass these up for single copy purchases which was another of the interesting trends publishers are seeing in the digital world: single copy sales are a growth business.  Per copy sales might be good but rate base is better.

From the NYTimes Media Decoder:

Time Warner is in talks with the Meredith Corporation to spin off much of Time Inc., the country’s largest magazine empire and the foundation on which the $49 billion media conglomerate was built, Amy Chozick and Michael J. de la Merced write. The deal would move the bulk of Time Inc.’s magazines, including titles like People, InStyle and Real Simple, into a separate, publicly traded company that would include Meredith publications like Better Homes and Gardens and Ladies’ Home Journal. The new company would borrow money to pay a one-time dividend of about $1.75 billion to Time Warner, making the transaction resemble a sale. Time Warner would continue to control the newsmagazines Time, Sports Illustrated, Fortune and the magazine Money. The deal is one of several options under consideration to reduce Time Warner’s troubled publishing unit.

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MediaWeek (V6, N6): Google Mapping, Netflix, Higher Ed & Copyright, Library Publishing + More

Gee, I wonder why Google were interested in travel guides. Here James Fallows (Atlantic) interviews Michael Jones of Google about maps (Atlantic).

We think there will be a new literature from the mapping dictionary that’s now being built. There’s an Android app we’ve released called Field Trip. You download it, and it says, “I don’t want to bother you, so how often should I talk to you?” You tell it “all the time” or “rarely” or whatever, and then you turn off your phone and put it in your pocket and don’t think about it again.

Then when you’re walking around, say in Washington, D.C., the phone will buzz and say, “You are 25 feet from an accurate map of 2,700 solar objects. If you go over there to the Einstein Memorial, you can see them.” Or you might be walking down the street and it will beep and say, “The rowhouse one block to the left is the No. 1–rated Greek restaurant within 500 miles,” or maybe: “Around the corner behind you is where a scene from your favorite movie was filmed.” It is using your location to search in a database of “interesting things,” and it learns what kinds of things you care about. It means having your life enlightened by travel knowledge, everywhere, or getting to walk around with local experts who know your tastes, wherever in the world you go.

The Economist on NetFlix's turn to streamed originial content - inevitable. (Economist):

Creating original, high-end television shows for subscribers is a new tack for a firm, the main business of which is renting out and streaming other companies’ content online. Others are following suit. Amazon, an online shopping mall that also offers a video-streaming service, has commissioned six television pilots, and has plans to develop films. Hulu, an online-video site, is also making original programmes, such as “Battleground”. YouTube, Google’s online-video site, which is better known for amateur videos of babies and blunders, has launched “channels” that are run by media companies and celebrities. They offer more professional content, although they have had mixed success so far.

Tune in to the early stages of television’s “third wave”. Online video used to be amateur and short-form. But it is starting to follow the path of broadcast television, and then cable, by offering high-quality content. People are watching more video online, and will be consuming even more of it as quality improves. During the third quarter of last year, Americans on average clocked up seven hours of online video a month, 37% more than they had watched a year before, according to Nielsen—although this is still much less than the 148 hours a month (yes, really) that they spent in front of their television sets.

In Inside Higher Ed Barbara Fister on the ramifications of the Georgia Copyright case and an opinion from the University Press view point (IHEd)

Fister: If a higher court agrees with the publishers that there is no such thing as a fair use of anything that might in some circumstances have been included in a bookstore or copy shop coursepack, or which might someday be exploitable as “custom made-to-order textbooks or other innovative products,” as publishers state in their appeal, then faculty who want students to read selections of books will find it prohibitively expensive and will favor assigning material that’s available for free on the web or articles published in journals already paid for through the library’s licenses.

Salisbury: I'm most intrigued by your statements about the use of scholarly materials, and I do wonder if, in the midst of all these pricing and access experiments, use will indeed become the new standard for payment. Short term loan and PDA programs are blossoming at libraries across the country, particularly with electronic content. Libraries say they only want to pay for what their students and faculty are actually using. In a world where we all have to be mindful of the bottom line, this makes a great deal of sense. But it seems contradictory to espouse a pay for use metric with some materials but not others. To my mind, this course content would fall under the same rubric (depending on how much of a work was used and other factors). It is being used, and used more freely and accessed by multiple students at a time online as opposed to a physical coursepack on reserve, and so, as you say, guess what budget line those fees will be charged to. I say this not out of any shred of animosity to libraries, for you are champions of scholarship and encouragers and facilitators of the very use and access we want to promote as publishers.

