MediaMemo » publishing

Amazon's iPad App Will Be All New, But It Won't Be Ready By April 3

Peter Kafka — Mon, 22 Mar 2010 10:39:26 +0000

Want to read the books you bought for your Kindle on your new iPad? You’re going to have to be patient.

Amazon promises that the iPad version of the Kindle app it is working on will be cool, but it won’t be ready when the first Apple devices show up April 3. That’s because the e-commerce giant, like most other developers, hasn’t been able to test the app on a real device. And it’s going to wait until it can do so to finish the software.

How will the app compare to Amazon’s other Kindle implementations — and more important, to Apple’s own iBook program?

Amazon (AMZN) isn’t saying much, though Kindle manager Ian Freed tells the New York Times that his group has “developed a tablet-based interface that redesigns the core screen and the reading experience.” The paper, which got a preview, informs us that the app “allows readers to slowly turn pages with their fingers”.

Amazon has created software versions of its Kindle reader for just about every conceivable platform, including Apple’s iPhone and iPod Touch. Barnes & Noble’s Nook (BKS) will also have an iPad app as well, though it will also wait until it can actually touch one of the tablets before it finishes its work.

As the Times notes, only a handful of developers (including the Wall Street Journal, which like this Web site is owned by News Corp.) have been allowed to work the device for the past couple month. But beyond “First!” bragging rights, I’m not sure the head start will be that big a deal for developers in the long run.

There are some iPhone/iPod apps that got a big boost by arriving early to Apple’s iTunes (AAPL). But there are many other successful programs that showed up later and thrived. ESPN’s ScoreCenter, for instance, didn’t debut for nearly a year after the app store opened for business, but it quickly became the most popular sports app.

And remember that when developers created their first programs for the iPhone, they were working on a platform that already sold millions of units in the previous year. First mover status for the iPad, though, means your initial audience will likely be in the “hundreds of thousands”.

Macmillan CEO Defends E-Book Price Hike, Again

Peter Kafka — Wed, 03 Mar 2010 13:00:48 +0000

Cheers to Macmillan CEO John Sargent, who has taken to writing long open letters to his readers about changes in his company’s e-book pricing model. Alas, the newest installment, on the company’s blog, doesn’t add much more to the discussion.

The short version: Sargent wants you to know that while he’s going to raise prices on new e-book titles, that doesn’t mean all e-book prices will be going up.

There has been a lot of concern from e-book readers that $9.99 books will no longer be available. Most Macmillan e-books will still be priced below ten dollars. Our e-book sales over the last year clearly indicate that only about a third of our e-book business is in the digital versions of new release hardcovers. Unit sales of older books far exceed our new release hardcover sales, so the $9.99 and lower prices will continue to represent the largest portion of our business.

This will be an interesting data point to remember when prices do bump up this spring, prompted by Apple’s (AAPL) entry into the e-book market via the iPad, and Amazon’s (AMZN) reluctant acceptance of the new scheme.

But ultimately, it’s a red herring. Either you’re sympathetic to publishers’ attempts to protect pricing of their paper-and-ink books or you’re not. If you want a good summary of the debate, check out the comments on Sargent’s post.

Time Inc.'s Magazines Get Less Bad, With Some Help From People

Peter Kafka — Wed, 03 Feb 2010 18:41:24 +0000

If you’re waiting for Apple’s (AAPL) iPad to rescue the magazine business, you may have to wait a very long time indeed. But the present-tense magazine industry–the ink-and-paper version everyone has left for dead–may be limping its way to a recovery.

It’s not close yet. But we are seeing signs that things are at least getting less bad. As Nat Ives notes, the slide in newsstand sales seems to have slowed in the second half of last year, and some titles are even reporting an uptick.

Meanwhile, industry heavyweight Time Inc. also had comparatively good news to report today-things are still down, but not as dire as they have been.

The numbers: The Time Warner (TWX) unit says Q4 subscription revenue was down six percent and ad sales were down 12 percent. Not stellar, but better than Q3, when they were down 13 percent and 22 percent, respectively.

The bottom line, in the meantime, helped by two rounds of major layoffs, stayed steady, with an operating margin of 14 percent.

It’s hard to tell how widespread the recovery is, because different titles have different stories to tell. Time Warner did note that its News unit–that includes Time, Fortune, etc.–lagged behind and that its Style group–overseen directly by CEO Ann Moore–did well.

