July 26, 2010 ECONOMIC UPDATE INDUSTRY UPDATE

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July 26, 2010 ECONOMIC UPDATE INDUSTRY UPDATE 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. 2 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
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