Bloomsbury’s Interesting Results

I don’t know why I find Bloomsbury so fascinating, I just do! Maybe it’s because they published the Harry Potter series, maybe it’s their fantastic cookbooks but I think it more likely, given the nerd that I am, that I find their medium to long-term strategy so interesting, this shift away from a reliance on trade towards educational, professional and information based publishing activities.

There is much to ponder in their half-year results but I want to focus on three points, two digital related one not.

Item the first, great sign of the robust nature of the UK digital market, Bloomsbury saw ebooks sales as a percentage of group revenue rise some 66% in terms of group turnover. Without that bounce, the company would have seen an overall drop in top line revenue. I wonder when that might be a problem for them? If print sales do not get a lift but ebook sales continue to rise, when will the revenue problem manifest in that top line revenue figure?

Digital sales mainly comprise ebook sales, which are up by 89% year on year to £4.5 million (2011: £2.4 million). Ebook sales now represent 10% of total Group continuing turnover (2011:  6%) and 15% of the Adult division continuing turnover (2011: 9%).

Item the second, this huge increase has the strange and I would imagine annoying effect of increasing the seasonality of the company’s results! Did we expect this outcome? I guess the answer is to shift reporting seasons to at least exclude January from the second half results?

Ebook sales peak in January and February following the sale of e-reader devices at Christmas and academic sales peak at the beginning of the academic year, in September and October. As these two revenue streams form a higher proportion of total turnover, the proportion of our results accruing in the second half of the financial year increases. 

Item the third, strategy pays off at just the right time. So the children’s division saw a £2.8 million drop in sales! That’s right totally offsetting the gains in ebook sales. What’s more it went from a £0.9 million profit to £0. Yet at the same time the information division delivered in spades.

The division generated 4% of Group continuing sales in the six months ended 31 August 2012 (2011: 4%) and 41% of Group continuing operating profit before highlighted items (2011: 15%). Continuing turnover in the Information division increased by 21% year on year to £1.8 million  (2011: £1.5 million).

Which is a very nice way of say that the margins on this end of the business are totally insane compared to the rest of the business! We know that group profit for the half was £2.1 million and that the Information Division delivered 41% of that or £800,000 give or take. Thus the division had a margin of 44% or so. Diversification and changing the focus away from Trade & Children’s books has saved Bloomsbury’s shareholders from a nasty surprise.

The strategy has worked, and worked well. It’s nice to see in an era when we don’t tend to think of publishers as innovative or rapid actors.

Go read This | The Finite Library by Willem Van Lancker

Colour me intrigued. Van Lancker is one of a trio involved in new ebook venture Oyster (good description and round up of the issues the start up will face by Martyn Daniels here). I found the section posted below in a rather interesting essay on Van Lancker’s blog. It suggests that ebooks are but the tip of Oyster’s iceberg of ambition and that while the public facing pitch is one that speaks of Spotify, the goal is actually something more refined controlled than that:

We are at an exciting impasse for the accessibility of content (e.g., images, writing), but simultaneously are confronted with a litany of services focused on incomplete collection and organization. This abundance of sources, media types, and proprietary systems has led to a fragmented and often frustrating environment. Few services promise the comprehensiveness of being your definitive library. Netflix, while likely replacing many viewers DVD libraries, offers no tools for curation and no sense of collection apart from a to-watch list queue.

via The Finite Library | Willem Van Lancker.

Amazon Steals Everyone’s Thunder Again (But Quietly)

Fascinatingly clever (if predictable in many ways) move from Amazon to extend the reach of its Kindle Owners’ Lending Library (KOLL) to the UK, Germany and France. By doing so it demonstrates very clearly that it is Amazon who is really driving the pace of development in ebook adoption and ebook retail. What’s more, it is making clear that its rivals are struggling to match its services to authors and readers within their own ecosystems. As the focus of ebook growth moves rapidly beyond the USA (has moved already in truth), Amazon is making the case for giving it exclusivity even more compelling.