“Well,” that is, by magazine standards: Revenue was flat in Q4, aided in large part by People magazine. (Now you can see why the Time Warner executive I talked to last year said it was hard to see the company dumping that title in particular.)

The company said that while ad dollars were down nine percent in the U.S., ad rates only shrank by “low single digits,” which is a bit encouraging. And Time Warner said numbers for the current quarter are improving over Q4.

Requisite caveat here: These numbers, and the ones you’re going to see for the next couple quarters, are being compared with really terrible numbers from previous quarters. So the fact that Time Inc. can’t show actual growth tells you that this is still an industry with really big problems. But maybe they’ll be more manageable than we thought–even without the help of a “magical and revolutionary device.”

Here’s the Q4 breakdown (click tables to enlarge):

And, for comparison’s sake, here are the Q3 numbers:

News Corp.: Conan's Not Coming to Fox Just Yet; Amazon's Ready to Bend on E-Book Pricing

Peter Kafka — Tue, 02 Feb 2010 22:41:33 +0000

Two interesting nuggets from a wide-ranging earnings call today:

News Corp. CEO Rupert Murdoch tried to lower expectations that his Fox broadcast network would hire Conan O’Brien.
Murdoch hinted that his book publishing unit is in line to get a new deal on e-books from Amazon, just as Macmillan has demanded (as will other publishers).

On the second point, here’s my on-the-fly transcription and paraphrasing of Murdoch’s comments about Amazon (AMZN), Apple (AAPL) and e-book pricing. It’s one of the most candid descriptions you’ll hear from a top executive about Big Media’s reluctance to embrace digital distribution at the expense of its existing system and revenue:

“We don’t like the Amazon model of $9.99….We think it really devalues books and hurts all the retailers of hardcover books. We’re not against electronic books; on the contrary, we like them very much” because they cost us less to distribute, “but we want some room to maneuver.” The Apple deal…“does allow some flexibility and higher prices” though e-books will still be lower than print versions. And now Amazon is willing to sit down with us again and renegotiate.

UPDATE: Here’s a more complete transcript from Seeking Alpha:

We don’t like the Amazon model of selling everything at $9.99. They don’t pay us that. They pay us the full wholesale price of $14 or whatever we charge. We think it really devalues books and it hurts all the retailers of the hard cover books. We are not against [inaudible] books. On the contrary we like them very much indeed. It is low cost to us and so on. But we want some room to maneuver in it. Amazon, sorry Apple in its agreement with us which has not been disclosed in detail does allow for a variety of slightly higher prices.

There will be prices very much less than the printed copies of books but still will not be fixed in a way that Amazon has been doing it. It appears that Amazon is now ready to sit down with us again and renegotiate pricing.

Again, it’s impossible to stress how scarring the music labels’ experience has been for Big Media. And they’re determined not to repeat the experience. Their takeaway, though, seems to be that they can stave off digital distribution by keeping prices high and inventory relatively scarce. Hard to believe consumers are going to go for that.

Earlier

A first glimpse at News Corp.’s fourth-quarter earnings (which, due to the company’s weird fiscal calendar, is technically the company’s Q2 for 2010): Pretty good. And much better than a year ago (thankfully). After factoring out one-time charges, the company posted earnings of 25 cents on revenue of $8.7 billion.

The Street was looking for earnings of 20 cents on revenue of $8.23 billion, and analysts were also hoping the company would boost its earnings forecast, due in part to a bump from the ginormous success of “Avatar.” No word on guidance in the earnings release, though.

I’ll pick through the release for other worthwhile nuggets for the next few minutes. And then the real show begins at 4:30 Eastern, when the company’s earnings call–easily the most entertaining one in its peer group due to the censor-free presence of CEO Rupert Murdoch–begins. We’ll be looking for commentary on his battle/negotiation with Google (GOOG), upcoming content deals with Apple and the iPad, his thoughts on paid content in general, a dash of political commentary or two, and an update on the turnaround effort at MySpace.

From the release: A pretty nice quarter at most of the conglomerate’s divisions, including the previously battered broadcast TV and newspaper groups. News Corp. says print revenue at The Wall Street Journal was up five percent and ads on the Journal’s digital network were up 17 percent.

MySpace and the company’s other digital properties, shuffled into the “other” category, don’t get much of a mention, but don’t seem to have done much, not surprisingly.

