Harlequin Posts 2007 Results

Returning to work after a three-day absence is never fun. I dealt with the more urgent emails while I was in Bethesda, but still had 149 unopened messages waiting yesterday morning. On top of that, I had three personnel issues that cropped up while I was away. Rather than trying to deal with them over the phone, I called our Personnel Director to go to lunch. In ninety minutes, we resolved the potential resignation and the emergency FMLA leave issues, and had a plan of action for the third more knotty problem.

Even so, it was 9:00 PM before I left work last night. By the time I got home, I simply tumbled into bed. Today was just as aggravating so I'm late in posting.

On Wednesday, Torstar--the parent company of Harlequin--announced its fourth quarter and full year 2007 results.

First, the fourth quarter results. The picture was ugly. Quotes are from the Torstar press release. All dollar figures are in Canadian dollars.

Foreign exchange rates are always a problem for Harlequin. If we disregard the impact of currency exchange, the book publishing revenue was down $3.1 million (Canadian) for the fourth quarter.

That $3.1 million loss breaks down this way: North American retail was down $1.3, the Direct-to-Consumer (bookclubs and online downloads) revenues were down $0.1 million and Overseas sales were down $1.7 million.

Sales revenue is one thing; the profits derived from those sales are another. First, remember that Harlequin reduced its global workforce by 4% in the third quarter.

Ignoring the foreign exchange rate impact, in the fourth quarter, the book publishing operating profits were down $1.7 million. It breaks down this way: North American retail was down $1.0 million, Direct-to-Consumer was up $1.0 million and Overseas was down $1.7 million.

In actual dollars, this means fourth quarter sales were down 11% to $106.6 million dollars while operating profits were down 23% to $12.8 million dollars.

Note that--despite the division revenues being down $0.1 million, Direct-to-Consumer profits were up $1.0 million. Torstar attributed this "primarily to lower promotional spending. Slightly lower sales volumes were offset by the positive impact of the mid-year price increase."

In parsing the fourth quarter Overseas results, Torstar reported: "Higher results in the Nordic group and Japan were more than offset by lower results in the United Kingdom and Holland and increased investment spending in India."

Now, let's look at the entire year results for 2007.

Book publishing revenue was $462.7 million for 2007, down $9.1 million from $471.8 million in 2006. This includes an $8.1 million loss resulting from the stronger Canadian dollar.

If we disregard the exchange rate, book publishing revenues were down $1.0 million dollars for 2007. That breaks down this way: North American Retail was up $3.6 million, North American Direct-To-Consumer was down $5.0 million and Overseas was up $0.4 million.

As you can see, although sales were up in North American Retail and Overseas, that increase was not enough to offset the loss in North American Direct-To-Consumer.

Again, let's move from sales revenue to operating profit:

Book publishing operating profits were up $6.3 million in 2007 excluding the impact of foreign exchange.

That operating profit breaks down into: North America Retail was up $5.8 million, North America Direct-To-Consumer was up $2.2 million and Overseas was down $1.7 million.

Torstar says the North America Retail profits were up from "a combination of the positive impact from the mid-year price increase on series books, a more profitable mix of titles, reduced overhead and promotion costs and lower amortization expense. Overheads were lower due to savings realized from the restructuring undertaken in late 2006 . . . The number of books sold was stable for both series and single title product in 2007."

After that terrible fourth quarter, it will be interesting to take a look at the Harlequin first quarter results. Those should be announced in another two months--at the end of April or the first of May.

Do Something Good Today . . . Please

I know I promised to talk more about Chris Anderson today, but I'm going to delay that post because of something I read on the Internet yesterday.

My plane was late getting out of Washington's National Airport so I was entertaining myself reading blogs on my laptop. I stopped by the Smart Bitches' website here and was shocked to learn that Preditors and Editors is being sued.

Any writer who spends any amount of time online knows about Preditors and Editors. For more than ten years, Dave Kuzminski has been maintaining the website where writers can go to check out the legitimacy of agents, editors and publishers. Any time a newbie on a writers' loop asks if anyone knows anything about an agent, half a dozen replies will direct the new writer to Preditors and Editors here.

Dave has not flinched from calling them like he sees them. Now two of the people whose toes he has stepped upon are suing him.

Dave reported the following on the Absolute Write website:

Okay, just to further clarify matters. P&E is being sued by Barbara Bauer and by Victor E. Cretella, III, Esq. in two separate courts.

Ms. Bauer is a literary agent who alleges I/P&E called her a scam and a scammer and is suing for libel.

Mr. Cretella is an attorney for PublishAmerica. He alleges I/P&E harmed his reputation by reporting him to the Maryland State Bar Association and his former employer for his actions against a member of Absolute Write and is suing for libel.

Dave has put a "donate" button on the P&E website for writers to contribute in order to help defray his legal costs. I couldn't get the button to work for me, but you can go directly to PayPal and send money to d.l.kuzminski@att.net

Notice that there are no spaces between the initials and the name.

If you have ever used P&E, please make a donation to help them. And get the word out on your blog or on the writer loops to which you belong. Thanks!

Nobody's Free Until Everybody's Free

Chris Anderson (he of The Long Tail) is popping up all over the Internet again.

When last we left Anderson, he was writing a book on the value of a business model based on free. I posted about Anderson's forthcoming book on June 10, 2007 here.

On Monday, Advertising Age did an interview with Anderson prior to his lengthy cover article in Wired, the online magazine. We'll talk about the interview today and the article tomorrow.

Anderson begins his interview titled "What Are You Worth in a Free Economy?" by talking about what he calls "the three kinds of free."

The first kind of free he describes is the Gillette razor-and-blade model. At the turn of the twentieth century, King Gillette invented the safety razor. While trying to convince people to try his innovation, he gave away thousands of razors. Of course, the razors were useless without the blades, which people then purchased for their new "free" razor. Anderson calls this model the cross-subsidy one, where the manufacturer subsidizes one product in order to build a market for another.

A variation of this model is the media model, the one all of us grew up with. We watch network television for free because the advertisers pay for the programming.

The second model is different in that the cost itself is diminished. It's the model on which Google and Yahoo give users free services to build up their user base. They then make their money by selling ads based on the number of clicks their sites ring up. In his interview, Anderson didn't distinguish this model from the first model clearly enough to satisfy me.

The third model is one Anderson calls the gift model. In this variation, services are donated in exchange for something the donor prizes: being a part of the process, or an increased recognition or reputation. The volunteers at Wikipedia are examples of this model. They are not paid for their work on the online encyclopedia, but they must derive some satisfaction from what they do because they continue to do it.

Anderson spends the second half of the interview talking about the fact that free permits hundreds (or thousands) of niches to spring up. He argues that the real profit is to be made in those niches because that's what truly matters to the consumer.

Perhaps an example would be the forthcoming new model for the Wall Street Journal. Most of the WSJ will be free in the future except for a very expensive service offered to the niche willing to pay for it.

Anderson points to this as an example of the quote by Stewart Brand, the creator of The Whole Earth Catalog. In 1984 at a hackers conference, Brand reportedly said: “Information wants to be expensive, because it is so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time.”

You can read the whole Anderson interview here.

A Big Day For DRM

Yesterday was a very, very long day. Caught a morning flight to Washington's National Airport and a cab to Bethesda. Of course, I got a cab driver who claimed not to know how to find the Marriott Conference Center. His memory miraculously improved when I told him, "I take this trip a couple of times a year. It's a $42 cab ride and I tip $8. You can rack up the $50 on the meter, or you can have the $8 tip. I don't care; it's up to you." He had an epiphany and got me to the hotel before the $8 tip completely evaporated although it was reduced to $4.23 by then.

Somehow a new staff member at the travel agency booked me into "the other Marriott" in Bethesda instead of at the Conference Center. And, of course, the Conference Center was completely booked. A friendly bellman I'd met during a previous visit suggested I ask about the "parlor rooms." Turns out that there is a floor of business suites that come with king-sized Murphy beds. The only catch was that the parlor rooms cost $500/night instead of the $300 my university usually pays. A kind front desk manager agreed to give me the room at my normal rate. There are a few perks to coming to the same hotel over and over.

So I'm in this enormous suite with a sitting room, a conference table and six cushy chairs, LIVE palm trees, a wet bar, kitchen, two exits, a bathroom stocked with Q-tips, cotton balls, and mouthwash in addition to the usual shampoos and sewing kit . . . AND a king-sized pulldown wall bed concealed behind a built-in closet.

