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Publishers Weekly Features

Eleven for the Millennium
-- 1/3/00
As a new era kicks off, PW looks at people who will help shape it

In the book business, hedging has become the preferred mode of forecasting, and it's easy to see why. One hundred years ago, common wisdom held that no format could replace the traditional hardcover; then came the paperback revolution. Twenty-five years ago, quaint bookshops seemed to be the past, present and future of retailing, only to be hard-pressed by mall stores, then the chains and now online vendors. And with change nowadays occurring at unprecedented speed, it is understandable if industry prognosticators qualify their remarks with some care.

But if the exact direction of these changes can't be easily divined, we can draw some conclusions about who will propel them. Combing areas from retailing to marketing to categories heretofore little known, PW selected the individuals, many of them unknown outside their narrow circles, most likely to serve as rocket boosters. By establishing electronic publishing platforms that allow for end runs around traditional means, agent Richard Curtis and Fatbrain's Chris MacAskill have embraced the convergent nature of the new millennium. Others have hewed closer to a traditional model. IPG's Mark Suchomel, for instance, continues to distribute books the way he always has, but he's been savvy enough to find niches like the museum market. Independent bookseller Barbara Peters continues to display the knowledge and personalization that has made her bookstore a success for ten years while branching out into publishing and branding-friendly activities.

The settings for these innovations vary too. There exists a perception that the those fomenting change will work at a new or unknown company. And certainly startups, from Gary Hustwit's Incommunicado Press to MacAskill's Fatbrain, are represented here. But a large chunk of this overhaul could in fact come from within an established framework. Embodying this ethos are the likes of Lisa Holton, who's charged with the responsibility of coordinating Disney properties here and abroad, and Kate Tentler, the new publisher of Simon & Schuster Online.

For all their differences, however, everyone here shares a fundamental quality: they represent something new, something innovative, and sometimes even something surreal as they move to influence publishing in the 21st century and beyond.

-- Steven M. Zeitchik

Online Bookselling: David Risher's Amazonian Talent

Time magazine may give the credit to Jeff Bezos, but it's the cadre of people behind the man who have helped turn Amazon into a juggernaut -- people such as senior v-p and general manager David Risher, who, like the site itself, adroitly juggle marketing and substance to great strategic and sales effect.

Largely unknown in book publishing circles, Risher could quit his job now and still make a powerful case that he's changed the book business as profoundly as anyone in the '90s. You name the innovation, Risher was behind it: Amazon Advantage, the Amazon Bestseller list, customer-comment sections. And he has no intention of stopping any time soon. "When people think of content, they think of words on a page," he says. "But it's fairly easy to write book reviews; it's just a question of getting the best reviewers. But there's so much more to do on the data side."

There are those who say that Amazon's expansion into horizontal markets will mean a commensurate departure from the book business. But now that the book section has begun to get into the black, this d sn't seem likely. If you still have doubts, one conversation with Risher could dispel them. "In the physical world, it's difficult believe that you can be the best bookseller in the world and the best toy store in the world. It may sound counterintuitive. But online, if you have people who are 100% committed to each kind of business, then we think you can." In fact, bookselling may be better off with the expansion. Many innovations that Amazon tests in other areas flow back into books -- promotional samples on the music site, for example, were eventually adapted for the audiobooks section.

Though he won't harp on it, Risher carries an impressive publishing pedigree. His stepmother is none other than Carol Risher, the AAP's intellectual-property guru. Risher's acuity makes a strong case for nurture over nature. Poised and articulate, he's a rare commodity in the New Economy in that he covers all three points in the proverbial triangle -- business, technology and "content" (in this case, books). He's a Harvard MBA, a Microsoft alum and impressively literary to boot. (An interview segues from talk about Amazon into a discussion about Jose Saramago.) It is this complex background that underlies his innovations at Amazon. These enhancements all seem to carry one denominator: they're meaningful additions that also happen to foster sales.

But with its site well-populated, Amazon.com faces different kinds of challenges. Negative customer reviews, for instance, can lead to diminishing returns and actually hurt sales. Risher's response is deft: "The good news is we have one objective -- to be the best place where people will buy books," he says. "To the degree we have to make those tradeoffs [between serious editorial and promotional material], it means we are failing."

Other pitfalls are more hidden but no less hazardous. Risher concedes that Amazon hasn't always been responsive to publishers. "We have to make it easier for publishers to work with us," he says. "I think we earn high marks, but not quite high enough," on such subjects as publishers correcting their title listings, he says, even as he acknowledges that "this is never going to be most streamlined part of our business."

