Author: Laura Hazard Owen

  • Barnes & Noble founder offers to buy chain’s 689 retail stores and BN.com

    Barnes & Noble founder and chairman Leonard Riggio has offered to buy the bookstore chain’s retail side, the company and an SEC filing confirmed Monday. Riggio is the company’s largest shareholder, owning 30 percent of its stock.

    Riggio’s offer would take Barnes & Noble’s 689 retail stores and BN.com private, and would exclude the college and digital businesses, which Barnes & Noble spun off into a separate entity, Nook Media, last year with investments from Microsoft and Pearson.

    The offer comes at a time when Barnes & Noble’s retail and digital businesses are both struggling. The company is set to report its Q3 2013 earnings on Thursday, February 28, and has warned investors of greater-than-expected losses for Nook. It also plans to close up to a third of its retail stores over the next decade. Separately, New York Times article on Sunday cited a “person familiar with Barnes & Noble’s strategy” who said the company’s poor quarter “has caused executives to realize the company must move away from its program to engineer and build its own devices and focus more on licensing its content to other device makers.”*

    Barnes & Noble said it’s formed a strategic committee to evaluate Riggio’s offer, with Evercore Partners as financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison as legal advisor. The company said there ”can be no assurance that the review of Mr. Riggio’s proposal or the consideration of any transaction will result in a sale of the retail business or in any other transaction. There is no timetable for the Strategic Committee’s review.”

    *Also see my ebook predictions for 2013.

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  • Here’s something new: Little, Brown UK launches digital-first imprint for literary fiction

    Several publishers have launched digital-first imprints for genre titles — science fiction/fantasy, romance and so on. In these instances, books are published first as ebooks and aren’t released in print unless they take off. Until now, though, we haven’t seen a major publisher launch an e-imprint focused on new literary fiction — more serious fiction of the type that wins awards and gets major reviews.

    That appears to be changing with Little, Brown U.K.’s launch of Blackfriars, a digital-only imprint that will focus on new literary fiction and serious nonfiction. The Bookseller reports that the imprint will publish nine to twelve titles a year, and they’ll be eligible for submission to major literary prizes like the Man Booker Prize. The Bookseller notes:

    Digital titles are accepted by prizes including the Man Booker Prize and the Women’s Prize for Fiction, with the condition that they are published by “established” houses and made available for sale in print if the title is selected by the judges at the shortlisting or longlisting stage, respectively.

    Blackfriars’ first titles will be published in June. Two of them were previously published in the US: The Painted Girls by Cathy Marie Buchanan by Penguin’s Riverhead and Benjamin Anastas’s Too Good to be True: A Memoir by Amazon. According to The Bookseller, the “royalty rates on the titles are largely the same as those on standard combined print and e-deals.” Traditional publishers’ standard royalty on ebooks is 25 percent. (I’ve asked Blackfriars if it is paying advances, and what its ebooks will cost.)

    Without the promise of higher royalties, digital-first imprints are not likely to be many authors’ first choice when they consider their publishing options — especially when it comes to literary fiction, which generally has not sold as well in digital formats as genre fiction has. But imprints like Blackfriars could provide a home for books that have had a little trouble taking off, and the books will get additional marketing support from Little, Brown.

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  • Nielsen, Billboard shift their tracking to account for cord cutters

    For the first time, Nielsen will begin tracking the habits of viewers who watch TV over broadband. And in another example of online media consumption shaking up traditional tracking methods, Billboard will begin including YouTube music video views in its charts.

    The Nielsen news was first reported on Wednesday by The Hollywood Reporter, which said that by September 2013 “Nielsen expects to have in place new hardware and software tools in the nearly 23,000 TV homes it samples.” Nielsen confirmed the news on Thursday, with Nielsen SVP Pat McDonough telling the New York Times that the company’s definition of “television household” will now include “those households who are receiving broadband Internet and putting it onto a television set.” According to the AP:

    “This will add roughly 160 homes to Nielsen’s current sample of 23,000 houses nationwide with meters monitoring viewing habits.

    More significantly, Nielsen will return to its sample to find homes that have cable or broadcast, but also separate TV sets hooked up through broadband. This will add an estimated 2,000 more broadband sets, significantly increasing the sample size.”

    The company is also working on ways to track viewing on smartphones and tablets.

    Separately, Billboard has begun including official YouTube music video views (from the U.S.) in its rankings. “All official videos on YouTube, including user-generated clips that utilize authorized audio, will now factor into how a song’s popularity is determined,” YouTube said on its blog. Billboard’s charts have included digital download and streaming data, tracked by Nielsen, since last year.

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  • Video recommendation engine Fanhattan expands from iOS to the web

    Fanhattan, an iOS app that helps viewers find movies and TV shows to watch on an iPad, rolled out a beta web version of its service on Thursday.