But News Corp does mention that digital media earnings were down $32 million compared with a year ago, “principally due to lower search and advertising revenue.” And the company lost $29 million on “digital media dispositions”–i.e., the fire sale/giveaways of properties like Rotten Tomatoes and Photobucket.

Here’s the breakdown by segment (click table to enlarge):

Liveblog

CFO Dave DeVoe: “Extremely pleased” with the quarter.

Movies: Revenue up due to decent DVD sales (no MGM problem here). Also high costs due to “Avatar,” but big profits from the movie will be coming in during the next couple quarters.

Broadcast TV: Local ads are improving; the telecom, fast food, finance categories are all improving.

Cable: Revenue is up 18 percent. Affiliate revenue is up 21 percent (more money for Fox News subs), and there was a “single-digit” boost in ad dollars.

Newspapers: Journal dollars are up, operating costs down. Ad revenue got better as the quarter progressed.

Books: Revenue up, expenses down.

“Other”/MySpace: Digital media revenue down, but cost-cutting helped trim losses.

News Corp. is boosting its dividend by 25 percent.

Guidance: The company’s operating income growth rate is expected to grow from single digits to the high teens. Better than anticipated: Film group, TV and cable. But revenue goals for digital media, including MySpace, will take longer than anticipated.

Murdoch sings the praises of content. [I will not argue with him, for now]. “Avatar” is awesome, he says, a “harbinger of fundamental change in the industry.” Also really good: “Alvin and the Chipmunks.” Fun to hear Rupe say “Alvin and the Chipmunks.”

WSJ is the No.1 paper in U.S. in terms of circulation, influence, quality. WSJ.com is a “digital model for newspapers around the world.”

Fox News Channel’s audience is both “loyal and lucrative.” Roger Ailes is doing an “admirable job” [translation: Bite me, Michael Wolff--the author of a recent Murdoch biography].

Last year, Murdoch says, News Corp.’s pay-to-play ideas sounded nutty, but now “the content clan has gathered around our ideas.” Consumers must pay and will pay “to be entertained and informed.” All those awesome new gadgets being made in China and sold at the Consumer Electronics Show need content or they’re worthless. Content, content, content. Get it? Content, content, content.

Murdoch says he’ll be wringing more dollars from cable operators. And “when it comes to online news, we’ll be changing that model too,” adding that News Corp. is in “substantive conversations with device makers on developing subscription models” to deliver content. And don’t forget about 3-D!

Not performing well but “long-term growth drivers”: Sky Italia satellite service. Also Sky Deutschland. And MySpace is “not yet where we want it.” In the last quarter, however, MySpace “started to see signs of traffic stabilization.”

Shout-outs for Chase Carey and other managers (but not by name).

Q&A

Question: How big a deal is retransmission consent in coming years? $40 million a month? $100 million a month?

Chase Carey: No numbers, but it’s going to be a “transforming event.” We have two of top 10 distributors done, more coming. It’s a three- or four-year process to knock these deals out.

Q: Does this fix the broadcast model?

Carey: “Yes, I guess you could say simplistically, it fixes it.”

Q: What’s the timing on an “Avatar” DVD, and what about a sequel? Also, how do TV ads look this year?

Murdoch: For “Avatar,” we think about 60 percent of profits will be in the next six months. Which means the DVD will be coming “as soon as possible,” but the movie will stay in cinemas for a while because we’re doing huge dollars in theaters still. Sequel? “Very early talks about it. Jim has ideas for one. We haven’t come to any agreement with him….Being Jim Cameron, I wouldn’t hold your breath for an early one.” Asked about the economics of a future release (“Will you keep the same revenue split?”), Rupe sort of rumbles and growls and sort of doesn’t have much to say. “Ask anybody; it is very easy to drop a $100 million in a hurry on a film, and we’d like to lay off some of the risk.”

Carey: TV trends for this year are “positive.”

Murdoch: TV stations will be up 18 or 19 percent, but last year was terrible. We’re still down compared with two years ago. Hard to see more than a quarter in advance. In newspapers, it’s hard to see more than a few weeks.

[Missed a question on Sky Italia here.]

Q: What are growth prospects for cable networks? They’ve been driven a lot recently by new subscriber fees. How much longer can you get those boosts?

Murdoch: Overall, “we think we have great potential for growth. Quite a long way to go yet.” Look at how NBCU’s USA is growing.

