Archive for Business News
The publishing industry could be turned onto its head with a recent revelation that Amazon is in talks with big 5 publisher Simon and Schuster. No one seems to know what the discussions are about, whether it has to do with eBook pricing or if they are talking about an acquisition. If Amazon were to purchase S&S it would give Amazon major distribution to physical bookstores and finally legitimate their own publishing imprints.
Amazon Publishing first launched in 2009 and is now composed of a number of imprints including AmazonEncore, AmazonCrossing, Montlake Romance, Thomas & Mercer, 47 North, New Harvest, Day One, and Powered by Amazon.
When Amazon got into the publishing industry initially major bookstores were very much against it. Barnes and Noble famously said it would not stock a single Amazon published title in their bookstores. At the time, they said “Our decision [not to stock Amazon published titles] is based on Amazon’s continued push for exclusivity with publishers, agents and the authors they represent.”
There are some obvious benefits of Amazon purchasing S&S. It would legitimize their publishing efforts and give Createspace users the ability to stock their books more easily in stores. It would also give authors signed to their imprints to be stocked in stores under existing S&S contracts and also assist them in their efforts to get books in the library via Overdrive, 3M and Baker & Taylor.
CBS Corp currently made $800 million in revenue in 2013 from their S&S publishing division. CEO Leslie Moonves said in a recent interview that “We are negotiating with Amazon as we speak.”
Amazon and CBS have a really solid relationship outside of books and eBooks. CBS initially went into business with Amazon three years ago as a digital test. But the relationship proved valuable as funding from Amazon helped underwrite the cost of “Under the Dome,” a summer series based on a best-selling Stephen King novel. CBS greenlit the high-profile project only after making sure the show would make money, and Amazon provided a key piece of the funding. “Under the Dome,” which was produced by Steven Spielberg, went on to be the most-watched summer TV series in 21 years. It also was the most popular program on Amazon’s service last year. No other broadcast network shows currently have such a quick turnaround on a subscription series.
Amazon offers other CBS-owned shows, including the complete “Star Trek” franchise and TV classics such as “I Love Lucy,” without commercials. CBS said its drama “The Good Wife” was the No. 1 show on the Amazon service during the fourth quarter of 2013.
In the last few years Amazon has been acquiring many companies to boost their publishing efforts such as book discovery site GoodReads and digital comic luminary Comixology. Amazon is responsible for more than three out of every five e-books sold, according to research firm Codex Group.
Update: Many sources are claiming that the talks are not about an acquisition but have to do with eBook pricing. Currently Hachette and Amazon are in talks to renew their contract and S&S might be starting early stage talks on their new arrangement. I doubt this is the case, in talking with major eBook stores such as Apple and Kobo, they are mandated to renew each contract individually within a certain window period. The pitfalls of discussing new contracts all at once would be tantamount to collusion and would go against the DOJ settlement on agency pricing.
Update 2 – Sources close to the situation have told Good e-Reader that the two sides met about a number of issues. One of them was avoiding some of the pitfalls that erupted during the Hachette contract dispute and getting on the same page. The second post of discussion was getting S&S support for Kindle Unlimited and contributing their backlist and midlist titles to help legitimize the new platform.
Amazon has found itself in hot water in France, as government authorities were ready to hit the company with hefty fines. This stems from a new law that was signed by France’s ruling Socialist Party and the opposition UMP Party that banned online retailers from shipping discounted books for free. It comes in the form of an amendment to a 32-year-old law that sets the value of new books at fixed prices. Instead of fighting it out with the French government, Amazon has bowed to pressure and will no longer ship books for free.
Amazon has increased the cost of shipping books by one centime. This is basically sending books out for only a penny, which satisfies the new laws but circumvents the spirit of it.
Culture minister Aurelie Filippetti has previously singled out Amazon, saying that it “destroys” bookshops. “Once they are in a dominant position and will have crushed our network of bookshops, they will bring prices back up,” she told a conference of booksellers last year.
France is highly protective of its bookshops, enshrining measures to preserve them in law since 1981 when discounts above 5% were banned to prevent big chains from using bulk orders to undercut smaller independent bookshops. France has 3,500 bookshops compared to just 1,000 in the U.K., of which roughly 700 are independent.