But the reality is that someone has to pay the bills. What you do is not free, and it costs you dear to purchase or license books and journals and databases. It costs students to buy textbooks or coursepacks or rent an etextbook. It costs a university presses to peer review, edit, typeset, and print or convert to digital a scholarly book. Yes, libraries have smaller budgets, students have little money, but university presses too are often seeing smaller institutional support, severely reduced coursebook income (which I cannot believe is unrelated to the greater availability of legal or illegal electronic editions) and, as you note, monograph sales are slowing to a trickle. So none of us has much to work with. But OA materials do not materialize out of thin air. Someone has to pay the bill; someone has to pay the researcher to create that content, and someone has to pay or employ the publisher, of whatever stripe, to produce that electronic content.

Is there a movement afoot for more library publishing programs? (Something I wrote about a few years back). Here from The Chronicle;

No place has more experience with library-based publishing than the University of Michigan. John P. Wilkin, associate university librarian for publishing and technology there, oversees MPublishing, a highly developed, increasingly integrated set of publishing operations that includes the University of Michigan Press.

When we talked, Mr. Wilkin sounded a little skeptical about the Library Publishing Coalition, which Michigan opted into as a second-tier contributing member. "Facilitating conversations isn't enough," Mr. Wilkin says. Shared infrastructure would be better. He worries about the term "library publishing," a phrase he hears being used by some academic publishers "to ghettoize what's happening" at libraries. At Michigan, "we're in the business of scholarly publishing," Mr. Wilkin told me.

He's spent the last half-year working to break down the boundaries between the press and the rest of the publishing operation. He considers the University of Michigan Press the "flagship imprint" of MPublishing. Integrating them "gives us an opportunity to think less about revenue, less about the container." That's a good survival strategy in a time of downward sales trends. "Selling books is increasingly hard, right?" Mr. Wilkin says. "We've got to support scholarship here."

Public libraries in the UK get hammered but some private ones have a renaissance (FT):

But amid the furore, it has gone largely unnoticed that some of the UK’s most venerable private libraries – havens of books, conversation and cultural events with histories stretching back centuries – are enjoying an upturn in their fortunes.

Nottingham’s Bromley House Library, founded in 1816, plans to expand after reaching its highest ever membership level. It boasts almost 1,200 members who pay a subscription of £80 a year. Founded in 1841, the world’s biggest independent lending library, The London Library, reports that recruitment of members, who pay £460 a year, is running at its highest level for five years.

“We have something that really appeals to people; people want to join our libraries,” says Geoff Forster, Leeds Library-based chairman of the 32-member Association of Independent Libraries. “There’s a message for the local authorities that traditional libraries are still desired by people.”

Newcastle city council has provoked outrage by proposing to scrap funding to arts organisations and to close 10 of its 18 public libraries. Yet the city’s private “Lit and Phil” library – the Literary and Philosophical Society, which this week celebrated the 220th anniversary of its founding in 1793 – is enjoying its highest membership levels since 1952.

From my twitter feed this week:

Private Libraries of a different sort: LJ on Prison Libraries LJ
Story of the Day: New report predicts MOOCs, tablets will boom http://ow.ly/hvPMF
Thompson outlines NYT’s digital push http://on.ft.com/X9NnRO
UK House of Lords Debate the Value of the Publishing industry. Scheduled for 1 Hour. Succinct. Transcript:

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South Maui 1978

Ulupalakua and South Maui 1978

This view is from Ulupalakua ranch which sits on the south part of Maui and is owned by some friends of the PND family.  We went to school with number one son who now runs things up there.  The PND family moved to Maui in 1977 (about three weeks before Elvis died - although the two events are not related) and if you look almost dead center at the white building on the coast you will locate our home.  PND senior was general manager of a hotel and we lived above the store for five years.  Not too bad living at a resort while in high school.

Needless to say this image will be a lot different now with all the development up and down that coast.  Much less so up at the ranch but recently they have been trying to put up a wind farm and some locals aren't too happy.  Hawaii imports all it's energy - seems like a good idea to me.

One of those odd coincidences that make you wonder how things can be so interconnected when you would never had thought it, happened to me related to this image.  In the early weeks of my first year at Bowker, I walked into our Financial Controller's office and she had one of those generic 'inspirational' posters on the wall.  I had never been in the office before nor met her before this meeting.  The image was actually taken from a boat out at sea looking towards the spot where this image was taken.  I looked at this poster and said "See that white building, I used to live there."   No one seemed that impressed.  I thought it was the weirdest coincidence.

