Monthly Archives: November 2008
Though books are among the noblest expressions of civilization, like other art forms they can be dangerous. Authors have been imprisoned and even executed because of them. Libraries have been sacked and books destroyed in bonfires because of the ideas they contained. Of recent memory, a fatwah was issued against Salman Rushdie for his novel The Satanic Verses, and the Turks prosecuted an author under Law 301 forbidding “Unturkishness” in books published in their country.
There is little risk, however, that bookstore employees will be trampled to death by customers rampaging through their shop aisles on Black Friday, the day after Thanksgiving that customarily initiates the holiday shopping season. Unlike stampeding shoppers who fatally ran over a Wal-Mart employee on Black Friday this year, bookstore shopping was conducted with the decorum one expects from well bred ladies, gentlemen and children, as I personally observed in a Barnes & Noble store in New York’s Lincoln Center area.
Books are worth fighting for and even dying for. But they’re not worth killing your neighbor over. Supplies are abundant, and if your store runs out of stock, it will be replenished soon enough, or you can buy it online.
Let people beat each other’s brains in over 32-inch flat-screen TV. Book shoppers, the cultured guardians of civilization, browse bookstore shelves, quietly make their selections and queue up patiently to pay for their purchases. Dignity and order prevail. They leave the shop clutching their books like talismen against the barbarism that would crush a living soul to death for a bargain on an X-Box at a discount store.
We are not animals. We are people of peace, we book people.
You can try calling your bookmaker about placing a bet on La Dotta Mano, but after checking the entries at Pimlico he will tell you there’s no such nag. That’s because it’s not the name of a horse. It’s the name of a book.
Oops – wrong bookmaker. The makers of this particular book are skilled Old World craftsmen hand-sculpting a Carrara marble-bound edition of plates of Michaelangelo drawings and sculptures. A copy of the extremely limited edition goes on exhibit today at the New York Public Library, as reported by David Carr in the New York Times. “La Dotta Mano” means “The Wise Hand” and the work is arguably il piu bello libro nel mondo.
It may also be il piu pesante – the world’s heaviest. We thought Phaidon’s 800 page Atlas of 21st Century World Architecture was heavy at fifteen pounds. La Dotta Mano weighs in at about sixty-two. Around the size of a Siberian Husky, except you don’t wear white gloves to shlep a Siberian Husky. You’d better wear them to protect your investment if you browse La Dotta Mano, however – the book sells for 100,000 Euros. Despite the price, some twenty bibliophiles have purchased it. They are undoubtedly reinforcing their bookshelves as we speak.
For more about the genesis of this remarkable book, click here.
Random House’s CEO Markus Dohle wants to expand the company’s e-book list by a serious multiple, taking the inventory from 8000 to something approaching 15,000. Matt Shatz, Random’s VP for digital operations, says sales of e-books have been soaring.
They certainly have been, as we have reported here. But E-book sales have a long way to go before matching the size or profitability of good old fashioned printed books. For that reason, and because any bold investment in today’s economic climate is worth cheering for, Random’s commitment to a dramatic increase in e-content is a very good sign.
Tim Arango reports in the New York Times that Digital Sales Surpass CDs at Atlantic. This should come as no surprise to fifteen-year-olds. In fact, it should come as a surprise to no one of any age. But it’s still another sign that the media is undergoing one of the profoundest transformations in the history of human communications.
Does that mean that dollars have also tipped from the hard copy side to the virtual? Not according to John Rose, a former music business executive quoted by Arango. “It’s not at all clear that digital economics can make up for the drop in physical,” Rose observed.
“With the milestone comes a sobering reality already familiar to newspapers and television producers,” writes Arango. “While digital delivery is becoming a bigger slice of the pie, the overall pie is shrinking fast.”
This too is no surprise to any business person caught in that terminator line where the fading light of the old media meets the rising sun of the new.
Where is the money disappearing to? Once you recite the motto of the new generation – “Information wants to be free” – it shouldn’t be too hard to figure out.
