Keeping the 'Book' in Textbooks

It's a little odd that a man who controls 30% of the American textbook publishing industry, an industry that supports the most fundamentally American institution of education, is...Irish. Barry O'Callaghan's Education Media and Publishing Group Ltd. is second only to Pearson PLC in terms of revenue from textbook publishing and the subject of THIS WSJ article published a few weeks ago. And although his business decisions take place in Dublin, he's still faced with tough questions about how to wade through this economic sludge. After his purchase of Houghton Mufflin and Harcout a couple years ago, O'Callaghan acquired some $7 billion in debt and is now figuring out how to reconcile that with falling sales.
His is not very novel. He is firing staff, purchasing fewer new books, phasing out old ones, and outsourcing functions.
Citigroup analysts just released said they believe the decisions will ultimately hurt the company's ability to compete for market share down the line, but O'Callaghan is tough spot, especially since S&P's just put Education Media on a list of companies most likely to default on their in 2009.
Other major textbook companies are seeing a similar and expected downturn. This kind of trend is especially important to study because the textbook publishing business sees a different kind of business model than do other kinds of publishing. Public school funding (i.e. taxpayers' dollars) will play a major role in keeping some companies afloat because the threat of tax shortfall looms large. But in general, the fact that these companies are so closely involved in the real and tangible effects on the American education system makes the textbook publishing crisis, if we can call it that, all the more pressing.

It's the same premise for the last article I posted, but I think this story adds a much-needed analytic depth to the problem that Barry O'Callaghan is facing. The Boston Globe published THIS article on Sunday and the fact that it's reporting on a Boston-based company gives the article a locally-inspired insight into the problem. So the facts are the same: Houghton Mifflin Harcourt is in deep trouble and everyone thinks it's about to tank. But there's an interesting twist here: Houghton disagrees. It defends itself by saying it's actually gaining market share and has enough cash to cover its loans. This is a very intriguiging point, for if the company really is in trouble, I'm wondering how their denial will affect the outcome in the long run.
And the long run is really what's most important here. The article quotes former executive Steven Dill when he says something really important about the situation: ""It was the birthplace of literary tradition in this country, one of those companies that believed in publishing books that push the wheel of civilization ahead. I'd be sorry to see that tradition go."
So the question becomes: how do we balance the need for this long-standing tradition? Should the textbook publishing industry start asking for its own bailout? Or is this not necessarily a fault of the economic crisis at all? Is this just another extension of the end of print culture as we know it? These are the things I'm looking to tease out of the jumbled mess.

A trend in scholarly journals (which I am considering as part of the textbook publishing sector): online repositories. Since the early 2000's companies that service higher educational institutions (i.e., those that deal with journals and other scholarly publications) have been creating online databases for new works. This is nothing new - we've all used JSTOR and I even found this very article on ProQuest, both of which operate on this same principle. But the trend is now gaining for new journals. That is, repositories for things that were already in print came easily (arguments for the democratization of information through democratizing technology are very strong), but academics weren't too sure about skipping print altogether and going straight for online databases.
It turns out they really don't need to skip print, necessarily, which was a main concern for the professors at Harvard last spring, who are now forced to give over some of their rights to their new works to a Harvard-wide online database. They were worried that the database would hurt their print market.
The new trend is to offer libraries and unversities (like the YPL Library Service Co. is doing, reported in THIS article published in PR Newswire last week) online through MARC records, MAchine Readable Cataloguing records. That is, once journals have been published in print, libraries will be offered records that will translate the cataloguing system into computer language.
This article showcases a mutually beneficial move to the web - everyone's happy. And I think this is how it should always be. Aside from the licensing and rights nonsense, scholarly works (more so than textbooks) need to be available to colleges and universities because this is the ground-breaking work being done. However, I'm wondering how established journals are faring in their print versions. Surely their doing well getting published online because of the large fee for accessing databases online, but what about their print publications?

The Financial Times ran THIS article yesterday, analyzing the growing e-book (Kindle) phenomenon and what it means for book publishing. It predicts that e-books could become a $1 billion industry (industry?) by 2010, biting its way into the $25 billion book publishing industry. Reporter Kenneth Li first questions whether book sales have actually tanked, citing some contradictory figures and then deciding that the spook of tanking has nonetheless caused publishing execs to start to rethink their businesses. The hardest part about looking at these trends, though, is distinguishing between an economic downturn and a real change in consumer demands for different kinds of media.
Li then looks at the potential impact of the Kindle 2, whose predecessor boosted Amazon's e-book sales by 400%! His most important line is

While the cost of delivery and printing declines in electronic distribution, the rest of the cost structure - promotion, marketing and author advances - remains the same, which potentially cuts into profit margins.

