July 26, 2010

Book Industry News Flat World Knowledge Advances Free Textbook Model ...... 1 McGraw-Hill Integrates M-H Connect on Blackboard Learn ...... 2 CourseSmart Offers Its Sampling Service in Faculty’s LMS...... 3 B&N Launches NOOKstudy e-Reader Software for PCs and Macs ...... 4 Blackboard Buys into Collaborative Learning Segment...... 5 Catalog/Retail Industry News Sears Uses Online Videos to Promote its Rewards Program...... 5 Kroger Will Expand FoodsCo in Oakland...... 6 TJX Cos. to Expand Marshalls into Canada ...... 6 Save-A-Lot Announces Affiliation with Local Hispanic Operator for Stores in Texas ...... 7 Duane Reade Opens Union Square Flagship Store ...... 7 Direct Marketing News Discover Adds Merchandise Options to Rewards Program...... 8 Livescribe Pushes Smartpen with Online Marketing...... 8 Study: Direct and Digital Hiring Trends Soften in Q3 ...... 9 Directory News Independents Projected to Capture Close to 30% Share of YP Market in 2012 ...... 10 Ziplocal will Rebrand Your Community PhoneBook, Focus on Expansion...... 10 Independent DHC Rates Remain Flat in Top Directories in 2010 ...... 11 RBOC Billings Decline 19.9% to $961.1 Million in June; YTD Down 12.4%...... 12 Magazine Industry News September Shines Brighter for Monthly Magazines This Year ...... 12 Future US Will Launch Maximum Tech Print Title ...... 14 Report: Dramatic Decline in Magazine Closures This Year...... 14 Guideposts Relaunches Web Site...... 14 Circ Tactics for Independent Publishers Acquiring New Titles ...... 15 PCWorld, Macworld Introduce Custom Content Division...... 16

ECONOMIC UPDATE

GDP: 2.7% in Q1 2010 (down from 5.6% Q4 2009) Unemployment Rate: 9.5% in June 2010 (down from 9.7% in May) Consumer Confidence: 52.9 in June 2010 (down from 62.7 in May)

INDUSTRY UPDATE – BOOK

Flat World Knowledge Advances Free Textbook Model (Educational Marketer – July 19, 2010) One year after officially launching its free open online textbook business for the higher education market, Flat World Knowledge (Irvington, N.Y.) has moved into bigger offices, added 34 employees and expects to see adoptions of its e-textbooks by college professors shoot up 189% this fall semester from fall 2009.

“We think we’re here to stay and the rate of usage will increase for a lot of factors,” Flat World Knowledge president and co-founder Eric Frank told EM.

And, despite the concept of free being a crucial part of the publisher’s mission, FWK was on track in fiscal 2010, ended June 30, to generate almost $1 million in revenue.

Flat World Knowledge currently has about 20 titles in its catalog. More are in development, and FWK expects the catalog to cover all of the 25 highest-enrollment college courses within three years.

FWK titles are free to anyone accessing them online. The company generates revenue through print-on-demand versions--$30 for a black-and-white soft-cover edition; $60 for the traditional hard-cover edition. Sales of supporting materials for instructors and students also generate revenue.

Print Is a Popular Option The popular free version attracts a variety of people, including home-school students and people who just want to learn something, Frank said.

But, print retains its attraction. Frank said that 40% of the number of free–book users have purchased the $30 black-and-white soft-cover edition.

Frank said a key to the acceptance of the FWK titles is that they are format agnostic. The student is the one who decides which version is most appropriate.

FWK expects sometime this month to expand its app options with versions for the Kindle and the iPad and virtually any device that accepts an ePub file, Frank said.

The spawning of multiple reading devices will help drive the digital transformation, Frank believes, by raising awareness, but not necessarily moving students away from computers onto the devices for studying. While it is easier to read on something you can hold in your hand than a laptop, devices that act more like computers will do better with students in the long run than straight e-readers, Frank said.

Professor: The First Consumer Like traditional textbook publishers, FWK markets first to college instructors, getting them to adopt a title and letting students pick the format. “Most professors are not ready to commit to just an e-version of a textbook because a lot of students can’t or don’t want to use that version,” Frank said.

Flat World Knowledge focuses first on developing a good title, then markets through webinars to professors and with e-marketing. A phenomenal two-thirds of professors who have adopted FWK titles never spoke to anyone at the company, simply selected the book from the website.

In April 2010, Flat World Knowledge signed distribution agreements with Barnes & Noble College Booksellers (New York) and NACS Media Solutions, a subsidiary of the National Association of College Stores (Oberlin, Ohio) to further penetration in the college market.

Sustainability of the Flat World Knowledge model is promising. Through the first three semesters of offering its book list, “we’re seeing 95% re-adoption,” Frank said.

McGraw-Hill Integrates M-H Connect on Blackboard Learn (Educational Marketer – July 19, 2010) McGraw-Hill Higher Education (New York) in July teamed up with Blackboard (Washington, D.C.) to make it easier for college students and instructors to access and use digital content and tools from the McGraw-Hill Connect learning management platform.

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The partnership marks the first time Blackboard has enabled full integration of a major publisher’s content and digital tools on the Blackboard Learn course management platform. The offering is expected to be available in early 2011.

