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VIEWER DISCRETION ADVISED VIEWER DISCRETION ADVISED
THIS INFORMATION MAY BE DEPRESSINGTHIS INFORMATION MAY BE DEPRESSING
WARNING!WARNING!
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Cowan, Liebowitz & Latman, P.C.Cowan, Liebowitz & Latman, P.C.1133 Avenue of the Americas, New York, NY 100361133 Avenue of the Americas, New York, NY 10036
(212) 790-9200(212) 790-9200cll.comcll.com
Not for reproduction without permissionNot for reproduction without permission
Book Publishing 09Book Publishing 09
The RecessionThe Recession
By Martin P. Levin, Esq.By Martin P. Levin, Esq.
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Book Industry Annual Growth2005-2008(E)
Source: 2005-2007 Book Industry Trend 20072008 Estimate using sample of 81 publishers-AAP
3
2005 2006 2007 2008 (E)
$34,629
$36,344 (E)
$37,085
$35,686
-2.4%+3.2% +3.3%+3.9%
Million$
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Book Industry Sales by Segment2007-2008 (millions)
CategoryCategory 20082008 20072007 % change% changeAdult hardcoverAdult hardcover 1,555.31,555.3 1,787.71,787.7 --13.0%13.0%Adult paperbackAdult paperback 1,452.51,452.5 1,402.51,402.53.6%3.6%Adult Mass marketAdult Mass market 807.9807.9 832.5832.5 --
3.0%3.0%Childrens/YA hard.Childrens/YA hard. 795.5795.5 908.4908.4 --12.4%12.4%Childrens/YA paper.Childrens/YA paper. 560.5560.5 526.8526.86.4%6.4%
Audio BooksAudio Books 159.1159.1 201.5201.5 --21.0%21.0%Electronic booksElectronic books 53.553.5 31.831.868.4%68.4%ReligiousReligious BooksBooks 608.3608.3 658.1658.1 --7.6%7.6%Higher EducationHigher Education 3,670.93,670.9 3,573.43,573.4Source: Association of American Publishers
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New Book Titles & New EditionsNew Book Titles & New Editions(2002-2007 ) (Units)(2002-2007 ) (Units)
Source: R.R. Bowker
2002 20072006200520042003
247,777
291,922
282,500
295,523
266,322
276,649
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20 largest book publishers in the20 largest book publishers in theU.S. 2007 ($ millions)U.S. 2007 ($ millions)
(Top 10)(Top 10)
1. Pearson $5,2952. McGraw-Hill $2,3673. Reed Elsevier $2,018
4. Scholastic $1,7345. Cengage/Thomson $1,4806. Random House $1,2667. Educational Media $1,1028. Harper Collins $9729. John Wiley $85410. Simon & Schuster $762
Rank Publisher Sales
Sources: Open Book Publishing, Inc. November 2008
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20 largest book publishers in the U.S. 20 largest book publishers in the U.S. 2007 ($ millions)2007 ($ millions)
(Next 10)(Next 10)
1. Thomson Corp. $7372. Holtzbrinck Group $5503. Hachette Livre $515
4. Wolters Kluwer $4775. Readers Digest $3756. Informa $3727. BNA $2958. Rodale $2469. Encyclopedia Britannica $22010. Harlequin $198
Rank Publisher Sales
Sources: Open Book Publishing, Inc. November 2008
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--And for the 20% of remaining sales--And for the 20% of remaining sales
There are 3,223There are 3,223publishers accordingpublishers according
toto Literary Market Literary Market PlacePlace
Source: Researched by Angel
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How Bad Can it Get?
While 2008 ended on anWhile 2008 ended on an
disappointing and even discouragingdisappointing and even discouragingnote for many in the book industry,note for many in the book industry,the outlook for the new year is eventhe outlook for the new year is evenbleaker.bleaker.
One-time adjustments by retailersOne-time adjustments by retailersand underlying shifts in the structureand underlying shifts in the structureof the book industry will make 2009of the book industry will make 2009the worst year for publishing inthe worst year for publishing indecades, and could lead to a long-decades, and could lead to a long-term fundamental change in theterm fundamental change in thebusiness. business.
Peter OlsenPeter OlsenPW January 5, 2009PW January 5, 2009
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Olsen foresees :The worst for Borders, B&N strugglingThe worst for Borders, B&N struggling
Growth of Amazon threateningGrowth of Amazon threateningindependent book storeindependent book store
Increase in returns in first half 2009 toIncrease in returns in first half 2009 tofinance inventoryfinance inventoryLower initial printings of new titlesLower initial printings of new titles
Pressure from bookstores for higherPressure from bookstores for higher
discounts and promotion $discounts and promotion $Longer payment termsLonger payment terms
New round of consolidations of New round of consolidations of
publisherspublishers
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Stocks Plunged In 2008CompanyCompany 12/31/0712/31/07 12/31/0812/31/08 % change% change
Marvel EntertainmentMarvel Entertainment 26.7126.71 30.7530.75 --15.1%15.1%John WileyJohn Wiley 42.8442.84 35.5835.58 --16.9%16.9%Educational Dev. Corp.Educational Dev. Corp. 5.475.47 3.703.70 --32.3%32.3%PearsonPearson 14.4914.49 9.549.54 --34.2%34.2%AmazonAmazon 92.6492.64 51.2851.28 --44.6%44.6%Reed ElsevierReed Elsevier 53.9053.90 29.8429.84 --45.4%45.4%Courier Corp.Courier Corp. 33.0133.01 17.9017.90 --
45.8%45.8%McGraw-HillMcGraw-Hill 43.8143.81 23.1923.19 --47.1%47.1%Barnes & NobleBarnes & Noble 34.4534.45 15.0015.00 --56.5%56.5%ScholasticScholastic 34.8934.89 13.5813.58 --
61.0%61.0%R.R. DonnelleyR.R. Donnelley 37.7437.74 13.5813.58 --Source: Reed Business Information
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ButButon the Other Handon the Other Hand
Scholastic 1920
Simon & Schuster 1924
Random House 1925
Business Week
(6 weeks before the crash) 1929Fortune(4 months after the crash) 1930
Marvel and DC Comics 1930
FoundedPublisher
Print media has a high survival rateto name a few
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COMING ATTRACTIONS
Increase in readingGood News!Increase in readingGood News!Google settlementGoogle settlement
Massive Spending on Education--Massive Spending on Education--$141 billion$141 billionMobile TechnologyMobile TechnologySocial MediaSocial Media
My SpaceMy SpaceFace Book, etc.Face Book, etc.