The US Federal Trade Commission is suing Amazon for not having enough safeguards in place to prevent children from racking up millions of dollars worth of virtual currency and in-app purchases.
FTC chair Edith Ramirez said in a statement: “Amazon’s in-app system allowed children to incur unlimited charges on their parents’ accounts without permission. Even Amazon’s own employees recognized the serious problem its process created.”
Amazon keeps 30 percent of all in-app charges, the FTC said in its complaint. The case “highlights a central tenant” of consumer protection laws in the U.S., that companies should get customer permission before charging them, said Jessica Rich, director of the FTC’s Consumer Protection Bureau, during a press conference about the lawsuit.
Amazon, in a letter to the FTC July 1, said it was “deeply disappointed” that the agency was moving toward filing a lawsuit. “We have continuously improved our experience since launch, but even at launch, when customers told us their kids had made purchases they didn’t want we refunded those purchases,” wrote Andrew DeVore, Amazon’s associate general counsel.
This is not the first time the FTC went after a company over in-app purchases by children. In January 2014 Apple provided full refunds to consumers, paying a minimum of $32.5 million, to settle a Federal Trade Commission complaint that the company billed consumers for millions of dollars of charges incurred by children in kids’ mobile apps without their parents’ consent.
Likely Amazon will have to make a token payment to make the FTC complaint go away. Given that Apple has the larger ecosystem and more user engagement, the likelihood of having to pay the same amount or more is not viable.
Barnes and Noble announced during a recent investors call that it was 100% committed to separating the Nook digital division from their bookstores. This will create a dedicated Nook company that will be publically traded and give investors an incentive to invest into the companies portfolio of eBooks, e-Readers, tablets and accessories.
In fiscal 2014 we have taken certain actions to strengthen the Company, including the ongoing rationalization of the NOOK business, growing the College business through new contract acquisitions and increased offerings to students and faculty, and initiatives to improve Retail’s sales trends,” said Michael P. Huseby, Chief Executive Officer of Barnes & Noble. “Our fiscal 2014 results and solid financial position at year-end reflect the positive impact of those actions. We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of NOOK Media and Barnes & Noble Retail. We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately. We fully expect that our Retail and NOOK Media businesses will continue to have long-term, successful business relationships with each other after separation.”
The stage has been set for Nook Media to be on its own, since 2012 when Microsoft and Pearson both invested serious capital. This spun the Nook enterprise into its own segment, but was still a big part of Barnes and Noble. In late 2012, B&N founder Len Riggio petitioned the board to let him separate the bookstores from everything else, and the concept was heavily resisted.
Barnes and Noble has been shaking things up on the executive level and many top players have departed the compay. Jim Hilt, head of global ebook sales, and before him digital products director Jamie Iannone and VP of digital products Bill Saperstein all departed in early 2014.
It is expected that Barnes and Noble will complete the separation of Nook Media by March 2015.
New York, NY (June 25, 2014)—Barnes & Noble, Inc. (NYSE: BKS)today reported sales and earnings for its fiscal 2014 fourth quarter and full-year ended May 3, 2014, and that its Board of Directors authorized management to separate the Barnes & Noble Retail and NOOK Media businesses.
Board Authorization For NOOK Media Separation
With the objective of optimizing shareholder value, the Company’s Board of Directors has authorized management of the Company to take steps to separate the Barnes & Noble Retail and NOOK Media businesses into two separate public companies. The Company’s objective is to take the steps necessary to complete the separation by the end of the first quarter of next calendar year.
“In fiscal 2014 we have taken certain actions to strengthen the Company, including the ongoing rationalization of the NOOK® business, growing the College business through new contract acquisitions and increased offerings to students and faculty, and initiatives to improve Retail’s sales trends,” said Michael P. Huseby, Chief Executive Officer of Barnes & Noble. “Our fiscal 2014 results and solid financial position at year-end reflect the positive impact of those actions. We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of NOOK Media and Barnes & Noble Retail. We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately. We fully expect that our Retail and NOOK Media businesses will continue to have long-term, successful business relationships with each other after separation.”