Today's Publishers Lunch had a link to a letter sent last Thursday by Madeline McIntosh, Senior VP and Publisher of the Random House Audio Group. The letter was significant.

Beginning March 1st, we will no longer require that our retail partners use DRM [digital rights management] when selling audiobooks via digital download.

McIntosh says that, since mid-September, RH Audio has been experimenting with DRM-free distribution on eMusic.com.

In case you're not familiar with DRM, it's the attempt by the entertainment industry to protect copyrighted digital material by putting restrictions on it that prevents anyone from making a copy.

On the surface, you might think that the copyright holder has the right to protect his/her material. However, what happens when you purchase a music download, but are unable to copy it to another device that you own? Or, what happens when the copyright runs out? The DRM doesn't self-terminate.

There has been an ongoing controversy regarding DRM. The entertainment industry has been arguing that DRM prevents pirated copies. You and I know that's not true. No DRM system is foolproof. All you have to do is visit a file sharing website to prove it.

The other side argues that, by putting unnecessary restrictions on material, the entertainment industry is being short-sighted.

Now, along comes RH Audio saying:

Because piracy is already a fact of life in the digital world, what we were interested in finding out was not whether piracy exists, but rather whether there is any correlation between DRM-free distribution and an increased incidence of piracy.

To find out, they watermarked all the eMusic audiobook files and then hired a watchdog service to report on whenever illegal pirated copies showed up on file sharing sites.

The results: We have not yet found a single instance of the eMusic watermarked titles being distributed illegally . . . It is worth noting that these results are entirely consistent with what the music industry has found in the last six months.

Because of these results and because we believe that the future of the audiobook category will depend on allowing a competitive retail marketplace, we will now allow our retail partners to sell in the Mp3 format (in other words, without DRM). This means that we will we (sic) be able to sell not only through existing partners such as iTunes, Audible and Amazon, but we will also be able to foster new audio sales through any of our CD retailers who have websites, and through emerging partners such as eMusic.

In order to allay their authors' fears, McIntosh says that RH Audio will not go to the Mp3 format for those authors who are uncomfortable with the idea. However, she points out that authors have the potential to earn more under the DRM-free format because digital downloads are paid at 15% royalty while CD sales are at 10% royalty.

McIntosh asks authors who are concerned to contact RH Audio if they do not want their books released in the DRM-free format.

The DRM-free format will NOT be used for RH's library download business. Titles distributed through OverDrive and NetLibrary will continue to have DRM restrictions.

The times, they are a-changin'.

BookEnds Is Judging Erotic Romance Next

My literary agency, BookEnds, is working its way through the various genres with their First One Hundred Words Contest. If you act quickly, you can post the first 100 words of your erotic romance on their blog here.

If you're interested, you'll have to act fast. The deadline is 9:00 AM EST today, January 26th.

Cutting Away The Dead Wood

I'm beat. Today I finally accepted that I couldn't put off pruning the rose bushes any longer.

I've talked before about how difficult it is for me to cut back my six rose bushes each year. Two years ago, I compared pruning roses to editing a manuscript in a post here.

I'd been working up to it for a couple of weeks. I'd already laid out my gloves, the shears, and the alcohol swabs on my workbench; I just hadn't done the deed.

It was a lovely day today. After cleaning the shears with the alcohol swabs, I started: (1) Cutting the dead wood; (2) Looking for the poorly placed canes to remove; and (3) Providing for cross ventilation. After each bush, I cleaned the shears again to ensure I would not carry a rose disease from one bush to another.

While I worked, I thought about the manuscript I'm working on. I've been fighting removing a couple of paragraphs of backstory in the first chapter. My critique partner, Maria, told me I needed to stay with the action. I didn't want to hear it.

As I removed the poorly placed canes--the ones that were growing sideways into the main canes--I realized that my backstory was growing sideways into my action. I dropped the shears, came back into the house and moved the backstory to my overflow folder. While I was at it, I removed a very clever bit of writing in the second chapter that didn't advance the story (but was oh, so clever).

When I returned to my bushes, I felt good about pruning both my manuscript and my roses.

When I get back from Bethesda, I'll spray and fertilize the bushes.

My Vote On March 4

Friday evening, I argued politics with a psychiatrist I know. He's a Democrat; I'm a Republican. However, we're united in our determination to see a Democrat in the White House this fall. Whomever the Democrats select as their candidate for the presidency will get our whole-hearted support.

But there our agreement ends. He is supporting Obama; I am supporting Clinton.

This morning, I checked the Internet and found the following, courtesy of The American Experience on PBS:

"The OPEC oil producers' cartel . . . recently announced another in a series of oil price increases that sent gasoline prices skyrocketing and led to severe shortages."

Patrick Caddell, pollster and deep thinker: "'What was really disturbing to me,' he remembered, 'was for the first time, we actually got numbers where people no longer believed that the future of America was going to be as good as it was now. And that really shook me, because it was so at odds with the American character.' Caddell argued that . . . Americans were suffering from a general crisis of confidence. Address this fundamental problem,
. . . inspire the country to overcome it, and you will turn [the] presidency around."

"I argued that there were real problems in America that were not mysterious, that were not rooted in some kind of national psychosis or breakdown, that there were real [energy problems], there was real inflation, that people were worried in their real lives about keeping their jobs, . . . We could engage the nation by addressing those problems and asking for a new level of public support... I also argued that if, having gotten elected on the grounds that we needed a government as good as the people, we now were heard to argue that we needed a people as good as the government, that we would be destroyed."

"If you are president and you're going to diagnose a problem, you better have a solution to it," [Hendrik] Hertzberg notes. "While he turned out to be a true prophet, he turned out not to be a savior."

The above quotes refer to the presidency of Jimmy Carter from 1977 to 1981.

While I absolutely concede that Obama would have an easier time defeating McCain than Clinton would, it's what happens after the election that worries me.

Our situation today is almost eerily similar to our situation thirty years ago. We have a worsening energy crisis and slow economic growth. Although it was Iran, not Iraq, that had most of our attention at the time, we were struggling with a Mideast crisis.

Carter was (and is) a man of great integrity who cares deeply for his fellow man. In that, I believe he and Barack Obama are similar.

Carter was stonewalled by his own party in Congress, that old guard pork barrel Democratic boys' club. Ignoring Carter's desire to effect change, they turned his presidency--which began with such hope--into a synonym for ineffectiveness.

I fear the same thing will happen to Obama. That won't stop me from voting for him if he gets the nomination, but it worries me. I hope I'm wrong.

So . . . I'll vote for Hillary on March 4 here in Texas. And, come November, I'll vote for whichever one survives the primary process.

It's That Time Of Year Again

Well, I'm irritated with myself.

On Monday morning, I'm leaving for Bethesda (Yes, AGAIN! I have three trips there this year). Trying to prepare for the journey, I selected three books to bring along--J.D. Robb's Strangers in Death; Mark Del Franco's Unshapely Things and John Connolly's The Unquiet.

I attended a party last night at the Dallas Police Association for a motorcycle cop friend of mine. Of course, the knowledge that a motorcycle cop had died that day saddened everyone, but it was too late to cancel the party.

When I got home I was too restless to write. I cruised the Internet and found reviews on Strangers in Death. Of course, that made me pick it up . . . just to take a peek . . . I finished it a little while ago.

So now I'm a book short for my trip. I guess I'll have to slip out of my meetings on Tuesday, find a bookstore and buy Kim Harrison's The Outlaw Demon Wails, which is due out that day.

Because I was reading Eve Dallas' latest outing, I didn't post for today yet. Guess it's time to try for my annual Guess the Oscars. Regular readers know it's more Who Maya Wants to Win than Guess the Oscars.

Performance by an Actor in a Leading Role: I think Daniel Day Lewis is likely to get it for his scenery-chewing role in There Will Be Blood. My choice is Viggo Mortensen in Eastern Promises.

Performance by an Actor in a Supporting Role: I think Javier Bardem will get the award for No Country For Old Men, and I fully support that choice.

Performance by an Actress in a Leading Role: I'm torn between Julie Christie in Away from Her and Marion Cotillard in La Vie en Rose. I suspect the sentimental favorite will be Christie, and I think I agree.

Performance by an Actress in a Supporting Role: Cate Blanchett's gender-bending role as Bob Dylan in I’m Not There is the show-stopping one. However, my choice (and I think the Academy will agree based on her strong body of work) is Ruby Dee in American Gangster

Best Animated Feature Film: This is a tough one. Ratatouille was a crowd favorite. However I think Persepolis will appeal to the moral conscience of the Academy. I'm going with Persepolis.

