California Jumps Into the Argument

California has joined those states pushing Amazon to pay sales taxes on Internet purchases made within their borders.

And Amazon is pushing back.

Yesterday, Dow Jones Newswires reported here:

In a letter to California's Board of Equalization, which oversees the collection of property taxes, sales taxes and other fees, Seattle-based Amazon said four bills introduced to the state legislature are unconstitutional because they would ultimately require sellers with no physical presence in California to collect sales tax merely on the basis of contracts with California advertisers.

"If any of these new tax collection schemes were adopted, Amazon would be compelled to end its advertising relationships with well over 10,000 California-based participants in the Amazon 'Associates Program'," wrote Paul Misener, Amazon's vice president for Global Public Policy, in a letter dated Feb. 24.

This is in line with Amazon's previous stance toward other states that have tried to collect sales taxes because the company is operating within their borders.

I've written extensively about this subject before, including here, here and here.

States have gone after Amazon for sales taxes, claiming two different kinds of physical presence:

• Amazon's Associates Program allows Internet users to advertise Amazon on their websites and earn money from any sales that result. When North Carolina, Rhode Island and Colorado argued that this program constitutes a physical presence in their states, Amazon shut down the program in those states. This is, of course, the same strategy the company is employing in California.

• When Texas argued that Amazon's distribution center in Irving constituted a physical presence in the state, Amazon announced the distribution center was owned by its subsidiary, Amazon.com KYDC LLC, and not by Amazon itself ... even though the subsidiary is located at Amazon's corporate headquarters. Amazon announced it would close the distribution center next month if Texas doesn't back down.

I think that the second bullet above is going to become more of an issue in the future. Readers of this blog may recall that on January 31 here, I reported on the conference call between Amazon and its stock analysts. This is the answer from the Seeking Alpha transcript to a question posed by the analyst from Jefferies & Company who asked about the number of distribution centers Amazon had at the end of 2010:

We had approximately 52 at the end of 2010. We added 13 last year. We will add more fulfillment centers this year. We ... aren't saying how many yet because again we're trying to determine what the growth rate will be.

I doubt that the tax dodge of having a "subsidiary" operate the distribution center will continue to hold up as Amazon increases its physical presence around the country.

The open question is whether the states have the courage to face anger from their citizens when Amazon pulls jobs or, in the case of the Associates program, potential money away from people during a tough economy.

My Less-Than-Excellent Adventure

I'm too tired to take on a heavy subject tonight so I'm just going to tell what happened today. This tale will probably give a psychologist pause, but ...

I'm prone to allergies twice a year: hayfever in October and mountain cedar in February. There are years when allergies absolutely lay me low. However, February had seemed mild until very recently. I've had a nasty post-nasal drip which alternated with a pounding sinus headache all week.

I'd soldiered on until today when I had both the headache and stomach issues from the post-nasal drip. I emailed my boss to say I'd be at home, took a handful of meds and went back to bed.

I woke up to the sound of the garbage truck rumbling down my street. Like Pavlov's dog hearing the bell, I responded instantly, leaping out of bed. Grabbing my garbage, I ran out the back door. I flung the plastic bags over my fence to the curb on the street.

Pleased that I hadn't missed trash day, I returned to the house to find my back door locked.

There I stood in my Lanz of Salzburg blue-and-white full-length nightgown and my purple slippers ... without a way inside ... because I had used the spare key stored outside the house when I locked myself out about a week ago and had not yet returned the key to its hidey hole.

My next-door neighbor used to have a key to the house until I recently changed out a key cylinder that had begun to stick in the dead bolt. I'd been meaning to have extra keys made, but hadn't gotten around to it yet.

I was not crazy about the idea of traipsing across the lawn dressed as I was to a neighbor--especially one with teenage boys--to borrow a phone.

I am an impulsive soul. I decided the fastest way to get back into my nice warm bed was to just break a window and worry about the repairs later. I picked up a decorative concrete cat from a flower bed and swung it at the bottom half of my double-hung bedroom window.

The cat bounced off the window.

I should mention that I'd broke into my house once before. I'd replaced the demolished glass pane with shatter-proof glass. I just hadn't realized how strong the new glass was.

I slammed the concrete cat into the window twice more before giving up. I viewed the rear of the house, trying to decide on a new plan.

Replacing the glass in the decorative French doors would be frightfully expensive. My bathroom has horizontal windows only a foot wide and ten feet above me.

That left the guest bathroom. Again the window was rather high--shoulder height for short me--and not really very big. I guessed each half of the double-hung window was about 18" X 22".

But beggars can't be choosers. I pulled a cast iron patio chair over and climbed onto it. Then I slammed the concrete cat into the top half of the window.

The glass shattered in a very loud and satisfying manner. I picked shards of glass out of the window frame. Once it was safe to reach in, I unlocked the window--grateful the alarm wasn't activated--and slid the window open.

The next problem was that the window was still too high and not wide enough for me to climb in feet first. I would have to go through face first, which meant a drop of about four and a half feet on the other side. Oh, well ... in for a penny, in for a pound.

I removed the planter sitting on the window sill along with my large bottle of Vita Bath (Original Spring Green Scent) and stuck my head through.

Fifty-four inches never looked so far. Especially since I would be landing on hard ceramic tile ... head first.

Making like a lizard moving down a wall, I slowly edged through: head, shoulders, chest, waist. I was VERY grateful for the privacy fence behind me. I didn't want to think about the rear view I was offering the world.

Once my hips made it through, I was over-balanced and things speeded up. I tumbled, tucking my head into my chest as I rolled.