A few years later I ended up hiring her and she had the office next to mine and every time I went in her office I saw her picture of my old home.

In addition to the images I've posted on Flickr and those I've periodically posted on PND, I have now produced a Big Blurb Book: From the Archive 1960 -1980 of some of the images I really thought were special.

I now have an iPad version of this book for sale ($4.99) on the Blurb site which you can find here: STORE

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The Big Merger - Interviews with some 'industry experts'

Earlier this year, Book Business Magazine asked some 'industry experts' and I were asked to discuss the pending merger between Random House and Penguin.  Four of us have some interesting perspectives.  Here is my section, but read all of them.

"Pearson and Random House have been talking about this for a while. They've been intellectualizing it for a lot longer than Simon & Schuster and HarperCollins [have] should they end up together," says Cairns, referring to reported preliminary merger talks between two more of publishing's titans.

Why are mergers and acquisitions on everyone's minds?
"I think because they believe scale is going to be the only way that they can really compete," figures Cairns. "They need to extract more revenue out of their assets, and by combining operations, they'll be able to push more content and more physical units through their operations."

Cairns cites physical properties, such as warehouses. "We know volumes in physical books are declining. They need to fill up that space with something, and it would be good if they could find other books. They'll be in a position where they'll have much greater volume and get more value out of the assets that they already own.

"My own view is that it's going to happen without too much of a hiccup," he says. "What happens next with other trade publishers is going to be interesting to see. In addition to rumors about HarperCollins and Simon & Schuster, says Cairns, "Hachette has always been suggested to have a lot of money to spend if they wanted to spend it."

With regard to the notion that the new entity will enjoy leverage over Amazon, Cairns is doubtful. "We've seen how aggressive Amazon can be in negotiating with publishers, turning the tables on them, turning off their buy button, things of that sort. I think that at best there'll be some type of equilibrium. … They've all got to sell books. Random Penguin is going to end up with a great stable of authors and that's going to be valuable, and Amazon wants to be selling them."

Read the whole article here.

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BISG: Making Information Pay for Higher Education

THIS IS THE BISG NEWSLETTER (NOT MINE) REMINDING EVERYONE ABOUT THIS WEEK'S MIP FOR HIGHER ED.

Enter my code MIP-INFO at registration for a 20% discount.