Achievement in Art Direction: Another tough one. I was torn between Sweeney Todd, The Golden Compass and Atonement. I think I'm going with The Golden Compass.

Achievement in Cinematography: I'm torn between Atonement and There Will Be Blood. I'm going with There Will Be Blood because of the oil derrick fire.

Achievement in Costume Design: I have no idea who will get it, but I'm going with Sweeney Todd out of affection.

Achievement in Directing: No question in my mind. No Country For Old Men.

Best Documentary Feature: I suspect the Academy will choose Sicko. While I am not a particular fan of Michael Moore (I think he's dishonest in his filmmaking), as a film that made an impression, I'm going to go with it.

Best Motion Picture: I wouldn't be disappointed if Michael Clayton won, but I'm going with No Country For Old Men. Michael Clayton is beautifully executed, but the story is an old--somewhat tired--one.

Now we wait to see . . .

A Dust-Up About Journalism Ethics

A couple of days ago, I touched on the subject of journalism.

While I'm not a journalist, I have a brother who is. We've spent a fair amount of time talking about journalistic ethics. I think those ethics can be instructive in looking at the way the Internet operates.

Tuesday's Chicago Tribune had an interesting article that draws attention to the issue of journalistic ethics. It's about a debate that began in Illinois at Northwestern University's Medill School of Journalism.

Dean John Lavine of the Medill School has been promoting "a fully integrated marketing program," in which advertising, marketing and journalism are blended. Purists feel that this is an inappropriate emphasis for a journalism school.

The issue came to a head when columns that Lavine wrote for the Medill magazine, the promotional organ sent to alumni and funding sources, came under scrutiny.

According to the Chicago Tribune, in last spring's issue, Lavine used anonymous quotes to tout the integrated emphasis. Lavine claimed that a Medill junior told him, "I sure felt good about this class. It is one of the best I've taken."

Lavine's use of anonymous quotes seemed suspicious to Medill senior David Spett, a Daily Northwestern columnist. He said he figured out which marketing class Lavine had mentioned and then tracked down all 29 students. Each denied making the comment, he said. (Chicago Tribune 2/19/08)

When confronted by The Chicago Tribune, Lavine insisted his quotes had come from real people, but defended his using anonymous sources "by drawing a distinction between a news story and a letter to alumni in a magazine."

The Tribune quoted him as saying, "Context is all-important. I wasn't doing a news story."

Apparently sixteen faculty members of the Medill School did not agree with their dean. They signed a two-page statement saying they are "deeply troubled" about Lavine's use of anonymous quotes and "called upon him to provide proof that he didn't fabricate the quotes . . . All of the professors who signed the letter teach journalism, including the former dean. None of the integrated [marketing] communications faculty signed it."

The Chicago Tribune says "Since then, Northwestern officials opened an investigation, students started a Facebook site called 'Save Journalism at Medill' and alumni voiced their concerns publicly and to administrators."

In a world in which blogs include ads and in which newspapers online now find their revenue generated by ads, it's important that we begin a discussion on where the lines should be drawn between marketing, advertising, opinion and reporting.

It began with product placement in films and television shows. Where will it go next?

I applaud the Medill School and Northwestern for recognizing that this is an issue which should be addressed openly and honestly.

More on Yahoo and Microsoft

On Monday, I talked here about the bid Microsoft was making for Yahoo. This is an update.

Both Microsoft and Yahoo have been in the news since my last post.

Microsoft chairman Bill Gates was quoted by the Associated Press (AP) saying on Monday that Microsoft has no plans to increase its offer. “We sent them [Yahoo] a letter and said we think that’s a fair offer . . .They should take a hard look at it.”

Speculation abounds as to Microsoft's next move. Yesterday, the AP said Microsoft:

"plans to authorize a proxy battle this week, according to The New York Times DealBook blog. It has until March 14 to nominate a slate of directors for Yahoo. Microsoft and its advisers declined to comment.

Election results would be announced at Yahoo's annual meeting. Last year's was held in June.

Microsoft also may simultaneously circumvent Sunnyvale, Calif.-based Yahoo's management and ask shareholders to sell their stock to Microsoft directly."

It's no secret that Yahoo's shareholders have been impatient with the company's lackluster performance. CEO Jerry Yang has failed to follow through on his promises to turn the company around. A direct offer to the stockholders by Microsoft to buy their shares might elicit a favorable response.

If Microsoft decides to go to the shareholders, they will probably focus on large blocks of stocks held by mutual funds and other institutional investors.

A proxy fight would be cheaper than raising the $31/share bid. If Microsoft follows through and sponsors a slate of officers and if the proxy battle succeeds in placing those people in office, Microsoft could try to undo any poison pill defenses Yahoo puts in their path.

Meanwhile, Yahoo hasn't been letting the grass grow under its feet. Apparently not satisfied that the poison pill strategy I described on Monday was sufficient, Yahoo's board adopted new severance packages for its employees.

The Associated Press reports:

The . . . company's new severance plans - to take effect if Microsoft succeeds in its takeover bid - cover Yahoo's top executives and all full-time employees. The plans are designed to keep workers on board even if the company changes hands. They also could make it harder for Microsoft to move Yahoo staff to Redmond and raise the overall cost of integrating the two companies.

In an e-mail to employees last Friday, Yahoo Chief Executive Jerry Yang wrote that the severance plans 'shouldn't be construed as any indication that a change in control might or might not take place.'

The company said in a Securities and Exchange Commission filing Tuesday that workers who lose their jobs without 'cause' or quit 'for good reason,' as Yahoo defines it, would continue to receive their salary and medical benefits for four to 24 months, plus reimbursement for 'outplacement services' for two years.

A Yahoo spokeswoman would not say what might constitute good reason.

Departing employees' stock options would also vest faster than scheduled under the new plans.

On the surface this move might look as though Yahoo is trying to retain its people. However, such moves would also make the company far more expensive.

There's another takeover term I didn't mention in my Monday post. Called a "suicide pill," or sometimes called "the Jonestown Defense," the term refers to a defense strategy that is so extreme it runs the risk of actually ruining the company instead of preventing a hostile takeover.

Stay tuned . . .

A Landmark For Bloggers

George Polk was a 34-year-old American journalist working for CBS and covering the civil war in Greece when he disappeared in the spring of 1948. A few days later his dead body was found. His hands and feet had been tied and he'd been shot in the head.

Shortly after Polk's death, a group of journalists developed the George Polk Awards for outstanding American journalism. The awards have been presented annually by Long Island University for nearly sixty years.

On Tuesday, the 2007 Awards were announced. The press release said the Awards "recogniz(e) journalists in 14 categories for media coverage that exposed corporate and government misfeasance, revealed the industrial roots of environmental catastrophe and uncovered the abuse of vulnerable populations including children, the elderly and veterans."

While I admire and celebrate all the Award recipients, I was particularly interested on one award. Here is the relevant portion of the press release:

The Polk Award for Legal Reporting will go to Joshua Micah Marshall, editor and publisher of the widely read political blog, Talking Points Memo. His sites, www.talkingpointsmemo.com and www.tpmMuckraker.com, led the news media in coverage of the politically motivated dismissals of United States attorneys across the country. Noting a similarity between firings in Arkansas and California, Marshall and his staff (with his staff reporter-bloggers Paul Kiel and Justin Rood) connected the dots and found a pattern of federal prosecutors being forced from office for failing to do the Bush Administration's bidding. Marshall’s tenacious investigative reporting sparked interest by the traditional news media and led to the resignation of Attorney General Alberto Gonzales.

The Internet recently marked the ten-year anniversary of the term "blog." According to Wikipedia, "The term 'weblog' was coined by Jorn Barger on December 17, 1997. The short form, 'blog,' was coined by Peter Merholz . . . in April or May of 1999."

Although blogs had been around before the term was coined, for much of the last ten years there has been a lively debate over whether bloggers should be called journalists. The announcement that a prestigious journalism award has been given to a blogger is not only a first, but a significant landmark in that debate.

Will Bunch, senior writer for the Philadelphia Daily News and author of the Attytood.com blog, had a thoughtful and thought-provoking post yesterday. Will's bio includes the following: "Before coming to Philadelphia, Will was a key member of the New York Newsday team that won the 1992 Pulitzer Prize for spot news reporting."