Touchdown was painful. I heard a crack which I believe was my left thumb. Somehow my nightgown tore in multiple places, and the tops of my bare feet scraped across the bricks outside the window. I also cut my forehead and scratched my chin on the stray bits of glass on the floor.

But I was inside. I lay on the floor, assessing my injuries while Bob The Cat licked my face. He had been quite frantic watching my assault on his home from the hallway.

I suspected I'd broken my thumb but, like Scarlett O'Hara, decided to worry about it later. I washed my hands and face, put on a warm flannel nightgown, took some Motrin, and went to bed.

When I woke, my thumb was still painful and pretty swollen, but I've broken fingers before. It didn't hurt as much as some have, and I still had a window to fix. The weatherman said the temp would be 39 degrees overnight.

I measured the window: 21" x 16 1/8". Headed to Home Depot, which no longer cuts glass. Grrrr. Went to Lowe's where a teenage boy cut three different panes before he got one right. Came home, slapped the window in--perfect. In less than an hour, I had caulked the window and cleaned up the mess in the bathroom.

Still have to address the extra key situation. The only window left for me to break on the rear of the house is the bottom half of that bathroom window ...

Hey, Rush Limbaugh!!!

I hear you're taking swipes at the First Lady's diet and waist size.

I haven't heard that low-level commentary since I was back in the elementary schoolyard ... when I was maybe eight or nine years old.

Not only were your comments juvenile, they said a lot about how hard up you are for material. Against the ropes, are you? {LOL}

And I'm not going to take the low road I would have taken when I was eight years old. Back then, I would have laughed and said something about the pot and the kettle.

It's frightening how far my Republican Party has sunk into the mud. Sarah Palin's mocking breast milk and here you are, right down there with her.

Yuck! I'm going to take a shower.

If you can't argue ideas, don't get into the debate.

Tools of Change 2011

Last week from Monday to Wednesday (February 14th thru 16th) the Tools of Change for Publishing 2011 took place at the Sheraton New York Hotel & Towers. This was the fifth year that O'Reilly Media presented the TOC.

I headed over to YouTube to see which presentations are offered and found a variety of interviews.

Margaret Atwood was the keynote speaker. Here is the ~30 minute talk titled "The Publishing Pie: An Authors View":

Kevin Kelly, co-founder of Wired did a ~26-minute presentation called "Better than Free: How Value is Generated in a Free Copy World" here:

Kassia Krozser of BookSquare was interviewed. Here's the ~6-minute video:

You can find other interviews and presentations on YouTube by entering TOC 2011 in the search window.

Meet Jane Yellowrock

A couple of years ago, I read Skinwalker, the first book in an urban fantasy series by author Faith Hunter.

The protagonist of Skinwalker is Jane Yellowrock, a Cherokee shape-changer. Hunter's novels have some similarities to Patricia Briggs' Mercy Thompson series. Both have Native-American skinwalkers as protagonists. Both heroines believe they may be the last of their kind.

But there are differences, too. Mercy is an auto mechanic who owns her own shop in the Pacific Northwest where she was raised by werewolves. Jane grew up in a orphan home and works as a killer-for-hire of rogue vampires.

Mercy changes into a coyote, but Jane is able to change into other forms if she has an object to help her suss out the creature's DNA. Her main form is that of Beast, a mountain lion who shares her body. When Beast is ascendant, the plot is told from her point-of-view in an untutored voice with her memories and sensations.

In Skinwalker, Jane is hired by New Orleans' vampire council to hunt down and kill a vampire serial killer. We meet a number of interesting characters: Molly, Jane's best friend who just happens to be a witch; Katie of Katie's Ladies brothel; Leo Pellissier, the Master Vampire of New Orleans; George Dumas, Leo's prime blood servant; and Rick LaFleur, a NO police detective.

I found the Beast sections of Skinwalker a little tiring, but liked Jane and the story enough that I purchased the second book in the series, Blood Cross.

In Blood Cross, Jane is still in New Orleans and has been hired by Leo to hunt down and kill a rogue vampire who is creating new, unchained vampires. Newly-made vampires are insane during their first ten years of existence and must be kept chained to protect both them and humankind.

Either Blood Cross was superior to the earlier book, or I'd gotten more comfortable with the Beast's POV because I thoroughly enjoyed Jane's new outing. I added Hunter's name to the calendar which I keep to track the forthcoming books of a short list of authors.

This past week I read Mercy Blade, the third in the Jane Yellowrock series.

Hunter just keeps getting better. I thought this was the best book of the three. The novel is nuanced: Hunter expands on her world-building, and Jane learns more of her heritage.

Vampires and witches are the only creatures who have "come out" of the supernatural closet. In Mercy Blade, Jane is still on retainer to Leo, and werewolves are about to come out to humans. When they do so, they allege Leo is a murderer.

Leo phones Jane with this instruction: "A persona non grata is encroaching upon my territory ... Meet with him, find out what he knows, and then send him packing." Booger's Scoot is the biker bar on the west bank where Jane goes to find this "persona non grata" and encounters a pack of very unfriendly werewolves.

The action is fast and furious, and I'm recommending this book and the series.

Borders Files for Chapter 11 Bankruptcy

I just reviewed the list of the 200 Borders stores that are scheduled to close. There are seven in North Texas:

1. 10720 Preston Road, Dallas
2. 1601 Preston Road, Plano
3. 2403 S. Stemmons, Lewisville
4. 5615 Colleyville Boulevard, Colleyville
5. 1131 N. Burleson Boulevard, Burleson
6. 2709 N. Mesquite, Mesquite
7. 3600 McKinney Avenue, Dallas

Dallas will retain the store on Greenville Avenue, Fort Worth will keep its store open, and the location at the D/FW Airport will continue to operate along with the stores in Allen and in Arlington.