The Company has engaged Guggenheim Securities, LLC as financial advisors and Cravath, Swaine & Moore LLP as legal counsel.
The Company notes that there can be no assurances regarding the ultimate timing of the proposed separation or that such separation will be completed. Any separation of NOOK Media and Barnes & Noble Retail into two separate public companies will be subject to customary regulatory approvals, securing any necessary financing, tax considerations, final approval of the Barnes & Noble Board of Directors and other customary matters and is dependent on numerous factors that include the macroeconomic environment, credit markets and equity markets.
Fiscal 2014 Fourth Quarter and Year End Results
The fourth quarter and full-year ended May 3, 2014, consisted of 14 weeks and 53 weeks, respectively, as compared to 13 weeks and 52 weeks in the prior year. Comparable sales data in this release exclude the impact of the additional week.
Fourth quarter consolidated revenues increased 3.5% to $1.3 billion versus the prior year. Consolidated fourth quarter earnings before interest, taxes, depreciation and amortization (EBITDA) improved to $11.2 million, as compared to an EBITDA loss of $124.6 million in the prior year. For fiscal 2014, consolidated revenues decreased 6.7% to $6.4 billion versus the prior year. Fiscal 2014 consolidated EBITDA increased to $251 million, as compared to $7 million a year ago.
“We’re pleased with our improved financial performance in fiscal 2014, generating EBITDA of $251 million, the highest it’s been in four years, while executing on our strategic initiatives during the year,” said Mr. Huseby. “Retail improved sales trends during the second half of the year, generating annual EBITDA of $354 million. College increased revenues from higher margin textbook rentals, continued to add new school contracts and developed and soft-launched Yuzu™, our digital education platform, growing EBITDA to $115 million. At NOOK, we executed on our plan to sell through existing device inventory, implemented cost rationalization plans, began to pivot our strategy from device focused initiatives to a content centric approach with the signing of our partnership with Samsung, all while significantly reducing year-over-year losses.”
Fourth Quarter 2014 Results from Operations
Segment results for the 14 weeks of fiscal 2014 and 13 weeks of fiscal 2013 fourth quarters are as follows:
Fiscal 2014 Resultsfrom Operations
Segment results for the 53 weeks of fiscal year 2014 and 52 weeks of fiscal year 2013 are as follows:
(1) Represents the elimination of intercompany sales from NOOK to Barnes & Noble Retail and Barnes & Noble College on a sell-through basis.
(2) This non-GAAP measure has been reconciled to the comparable GAAP measure as required under SEC rules regarding the use of non-GAAP financial measures on the attached Segment Information table.
The Retail segment, which includes the Barnes & Noble Bookstores and BN.com businesses, had revenues of $956 million for the quarter and $4.3 billion for the full year, increasing 0.8% for the quarter, while decreasing 6.0% for the year. The inclusion of the 53rd week contributed $57 million in additional sales in fiscal 2014. Comparable store sales declined 4.1% during the quarter and 5.8% for the full year. “Core” comparable store sales, which exclude sales of NOOK products, decreased 1.9% for the fourth quarter, which included unusually severe February weather. Excluding February, fourth quarter Core comparable store sales decreased 0.5%, in-line with previously reported third quarter results. Core comparable store sales declined 3.1% for the full year. Sales for both the quarter and the year were also impacted by store closures and lower online sales.
Retail generated fourth quarter EBITDA of $53 million, essentially flat as compared to a year ago. For fiscal 2014, Retail EBITDA decreased 5.9% to $354 million, primarily as a result of the sales decline.
The College segment had revenues of $298 million for the quarter and $1.7 billion for the full year, increasing 18.2% for the quarter, while decreasing 0.9% for the year. The inclusion of the 53rd week contributed $15 million in additional sales for fiscal 2014. Fourth quarter sales were positively impacted by timing of the back-to-school rush season, driving comparable College store sales of 2.6% for the quarter. Comparable sales decreased 2.7% for the full year on a higher mix of lower priced used textbook rentals and lower textbook volume. Comparable College store sales reflect the retail selling price of a new or used textbook when rented, rather than solely the rental fee received and amortized over the rental period.