    Fanhattan is something like a TV Guide for online video: Users enter the movie or TV show they want to view, and the app hooks them up with a list of online providers (Netflix, Amazon, HBO Go, and so on) where they can watch it. The company’s expansion to the web allows it to offer more content recommendations from more providers — 29 providers on the web, compared to 16 on iOS — as well as more free shows, for a total database of a million shows and videos. Web viewers, for instance, can watch shows on broadcasters’ websites, and they can access Hulu as well as Hulu Plus. “Depending on what device you’re using the service on, it will clearly show you your options for watching,” Fanhattan CEO Gilles BianRosa told me.

    Fanhattan content providers

    BianRosa says that Fanhattan launched on iPad first because the difficulty of finding content to watch was more pronounced there — “all those apps that don’t talk to each other.” The web is a little different: “Many people actually discover movies and shows on the web, so we wanted to make sure that the discovery aspect was really front and center, especially the social aspects.”

    The company is launching a new blog, Fanhattan Voice, that provides video recommendations and other entertainment news and features. And the company’s WatchLists feature, which has been available on iOS since last summer, is being expanded on both iOS and web: Users can now curate their own lists around different themes and can share them with others, rather than just marking which TV shows and movies they want to watch.

    BianRosa told GigaOM’s Janko Roettgers last summer that the company will expand to connected devices in the future, but he isn’t ready to announce anything yet. “We’re going it one screen at a time,” he told me. “But we think that launching on the web in the way we have will help consumers in the living room discover what’s available.”

    GigaOM readers who want to try Fanhattan on the web in beta can sign up with code “GigaOm.”

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  • Indie bookstores sue Amazon, big-6 publishers for using DRM to create monopoly on ebooks

    Three independent bookstores have filed a class action suit against Amazon and all of the big-six publishers, alleging that the proprietary digital rights management tools Amazon uses on ebooks serve to create a monopoly. The indies, represented by Los Angeles antitrust firm Blecher & Collins say publisher contracts calling for the use of this DRM, which like most forms of DRM prohibits readers from copying ebooks or reading them on non-authorized devices, restrain ebook sales and that Amazon “has unlawfully monopolized or attempted to monopolize the market for ebooks in the United States.”

    The case was filed in New York’s Southern District court (which also oversaw the Department of Justice’s antitrust suit on ebook pricing) on February 15 and was first noticed by the Huffington Post Thursday afternoon. The named plaintiffs are Manhattan-based Posman Books, Book House of Stuyvesant Plaza and Fiction Addiction of Greenville, South Carolina; they seek to represent “all other similarly situated independent brick-and-mortar bookstores.”

    The filing cites estimated market share for Kindle, Barnes & Noble’s Nook and Apple’s iBookstore as evidence that Amazon has a “dominant position” in the ebook market. The estimations cited are generally accepted in the publishing industry — over 60 percent for Amazon’s Kindle e-readers, around 25 percent for Nook and under 10 percent for the iBookstore (though some believe that Apple’s market share has grown ). The filing says Nook is Kindle’s “only substantial competition” but, in reference to recent news and earnings reports, notes Barnes & Noble is “experiencing financial difficulties and will be downsizing by closing a significant portion of their brick-and-mortar bookstores.” The filing doesn’t mention Kobo, but Posman, Book House and Fiction Addiction all sell Kobo ebooks through the company’s partnership with the American Booksellers Association.

    To be clear, Barnes & Noble, Kobo and Apple also sell ebooks with DRM on them. Barnes & Noble and Kobo use Adobe DRM, and Apple uses its own proprietary DRM on ebooks — but that appears not to be at issue in this case because of Apple’s reportedly small ebook market share. (The filing does mention that Apple doesn’t use DRM on music.) Rather, the filing takes issue with Amazon’s proprietary DRM, AZW: “Ebooks with the AZW DRM can only be read on a Kindle device or on another device enabled with a Kindle application…the Kindle app works solely with ebooks sold by Amazon.” While the case names only the big-six publishers as defendants, Amazon places its DRM on nearly all of its ebooks from all publishers.

    The filing says that big-six publishers, through their contracts with Amazon that allow for Amazon’s proprietary DRM on their ebooks, “unreasonably restrain trade and commerce in the market for ebooks” in violation of the Sherman Act,” and claims “consumers have been injured because they have been deprived of choice and also denied the benefits of innovation and competition resulting from the foreclosure of independent brick-and-mortar bookstores.”

    Most of the filing, though, is spent on Amazon, which the plaintiffs accuse of purposely creating a monopoly on ebooks in the United States. According to the filing:

    The aforesaid conduct and acts of Amazon and the big six were engaged in by Amazon with the purpose and intent: (1) to injure, suppress, destroy and irreparably harm Plaintiffs and the other Class Members in the relevant market; (2) to monopolize the market for the sale of ebooks in the United States; (3) to reduce or eliminate sales of ebooks by Plaintiffs and the other Class Members; (4) to control prices; (5) to reduce the variety of offerings that would otherwise be available to consumers; and (6) to unlawfully monopolize trade and commerce in said relevant market.

