Tuesday, July 31, 2012

BISG survey says that eBook buyers are more willing to buy print

The Book Industry Study Group has just released the third part of Volume Three of its Consumer Attitudes Toward E-Book Reading research report. Here's a summary:
  • The percentage of eBook buyers that exclusively or primarily purchase eBooks has dropped from nearly 70% last August to 60% in May 2012.
  • The percentage of survey respondents with no preference for eBook or print formats, or who buy some genres in eBook format and others in print, has increased from 25% last August to 34% in May.
  • Amazon's Kindle Fire has overtaken the iPad as the tablet of preference among eBook consumers. 7% of survey respondents owned a Kindle Fire last December vs. 20% in May 2012, while iPad ownership remained flat at 17% in both surveys. By comparison, 5% of respondents owned a Barnes & Noble Nook Tablet in May, and 8% owned another Android-based tablet.
  • While overall use of tablets as primary eReading devices is increasing, the changes aren't uniform across devices:
    • 35% of respondents cited Amazon's Kindle eReaders as their primary device for reading eBooks, down from 48% last August.
    • Apple's iPad was cited as the primary device for reading eBooks by 9% of respondents in May, down from 10% in February.
    • Respondents who cited Barnes & Noble's Nook tablets and eReaders as their primary device for reading eBooks declined from 17% last August to 13% in May.
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College bookstores claim that the price of course materials is dropping

The National Association of College Stores, which represents college bookstore operators, has just released a study saying that by students' estimates, the average annual cost of required course materials is $655, down from $667 two years ago and $702 four years ago. The Student Watch study published by the NACS seems, at least in part, to be a response to the press release sent out last week by CourseSmart that said that almost 35% of students don't think that it's worth their effort to sell their textbooks back to college bookstores.

The NACS study says that 74% of college students prefer to rent hard copy textbooks; the organization claims that rental can save students between 45% and 66% off the price of a new print textbook. (CourseSmart claims similar savings from rental of its eTextbooks.) The NACS claims that purchasing used textbooks can save 25% off the price of new textbooks for students, and that renting or purchasing eTextbooks is also an option for saving money.

NACS' members are facing many challenges: Competition from Internet-based textbook suppliers such as Chegg, Amazon, BookRenter and others; publisher groups like CourseSmart that compete against bookstores; colleges and universities that cut direct deals with publishers such as McGraw-Hill and provide textbooks and course materials through activity fees; and schools that adopt open textbooks at low or no cost. Students, colleges and universities are exploring more options than ever before, and college bookstores are no longer most students' de facto source for textbooks, eTextbooks and other materials.
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eReaders are great for casual readers, not so great for highlighting and notes

The Atlantic has an essay about the state of eReaders written by Alan Jacobs, an English professor at Wheaton College. Here's a summary:
  • Both eReaders and tablets are making it easier to read at night, with front lights (eReaders) and dimmable backlights (tablets). 
  • E Ink displays on eReaders are still far superior to LCD displays on tablets when it comes to glare. 
  • The contrast of eReader displays has improved considerably. 
  • eReaders have limited typeface options and do a poor job of handling kerning and spacing. (A large part of the problem is EPUB, which emphasizes dynamic page flow to the detriment of just about everything else.) 
  • Highlighting and annotation, which are very important for literature studies, are all but impossible with eReaders. The trend to replace dedicated keyboards with on-screen keyboards has made annotation even more difficult. On the other hand, tablets handle highlighting and annotation much better, although they still have some quirks. For example, it's impossible to extend a highlight across a page break on the iPad (although it can easily be done on Nook and Kindle eReaders.) 
The bottom line is that eReaders and tablets are generally improving for general reading, but for engaged reading, there's been little improvement, and in some ways eReaders' capabilities are moving backwards.

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September 12th is the likely date for Apple's announcement of the new iPhone

iMore is reporting that Apple plans to introduce its next iPhone, as well as an 8" iPad and updated iPod nano, at an event on September 12th. Bloomberg's sources confirm the date and that the next iPhone will be announced, but said nothing about other devices. iMore's sources say that the iPhone will go on sale in stores on Friday, September 21st; the website's sources haven't provided any specific information on release dates for other devices.

AllThingsD has also come close to confirming the September 12th announcement date for Apple's next iPhone. They haven't quite confirmed IMore's report, but they say that they've confirmed with their own sources that the announcement will be held the week of September 9th, with the 12th being the most likely date.

AllThingsD also points to a massive ramp-up in Apple's prepayments for components, as reported both by Wells Fargo Securities and Apple's own 10-Q filing. Apple's prepayments rose $1.15 billion in the June quarter to their highest level in four years--12.6% of Apple's total sales, according to Wells Fargo's Maynard Um. In a note to clients, Um said that these increases have been followed by ramp-ups in revenue in the following two to three quarters. AllThingsD also notes that the increase in component prepayments is so high that it suggests that multiple products are being readied for launch.
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Monday, July 30, 2012

State Comptroller's audit shows that MTA gave Apple an unfair advantage in Grand Central Station bidding

The New York Post reports that an audit by New York State Comptroller Thomas DiNapoli reveals that Apple was allowed to dictate some of the bidding terms for the retail space that it subsequently leased in Grand Central Station from the Metropolitan Transportation Authority. The most blatant hurdle that the MTA accepted was that any bidder had to post $5 million in cash within 30 days in order to bid on the space--a condition which only Apple met. The audit states that “The competitive process followed by MTA . . . was at a minimum severely slanted toward Apple."