In the current issues of The New York Review of Books, Robert Darnton wrote THIS essay about Google's recent out-of-court settlement with publishers and authors over its alleged copyright infringement due to its mass-digitization of library books within major research universities. Of course, this piece isn't really an article - it's an essay. But Darnton puts forth his kind of analytical thinking that newspapers are often prohibited from offering in their reporting.
Darnton starts by elegantly describing the history of copyrights - and their balancing act: between an individual's need to profit but the public's right to have an open public sphere of information. He then goes on to consider the role of libraries in shaping this public sphere - the greatest potential disseminator of information!
But Darnton then gets to talking about the Google settlement, which creates the Book Rights Registry to license works to individuals and organizations while protecting the copyrights of the works that Google has been digitizing. The contradicion is this: although Google Books has the potential to be the world largest and greatest public library, it is also simultaneously concentrating too much power (of information and the spread of information) in the hands of too few. This is at the heart of the issue of digitizing books - and it's something so incredibly urgent to think about.
I am enormously ambivalent about this issue. There is so much potential good and so much potential harm. We have to wait and see, in the end, because right now we're being asked to choose which is more important: the public's access to information or the multiplicity of different disseminators?

I understand that Gawker is not really an unbiased source of news. But I really love THIS article (blog post?) because it's indicative of the critical POV the website takes against MSM (main-stream media) and it gives a good history of the debate that the Grey Lady is involved in now.
The post first applauds Michael Hirschorn's essay in the Atlantic about the gloomy future of the NYT, then goes on to look at how NYT's Catherine Mathis responded in a letter. The response was predictable (and I think valid in some ways). But this article makes a really good point about the debate: Hirschorn originally discussed in his essay possible solutions and ways to keep truckin' without sacrificing everything. Instead, the debate (and the public, it seems) is only concerned with this "will it tank/will it not tank" dichotomy. And this really might not be the best way to look at the situation if we're trying to wrap our minds around a whole new technological paradigm.
I am personally conflicted about NYT's upcoming credit crunch, though. I want to believe that they're going to be fine and that all they say about their assets and credit agreements is true. On the other hand, I can't help but think that the paper is not being wholly transparent about what exactly is going to happen. And considering this entire ordeal is so important essentially because we're talking about an organization that helps keep the American public well-informed, I would hope they should share their information about itself as well as they share the news.

THIS is a loaded article, covering all of the main concerns and big players in the current debate about educational media. It's a great testament to the complicated web of businesses that account for the U.S. textbook industry.
It starts with Houghton Mifflin Harcourt's dispute of S&P's lowering their ratings last week (ouch!). It also lowered Education Media's ratings (the massive textbook company owned by the Irish bloke). But S&P's outlook for HMH was particularly bleak: predicting their liquidity being depleted by 2010. HMH, although it does not usually comment on ratings or "rumours," lashed back saying cost-cutting will be plenty effective. They also outright said they would remain in compliance with their debt covenants, something S&P said they won't be able to do. It really seems like a battle of PR firms and I'm wondering how far HMH will go to protect its precious reputation before is starts to really make ridiculously spiteful claims.
But the article goes on to give a really great view of the textbook business as a whole. It says, "According to the Association of American Publishers, "K-12" textbook spending, covering kindergarten to the 12th grade, fell by 4.4 per cent in 2008." The government is all tangled up in here because when they decrease tax receipts for public schools, those schools can't buy the textbooks it needs.
But the debate is whether some other aspects of the business will come to make up for it, namely the higher education books, which are always in demand during a recession because people flock back to school when they can't find employment. Not surprisingly, the textbook companies are confident about the potential growth in other markets and the ratings companies are skeptical. Time will tell... right?

The professor featured in THIS article is a true pioneer in the textbook business. Professor Frank Markham at Mesa State College in Colorado, is trying out a new and innovative textbook publishing company, Flat World Knowledge (a brilliantly ironic name for this kind of company). The company daringly cuts out the middleman (college bookstores) and sells directly to professors and their students for a fraction of the original cost In fact, there is an un-printable FREE version available, but interestingly enough, most of the students still pay to have some version in print (how can the print culture be dying when people will still pay to have something in their hands when it's FREE online?!).
And the company even offers the professor the option of modifying the content of books to cater to the specific course before it is sold to the students. This is a fantastic development for the textbook business because it shows that they have no forgotten that publishing (especially for students) involves active learning and thinking.
There are 30 professors joining Markham in this little experiment. And in a really interesting twist of the business model, Flat World is financing its free online books by selling study aids and audio versions of the books!