    The plaintiffs seek an injunction “prohibiting Amazon and the big six from publishing and selling ebooks with device and app specific DRMs and further requiring the big six to allow independent brick-and-mortar bookstores to directly sell open-source DRM ebooks published by the big six.” Alyson Decker, the Blecher & Collins attorney overseeing the case, told me that independent bookstores’ agreements to sell ebooks through Kobo aren’t sufficient: “My understanding is that the Big Six do not currently have any direct agreements for ebooks with independent brick and mortar bookstores comparable to the agreements they have entered into with them for traditional books. While some independent brick and mortar bookstores are able to sell ebooks for Kobo, my understanding is that that agreement is with Kobo and not directly with the big six.”

    Many independent bookstores may lack the technical knowledge and infrastructure to be able to sell ebooks straight from the publishers, but the filing doesn’t get into details on exactly how such a system would work. Decker said she couldn’t comment specifically on the type of “open-source DRM” that the plaintiffs seek.

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  • Want Google Glass? You’ll need some luck (and $1,500)

    Google announced Wednesday that it’s making Google Glass, its augmented reality smart glasses, available to a lucky few “creative individuals.” U.S. residents can apply now to receive — or, rather, have the chance to buy — a pair of Google glasses. They have to make their case on Twitter or on Google+ in 50 words or less (plus up to five photos and one video) by February 27.

    If selected, applicants will have the option to pay $1,500 plus tax and then head to “a special pick-up experience in New York, Los Angeles, or the San Francisco Bay area.” Applications are judged based on “how creative, compelling, original, useful, and influential the applications and their proposed uses for Glass are, and how broad a spectrum of user interaction they would provide.”

    So far it seems as if Google Glass’s Twitter account @projectglass is fielding a lot of complaints about the U.S.-only requirement. The company also tweeted that it’s working on a solution for people who wear prescription glasses, and that available colors will be “Tangerine, Charcoal, Shale, Cotton and Sky.”

    Google also released a video taken through Google Glass, showing that users can take pictures, record video and get translations, answers and other info by asking.

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  • Audible launches on iPad and redesigns for iPhone

    Audible iPhone appThe Amazon-owned digital audiobook subscription site Audible is launching its first iPad app and is also releasing a new version of its iPhone app that will allow for some downloading over cellular networks.

    “More than 20 percent of Audible customers already use Audible’s iPhone app on the iPad,” Audible VP of Mobile Apps Ajay Arora said in a statement. The new iPad design is graphics-heavy, with a focus on audiobooks’ covers — it looks similar to the Kindle iPad app.

    Audible’s iPhone app is getting a redesign to make it consistent with the iPad version, and it also gets a couple new features: Users can sign in with their existing Amazon accounts rather than creating a separate Audible account, and they can now download up to 50 MB of an audiobook — which the company says translates to about three hours of listening time — over cellular networks. Previously, downloading was limited to Wi-Fi.

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  • Craigslist still has no official app, but here’s a pretty good one from the team behind Path

    Craigslist gets over 50 billion page views and over 60 million U.S. visitors every month — yet the classified site’s design and mobile strategy appear stuck in the year 2000 (when it first expanded beyond San Francisco). Craigslist offers a barebones mobile view, and it’s recently rolled out some mobile-friendly features like a map view and an image-heavy grid view. But it’s never released its own smartphone or tablet app, and its API is closed.

    Mokriya craigslist app 2Plenty of companies have stepped in to try to fill the void, and the most recent of those is Mokriya, the development company behind apps like Path and Hipster. Mokriya’s new Craigslist app for iPhone and Android, which launches Wednesday morning, and is called Mokriya Craigslist, joins third-party Craigslist apps like Craigslist Mobile and c•Mobile. What sets Mokriya Craigslist apart, the company says, is its easily navigable “two-tap” interface and the fact that it’s officially licensing data from Craigslist. The basic version is free; a premium version that allows posting and other features is $0.99.

    When you launch the Mokriya Craigslist app, you choose category and city. Listings are then presented in an image-heavy interface. “Browsing Craigslist should be as pleasurable as using Pinterest,” Mokriya founder Sunil Kanderi told me.

    Mokriya Craigslist app 1To choose a new category, post a listing of your own or ‘favorite’ a listing; all you have to do is tap at the top of the screen. “We built this to solve the problem of having to browse through multiple categories,” Kanderi said. Users can also create alerts so that they’re notified when, say, an apartment that fits their criteria is listed. And the app can use GPS to identify listings near a user’s location. Posting is also streamlined: A user writes a headline and description, chooses photos from his or her camera roll, adds price and category, and that’s it. Browsing listings is free, but to post listings, ‘favorite’ listings or set alerts, you’ll have to pay $0.99 for a premium version. I found a test version of the app smooth and nice to use — which sets it apart from some other unofficial Craigslist apps I’ve tried.