Of the 28 stores operating in Texas, eighteen will remain open, including all three locations in San Antonio and the four locations in Houston.

You can see the entire list of 200 stores scheduled to close here.

Today's Shelf Awareness reported this morning that:

While Borders plans to close 200 superstores in the next several weeks ... it may close up to 75 additional stores after that.

Don't forget that Borders still operates a lot of Waldenbooks in addition to a fair number of other non-superstores.

Shelf Awareness also said:

Borders estimated that it loses about $2 million a week combined on the stores set for closing.

I'm always sad to see a bookstore shutter its windows but--with numbers like that--it's not hard to see why Borders is taking this action.

So what do all these bookstores closing and Borders filing for protection under Chapter 11 mean?

Well, this is not great news for the publishing industry at a time when publishers are still trying to figure out how to make money in the brave, new digital world. In addition to having fewer venues in which to sell their wares, the Big Six publishing houses are Borders' largest unsecured creditors. You can go here to read Borders' bankruptcy filing. Scroll forward to the list of the 30 largest unsecured creditors. Borders owes Penguin (#1) $41 million, and Macmillan (#6) $11 1/2 million.

A friend called me today to say that this would just escalate the move to e-books. I'm not sure there is a direct correlation between the two although I'm intrigued by the fact that all three Austin Borders are closing. Austin is the Silicon Valley of Texas with a very young, very e-savvy population.

On the other hand, Austin still has five Barnes & Nobles stores.

According to Publishers Weekly here, most of the 200 stores being closed have over 20,000 square feet including a 42,770 sq. ft. operation in Chicago and a 42,600 sq. ft. store on Park Avenue in New York.

But, let's face it, consumers in Chicago and New York are not as likely to be hurt by this the move as those living in more remote locations with less access to bookstores. Those consumers may have to turn to the Internet for their books.

But will they order physical books from Amazon or e-books? Either way, this event is likely to benefit Amazon's business.

Yesterday's Wall Street Journal reported here:

The Ann Arbor, Mich., company's $505 million bankruptcy debt from GE Capital to fund its operations while in bankruptcy comes in many tranches, and includes both a $55 million term loan and a $410 revolving loan ... The filing comes after Borders unsuccessfully sought to avoid bankruptcy by striking a tentative deal with GE Capital for a new $550 million secured line of credit. But the retailer first had to hit certain benchmarks, such as negotiating more favorable store leases with its landlords and finding other lenders to take on $175 million of the credit line.

The fact that GE Capital is willing to risk $505 million suggests that Borders has a least a chance of being able to successfully manuever out of the hole it's dug for itself.

Borders previous management made huge mistakes--not the least of which was handing over their Internet business to Amazon to manage for them. B&N was much quicker in trying to adapt to the new reality of the Internet and digital books while Borders focussed on building more and bigger bricks-and-mortar stores.

Stay tuned ...

Hey, Governor Perry!

I love Texas. I love the people, I love the friendliness, I love the place.

What I don't love about Texas are the knuckleheads the citizenry regularly elects as governors. I couldn't stand George W. Bush and feel the same way about the current guv, Rick Perry. Both men spent their time in office focussing on how to grow their public profiles so they could make a presidential run. Both were described by Texans as "a great guy"; neither impressed me as a governor.

And we all know what a fabulous prez George Bush made. Writer Molly Ivins called him "Shrub" and once said about him, "Everyone knows the man has no clue, but no one there has the courage to say it. I mean, good gawd, the man is as he always has been: barely adequate."

Fast forward to today: Rick Perry is slicker than goose poop, but routinely makes me wince. He's got great hair and little else.

Case in point, on Friday, the Texas governor did an interview with the Washington Examiner:

Gov. Rick Perry, R-Texas, told The Examiner in an exclusive interview that Amazon's decision to leave the state was a result of a wrong decision by the state comptroller, and that he will work with legislators to make sure Amazon
can stay.

This is my open letter to Governor Perry:

Dear Gov. Perry: PLEASE spend some time learning about an issue before immediately knee-jerking to what you believe is a "pro-business" stand.

Texas has a number of great bookstores. You'll be spitting in their eyes if you allow Amazon to avoid paying state taxes while forcing bricks-and-mortars stores to do so.

Amazon is hiding behind a tax dodge. They have created a subsidiary to operate the distribution center in Irving and claim that this means Amazon is not operating in the state. Give me a break.

PLEASE think twice and act once. Don't remind every Texan that you are the successor to George W. Bush.

And for everyone else. Please remember the name Rick Perry.

Publishers Bundling e-Books

Happy Valentine's Day!

Friday's Wall Street Journal had an interesting story by Jeffrey A. Trachtenberg titled "Publishers Bundle e-Books to Boost Sales, Promote Authors."

The article offers an overview of the e-books being bundled by a variety of publishers. Some bundle early books by one author, others bundle e-books by genre (i.e. romance) or by subject.

"'By bundling titles at a discount we're raising their visibility and making them more price-attractive,' says Mr. Klebanoff," chief executive of RosettaBooks.

Mr Klebanoff also says "a bundled price of $9.99 or less 'is definitely in a consumer sweet spot'."

Maja Thomas, Sr. VP of Hachette Digital, explained that her company has begun to bundle titles from an author's series together. She gave the example of three early Michael Connelly e-books being bundled for $17.99, which represents a savings of $1 off each of the three.

Sony Corp. agreed. They indicated that series bundles are selling very well.

On the other hand, Penguin refuses to discount. They put eight of the Sookie Stackhouse e-books together in one bundle and priced it at $55.99

Go here to read the article.

