After hanging on during the rise and fall of CD-ROM and other good tries, the annual Milia fair in Cannes was ready for the Internet explosion. At this February's show, subtitled "International Content Market for Interactive Media," the fair's universe expanded, and considerably, with producers, developers and designers exhibiting alongside the next turns in the road in enabling technology. Some 7000 participants were clocked in, including boothless walk-ins as well as impressive floor shows from the likes of Intel, Apple and Microsoft.
For book people, this sixth Milia was perhaps less a market than a market study. Wonder how Germany's big B is going to operate its global online bookselling? One could buttonhole the Bertels-men in Cannes. Need some content? Try Bill Gates's art and photo archive Corbis or the China Cartographic Publishing House. Unlike most other electronics shows, Milia is future-oriented, but that d sn't necessarily mean virtual -- you can see and touch.
Although a well-attended keynote address by James Murdoch, president of New America Digital Publishing (part of his father's News Corp.), consisted largely of quotes from others, he did speak sternly of earlier business models that have come to grief. For example, how did U.S. business models in electronic publishing go so wrong, when many others seemed to have gone right? The biggest American media groups, after significant presences in earlier years, simply failed to show this time. Europeans suggested that the fault lay not with business models but with boards of directors and their fear of impatient stockholders, whereas European managers can pursue longer-term strategies. Thus Bertelsmann purchased then-loser Doubleday and Hachette bet on Grolier, because they had time on their side -- just as Vivendi's Havas could up its stakes in the general-book business at the very moment the timorous wanted out.
Havas, now a world leader in books and professional publications, came to town with some news. After taking over America's Cendant Software, it is merging it with other Havas multimedia activities in a new U.S.-based company to be known as Havas Interactive Inc., which instantly became a world leader in computer games software, number two worldwide in interactive education (via Coktel, Knowledge Adventure and Syracuse Language) and number three worldwide in productivity with Sierra Home. With over $600 million in annual sales -- 80% of that coming from the U.S. -- multimedia henceforth represents 20% of Havas group activity. U.S. market growth is projected at 15% annually, with a still more impressive 25% anticipated on the European side.
In the other corner, the French-based Lagardère group's multimedia activities have been gathered into Grolier Interactive, whose online and offline logos are Hachette Multimedia, Club Internet and Studio Grolier; a major expansion of multimedia products for the international market is planned, notably via copublisher Dorling Kindersley (with a children's learning program to be published and marketed in the U.S. under the Step Up logo).
The Cannes show neatly coincided with the European launch of Bertelsmann's online bookselling programs in Germany and France (respectively, bol.de and bol.fr), with British and Dutch service expected by the end of April. Operations in Spain have been put off until later in the year, while no target date has been set for the Italian company (to be operated with Mondadori). Details of the French program -- in fact, a 50/50 joint venture with Havas -- were unveiled by its CEO, Fabrice Cavarretta, who displayed the opening screen that stresses that bol.com is international and lets the user click onto any existing service, such as the Bertelsmann/B&N joint venture in the U.S.
The big difference between the various countries' versions of bol will be in pricing, Cavarretta explained to PW. In France, the law allows a 5% discount, and that's all the customer will get; sales in other European countries will adhere to existing publisher/bookseller agreements. For cross-country sales -- say for an American book ordered by a French customer -- the selling country's terms govern. Apart from the stingy discount policy, most elements in the French offer will be familiar to Americans. To PW's query as to the likelihood that bol.fr might cannibalize that other Bertelsmann-Havas partnership, the giant France Loisirs book club, Cavarretta responded that he thought this unlikely -- because the club d s a special kind of book for a special kind of audience and is able to legally discount heavily (thanks to the nine-month gap between original publication and club release).
Models for Americans
Not so long ago, the stand of a major player such as Viacom's Simon &Schuster would have lorded over the floor. This year at Milia, a visitor tracking down the S&S stand's catalogue number wound up at the smallish booth of Versaware Technologies Inc. (with headquarters in New York and Jerusalem). S&S and other American and British book groups have learned to farm out some or all of their electronic publishing. Listed as Versaware "partners," in addition to S&S, were Random House, NTC, OUP, Addison Wesley Longman and Merriam Webster. Versaware's secret, explained CEO Harry Fox, is to offer a turnkey solution that enables publishers who want only a limited commitment to enter the digital world all the same, and to profit thereby.
Versaware's big news at Milia was an agreement signed with world market leader Pearson Education (News, Feb. 15). In another agreement, with Britain's Marshall Editions, Versaware both licenses its books and makes the investment; Marshall sells the finished product in CD-ROM format while Versaware d s its marketing via the Net. With S&S Interactive, which planned an encyclopedia but shied away from the anticipated $1.5-million investment, Versaware cut the cost to a fraction, putting together The S&S New Millennium Encyclopedia and Home Reference Library with 170,000 articles and entries.
Scouting the floor for "business models," PW stopped at France's Gallimard, where managing director Pierre Cohen-Tanugi revealed the European way into the future. Gallimard was a founding exhibitor at Milia at a time when the company hadn't yet decided to go into electronic publishing. When it did, it was a modest beginning and hardly a moneymaker. It did its own and partners' products, working with a permanent staff of 10 increasingly savvy creators, dipping into the Gallimard backlist. "And now we're breaking even," Cohen-Tanugi told PW.
An attempt to find the booth of the Holtzbrinck group's Systhema multimedia logo led to another example of seemingly sensible downsizing. At Galileo Multimedia, PW met its managing director Robert Hyde, who doubles as international director of U.K.-based Learn Technologies Interactive, a partnership between Holtzbrinck, Time Warner and Colombia's Carvajal that produces upscale CD-ROMs under the prestigious Voyager imprint.
Most fairg rs PW spoke with were less sanguine about CD-ROMs, more upbeat on Web delivery of book content; few held out hope for handheld electronic books. Ronald Whittier, who as senior v-p and general manager of Intel's Content Group was one of the show's stars, naturally placed computers at the center of the electronic future (even TV will be channeled through scaled-down computers, he believes, rather than the other way around). Nonfiction material of a real-time nature and disposable content will also come in via the screen, while literature will continue to reach us in the form of those handy take-out items called books, if only because of our fondness for the smells of ink and paper. Of course these print books will be sold increasingly via the Net, which will become increasingly personalized.