    Mokriya officially licensed data from Craigslist prior to building its app. That should help it avoid legal hurdles: In the past, apps that have used Craigslist data without permission have gotten in trouble. This past summer, for example, Craigslist sued apartment search app PadMapper for using its data without a license. Craigslist didn’t answer my question about how many apps it’s licensed its data to (in fact, it didn’t respond to any of my questions for this story), but I imagine that many third-party apps besides Mokriya do have licenses or they’d have gotten cease-and-desist letters by now. (c•Mobile, for instance, notes on its iTunes page that it’s officially licensed.)

    Craigslist is also making a little money off Mokriya’s app: “As part of the licensing agreement, Craigslist does get a small revenue cut,” Kanderi told me. “But mostly the licensing agreement ensures that we are in compliance with Craigslist’s terms of use.”

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  • Four companies that are changing digital reading in Africa

    The digital reading revolution is not going to look the same in developing countries as it has in the developing world — but that doesn’t mean that ebooks don’t have potential there. Efforts to get them into readers’ hands, however, are complicated by low incomes, spotty or nonexistent internet access and lack of credit cards.

    At the O’Reilly Tools of Change conference last week in New York, Paperight’s Arthur Attwell and Worldreader’s Michael Smith outlined several companies’ efforts to bring new ways of reading to developing countries. Here’s a brief introduction to each of those companies.

    Paperight screenshotPaperight

    Arthur Attwell worked in educational and scholarly publishing in South Africa for several years while cofounding and running a digital publishing company called Electric Book Works. But, he said, “The more I worked in ebooks, I found that I was essentially making ebooks for rich people. I didn’t think that was a very interesting challenge.” South Africa’s digital publishing market, he said, is supported by just one or two million wealthy people; the country’s remaining 48 million residents can’t afford it.

    Digital wasn’t the solution for Attwell: The most recent South African census found that 65 percent of the country’s residents have no internet access at all. But, Attwell said, every South African village, town and city has at least one “photocopy shop” with copy machines and those buildings usually have internet access. His company Paperight, launched in May 2012, takes advantage of those shops to distribute books. A store registers on Paperight.com, opens a prepaid account of credits and instantly gets the legal right to download and print books for their customers. Over 200 South African shops, as well as a few in other African countries, are now using Paperight.

    Worldreader

    Worldreader, an NGO I’ve covered in the past, gives Kindles to students in sub-Saharan Africa and has become increasingly well-known in part because of its partnership with Amazon. (CEO David Risher was previously an Amazon executive.) The company has distributed 428,000 ebooks to 3,000 kids as of January 2013.

    Worldreader is now pushing forward with reading on basic mobile phones. An app called biNu lets users download Worldreader books (and other content — including Facebook) over a basic feature phone’s data signal. biNu is now enabled on 5 million subscriber phones, primarily in Nigeria. (The top five book searches, Worldreader’s Smith said, were “sex,” “romance,” “the Bible,” “Harry Potter” and “physics.”) Worldreader is also working with students to self-publish their own writing on Amazon’s KDP platform.

    Right now, Worldreader is tied to Kindle. Smith said the company is “definitely looking to get beyond” it, but right now Kindle is the only e-reader that supports 3G. And in many countries where Worldreader operates, internet access isn’t easily available. Smith said Worldreader also needs Amazon’s Whispercast technology to push books onto devices, and other e-reading companies don’t yet have that system in place.

    Mxit screenshotMxit and Siyavula

    Mxit is a social network for mobile phones, with about 50 million users across the African continent. The network relies primarily on instant messaging but also allows access to other kinds of content — including books. One of the first books distributed on Mxit’s platform in 2009 was a novella called “Kontax.” Aimed at teens and available in both English and Xhosa (one of South Africa’s official languages), the book was distributed in parts, allowing readers to discuss it as unfolded. “Kontax” was read 34,000 times, and Yoza, the initiative behind it, has expanded to offer more cell phone novels (which it calls m-novels).

    Now, the South African open-source creative commons textbook publisher Siyavula is distributing free math and science textbooks on Mxit. (Attwell’s Shuttleworth Foundation is a backer of Siyavula.) In 2010, following teacher strikes, the South African government arranged to print copies of Siyavula’s textbooks and distribute them to high school students. As a result, over 200,000 South African students have read Siyavula’s content. Now corporations are sponsoring books in new subjects and for younger students.

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  • Department of Justice clears Random House-Penguin merger

    Random House parent company Bertelsmann and Penguin parent company Pearson announced Thursday that the Department of Justice has approved the proposed merger between Random House and Penguin ”without conditions.”

    “We have closed our investigation and took no action,” a DOJ spokeswoman confirmed.

    The merger, which remains under review by other antitrust authorities including the European Commission and the Canadian Competition Bureau, would create the world’s largest publisher. According to the announcement sent by Pearson, “Pearson and Bertelsmann continue to expect the transaction to close in the second half of 2013, after all necessary approvals have been received.”