Carey: In the U.S., we’re moving to “quality over quantity”–we can wring more out of foreign exchange, etc. Fox News is only getting more powerful; it has “great upside.”

Q: Regarding newspapers, what growth came from organic increase versus currency fluctuations?

The majority is from foreign exchange.

Q: Does your guidance assume that the “Avatar” DVD is coming in the next two quarters?

Murdoch: “Yes, but it won’t be 3-D” [which I don't think the analyst was asking about].

Q: Back to retransmission consent: You’ve been getting more and more money from cable guys. Why can’t you get $4 or $5 per subscription for Fox broadcast subs?

Murdoch: “We’re modest people.”

Carey: Hyuk, hyuk. Real answer: It takes time. “We try to approach this constructively. We’ve built businesses with [cable guys], we’ve built valuable cable channels” [translation: patience!]. We want to extract more without killing the cable guys.

Murdoch: That said, we’re asking for the same thing [for broadcast channels] that the cable networks are getting, which “certainly won’t kill the cable companies.”

Q: Please talk about value of film libraries (i.e., MGM). They’re generating big operating profits for cable now. How long will this last?

Murdoch: Regarding the MGM auction, “you can count us out of that one altogether” because others will pay more than we’re willing. And we’re not pursuing the Miramax catalog at all.

Carey: A film library by itself, without new stuff coming through, is a “depreciating asset.”

Q: On guidance: You say the ad market getting better, etc., but it sounds like you’re saying Ebidta growth is slowing.

Murdoch: “We honestly do not have any visibility about the last quarter.”

Q: On books/e-books/Apple, what’s going on with that?

Murdoch: We don’t like the Amazon model of $9.99….We think it really devalues books and hurts all the retailers of hardcover books. We’re not against electronic books; on the contrary, we like them very much, lower costs to us, but we want some room to maneuver. The Apple deal does allow “some flexibility and higher prices” though e-books will still be lower than print. And now Amazon is willing to sit down with us again.

Press Q&A

Q: What’s up with plans to charge for newspapers on the Web?

Murdoch: “Not ready to announce yet [long pause]. We won’t be ready yet to make an announcement.” A “lot of talks with a lot of people.” There will be more to say within the next two months, Murdoch adds.

Q: Are you still going to fall $100 million short on the Google deal?

Murdoch: Yes. People using social networks don’t use search a great deal. Facebook has seen this, too. It’s “really too early to make confident predictions…but from going down, we’re beginning to go up.”

Q: Can we get some details about Time Warner Cable (TWC) deal?

Nope.

What about Conan O’Brien on late night?

Murdoch: If the programming people can show us we can do it and make a profit on it, we’ll do it in a flash. I’m sure there have been conversations with Conan, but “if you mean real negotiations, no.”

[Missed two questions here.]

Q: Another late-night question: If you do go into negotiations with Conan, how do you placate your affiliates?

Murdoch: It’s a different deal than NBC. They screwed up 10 pm, which reduced the lead-in to local news. Our affiliates run syndicated programming at 11:30, though, so it will take time to adjust there.

Call ended. This one seemed short to me.

More or less redundant disclosure: News Corp. (NWS) owns this Web site.

The Music Industry's Cautionary iTunes Tale Resonates with Publishers–And Apple

Peter Kafka — Wed, 27 Jan 2010 14:41:25 +0000

Look who has learned one of the most important lessons of the music industry’s love-hate relationship with iTunes: Apple.

The music labels love iTunes because it gave them a new revenue stream while CD sales withered away. And the music labels hate iTunes because it helped CD sales wither away by giving consumers the chance to replace $15 discs with $1 songs.

But now, as Apple prepares to launch e-book sales along with its new tablet, the company seems to be taking a different tack. It’s letting book publishers push their digital pricing up instead of down.

The Wall Street Journal reports that Apple (AAPL) was still haggling with publishers Tuesday night, but says the gist of Apple’s offer is this: Publishers can set their e-book prices at $12.99 or $14.99, well above the $9.99-or-less price point Amazon (AMZN) is pushing.

Apple’s terms would actually generate less money per sale for publishers than Amazon currently does, but publishers are so worried about digital cannibalization that they seem willing to take a hit in order to protect their paper-and-ink products. WSJ:

In adopting the Apple model, the balance of power would shift at least partly back to publishers, which regain control of pricing. In setting higher prices, they could provide a level playing field for all e-book retailers. The potential for publishers is that the device may generate greater volume for e-book sales.