For the second time, I feel the need to post about an article does not really come from "reading the trades." It's an essay from Harper's, which is a magazine and so for the sake of argument, I'm going to say that this makes it even more relevant.
Gideon Lewis-Kraus wrote an article entitled "The Last Book Party" that appears in the March issue of the magazine. It begins with this quote, "The problem with publishing is the relentlessness of the apocalypse." He explains, however, how the "present onslaught" is different from past attacks on the industry because the attack is now coming from within: from managers and conglomerates rather than from the railroad, the post office, or the Gregorian calendar. He also articulates what is really at stake here: that the really great thinkers of are time aren't even being paid for their genius. What's at stake is our intellect!
Lewis-Kraus then goes on to render the scenes of Frankfurt during the week-long annual Book Fair, where the rights to manuscripts are debated, negotiated, bought, and sold. He points out how this is the "writer's worst nightmare" - a place where ideas are sold like commodities. And in witnessing all this take place, he's shedding light on the way that our tastes are now negotiated for us. It's scary. Is this the last book party?
As he goes on to describe interesting anecdotes from the Fair, he mentions one very interesting figure, Bob Miller, who founded Hyperion and Disney's publishing company. His new venture, HarperStudio, is doing something new: it doesn't offer more than $100,000 in advances, but splits the profits from the book 50-50 with the writer. Everyone is apparently very excited about this. I wonder how this will change things.
I also think it's very interesting that Lewis-Kraus only fleetingly mentions e-books. In parentheses: E-books are hot this year.
He does, though, do a great job of describing the social scene of the publishing business, an easily forgotten part of the equation. There is lots of networking and name dropping and schmoozing. It's like Fashion Week for publishing. His point, I gather, is to point out how blissfully ignorant everyone is about the state of publishing. He does not, of course, outright say exactly what he thinks about the future of the publishing sector, but his essay certainly points to a major tension: popping champagne bottles and dropping book sales.

USA Today published THIS article yesterday about the new audio feature on the Kindle. The question, and the stakes here, is whether the read-aloud function (a computer-generated voice) violates the copyright given to the e-book publisher. Usually, rights for the audio book and rights for the e-book are licensed to different people. This is worrisome for publishers because it is another hit to their potential product line - they're worried that computer voices will get so good that they drown out the demand for real people reading the books. Amazon is the defendant here, saying it isn't violating copyrights because a computer-generated audio cannot constitute a derivate work.
I think the significanse here is that publishers are once again hit with serious competition from emerging technologies - and they are getting increasingly whiney about these developments.

THIS article came out on Monday from the PR Newswire and although I know the dangers of relying on something that comes from a PR wire, I think this is a really important story. This new technology, the BookOnBoard software, has finally broken down the barriers to getting books formatted and accessible for the iPhone and iPod Touch. I think it's a huge step for e-book publishing because it means people who already have the devices can simply download the application and start reading books easily. What the article doesn't mention, obviously, is the question about whether this technology will actually be adopted by iPhone users. I wonder how this will impact the Kindle's market and obviously, the demand for print.

THIS article, written by Graham Vickers in Monday's issue of The Guardian, is truly a rigorous analysis of the technological landscape of the last 30 years. It is a concise and logical overview of some of the major trends in all type of media, touching on publishing, music, live theater, and so many others. Vickers gives a sweeping chronology of the major developments in the business of media, but I think the most important thing to take away is his emphasis on intellectual property. He take a moment at the end of the article to specifically talk about the delicate balancing act that TV faces, but I think issues of rights and licensing are central to almost all of the major media businesses today.
What I see from this article is a serious overall trend with intellectual property becoming more and more complicatedly tied into the business models of the media. Probably because of a number of factors, our technological advancements are being severly hampered by increasingly intricate webs of intellectual property. And because of this rapid technological change we're seeing, the legal aspects of media are have more of an impact on how society adapts. Although this is a really abstract analysis, I think it's certainly at the heart of the major trends in business of media in general.

EVERYONE SHOULD READ THIS ARTICLE!!!

This post doesn't actually come from a newspaper, but I think it's important nonetheless. Students in the department may remember getting an e-mail last week about applying for a program at Time Warner called Reverse Digital Mentoring. It's a program that takes tech-savvy undergrads and matches them up with a tech-lacking executive at the company. The purpose is to help these high-ranking executives get more familiar with the rapidly changing digital media. The underlying assumption, I suspect, is that Time Warner is getting a little freaked out by how important these technologies are becoming and they now NEED their executives to understand how they work.
This all makes it quite nerve-racking that I have an interview for the program this Monday!! I already started off by responding to the program coordinator by "Mr." instead of "Ms." so clearly I'm on the right track, but I'll be sure to update if anything comes of this - it could be a really interesting probe into how much media technologies are affecting business decisions!