But perhaps more dangerous is the misperception that Amazon aims to become a big-box retailer like Wal-Mart. Certainly, Risher says, he can understand how this notion gained currency, as Amazon has developed its distribution infrastructure at a speedy rate. But, he says, the analogy comes up short for several reasons. First, digitally distributed material, including e-books, could soon be for sale on the site, a decidedly non-Wal-Mart feature. (Risher stresses that he d sn't envision Amazon signing authors to exclusive deals to sell books directly online.) And then there's the way Amazon can use the enormous amounts of information it collects. "Even though we don't have regions the way atomic stores have, we can use pre-orders to predict what we're going to sell," he says. He pauses. "The conversation has evolved to the next level. We can help publishers with their midlist and backlist titles. We want to be publishers' best channels." Coming from most people, the pledge might sound empty. From Risher, only the naive wouldn't believe him.

-- Steven M. Zeitchik

Agenting: Richard Curtis Represents a New Wave of Disintermediation

Ten years ago, agent Richard Curtis wrote a prophetic article for Publishers Weekly in which he predicted that if American publishers continued with what he regarded as their ruinous returns policies, there would eventually be only half a dozen large publishers left. "You can't say I didn't call it correctly," he now says triumphantly.

He was also convinced that electronic delivery systems, then barely developed, would eventually steal the market away from traditional book publishers. Acquiring rights to properties for electronic dissemination, he thought, would be the wave of the future.

So two years ago, Curtis began to do just that for out-of-print books, first for those of his own clients, then for other agents' authors as well. "I wasn't sure what I planned to do with them, but I knew I would control a significant body of content," he says. He, along with four partners, established E-Rights/E-Reads, Ltd., a separate corporation that he describes as "author-centric," alongside Richard Curtis Associates (incidentally, one of the few agencies with its own Web site). E-Rights (www.e-rights.com) helps authors find out whether their books are officially out of print, assists them in recovering the rights from their publishers and allows them to prepare digitized versions of their books that can either be transmitted as e-books or prepared for on-demand printing applications.

The E-Reads Web site (www.E-reads.com), which will be up before the end of the winter, will offer an extensive catalogue of previously published books, as well as some new titles, that are available in three ways: as PC uploads, for E-book readers, or as texts available for on-demand printing. At present there are about 600 titles to which E-Rights/E-Reads now holds the rights, mostly science fiction and romance titles (both Curtis agency specialties), with some general fiction and nonfiction as well. Curtis will function, for all intents and purposes, as both publisher and retailer. There are some well-known names on the list, including SF authors Donald Moffitt and Harlan Ellison, and romance writers Maggie Davis and Jennifer Blake.

Curtis pays all authors a 50% royalty on any revenues their books generate -- which, he points out, is several multiples of what they would receive from a conventional publisher.

It is Curtis's willingness to experiment with the changing roles of publishing even as he continues to pursue agenting that increases his likelihood of thriving in a new, more disintermediated, climate. "I keep thinking about how to construct a model for such a business," Curtis says. "For someone approaching it with no preconceived notions, what should the publishing process look like? After all, there are really only two key players, the author and the reader, with some kind of gateway minder adding value in the middle. The traditional publisher has far too much in the way of overhead -- buildings, staff, warehouse, printing costs." Where d s such a model lead? Curtis acknowledges he hasn't had sufficient experience yet in the retail marketplace to know how well he can sell these resurrected titles. But he expects business to expand as awareness and usage of the Net d s: "I can foresee a golden age of publishing. Imagine those millions of out-of-print titles all available again." And he insists he has gone into all this with some trepidation. "We have to break the existing models and cross some lines, or publishers and agents run a very real risk of becoming completely irrelevant to the process."

-- John F. Baker

Distribution: Mark Suchomel Finds the Niches, On- and Offline

At a time when many predict the demise of the book as we've known it, distributors appear to have the most to lose. After all, the core of their business is the warehousing and shipping of books. Yet distributors have already faced a comparable test: in the early and mid '90s, the traditional book market began eroding and a plethora of new bookselling outlets developed, a challenge that seemed as threatening then as the early 21st century seems now. Many distributors wound up thriving, and the smart ones, like Mark Suchomel, president of Independent Publishers Group, based in Chicago, are taking the lessons they learned selling to niches and preparing to apply them to the new digital age.