The MTA is defending itself by claiming that Apple's first-year rent of $1.1 million is four times what restaurant Metrazur had been paying for the same space, but the Comptroller's office countered that the restaurant's below-market lease payments had been lowered even further by $2.4 million in lease concessions given it because of earlier MTA mistakes.
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Samsung develops AMOLED display with better resolution than Apple

Electronista reports that Samsung has managed to increase the resolution of its AMOLED displays to 350 pixels per inch, higher than the density of Apple's Retina Displays (264 to 326ppi), without having to make major changes in its manufacturing process. However, Samsung has achieved these improvements only in its labs so far, so it's not clear how long it will take for them to reach production.
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Apple accuses author of naming the eRetailer that she dare not name

Apple's never had much love for that pesky First Amendment, and The Digital Reader reports that the company has now banned an eBook from its iBookstore simply because it mentions Amazon. Here's a summary:

Author Holly Lisle was asked to release her series of eBook lessons on writing in Apple's iBookstore, which she did. Everything went swimmingly until she reached Lesson 6, which teaches authors how to do research in order to identify other genres in which to sell their books. As part of the lesson, she included an example with links to Amazon's website. Apple rejected the eBook on the basis of the links to Amazon (something that Apple's done in the past,) and Lisle edited the eBook and replaced the links to Amazon with links to her own site. Then, she resubmitted the eBook, and Apple rejected it again, this time because it simply mentioned Amazon. (To be completely accurate, Apple rejected the resubmitted version because it claims that Lisle didn't remove the links to Amazon, even though she actually did remove them and has uploaded the new version of the eBook without the links multiple times.)

It's not unusual for eBookstores to delete, or fail to approve, eBooks due to plagiarism or because they reproduce public domain content that's already available in the bookstore in multiple forms. However, Apple appears to be only eRetailer that refuses to carry eBooks that even mention competitors. Lisle claims that Apple's actions aren't censorship because Apple isn't a government entity, but it's a distinction without a real difference. If, instead of having 10% market share, Apple had 90% market share and engaged in this behavior, it would be de facto censorship.

Update, August 2, 2012: Apple has apologized to Holly Lisle and has reinstated her Lesson 6, including the links to Amazon. However, the decision to allow Lisle to sell her eBook should be seen more as a response to negative PR than as any change in Apple's policy of banning eBooks with links to competitors.
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Strategy Analytics forecasts more than 780 million tablets in use worldwide in 2016

Market researcher Strategy Analytics has released a new study, "Global Tablet Installed Base Forecast by Country," which projects that the worldwide installed base of tablets will exceed 780 million units in 2016. According to analyst Matthew McKee, growth will be driven by ongoing price erosion and replacement of obsolete and broken tablets. He believes that the Asia Pacific region, led by China, India and Japan, will represent 25% of the entire global tablet installed base by the end of 2016, and will become the number one region, just ahead of North America. Here are a few other findings from the report:

  • The global tablet installed base will increase by 125% this year. 
  • By 2016, the top 14 countries will have over 50% household penetration of tablets. 
  • Small, wealthy countries such as Switzerland, Luxembourg and Singapore will have the highest household tablet penetration.
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NBC's 48-year-old Olympic playbook

Comcast division NBC is being blasted for how it's broadcasting the 2012 London Summer Olympics. Despite broadcasting events on NBC and its Spanish-language Telemundo broadcast network, cable networks NBC Sports Network, MSNBC, CNBC, Bravo and two networks started specifically for the Olympics, as well as online, NBC couldn't find any place to show the opening ceremonies live as they happened. Instead, they were delayed by three hours for broadcast in the U.S.'s Eastern and Central time zones--and the events that U.S. viewers saw were edited. Viewers on the Pacific Coast were forced to wait another three hours to see the ceremonies.

NBC is tape-delaying its coverage of most events that it thinks U.S. viewers will be interested in to "prime time" hours, in order to maximize advertising revenues. That decision, along with an almost total focus on U.S. athletes, has led to an initial barrage of complaints by viewers on Twitter, followed by similar complaints on websites and in newspapers. NBC spokespeople and executives have either dismissed the complaints or pedantically reminded commenters that most events are being streamed live on the Internet. And yes, the events are covered live on the web, as long as you can prove that you subscribe to a participating cable, satellite or IPTV video service provider, and providing that the stream doesn't freeze up mid-event. NBC lards the web streams with plenty of commercials, so it can't claim that it has to limit viewership to only those who subscribe to a multichannel video service. (Or, perhaps being owned by Comcast has something to do with it.)

Now, a U.S. editor for the U.K.'s Independent newspaper has been banned from Twitter, ostensibly because he tweeted the email address of an NBC executive. NBC admitted that it filed the complaint against the editor, Guy Adams, although anyone with an IQ above breathing can figure out the email address for any NBCUniversal employee through Google. I can just imagine the drone in NBC's corporate communications department saying "Now we've got 'em!" after seeing the tweet go out. (Update, August 1, 2012: It was actually a drone at Twitter who found the tweet, contacted NBC and told them how to file the complaint. Then, the mindless drone at NBC filed the complaint and rubbed their hands in glee. I made up the part about rubbing their hands in glee.) The only problem is that, as Reuters' Felix Salmon pointed out, that the Twitter rule covers "non-public, personal email addresses," neither of which applies to the address that Guy Adams tweeted--it's a corporate, public email address.

NBC's response to the fracas has been uninformed, manipulative and dismissive--but that's just a knee-jerk reaction, not the real problem. The real problem is the game book that NBC's playing with, a game book written by Roone Arledge in 1964 when ABC first broadcast the Innsbruck, Austria Winter Olympics. Tape and film from that first ABC Olympics had to be flown to New York for broadcast. Over the 20 years that ABC held rights to the Olympics, Arledge introduced the policy of tape-delaying and editing opening and closing ceremonies. Even after it was possible to broadcast live from anywhere in the world, Arledge continued to tape-delay events and ceremonies for broadcast in prime time. To attract more female viewers, he came up with the "up close and personal" concept of taped background packages on selected athletes designed to generate human interest. Event coverage focused on the performance of U.S. athletes, and created controversies even when none existed.