Fourth quarter College EBITDA increased to $14 million, while full year EBITDA increased 3% to $115 million, as higher margins and net new store growth outpaced additional investment spend in our digital education platform, Yuzu. College’s fiscal 2014 EBITDA includes $22 million of expenses for Yuzu, as compared to $7 million in the prior year.
The NOOK segment (including digital content, devices and accessories) had revenues of $87 million for the quarter and $506 million for the full year, decreasing 22.3% for the quarter and 35.2% for the year. The inclusion of the 53rd week contributed $9 million in additional sales in fiscal 2014, including $1 million in additional device and accessories sales and $8 million of additional content sales.
Device and accessories sales were $25 million for the quarter and $260 million for the full year, declining 30.1% and 44.8%, respectively, due to lower selling volume and lower average selling prices. Digital content sales were $62 million for the quarter and $246 million for the full year, declining 18.7% and 20.6%, respectively, due primarily to lower device unit sales.
NOOK EBITDA losses were $56 million for the fourth quarter and $218 million for the full year, both including previously disclosed asset impairment charges of $28 million. Prior year results were adversely impacted by NOOK inventory-related charges of $133 million for the quarter and $222 million for the year, as well as $20 million of primarily goodwill impairment charges. The remainder of the EBITDA loss reduction was primarily attributable to reduced expenses on lower marketing costs and cost rationalization efforts.
The consolidated fourth quarter net loss was $36.7 million, or $0.72 per share, as compared to the prior year net loss of $114.8 million, or $2.04 per share. Fiscal 2014 consolidated net losses were $47.3 million, or $1.12 per share, as compared to $157.8 million, or $3.02 per share, in the prior year.
In the fourth quarter, the Company recorded a $12.5 million tax benefit, driven primarily by the utilization of previously reserved deferred tax assets. Tax expense for the full year was $52 million, largely driven by partnership tax allocations and previously recorded valuation allowances.
For fiscal year 2015, the Company expects both Retail comparable bookstore sales and Core comparable bookstore sales to decline in the low-single digits. College comparable store sales are also expected to decline in the low-single digits. The Company expects to continue to decrease EBITDA losses in the NOOK segment.
A conference call with Barnes & Noble, Inc.’s senior management will be webcast beginning at 10:00 A.M. ET onWednesday, June 25, 2014, and is accessible at www.barnesandnobleinc.com/webcasts.
Barnes & Noble, Inc. will report fiscal 2015 first quarter results on or about September 4, 2015.
Perseus Book Group was founded in 1996 and has been acquiring small imprints to expand their business. Over the course of the last few years the entire publishing industry is consolidating and Perseus was a solid acquisition target. Hachette has announced they are purchasing Perseus and absorbing all of their imprints and then selling the distribution business to Ingram.
Hachette is currently the 4th largest publisher in the US and the absorbing of Persius will boost their annual revenue an extra $700 million dollars. This stems from the many imprints it now owns, such as from Avalon Travel, Basic Books, Da Capo, The Economist, Nation Books, Running Press, Seal Press, Weinstein Books and Westview.
Not only does Hachette get access to all of the current catalog of titles but also access to 6,000 backlist of titles it can now issue as eBooks. These include perennial sellers such as “Friday Night Lights” by Buzz Bissinger and “Skinny Bitch” by Rory Freedman and Kim Barnouin.
Perseus can be considered by some, to be the largest book distributor in the US. Under the terms of the Hachette deal Ingram will absorb the client services division, which provides back-end services like marketing and distribution, to Ingram Content Group.
The currently Blackberry 10 ecosystem is fairly woeful, with only a handful of apps that were built with the native framework. The lack of a solid user base and complex SDK turned off many companies such as Netflix, Snapchat, Instagram and many others. This situation is now rectified as Blackberry just signed a licensing agreement to have the Amazon App Store bundled on all phones starting with the 10.3 firmware update.
Good e-Reader exclusively reported back in January at the Consumer Electronic Show in Las Vegas that the 10.3 update will have a new Android driven app store for customers to have access. It looks like we were right because in the next few months the Amazon App Store, with over 200,000 will be preloaded on any new phones being sold and a firmware update available for existing users.