As Suchomel explains it, regardless of the form in which what we now call the book appears, "There is one constant: we still need to sell and market it."

Suchomel should know. IPG's sales jumped 40% in 1999, continuing several years of phenomenal sales expansion. The company is growing so fast that it will soon double its warehouse space. Besides improving titles -- about 2800 altogether -- the gain is attributable to the company's push to "expand our markets" and "get closer to the consumer," Suchomel says. "We're matching individual books to individual retailers."

IPG, which owns Chicago Review Press and its imprints, Lawrence Hill and A Cappella Books, has a core group of some 60 publisher-clients as well as another 300 through the Publishers Marketing Association small press selection program. What it d s for these clients is go beyond the obvious "special market" customers, such as Target, Costco and Wal-Mart. For example, the museum market has been good for many IPG titles, which are predominantly nonfiction. "We'll find one museum store that can sell 100 copies of a book in a year," Suchomel says. "That d sn't sound like a lot in overall terms, but when you do with a lot of titles on the list, it adds up to some big numbers."

Another example: IPG recently signed on the Brooklyn Botanic Garden, which publishes four titles a year and has 50 titles altogether. While IPG's sales force is expanding BBG's presence in the trade, the company is also going after greenhouses, bonsai specialists, botanical gardens and other green sales venues, using "more targeted sales materials," visiting larger ones with reps and contacting smaller accounts via the phone. Once given a spot to grow in those outlets, the titles become, ahem, "an evergreen sale," as Suchomel puts it.

Taking advantage of the lower costs for producing sales materials, last year IPG created an African-American book catalogue for a small percentage of the list and sent it to stores, libraries and professors, which resulted in a jump in sales.

As IPG becomes much more of "a marketing company," Suchomel says, it's adding staff, becoming more involved in publicity and advertising, and putting more emphasis on "the service of marketing. We're book marketing experts as well as warehouse experts," he says, perhaps describing a position in which many distributors may soon find themselves. IPG is also beginning to explore selling electronic editions of its books, some of which will work very well in that format, Suchomel predicts. Last month, the company redesigned its Web site and hired a full-time online editor. Besides providing information (including downloadable catalogues and artwork) to trade and non-trade alike, the IPG Web site sells "a little" to consumers.

As a marketing company, IPG looks forward to the potential of the digital future. "For us, the good, safe way to publish is not for everyone, but for the specific consumer," Suchomel says.

-- John Mutter

Online Marketing: No R&R for S&S Online's Kate Tentler

If the old saw about revolutions beginning at the margins is true, Kate Tentler wants none of it. The newly appointed publisher of Simon & Schuster Online is preparing her company's site to be a rich and popular space for all kinds of book content. One look at her track record makes it difficult to argue.

Among S&S's achievements under Tentler, who for four years served as associate publisher under Lisa Mandel before being promoted last month: an early release of the yachting adventure title Knockdown; promotional programs that give away excerpts by the likes of Stephen King; the securing of niche virtual space for stalwarts like The Joy of Cooking; accelerated digitization of both the front- and backlist; and a beefed-up Web site that features consumer, bookseller and media sections. Superimpose an aggressive marketing strategy on a sharp sense of content, and you'll begin to have some idea as to the direction S&S Online will move under Tentler's supervision. Among her chief priorities? To continue building and developing fan-based communities, highly unusual for a large publisher site.

It's not just Tentler's achievements at S&S that lend credence to the notion that a large publisher could march in front. She boasts a solid editorial background, having held senior editorial positions at Sassy magazine and the Village Voice before coming to S&S. She can also speak the corporate language and has spent years lobbying hard for internal acceptance. "Today, everyone finally gets how the Web is going to be part of our world," she says. "My only battle is that I keep wanting to send out more excerpts than other people [in the company]."

But as she continues to wage this fight, Tentler also realizes that it isn't enough to merely transfer content from the old media environment to the Web. "It's a different kind of content production than books. It's more like Sassy. It's shorter, its sharper, it's sometimes less about writing. It's hokey to say, but it is about communicating ideas."

In an interview, Tentler's comments about the future of S&S on the Web are a mix of corporate guardedness and refreshing candor, the same blend of old and new media qualities that she brings to her job. She circles carefully around the question of how the S&S site might change, but then lashes out against the presumptive types whom she feels patronize online departments. "There's a misperception that we don't get it," she says. "[But] publishing is the most avant-garde thing on the Web. It's growing even faster than music, which was fighting it for so long. We know the world is changing, and we know the business is changing."