I'm not dumping on Arledge: He's one of the fathers of American sports broadcasting, and ABC's coverage of the kidnapping of Israeli athletes at the 1972 Munich Summer Olympic games, most of which was reported by ABC's sportscasters, not newspeople, was the birth of American television sports journalism and one of the most honored events in American television history. What Arledge did was right for the available technology and the times. The problem is that Arledge stopped running ABC Sports in 1986. The Internet didn't exist as anything but an academic curiosity when he retired, but with the exception of offering real-time event video streaming, NBC is doing the same things that Arledge did in 1964--just more of it, on more channels.

Roone Arledge died in 2002 at the age of 71. If he were still alive today, I think that he's tell NBC's management the following: "Times have changed, and so should you."
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Saturday, July 28, 2012

The New York Times now gets more revenues from subscriptions than advertising

According to New York Magazine, subscription revenue exceeded advertising revenue for the second quarter in a row at the New York Times Company. In Q2, print and digital advertising revenues from its newspapers declined 6.6% year-over-year to $220 million, but subscription revenue was up 8.3% to $233 million. This represents a dramatic shift for the Times Company, and for newspaper publishers in general, which have gotten the majority of their revenue from advertising for many decades.

Revenue from print advertising has been declining since the 2008 financial crisis, and the growth of online advertising revenues has stalled. On the other hand, the Times' aggressive program to increase digital subscribers has been successful--digital subscribers for all its newspapers increased from 454,000 in Q1 to 509,000 in Q2. The company also increased the price of its morning print newspaper, but it didn't have much impact on sales.

As Ken Doctor of Newsonomics told New York Magazine, "The future looks like it's going to be a majority reader revenue. What we don't know is at what level. And that's huge, because it tells us how big of a newsroom they can support."
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Seton Hall University to equip students with Windows 8 tablets and Ultrabooks

TabTimes reports that Seton Hall University will give out Samsung Windows 8 tablets to all new science and honor degree juniors after the operating system ships this Fall; other new students will get Samsung Ultrabooks. The University will also give out Nokia Lumia smartphones to all incoming freshmen starting this fall.
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Apple's U.S. margins for iPad about half those of iPhone

As part of the myriad lawsuits between Apple and Samsung, Reuters reports that a statement from an Apple expert witness in a case going to trial in San Jose reveals Apple's margins on the iPhone and iPad. According to the statement, between April 2010 and the end of March 2012, Apple's gross margins on U.S. iPhone sales were 49% to 58%, generating revenues of more than $33 billion, while gross margins on iPad sales were 23% to 32%, generating revenues of more than $13 billion. The numbers reflect the fact that iPhone prices are heavily subsidized by mobile carriers, while most iPads are sold without broadband connectivity and are thus unsubsidized. Apple has chosen to accept lower margins on iPads in order to avoid creating a price umbrella for competitors.
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Pearson's First-Half 2012 results

Pearson has reported its first-half 2012 financial results; here's a summary:
  • North American educational sales were £1.022 billion, up 9% year-over-year; adjusted operating profits were £62 million, up 35%. (Net margins were 6.1%) 
  • International educational sales were £724 million, up 13% year-over-year; adjusted operating profits were £73 million, up 16%. (Net margins were 10.1%) 
  • Professional sales were £180 million, up 2% year-over-year; adjusted operating profits were £9 million, down 65%. (Net margins were 5%) 
  • Penguin's worldwide sales were £441 million, down 4% year-over-year; adjusted operating profits were £22 million, down 48%. (Net margins were 5%) 
  • Educational digital platform registrations were up 30%. 
  • Penguin's eBook revenues were up 33% and now represent almost 20% of the publisher's revenues. 

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Shades of things to come, if you live in Kansas City

Engadget reports that Google has officially launched its Google Fiber service in portions of Kansas City. The service breaks down as follows:
  1. A $300 "construction fee" (temporarily waived for monthly subscribers) gets customers a set-top box, a Storage Box DVR with a 2TB hard drive that can store 500 hours of HD video, a Network Box with a four-port Ethernet router and 802.11n Wi-Fi, and a free Nexus 7 tablet to serve as the system's remote control. 
  2. For $120/month, subscribers get "hundreds" of television channels, and most importantly, a fiber Internet connection with download and upload speeds of 1Gbps; only a few Internet Service Providers around the world offer Internet connections this fast. 
  3. The 1Gbps connection is available by itself without television for $70/month. 
  4. Any consumer willing to pay the $300 construction fee can get basic 5Mbps internet service free for "at least" seven years. 
  5. "Key institutions" (most likely local government and schools) will get the full 1Gbps service for free, 
Kansas City is the first city to get Google Fiber, but it won't be the last; the company is conducting a "rally" where the city with the most people who pay $10 to preregister for service will get Google Fiber next.

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Thursday, July 26, 2012

Amazon misses on both revenues and profits, but the stock is up

According to Bloomberg, Amazon reported its Q2 financials after the close of the market today. Gross revenues were $12.8 billion, just short of the consensus analyst estimate of $12.9 billion but still up 29% year-over-year. Net income, however, was only $7 million, or $0.01/share, compared with $191 million or $0.41/share a year ago, and below the $0.03/share forecast by analysts.

The company claims that the decline in profits was due to big investments in distribution centers, but another factor was likely to be declines in sales of the Kindle Fire and Kindle eReaders. Analyst Mark Harding estimates that Amazon sold only 670,000 Kindle Fires in Q2 due to customers' expectations of an updated model (or models) later this year.

Amazon expects a Q3 loss of $50 million to $350 million compared to analyst expectations of a profit of $119.6 million, on sales of $12.9 billion to $14.3 billion, vs. analyst expectations of $14.1 billion. The company has built eight new fulfillment centers this year and plans to build ten more before the end of the year, and much of that expense will be loaded into Q3.