Bunch says:

It would have seemed incredible a couple of years ago, but a George Polk Award was given this morning to a blogger . . . Hopefully, this acknowledgment of what one savvy blogger and his team have accomplished is a milestone that will speed the day when mainstream journalists realize that the best kind of blogger like Marshall is truly one of our own kind, using new tools and a new way of thinking to break a news story that otherwise might have not been discovered.

Bunch offers the following key points about Marshall's model for blogging that can inform journalists of the future:

• No pride of ownership in a story. Newspapers are often so competitive that they refuse to report on a story broken by a rival paper. Not so bloggers to whom everything is fair game.
• 220 heads are better than one. Blog readers are "not just passive readers--they react, they mobilize . . . they make their voices heard." When Marshall and his team were trying to work their way through 3,000 pages of material sent by the Justice Department to Congress, they asked their "audience" to help them read the material. In three and a half hours, 220 people had answered that call.
• Passion and drive. Bunch speaks eloquently of the passion of both journalists and bloggers "who want to work harder and faster because there are readers gobbling up their reporting as fast as they can dish it out."

I strongly urge you to go here to read Bunch's blog. I applaud both his openness and his willingness to look beyond the current model for his own industry. Whether his peers are able to overcome their prejudice long enough to listen to what he is saying may determine the future of that industry.

Free E-Books From Tor Publishing

Yesterday, thanks to a post on Dear Author here, I signed up for Tor's newsletter.

If you sign up for the newsletter, you'll receive a free e-book every week.

According to the Tor Publishing site, "Our next free book is Old Man's War by John Scalzi, 2006's winner of the John W. Campbell Award for Best New Writer. Next week, Through Wolf's Eyes by Jane Lindskold."

So, go here and sign up for the newsletter.

Borders Takes On New Partners

On Friday, I wrote a post about the new Borders store model being unveiled in Ann Arbor.

Also on Friday, self-publishing enterprise Lulu announced a deal with Borders. The Raleigh News & Observer reported "Lulu will run interactive kiosks at new Borders stores where customers can upload, showcase and ultimately sell their works via Lulu.com . . . Authors also can get limited professional assistance for $299. A $499 package includes professional editing and design."

Note the story does not say anything about selling the books through Borders, only through Lulu.

Lulu now has kiosks in thirteen Borders stores in Michigan.

Borders has also signed deals with Ancestry.com (genealogy) and Shutterfly (photo sharing).

Revisiting Microsoft and Yahoo

Years ago, I worked for Smith Barney, a stock brokerage house known for its corporate finance department. That department helped to bring companies public as well as putting together important mergers. I learned a lot during my time there, eventually earning my broker's license.

We're going to look at the situation with Yahoo and the offer made for it by Microsoft.

When last we discussed the matter on February 1st, Microsoft had just made a $31 per share bid to take over Yahoo.

Since that time, Yahoo has formally rejected the offer, saying it was too low. The Yahoo board believes a fair price would be $40/share. This from a company that was selling at $19 prior to the bid and that--two days before the bid--had warned its shareholders not to expect its performance to improve before 2009.

I thought it might be helpful to look at a glossary of the terminology used in acquisitions and takeovers. Listed below are the applicable terms. The definitions in italics are courtesy of Verisign. The comments that follow are mine:

Bear Hug: An offer made by a company to buy the shares of another company that is too high for the board of the target firm to refuse. Microsoft bid $31/share and got turned down. The question is whether they're willing to sweeten the offer to the point that Yahoo's board would be unable to turn it down. Experts think this is unlikely. Why offer more unless you have to? Unless, for example, Yahoo finds itself a white knight to make a competing offer that Microsoft is then forced to match.

Black Knight: A company that makes a hostile takeover offer on a target company. Microsoft has the potential to become a black knight. If they decide to go around the Yahoo board directly to the shareholders, they will have moved into black knight territory.

Hostile Takeover: A takeover attempt that is strongly resisted by the target firm. Microsoft made a polite offer and was turned down politely. If Microsoft decides to go hostile, CNET News believes it will try one of two things: (1) Make a formal tender offer, going directly to the shareholders with the deal, giving investors a deadline by which to turn over their stock to Microsoft, and/or (2) Nominate their own candidates for the Yahoo board. The entire ten-member board is up for re-election at the annual meeting (probably in June). This move would allow Microsoft to push their deal through and, importantly, flush Yahoo's poison pill down the toilet.

Poison Pill: A strategy used by corporations to discourage a hostile takeover by another company. The target company attempts to make its stock less attractive to the acquirer. Reuters reports that in March 2001, Yahoo adopted a poison pill. If anyone buys 15% or more of Yahoo's stock (outside of an agreed-upon bid), shareholders are offered the right to buy more shares. This, of course, will dilute the value of the shares the black knight has acquired, making it much more expensive for the takeover company to acquire Yahoo.

In addition to its poison pill, Yahoo is actively looking for a new partner that will be more likely to allow its company to remain independent. As opposed to a black knight, such a partner would be called a white knight.

White Knight: A company that makes a friendly takeover offer to a target company that is being faced with a hostile takeover from a separate party. Reports indicate that Yahoo may be in talks with both News Corp. and AOL, in the hope that one of the two might become its white knight.

Stay tuned . . .

Harvard To Begin Publishing Research For Free

On Wednesday, I did a post on the business model of "free."

Coincidentally, on Thursday, Harvard announced it will begin posting some research on the Internet--for free.

On Tuesday, Harvard's arts and sciences faculty met to discuss the possibility. According to The New York Times, the faculty "voted overwhelmingly in favor of a resolution that would commit Harvard to open access access--the movement to speed the exchange of knowledge by freely distributing research on the Web."

This decision applies only to the arts and sciences faculty.

An Office of Scholarly Communication will be created along with a website. It is expected that these will be ready by April 1. The authors of scholarly articles will retain their copyright and are free to publish their research elsewhere.

On Tuesday, the director of the university library was quoted by The New York Times, saying, "In place of a closed, privileged and costly system, it will help opne up the world of learning to everyone who wants to learn . . . It will be a first step toward freeing scholarship from the stranglehold of commercial publishers by making it freely available on our own university repository."

A first crack in the dike?

Two Publishers Trying New Experiments

This week, two of the biggest publishing houses made announcements that indicate they're paying attention to changing reader tastes.

On Monday, The Wall Street Journal (WSJ) pointed out that "retailers and publishers are looking for clues into how readers want to access digital content." In an experiment, Random House has decided to sell individual chapters of the popular Made to Stick: Why Some Ideas Survive and Others Die. The publishing house seeks to "gauge reader demand for bite-size portions of digital texts" by selling the chapters for $2.99 each.

Readers looking to buy the chapters should go here. After purchase, they'll receive an email, which will give them the link to download the chapter to their computers. Eventually, RH says readers will be able to download the chapters to devices like BlackBerries.

While this type of download will be attractive to students or people wanting to download a specific chapter from a non-fiction book pertinent to their need, it remains to be seen whether Western readers will be interested in purchasing small chunks of fiction works.

Also on Monday, The New York Times reported HarperCollins has uploaded entire books by popular writers, permitting readers to browse the contents in the same way customers would examine the books in a bookstore. The publishing house is trying to determine whether this will increase hardcover sales of the books.

The books can be found here on the HarperCollins' website.

Right now the available books include The Witch of Portobello by Paulo Coelho; Mission: Cook! My Life, My Recipes and Making the Impossible Easy, a cookbook by Food Network's Robert Irvine; I Dream in Blue: Life, Death and the New York Giants by Roger Director; The Undecided Voter’s Guide to the Next President: Who the Candidates Are, Where They Come from and How You Can Choose by Mark Halperin; and Warriors: Into the Wild, a children's book by Erin Hunter.

The free electronic versions will only be available for a month, and users will not be able to download them. HarperCollins plans to continue to upload copies of Mr. Coelho's other books--one each month throughout 2008.

The Times said:

Reached by telephone in Paris, Mr. Coelho said: “I believe that generosity pays off.” On his own blog, he gives readers links to pirated editions uploaded by readers in numerous languages. “I believe that they are not going to go beyond 20 or 30 pages” when reading on the Internet, he said.

HarperCollins also intends to begin offering 20% of selected books on their site two weeks before the hardcover goes on sale.

Borders Unveils Model For New Store

I'm late in posting today because my laptop blew up Wednesday. I dropped it off at my computer guru's tiny shop yesterday morning and got it back today. He always adds new things to the laptop while he's playing with it so it came back fixed AND improved.