But note that Apple isn’t offering publishers complete control of their pricing as it does with developers on its App Store. And while Apple is giving publishers more latitude, it is being more aggressive than ever with the TV business, reportedly by pushing the networks to cut prices for their shows.

The other big caveat is that if Apple does want to sell e-books for 30 percent to 50 percent more than Amazon, those e-books are going to have to be pretty special. Simply adding a dash of color and some graphics won’t cut it–these things will really need to be “enhanced” to justify the premium. Figuring out how to do that while keeping margins intact is a whole other story.

Plenty of time to hear about that later, though. For now, let’s see what Steve Jobs has to show us today.

Digital Daily’s John Paczkowski will be reporting live from the Yerba Buena Center starting at 1 pm ET; head over to his liveblog to catch the action in real time.

Dude Web Site Publisher Breaks Into Games (Heh heh. Heh heh.)

Peter Kafka — Mon, 25 Jan 2010 19:59:00 +0000

For the past several years, Keith Richman has run a Web publishing company that specializes in video and stuff for dudes. Which means he ought to be struggling and/or out of business by now–both sectors have had way too many competitors chasing not nearly enough ad dollars.

Not so, says Richman. He won’t divulge numbers, but says his Break Media has seen revenue climb 40 percent in the last year and is sort-of profitable (sort-of technical term: “Ebitda profitable”) to boot.

Break.com and its associated sites (CagePotato.com, HolyTaco, etc.) have plenty of competition from the likes of College Humor and Heavy et al–not to mention Google’s (GOOG) YouTube and Hulu–but they’re holding up quite nicely: ComScore (SCOR) pegs their audience at six million monthly uniques. Just as important: Minority owner Lionsgate Entertainment (LGF), which plunked down $21 million for a 40 percent stake in the company in 2007, doesn’t seem to be demanding a payout anytime soon.

Richman is now tackling another market that already has way too many competitors: Social games, dominated by the likes of Zynga, Electronics Arts (ERTS), and Playfish, etc.

No matter. Richman has hired a staff of 13 to kick off his games effort–you can get a taste of what he’s up to here–and says he’ll have a staff of 30 by March (most of them will be in China). Richman’s idea is simple: These games are hot now, but they’re only going to become bigger, so best to jump in while you still can.

Plus, you can iterate through this stuff pretty quickly–Richman’s team put together a supercrude and pretty popular “Tiger Woods Wife Outrun” game within three days of Woods’s car crash last fall–so the sooner you start, the more you can learn.

We talked about all of this in a brief chat last week in New York:

[ See post to watch video ]

Does It Really Take a Year to Build a Pay Wall?

Peter Kafka — Wed, 20 Jan 2010 22:32:02 +0000

Is the pay wall plan for the New York Times too late? Will it generate too little? We won’t know for some time. Because the paper, which lost $35 million in the last quarter, says it won’t finish building the wall until 2011.

If that time frame puzzles you, you’re not alone. Plenty of pundits are wondering what kind of digital wall could possibly require a year’s worth of assembly. Can’t you just slap this stuff up pretty fast? It’s the Internet, after all.

New York Times (NYT) Chairman Arthur Sulzberger Jr. and CEO Janet Robinson, in their memo to employees, stress that the paper is moving with “appropriate care” in the next 12 months because “it will take time to get this right.”

Perhaps there are other reasons to move slowly. The duo’s memo, for instance, holds out the possibility that the paper might end up working with a partner. Steve Brill’s Journalism Online consortium, which is promising to create pay walls for a large number of papers, would be one option.

And last I heard, some News Corp. (NWS) officials were holding out hope that the Times could join its pay wall consortium. (News Corp. also owns this Web site.) If the Times does want to play well with others, moving slowly might make some sense while it waits for said others to catch up.

Meanwhile, some cynics (gasp!) have suggested that the Times announcement is merely a trial balloon. Though I have to confess I don’t see what that would accomplish.

But assuming the paper does go it alone and does intend to build this thing, would it really take a year? Yes, say two publishing sources with first-hand knowledge of both pay walls and big publishing companies.

The problem, in a nutshell, is that there are at least three different problems to solve: Authenticating current print subscribers so that they can get the online paper free; installing the “meter” that measures use for nonprint subscribers; and creating a commerce engine that can take orders, process subscriptions, figure out how to provide bundled offers–i.e., the cost of online access plus, say, a Kindle or Apple (AAPL) tablet subscription–etc.