Amazon's stock closed at $220.01, and is currently priced at $222.80 in after-hours trading.
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McGraw-Hill Q2 financial results: Education is declining faster than Financial is growing

McGraw-Hill has released its Q2 financial results. The company is headlining its record adjusted diluted earnings per share of $0.85, but that's mainly to deflect attention from what's overall a disappointing report:
  • Q2 revenue was $1.547 billion, down 1% year-over-year, due to a 12% decline in revenues at McGraw-Hill Education that wasn't compensated for by a 5% increase in revenues at McGraw-Hill Financial. 
  • Net income from continuing operations increased 2% to $216 million, and diluted EPS increased 11% to $0.76. 
  • When one-time costs related to the company's Growth and Value Plan (planning for a sell-off or spin-off of McGraw-Hill Education) are subtracted out, adjusted net income from continuing operations increased 15% to $243 million, and adjusted diluted EPS increased 25% to $0.85. (That's where the "record quarter" came from.) 
  • McGraw-Hill Education's revenue for the quarter declined 12% to $474 million, but operating profit increased by 36% to $57 million, due primarily to restructuring and cost controls. 
  • Revenues in the Higher Education, Professional and International (HPI) Group declined 2% to $241 million. 
  • 34% of HPI's revenue in the quarter came from digital products and services; digital subscription platforms grew 33%. 
  • Revenues in the School Education Group declined 20% to $233 million, and the Group expects an overall 10% reduction in the K-12 market this year, the lowest spending level in over a decade.

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NAPCO/InfoTrends eBook Publisher Survey

The July/August edition of Book Business Magazine has the results of a survey of 261 publishers (including 145 book publishers) done in May by InfoTrends and the North American Publishing Company (Book Business' parent) about their adoption of digital media and approach to digital production and distribution. Some of the results are surprising; here's a summary:
  • PDF was the format of choice for 76% of the book publishers, followed by EPUB, with 68%.
  • The top priority for eBook production and distribution at the book publishers was improving the overall user experience, cited by 60.3% of respondents, followed by improving overall design and typography (54.9%) and incorporating embedded rich media (44.4%). Only 20.6% planned to add search capabilities, and features such as embedded social media and sharing capabilities; improving footnotes and references functionality; and enabling reader annotations and highlighting were all named by less than 20% of publishers.
  • The Amazon Kindle was the most popular device that book publishers use to test their eBooks, cited by 39.7% of respondents, followed by Apple's iOS devices (34.9%), Barnes & Noble's Nook (25.4%) and Amazon's Kindle Fire (22.2%).
  • Surprisingly, 30.2% of respondents said that they don't test or tune their eBooks for specific mobile devices, which may explain why so many eBooks look so bad on mobile devices, and 13.5% of respondents don't know which devices (if any) their company tests eBooks on.

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iPad's market share increased in Q2, Android's share flat on higher shipments

TechCrunch reports on Strategy Analytics' Q2 tablet shipment report. iPad shipments increased to 17 million units in Q2 2012 from 9.3 million units in Q2 2011, while Android tablet shipments were 7.3 million units in Q2 2012 vs. 4.4 million in Q2 2011. Microsoft-based tablet shipments fell from 600,000 units in Q2 2011 to 300,000 in Q2 2012, as did "Others" (primarily the RIM PlayBook,) which fell from 700,000 in Q2 2011 to 300,000 in Q2 2012.

In terms of market share, Apple's share increased from 62% to 68.3%, while Android's share stayed flat at 29.3% despite the increase in units shipped. Microsoft's share dropped from 4% to 1.2%, and "Others" dropped from 4.7% to 1.2% Total tablet shipments grew 68.8% year-over-year.
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Pay for a chance to perhaps have your book sold in Barnes & Noble

According to paidContent, FastPencil, a self-publishing services company, has struck a deal with Barnes & Noble to carry some of its titles online and in stores. The deal covers two FastPencil "imprints," Premiere and Wavecrest. Participation in the Premiere program seems to be limited to experienced authors who've already published at least one title that sold more than 10,000 copies, while the Wavecrest program is open to anyone who's willing to spend enough money.

FastPencil offers a free self-publishing service, but it's little more than a mechanism for the company to sell the author more services. There are three bundles of editorial, design and distribution services available in FastPencil's basic program, priced from $999 to $1,999. Even the most expensive program only includes five printed copies of the book. Pricing for Premiere is by quotation only, and Wavecrest, which offers exactly the same services as FastPencil's basic bundles plus a package of promotional services, is priced from $4,499 to $7,499. (For $7,499, the author still gets a grand total of five printed copies.)

FastPencil isn't even guaranteeing that Barnes & Noble will carry Premiere and Wavecrest titles; all it will do is pitch all new Premiere and "most" Wavecrest titles to a B&N buyer at quarterly meetings. B&N has complete discretion as to which titles it carries, and FastPencil has complete discretion as to which Wavecrest titles it pitches. I'm certainly not saying that FastPencil is doing anything fradulent--but they're asking an awful lot of money for what they actually do.

Let me be clear: Publishing your own book is the same thing as starting your own business. It requires a lot of work--but frankly, most of that work is neither difficult nor expensive. If you want someone to do all the work for you, pitch your book to an established publisher. They have more and better resources to help you than just about any self-publishing company, and you can save your money for promotion--which is the one thing that most publishers can't, or won't, do for you.
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Do you really want your book publisher to also have the television and movie rights?

According to paidContent, Random House has partnered with Fremantle Media to create Random House TV, which will develop television shows based on Random House's books. Fremantle will have a "first look" at all of Random House's properties. Random House TV will be part of Random House Studio. formerly known as Random House Films.

There are a number of things wrong with this deal from an author's perspective: First, Fremantle Media and Random House are both owned by Bertelsmann, which makes the negotiations between the two companies self-dealing. Authors are likely to earn considerably less than they would if there was a truly competitive bidding process for Random House's properties. In addition, Fremantle's specialties are reality television and game shows (for example, American Idol, America's Got Talent, The Price is Right and X Factor.) The only drama of note on Fremantle Media's website is Merlin, a series about the young Merlin that's co-produced by Elisabeth Murdoch's Shine and BBC Wales, and that's only distributed by Fremantle. They're the last producer that most broadcast and cable networks would think of for dramatic programming.