    Pearson’s full announcement:

    Pearson and Bertelsmann today announce that they have been notified by the U.S. Department of Justice that it has closed its investigation into the proposed merger of Penguin and Random House, without conditions.

    The two companies announced their agreement to combine Penguin and Random House in October 2012. The proposed merger is currently under review by the European Commission, the Canadian Competition Bureau and various other antitrust authorities around the world. Pearson and Bertelsmann continue to expect the transaction to close in the second half of 2013, after all necessary approvals have been received.

    Following completion, Bertelsmann will own 53% and Pearson 47% of Penguin Random House. It will encompass all of Random House and Penguin Group’s publishing units in the U.S., Canada, the U.K., Australia, New Zealand, India and South Africa, as well as Penguin’s operations in China and Random House’s publishers in Spain and Latin America. Pearson and Bertelsmann believe that the combined organisation, the world’s leading consumer publishing company, will have a stronger platform and greater resources to invest in rich content, new digital publishing models and high-growth emerging markets.

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  • Barnes & Noble warns investors to expect more bad Nook news

    It’s only been a couple months since Barnes & Noble downgraded guidance for its Nook business. Now the company is doing so again.

    In a press release sent out after the market closed Wednesday, Barnes & Noble said it ”expects its fiscal year 2013 Nook segment EBITDA loss to be greater than it was in fiscal 2012 and expects fiscal year 2013 Nook Media revenues to be less than $3 billion.” Previously, B&N had expected Nook Media’s FY 2013 revenues to be $3 billion, with EBITDA losses comparable to those in FY 2012.

    Barnes & Noble had also been set to announce its third-quarter earnings for fiscal year 2013 on February 22, but said Wednesday it will actually report them a week later, on February 28.

    Nook Media is supposed to be the profitable part of the company. Consisting of B&N’s Nook and college businesses, Barnes & Noble spun it off in 2012 with a $300 million investment from Microsoft and, as of late December 2012, an $89.5 million investment from Pearson. (Barnes & Noble holds 78.2 percent of Nook Media.) Instead, Nook is doing worse at the same time that Barnes & Noble’s other segments — retail stores and BN.com sales — are also doing badly. Over the holidays, Nook device sales, BN.com sales and in-store sales all fell compared to the previous year. And the company plans to close up to a third of its retail stores over the next decade.

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  • Updated: Time Warner reportedly in talks to sell its publishing business to Meredith

    News Corp is spinning off its own publishing division, and now Time Warner is reportedly looking to sell off Time Inc., its publishing division, Time publication Fortune reported Wednesday. The New York Times and Wall Street Journal both reported late Wednesday afternoon that the potential buyer is Meredith, which publishes women’s magazines like Better Homes and Gardens and Ladies’ Home Journal.

    According to the Fortune article, which cited unidentified sources:

    In one scenario, most of the company’s publishing titles, such as PeopleInStyle, and Real Simple, would be carved out and rolled into an independent company and sold to the undisclosed buyer. Under this plan, Time Warner would maintain control of at least three titles – TimeSports Illustrated, and Fortune – according to the sources. A Time Warner spokesman says, “We never comment on speculations of this nature.”

    The New York Times, also citing unidentified sources, elaborated that “Meredith did not express interest in purchasing Time Inc.’s sluggish news titles.”

    In 2012, Time Inc. contributed $3.4 billion in revenue to Time Warner’s total revenues of $28.7 billion — a decline from 2011, which the company attributed to lower subscription and advertising revenues. The publishing division laid off about 500 people — roughly 6 percent of its global workforce — in January.

    It’s unclear who a potential buyer for Time Inc. might be. BDT Capital, the bank that Fortune reports is involved in the deal, has ties to Warren Buffett, leading AdAge to speculate that Buffett could be involved in the deal.

    This story was updated at 5:00 p.m. ET to reflect reports from the WSJ and NYT that Time Inc.’s potential buyer is Meredith.

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  • Amazon gets more CBS and Showtime shows for Prime Instant Video

    Amazon Prime Instant Video is getting more shows from CBS and Showtime, the company announced Wednesday. Prime members will now have free streaming access to past seasons of America’s Next Top ModelEverybody Loves RaymondJerichoThe L WordUndercover Boss and United States of Tara.

    Prime Instant Video already offered some CBS and Showtime series for streaming. Amazon also announced a deal earlier this week to stream episodes of CBS’s upcoming Stephen King drama Under the Dome this summer while the show is still on the air.

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  • Flipboard goes on a hiring binge: 8 new people, including 3 former Hulu execs

    Social magazine Flipboard hired eight new employees this week, including three former Hulu executives. That brings the company’s total head count to 77.

    Eric Feng joins Flipboard as CTO, reporting to CEO Mike Cue. Feng was the founder of Erly, which let users create webpages for specific events. Before that, he was CTO at Hulu and a partner at venture capital firm Kleiner Perkins, which has been one of Flipboard’s largest investors.

