News Shorts
Staff -- 12/18/00

Y.S. Chi to Join Random House | Harcourt Turns In Solid Farewell Performance
MightyWords Adopts B2B Focus | Lightning, Xlibris Team Up | Ullstein, Heyne In Merger
Areheart Promoted, Gets Own Crown Imprint | Gemstar Has 'Simple' Biz Plan
New 'PW' Midwest Correspondent

Y.S. Chi to Join Random HouseY.S. Chi, who has held a number of executive positions in his nine years at Ingram, will join Random House next month as executive v-p and chief operating officer for Random House
Chi to join Random
House in January.
North America, a newly created position. In addition, Chi has been named to spearhead Random House's entry into Asia as president of Random House Asia. Chi will report to Erik Engstrom, president and COO of Random House, while also working closely with Random House chairman and CEO Peter Olson on the company's Asian initiative. Chi told PW that the Random House position gives him a unique chance to work with a truly global company and said the company has the means and interest to build a substantial Asian business.
According to Random, while Chi will also begin developing a business model for Random House Asia, his immediate priority will be his North American responsibilities. As COO, Chi will oversee all operations and administrative service and support functions, including such areas as distribution and fulfillment, book production, inventory management, SAP, information systems, human resources, legal and contracts, corporate services and facilities management.

In developing an Asian strategy, Chi will initially concentrate on evaluating start-up and joint ventures in Japan, where Bertelsmann has a minority stake in the publishing and media company Kadokawa; in China, where Bertelsmann has a book-club operation; and in Korea, where Bertelsmann is launching a book club.

Chi first joined Ingram in 1992 at Ingram Micro and moved to Ingram's book group in 1996. He most recently served as chairman of Lightning Source as well as president of Ingram Fulfillment Partners. John Ingram, chairman of Ingram Book Group, will add the title of chairman of Lightning Source. Ed Marino will continue as president and CEO of Lightning, reporting to Ingram.
--Jim Milliot

Harcourt Turns In Solid Farewell Performance Harcourt General, which expects its acquisition by Reed Elsevier to be completed in the first quarter of 2001, reported that earnings from continuing operations for the year ended October 31,
2000, jumped 51.9% to $182.8 million on a sales increase of 12.4%, to $2.40 billion. Net income fell to $79 million from $183.8 million in fiscal 1999; net income in fiscal 2000 includes a $103-million charge to cover HG's liabilities from the bankruptcy of GC Companies, the movie theater business that HG spun off in 1993.
The strongest performer in the year was the company's education group where sales increased 29.8% to $754.7 million and operating earning increased 54%, to $162.3 million. The group was paced by strong gains in its k-12 publishing businesses where both its elementary and secondary school units had solid years. HG's supplemental business as well as the trade group also had increases in sales and earnings in the year.

Sales in the higher education group fell 1.3%, to $361.3 million, mainly due to the loss of $20 million in revenue from the transfer of Harcourt Learning Direct's Canadian operations to the STM group. Earnings in the period rose 14.2% to $50.2 million. The group's core college publishing division had gains in both sales and earnings.

Revenues in the Worldwide STM groups climbed 6.8%, to $745.1 million, and earnings increased 19.4%, to $140.4 million. Results were strongest in the group's Harcourt Health Sciences, Academic Press and international operations which were led by gains in Europe and Asia.
--Jim Milliot

MightyWords Adopts B2B FocusThe online publishing company has refocused its business model to emphasize sales through affiliated Web sites, while still offering content directly to consumers. Under this new strategy, called "The Mighty Network," MightyWords will seek to develop
MightyWords will syndicate content.
partnerships with sites to post MightyWords texts for sale. MightyWords will provide anonymous backend fulfillment and receive a fee for each sale. Prices will be standardized and affiliate sites will not be allowed to discount.
The change in strategy comes less than a month after the company dropped the majority of the self-published titles it sold in favor of marketing works from name-brand authors (News, Nov. 20). MightyWords v-p and general manager Judy Kirkpatrick told PW, "This is the final evolution of MightyWords. We're removing ourselves from the marketplace of e-books and moving into the marketplace of information."

Kirkpatrick was careful to distance the company from what she described as New York-centric e-book publishing dominated by large trade publishers looking to put out bestselling fiction and nonfiction. The company will continue to evaluate unsolicited submissions, though it will favor business, technical and computer-related texts.

MightyWords said that no employees will be let go as a result of the change in strategy; marketing staff will be reoriented toward generating business from affiliate customers rather than readers. Chris MacAskill, chief executive of MightyWords, told the Wall Street Journal, "We started out with a vision of self-publishing that was a little misguided on my part." He added, "It is highly branded, highly credible, high-quality stuff that sells." Kirkpatrick sees the company as having come full circle. "If there was some other way to make money acting as an Internet publisher, we would have stumbled on it by now," she said.
--Edward Nawotka

Lightning, Xlibris Team UpLooking to improve its sales through retail outlets, self-publishing print-on-demand services provider Xlibris announced an alliance with Lightning Source, Ingram's POD service, to provide better access to bookselling accounts.