In essence, what it means is that with a single sign-on, students and instructors in institutions that use the Blackboard platform can access the McGraw-Hill Connect tools and content.

The integration puts those materials into the college course workflow process.

Previously, students would have to click through from the Blackboard platform to the McGraw-Hill site. Professors would have to do some additional re-keying of data.

The agreement streamlines the process, facilitates access to material from the third-largest college publisher and could increase sales opportunities by putting access right in front of potential customers.

Connect is McGraw-Hill’s learning management platform that covers 34 disciplines and includes 250 titles of digital textbooks and tools, including ancillary materials, assessment engines and adaptive learning tools.

One key benefit is that assessments, quizzes and tests will post directly to the Blackboard gradebook, merging a process that previously involved two separate systems.

McGraw-Hill Connect currently is used by more than 1.8 million students and instructors at some 600 colleges and universities in the U.S. Connect will continue to be available separately for students and instructors that do not use the Blackboard system.

CourseSmart Offers Its Sampling Service in Faculty’s LMS (Educational Marketer – July 19, 2010) CourseSmart (San Mateo, Calif.) the online sampling and e-commerce site for college e-textbooks, launched a program to take its service to college faculty instead of requiring them to come to its website.

Faculty Instant Access Program allows single sign-on access to CourseSmart’s catalog of e-textbooks through the institution’s learning management system or campus portal.

“This is about integrating with the faculty workflow, so it is immediate access,” CourseSmart CEO Sean Devine told EM. “They don’t have to go to us.”

CourseSmart, supported by the major college publishers, was created to be the one place faculty can go to find the most widely used books. It boasts about 13,000 e-titles, or more than 90% of the available core college textbooks.

Initially, the access program is being rolled out to a select group of as-yet-unnamed institutions, though Devine said they represented a cross-section of two- and four-year institutions from across the country. A broad rollout will follow.

The access program is management system agnostic, fitting in with Moodle, Sakai, Desire2Learn and Blackboard and portals such as SunGard Luminis, Datatel Portal and uPortal.

The access program is aimed at facilitating the sampling process for faculty members, though the choice of whether to go for e-text or print remains a student choice. “We haven’t gotten to the point where a faculty member says, ‘I’m adopting digital only,’” Devine said.

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The CourseSmart initiative comes as the concept of digital textbooks appears to be gaining acceptance among faculty and also as textbook rental programs appear to be proliferating like rabbits on college campuses. But Devine said the CourseSmart outreach to faculty was not a preemptive strike against potential competition from textbook rental programs.

“We don’t believe we’re being pushed into this by rentals, at all,” Devine said. “We like to think we’re where rentals are going.”

B&N Launches NOOKstudy e-Reader Software for PCs and Macs (Educational Marketer – July 19, 2010) E-readers have yet to prove themselves on college campuses, but Barnes & Noble (New York) thinks it has found a way to marry at least the concept of the devices to the functionality students want.

Barnes & Noble, which markets and distributes the Nook e-reader, for the fall semester plans to roll out the NOOKstudy integrated software solution for PC and Mac computers. It’s free and no e-reader required.

“We wanted to bring these capabilities to the devices that students already have,” Tracey Weber, Barnes & Noble’s executive vice president for textbooks and digital education, told EM.

Acknowledging students’ lukewarm reception to e-readers for coursework, Weber said she was excited overall by the growing student acceptance of e-textbooks.

“It does feel to us like the time is right for these things to come together,” Weber said.

NOOKstudy currently is being piloted at several two-year and four-year universities, including Pennsylvania State University, the University of Nevada, Las Vegas, Queensboro Community College in New York and the Rochester (N.Y.) Institute of Technology.

Fitting to Student Study Habits While Barnes & Noble would love students to snap up the Nook device itself, the company recognized that student study habits differ considerably from leisure reading. For one thing, students tend to study with several books or materials open at once, moving back and forth among them, or they move back and forth among pages in the same book. That experience is difficult, or impossible, to replicate currently on the more linear e-readers, Weber said.

Among NOOKstudy’s capabilities that Barnes & Noble is touting is that students can manage their course-related digital content—e-textbooks, class material and notes on the device they use most.

Barnes & Noble also thinks it has improved some of the tools that students seek most from the e-textbook experience, including highlighting—multiple colors available—and note-taking. Students can insert various symbols—or pushpins, in NOOKstudy terminology—and tag notes for easier searching. Thus, students can pull up all the notes they’ve marked for the final exam, for instance, and click on them to pull up the relevant section of the textbook.

NOOKstudy also supports both the ePub and PDF formats to facilitate access to most e-trade books and e- textbooks.

Distribution Edge Barnes & Noble, which operates 775 retail stores, also operates 637 college bookstores reaching almost 4 million students and more than 250,000 faculty members. That gives it an edge in marketing and distributing the NOOKstudy software.

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NOOKstudy will be available through the Barnes & Noble website and its store. Marketing efforts are three- pronged: encouraging students to try e-textbooks, helping faculty understand how digital tools like NOOKstudy can help them manage courses, and focusing on institutions seeking forward-looking solutions, Weber said.

Blackboard Buys into Collaborative Learning Segment (Educational Marketer – July 19, 2010) Staking a claim on the collaborative learning market segment, Blackboard (Washington, D.C.) is scooping up two virtual classroom technology providers Elluminate (Pleasanton, Calif.) and Wimba (New York) in a combined $116.2 million transaction that is expected to be completed later this year.