Has it come to this? According to the New York Observer’s Leon Neyfakh, editors and publishing company executives are being asked to cut back on lunches. Neyfakh’s headline says it all: Publishing Bigshots Told to Open Canned Tuna, Eat at Desk
But it gets worse: some agents are splitting lunch bills with editors or – ohmigod! – treating entirely.
ICM co-head Esther Newberg suggested that maybe agents and editors could start splitting bills instead of saddling publishers with the whole thing as per tradition. “We’re all part of this economic crisis,” says Newberg. “I think that we can alternate. I think that would certainly be fair.”
I dunno. Most agencies are far from behemoths, and even paying the tip for the coat check attendant is likely to trigger cardiac infarction in any agent who as little as six months ago didn’t hesitate to order the three pound lobster without checking the menu for the price per pound. Another agent mentioned in Neyfakh’s article, Ira Silverberg, can see the handwriting on Le Bernardin’s wall. “We can get together and have a shawarma and sit in the park and talk about writers. The social time is really important, but what is not important is how expensive the food is.”
Shawarma? In the park? If an agent is asking $2500 for a cowboy novel, maybe. But soliciting a $5 million pre-empt for the hottest novel since Fear of Flying with shawarma grease dripping into your lap?
I don’t think so.
Nefakh debriefed some other execs about The New Frugality. Check out his article and learn who’s eating in the company cafeteria.
Motoko Rich in the New York Times reports that Education Media and Publishing Group, the Irish owner of Houghton Mifflin Harcourt, “borrowed heavily to finance the acquisitions of Houghton Mifflin in 2006 and, last year, Harcourt.” How much, exactly? Jeremy Dickens, the private-equity company’s president who this week announced a temporary halt of acquisitions, put it at “about $7 billion in debt outstanding, on which it was paying about $500 million in debt service annually,” says Rich, who makes it clear that the purchase freeze was directed at the company’s consumer book business, not the textbooks. The former comprises less than 6 percent of total revenues.
Yesterday we speculated on the possibility the company or some part of it might have to be sold to relieve debt pressure. Dickens denied it – sort of. “If there’s a transaction that makes sense for all of our stakeholders, we’ll consider it,” he stated, admitting that some trade publishers had been sounding the company out.
We thought one of them could be Hachette. Interestingly, Hachette and Houghton Mifflin Harcourt were paired in Rich’s article for another reason. Contrasting the bleak news from HMH, Hachette announced a holiday bonus for all its employees amounting to one week’s salary.
If Oprah nearly lost it over v. 1 of the Kindle, it’s hard to imagine what she’ll do when she holds v. 2 in her hands. Though Amazon has thrown cold water on rumors, they just don’t go away. TechCrunch.com quotes “Our sources” to confirm that the long awaited, long debated second version of the Kindle will be released early in the coming year.
“Our sources” is not exactly the kind of collateral you can take to the bank to borrow against your mortgage. But it actually does make sense. We’ve reported on serious development and actual announcements of competitors, especially in the area of tablet-sized handhelds suitable for students. Jeff Bezos may be hearing those footsteps
So, for what it’s worth, TechCrunch.com’s somewhat ethereal sources say Kindle 2 is tentatively scheduled to go on sale in “early next quarter.”
After I ran an item yesterday about the acquisition freeze at Houghton Mifflin Harcourt, in which Publishers Weekly used the term “leveraged”, a related news item was brought to my attention. At a panel conducted at last October’s Frankfurt Book Fair, Lagardere Publishing’s Arnaud Nourry observed, “within the last two or three years some major publishing companies, particularly in education, have been acquired by highly-leveraged private equity funds…. I’m sure that within the next months some of these companies will have to sell some of the assets back…”
In light of yesterday’s news, Nourry’s prescience is quite remarkable.
Or is it more than prescience? Nourry, Chairman and CEO of Hachette Book Group, which owns Little, Brown and Grand Central among other holdings, finished the above sentence thus: “…and we’ll be there…to make these acquisitions.” If he, and we, are talking about the same highly leveraged major educational publishing company, he may have been hinting that he’s got his eye on Houghton Mifflin Harcourt.