Amazon Strikes Back at Texas

Beginning in May, 2008 here, I wrote half a dozen posts about the kerfuffle between Amazon and a number of states around the U.S. on the subject of collecting state taxes.

Amazon has an "affiliates" program where people advertise Amazon on their Internet sites and then earn sales commissions on each purchase visitors to their sites make at Amazon.

Individual states have been complaining that although Amazon is paying these people around the country who are, in effect, their representatives, Amazon does not pay the states' sales taxes. This gives Amazon an unfair advantage over those bricks-and-mortar bookstores who both contribute to local economies AND pay the sales taxes. Amazon is not playing on a level field.

In July, 2009, I posted here that:

Bloomberg is reporting that the price of Netflix shares jumped on Monday on speculation that Amazon may be planning to buy the mail-order movie
service ...

A security analyst was quoted in the Bloomberg report saying that Netflix is an "unlikely target for Amazon" because it has distribution centers all over the U.S. Those distribution centers would mean that Amazon would have to collect sales tax in each state where one existed.

... Forbes reported that Amazon had "notified associates in Rhode Island and Hawaii that the company was no longer working with them . . . because [those] states have passed laws to collect sales taxes on these transactions." Shortly afterward, Amazon also cut off their associates in North Carolina.

This past October here, I reported on two states--North Carolina and Texas--which were actively pursuing their demands that Amazon pay state taxes. North Carolina argued when Amazon paid their affiliates in North Carolina, that transaction triggered sales tax.

Texas argued that, by operating a distribution center in Irving, Texas, Amazon had a local presence and needed to pay sales taxes. According to the Dallas Morning News:

"Amazon contended the distribution center [in Irving, Texas] was owned by one of its subsidiaries called Amazon.com KYDC LLC, which is located at the same address as its corporate headquarters in Seattle."

Amazon has now struck back at Texas. Yesterday's Wall Street Journal reported here:

Amazon.com Inc. is closing a Dallas-area fulfillment center and canceling a planned expansion of its operations in Texas after the online retailer failed to reach an agreement with the state over taxes.

In an email to staff, Dave Clark, [Amazon's] ... operations chief for North America, said the state's "unfavorable regulatory climate" prompted the decision ... The closure will occur on April 12.

I think Amazon is overplaying its hand. Article I of the U.S. Constitution says that interstate commerce is regulated by the federal government. While the Internet was growing, Congress was reluctant to take any action to harm its burgeoning businesses. Now those businesses are mature, and Internet sales are well-established. It's a different world.

The founder of Amazon, Jeff Bezos, spent a lot of time in Texas while he was growing up. His grandfather had been the regional manager for the Atomic Energy Commission in Albuquerque. "Pops" Gize retired to his Lazy G Ranch in Texas. Jeff spent a lot of time with his grandfather on the 25,000-acre ranch, learning to fix equipment, dig ditches and brand cattle.

We have signs on our roadways down here that say: "Don't Mess With Texas." Apparently Jeff has forgotten those notices.

News From Charlaine Harris

Almost ten years ago, in May of 2001, I picked up a book titled Dead Until Dark by Charlaine Harris. The cover art didn't appeal to me, but the subtitle "The Southern Vampire Mysteries" did.

I laughed my way through the novel, thoroughly enjoying it. The protagonist, Sookie Stackhouse, is a telepath being slowly driven crazy by the chatter in her head from all the minds she cannot block out. She is thrilled to realize that she cannot "read" a vampire's thoughts. That alone is enough to tempt her into an affair with Bill the Vampire.

Dead Until Dark was the first vampire novel with a chick lit voice I'd ever encountered. Now, of course, they litter the bookstores. And with the premiere of the HBO series True Blood, based on the Southern Vampire Mysteries, millions of people are familiar with Sookie's adventures.

I was so taken with Dead Until Dark that, when I visited Florida a few months after reading the novel, I dragged my mother to Haslam's Used Books to find a copy of the novel to give to my youngest brother to read.

It was nearly a year before the second Sookie Stackhouse novel was published. In the interim, I sampled other books by Charlaine Harris. I loved the series starring Lily Bard, the survivor of a brutal rape, who runs off to build a new life for herself in Shakespeare, Arkansas as a cleaning lady. She frequently finds dead bodies and must solve the mystery of their murders.

Alternatively, I hated the series starring Aurora Teagarden, the librarian of Lawrenceton, Georgia, who also solves mysteries. The Aurora series was just too precious for me [gag]. I forced myself through the first book and stopped a few pages into the second.

I liked the Harper Connelly series, which falls midway between the light voice of Sookie and the much darker voice of Lily Bard. Harper was hit by lightning as a young girl, which gave her the weird ability to locate dead bodies and to access their final memories. Harper has monetized this ability by selling her services to municipal governments and private individuals trying to find missing persons or figure out what killed them. She and her stepbrother Tolliver travel wherever they are called in the U.S. She makes me think of a psychic Have Gun, Will Travel.

In the ten years since Dead Until Dark was published, I've continued to read the series, which used to release new book every May. I don't subscribe to cable television because it diverts way too much of my time from my writing, but I keep up with True Blood via visits with friends and family.

Last week Charlaine Harris announced that it was likely she would only write two more novels in the Southern Vampire Mysteries series. According to the Los Angeles Times, she said:

“I still love Sookie, but I’m beginning to want to write something else, and Sookie’s kind of taken over my life. I was able to write other things for the first few years I was involved in Sookie, but then after the start of the television show she took over so much of my time because of my increased publicity obligations that it’s been very hard to write other things, and I really need to do that.”

I also was surprised to learn that Harris has created an on-line game through i-Play. The game features Dahlia Lynley-Chivers, "a ruthless, fashion-conscious vamp." who wants to find a potion that will allow her to spend time in the sunlight. Go here to visit the i-Play site.