“We thought that the best way for us to enter the market was by acquiring the top two leading providers of virtual classroom technology because this would place us as the market leader in this space as well,” Blackboard president and CEO Michael Chasen said in July when announcing the pending acquisitions.

Blackboard will pay $57.2 million to acquire Elluminate and $59 million for Wimba. The combined price is 4.3 times the combined contract value of about $27 million for the two companies.

The acquisitions are expected to contribute about $6 million in revenue to Blackboard in 2010, and with moderate growth should contribute about $30 million in 2011.

Chasen said it was strategically important to make the acquisitions in keeping with Blackboard’s long-term plan of providing the key infrastructure for e-learning.

Elluminate and Wimba will form the backbone of the new Blackboard Collaborate platform group to be led by Maurice Heiblum as president. Heiblum is president of Elluminate.

In a letter to clients, Blackboard pledged to continue current integration work that the two companies have with open-source products and to maintain the relationships the two have with other commercial learning management system providers (Blackboard competitors) as well.

INDUSTRY UPDATE – CATALOG / RETAIL

Sears Uses Online Videos to Promote its Rewards Program (Internet Retailer – July 22, 2010) Sears has started to promote the retail chain’s Shop Your Way Rewards program with a contest that encourages consumers to post videos about how they would spend 1 billion rewards points.

Sears, No. 8 in the Internet Retailer Top 500 Guide, will allow program members to submit the videos and select the winners. Consumers can submit 45-second videos describing the best way to spend the 1 billion points, which potentially is the top prize in the contest. The catch is this: The contest winner must donate at least half the points to charity.

The contest, which runs through mid-October, marks the upcoming one-year anniversary of the rewards program, which Sears introduced in November 2009, says Lou Ramery, the retailer’s senior vice president of relationship marketing. The contest is the first Sears has undertaken that involves consumer-generated online videos, he says.

Sears recently added the rewards points component to the program, he adds. Only consumers who sign up for the rewards program, which also includes Kmart consumers, can submit videos or vote for the winner.

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“The contest is a fun way to engage our more than 17 million members while also giving them the opportunity to help others,” says Scott Freidheim, executive vice president, operating and support businesses.

The rewards program typically awards ten points for every dollar spent, Ramery says, though some purchases earn more points. Consumers can spend their points across all brands owned by Sears.

The prize pool starts at 100 million points and increases 10,000 points for every video submitted. That means consumers would have to submit 90,000 videos for the prize to reach 1 billion points. Each individual can submit multiple entries.

Sears will post the videos at www.billionpoints.com.

This is the second time in recent weeks that Sears Holdings Corp. has turned to consumers to promote programs or its web sites. The company has begun asking consumers to submit video game reviews to MyKmart.com, an online community launched in May 2009. The retailer will post the best reviews on Kmart shelves.

Kroger Will Expand FoodsCo in Oakland (Chain Store Age – July 20, 2010) Kroger Co. said Monday it will open two new stores under its FoodsCo banner in two East Oakland, Calif., neighborhoods by 2012, according to a report by Supermarket News.

The stores are being planned in underserved areas of East Oakland that have been without local grocery stores for 20 years, the report said, citing Oakland’s Economic Development Agency.

FoodsCo is a price-impact, warehouse-style banner Kroger Co. operates in California.

TJX Cos. to Expand Marshalls into Canada (Yahoo! Finance – July 20, 2010) TJX Cos. said Tuesday that it will expand its Marshalls store chain into Canada, with plans to open six locations there initially.

TJX, which also sells discounted clothing and home furnishings under the T.J. Maxx, HomeGoods and A.J. Wright nameplates, said that it plans to open its first Canadian store next spring. Carol Meyrowitz, president and chief executive of TJX, said that TJX's Canadian division has the company's highest financial returns.

"Canada has been a very successful market for TJX since we first entered in 1990," she said in a statement. She noted that the Canadian market can ultimately support 90 to 100 Marshalls stores.

Marshalls in Canada will be managed by TJX Canada, the operating group managing the Winners, HomeSense and StyleSense chains there. TJX said it is not yet ready to announce specific locations for the initial stores in Canada.

The company operates 903 T.J. Maxx stores, 819 Marshalls stores, 328 HomeGoods stores and 154 A.J. Wright stores in the U.S. In Canada, the company operates 208 Winners locations, 79 HomeSense units and three StyleSense stores. In Europe, the company operates 281 T.K. Maxx stores and 19 HomeSense stores.

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Save-A-Lot Announces Affiliation with Local Hispanic Operator for Stores in Texas (Market Watch – July 21, 2010) Save-A-Lot, one of the nation's leading hard discount, limited assortment grocery chains and a division of SUPERVALU /quotes/comstock/13*!svu (SVU 11.12, -0.04, -0.36%) , and Hispanic grocery operator Rafael Ortega announced today that they have joined together to form a new company, Adventure Supermarkets LLC. The new company owns and operates six former Save-A-Lot stores in the Houston and South Texas markets under a co-branded format, "El Ahorro Save-A-Lot."