Is there a white knight in the offing? Watch this page…
Incidentally, Nourry also had this to say on that same panel: “I don’t see the banks pushing Borders into bankruptcy in the short term, and I’m rather confident about the next six or nine months for these big accounts.”
From his lips to God’s ear.
The Sunday New York Times Magazine of November 23, 2008 is called “The Screens Issue” and carries a number of brilliantly insightful articles about the media revolution of which we are all both active participants and hapless victims. The most arresting piece of all is Becoming Screen Literate by Wired‘s Kevin Kelly and I can’t commend highly enough.
After more than five hundred years of domination by printed text, Kelly says, “Now invention is again overthrowing the dominant media. A new distribution-and-display technology is nudging the book aside and catapulting images, and especially moving images, to the center of the culture. We are becoming people of the screen.”
The collective mentality of today’s social networking generation – what Kelly calls the “hive mind” – is utilizing cheap and ingenious digital tools to produce movies, videos, anime, 3D computer models and other wonders. The “author” of these works is not an individual but, rather, a cultural community. It is even bigger than what the French call the auteur, the unifying human vision that infuses a motion picture. The hive’s human components do not necessarily know each other but contribute anonymously and selflessly to the creation of a media event that is not only greater than the sum of its part but possesses immense global reach and impact.
‘After all,” writes Kelly,
“this is how authors work. We dip into a finite set of established words, called a dictionary, and reassemble these found words into articles, novels and poems that no one has ever seen before. The joy is recombining them. Indeed it is a rare author who is forced to invent new words. Even the greatest writers do their magic primarily by rearranging formerly used, commonly shared ones. What we do now with words, we’ll soon do with images.”
A breaking news story in Publishers Weekly reports that Houghton Mifflin Harcourt announced a temporary suspension of acquisitions, fueling lots of speculation about the health of major publishing companies in the current toxic economic climate.
In its report, PW used the word “leveraged” in describing a possible underlying reason for HMH’s extraordinary action. A news report in WeeklyTelegraph.co.uk may shed some light on the underlying deal that that brought Harcourt into the arms of Houghton:
Publishing giant Reed Elsevier has sold the remaining parts of its Harcourt publishing division to Houghton Mifflin Riverdeep Group, the publishing and software group chaired by Irish entrepreneur Barry O’Callaghan, for $4bn (£1.96bn).
Mr O’Callaghan’s HM Riverdeep Group completed the deal to buy the US-based Harcourt schools education publishing business yesterday evening, after the stock market closed. It is paying $3.7bn in cash and the remainder in shares.
Investment banks Credit Suisse, Lehman Brothers and Citi advised on and financed the deal for HM Riverdeep, which is expected to complete in the first half of 2008.
The acquisition will make HM Riverdeep one of the largest US educational textbook publishers alongside McGraw-Hill and Pearson’s Simon & Schuster.
Mr O’Callaghan’s interest in the remainder of Reed’s educational business comes just months after his Dublin-based company completed a $5bn reverse takeover of Houghton Mifflin, the fourth largest textbook publisher in the US.
That deal was one of the biggest in Irish corporate history, exceeding the $3.9bn (£2.66bn) leveraged buyout of Jefferson Smurfit, the family-controlled paper and packaging company, by Madison Dearborn, the private equity company, in 2002.
Riverdeep originally floated on Nasdaq in 2000 with a value of $140m, but was then taken private in 2003 with a valuation of $400m.
Reed Elsevier bought the Harcourt Education division in July 2001 as part of its acquisition of Harcourt General. The Anglo-Dutch business information, medical and academic publisher put its education arm up for sale in February, after errors and contract losses in its exam-testing business damaged revenues and profits.
In April, Pearson, owner of the Financial Times, agreed a $950m bid for Reed’s assessment and international education assets, continuing a spate of big deals in the educational publishing sector.
Though other major trade publishers have troubles of their own right now, they are of a more conventional kind — possible slowdown of holiday sales, returns, and the like. Alarmed authors and agents can take comfort, however cold, that the HMH situation is not representative or predictive.