Among those changes is the possible move into more direct fulfillment, particularly for electronic titles. While she's careful about addressing the issue of direct e-book sales via the site, Tentler is amenable, perhaps more than most online publishers, to the notion of niche sites fulfilling directly from the publisher. "As long as they [other sites] fulfill the promise they are making to their customers and pay us, I don't think it's a bad idea to have your book in as many places as possible," she says.

-- Steven M. Zeitchik

Indie Bookselling: Mystery Storeowner Barbara Peters Dons Many Disguises

When one short decade ushers in a century's worth of change, it takes a nimble approach to navigate the unknown. In October of 1989, Barbara Peters, a former lawyer from Chicago, opened a specialty bookstore, The Poisoned Pen, in Scottsdale, Ariz., fully expecting to run a traditional, over-the-counter retail operation. "Quickly, I saw that because of our location we needed to become a mail-order, long-distance store," she says. So Peters began publishing the monthly Booknews, a way of staying in touch with her customers and selling to them in an era long before e-mail.

It wasn't the only innovation she ushered in. A master of promotion well before it was called branding, Peters wears all sorts of hats in her community -- hats that bear the Poisoned Pen logo. She teaches a course on Crime Fiction at Arizona State University-Tempe. She runs a monthly series of author interviews for the Scottsdale Public Library, which are taped for airing on the city TV station. And she lectures to all sorts of groups throughout the Ph nix metropolitan area. The Poisoned Pen sponsors yearly conferences, events beloved by mystery devotees, that draw authors, publishers and fans together for meetings and socializing.

But perhaps more ambitious than any community-building activity, Peters has made the jump most booksellers only fantasize about: she has become a publisher. "At first I thought we were going to be a reprint company, but the dramatic changes in New York publishing -- the consolidations and diminishing lists -- have made available to us authors of original books." Poisoned Pen Press aims to publish two reprints a month and six originals a year; among its better-known authors is Ridley Pearson.

In the age of the embattled bookseller, Peters serves as an example of how clever marketing and diversification can steel a traditional business against the forces of change -- and appropriate those forces for profit. Operating with a margin that would turn any bookseller green, Peters has built a small empire on the foundation of that first store. In June 1999, sales were about $1,400 per sq. foot, which is between three and four times the ABA guideline. Rent costs had dropped to about 2% of gross; ABA recommendation is 8%.

With an active Web site and assorted targeted e-mail newsletters, Peters used technology to do very well what many others had done before. But it wasn't enough. A couple of years ago, she started looking for a new space where she "could reinvent our store as a community literary center. I saw the bookstore as theater."

The new Poisoned Pen, only a few blocks from the old one in downtown Scottsdale, has movable shelves and greater space. It can be a theater (an Alfred Hitchcock film night was held in December), a dining room (PEN Women is catering a dinner there in January, with a speaker who has nothing to do with mysteries), a meeting place. Book groups gather for their regular discussions. Local charitable associations hold meetings there. Peters has invested in the Authors' Cafe, which recently opened next to the new store. And she actively pursues partnered events with the library and other local organizations, including cooperative programs with the chains.

The Poisoned Pen has offered programs in conjunction with the local Borders store, at Peters's suggestion, as when St. Martin's asked her to have a signing last fall for its recently published Vincent Price: A Daughter's Biography, and Peters suggested holding the event at Borders to draw a wider audience and garner greater promotion. To some, this might seem like she's sleeping with the enemy; Peters just thinks of it as smart marketing. Perhaps more than any one innovation, it is this flexibility that makes Peters so successful.

"The rate of change in the industry over the last five years has been enormously faster than in the previous five years. I can't say that any of us knows what the bookselling industry will be like 10 years from now. Will there be retail stores? What will they look like? And no one can say where the engine of e-commerce will take us, whether we deal in cars, airplane reservations or books."

Wherever, this bookseller -- whose personal motto is "There's no rest ever for the wicked... or ambitious" -- will be there.

-- Dulcy Brainard

E-Publishing: Chris MacAskill's Soft Gray Matter

When some startups want venture capital, they write a business plan, travel the country, maybe draw up a chart or two. When Chris MacAskill needed funding, he got on a plane and flew up to Seattle for lunch. An hour into the meal, he had gotten what he wanted -- $20 million and the blessing of Microsoft co-founder Paul Allen. "He just loved the idea we had for eMatter," says Fatbrain CEO MacAskill, referring to the new publishing platform he launched last fall.