Go here to read the L.A. Times article.

Long-Lost Hammett Works Uncovered

Last Friday, the UK's Guardian had a story that warmed my cockles:

A cache of unpublished works by famed writer Dashiell Hammett, often seen as the father of hardboiled detective fiction, has been found and is set to be unveiled in America.

Andrew Gulli, editor of the crime magazine The Strand, was doing research in the archives of the Harry Ransom Centre at the University of Texas in Austin. He found fifteen unpublished short stories of Hammett's.

Hammett was the author of The Maltese Falcon and The Thin Man series. He had worked for The Pinkerton Detective Agency for seven years while in his 20's and drew on that experience when writing his crime fiction.

Gulli's magazine has been successful in publishing other unpublished works by well-known writers. In 2008, French scholar Francois Gallix found an unpublished 23,000-word novella which Graham Greene had written at age 22. "The Empty Chair" was unfinished, and The Strand serialized the existing five chapters. Ironically, Gallix found the manuscript in the Harry Ransom Center at the UTA Austin, the same place Gulli found the Hammett work.

In 2009, Gulli learned of HarperStudio's plan to publish Mark Twain's stories in time for the hundredth anniversary of Twain's death, which occurred in 1910. Gulli convinced HarperStudio to let him publish "The Undertaker's Tale," a previously unpublished story found in the Twain archives at the University of California.

Later in 2009, an Agatha Christie fan searching the archives of her holiday home in Devon found two unpublished short stories among her notebooks. The Strand announced it would publish the 5,000-word "Incident of the Dog's Ball."

All his success in publishing previously lost works must have encouraged Gulli to do some of his own research into the Dashiell Hammett archives.

I liked this quote from the Guardian about Hammett's writing:

Hammett, along with other writers of the 1920s, 30s and 40s such as Raymond Chandler, defined a new fictional world with their gritty portrayals of urban America. They eschewed straightforward heroes and villains for chancers and grifters who worked both sides of the law. These low-life characters and anti-heroes were a ground-breaking development for most mass fiction and still influence crime novels today.

Wintertime And the Super Bowl

Sorry, I didn't post on Wednesday. The weather here in Texas has been occupying my time.

My youngest brother, a sports columnist, is in town for the Super Bowl. He arrived on Sunday, mocking the way Dallas handles bad weather. One of his first text messages to me was:

I came here from Pittsburgh where 12-year-olds drive cabs in the snow.

When the ice storm hit Monday night, I urged him not to drive to the stadium in his rental car, especially since the NFL was providing buses for the teams and the media for Media Day.

Tuesday morning, DART (Dallas Area Rapid Transit) was not operating its buses for the residents of Dallas, but the Super Bowl nobility were chauffeured to their destination. A caravan of NFL buses and police cars trailed behind a sanding machine en route to the stadium. I sent my brother a text saying I was watching him on television. Frustrated by the slow progress, he responded that the ice would melt before they got there. And, in homage to O.J. Simpson's low-speed televised car chase, he added that Al Cowlings was in the seat in front of him on the bus.

I stayed home from work Tuesday, but went to the University on Wednesday and Thursday. I warned my brother to be careful on the ice. I told him I had used my breakfast chair to balance me on the ice when I went outside to feed the cardinals (I have four nesting pairs in my backyard). He laughed at me. And then he slipped and landed on his back when he went out to dinner with his colleagues late Wednesday night.

Last night, six inches of snow covered the ice in my backyard. It's gorgeous, and I'm staying home again today because Dallas does not own a single snow plow.

Six inches of snow is nothing to people in Chicago and Boston, but when your city doesn't even have a supply of salt, it paralyzes traffic.

P.S. My brother is now expressing concern that he will be able to get home Monday morning.

Amazon Talks to Stock Analysts

I love Seeking Alpha. It's a website that posts the transcripts of the conference calls between public companies' management and the analysts who follow the companies' stock.

Seeking Alpha has now posted the transcript of the question-and-answer session on Thursday between Amazon and the analysts who follow their stock. Despite all the questions, Amazon said practically nothing. Almost every question was greeted with an expansive, but empty, cheeriness. In the approximately twenty questions, I counted eighteen "great," seventeen "well," sixteen "excited" or "exciting," and fourteen "pleased."

Amazon's spokesman during the call was Tom Szkutak, Chief Financial Officer and senior vice president. Szkutak came to Amazon eight years ago from General Electric.

Seeking Alpha allows me to quote up to 400 words. I tried to pick answers where something was actually said. The pickin's were pretty slim.

[From Youssef Squali of Jefferies & Company, Inc.]
...can you tell us how many distribution centers you actually had at the end of 2010?
We had approximately 52 at the end of 2010. We added 13 last year. We will add more fulfillment centers this year. We ... aren't saying how many yet because again we're trying to determine what the growth rate will be.

[From Youssef Squali of Jefferies & Company, Inc.]
Are you quantifying CapEx [capital expenditures] for Q1 [the current quarter]?
No, we haven't quantified the CapEx for Q1 ... But again, we will do what we need to do to support the growth in both the infrastructure and fulfillment.

[From Benjamin Schachter of Macquarie Research]
... the one question would be, all in Kindle hardware and software, the whole thing together; how is that impacting gross margin? And then overall, how should we think about how the agency model and the e-books? How that going to impact margin?
First off, we have a long-standing practice of not breaking out any individual products or categories. But what I can say about Kindle is it's growing very fast. We're extremely pleased with what we're seeing. We sold millions of devices in Q4. The content business, the content part of it is growing very fast ... We have Kindle content, eKindle book sales growing at a faster rate than paperbacks, which is really exciting. And so that business is going very well.