    Eugene Wei, who’d been VP of product at Erly and prior to that worked at Hulu and Amazon, and Eden Li, who’d been a software engineer at both Erly and Hulu, are heading to Flipboard along with Feng.

    In addition to Feng, Wei and Li, Flipboard spokeswoman Christel van der Boom said the company also hired five other people in engineering and product this week, and is “looking to add more people as well.”

    Flipboard, which is a little over two years old, had 20 million users as of September 2012. It has apps for iPad, iPhone, Android phones and tablets, Kindle Fire and Nook.

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  • Macmillan settles with DOJ, leaving Apple last defendant standing in ebook pricing case

    Macmillan, the last remaining publisher holdout in the Department of Justice’s ebook pricing antitrust lawsuit against five publishers and Apple, has decided to settle about ten months after the lawsuit was originally filed. Following Penguin’s settlement in December, Macmillan CEO John Sargent had said  Macmillan wouldn’t follow suit, but he acknowledged Friday in a letter to authors and agents that “the potential penalties became too high to risk even the possibility of an unfavorable outcome.” The settlement means that Apple is the only remaining party fighting the DOJ lawsuit, with a trial set to begin this summer.

    How this settlement is different

    According to documents filed with the court Friday (PDF, and see links below), Macmillan agreed to many of the same settlement terms that HarperCollins, Simon & Schuster, Hachette and Penguin already agreed to — but there are also significant differences. Retailers will immediately be allowed to discount Macmillan’s ebooks, in order to “provide for more prompt relief to consumers.” In the cases of the three original settling publishers (HarperCollins, Simon & Schuster and Hachette) and Penguin (which settled in December), “several months passed before consumers saw the benefits of the settlements through lower retail prices on many of the settling publishers’ ebooks.” In Macmillan’s case, however, according to the competitive impact statement:

    Macmillan must allow its e-book retailers to discount within three business days of agreeing to the settlement, even if it has not formalized new contracts with retailers…To induce Macmillan to accept this more stringent term, the United States agreed that the two-year cooling-off period for Macmillan would run from December 18, 2012, the date on which Penguin signed its settlement.

    That “two-year cooling-off period” means that, for two years, settling publishers can’t restrict retailers like Amazon from setting, changing, or lowering ebook prices. The settlement means Macmillan gets a back-dated head start on this period, so it will again be able to restrict discounting in December 2014. Most-favored nations clauses are prohibited for five years, but Macmillan had already removed those from its contracts.

    Unlike the other big-six publishers, Macmillan also publishes digital textbooks. Those are exempt from the settlement because the DOJ antitrust case focused only on trade books.

    Finally, there are provisions to make it clear that Macmillan’s parent company, Holtzbrinck, would be in trouble if it “worked in concert with Macmillan to evade Macmillan’s obligations under the settlement.”

    “Our company is not large enough to risk a worst case judgment”

    In his letter, Sargent describes massive legal bills that Macmillan — the smallest of the big-six publishers, and the only one that is entirely privately owned — would have had to pay in “a worst case judgment”:

    As each publisher settled, the remaining defendants became responsible not only for their own treble damages, but also possibly for the treble damages of the settling publishers (minus what they settled for).  A few weeks ago I got an estimate of the maximum possible damage figure. I cannot share the breathtaking amount with you, but it was much more than the entire equity of our company.

    Court docs

    Macmillan’s proposed final judgment (PDF)

    Competitive impact statement (PDF)

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  • iTunes launches Breakout Books section to highlight self-published titles

    Amazon intensely promotes self-published Kindle books, and now Apple is taking steps toward doing the same thing. The company has launched a new section of the iBookstore, “Breakout Books,” a “hand-picked collection of books from emerging talents…independently published to the iBookstore.” New books will be added “as they begin taking off.”

    Apple had previously launched Breakout Books sections in Australia, New Zealand, Canada and the U.K. The section focuses primarily on genre fiction, with sections for romance, sci-fi/fantasy, and mystery/thriller.

    While Apple mentions “hand-picking,” the books in the section primarily seem to be chosen based on how well they are selling. In a very long blog post about the benefits of self-publishing, Mark Coker, the founder of self-publishing company Smashwords, notes that 54 of the 64 titles in the Breakout Books section were distributed by Smashwords. He’d previously noted that Apple is now the largest retailer for Smashwords authors. (Smashwords does not distribute books to Kindle.)

     

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    • Amazon introduces virtual currency for Kindle Fire apps and games

      In May, Amazon will roll out its own virtual currency, Amazon Coins, for purchasing apps, games, and in-app content on Kindle Fire in the U.S. To entice users, the company will hand out “tens of millions of dollars in Amazon Coins” for free.

      App developers will get their standard 70 percent revenue cut on content purchased with Amazon Coins.

      This isn’t Bitcoin: Amazon’s not creating its own decentralized digital currency (yet). Amazon Coins primarily seems like a way to promote Kindle Fire games and get customers to try them for free. The company has recently rolled a number of other features for game developers, including in-app purchases of physical goods. For now Amazon Coins can only be redeemed for Kindle Fire apps and games — though an FAQ notes that “apps and games that are available for sale on both Android and Kindle Fire will also be purchasable with Amazon Coins.”