Such is the influence of the soft-spoken Silicon Valley visionary, who's as apt to use words like "dang" as he is to plot the overthrow of publishing. But with a mix of marketing savvy, technical know-how and whimsy, MacAskill has fashioned himself into one of the new e-publishing powers.

MacAskill is no stranger to the world of books. He founded Computer Literacy, a technical bookseller, in 1996, when one of Amazon's bestselling titles was still Creating Killer Websites. (In fact, he flirted with the idea of creating a general bookseller but thought "Amazon is just too far ahead.") When he saw earlier this year that dedicated-reader companies were greasing the wheels for mass e-book consumption, he dreamt up eMatter, a secure system that delivers books in PDF format to your PC for printing and reading on-screen. His plan, he says, is to create a whole new genre of work whose length lies between magazine article and full-length books.

But only the most naive of Valley watchers thinks that the ambitious MacAskill (who once worked with Steve Jobs at NeXT) will stop here. As the ability to read on the Web gets better and printer quality improves, full-length titles is an easy step for a company that could soon become one of the best-known book destinations on the Web.

MacAskill's journey with Fatbrain hasn't been without trauma. Where other publishers have moved in fits and starts to embrace traditional publishing, MacAskill charged ahead at full speed. His hiring of former S&S e-book guru Ina Gottinger was perceived in some quarters as fighting words. And his unapologetic welcoming of all self-published work, even the shoddy kind, as a necessary price for the blockbuster seller, earned him his share of critics. But he believes today's publishing world is a very different one from that which produced such criticisms: "When they thought of vanity in the past, they thought it will be bound and we're going to get it for sale at Barnes & Noble. But this isn't going to be a very rewarding experience for the author if he's not going to sell it."

For all his savvy, one of MacAskill's greatest skills lies in the way he, like any effective visionary for the next century, acknowledges that content is king, but eyeballs is king maker.He's marketed the site in such a shrewd way that NPR reported when he renamed the company Fatbrain last summer. In two months, he lured almost 6,000 authors to publish their work as eMatter. True, the $1 per month "storage fee" is hardly a barrier. But consider this: in one day, more authors sign up as eMatter authors than most houses publish in a year. With such a high volume, MacAskill hopes plenty of solid content will emerge. "People didn't like ATMs when they were first announced. Now everyone complains when a bank d sn't have one."

-- Steven M. Zeitchik

Large Publisher Sales: Nothing Random About Don Weisberg and Madeline McIntosh

To many people, the growing use of technology means a colder, more depersonalized world, where decisions are based on computer-generated analysis. But that's not how Don Weisberg sees it. The president of the Random House sales group wants technology to be used by the Random sales force to help sell books on a more "personalized basis¦. We are focusing more and more on one-to-one marketing," Weisberg says firmly.

It's not just a line. Weisberg knows the territory well, having worked as a bookseller and field sales rep for a total of 12 years before embarking on a 12-year odyssey within BDD that landed him at his current position in 1998. This experience has given him a credibility both within the company and without, as well as a pragmatism that makes a him a flexible and effective sales director.

As a pragmatist, he's embraced the digitization of Random House's content, which includes converting a book's text, interiors, jackets and related promotional materials. All these digits will improve the selling experience by making more promo materials available through the Internet; Weisberg envisions a day when a rep can be visiting an account and be able to call up the latest marketing materials. The digitizing of information will also make it easier to use the Internet itself as a marketing vehicle. Although Random has no plans to establish an online bookselling arm, Weisberg d s plan to use the Net to "drive readers into stores." Through links to other sites, Weisberg wants to make sure that Web surfers who stumble onto a book know how they can buy it. Under Weisberg, Random is quickly moving ahead to collect sales histories for individual titles in a "data warehouse" that is easily accessible by Random personnel. Random's goal is to improve efficiency by "getting the right initial order, minimizing returns and having a quick turnaround," Weisberg says, adding that these aims "are in sync with what our customers want."