"We are always looking for innovative opportunities to bring the Save-A-Lot brand to local communities, and we think this affiliation best enables us to serve the Hispanic community in this area," said Bill Shaner, Save-A-Lot president and CEO. "This relationship is a new business model for the company. Combining Mr. Ortega's local insights with the power of the Save-A-Lot network of stores and exclusive-label expertise will enhance our ability to provide our Hispanic customers in this part of the country with the products and services they need and want, while positioning the Save-A-Lot brand for growth."

Ortega has 24 years of experience in serving the Hispanic community in Texas and currently owns and operates 15 El Ahorro Supermarkets and almost 100 La Michoacana Meat Markets.

"I am pleased about joining with Save-A-Lot in this opportunity and excited about the potential of our new, blended format," said Ortega.

The six stores, which are located in Brownsville (one store), Victoria (one store), Harlingen (one store) and Houston (three stores), Texas, began operating under the new co-branded name, "El Ahorro Save-A-Lot," at the end of May.

Duane Reade Opens Union Square Flagship Store (Drug Store News – July 21, 2010) Duane Reade has announced the opening of its new flagship store located at the southern end of Union Square Park in New York on the site once occupied by Virgin Superstore. This latest opening reflects the company's new emphasis on health, fresh food and higher-end beauty.

The new 13,944-sq.-ft. store, located at 52 E. 14th St., has dedicated substantial space to beauty products and services, including the Ramy Brow Bar, which offers a menu of tweezing, shaping and sculpting options for eyebrows. The new beauty section also features an expanded "Look Boutique," Duane Reade's exclusive beauty bar offering.

For those in need of medical attention, the location offers a "Doctor on Premises" service to treat walk-in customers for general ailments and illnesses. For added convenience, the pharmacy department will be open 24 hours.

"It's an unbelievable space that is at the crossroads of so much nonstop activity," stated Joe Magnacca, president of Duane Reade. "We've really added a number of unique things and expanded some of our more popular offerings, such as our Look Boutique, to make this space exciting -- and essential -- to our customers."

The airy, wide-aisle new store is designed to appeal to a younger and more active neighborhood. A dedicated food section includes everything from sushi and sandwiches to fresh-baked breads and healthy snacks.

In addition, baked goods, as well as a cheese section and self-service coffee bar is available. A refrigerated section features on-the-go meals, and there is a station for cut fruits and vegetables, oatmeal and premade salads and sandwiches. 7

INDUSTRY UPDATE – DIRECT MARKETING

Discover Adds Merchandise Options to Rewards Program (DM News – July 21, 2010) Credit card company Discover announced July 21 that it has revamped its Cashback Bonus rewards program.

The company now allows cardmembers to redeem cash rewards for more than 400 products, including iPods, coffee makers, tools and exercise DVDs. Customers are not charged shipping fees or taxes on their merchandise selections. Consumers also have the option of partially paying for an item using their Cashback Bonus and charging the remainder of the cost to their cards.

Customers, who receive 5% cashback on select purchases and 1% on other charges, can also continue to redeem their rewards for partner or Discover gift cards, direct deposits, balance payments or charity donations.

“It's just another way in which we can continue to enhance the experience,” said Dana Traci, Discover's VP of rewards and product management.

Discover also has added features to the rewards section of its website, including a search function and personalized recommendations, which are determined using a customer's rewards-redemption and buying histories. Discover teamed with Affinion Loyalty Group on changes to the merchandising agreements.

The credit card company is marketing the enhanced rewards program to current cardmembers through e-mail marketing, the Discover website, targeted online advertising, and customers' mailed statements. It has also launched a promotional website, ItPaysToDiscover.com.

“We're really looking at all our customer touchpoints and ways in which we can reinforce our rewards value that we're offering to cardmembers,” Traci said.

Livescribe Pushes Smartpen with Online Marketing (DM News – July 21, 2010) Livescribe launched a multimillion-dollar integrated marketing effort July 19 to back the release of its Echo smartpen. It is the technology company's first significant launch since the release of its debut product two years ago. Agency T3 developed the campaign.

The Echo smartpen is an upgrade from the company's earlier Pulse smartpen, which not only writes but also records everything a consumer hears, writes and draws during a meeting or a class. The product release coincided with a number of additional software revisions and enhancements.

“It's probably the biggest launch for us,” said Eric Petitt, senior director of marketing at Oakland, CA-based Livescribe. Petitt declined to be more specific about the campaign budget, other than calling it “multimillion dollar,” but said it was “significant” given Livescribe's relatively small size.

The new pen is available in national retail chains, such as Best Buy, Target, Amazon.com, Staples and Apple stores. The company wanted its marketing campaign to match its growth trajectory, which has led to the sale of 400,000 smartpens and a doubling of its growth from last year, said Petitt.

The effort's goal is to drive traffic to the company's site, where the product is also for sale. The bulk of the marketing budget is going toward online marketing, including video ads in particular, so it can demonstrate how the product actually works. A branded YouTube channel for the new product is still in the works.

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“We want the customer to see the product and understand what it can do,” said Petitt, who acknowledged it can be hard to verbally describe. “We're an entirely new category. Our challenge is explaining why this product exists.”

Livescribe is conducting audio, on-screen and in-app advertising on music site Pandora after T3 found the company's customer base indexes high in music.

The campaign also includes e-mail marketing to existing customers, search, promotions to its 100,000 Facebook fans, print advertising, media outreach, a revamp of PPC efforts and in-person events.