      Amazon Coins are also not discounted over regular dollars: “One Amazon Coin is worth one cent, so if an app costs $2.99 it will cost 299 Amazon Coins.” It’s unclear how Amazon will sell the coins to users (and how many they’ll have to buy at once) when the free giveaway period is over, though the release says the company will “make it quick and easy for customers to buy additional Amazon Coins using their Amazon accounts.”

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    • Two years and three CEOs later, publisher JV Bookish is ready to help users find their next book

      Bookish, which is backed by big-six publishers Hachette, Penguin and Simon & Schuster and intended to promote book discovery and sell books, was supposed to launch in the summer of 2011. Nearly two years and three CEOs later, the site is finally scheduled to make its debut Monday night. With a book recommendation algorithm, original editorial content and a database of 1.2 million titles and 400,000 authors, Bookish is designed to be a one-stop shop for readers looking to connect with authors and find their next book. The company is headed by Ardy Khazaei, who previously led media startups WEBook and MyHound.com and was VP of electronic media at HarperCollins. (Bookish’s first CEO, Paulo Lemgruber, left the company in October 2011; the second CEO, Caroline Marks, left in September 2012.)

      I got a demo of Bookish at the company’s trendy, book-filled offices in Manhattan’s Flatiron District last week, and had a chance to use the site further on Monday when it was prematurely available online for several hours as it was being tested. Overall, I think the long-delayed Bookish is off to a promising start.

      Bookish has the opportunity to shape book discovery and offers publishers a chance to directly engage with readers. It also allows them to tiptoe into direct sales. I’m less intrigued by the original editorial content: I’m not sure it differentiates itself enough from other book-related content on the web to draw users to the site for the first time. Once those users make their way to the site, though, they’ll find a clean, easy-to-use design, and an algorithm that may well find them their next book — even though it’s limited to less than a quarter of the books on the site for now. Here’s my overview of the site.

       Screen Shot 2013-02-04 at 3.51.22 PMThe basics: Books and authors

      While only three of the big-six publishers are financially backing the site, the other three — Random House, HarperCollins and Macmillan — are making their books available through it, along with 10 other publishers including Scholastic and Houghton Mifflin. In total, that’s 1.2 million unique titles spanning 18 genres (fiction and literature, children’s, cookbooks, and so on), and 400,000 authors have profile pages. The book pages include basic information, a preview of the first chapter, related news and videos, and a roundup of any “must-read” lists that the book has appeared on (for more on those lists, see below). Each book page also includes purchase links (more on that below, too).

      Algorithm-generated book recommendations

      Online book discovery is a huge problem for publishers, and Bookish tackles it with a recommendation algorithm that lets users input up to four titles to find what to read next. “We’re very much a technology company,” Karen Sun, an MIT grad (and book blogger) who is heading the company’s recommendation engine, told me. “This is probably the largest venture in the book space, in terms of data.” Sun explained that while Amazon and Goodreads primarily deliver book recommendations based on “collaborative filtering” — namely, a user’s purchasing or rating and reviewing history as well as those of other users — Bookish doesn’t have that user or purchase data yet. Instead, it relies on “deep, introspective” data: “Recommendations are based on the books and understanding of the books.” The recommendation looks at features like the authors, editors and illustrators who contributed to a book, the awards a book has won, and genre and publication date, then layers on a machine-learning component that parses user and professional reviews to try to distill themes, concepts and sentiments. Insights from the editorial team are included, too.

      Screen Shot 2013-02-04 at 2.33.34 PM

      A user who liked The Help, for instance, receives recommendations for Hotel on the Corner of Bitter and Sweet by Jamie Ford — another women’s fiction title that features race relations — and The Guernsey Literary and Potato Peel Pie Society, a book that, like The Help, includes an aspiring female author. Type in Malcolm Gladwell’s The Tipping Point and the engine pulled up four similar “big ideas” books, but also two Spanish-language titles that were out of place even if the subject matter was similar (and you’ll see a Spanish-language edition of The Room in the recommendations for The Help above).

      For now, Bookish’s recommendation engine works with only about 250,000 of the 1.2 million books on the site. Sun says the engine will improve over time, and will eventually integrate reader reviews and user actions — other books users have looked at and rated on the site.

      Screen Shot 2013-02-04 at 2.45.28 PME-commerce: Essential, but…

      Each book on the site can be purchased in print or digital formats directly through Bookish or from another retailer — there are affiliate links to Amazon, Barnes & Noble, Books-A-Million, IndieBound, Apple and Kobo.

      Distributor Baker & Taylor is handling all of Bookish’s direct sales. For now, ebooks purchased through Bookish are only available in EPUB and PDF formats, for reading on iPad, Android, Nook and desktop — no Kindle.