"What our customers want" could very well be Weisberg's mantra. In his six years as San Diego-based rep for BDD, he learned the skill of giving clients and consumers what they want rather than imposing on them an ivory-tower vision. This realpolitik is manifest in Weisberg's other views as well. Unlike many industry folk, he's bullish about the future of mass market paperbacks, noting that it "remains the format of choice" for millions of readers. While superstores may not be the best environment for selling mass market titles, Weisberg and Random House have taken advantage of the ability of mass merchandisers and supermarkets to sell mass market titles to keep the format viable.

While Weisberg grapples with the changing world of traditional sales, one of Random's stars, Madeline McIntosh, took just three years to become the company's director of online sales, a post that would have been unimaginable five years ago. Today, she serves as v-p and director of sales for the Ballantine Bantam Dell Doubleday Broadway sales division, as well as director of online sales for Random House Inc.

In her capacity as online sales director, McIntosh oversees the fastest-growing distribution channel for Random House. But, she says, the nature of the growth is changing. Whereas online sales grew exponentially in 1998, growth in 1999 has been at a more steady pace, although sales during the holiday season saw a tremendous spike.

So how d s a large publisher cope with the dynamic world of e-commerce? McIntosh has a few ideas. First, she realizes that Internet bookbuyers tend to skew toward a more educated and affluent demographic than average book buyers, and she has successfully promoted literary fiction to that market. She's also keen on providing as much material as possible to online stores, such as the information included in Random's "electronic catalogue." In addition, she says, the early days of e-retailing were marked by a freewheeling environment where the rules were still being written. "Today," McIntosh notes, "you're dealing with real businesses that have actual bookbuyers and warehouses."

McIntosh, who's been praised for being a quick study on the rapidly changing nature of today's retail market, will need all the skills she can muster. After all, while books were the number one product sold over the Internet when online stores began, e-retailers are now selling a broad array of products. "Publishers need to be aware that now we have to compete with other companies for screen space," McIntosh advises. "We have to find ways to incenticize online stores to keep selling books. We have to make it as easy to sell books as it is to sell music, videos, software or whatever other products e-retailers are carrying. There may be an infinite amount of shelf space in cyberspace, but there are only a limited number of eyeballs."

-- Jim Milliot

Indie Publishing: Gary Hustwit Brings Downtown to the Big Time

Ten months after moving his aggressively hip small press from San Diego to New York City's Lower East Side, Gary Hustwit, founder, CEO and digital go-to guy of Incommunicado Press, has settled into small offices in a building he shares with a music club. It's an appropriate arrangement for a man whose first foray into publishing was a book called How to Release an Independent Record, self-published in 1991.

Since then, Hustwit has launched Incommunicado Press, which specializes in what he likes to call "severe literature," a visceral genre of writing and reportage fixated on the rough textures of daily reality encountered along the fringes of urban life. But while Hustwit clearly loves the role of fun-loving hipster, he's also literate, savvy about technology and a no-nonsense entrepreneur who has consistently shown a knack for the calculated risk. Last year, he opened a small press bookstore in the IP space, where music fans and other assorted night owls drift from the store to bar, book purchases in hand. In the fall, he joined with his partner and sister Valerie Hustwit, an Internet marketing professional, to co-found a separate company, MP3Lit.com, which distributes downloadable digitized spoken-word audio. And his next Web venture will be LoudBooks.com, a frontlist digital audiobook publishing venture using MP3 and Windows Mediaplayer; it's slated to launch sometime around March.

Hustwit is part of a gang of small publishers situated on the Lower East Side; others include Akashic Books and Softskull Press. But for all his edginess, Hustwit calls Barney Rosset and Sonny Mehta his "publishing role models." Like these icons, Hustwit manages to publish and sell books that are risky and artful. He released I Listen by the sound performer The Spacewurm, which transcribed live cell-phone conversations and whipped up mainstream media attention. He also published Living for the City, Jervey Tervalon's vivid stories of life in South Central L.A., before the award-winning novelist moved on to Pocket Books.

Yet Hustwit acknowledges that "it's tough to grow a small press from within," and so he has jumped headfirst into the new media world. "You can make money on the digital side," he explains. "There's no loss in audio quality and there's no physical thing, no capital burden that will make you conservative about content." Nevertheless, he's skeptical about e-books ("You still lose quality from paper to screen, and the prices need to come down") and rolls his eyes at print-on-demand publishing ("A lot of vanity publishing and e-crap"). And he's sticking with paper, because "you exclude too many people when you specialize in new media."

Y2K looks pretty good from the Lower East Side. IP has a backlist of 30 titles and 10 books slated for 2000.