On Wednesday, Reuters reported on the model for the new Borders store, saying the bookchain "unveiled a new concept on Wednesday -- a store where shoppers can mix and burn CDs, explore their genealogies and even publish their own novels."

The new model is intended to help the #2 bookseller to turn around its lackluster performance. Reuters says the plan is to "refocus on its core U.S. store operations."

The new-style Borders store, which features additional seating, is in Ann Arbor. According to yesterday's Publishers Lunch, "The biggest change is their Digital Center, outfitted with computer workstations and a promise 'we'll show you how' with the help of knowledgeable staff. Borders wants customers to buy music for download (to non-Apple players) and custom-burned CDs; print out digital photos and create their own photo books; self-publish through a 'personal publishing' program in conjunction with Lulu.com; research their family history through 'genealogy services' from Ancestry.com; and buy Sony Readers and download e-books."

Read the Reuters' story here.

CNN Dooces One Of Its Producers

On Tuesday Chez Pazienza, a producer on CNN's American Morning, was dooced by his employer.

If you're a blogger, you probably recognize the word "dooced." The word is a neologism that sprung up on the Internet after Heather Armstrong was fired on February 26, 2002.

Heather had the singular distinction of being the first person ever fired for her blog. Dooce was the name of that blog and, according to the Urban Dictionary, it became the word used to describe being "fired from your job because of the contents of your weblog."

If you want to read Heather's story, go here.

Chez Pazienza had worked for CNN for four years and had been writing a blog called Deus Ex Malcontent since May, 2006. According to his post for yesterday here, he was fired because of that blog.

His friend, Terry Heaton, had a bit more to say on his own blog here:

Chez Pazienza, a producer at CNN assigned to American Morning, was unceremoniously fired from his job today — without severance — over the content of his popular and edgy blog, Deus Ex Malcontent (warning: adult language) . . . According to Chez, he was terminated for violating network policy by not running what he was writing through their vetting system.

This isn't the first time CNN has fired a blogger. Almost a year ago, according to the Huffington Post here, the Cable News Network fired an intern named Rachel for her "password-protected, closed-membership" blog in which she shared industry secrets like "Anderson [Cooper] apparently gets gift baskets all the time, and leaves them to the interns to enjoy."

I'm sure there's a lesson here.

As for me, I'm going to be especially careful from now on during the month from February 12 to March 5--the period during which all three bloggers were canned.

I Gotta Be Free

We're going to talk about the business model of "free" today.

At the same time the music, film and publishing industries are struggling with the concept of DRM (Digital Rights Management), a few visionaries are exploring options at the opposite end of the continuum.

Last summer, I wrote about Chris Anderson's upcoming book, Free. You'll remember Anderson; he wrote The Long Tail. He also talked at last year's Book Expo America about the relationship between the Web and free content. If you'd like to read my post about that speech as an intro to today's material, you can find it here.

This week Tim O'Reilly is hosting his second Tools of Change for Publishing conference at the Marriott Marquis Hotel in New York. If you want to read my post about the first TOC conference go here.

Today's Publishers Lunch talked about O'Reilly, but also directed readers to another blogger who is talking about "generosity" as a business model. That blogger, Kevin Kelly, was the first executive editor of Wired magazine.

Kelly had an interesting post titled "Better Than Free" on his blog two weeks ago. He argues that--until the Internet came along--our economic model was based on scarcity, and our wealth came from making copies to sell. In the media industry, those copies would be printed books, DVDs and CDs.

Along came the Internet. Kelly opens his post with the line, "The Internet is a copy machine. . . [and] Unlike the mass-produced reproductions of the machine age, these copies are not just cheap, they are free."

Kelly's thesis goes this way:

• When copies are super abundant, they become worthless.
• When copies are super abundant, stuff which can't be copied becomes scarce and valuable.
• When copies are free, you need to sell things which can not be copied.

The rest of the post focussed on the things that cannot be copied. Kelly identifies eight uncopyable values, which he calls "generatives" because they must be generated, grown, or nurtured. Things like:

• Immediacy: People want to be the first to read the new book, the first to see the new movie and the first to own the new record.
• Authenticity: People want the "real" thing, the one that is warranted and special.
• Accessibility: People want easy access to their possessions. Look at the iPod, the Shuffle and all the other devices that aggregate our music and make it easily available to us.
• Findability: People want to be able to find the quality work in the vast sea of sludge. This is the value that I have previously described as the impediment to self-published work. Someone needs to vet for quality.
• Interpretation: People want to understand what they have. Kelly reminds us: "As the old joke goes: software, free. The manual, $10,000."
• Embodiment: People want the tangible product: the book they can hold in their hands or the live performance they can attend.
• Personalization: People don't want the generic version; they are willing to pay a lot for a personalized version. ". . .personalization requires an ongoing conversation between the creator and consumer, artist and fan, producer and user."
• Patronage: People want to pay creators. According to Kelly, people are happy to pay artists, musicians and authors "if it is very easy to do, a reasonable amount, and they feel certain the money will directly benefit the creators."

After he identifies the eight generatives, Kelly gets to the essence of his argument:

These eight qualities require a new skill set. Success in the free-copy world is not derived from the skills of distribution since the Great Copy Machine in the Sky [the Internet] takes care of that. Nor are legal skills surrounding Intellectual Property and Copyright very useful anymore. Nor are the skills of hoarding and scarcity. Rather, these new eight generatives demand an understanding of how abundance breeds a sharing mindset, how generosity is a business model, how vital it has become to cultivate and nurture qualities that can't be replicated with a click of the mouse.

In short, the money in this networked economy does not follow the path of the copies. Rather it follows the path of attention, and attention has its own circuits . . .

Most of the suggested solutions I've seen for overcoming the free involve some measure of advertising. I think ads are only one of the paths that attention takes, and in the long-run, they will only be part of the new ways money is made selling the free.

I found Kelly's arguments fascinating, and I'm looking forward to seeing Chris Anderson's upcoming book on the subject.

I encourage you to read Kelly's entire post here as well as his earlier post titled "Technology Wants To Be Free" here.

Writers May Return to Work By Tomorrow

The Writers Guild of America (WGA) votes today on a new contract deal and on whether to end their three-month strike against The Alliance of Motion Picture and Television Producers. On Sunday the WGA board and negotiating committee approved the new three-year deal. Writers could be back to work as soon as tomorrow.

The breakthrough in negotiations came on January 22 when the WGA abandoned its proposals to unionize writers who work on reality shows and on animated movies. The writers' union decided to focus instead on its most important issue: getting paid when their work is delivered via the new media--across the Internet on devices like cell phones and laptops.

After the Directors Guild (DGA) reached agreement with the studios last month, cracks began appearing in the WGA's solidarity. Some writers pressed to accept a similar deal to the one reached by directors while other writers wanted to sweeten the pot.

Sunday's LA Times described the new media provisions reached by the writers:

Under the tentative deal, film and television writers, who previously got nothing for shows and movies streamed over the Internet, will receive a fixed residual payment of $1,200 a year for one-hour shows streamed online in the first two years of the new contract.

In the third year of the deal, however, they would receive something directors will not: residuals equal to 2% of the revenue received by the program's distributor. Productions of certain shows created for the Internet will now be covered by the Writers Guild contract . . .

The tentative agreement also includes a doubling of the residual rate for movies and TV shows sold online and secures the union's jurisdiction over content created specifically for the Web, above certain budget thresholds. And like directors, writers would receive a 3.5% increase in minimum pay rates for television and film work.

The studios aren't out of the woods yet, however. In June, the Screen Actors Guild (SAG) contract expires. According to the L.A. Times, "Officials of the 120,000-member actors union have sounded increasingly militant."

Keep An Eye on Time Warner

Today, all eyes are likely to be on the proposed Microsoft/Yahoo deal. Rumor has it that Yahoo plans to reject the offer, saying it's not rich enough. I'll have more to say on this later.

However, there's another potential deal floating around that's gotten much less play, and I thought I'd mention it here.

Last month on January 1st, Jeff Bewkes became the new CEO of Time Warner Inc. after serving two years as president of the company.

Bewkes worked his way up the line, starting out as the CFO of HBO for five years (during the period when Time--parent company of HBO--merged with Warner Communications, making HBO a part of Time Warner).

He went on to become president of HBO in 1991, and then served as CEO of HBO from 1995 to 2002. In 2002, he moved up to chairman of Time Warner's entertainment and networks group and then became president of Time Warner, Inc. in December, 2005 under CEO and Chairman Dick Parsons. With Bewkes' latest promotion, Parsons gives up the CEO title, but will remain chairman.