      Bookish seems to want to stress that it’s not cutting into other retailers’ sales, even though a serious direct-sales outlet is something that book publishers desperately need.

      “We want to be able to say you can buy [a book] here and it’s reasonably priced. We’re not trying to steal sales away from other places,” CEO Khazaei told me. Publishers probably don’t care about taking sales from Amazon, but they may not want to sour relationships with retailers like Barnes & Noble and the independent bookstores represented by IndieBound.

      Bookish’s print and ebook prices appeared to match those offered by Amazon, though I wasn’t able to test many titles. Khazaei told me that “I don’t know how the pricing decisions are made, really,” Khazaei said. “I assume [Baker & Taylor] is tracking [prices on other sites] but we just leave it in their hands.” While the site seems like an obvious place for publishers to run special sales on both print and digital books, that doesn’t seem to be a priority for now.

      Original editorial content along with the algorithm

      the onion book of known knowledgeBookish has seven full-time editors who each manage different genres and update those sections daily with original book coverage. The site is also soliciting pieces from well-known authors and other public figures. In one ongoing feature, for instance, editors from The Onion review books. Other editorial features at launch include a column by Eat, Pray, Love author Elizabeth Gilbert and an interview between bestselling thriller authors Michael Connelly and Michael Kortya. In addition to that content, the site’s editors are curating columns and lists of books like “The Biggest BFF Breakups in YA Books” and “Big Ideas.”

      Advertising, revenue and partnerships

      Bookish is collaborating with USA Today’s books website. Its original editorial content will be syndicated on USA Today’s website, and the technology that Bookish uses to let readers view the first chapter of a book and to offer book recommendations will also be included on USA Today’s site. In exchange, Bookish will feature USA Today’s book bestseller lists on bookish.com.

      In addition to book sales, Bookish will get revenue from advertising. For now the site’s ad slots are taken up with books from the three launch partners, but eventually the company will expand advertising to other publishers and to companies from outside the book business. Prior to its launch two years ago, Bookish had announced an advertising and content syndication deal with AOL Huffington Post, but that’s off the drawing board for now. A company spokeswoman told me Bookish is “in discussions about continuing to work with AOL in the future.”

      Not a focus: Social, self-publishing

      Other publishers can sign an agreement with Bookish to add their titles to the site. (Khazaei told me Bookish doesn’t charge publishers anything to join, but they presumably have to fulfill a number of requirements to be included.) However, self-published authors can’t add their books. “The focus right now is on traditionally published titles,” Khazaei said.

      Also at launch, the social features that are a key part of Goodreads’ mission are absent from Bookish. Users can’t friend or follow each other — the focus is on a reader’s individual interests. I found that refreshing: Just because you’re Facebook friends with someone doesn’t mean that he or she shares your book preferences, and I prefer the algorithm-driven approach.

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    • In settlement with French publishers, Google promises $82 million fund and advertising help

      Google has come to an agreement with French publishers who wanted the search giant to start paying them for linking to their content.

      In a blog post Friday, Google CEO Eric Schmidt announced two new initiatives to appease France: “First, Google has agreed to create a €60 million [USD $82 million] Digital Publishing Innovation Fund to help support transformative digital publishing initiatives for French readers. Second, Google will deepen our partnership with French publishers to help increase their online revenues using our advertising technology.” Google won’t pay for links, however.

      As paidContent’s Jeff John Roberts reported recently, French publishers had wanted more money, between €70 and €100 million euros. And a tweet from Frédéric Filloux suggests that more details still have to be worked out. The agreement is similar to one that Google reached with Belgian publishers in December; in that deal, Google agreed to buy around $6 million worth of advertising.

      Thumbnail image courtesy of Shutterstock user alp33.

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    • Sorry, Netflix and Hulu: Amazon gets exclusive streaming rights to Downton Abbey

      Right now, cord-cutting Downton Abbey fans have several options for streaming previous of the show: Netflix, Hulu Plus and Amazon, as well as PBS’s own website for current-season episodes. Later this year, though, options will be much more limited: Amazon said Friday that by the end of 2013, Prime Instant Video will be the exclusive paid streaming service to allow access to the show.

      Users of other services should watch the show while they can. Netflix only has Season 1, which a source familiar with the deal says it will lose on July 1, while Hulu Plus has Seasons 1 and 2.

      A press release lays out the timing:

      Beginning June 18, 2013, Prime Instant Video will be the exclusive subscription service for streaming the all-new Season 3 of Downton Abbey, and later this year, no digital subscription service other than Prime Instant Video will offer any seasons of Downton Abbey. Prime Instant Video will continue to be the exclusive subscription home through Season 4 and, if produced, Season 5 of Downton Abbey.

      It’s easy to see why Amazon wants this deal. Downton Abbey is ”the most popular TV series with Prime Instant Video customers, ever,” the company said.

      Fans should still be able to watch new episodes on PBS.org and will continue to be able to buy individual episodes and seasons from iTunes and Amazon.

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