MP3Lit.com will get a new office and eight new employees, mostly acquiring editors; and the bookstore will expand in size and merchandise. And Hustwit (along with Valerie) is trolling for big-time investment for LoudBooks. "Traditional publishers frown on new ideas," Hustwit says. "Indie publishers are a glimpse into the future. I can't outmarket Penguin Putnam, but I can outsmart them." Pausing for a second, he changes his mind: "On the Web, I can probably outmarket them, too."

-- Calvin Reid

Billion-Dollar Bookselling: The Path of Kahn, Where B&N's Physical and Virtual Worlds Meet

There was a time when online and bricks-and-mortar operations could function independently of each other. No longer. "The price of admission to be successful in today's retail environment is to provide consumers with the option of shopping online or in a store," says Barnes & Noble COO Alan Kahn. Indeed, Kahn, a 21-year veteran of the company and CEO Len Riggio's right-hand man, has implemented a broad range of initiatives since he came from B&N College two years ago, from the acquisition of stores (Babbage's) to the enhancement of B&N's publishing program (Friedman Fairfax) to bringing Barnes & Noble's physical stores in sync with the strategy of its on-line affiliate, barnesandnoble.com.

On this last count, Kahn's ambitious program entails the installation of terminals in most of its superstores to allow customers to order any product that is offered through bn.com. "Everything that is available electronically needs to be available at the store level as well," Kahn says matter-of-factly.

But Kahn isn't stopping here. Another technological enhancement he has overseen this year has been the rollout of the BookMaster system to B&N superstores. Among the many benefits BookMasters brings to B&N is the ability to improve customer service. "[We] received a wake-up call from the Internet companies in terms of customer service. Whether it's providing gift-wrapping services, a faster cashier system or a better method to find a book, these are things that we have to provide to keep our customers satisfied," Kahn says.

The next major technology improvement that B&N will most likely tackle is the print-on-demand issue. While Kahn d sn't see B&N installing printing equipment in any stores this year, he d s expect such technology to make its way into B&N's physical outlets within two to four years. All the new technology hasn't prevented Kahn from continuing the pace of superstore growth, if not at the break-neck speed of the early to mid-'90s, then certainly at a faster pace than many have expected. The company will open 40 to 50 new superstores this year, to add to its current total of 528, while continuing to close Dalton outlets. Kahn notes that he expects the number of Dalton stores -- presently at 444 -- to eventually settle to between 200 and 250 locations; Borders, by contrast, still maintains approximately 900 Walden stores. But he also cautions, "We have to be more selective about superstore openings."

-- Jim Milliot

Children's: Lisa Holton's Global Vision

Lisa Holton
Globalization, to some publishers at least, is a dream for the future. But to Lisa Holton at Disney, it's very much today's reality. This past October, she was named senior v-p and publisher, Global Children's Books, Disney Publishing Worldwide -- which means she now wears two hats: running Disney's U.S. children's publishing business, as she had been doing, and having creative responsibility for the children's books Disney publishes internationally.

"What this change means," Holton says, "is that Disney is acknowledging that the creative centers around the world need to be linked. Now I spend my time thinking, how to create connections between the different groups? How do we use all of the resources at our disposal?"

As publishers look to strengthen their properties internationally, Holton's ambitious efforts at a conglomerate like Disney could serve as an example for what others may attempt on a smaller scale, such as taking advantage of the company's various media outlets for a property (the much-vaunted "synergy" word), or paying for high-quality artwork by amortizing the costs among several publishing entities.

From the outside, Holton contends, Disney as a publishing company can easily be misunderstood. "The basic premise of the children's group is that it's still about the authors on the one hand, and the talent and editorial direction on the other." Undeniably the "big marketing machine" Disney is famous for helps a great deal, as well d s Disney's Web site, which gets a reported 20 million visits per month. "All this is very important in terms of marketing and reach and exposure," Holton says. "But it's still in some way about what it's always been about: great authors and great illustrators, and about creating a place where they feel creative."

Characters like Mickey and Goofy, of course, have a lot to do with what has made Disney so successful. But Holton is not content to simply rest on their laurels. As an example of cross-channel publishing synergy, she mentions Bill Joyce's Rolie Polie Olie; the project originated as an animated TV show airing on the Disney Channel, spawned a traditional hardcover picture book with HarperCollins, Joyce's longtime publisher, and Joyce is now creating a tie-in program of original books for Disney.