Roland LaPlante, chief marketing officer at Xlibris, told PW that Xlibris now has more than 4,000 titles available through Lightning Source. LaPlante said that about 80% of its sales are currently through its own online bookstore (located at, with the rest coming through general retail channels. The new alliance will allow general bookstores to order its titles through Ingram. "We've added about 200 online retailers including,, and," said LaPlante. The agreement has been in place for a month, and LaPlante said, "We've already seen our sales begin to increase." Xlibris has a similar but less extensive distribution alliance with Baker & Taylor.

Under the new alliance, Xlibris paperback titles can be printed and ready to ship within 48 hours.
Hardcover titles can be printed and ready to ship in four to six days. LaPlante said the alliance will also work toward establishing technical standards for POD. "We're both expanding out of the U.S., and it will be good for everyone to be able to use POD formats all over the planet."
Ed Marino, president and CEO of Lightning Source, said the alliance has already helped Xlibris boost its distribution and improve its efficiency. "We hope to establish similar synergies as both companies expand into the U.K," he said.
--Calvin Reid

Ullstein, Heyne In MergerWhat is being described as "the biggest German merger in years," the takeover of Germany's largest privately owned book publisher, paperback giant Wilhelm Heyne Verlag, by the Econ-Ullstein-List group, will create the country's number two trade house (after Bertelsmann/Random House) on January 1. Together, the merged companies will represent some DM350 million in turnover (or nearly $160 million at a recent conversion); each party to the merger contributed about half of that. Christian Strasser, CEO of Econ-Ullstein-List, a part of media
giant Axel Springer Verlag, will run the merged group.

When the fusion is completed, the group will do general trade publishing--with an emphasis on fiction--under the Ullstein and Heyne imprints. Heyne is the German publisher of such list leaders as Tom Clancy, John Grisham, Mary Higgins Clark and Dean Koontz, while Ullstein d s Stephen King, Nelson DeMille and Rita Mae Brown. Ullstein's publisher Lothar Menne, a well-known player in the international rights marketplace (and who earlier in his career held the same job at Heyne), will oversee combined trade operations. Literary publishing will be done under the Econ group's List and Classen imprints and Heyne's Diana, while Econ will pursue its serious nonfiction and business publishing.

Meanwhile, Menne assured PW, the companies will continue to work with their regular scouts in Anglo-American markets (in the U.S., Franklin & Segal for Heyne, Jane Starr for Econ-Ullstein-List).
--Herbert R. Lottman

Areheart Promoted, Gets Own Crown ImprintShaye Areheart, an executive editor at Harmony Books since 1992, has been appointed v-p/ editorial director. In addition, she will become editorial director of Shaye Areheart Books, a newly created Harmony Books imprint devoted to contemporary literary fiction. She will report to executive editorial director Lisa Lowenthal. Shaye Areheart Books will publish six to nine titles a year, beginning with a fall 2001 list.

Areheart, a winner of the 1999 LMP award for editorial excellence, has edited novels by Chris Bohjalian, author of the Oprah Book Club selection Midwives; Craig Nova; Sheri Reynolds; and Simon Mawer. During 13 years at Doubleday, she worked with such authors as Ray Bradbury, Willie Morris and Phyllis Whitney, and collaborated editorially with Jacqueline Onassis on books by Bill Moyers, Gelsey Kirkland and Andre Previn.

Gemstar Has 'Simple' Biz PlanWhile most of the companies in the e-publishing world are looking for ways to make money, Gemstar's e-book business model is "simple," Peter Boylan, co-president and chief operating officer of the company, told analysts at this month's UBS Warburg media conference. Gemstar's plan is to establish its e-book devices as the preferred choice for reading, but it will derive its revenues as "a technology enabler and portal," Boylan said. In other words, Gemstar will make its money from licensing its proprietary technology to such companies as Thomson to manufacture readers. Gemstar will also generate recurring revenues from content sales; it receives 20% to 25% of the cover price of a book and 50% of the subscription price from
newspapers and magazines that are downloaded to one of its dedicated devices. "We're not interested in manufacturing reading devices, having inventory or dealing with retail distribution," Boylan said.
Boylan maintained that publishers will be willing to give Gemstar a relatively large slice of the revenue pie because "everyone is scared to death that what happened in the music industry will happen to them." Publishers are afraid of losing control of their future over digital rights management issues, and will be willing to partner with a company that can provide security, Boylan said.
--Jim Milliot

New 'PW' Midwest CorrespondentBrad Zellar has been named PW's Midwest correspondent, effective immediately. Zellar is a Minneapolis writer with 20 years of retail experience in the book business.

In addition, Zellar is a contributing writer for the alternative weekly City Pages, and frequently reviews books for the Minneapolis Star Tribune. PW editor-in-chief Nora Rawlinson said Zellar's appointment "reflects our commitment to cover all aspects of the publishing industry." Zellar can be reached at (612) 925-8916.