On February 6, Bewkes spoke with investors for the first time as CEO. He described a restructuring of AOL and talked about separating AOL's Internet business from its advertising business.

That raised investor hopes that the new CEO planned to spin off the AOL Internet business, which has been hemorrhaging since Time Warner made the decision to drop the cost of subscription fees on their dial-up business in favor of trying to grow the advertising business. Portfolio.com reports "Revenue at AOL fell 32 percent, as it lost 740,000 subscribers." Those subscribers sought high-speed access elswhere. "The current total of 9.3 million subscribers is down 3.8 million from last year," according to the Associated Press.

Portfolio.com said, "While Bewkes did not outline any specific plans to combine part of AOL with another online partner, such as Google, he noted that the company was "open to strategic moves that make sense."

The timing for spinning off AOL might not be right. The Associated Press (AP) said "...those prospects became murkier last week when Microsoft Corp. made an unsolicited bid for Yahoo Inc. That would not only eliminate two likely bidders for AOL, but create a major online advertising power."

The AP also pointed out that Time Warner owns 84% of Time Warner Cable and may be considering spinning it off tax-free. However, with the value of cable stocks down, this may not be the time for that move.

Stay tuned . . .

Phyllis A. Whitney Dies At Age 104

I returned from Austin to find sad news. Author Phyllis A. Whitney died on Friday at the age of 104. Reading the article in The New York Times (NYT) , I felt a mixed rush of sorrow and nostalgia.

I was a voracious reader as a child. Our household was frequently in an uproar, and books provided needed stability. They offered a refuge to which I could retreat when things around me became too chaotic.

Books also helped to assuage my juvenile insecurities. I was an obsessive kid, full of fear. I decided at an early age that knowledge was the key to feeling safe, and books gave me a [false] sense of security. Tests in sixth grade revealed, at age eleven, my reading comprehension was that of a junior in high school.

My grandfather regularly sent boxes of books to my mother. Grandpa loved detective novels, and the boxes were always filled with paperbacks by Erle Stanley Gardner (Perry Mason), Ellery Queen and Rex Stout (Nero Wolfe). By age ten, I'd started working my way through those boxes.

Mom worried Grandpa's reading material was too mature for me. She went looking for more appropriate material for a prepubescent female and began feeding me books by Agatha Christie, Mary Roberts Rinehart and . . . Phyllis A. Whitney.

Whitney was a fascinating woman. She was born in Japan in 1903 to American parents. Her middle name "Ayame" means "iris" in Japanese. Before age fifteen, she'd lived in China and the Phillipines in addition to Japan.

When she came to the States for the first time, she had trouble academically because she'd been educated in missionary schools overseas. Whitney was twenty years old before she graduated from high school.

After graduation, she worked in bookstores and at the Chicago Public Library. According to the NYT, it took four years for her to sell her first short story to the Chicago Daily News.

Whitney wrote over seventy novels, many of which were set in exotic locales. The NYT once called her "The Queen of the American Gothics." Her website says, "In 1975, Phyllis A. Whitney was elected President of the Mystery Writers of America. In 1988, the organization awarded her the prestigious Grand Master Award . . ."

I was moved by the last paragraph of the NYT story on her yesterday:

Ms. Whitney ascribed her success as a writer to persistence and an abiding faith in her abilities. “Never mind the rejections, the discouragement, the voices of ridicule (there can be those too),” she wrote in “Guide to Fiction Writing.” “Work and wait and learn, and that train will come by. If you give up, you’ll never have a chance to climb aboard.”

Janet Evanovich Tears The Sheets With Cannell

I'm posting tomorrow's blog early because I'm spending the weekend in Austin and won't be back at my computer until late in the day on Sunday.

Today's Publishers Lunch (PL) had an item about Janet Evanovich. The hugely popular writer of the humorous Stephanie Plum mystery series now has thirteen novels in print starring the lingerie buyer turned bounty hunter. Each book has a number in the title with the first being One For the Money and the 13th, Lean Mean Thirteen.

Evanovich has been experimenting with collaborative efforts with another writer since the re-release of her book Full House in an expanded version in 2002. She and writing partner Charlotte Hughes have now produced six "Full" novels.

In 2004, fellow writer Jennifer Crusie decided to collaborate with adventure/thriller writer Bob Mayer on a novel written from both the hero and heroine's point of view. Crusie wrote the female POV while Mayer wrote the male POV. The huge buzz over that novel, Don't Look Down, which was released in 2006, may have prompted Evanovich's decision to collaborate with a male partner.

Evanovich agreed to write a book jointly with Stephen J. Cannell, the television producer/novelist. Cannell created mostly crime dramas including the hugely successful Adam-12, 21 Jump Street and The Rockford Files. He has also written more than a dozen crime novels.

Evanovich and Cannell's collaborative effort was to be called No Chance and was to be the first of a series. The novel, starring Special Forces veteran Benjamin Cannon, was set to be released by Grand Central Books in October, 2007.

October came and went without the book being released.

Friday's Publishers Lunch reports that the book AND the collaboration has been cancelled due to "creative differences" between the two writers.

Friday's New York Post reports that "the resulting fallout may have caused a rupture in the relationship between Evanovich and her longtime agent Robert Gottlieb at Trident Media."

PL indicates that, two months ago, Gottlieb represented Evanovich during the signing of a new four-book deal with St. Martin's Press reputed to be worth more than $40 million. However, it seems likely that Evanovich's son Peter will represent her on a go-forward basis.

Feedback on Rule #5

After yesterday's blog in which I mentioned Laura Albert (who wrote as J.T. Leroy), I got an email from her, directing me to an article written by Levi Asher.

You will recall Asher wrote an article for The Guardian titled "How to Avoid Author Scandals." In my blog, I suggested that Laura should have read Rule #5--"Just say no to sending a friend out in public with a wig as you"--before sending her half sister out in a wig to pretend to be J.T. Leroy, Laura's pseudonym.

In the interest of fairness, I am happy to direct my readers to the link Laura sent me. Please go here to read the article.

The School For Scandal

The Guardian had an article on Tuesday by Levi Asher, the New York writer who founded Literary Kicks. LitKicks here is a website that highlights contributions of poetry and prose.

Asher's article, titled "How To Avoid Author Scandals," offers eight rules for writers to remember:

1. Do not use the word "memoir" unless you mean it.

2. If you're not sure whether what you're writing is a memoir or not, guess what? It's a novel.

3. No more than half a page of plagiarism per book.

4. Don't make up exact dates that you can't remember. Instead, be general: "The most important day of my life was the day of my son's birth, in the summer of 2005 ..."

5. Just say no to sending a friend out in public with a wig as you.

6. If you're in a flame war and you're about to go sock puppet, take a 10-minute break and go to a coffee shop without a wi-fi facility. Maybe the walk will cool you down.

7. Go ahead and make up dialogue. Everybody except Tom Wolfe does.

8. Pick a name. "Benjamin Black is John Banville" is just not a good look.

Readers of this blog will recognize the scandals and just plain quirkiness that prompted Asher's list.

Rule #1 refers to Timothy Patrick Barrus AKA Native American writer Nasdijj among others. You can read about him here.

Both Rule #2 and Rule #4 might apply to James Frey, the author of A Million Little Pieces. You can read about him here.

Kaavya Viswanathan needed to read Rule #3 before writing her first novel, How Opal Mehta Got Kissed, Got Wild and Got a Life. Read about her here.

Laura Albert should have read Rule #5 before sending her half sister out in a wig to pretend to be Albert's alter ego J.T. Leroy. Read about her here.

If reporter Michael Hiltzik had read Rule #6, he might still be writing his column and Internet blog for the Los Angeles Times. Read his story here.

Rule #7 probably refers to Tom Wolfe's last novel, I am Charlotte Simmons. After that novel, Wolfe had to leave his publisher of forty-two years to get the advance he wanted for his next book. Read a sample review here.

Asher obviously is not a fan of an author taking multiple names in order to write in different genres. Here's a blogger who feels the same way.

Reading Asher's article was like taking a stroll down memory lane to revisit some of the most infamous scandals of the last two years.

A Look At Mass Market Paperbacks

Monday's Publishers Weekly (PW) had an article reporting that, despite softness in the mass market paperback (mmp) segment, publishers are not abandoning the format.