Livescribe is targeting a broad array of consumers with the campaign — “anyone who struggles with in-bound information” — including journalists, lawyers and sales people, said Pettit. One-third of the company's customers are college students, and it will conduct product demos at colleges and in Best Buy and Brookstone stores as part of the campaign.

Yumi Prentice, managing director and SVP at T3, San Francisco, said the agency hopes to “leverage [Livescribe's] existing database and social components” as the campaign continues to develop. Currently the company sends out a few hundred thousand e-mails a month to its user base in four countries.

“They have a real powerful advocacy built into their user base, and we want to explore that further,” she said.

A custom brand study commissioned to comScore will track results of the campaign, Prentice added.

Livescribe hired T3 as its first agency of record in April after a competitive pitch to plan and develop the campaign. Pettit said the company hired T3 for a number of reasons, including its “doggedly persistence on getting the right deal for clients” and a “data-driven” approach.

“The first thing we knew we wanted was a direct relationship with a really strong media planning team,” Pettit said. “And we were really impressed with the creative team in Austin.”

Study: Direct and Digital Hiring Trends Soften in Q3 (BtoB Online – July 14, 2010) Weakening economic signals are having an impact on the hiring expectations of digital and direct marketers for the third quarter, according to the latest employment survey from direct marketing executive search company Bernhart Associates.

According to Bernhart’s “Quarterly Digital and Direct Marketing Employment Report,” which polled online 417 companies between June 29 and July 12, 39% said they will add staff during the third quarter of this year, down from 43% who planned new hires in the second quarter and 46% in Q1.

In addition, 23% of respondents currently have a hiring freeze in place, up from 20% in the second quarter. And the percentage of companies planning layoffs in the third quarter grew to 6%, compared with 3% during the spring quarter.

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INDUSTRY UPDATE – DIRECTORY

Independents Projected to Capture Close to 30% Share of YP Market in 2012 (Yellow Pages & Directory Report – July 2010) Independent publishers are projected to increase revenue 2.8% to $4.29 billion in 2010 accounting for 28.8% of total yellow pages market revenue, according to Independent Yellow Pages Markets 2010, an upcoming report from YP&DR publisher Simba Information. The report also projects the independent share will continue to grow steadily, reaching a nearly 30% share by 2012.

The telco segment is projected to decline an additional 5.2% to $10.67 billion in 2010 before leveling off to very slight revenue increases of less than 1% through 2012, which also contributes to the ever-increasing independent revenue share.

Independent growth will be driven by increasing penetration in existing markets and a continued push into the online yellow pages arena, especially by Yellowbook (Uniondale, NY) and Ziplocal (formerly Phone Directories Company) (Orem, UT). Few independent publishers have scheduled any directory launches through 2012 following several years of numerous launches including 74 new books with 10.2 million circulation in 2007 and 2008.

The entire yellow pages market is expected to reach the $15.2 billion a year mark by 2012 with the telcos accounting for $10.71 billion while the independents are projected to account for $4.49 billion.

The report also tracks metro markets, including Manhattan, Boston, Chicago, Kansas City, Seattle, Austin, Sacramento, San Francisco and Buffalo, which account for an approximate 12% share of the total yellow pages revenue.

The report also looks at the industry’s evolution from six telco publishers—SBC, Bell Atlantic, Bell South, GTE, Ameritech and US West Dex—controlling more than 85% of the yellow pages revenue in 1999 to today’s largest publishers—AT&T, SuperMedia (formerly Idearc), Dex One (formerly R.H. Donnelley) and Yellowbook— accounting for more than 72% of the industry’s revenue.

Ziplocal will Rebrand Your Community PhoneBook, Focus on Expansion (Yellow Pages & Directory Report – July 2010) Ziplocal (formerly Phone Directories Company) (Orem, UT) will rebrand its newly acquired Your Community PhoneBook operation over the next year and will also focus on digital and print expansion, CEO Olivier Vincent told YP&DR. “All of our directories will be branded Ziplocal including Your Community PhoneBook and those will be branded as they are published.”

Vincent said it won’t be a total rebranding because Your Community PhoneBook, which has a very high community-based recognition, uses red color dominance on its books which will be retained. The locally-oriented photo concept for the cover of the former PDC directories will also be retained. Ziplocal changed its name from PDC in 2009.

Ziplocal acquired Your Community PhoneBook (formerly DataNational) (Blue Bell, PA) as part of a cross-border deal between Yellow Pages Group (Montreal) and HM Capital (Dallas), the owner of Ziplocal and Canpages (Vancouver, BC). YPG acquired Canpages (see story, this issue) and Ziplocal received Your Community PhoneBook. YPG paid US$222.2 million for Canpages and a 35% ownership share of Ziplocal.

Vincent said having a partner like YPG, which is an incumbent in Canada while Ziplocal is an independent in the U.S., is not really an issue. “Being the official print publisher has become obsolete over the last few years. What’s important to the customer is what is delivered whether it is print, local searches, Web or mobile.”

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Vincent said Ziplocal will focus on merging the operations and expanding its digital platform. “Part of the deal with YPG is we retained the intellectual online property in our new organization.”

Ziplocal will focus on bringing real digital to the yellow pages online world rather than the “look and feel” of the print directory, Vincent said. “No one is going online to look for a book or to turn pages. The look and feel of print is nowhere near what the markets needs or what the market is looking for.”