[James Mitchell of Goldman Sachs Group Inc.]
... is there any big obvious reason why international growth decelerated while the domestic growth accelerated?
In terms of the international growth specifically, if you look back to last year, we did have very strong media growth in international in Q4. You'll see that it's up 26% on a local currency basis, which is one of the strongest quarters we've had ... but there were certainly some impact from some of the weather that we saw in Europe during the month of December.

[James Mitchell of Goldman Sachs Group Inc.]
Is the fact that some of the e-books are being sold on an agency rather than on a consignment basis, is there acting as track on growth temporarily, in terms of your reported revenue?
Certainly, the agency piece is included in the numbers that we reported today. But in terms of the impact, we're not bringing that out. But again, we're very excited with the growth that we're seeing within books, e-books specifically and physical books are going well as well.

But although the conference call was a non-event, Publishers Marketplace pointed me toward the very interesting SEC paperwork which Jeff Bezos filed on Friday. He reported that he owns 19.5% of the shares of Amazon. When I multiplied his 88,135,951 shares times Friday's stock close of $171.14, I got $15 billion.

Not bad for seventeen years' work.

Go here to read the SEC filing.

Amazon Had a Fab Fourth Qtr & Stock Drops

Yesterday's Publishers Weekly had an excellent article about Amazon's excellent autumn here:

The top line was stellar with total sales for the year up 40%, to $34.2 billion, while net income rose 28%, to $1.15 billion. In a prepared statement chairman Jeff Bezos said the company passed two milestones in the fourth quarter--its first time sales topped more than $10 billion in a quarter with actual sales hitting $12 billion; and “after selling millions of third-generation Kindles during the quarter, Kindle books have now overtaken paperback books as the most popular format on Amazon.com,” even while sales of paperbacks rose.

Despite this glowing news, the stock nose-dived in after-hours trading. The stock price dropped more than 10%, losing $17.15 to $167.30. I found this puzzling given that Amazon had exceeded its forecast of per-share profit of 88 cents on sales of $12.99 billion by earning a per-share profit of 91 cents on sales of $12.95 billion.

To find out why the stock had dropped, I trolled the Internet. The Seattle Times had a story here that helped explain investors' reaction:

One concern: Amazon, which released its results after the closing bell, gave a first-quarter outlook that fell below Wall Street's prediction.

Another concern: Amazon's operating costs rose 38 percent from a year ago, squeezing profit margins ...

Stifel Nicolaus analyst Jordan Rohan ... [said]: "Amazon did exactly what it told investors it would do ... What does that tell you? It tells you that expectations got ahead of themselves."

Along the same lines, BGC Partners analyst Collin Gillis sees Amazon shares as overvalued and rates Amazon stock as a "sell."

Amazon webcast the conference call. If you want to listen (and view a slide presentation), go here.

The Future of the Book Business

Publishers Weekly pointed me to Tuesday's New York Times, which had an op/ed piece on the book business here.

The editorial began with the reminder that Borders is in precarious shape. Suppliers are refusing to restock and landlords are beginning to take defensive measures.

Despite all that, we are happy to say that it’s far too early to kiss book publishing goodbye. E-book sales more than doubled in the first 11 months of last year — to about 8 percent of total sales. E-readers are flying off the shelves, and overall book sales are holding up as the paper-based industry transitions to the digital age, increasing 3.5 percent in the first 11 months of 2010.

The op/ed points out some of the challenges the book business faces; obstacles we have discussed on this blog over the years:

• People have so many more options for ways to spend their precious leisure time
• Publishers compete for best-selling authors, making it tougher for new writers to break into the business
• The possibility that readers no longer want to read book-length material, preferring to opt for shorter material
• The push toward social interaction via the web, which is very different from the solitary occupation of reading a book

The piece concludes with this optimistic statement:

Though book sales have declined slightly in the last 10 years as a share of
consumer spending, they have still grown more than 15 percent over the period,
after accounting for inflation. And Nooks, Kindles and the like might actually
help books gain a wider following by taking the bookstore to the customer.

May it ever be thus.

Do I Look Like Ann Landers?

There's a major-league cat fight going on over at Harper's Magazine.

According to Wikipedia, Harper's is "the second-oldest continuously published monthly magazine in the U.S." after Scientific American. It was founded in June, 1850. Contributors have included Horatio Alger, Noam Chomsky, Winston Churchill, Theodore Dreiser, Robert Frost, Seymour Hersh, Henry James, Jack London, Norman Mailer, Thomas Nast, Sylvia Plath, Jane Smiley, John Steinbeck, Hunter S. Thompson, Mark Twain, John Updike, Kurt Vonnegut, E.B. White, Woodrow Wilson and Tom Wolfe.

In 1980, the magazine came close to dying when it was announced the August issue would be its last. In July, John R. MacArthur, grandson of billionaire philanthropist John D. MacArthur, rescued Harper's by establishing the Harper's Magazine Foundation, which now publishes the magazine. MacArthur became president and publisher of Harper's in 1983 at age 27. He is now 54.

New York Magazine called Harper's: "one of the last bastions of old-line liberalism and a lonely defender of a certain idea of what literary culture should be."

That's why the current controversy seems so ironic.

As New York describes the contretemps, it sounds like two issues that have been simmering on the back burner finally came to boil.

First, of course, is the problem all newspapers and magazines face today: how to be profitable in an Internet world. New York says Harper's 2009 tax return indicated "MacArthur invested $4.4 million into the magazine" while his 2006 losses "were only $2.9 million."