As a reminder, the mmp is the smaller paperback, usually about 4" x 7." It's the least expensive of the most common print mediums. Its cover is a heavy paper, but its pages are thin and cheap and yellow over time. These books are so cheap that, when bookstores return them to the publisher for credit, the covers are stripped off and sent to the publisher as proof of the return while the rest of the book is pulped.

The trade paperback is the larger paperback version, approximately 6" x 8." The paper inside a trade paperback is the same quality as that of a hardback book. Trade paperbacks and hardback books are both returned in their entirety to the publisher/distributor for credit.

Publishers Weekly interviewed Louise Burke, the publisher of Pocket Books. She said: “Mass market gets the most attention when people talk about a format not being what it used to be . . . But it still has a lot of value in getting readers in and then moving them up to hardcover. You have to look at the big picture.”

To help boost paperback sales, Levy Home Entertainment has initiated a variety of programs, including having an author autograph several thousand copies of a title before shipment and promoting specially priced titles at $4.99 to attract interest in a new author or an established author's backlist.

Another innovation is the $9.99 premium paperback, which according to the Write News has "higher quality paper, more white space both in the margins and between the lines of text, and a larger font size throughout." The premium was pioneered by Penguin in the spring of 2005 with the intent of appealing to aging baby boomers. Publishers have since discovered that the premium paperback also holds an appeal for younger readers who prefer hardbacks. The premiums haven't done well with romance readers because that segment of the market is "more price sensitive."

Speaking of romance, publishers agreed that "among the various mass market categories, romance continues to enjoy solid sales gains, helped by . . . a resurgence” in historical romance. "Another hot category cited by several houses was paranormal" although one publisher "warned against the danger of overpublishing in the category." (PW)

The article said the increased competition for limited shelf space is a reason for the mmp soft sales in 2007. Even so, publishers are not planning to abandon the genre. They see the low price of the mmp helps readers to discover new writers. Additionally, in an economy facing recession, mass market paperbacks offers an inexpensive alternative for entertainment.

Update on the WGA Strike

This morning's Variety announced "WGA [Writers Guild of America] leaders have scheduled a bicoastal powwow on Saturday, with membership meetings in Gotham [New York] and L.A. designed to sell the new contract agreement to the WGA's rank-and-file and end the 3-month-old strike."

If enough WGA members back the proposed contract, the WGA board will go forward to ratify the new deal and consider issuing a back-to-work order. Writers could be back on the job as soon as Monday--although the WGA membership would still have to vote on ratification to officially end the strike.

There is growing concern over the future of the upcoming pilot season. If writers don't get back to work soon, the pilots will be in real jeopardy.

You can read the whole story here.

Vanity Fair Cancels Its Oscar Party

Despite the optimistic news coming out of the studios/WGA discussions, the Associated Press (AP) announced around 9:00 AM EST that Vanity Fair is cancelling its annual Academy Awards party on February 24th.

Vanity Fair began holding the glitzy affair at Morton's restaurant in 1994.

"After much consideration, and in support of the writers and everyone else affected by this strike, we have decided that this is not the appropriate year to hold our annual Oscar party," said a statement posted on VanityFair.com.

"We want to congratulate all of this year's nominees and we look forward to hosting our 15th Oscar party next year," the magazine said.

The AP said that Vanity Fair's editor made the decision to cancel the party after talking with writer friends. The move is intended to show "solidarity with the writers, directors and actors."

Another WGA Strike Update

Today's LA Times had a story on the striking Writers Guild of America (WGA).

The Times indicates that agreement may be near. "The West Coast board of the Writers Guild of America has reacted favorably to the outlines of a pending agreement reached between guild negotiators and Hollywood studios."

The deal reached between the studios and the directors served as the jumping-off point for the new round of discussions between the studios and the writers.

The two sides reached a tentative agreement on Friday, and attorneys are now drawing up the actual contract language based on that agreement. If the WGA board sees and approves that language, the strike could end, and the contract could go to the membership for a vote this weekend.

The fate of the upcoming Academy Awards show hangs over the negotiations like the Sword of Damocles.

The Times says:

The deal includes a doubling of the residual rate for movies and TV shows sold online and secures the union's jurisdiction over content created specifically for the Web, above certain budget thresholds. It also establishes payments for shows streamed online that improve upon what directors were given in their new contract.

The WGA leadership is pressing members not to abandon their picket lines until the deal is sealed.

Election Day Preview

It is midway through the day here in Texas.

I woke early and was at my desk by 7:30--despite rain and the fact that I usually drift in around 9:00 AM.

I've been aware of a low-level anxiety all morning. Sort of like the feeling my mother used to describe as "ants in your pants."

While I was eating my Chinese food and cruising the Internet over lunch, it dawned on me.

I'm worried about the election.

I was the same way in November, 2000. At that point, I'd had five years of George Bush as governor of Texas and--although I'd been a Republican since I first registered to vote at 18--I refused to vote for him. When he first ran for governor, I wrote him off as a lightweight. Nothing that has happened since then has changed my mind. I didn't vote for him for governor or president.

The television and radio broadcasts are filled with commentary about the war in Iraq and the slowing economy. While both are hugely important issues, neither one worries me as much as a third issue: nominations to the Supreme Court.

Right now the Court is somewhat tenuously balanced: four conservative justices (Roberts, Alito, Scalia, and Thomas), four liberal justices (Breyer, Ginsburg, Stevens and Souter) with Justice Kennedy acting as the balance.

The problem is that the two oldest members of the court are liberals: Stevens is 87 and Ginsburg is 74. Kennedy, the court's swing vote, is 71.

The next president, assuming s/he has two terms, is likely to replace two justices. That will probably be the two liberal ones.

I want the Court to remain moderate. So my vote in November will be largely determined by that single issue.

Whatever YOUR issue, make your vote heard. If you haven't yet, get out there and vote. Your vote does make a difference.

So What's the Deal With e-Publishing?

John left the following comment on last night's post:

So you like e-publishing? What are the uses and abuses?

I saw somewhere that you had published on Ellora's Cave.

I frequently speak of traditional publishing and self-publishing. In my mind, those are the only two distinctions in the publishing industry. They are two distinct business models, and everything else falls under one or the other of those two designations.

So where does e-publishing fall?

It is traditional publishing, using a different medium. Instead of print books, it releases electronic books, also called e-books. That's the main difference. In e-publishing, as in print publishing, you submit to a publisher who evaluates your manuscript and decides whether to accept it for publication. When your e-book sells, you receive statements and royalties.

Are there differences between print publishing and e-publishing? Yes, but they are the result of two different mediums, not two different business models. There are pros and cons on both sides.

First, let's talk about print publishing:

• The investment on the part of the publisher is larger (printing costs, distribution, warehousing) so the publishing houses are more cautious. As a result, the bar for acceptance is set higher.
• It takes a lot longer to see your book published; a year from the time the contract is signed is pretty common.
• Because of the longer lead time to release, print publishers generally offer advances against sales (commonly given in thirds: one third when you sign the contract, another third upon the publisher's determining the manuscript is acceptable and the final third upon release).
• Print publishing has been around a lot longer than e-publishing so the distribution network is better established. This means that, at this point in time, you will probably sell more books via print publishing than e-publishing.

Now, let's talk about e-publishing:

• E-publishing is much less expensive than print publishing so e-publishers are more open to taking chances on genres and writers. For someone tired of rejection letters or impatient to be published, e-publishing can offer an attractive alternative.
• The time lag between the signing of a contract and the release of a book is much shorter in e-publishing than in print publishing.
• Because of the accelerated release schedule, e-publishing doesn't typically pay more than a token advance, if any. E-publishing doesn't need to allow for reserves for returns from bookstores so royalties are paid on a monthly or quarterly basis immediately after release.
• E-publishing is much more open to a variety of book lengths. It's much easier to sell shorter stories online than in print publishing.
• Although print publishing might sell more books, e-books offer MUCH higher royalty rates. It is not uncommon for an e-book writer to receive 33% to 40% royalty rates.
• E-publishing is a newer medium. That means there are some better-established e-publishers and a lot of start-ups. It is so easy to become an e-publisher, that people are able to create a business in their kitchen in a few days. Writers who have been unable to find publication for their work decide they'll self-publish by opening up their own publishing house. They seek other writers to lend their "publishing house" credibility. These do-it-yourself operations frequently run into financial problems. They go out of business at an alarming rate. If you are considering e-publishing, you need to stick to the better-known companies.
• Readers of sci-fi and romance were among the first to embrace e-books, but other readers are now beginning to embrace the medium. And the establishment is taking note. Amazon recently released the Kindle e-reader. Today's Publishers Weekly reported: "Reflecting the growing importance of digital publishing to traditional publishers, Simon & Schuster has created the position of Chief Digital Officer and named Elinor Hirschhorn to fill the spot. "
• Print publishers have been offering contracts to the better-known e-book writers. MaryJanice Davidson is among those who got her start in e-books. Interestingly enough, many writers who accepted print contracts continue to write for e-publishers. More telling, writers who were originally published in print are actively seeking e-book contracts. I believe this is a recognition that e-publishing is a growth industry.