He said they will be expanding the digital offerings they had at Canpages. “We love our search platform but it is about two years old. Now we look for something more. We will look at social media, mobile and any new service that becomes available that might be what users are looking for online.”

Vincent said they are already looking at programs to put advertisers onto other Web sites in order to grow traffic, additional services through social media, the E-commerce world and continued expansion into the mobile world for opportunities. “Ziplocal is a local search firm, not a directory operation with some online,” Vincent said.

But Ziplocal won’t stop at expanding its online operations, Vincent said. “It is early to say exactly what will happen but we’ll be looking to expand whether through acquisition, merger, start-up or digital. But, expansion is at the front of our radar.”

Another challenge in the forefront for Ziplocal is sale staff training, Vincent said. “With so many new opportunities through digital expansion it is important for the sales staff to remain up to speed on technological offerings. And, the only answer is training, training and training. Sometimes we train the managers who train the staff but training is ongoing and it is permanent.”

He said his experience at Canpages was that about half of the sales staff understands the new technology at first. But those who understand the entire print and digital offerings make more money than the others and that becomes motivational force.

He said that while training is expensive, it is important to handle costs associated with the migration from print to digital and reallocate investments from print to digital. “The rapid expansion from print to digital is here to stay and, while print is not dead, the usage is migrating. And, that’s where there is an opportunity.”

The combined Ziplocal and Your Community PhoneBook operation has 965 employees, 317 directories with 25.6 million circulation and combined revenue of $130 million.

Independent DHC Rates Remain Flat in Top Directories in 2010 (Yellow Pages & Directory Report – July 2010) Double-half column (DHC) rates in 16 large independent directories remained flat in 2010, according to a YP&DR tally. The directories selected for analysis include five from each of the two largest independents, Yellowbook and White Directory Publishers; three from Valley Yellow Pages, the third largest independent publisher; and three from Ambassador Media Group, which operates in the highly competitive New York City market.

The 16 directories had an average DHC rate of $8,465 in 2010, flat with the average in 2009, primarily as a result of the only rate reduction in the 2010 books, an 18.4% reduction by Yellowbook in its Minneapolis-St. Paul directory. Without the Minneapolis-St. Paul reduction, the average increase in 2010 is approximately 1.6%.

A spokesperson for Yellowbook said the Minneapolis-St. Paul DHC rate was reduced to $9,960 in 2010 from $12,204 in 2009 to reflect the publisher’s bundled approach to sales in the market. “Because the rate is part of our bundled prices, the DHC rate is misleading if you look at it on a year-to-year basis,” the spokesperson said.

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White led with the top three highest cost-per-thousand (CPM) directories with the 210,000-circulation Durham/Chapel Hill, NC book at $88, the 277,000-circulation Greensboro, NC book at $83 and the 277,000- circulation Columbia, SC book at $72.61. The three lowest CPM’s were all posted by Yellowbook with its 1.1 million-circulation Chicago book at $31.56, its 824,000-circulation Boston book at $41.13 and its 919,000- circlation Minneapolis-St. Paul book at $43.35.

The highest DHC rate was Yellowbook’s 825,000-circulation Baltimore directory at $14,328, a 1.5% increase over $14,112 in 2009. Ambassador posted the second highest DHC rate at $11,122 for its 663,000-circlation Manhattan book, flat with its rate in 2009. Ambassador, which has been in bankruptcy proceedings since mid 2009, did not post any rate increases in its other two directories on the top-16 list.

The highest rate hike was 7.2% in Valley’s San Jose/Santa Clara, CA directory with 532,000 circulation. The DHC rate in the San Jose book is $7,644 in 2010, compared to $7,128 in 2009. The second highest rate hike was also posted by Valley at 4.5% in its 606,000-circlation San Francisco book. The DHC rate in the San Francisco book is $8,136 in 2010, compared to $7,788 in 2009.

RBOC Billings Decline 19.9% to $961.1 Million in June; YTD Down 12.4% (Yellow Pages & Directory Report – July 2010) Billings for RBOC publishers declined 19.9% to an estimated $961.1 million in June in books with more than 50,000 circulation, according to YP&DR estimates. Yellow pages volume declined 22.4% to 61,920 pages.

The decline can be attributed to the rescheduling of 21 directories with greater than 50,000 circulation by the RBOC publishers—AT&T Advertising Solutions, Dex One (formerly R.H. Donnelley) and SuperMedia (formerly Idearc Media).

The reschedule or discontinued directories accounted for a decline of more than 17,000 yellow pages including 15 directories by SuperMedia, five by AT&T and one by Dex One.

A total of 145 directories with greater than 50,000 circulation were published in June, compared to 166 directories with greater than 50,000 circulation in June 2009.

SuperMedia led in billings with more than $398.2 million, followed by AT&T with $322.3 million.

YTD through June billings are down 12.4% to $4.46 billion compared to the same period in 2009. Yellow pages to date are down 15.2% in June compared to 2009.

INDUSTRY UPDATE – MAGAZINE

September Shines Brighter for Monthly Magazines This Year (Advertising Age — July 19, 2010) Ad pages in magazines' crucial September issues -- vital particularly for fashion and beauty monthlies -- are giving many publishers something to sing about.