You will be able to access popular apps such as Groupon, Netflix, Pinterest, Candy Crush Saga and Minecraft – all available for direct download!
This is landmark agreement that Blackberry signed with Amazon, but there is a downside. Starting July 21st the company is closing its video and music business on Blackberry World. Previously downloaded content will be available after that date through MyWorld. Part of the agreement with Amazon necessitated the Seattle based company to get all multimedia sales through their own ecosystem.
Blackberry is putting a priority on Android apps being the future of their ecosystem. Recently, the company let go their entire developers relations team and a number of engineers responsible for native apps in Blackberry World. It looks like developing your own ecosystem from scratch and offering a paltry selection of content was not the best gambit and now Blackberry is getting in bed with Amazon.
Barnes and Noble has announced that they are bowing out of the audiobook industry starting July 1st 2014. The Nation’s largest bookseller is imploring customers to backup all of their old titles before they are gone for good.
Many people in the industry were very surprised to know that B&N even sold audiobooks. The company never issued press releases or acquired their own library of content. Instead, they relied on Overdrive to provide all of the audio editions for them. This made the process confusing to customers because they would have to use the Overdrive Media Console to listen to audio editions they purchased, making the entire process convoluted.
Barnes and Nobles strategy for selling digital audio editions could not be any different from Amazon owned Audible. Audible consistently acquires new titles and buys out defunct companies assets to bolster their own catalog.
The entire audiobook industry is currently worth around 1.6 billion dollars and that figure should climb further. The main reason? Audio book producers have been increasing their output. 13,255 titles came out in 2012, up from 4,602 in 2009.
The Amazon Fire TV box received a tremendous amount of hype when it was first released last month. It is painfully obvious that this is one segment that Amazon has yet to really crack, like they have eBooks. In order to push out more Fire TV sales Amazon has been sending emails and snail mail letters to Prime members telling them they can trial it for free, for one month.
You can get a Free Fire TV now for one month and Amazon will pay the shipping to you. If you want to send it back, you can do so and not incur any extra charges, at the end of the month your credit card will be automatically billed.
Amazon Fire TV was originally launched in April and the Seattle based company has not divulged hardware sales. Currently it sits in the 1st position for the popular Electronics category with Google Chromecast and the Kindle e-reader rounding out the top three. If you really think about it the Fire TV has been in the Top 10 for 52 days, while Apple TV has been there for the last 792, quite telling.
You have to be a current Prime member to be eligible for the offer and reside in the US. Try clicking on THIS link to see if you are eligible for the offer.
Amazon regularly employs strong arm tactics when negotiating better book deals from publishers. This normally occurs when the existing contracts expire and its time to renew it. Amazon is the largest seller of digital and print titles in the world and this gives them tremendous bargaining power. Publishers simply cannot afford to not do business with them and give up heavy concessions. Amazon and Hachette are currently redoing their contract and in order to gain a better deal, Amazon is delaying the shipping of physical titles.
Popular bestseller authors David Baldacci, Malcolm Gladwell and James Patterson print titles are experiencing massive shipping delays. Other affected Hachette titles include Kate Adie’s memoir The Kindness of Strangers, Antony Beevor’s The Second World War and Cressida Cowell’s How To Train Your Dragon. Hachette said that, “for reasons of their own,” Amazon is holding minimal stock and restocking some of its books slowly, causing “available in 2-4 weeks” messages to appear when customers try to order.
Hachette said that it was “grateful for the patience of authors and all Amazon readers as we work to reach an agreement and to encourage Amazon to be back to offering Hachette Book Group’s books within normal shipment times”.
Amazon is well known for their heavy handed negotiating tactics from past cases. The company pulled 5,000 eBook titles from the Independent Publishers Group in 2012. In 2010 they pulled all Macmillan eBook titles over a storm that brewed for over a year. Macmillan wanted Amazon to increase digital prices from $9.99 to $15.99 and needless to say it was easier to pull the titles than set a precedent for expensive titles.