In the December Providence Journal, MacArthur made his opinion of the Internet clear in a column reproduced in Harper's here:

Partisans of the Internet like to say that the Web is a bottom-up phenomenon that wondrously bypasses the traditional gatekeepers in publishing and politics who allegedly snuff out true debate. But most of what I see is unedited, incoherent babble indicative of a herd mentality, not a true desire for self-government or fairness.

Wow!

It probably comes as no surprise to you (reading this on the Internet) that MacArthur's position on the Internet has been a trifle worrisome to the staff at Harper's. That concern--among others--led to the second issue. The staff began thinking about unionizing, and Ben Metcalf, the literary editor, was instrumental in transforming thought to action.

Last July, Metcalf and a small group of staff informed MacArthur that they were unionizing. The publisher was furious. New York described it:

MacArthur contested the entire staff's right to unionize, arguing that editors and assistant editors who make up about half of the editorial team were management and thus did not qualify.

Despite MacArthur's opposition, last October Harper's did form a union, joining UAW Local 2110.

Last Tuesday, New York reported here that:

MacArthur "is trying to lay off Harper’s' literary editor, Ben Metcalf, who’s worked at the magazine since the mid-nineties and who played a key role in the union drive — a move the union says is pure retaliation."

And, over the weekend, battle lines were drawn as New York reported here that "84 writers and former Harper's editors" wrote an open letter to MacArthur. The letter here said in part:

We ... object to the actions you've taken in response to the union formed there, by legal vote, on October 14th of last year. We are greatly concerned to learn of your plan to lay off union members so closely on the heels of the election and without first negotiating a contract. We ask that you reconsider these layoffs and negotiate with this union in good faith, as the law requires.

... we further ask that you explore fund-raising options adopted by other not-for-profit publications and open the magazine's foundation to monies other than your own.

I was conflicted as I read New York's excellent coverage (I really encourage you to read the two articles). John MacArthur deserves enormous credit for many things, not the least of which is rescuing Harper's during its time of need when he himself was just 24 years old. The guy could have spent his time ... and the family money ... on lots of other things.

I also feel a lot of sympathy for him. I'm ambivalent about the "herd mentality" of the Internet myself. There are so many calls on our time today that I am reluctant to do any more than I am currently doing on the Internet. I've poked my toe out on the Twitter branch, but I've steadfastly resisted diving into the FaceBook pool.

Bottom line, I've decided I can best understand Mr. MacArthur's situation if I liken it to adopting a child. Nobody forced you to do it. It was a laudable decision on your part. However, once you decided to cross that line, you assumed certain responsibilities. And those responsibilities go far beyond just feeding and clothing the kid.

You're also stuck with figuring out how to handle the graceless, ungrateful and often obnoxious teenager--whether you want to or not. Maybe you don't agree with his decision to dye his hair pink and only answer to the name Laser Moonbeam, but he's your kid. You have to do what's in his best interests.

And that includes letting him grow up and assume responsibility for his life.

It's way better if you do so with grace and understanding. After all, if you keep peace in the family, one day you get to hold the grandkids and take some credit for everyone's happiness.

Odds and Ends

From USA Today here:

The post-holiday surge in sales of e-books continues. For the third week in a row, more than a third of the top 50 books on USA TODAY's Best-Selling Books list sold more e-book copies than print versions.

On Tuesday, Apple reported here on their blockbuster first quarter ended December 25, 2010:

The Company posted record revenue of $26.74 billion and record net quarterly profit of $6 billion, or $6.43 per diluted share. These results compare to revenue of $15.68 billion and net quarterly profit of $3.38 billion, or $3.67 per diluted share, in the year-ago quarter ...

Apple sold 4.13 million Macs during the quarter, a 23 percent unit increase over the year-ago quarter. The Company sold 16.24 million iPhones in the quarter, representing 86 percent unit growth over the year-ago quarter. Apple sold 19.45 million iPods during the quarter, representing a seven percent unit decline from the year-ago quarter. The Company also sold 7.33 million iPads during the quarter.

From Shelf Awareness here:

November bookstore sales rose 5.3%, to $1.09 billion, compared to November 2009, according to preliminary estimates from the Census Bureau. For the year to date, total bookstore sales have slipped 1.9%, to $14.4 billion.

The gain reverses a slide in sales compared to 2009 for the past half year: November marked the first time since April that bookstore sales were up compared to the same period a year earlier ...

E-books continued to be the strongest category, with sales up 129.7%, to $46.6 million, in November, compared to the same period in 2009, and sales up 165.6%, to $391.9 million, for the year to date.

Who Reads Mysteries?

Publishers Marketplace directed me to a survey of mystery readers commissioned by Sisters-in-Crime. Bowker PubTrack conducted the survey of 1,056 mystery readers in September, 2010.

According to the study, the respondents were drawn from two sources:

The study "used PubTrack™ Consumer’s monthly panel of U.S. book buying men, women and teens, balanced to US Census ... Respondents were drawn from a pool of 75,000 survey respondents who bought a book in 2009 and the first half of2010. The survey was given to a broad range of mystery readers, notjust seriously involved mystery fans."

In addition, "Sisters in Crime provided a supplemental contact list from mystery bookstores."

The readers were classified as avid (37% said they are almost always reading a mystery), frequent (51% said they often read mysteries) and occasional (12% said they sometimes read mysteries).

Not surprisingly, the gender of readers breaks heavily female (65%) to male (36%).

I'll confess to being a bit surprised at the age spread. Seventy-one percent (71%) of the readers were over 50 years old while only 15% were in their 40's and 14% were 39 years old or under. The bottom line here is that seven out of ten of the readers were over 45.