Publishers are reporting they have sold many more ad pages in this year's September issues than they did last year, when monthly magazines saw ad pages plunge an average of 23.6% from the September before that, according to the Media Industry Newsletter. Last year some titles saw September ad pages decline by steep double digits.

Most titles haven't recaptured their pre-recession levels. And the resurgence doesn't mean magazines have answered all their challenges: A forecast last month predicted that magazines' annual print-ad revenue would decline again in 2010, 2011 and 2012 before rebounding in 2013. 12

But September issues matter a lot, not only because advertisers -- particularly in fashion, jewelry, accessories and watches -- frequently use them to introduce campaigns. Running a piece of those campaigns in September helps, because those campaigns often continue for several months, hopefully setting up a relatively strong end of the year.

"September is seen as the best single-issue gauge of the media marketplace once the semi-lull of summer issues is behind us, and it represents the first issue to close after the time period when many advertisers might have re- evaluated budgets based upon retail sales, company performance, and other prime indicators," said Mary Morgan, VP and publisher at Hearst's Redbook. "Of course, coinciding as it does with consumers' push to back- to-school, fall fashions and the ramp up to seasonal changes, many tea leaves are being read all at once."

Redbook is expecting to run 148 ad pages in this year's September issue, up 24% from September 2009 and even 8% above September 2008.

The good news about this September follows other encouraging signs earlier this year.

"The market continues to be pretty volatile, but I have to say, so far, so good," said Lou Cona, exec VP of Condé Nast Media Group. "The continued momentum in the economy has really inspired clients to invest in their brands via our brands."

Condé Nast's Vogue, where the September issue matters so much that it became the subject of the documentary "The September Issue," will include 532.4 ad pages, up 24.1% from the issue a year earlier and more than any other Conde title will run in September. In its September 2008 issue, Vogue ran 674.1 ad pages.

"We saw growth from existing advertisers as well as some new advertisers," said Vogue VP-Publisher Susan Plagemann. Retail advertising in particular exceeded expectations, she said.

Vogue rival Elle, part of Hachette Filipacchi, said this September's issue would have 382 ad pages, up 18% from 324.8 in 2009.

Condé Nast's monthlies as a whole averaged a 7.2% gain in ad pages across their September issues this year, according to Condé estimates. Automotive, fashion and beauty advertisers in particular have been spending strongly, although home products and pharmaceutical advertising remains weaker than Condé would like.

Among Condé titles' September issues, ad pages rose 57.3% to 241.2 at Glamour; 14.4% to 88.5 at Self; 6.8% to 225.9 at Vanity Fair; 4.5% to 143.6 at Teen Vogue; 2.9% to 213 at GQ; and 1.4% to 119.5 at Allure. Some titles declined, including Details, where September ad pages fell 23.3%, and Lucky, where September ad pages fell 10.9%.

At Hearst, Harper's Bazaar expects to publish a September issue with 12% more ad pages than last year. Hearst will also see gains of 10% at Seventeen and 7% at Esquire, the company said. Marie Claire gained 37% if you set aside a supplement that accompanied the September 2009 issue but has been moved to the October issue this year, the company said. Cosmopolitan will come in flat with 150 ad pages, roughly the same as last year.

"Our September issue was one of our strongest on record, and is really a continuation of the momentum we've been experiencing throughout the year," said Nancy Berger Cardone, VP and publisher of Marie Claire.

Time Inc.'s InStyle will run 403 ad pages in September (including ad pages from a Makeover special), 16% more than September a year earlier, 21% above September 2008 and the first time since 2000 that InStyle's September paging will include more than 400 ad pages.

Sibling Time Inc. title People StyleWatch is running 135 ad pages in its September issue, up about 54% from its September 2009. About 60% of the ad paging in the new issues comes from new advertisers including Marc Jacobs, DKNY and Michael Kors, a StyleWatch spokeswoman said. 13

And Time Inc.'s Real Simple will likely include 141 ad pages, about 6% more than last year.

Even magazines that don't revolve around fashion and beauty can ride the September wave. Time Inc.'s Health magazine expects more than 125 ad pages, up about 24% over last year, partly because beauty advertising has proved the magazine's largest growth category this year. Ad pages in All You's September issue will top September 2009 by 40%, the magazine said.

Future US Will Launch Maximum Tech Print Title (Mediaweek — July 15, 2010) Computing magazines have contracted in recent years as their digitally-inclined readers have shifted to the Web, but Future US apparently believes there’s still a market for a technology-oriented print title.

The niche media company announced it is launching Maximum Tech, a quarterly magazine designed to help consumers make sense of the growing personal technology and consumer electronics options available. A companion online channel will reside at Future’s MaximumPC.com.

The first issue is due out Sept. 21, not surprisingly, will cover the hottest area of consumer electronics, tablets, as well as HDTVs and smartphones. Future US said that issue will have a cover price of $9.99 but didn’t reveal the price for subsequent issues.

Future US’s publishing schedule of Maximum PC, a magazine for the hard-core tech enthusiast, will remain unchanged.

Report: Dramatic Decline in Magazine Closures This Year (Audience Development — July 19, 2010) Last year, when so many magazine publishers were scratching and clawing, trying to keep their businesses afloat despite the slumping economy, 279 magazines closed during the first half. So far this year, the rate at which titles are fading into oblivion has slowed dramatically. According to the latest report from online magazine database MediaFinder, only 87 titles have shut down through the first six months of the year.