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More Americans are reading
LeisureReadingDown
ReadingRates by Race& Ethnicity Up
OverallRates for allage groupsUp
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If approved on June 11, 2009If approved on June 11, 2009
Google willGoogle will
Scan copyrighted books from data baseScan copyrighted books from data baseScan out-of-print books sell adsScan out-of-print books sell ads
Set up a Registry (i.e. ASCAP) at revenueSet up a Registry (i.e. ASCAP) at revenuecost =$34.5 millioncost =$34.5 million
Pay $45 million to rights holdersPay $45 million to rights holders
For full details seeFor full details seewww.googlebooksettlement.comwww.googlebooksettlement.com
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Mobile Technology
More books available on SmartMore books available on SmartPhonesPhones
Readers 1.5 million publicReaders 1.5 million publicdomain books now available fromdomain books now available fromGoogleGoogleProfessional doctors, etc.Professional doctors, etc.School and college studentsSchool and college students
New publishing applications nowNew publishing applications nowbeing developedbeing developedMicrosoft now offers windowsMicrosoft now offers windowsMobile 6.5 and Internet Explorer isMobile 6.5 and Internet Explorer is
in developmentin development
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Social Networks
FoundedFounded : 2003: 2003Owned by NewsOwned by News
Corp.Corp.ValueValue : Unknown: Unknown100 millionth account100 millionth accountreached on August 6,reached on August 6,20062006Now in excess onNow in excess on106 million accounts106 million accountsAttracts 230,000 newAttracts 230,000 newusers/dayusers/day
20
FoundedFounded : 2004: 2004Owned by private-Owned by private-
founded by Markfounded by MarkZuckerberg andZuckerberg andDustin MoskowitzDustin Moskowitz175 million active175 million activeusers worldwideusers worldwide
ValueValue : Microsoft: Microsoftbought 1.6% forbought 1.6% for$240 million$240 millionEstimated value:Estimated value:
about $15 billionabout $15 billion
My SpaceMy Space FacebookFacebook
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Massive Spending on EducationMassive Spending on Education$141 billion$141 billion
Direct Funding for Education $77 BillionDirect Funding for Education $77 Billion$40 billion in state stabilization funds to help$40 billion in state stabilization funds to helpavert education cutsavert education cuts$13 billion for Title I$13 billion for Title I$12 billion for IDEA$12 billion for IDEA$5 billion in competitive incentive grants to$5 billion in competitive incentive grants tostatesstates
$5 billion for Early Childhood$5 billion for Early Childhood$2 billion for other education investments$2 billion for other education investments
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Massive Spending on EducationMassive Spending on Education$141 billion$141 billion
College Affordability $30.8 BillionCollege Affordability $30.8 Billion$17 billion to the Pell Grant program$17 billion to the Pell Grant program$13.8 billion to boost the tuition tax credit from$13.8 billion to boost the tuition tax credit from$1800 to $2500 for families earning up to$1800 to $2500 for families earning up to
$180,000$180,000Additional School Modernization (up to)Additional School Modernization (up to)$33.6 Billion$33.6 Billion
An additional $8.8 billion in state stabilizationAn additional $8.8 billion in state stabilizationfundsfundsFinally, the Act provides for states and schoolFinally, the Act provides for states and schoolsystems to issue $24.8 billion dollars in bondssystems to issue $24.8 billion dollars in bondsfor renovation, repairs and school constructionfor renovation, repairs and school construction
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The Old Agenda Item
Started in the DepressionStarted in the DepressionA practice thatA practice that
Needs urgent attention in this recessionNeeds urgent attention in this recession
New
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27.6%
24
Returns
RevenueReturns
$14.5 billion
$4.0 billion
2008 2008
Source: Association of American Publishers
Billion$
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Options for reduced returns
Offer a non-returnable discountOffer a non-returnable discountKeep present discount and set up aKeep present discount and set up a
bonus plan for efficiencybonus plan for efficiencyRead and comment at our blog at:Read and comment at our blog at:
http://cowanliebowitzlatman.blogspot.comhttp://cowanliebowitzlatman.blogspot.com
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Cowan, Liebowitz & LatmanCowan, Liebowitz & Latman