Web Version  |  Update preferences  |  Unsubscribe Like Tweet Forward LAST CHANCE TO REGISTER BISG's signature event for higher ed publishing is only three days away! MAKING INFORMATION PAY FOR HIGHER ED PUBLISHING February 7, 2013 | 9AM to 2PM Eastern The Yale Club of NYC BISG's Making Information Pay for Higher Ed Publishing conference, held this Thursday in NYC, features an exciting array of data-rich presentations offering new insights into the unfolding digital transformation, student perspectives, illicit acquisition behaviors, international opportunities, and much more!... Meet the speakers! PRESENTATION: Education on the Open Web: The MOOC Experience Dave Cormier President, Edactive Technologies Web Projects Lead, University of Prince Edward Island Dave Cormier is a web projects lead at the University of Prince Edward Island, co-founder of Edtechtalk, and president of Edactive Technologies, a social software consulting firm. He teaches academic courses in writing, emerging tech, and culture. His major research interests include placing educational technology in a "postdigital" context, the examination of planned and unplanned communities, rhizomes as a model for knowledge creation, and open-source multiuser virtual environments (MUVEs). Dave is a member of several research communities and has participated in several web based research projects including the Open Habitat project and the Living Archives project. He has produced, designed, or participated in over 300 online webcasts in the past four years and speaks regularly at conferences on topics including rhizomatics, effective use of new technologies, and educational project management and design. PRESENTATION: The Promise of Highly Interactive Online Learning Rebecca Griffiths Program Director for Interactive Learning, Ithaka S+R Rebecca Griffiths leads Ithaka S+R's growing program in online learning. In this capacity, she is managing an initiative to test whether and how Massively Open Online Courses (MOOCs) could be adopted by faculty to improve learning and reduce costs within public universities and colleges. This effort is undertaken in partnership with the University System of Maryland and funded by a generous grant from the Bill and Melinda Gates Foundation. Previously, Rebecca launched and led ITHAKA's Strategic Services practice (now part of Ithaka S+R), which provides research and advisory services to clients. In that capacity she worked with online education initiatives to deepen their understanding of the audiences they serve and to develop sustainable business plans. In addition, Rebecca advised foundations on opportunities for funding new projects and co-authored reports on sustainability of digital projects, the role of publishing in universities, and uses of open source software in higher education. Before starting the Strategic Services practice, Rebecca was a founding member of Aluka, a nonprofit initiative to develop online primary resources from and about Africa for research and teaching. The Aluka collections are now available through JSTOR. Previously, Rebecca worked as a strategic consultant for Monitor Company in its Hong Kong and London offices. There she managed projects in media and telecommunications, helping her clients evaluate new growth opportunities, develop corporate strategies, and strengthen their organizations. She has also served as a product manager at AOL, responsible for launching new online services, and in business development at a subsidiary of News Corporation. Rebecca has a master of business administration from MIT and a bachelor of arts from Princeton University in East Asian studies. She speaks proficient Mandarin. PRESENTATION: The International Playing Field: Exploring Opportunities Overseas Joe Karaganis Vice President, The American Assembly at Columbia University Joe Karaganis joined The American Assembly at Columbia University as Vice President in 2010. His work focuses on the relationship between digital convergence and cultural production, and has recently included research on broadband adoption, data policy, and media piracy. Joe is the editor of The Politics of Open Source Adoption (2005), Structures of Participation in Digital Culture (2007), and Media Piracy in Emerging Economies (2011), among other work. Prior to joining the American Assembly, he was a program director at the Social Science Research Council in New York. PRESENTATION: The State of Higher Ed Publishing: By the Numbers Carl Kulo US Director, Bowker Market Research Carl Kulo is US Director of Bowker Market Research, a recognized leader in plotting trends that impact organizations serving book consumers. At Bowker, Carl's role encompasses the management of the PubTrack Higher Education Sales Data Analysis tool where he provides client services to larger higher education publishers. Mr. Kulo was instrumental in the Bowker transition to PubTrack Higher Education -- the premier market intelligence source for the college textbook publishing industry. Carl's role includes management of the Bowker consumer research panel, reaching more than 100,000 US book consumers, where he collaborates with teams of researchers to monitor and analyze market movement and the digital transformation in the book market. Carl also manages the primary research projects for specific segments with the book industry, including genre-specific projects, and projects with individual publishers, author groups and outlets. Among the initiatives is a multi-year project with BISG to benchmark student attitudes toward content in higher education and consumer attitudes toward both e-devices and digital content. Prior to joining Bowker, Carl was Director of Market Research for Wiley Higher Ed, where he ran qualitative and quantitative research studies for the editorial, sales and marketing groups. PANEL MODERATOR: Structured Online Learning vs. MOOCs Maureen McMahon President and Publisher, Kaplan Publishing Maureen McMahon is President and Publisher of Kaplan Publishing, one of the nation's leading publishers of academic and professional resources in print and digital formats. In addition to overseeing content production, delivery, and management for Kaplan Test Prep course and retail products, she oversees Kaplan Labs, an initiative that focuses on the potential for emerging technologies to improve learning outcomes; Kaplan Mobile; and EPUB 3 product development. Prior to joining Kaplan in 2006, she was Vice President and Publisher of the Kaplan imprint at Simon & Schuster, and held several positions at Random House, including Publisher of The Princeton Review, Associate Publisher of Villard Books, and Director of National Accounts. PRESENTATION: Why Students 'Go Digital': Aspirations and Barriers to Success Len Vlahos Executive Director, Book Industry Study Group Len Vlahos, an 18-year veteran of the American Booksellers Association (ABA), signed on as BISG's Executive Director in September 2011. He has served as ABA's communications director, e-commerce director, education director and, just prior to joining BISG, was ABA's Chief Operating Officer Len has worked for Internet marketing pioneer Yoyodyne, and for Kratz & Co. public relations. Prior to joining ABA, he worked in independent, chain, and university bookstores. Special thanks to our sponsors! Additional sponsorship opportunities are available. Please contact BISG Deputy Executive Director Angela Bole at angela@bisg.org for more information. You are receiving this message because you are subscribed to the listserv of the Book Industry Study Group. Edit your subscription | Unsubscribe Book Industry Study Group 145 W. 45th Street Suite 601 New York, NY 10036 Ph: 646-336-7141 Email: info@bisg.org

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