Where the books came from was interesting:

• 19% of all readers acquire mysteries at libraries


• 11% of all mysteries are sold through book clubs such as Mystery Guild


• 39% of all mysteries are purchased in stores

E-book sales are growing fast. In 2009, 1.7% of books sold were e-books. In Q2 of 2010, 7% of books sold were e-books.

Another interesting element was the reason why the readers selected a particular mystery to read:

• 53% chose a specific mystery because they liked the author
• 39% liked the series
• 29% liked a character
• 21% liked the subject or topic
• 16% liked the price

The survey makes for interesting reading. Go here to see the whole survey.

Nattering About Amazon and Kindle

Remember Johnny Carson's Carnac the Magnificent shtick? Johnny would hold an envelope up to his forehead and make a prediction.

I don't have a big feathered turban, but I do have an adorable gray cap, and I'm going to make a prediction of my own: Sometime between April 10 and 25, Amazon will announce that Stephen King has been inducted into the Kindle Million Club.

What is the Kindle Million Club, you ask? According to Amazon:

The "Kindle Million Club" recognizes authors whose entire body of work has sold over 1 million copies in the Kindle Store (http://www.amazon.com/kindlestore).

On July 27, 2010, Amazon announced that Stieg Larsson was the first author to achieve Kindle Million Club status.

Exactly three months later, on October 27, 2010, Amazon announced that the collected works of James Patterson had catapulted him into the Kindle Million Club.

Last week, slightly less than three months later, Amazon announced that Nora Roberts had achieved Kindle Million Club status on January 11, 2011.

Do you see a pattern here? I do. By the way, Amazon is scheduled to have its Fourth Quarter earnings conference call on Janu-
ary 27, 2011. While it would be very nice to have such upbeat information to share with the stock analysts, it probably would have stretched the analysts' credulity a bit to have Nora join the Million Dollar Club on the very day that Amazon announces its year end results. Hence the January 11 announcement.

Anyway, that's why I'm betting Stephen King will ring the bell in April.

Over the weekend, I read an article by Steve Windwalker titled "Just How Big is the Kindle Revolution?" Among the things Windwalker said that caught my interest was:

... when you look at the long lists of titles by Roberts and Patterson, it is all the more impressive that Larsson was able to storm the castle with a single trilogy. But there's definitely a lesson here for emerging authors, and it is a lesson that many Kindle Nation faves like Imogen Rose, Scott Nicholson, Paul Levine and J.A. Konrath have learned well: trilogies, series, and multiple titles allows authors great efficiencies when it comes to building exposure for their books.

Go here to read the article.

Revisiting the Millennium Trilogy

Publishers Marketplace pointed me toward two articles on Stieg Larsson's Millennium trilogy.

The first is an article in Canada's National Post here, which dropped this bombshell:

In a new memoir to be published next week, Eva Gabrielsson says that she wants to finish writing a fourth volume in the massively popular series of thrillers written by her longtime partner, the late author Stieg Larsson.

In my December 10 post here, I reported that, because Larsson died without a valid will, his father and brother inherited his estate. The pair offered to sign over Larsson's half of the apartment he shared with Gabrielsson "if she would turn over his laptop, which supposedly held an unfinished fourth novel. She refused to give in to what she called 'extortion.' Bad press led to the family finally signing over Larsson's half of the apartment."

Of course, Gabrielsson faces a very huge impediment to publishing her partner's novel if she finishes it. Presumably, the father and brother own Larsson's copyright to his characters. The National Post acknowledges this issue along with a tantalizing insight into the proposed fourth book via a quote from Agence France-Presse :

[Gabrielsson would only finish the fourth book] once she gets undisputed rights to his work from the Larsson family.

“It is not my intention to recount here the plot of the fourth volume,” she said. “On the other hand, I want to say that Lisbeth little by little frees herself from her ghosts and her enemies.”

At the same time, The New Yorker has an article here that tries to decode why people love Stieg Larsson's novels.

Reviewer Joan Acocella and I agreed on two issues. Readers of this blog may remember that, last July here, I said:

The structure of the novel is similar to that of a sandwich. The financial crime story is the bread surrounding the mystery of Harriet's disappearance. The mystery whizzes along; the financial crime story plods endlessly.

Acocella also hated the pace, and I nodded in agreement with her assessment of Blomkvist when she said:

The most crippling weakness of the trilogy, however, is its hero. Mikael Blomkvist is so anti-masculinist that, in a narrative where people are brandishing chainsaws, he can take no forceful action.

I was surprised that Acocella made the following error when describing Lisbeth Salander:

Early in the trilogy, we find out that when Lisbeth was a child her mother was regularly beaten senseless by her mate, Alexander Zalachenko, a Russian spy who had defected to Sweden, where a secret branch of the security police put him on the payroll, thinking that he could tell them useful secrets.

Acocella is wrong here. Larsson didn't tell us about Lisbeth's parents until the second novel in the trilogy, The Girl Who Played With Fire. In the first novel, Lisbeth visited her mother on holidays, but only referred to what happened in their past as "The Evil."

Acocella believes that part of the attraction of the Larsson trilogy is "the absolutist morals" of the "revenge story." I agree with the absolutist morals part of her assessment. I liken the books to the cowboy tales of my childhood: the white hats pitted against the black hats (or Indians). We like stories in which good [although Lisbeth pushes that description] triumphs over evil.

Acocella also suggests that readers are titillated by the rapes. That was certainly not the case for me. I regarded much of the sexual content of the novel as Larsson's male fantasies allowed to run amok. [shrug]

For me, the chief attraction of the novels was Lisbeth Salander. She intrigued me and made me care. I wanted things to turn out well for her.

I hope there is a fourth novel. I would like to see how Salander ends up.