Olive Tree is a Christian company, best known for their Bible Study app for Android. It has been downloaded almost 4 million times from Google Play and the Good e-Reader App Store. Olive also has 7 paid apps that act as audiobook players or virtual study guides for various editions of the Bible, such as King James. Today, HarperCollins Christian Publishing has announced it has purchased Olive Tree.
Rachel Barach, currently the general manager of HCCP’s Bible Gateway, will oversee Olive Tree’s operations. “I am thrilled to lead these two groups,” stated Barach. “Olive Tree’s focus on high quality, educational Bible experiences will complement Bible Gateway’s mission to provide easy access to Scripture. Together, they will help grow biblical knowledge and engagement worldwide.” She continued with, “We are committed to upholding the integrity of Olive Tree with its operating partners, publishers, and consumers. We believe that these relationships are, and will continue to be, an integral part of our strategy moving forward.”
Olive Tree currently employs 30 people, who will remain in Spokane Washington. The vast majority of the staff are tech savvy and mainly focus on maintaining their fleet of apps and adding in new features. Founder Drew Haninger has taken on an advisory role during the transition period to HarperCollins.
Facebook just launched a news service called FB Newswire. It is designed to give writers, journalists and news companies a way to stay in touch with trending and developing stories. The company hopes to mirror how Twitter has become a global news service, that breaks stories before anyone else.
FB Newswire content will come from two sources. The main one is Storyful, a social-news service that News Corp. acquired in December for $25 million. As a Facebook post by Andy Mitchell describes it, the service will highlight content that has been posted by users and media entities who are reporting on breaking news events around the world, and comes complete with an easy-to-use “embed” function.
The second source of news stories will be sourced by users status updates that link to a 3rd party news website. The Facebook algorithms will incorporate video, pictures and headlines. Users will be able to embed the stories, with special code, similar to how Twitter handles embedded Tweets.
The sole premise of this initiative is to give journalists and news companies the ability to trust the sources. This is why the vast majority of it will come from confirmed companies like Storyful.
Kobo is based in Toronto Canada and the company today axed over 60 jobs. They also reshuffled existing employees into different departments in a bid to refocus on e-readers and their line of apps. Currently Kobo employees over 500 people worldwide, from executives to agents.
In a statement today to Good e-Reader, Kobo said “To focus resources on innovation, partners, and readers, the leadership team has realigned the organization’s structure, which has also meant some staff reductions. As part of this change, teams have been restructured and optimized; redeploying employees to best use their skills to support the company’s core goal of providing the best global eReading experience. All our offices will continue to operate as usual, with a mandate to grow the business in each of our territories.
While these decisions are never easy, we believe that we have the structure that puts us in the best position possible to aggressively compete in an ever-challenging global marketplace. By ensuring the Kobo team is lean and agile, we will be able to strengthen our business position and continue our trajectory of global growth.
Kobo’s mission remains to lead the global transformation in reading by inspiring people to read more and more often – anytime, on any device, anywhere around the world.”
The Canadian based e-Reader company did not mention whether these dismissals were on the executive level, junior or both. Many industry experts are surmising that this is partly due to the new President Michael Tamblyn and new CEO Takahito Aiki. Likely some of the old guard has been let go and the two executives are trying to surround themselves with people who have the same vision as they do.
Amazon Prime members are getting an exclusive benefit in the form of Prime Pantry. This new program is exclusively aimed at Prime members who love to shop at Amazon. You can fill up a box with whatever you want, as long as it weighs 45 pounds for a flat rate price of $5.99.
When you order lots of items and have them shipped it, the costs can sometimes be prohibitive. The essence of Pantry is fill it up with how much or little you want. As items are added to the box the Pantry service tells you exactly how much the box is full on a percentage basis. Pantry boxes are large and can hold up to 45 pounds or four cubic feet of household products.
If you were to order a box of detergent, a 12 pack of Coke and a toaster, the costs would be high. Instead of having everything shipped out individually you can fill up as singular shipping box with Prime Pantry. The service only deals with non-perishable foods and is US only to start.
Amazon is betting big on tapping into the lucrative consumer packaged goods industry. This is dominated by big box retailers such as Sams Club and Costco. The Seattle based company is hoping that they can leverage themselves to giving good deals on small items and not forcing them to buy the Ultra King Size version.