This deal is an excellent example of why authors should retain as many rights as possible, including television and film rights. The Random House/Fremantle Media partnership is a marriage of convenience for Bertelsmann, but it's unlikely to do anything for most authors except tie up their ability to get a fair price for their television rights.
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Wednesday, July 25, 2012

Simba Information: Waterstones' deal with Amazon will be "...one of the biggest screw-ups in the history of book retail"

Book Business has an interview with Simba Information Senior Analyst Michael Norris, whose company just published its Trends in Trade Book Retailing study. Norris reiterates something that I've been saying for a while: eBooks aren't growing the publishing market--they're just cannibalizing print sales. Further, print sales are falling faster than eBook sales are growing, so at best, eBooks are slowing the market's overall rate of decline.

Norris says that Barnes & Noble's relative success in the eBook business has a great deal to do with its stores, and with its promotion of Nook hardware and accessories in those stores. He's puzzled by B&N's decision to break its Nook business away from the rest of the company--and even more puzzled by Waterstones' decision to partner with Amazon for Kindle eReaders and tablets. Norris compared Waterstones' deal to Borders' disastrous decision to outsource its online eBookstore to Amazon, and said "...I’ve really got to hand it to companies like Amazon, they know how to kill a competitor and make it look like suicide." He added, "It’s going to be one of the biggest screw-ups in the history of book retail."

When asked what book retailers that sell eBooks can do, Norris said "I urge every retailer who does sell ebooks to buy one of their own ebooks and then buy the same or similar ebook from Amazon, then think...about what kind of experience is going to make people come back. "
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Amazon close to deal to double its space in Silicon Valley

The Silicon Valley/San Jose Business Journal reports that Amazon is close to a deal to lease two multistory buildings in Sunnyvale, CA near Moffett Field for its Lab126 subsidiary, which designs its Kindle hardware and software. One is a completed 224,492 sq. ft. building, and the other is a 357,481 sq. ft. building that's under construction.
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Convert your 200-page printed book to a PDF for two bucks

Publishing Perspectives writes about a Japanese trend that's starting to get traction in the U.S.: Ship your print books to a service bureau, where they convert them into searchable PDFs. zLibro, a Japanese company that operates the BOOKSCAN service in Japan, has opened a U.S. operation in San Jose, CA called 1DollarScan.com. As the name implies, the company scans and converts print books for $1 and up, with additional services available (including OCR to make the book searchable) at higher cost. The company also scans business documents, business cards, photos and greeting cards. However, books aren't returned to the original owner under any circumstances, and other documents are returned only if specifically requested and at a fairly high cost. (Books are cut apart before being scanned, and are recycled after scanning.)

1DollarScan claims that it "honors Copyright", but its also says that it relies on "Fair Use" rules, which means that it scans everything, except where a specific agreement is in place with a publisher or author not to scan their works. Most of 1DollarScan's terms and conditions relating to copyright are designed to protect the company if it gets sued, not publishers or authors. Once the books are scanned, the buyer could easily post them to a file-sharing site. It doesn't appear that 1DollarScan applies any DRM to the PDFs it creates.

I wouldn't be surprised if publishers and/or authors file suit against 1DollarScan for facilitating piracy, but it doesn't appear that they're doing anything that an individual couldn't do with a sheet-fed scanner.
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Children's publisher converts all its eBook-only titles to print

Digital Book World reports that Xist Publishing, a children's picture book publisher based in Irvine, CA, is converting 104 eBook-only titles to print. The company reports that its titles with both print and eBook versions sold more copies at higher prices. (The company's decision makes sense in light of the BookStats numbers released today that showed that eBooks comprised only 8% of Juvenile/YA fiction sales by revenues in 2011. By not having print versions of 104 titles, Xist was leaving a lot of money on the table.)
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Polaris Library Systems to resell 3M's library equipment

3M has signed Polaris Library Systems as a reseller of its automated materials handling, RFID and SelfCheck systems for libraries. It's an expansion of the companies' previous deal, in which Polaris integrated the 3M Cloud Library eBook Lending Service with its OPAC. The deal suggests that 3M may be offering OPAC vendors a more extensive business relationship, which could give it a leg up over OverDrive.
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Google values Motorola Mobility's entire hardware business at $670 million

FierceWireless reports that in an SEC filing, Google detailed how it valued the $12.4 billion that it paid to acquire Motorola Mobility. Here's the breakdown:
  • $5.5 billion for the 17,000 patents that Google acquired
  • $2.9 billion for cash in Motorola's treasury
  • $2.6 billion for goodwill (trademarks and intangibles)
  • $730 million for customer relationships (Motorola's relationships with telecom, cable and IPTV companies)
  • $670 million for "other net assets"
Those "other net assets" include Motorola Mobility's entire phone, tablet and set-top box businesses. It's no wonder that we haven't heard much about Google's plans for Motorola's hardware businesses--Google thinks that they're fairly close to worthless. Google could write off the entire hardware business and take a modest one-quarter earnings hit.

If I worked for Motorola Mobility and I wasn't already looking for a new job, I'd be firing out resumes after Google's SEC filing. Is it possible that Google will invest big bucks to turn around Motorola's hardware business? Sure, it's possible--but not likely.

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Tuesday, July 24, 2012

Amazon puts limits on 3G web browsing

The Digital Reader reports that Amazon has imposed a 50MB/month limit on web browsing over 3G on older Kindle eReaders. (The current Kindle Touch doesn't allow web browsing over 3G at all.) There's no limit on bandwidth use over Wi-Fi. Once the 50MB limit is reached, the 3G connection only works for visiting Amazon.com, the Kindle Store and Wikipedia.
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Rakuten deals with bad reviews of the Kobo Touch by deleting them

The Digital Reader reports that Rakuten's launch of the Kobo Touch in Japan isn't going quite as expected. Despite the company's "Kill Amazon" chest-beating a few weeks ago, actual customers aren't thrilled about the Kobo Touch eReader. Reviews on the website gave the eReader an average rating of 2.96 out of 5, and reviews were fairly equally split between four stars and one star. I'm using the past tense because Rakuten took the entire review page off its website. Reviews of the eReader complained about "...crashing setup of kobo desktop application, very limited offer of Japanese books, unresponsive touch screens, poor customer service, etc."