"Our model is that there's this continuum," Holton says, "from books based on big feature pictures like Toy Story 2, to projects like Rolie Polie Olie, where you have a brilliant children's book illustrator creating children's books and a TV show, to someone like Gordon Korman, whose Monday Night Football Club books have been turned into a TV series on the Disney Channel called The Jersey."

According to Holton, "Part of our philosophy is that the kid we publish for isn't all that different. Adults often read incredibly literary fiction and then light popular fiction -- and kids are the same way." They are, however, proving more and more elusive as a market. "There's so many stimuli these days, so much competition for kids' attention," she points out. "It's difficult to break through. With older kids, it's very hard to reach them directly in a meaningful way. We live in this world of instant gratification, shorter shelf life, shorter media blips. Children's books take time to find their market. I still worry about how you can publish a great new book and give it the time and nurturing that it needs."

Problems that won't be going away anytime soon. But Holton is optimistic that good publishers will succeed in the days and years to come, no matter how the books will be marketing and disseminated.

As a children's publisher looking to the future, she says, "You absolutely have to be aware of Neil Postman's premise that technology is completely transforming our culture. We can't stand apart from it. How do very talented people get their work out in this new world, where the model is changing every five minutes? I'm watching Disney completely change that model."

-- Diane Roback

College Bookselling: Unknown Until Recently, Eric Kuhn Is Now Big Man on Campus

Eric Kuhn speaks haltingly, a barrage of words followed by an awkward pause, then another burst of words. Perhaps that's because his company, the fabulously successful VarsityBooks, is in a quiet period as it awaits an IPO. Or maybe it's because things have sped along so rapidly for this 20-something former attorney that even he has to slow down once in a while to take it all in.

Ever since Kuhn, who says his only previous experience with college bookstores came when he entered them as a student, stormed onto the college territory, he's done nothing but make a name for his company. He started with five schools in the fall of 1998; by August of last year, his company had racked up more than $5 million in sales, in part because of aggressive discounting. He has caught the attention of NACS, which has sued Varsity for false advertising and raised a ruckus over some publishers' discount policies to the bookseller.

Kuhn's brainchild is a strange hybrid. On the one hand, it is an aggressive netco that's lured more than $40 million from private investors and looks to raise $75 million more through the offering. On the other, it's a company that's as savvy about grassroots marketing as it is about venture capital. It recently started a program that gives students free e-mail services, and has made a push, via publishers, to bring word of Varsity to professors, who can in turn recommend it to students. Kuhn's greatest triumph may lie with the hiring of student reps -- there are now 1300 students whose task it is to rally classmates and report back to Varsity -- at campuses around the country. "We started with the premise that we were using technology to sell books, products and services to students via a new medium, one that they've been incredibly comfortable with, with an approach they've previously not seen. We formulated our brand based on what college students said to other college students."

Kuhn's relationship to the physical stores represents an inversion of the trade book market: while some perceive bricks-and-mortar indies in the general trade as warm, welcoming places and the online competition as impersonal discounters, Kuhn has taken a grassroots approach to the Web and negated decades of impersonal bookselling at the physical stores. "I think we benefited from being the anti-college bookstore," he says. "If you take a step back and remember your own experience in a campus bookstore, you probably remember it as incredibly frustrating. The approach we took was to make it a really positive and powerful experience. We had to make it such that people wanted to tell 10 of their friends about it."

But don't let all this warm-and-fuzzy talk fool you. For all his New Age-y qualities, Kuhn understands the economics of distribution as well as anyone. In fact, without Varsity's drop-shipping arrangement with Baker &Taylor, his business might be enjoying only a fraction of the success. But all books are sent directly from B&T, Varsity has avoided the understocking problems that can result in long waits for students. Shrewder still is how he locked up the deal: by selling B&T a 25% stake in Varsity.

All this isn't to say Kuhn d sn't face obstacles. He must still obtain course info at public schools via the Freedom of Information Act. The growth of startup bigwords.com and the intense online initiatives of all three major college players -- Follett, Wallace's and Barnes & Noble -- won't make it any easier. But he's confident that by strategically moving into new areas, some of this competition can be diluted. "Books are a required purchase," he says, " and we clearly want to get into other products and services." But he also is looking to learn a lesson from his trade counterpart, Amazon. "We don't want to sell products out of left field and be everything to everyone," he says.

-- Steven M. Zeitchik
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