No, John, I've never been published by Ellora's Cave. However, if I didn't already have a publisher for my erotic romances, I would be happy to be published by EC. They are probably the best known of the e-publishers. Their authors make very good money.

I get irritated every time I hear someone sneer at e-publishing. I invariably get a vision of a farmer telling his wife that the Ford Model-T rattling past their property is "just a craze."

On Buying Low and Selling High

This question came up twice today in two different venues so I thought I'd natter on about it for a few minutes.

On a writers' loop I belong to and, later, during the Writer's Chatroom discussion tonight, I was asked about trying to write in a genre that's "hot."

The conventional wisdom is that, by the time you identify a "hot" trend and write a novel in that genre, the market will likely be saturated and the trend cooling down.

A perfect example is the popularity of chick lit novels. Every publishing house opened a chick lit imprint, and almost every writer had a story featuring expensive high heels, a gay best friend and an obsession with shopping. By 2006, you couldn't give a chick lit manuscript away.

But something interesting happened. The chick lit voice (full of attitude but minus the high heels, gay friend and shopping obsession) morphed across genres into another hot trend: urban fantasy.

So . . . should you try to chase a trend or not?

If your goal is a New York publisher, probably not. It takes New York a long time to release a book. By the time you identify the trend, write the manuscript, get a contract and are published, the odds are good the trend will be on the downswing.

However, if your goal is e-publishing, it may be possible to jump on a trend before it cools down. E-publishing can release your manuscript online in a third of the time it takes to get traditionally published.

The flip side thinking is that you need to write the book that matters to you, no matter whether it's in vogue or not. This train of thought holds that there is always a place for a well-written book and that, even if you can't sell it today, the market will cycle back around in six months, a year or three years, and you'll be able to sell it then.

Thinking about this, I was reminded of my years in the stock brokerage industry where the mantra is "buy low, sell high." We were always having clients call, wanting to buy the hot new stock. The only problem was, by the time Joe Ordinary heard about the stock, the price jump had already happened. Our clients were asking to buy a stock that was now too expensive and probably due to drop in price.

In order for buying and selling based on "hot" trends to work, you have to catch the trend on the uptick, not the downtick. If you aren't in on the beginning, most of the upswing momentum will be over by the time you hear about it.

Re-Reading George Orwell's Rules

Sorry to be so late in posting. My afternoon got away from me.

Well, I'm a happy camper. I got Dutch tulips and daffodil bulbs at half price at my very pricey nursery.

I also had a very nice chat at the Writer's Chatroom.

Nathan Bransford mentioned a couple of things in his blogs on Thursday and Friday that I think bear repeating.

In his Thursday blog here, he pointed out that people submitting entries for his first page contest are trying too hard to provide "shock and awe" in their openings.

I agree. But I also noticed something else that relates to Nathan's Friday post. Nathan directed readers of that post to George Orwell's six rules for effective writing here.

As I'm sure most of you have, I've seen these rules before. However, in looking at the entries for Nathan's contest, I was struck by the relevance of #2 and #3, which I believe go hand-in-hand.

Orwell's Rule #2 says, "Never use a long word when a short one will do." Rule #3 says, "If it is possible to cut a word out, always cut it out."

Sometimes I suspect newbie writers feel a need to "prove" themselves as literate. When I read the entries, I sometimes had the sense of someone trying to pack twenty pounds of potatoes into a five-pound sack.

Every sentence does not have to be fifty words long. You need to vary your sentence structure with short sentence and an occasional long sentence.

And don't write with a thesaurus in your right hand. Twelve-dollar words are not better than one-dollar words. Keep it simple. When readers read for pleasure, they usually don't want to have to work at understanding what they're reading.

The old KISS principle still applies.

A Scent of Spring

It's a lovely spring day, and I've been out and about since early this morning, weeding and pruning.

I'm doing that Writer's Chatroom tonight at 6:00 PM EST. I'll come back and do a Sunday post before then.

In the meantime, I need to visit the nursery and buy some new bulbs [grin].

Notre Dame Sculpture

I'm working on a paranormal and was cruising the Internet looking for a face for my demon. I came across this photo. I
LOVE it.



These are a pair of gargoyles on the roof of Notre Dame in Paris. The photographer is Nicolas Knight, an artist who lives in New York. His website is here. I contacted him, requesting permission to post this photo here.

The gargoyles remind me a little of a pit bull or perhaps a pit viper. Their faces are beautiful and . . . terrifying . . . at the same time.

Dara Joy Resurfaces

There was a lot going on in publishing and in business this week, but I'm going with the weird story for today's post.

Last April, I told the cautionary tale of Dara Joy, the up-and-coming author who demolished her career through the exercise of extremely poor judgment. If you're not familiar with the name Dara Joy, I suggest you read my first post here before continuing with this entry.

I hadn't given another thought to Dara since writing that post last April.

Yesterday, the Dear Author site published an update on Dara. Read the rest of the story here. The comment trail put me on the floor.

One note of advice: Do NOT go to the Urban Dictionary for a definition of "ploot." I did and wish I hadn't.

Come Talk To Me Sunday Night

I'll be doing a live chat over at the Writer's Chatroom on Sunday night.

7:00 PM EST and 6:00 PM CST.

I'd love to have company if you're available. It's free.

Go here at the right time.

Hoping to see you there.

Microsoft Makes Offer For Yahoo

Last Thursday, I wrote a post titled "Yahoo Looks Ripe For A Deal" here.

In the article, I quoted a January 19th Wall Street Journal article, which had said:

For the right marauding investor, Yahoo looks like glistening treasure. Like all worthy plunder, it won't come without some effort. But for an activist hunting for a target, it looks like a pretty appealing start page.

Now--only eight days after my post--comes the news that Microsoft announced this morning it has made an offer to buy Yahoo for $44.6 billion in cash and stock.

According to Reuters, this would be the biggest Internet deal since the merger between Time Warner and AOL.

Yahoo's stock closed at $19.18 on Thursday. I just checked the pre-market price for this morning. The stock was at $29.56 as of 8:21 ET.

Microsoft's offer to buy was at $31 per share--a 62% premium over Thursday's close.

The Reuters story included a quote from Microsoft CEO Steve Ballmer:

"We have great respect for Yahoo, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market . . ."

Yahoo did not immediately offer a comment.

Not everyone was impressed by the offer. Reuters quoted Tim Smalls of the brokerage firm Execution LLC:

"Shocking! To me, the premium seems exorbitant, for what is a dwindling business. I personally don't see how the synergies of Microsoft-Yahoo is going to take on Google . . ."

This is only the beginning. While the Yahoo shareholders might welcome seeing their stock in play, it's unlikely that the company's executives will regard this offer in a positive light.

Also, once a company goes into play, new players often enter the field.

It will be interesting to see how Google responds to this news.

Amazon Buys Audible

It's time for my annual mention of Audible.com, the largest provider of digital downloads of audiobooks in the U.S.

On February 3, 2006, I mentioned Audible here in a post on new technologies. A year later on January 5, 2007, I brought the company up again here in a post on "Another Look At Audible."

Today, February 1, 2008, I'm back to report that Amazon.com said yesterday it has reached agreement to purchase Audible for $11.50 per share.

This is Amazon's second major purchase of an audio provider. Last May, Amazon acquired Brilliance Audio, an independent producer of audiobooks based in Grand Haven, Michigan.

Reuters reported that Amazon values the Audible deal at approximately $300 million.

Audible stock closed Wednesday night at $9.33 a share so the $11.50 purchase price represents a 23% premium.

The Audible purchase creates some questions. First, according to Publishers Weekly, Audible "is the exclusive distributor of spokenword audio to iTunes, owned by one of Amazon's competitors, Apple."

A second issue is DRM (Digital Rights Management). Audible's content is DRM protected. Amazon offers music downloads without DRM protection.

Stay tuned . . .