To be fair, the Kobo Touch has only been on sale in Japan for a week, and there are almost always problems at launch. However, the Kobo Touch isn't a new product--it's been shipping for more than a year. Rakuten may have believed that its dominance of the Japanese eCommerce market would allow it to quickly build comparable dominance of the country's eBook market. However, if they don't fix the problems with the Japanese-language Kobo Touch quickly, what's more likely is that they'll either kill the domestic eBook market or hand it to Amazon.
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CourseSmart claims that it's saved college students $100 million by comparing apples to oranges

CourseSmart has put out a press release claiming that it's saved college students more than $100 million on eTextbooks and digital course materials since the company was founded in 2007. The press release doesn't say how CourseSmart came up with its savings figure, but it most likely compared the rental price for its eTextbooks with the full retail price of the equivalent print textbooks. The company clains to have 30,000 titles from "more than 33 publishers" (does that mean 34?,) representing over 90% of the core textbooks in use today.

The press release refers to a Book Industry Study Group survey that found that "close to 35% of students considering bookstore exchange or buyback programs say that it is not worth the effort or believe that the bookstore would likely not accept their textbooks." Of course, that means that 65% do believe that it's worth it to sell their textbooks back. The reason that CourseSmart is making this argument is that it only rents its eTextbooks; there's no purchase option, so students have nothing to sell back (or to keep, for that matter) at the end of the semester.
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Clueless publisher to release book based on "Text from Dog" Tumblr posts

Publishers are desperate to find the next "pre-sold" property...and here it is: The Bookseller reports that British publisher Headline has paid an undisclosed amount to animator Joe Butcher for a compilation of his Tumblr posts called "Text from Dog." The characters in the Tumblr, October Jones and his dog Cooper, have more than 100,000 Tumblr fans and 40,000 Twitter followers. Hence, a pre-sold audience. Here's a quote from Headline deputy publishing director Sarah Emsley (and I'm not making this up):

"October and Cooper have been brightening up our days for months and we could not be more thrilled to be working (with) them. Buy your copy this autumn to see if it will be BATDOG or CATCAT who reigns supreme this Christmas."

John Biggs at TechCrunch read the Bookseller story, and demolished it. Here's a quote:
So look, here’s what’s up: you guys are killing yourselves. Like this. You’re paying what? Probably six figures for a book based on Text From Dog, an arguably funny Tumblr that, in book form, will sell a maximum of 5,000 copies and then disappear from the cultural Zeitgeist. I mean you wouldn’t pay some no-talent asshole to pretend to write a work of fiction and then capitalize on her name to sell some garbage, would you? Oh wait, you would. But still. Why? Why are you doing this? Stop.
And another one:
I can see the wheels turning. “This is funny! It’s on the web! We can monetize it! People love dogs! People are stupid! This could make our quarter!” Stop.
You’re about to be flattened. Book piracy is about to smash your top shelf revenue while books like Text From Dog are going to kill any respect we once had for the big six. You guys clearly have no idea what you’re doing and you’re depending on your recent Yale-grad philosophy major Assistant Editor to bring you some hot, hot web trendz to capitalize on. Real fiction and non-fiction? Blah, that’s for old people and nerds. What the kids want to do these days is go into a book store and buy a book based on a Tumblr blog. Because kids are stupid. Also vampires. And sex.

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Monday, July 23, 2012

Author Sylvia Day is Penguin U.K.'s 'erotic...sensation'

Any sentence that combines "Penguin" and "erotic sensation" is likely to create cognitive dissonance. Nevertheless, The Bookseller reports that Penguin says that Sylvia Day's Bared to You has sold 50,000 paperbacks and another 50,000 eBooks in the U.K. Even though it's an erotic potboiler and the cover art copies Fifty Shades of Grey, Penguin U.K. CEO Tom Weldon said "This is not copycat publishing. In a digital age, this is giving readers what they want straight away."
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The Weekly Reader to be folded into Scholastic News

The New York Post reports that Scholastic, which acquired the Weekly Reader earlier this year, is folding the newspaper into its Scholastic News, and has laid off all but five of the Weekly Reader's employees. The Weekly Reader, which was founded as Current Events magazine in 1902, had 13 million subscribers at its peak. Scholastic acquired the newspaper from the Reader's Digest Association in February for between $10 and $20 million. It was acquired by private equity firm Ripplewood Holdings in 1999 for approximately $310 million, then merged with Reader's Digest five years ago.
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What did Pearson really buy when it acquired Author Solutions?

On the IndieReader blog, David Gaughran writes about last week's acquisition of self-publishing company Author Solutions by Pearson. Author Solutions will become an independent business within Penguin. Gaughran writes that Bertram Capital, the private equity company that owned Author Solutions, has been looking for a buyer for the company since March. The company grossed $99.8 million in revenue in its most recent fiscal year, of which 63% came from the sale of services to authors, and only 37% came from the sale of books.

According to Gaughran, "Industry watchdogs such as Writer Beware have received a litany of complaints about Author Solutions and their subsidiaries over the last few years: misleading marketing, hard-selling of over-priced services, questionable value of products provided, awful customer service, and, after all that, problems with writers being paid." He points to Author Solutions' "web-optimized press release" priced at $1,199 as an example of wildly overpriced services, and writes "In case it isn’t obvious, you would likely receive greater promotional value from setting fire to that money on YouTube." Gaughran says that "...the average customer spends around $5,000 over their “lifetime” with the company, but only sells 150 books." Customer dissatisfaction could explain in part why the average author only publishes 1.3 books through Author Solutions (the company claims that it's published 190,000 titles by 150,000 authors.)