“More magazines would have ceased publication but fortunately were acquired and continued publication,” Trish Hargood, president of MediaFinder publisher Oxbridge Communications, says in a release. “Smaller companies took advantage of the opportunity to buy magazines from Reed Business Information and Nielsen Business Media, who were struggling to divest themselves of many b-to-b titles.”

Meanwhile, the number of launches also slowed through the first half, with 90 titles coming to market, the report says. That’s compared to 187 magazines that launched during the same period last year.

A total of 16 print magazines converted to online-only formats over the first half, versus 43 during the same period last year, the report says.

Guideposts Relaunches Web Site (Audience Development — July 19, 2010) Late last week, Guideposts launched its new Web site. The redesigned site has a new user interface and navigation, more free content in the form of ebooks and has integrated a feed from the brand's Facebook page. All the new elements were added with the intention of growing audience. 14

The redesign follows a year of explosive growth for the site. According to the company, Guideposts.org grew its traffic 850 percent from July 2008 to July 2009. Currently, the site is averaging about 250,000 monthly uniques.

According to Philip Charles-Pierre, vice president, digital media, the ebooks—on such topics as daily devotionals, angel sightings and other inspirational stories—are offered for free as a way to collect email registrations. Following that, Guideposts has developed a collection of email newsletters that coincide with the ebook topics. There are nine ebooks currently available, with 20-30 planned by the end of the year.

The site now features more than 20 bloggers and other topical experts—part of a push for fresher daily content. "This is a big difference from what we had before," says Charles-Pierre. "The marquee and other stories will rotate on a daily basis, which gives a person a reason to come back."

The site is built on the Drupal Web CMS, and the relaunch is based on an upgrade to version 6. So far, Charles- Pierre has not reworked the ordering process for any of the new ebook content. The initial focus was to funnel the users to the right place—the conversion architecture will be worked on next.

Charles-Pierre opted to forego adding any discussion forums to the site, he says. Instead, the home page features a live feed from the Guideposts Facebook page, which currently has 14,000 fans. "It's a more efficient way to bring them into the site," says Charles-Pierre. "Whenever we post something we get lots of responses. The goal is to make it so you can see the comments [on the home page]. Commenting is one thing, but community is another. Instead of creating a new one, we've leveraged an existing one."

Charles-Pierre says about 2 percent of the site's overall traffic is referred from Facebook.

Circ Tactics for Independent Publishers Acquiring New Titles (Audience Development — July 21, 2010) While the economic recession has crippled many magazine publishers large and small, it has also given independent publishers the opportunity to grow their businesses. There are key, circulation-related points to address, however, when acquiring titles, especially when it comes to the condition of their files. At the 2010 FOLIO: Show, circulation consultant Bruce Sprague gave workshop attendees a few things to consider because “doing the ‘due diligence’ now will avoid problems and unexpected cost later.”

• Know the audit cycle of the magazine. Paying close attention to the cycle, which is determined by the bureau that performs its audits, will reveal any hidden red flags. For example, if the magazine is nine months into the audit cycle and there is only 20 percent one-year circulation, that could be a big problem.

• Request the “final reports package” for the most recent issue close. This information, Sprague says, should be provided by the title’s current fulfillment vendor and will let you know how many customers are one-year subscribers, two-year subscribers, etc., thus, allowing you to budget accurately. The information in these reports should be dated, so if the final package contains old information, that’s a red flag because BPA only allows demographic data reported in audit statements to be no older than three years. Expect to spend more money on renewal efforts if this happens—you’ll need to send out a full renewal form instead of a short one to capture updated information.

• Request to see the last two or three budget reports. If the current circulation budget is significantly less or if expenses are lower than normal, ask why.

• Check the subscriber sources. Knowing whether the subscribers to the acquired title are from written, electronic or telemarketing sources may be important to current and future advertisers. It will also give you an idea of how much it will cost for you to renew/re-qualify and develop new subscribers.

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• Check vendor contracts and postage set-up. Be sure to find out whether domestic or offshore telemarketers are servicing these titles because they could impact your costs. And there may be penalty costs for changing your fulfillment or telemarketing vendors, so be sure to read the fine print or ask questions. Also, is the acquired title mailed out to subscribers using periodical or standard class postage? Keep in mind that moving from standard to periodicals class may be very expensive. Plus, 50 percent of the copies must be distributed to people that have personally requested the magazine in order for the title to be mailed out via periodicals class.

PCWorld, Macworld Introduce Custom Content Division (BtoB Media Business — July 20, 2010) International Data Group’s PCWorld and Macworld announced the formation of a custom content division called PCWorld|Macworld Content Works. The division will produce white papers, videos, events, websites and other materials for technology marketers.

Ted Greenwald was named content director of Content Works. Previously, he was a senior editor at Wired.

“As information overload continues to increase, marketers are telling us they have to work harder than ever to connect with prospects and customers. Content Works will deliver extraordinary content that will engage marketers’ audiences in meaningful ways,” Mike Kisseberth, president-CEO of PCWorld and Macworld said in a statement.

16 The Weekly Industry Update is published by Quad/Graphics Marketing. Please contact Alberto Peña at 212-583-6636 or [email protected] with any questions or comments.