Amazon.com, Inc. today announced that the Kindle Owners’ Lending Library is coming to the UK, Germany and France later this month, bringing Kindle owners with a Prime membership over 200,000 books to borrow for free as frequently as a book a month, with no due dates. Independent authors and publishers using Kindle Direct Publishing KDP who enroll their books in KDP Select can be included in the Kindle Owners’ Lending Library in the UK, Germany and France, as well as the US. With the new lending libraries launching this month, the KDP Select fund has been increased by $100,000 to $700,000 in October, with a larger increase anticipated in November. Authors will earn money every time their book is borrowed from any of the lending libraries – in September, authors earned $2.29 per borrow, which is more than many KDP books earn per sale.

via Amazon Media Room: Press Releases.

What amazes me the most about this move is just how dangerous it is for the ebook retailing rivals who have yet to open their doors to self-published content. In reality only Kobo has a fully functional platform for self publishing authors beyond the USA (Apple does too, but only to the extent that those who have a nice Mac can access their iBookstore, but not everyone has a Mac).

Nook’s platform is US only, though the talk is that this will change soon, the longer B&N & Microsoft exclude non-US citizens from the service, the longer Amazon has to lock in exclusive content for three months at a time. It’s not that the content individually is necessarily compelling, but given the wide field of talent in question, some is sure to be winning material, even if much of it isn’t great. The trick is, of course, that Amazon is armed with the tools to sort, grade and sift through this mass of titles and to promote, suggest and even work with the best (or just the most saleable, let’s not forget that the goal is money-making not literature spreading).

I’ve talked before about how important authors are to the success of an epublishing platform and ecosystem. Sometimes I think the retailers agree with me on this, other times I think they only pay lip service to the idea. Perhaps that’s a lingering snobbery regarding self publishing authors (which is foolish, idiotic and wrong-headed in an age when some of the biggest writers are rapidly moving towards self publishing, are already self publishing or have emerged from the self publishing space). Perhaps it is a desire to avoid dealing with so many small accounts and the headaches of customer service and platform development that entails. Who knows, but the longer these ecosystems remain closed shops to direct author engagement the larger a lead they allow Amazon to build up on them.

Every author Amazon signs up for KOLL is three months of exclusive sales for Amazon, three months lost revenue for their rivals. More importantly it is three months of sales data and analysis for Amazon that no-one else will have. That’s especially important when a title is loaded into KDP & KOLL for the first time, before getting a look in elsewhere. What will happen when one of those sign ups turns out to be the next EL James? What will happen is that Amazon will sign that author up directly, before the KOLL period ends and the game, for that author, is up for the other platforms.

It is not just dangerous to rival retailers though. If Amazon succeeds in convincing enough authors that KDP & KOLL are the way forward and along with them, exclusivity, companies like Smashwords and other aggregators of self published content will be put in the position of having to justify their offering. As long as a vibrant market for content persists of course (and despite this move, we do have a vibrant market for content) everyone has room to move and grow.

So yes, this move is illuminating, it suggests that Amazon is still the pace setter and is capable of moving faster and more aggressively than anyone else (still, after five years). Kobo has started something of a price war for self published authors though, by offering a higher royalty to authors who use their self publishing platform. If this keeps self publishing writers committed to an non-exclusive policy then it will have been a wise move. I’m sure it is a smart response from a smart company, even if it is one that admits to a certain weakness in terms of the capability of their platform, but then competition doesn’t (and indeed shouldn’t) always mean matching your rivals move, but finding clever and novel ways to best them where your strengths lie.

What that in mind, Kobo and other Amazon rivals would do well to pay attention to Baldur Bjarnason‘s piece on FutureBook about how Ebook publishing platforms are a joke, pay attention that is and offer some of the services he mentions to self publishers asap.

Go Read This | Publishers Settle Long-Running Lawsuit Over Googles Book-Scanning Project – Publishing – The Chronicle of Higher Education

It seems so odd that this issue should just fizzle out the way it has. How quickly the field of play has been re-shaped in the last few years:

Under the settlement, American publishers can now opt to remove their copyrighted books and journals from Google’s library project or choose to make them available for use and sale. Beyond that, the statement offered few details, not revealing what commercial terms Google and the publishers have reached.

“Its now clear that we can choose to make our works available or remove them from the project,” Tom Allen, president of the publishers association, said in an interview. “We think this clarifies a lot.” Under the deal, publishers that do not remove their copyrighted material from the project can get a digital copy to use.

via Publishers Settle Long-Running Lawsuit Over Googles Book-Scanning Project – Publishing – The Chronicle of Higher Education.