It's possible that Penguin could clean up Author Solutions' operations, but first, the publisher has to believe that there are problems. Penguin CEO John Makinson said the following in Pearson's press release announcing the deal:

“No-one has captured this [self-publishing] opportunity as successfully as Author Solutions, which has rapidly built a position of world leadership on a platform of outstanding customer support and tailor-made publishing services.”

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Qualcomm to license, not build, future Mirasol displays

The Digital Reader's Nate Hoffelder reports that Qualcomm has announced that it will license, rather than manufacture, the next generation of its color Mirasol displays. Hoffelder writes that the Mirasol display was difficult to manufacture, which led to high prices that made devices using the displays uncompetitive. It's unlikely that other companies will license the display, given Qualcomm's problems and the rapid market transition to tablets with LCD- and OLED-based displays.
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Are we on the path to bookless libraries?

David Bell writes  in The New Republic that the New York Public Library's plans to put millions of print books into storage and close branch libraries weren't driven by the digitization of books (Bell writes that there are more books available more quickly on an iPhone than at the NYPL,) but that the changes are inevitable given budgetary pressures and the rise of eBooks. Here's a summary:
  • The NYPL's Central Library Plan calls for transfer of millions of books from the stacks of the main branch to a facility in New Jersey, from which it will take at least 24 hours for them to be delivered back to NYPL's branches. In addition, some nearby branches will be closed and consolidated with the main library in the updated Schwarzman Building. New library head Anthony Marx claims that the physical consolidation of nearby branches into the main library will save as much as $16 million, or the equivalent of adding 50% to the library's endowment. 
  • The NYPL's acquisition budget has shrunk 26% over the last four years. 
  • Marx is developing a program whereby New York City public school students will be able to order print books from the NYPL system and have them delivered to their schools within 24 hours. 
  • In a few years, all cell phones will have Internet access. eReaders and tablets are improving quickly. While there are some good reasons to maintain print collections for research purposes, in the long run, the combination of shrinking financial resources and device improvements will dictate replacement of print with eBooks in libraries. However, this transition will most likely take 20 to 30 years. 
  • Digitization efforts by groups such as the Digital Public Library of America (DPLA) will supersede the sloppy and often inaccurate job done by Google--for example, 325 books in Google's collection that mention Woody Allen have their publication dates listed as being prior to Allen's birth. 
  • The functions of libraries are still necessary, even in a world of eBooks: Providing research assistance, developing access portals for online content, organizing special programs and exhibitions, building both general and specialized collections, and screening out inaccurate and inappropriate content. 
  • It's inevitable that most, if not all, of these functions will eventually be available over the Internet, but there are many things that public libraries are uniquely suited to offer, as Bell writes: "Now, even as books and periodicals are increasingly available elsewhere, there is more and more public demand for other forms of interaction: lectures and seminars, tied to online courses and readings; authors’ appearances; book groups; exhibitions of art works and films; study centers hosting fellows who contribute to public discussions." 
  • These changes could lead some to conflate libraries with Internet cafés, but Bell writes that cafés were places of serious public discussion in 17th- and 18th-century London, Paris and Amsterdam.

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Canon's EOS M: Strong competitor in the mirrorless market, but perhaps not for video

Digital Photography Review has one of the first analyses of the new EOS M, Canon's first mirrorless interchangeable lens camera. It has an APS-C-sized 18MP sensor and a new EF-M mount for which two lenses will be available at release: An 18-55mm f/3.5-5.6 IS STM zoom, and a 22mm f/2 STM pancake lens. In the U.S., the only configuration available will be a kit with the EOS M and 22mm lens for $799. (The 18-55mm lens will be sold separately for $299.) An adapter will be available for conventional EF and EF-S lenses. No flash comes with the EOS M, although a separate Canon flash can be purchased.

According to DP Review, the EOS M is designed as a step-up camera for point & shoot users who want DSLR capabilities without DSLR complexity. To that end, the EOS M's exposure mode dial has only three settings, and most of the camera's controls are available through a touchscreen menu--on a 3" 1.040M display that doesn't pivot. The EOS M doesn't have a viewfinder. Maximum shutter speed is 1/4000 second, and maximum ISO is 12,800 (25,600 with boost.) The camera can shoot 4.3 fps in continuous shooting, or 3 fps with autofocus tracking.

The EOS M has some nice video features: 1080p at 24, 25 or 30 fps for a maximum of 29 min. 59 sec. per clip, with continuous autofocus in movie mode with subject tracking. Recording can be done in full auto, full manual or anything in between. It also has built-in stereo microphones, stereo inputs and adjustable level controls. The EOS M's biggest limitations (at least on paper) are that 60 fps is limited to 1280 x 720 and 640 x 480, and the rear display is both fixed and the camera's primary control surface, making a separate video viewfinder required for professional videography.

The EOS M is a strong competitor in the mirrorless market, but videographers for whom size isn't the first consideration should probably spend a bit more for the Canon Rebel T4i/650D in order to get its more flexible display, physical controls and adapter-free support for EF and EF-S lenses.

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Friday, July 20, 2012

Zola Books wants to partner with independent booksellers

Jeremy Greenfield of Digital Book World writes about Zola Books, a new eBook retailer that launched in beta shortly before this year's BEA. The company has raised $1.3 million from investors and plans to open its eBookstore to consumers on September 19th. Zola is offering eBook partnerships to American Booksellers Association members that have been selling eBooks through Google Books, but it's not clear whether Zola is under official consideration to replace Google by the ABA.

One ABA member, Katie Fransen of One More Page Books in Arlington, VA, said that the ABA eBook program was much too expensive. The ABA charged a monthly fee of around $200/month to program and maintain the store's website, and to act as a go-between with Google. Fransen, whose store has signed up for Zola's beta program, said that Google offered a very small percentage on sales to its independent bookstore partners. Zola, on the other hand, pays publishers 70% of each sale, and then splits the remaining 30% equally with its partners (Zola pays the 4% credit card transaction fee out of its share of the 30%.) It's a great deal for publishers, but it's significantly less than what most bookstores make on print sales. (Also, it's unclear what the business model truly is--Greenfield writes that Zola gives independent booksellers that run their own online stores 60% of the net proceeds from every sale, which, if net proceeds are measured after the publisher's share, would be a slightly better deal for booksellers.)

To date, Zola has signed up 48 bookstores for its beta test, and half of them have committed to use Zola when it launches in September, although the article says that the number of participating bookstores continues to change.
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870-page law casebook becomes a $10 eTextbook

PaidContent writes about a new, 870-page legal casebook titled “Advertising & Marketing Law: Cases & Materials” written by trademark experts and bloggers Eric Goldman and Rebecca Tushnet. Two things make this new book stand out:

1: It's being published on Scribd as a DRM-free PDF download, and
2: It's priced at $10.

On his blog, Goldman writes at length about the new book. He's far from happy with Scribd:
Scribd is a horribly limited platform for eBook publishing (and for doing just about everything else). [Among other limitations, I believe it only completes sales with US residents, and (for no good reason at all) it requires buyers to log in via Facebook to complete the purchase. If you can't complete a purchase via Scribd due to these limitations, email me and we'll set up a PayPal transaction.] [Update: I got an email from Scribd informing me that they just opened up international sales, and you must be logged into Scribd to make the purchase and you can (if you navigate around) find a way to log into Scribd without connecting with Facebook.] We are working on moving away from Scribd to a better eBook publishing platform...once we figure out what that is. If you have any recommendations, please email me.
Here's Goldman's analysis of the pricing model:
Here’s how I see the math: a $150 casebook may have a $110 price wholesale (or less). At 10% royalties to the authors, Rebecca and I would share $11. At the $10 download price, Scribd takes $2.25 a download, leaving us author royalties of $7.75. So discounting the retail price 93% perhaps reduces our royalties by less than 30%. Let’s hear it for disintermediation! Plus, just like any demand curve, the lower price point should lead to higher sales, which may, in fact, make our approach profit-maximizing. (Just so we don’t delude ourselves, we’re not talking big numbers in any case).
Goldman also admits that the casebook isn't quite done yet:
While we’ve deemed the book ready for public release, it’s not “done.” I’d say it’s only about 90% done. Unfortunately, you’re going to notice some of the unfinished 10%, starting with the crap-ass book “cover” I whipped up in about 5 minutes some time around midnight one night last week, and continuing with the countless typos and formatting errors you’ll find throughout the book. We’ll be fixing errors as we find them, so please send us your corrections and suggestions. Because Rebecca and I own the copyright and completely control the publication schedule, we anticipate issuing new versions fairly frequently. No promises, but I anticipate we’ll publish annual editions for at least the next few years.
Goldman's and Tushnet's casebook combines elements of commercial eBook publishing with the Open Access academic publishing model. It's not quite free to students, but compared with the $150 that such a casebook would typically cost, $10 is pretty darn close to free. And, as Goldman points out, he and Tushnet have dropped the retail price by 93% while reducing the royalties that they would have earned if the book was published by an academic publisher by only 30%.

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Thursday, July 19, 2012

Germany's PaperC raises money to fund development of HTML5 eReader

GigaOm reports that PaperC, a German eBook retailer, is trying to raise from €50,000 to €100,000 through a crowdfunding site in order to transition to a HTML5-based platform. PaperC allows users to purchase eBooks by the page, chapter or entire title, and plans to offer a monthly subscription program giving members unlimited access to the company's entire collection. The company currently has 120,000 registered users and distributes titles from more than 100 publishers.

PaperC is working with German crowdfunding site Innovestment to raise funds to launch PaperC.com, a new platform that is based on HTML5, instead of the current PDF-based platform. They've developing their own HTML5 eReader and PDF-to-ePub converter.
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Scholastic releases Q4 and FY2012 results, and FY 2013 outlook

Scholastic has released its financial results for FY2012, and its outlook for FY2013. The company's results can be summed up in three words: "The Hunger Games." Here's a summary:
  • Q4 revenues were up 24% year-over-year, to $678.5 million. 
  • EPS (diluted) from continuing operations were $1.86, compared to $0.83 in Q4 2011. 
  • FY2012 revenues were up 14% year-over-year, to $2,148.8 million. 
  • EPS (diluted) from continuing operations were $3.41 vs. $1.34 in FY2011. 
  • Year end cash and cash equivalents exceeded total debt by $35.6 million, compared to debt exceeding cash by $98.1 million a year earlier. 
  • Children's Book Publishing and Distribution segment revenue in Q4 was $379.4 million, compared to $268.8 million in Q4 2011. Operating income was $82.4 million vs. $41.6 million in Q4 2011. Q4 School Book Fair revenues grew modestly, but School Book Club revenues declined.  FY2012 segment revenue was $1,111.3 million, up 21% from $922 million in FY2011. Operating income rose to $153 million in FY2012 vs. $78.1 million in FY2011. 
  • Educational Technology and Services segment revenue declined to $52.7 million in Q4 from $61.4 million in Q4 2011. Operating income also fell, to $1.7 million in Q4 compared with $8.6 million in Q4 2011. However, FY2012 segment revenue rose to $254.7 million from $230.8 million in FY2011, while operating income increased to $49.2 million in FY2012 vs. $38 million in FY2011. 
  • For FY2013, the company expects total revenue of between $1.9 and $2 billion, and EPS (diluted) from continuing operations of from $2.20 to $2.40 before one-time items. 
  • Scholastic expects revenues and operating income in the Children's Book Publishing and Distribution segment to decline, due largely to declining sales of The Hunger Games trilogy. It expects Educational Technology and Services revenues to be flat, but operating income to decline slightly. 

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