None of this stuff ought to be rocket science, but that doesn’t mean it’s not hard, my pay wall experts say. Even if the Times builds its new pay wall on the bones of Times Select, the newspaper’s 2005-2007 attempt, it could easily take it a year to assemble this thing, they insist.

It’s possible that my sources are talking their book a bit–if building a pay wall were easy, there’d be less work for them. But I’m willing to take them at their word until someone convinces me otherwise.

The Secret Behind the Kindle's Best-Selling E-Books: They're Not for Sale

Peter Kafka — Tue, 29 Dec 2009 11:00:58 +0000

One big reason readers choose e-books over ink and paper versions: The digital ones are cheaper.

This wasn’t the case when e-books first appeared a decade ago. But Amazon (AMZN) has made a point of selling its Kindle titles at a discount compared with physical editions, even if it means losing money.

And then there are the titles that Kindle owners really, really love–the ones they get for nothing. As the Washington Post noted earlier this week, the list of best-selling Kindle titles is dominated by free books:

Amazon’s customers have made it clear that $9.99 is still too high for their taste. Most titles in the company’s list of top 100 Kindle bestsellers are priced below $9.99, and the most popular price point is $0.00.

The good folks at MediaBistro have gone ahead and counted, so you don’t have to. As of a day ago, 64 of Amazon’s top 100 Kindle titles cost nada.

How exactly does that work? I understand why Amazon is able to hand out public domain works like “The Adventure of Sherlock Holmes” and “Pride and Prejudice” for free. But I’m not sure what’s going on with titles like Noel Hynd’s “Midnight In Madrid” (No. 1 on the Kindle charts) or Beth Hensperger’s “Not Your Mother’s Slow Cooker Recipes for Entertaining” (No. 9). Anyone want to weigh in?

I’m also not sure what conclusions we can draw from the dominance of freebies on the Kindle charts. I’m tempted to say that Kindle buyers are rabid but indiscriminate readers, and they’ll lap up whatever you put in front of them.

But without a real sense of the numbers, which Amazon is never going to cough up, it’s hard to tell what the sales patterns really look like.

I suspect, for instance, that a lot of the freebies are picked up by readers in the first few weeks they own a Kindle when they’re looking to download something simply for the sake of downloading something.

I also assume that the Kindle charts are skewed by hardcore early adopters’ reading habits. And that the patterns will start changing now that more casual users are picking up the Kindle for the first time.

And in case you were wondering–because I was–Amazon says it is not counting free book downloads when it releases sales statistics like the one it put out on Saturday, when it said more customers had purchased Kindle titles than physical books on Christmas day.

[Image credit: lordcolus]

Will New York Times Vet Saul Hansell Run AOL's New Robot Factory, or Something Less Ominous? Let's Ask Him.

Peter Kafka — Fri, 11 Dec 2009 17:19:05 +0000

For much of this year, AOL made a point of boasting about each and every traditional journalist it hired. Message: We’re dead serious about becoming a content company, not one that sells Internet access to people who don’t know any better.

These boasts grew less frequent in recent months as the company’s hiring binge drew to a close, then switched into reverse when AOL announced it would need to shed a third of its staff. Meanwhile, AOL’s plans to inject automation into its content factory freaked out both employees and outsiders.

So the company’s most recent hire, announced shortly before AOL (AOL) separated from Time Warner (TWX), may help soothe some frayed nerves: New York Times (NYT) veteran Saul Hansell, who will run AOL’s new Seed.com content-creation platform.

But what does that actually mean? Is Hansell going to be running “AOL’s News Borg,” as Gawker put it? Or something less ominous?

I talked to Hansell yesterday and the answer is…not really clear.

Hansell, who spent 17 years at the Times, can’t spell out exactly what he’s going to do at AOL because he’s not exactly sure himself. He says he reached out to AOL CEO Tim Armstrong when the paper announced its most recent round of buyouts in October, and then he and the company went about creating a job that made sense for him.

But beyond his new title, “programming director,” a lot of what Hansell will do at his new gig is do is up in the air. The positive spin: That’s okay because uncertainty is a way of life at a start-up and AOL is in many ways a company that has to reinvent itself on the fly, just like a start-up. You can fill in the less positive interpretation of this yourself.

Hansell does have some big-picture ideas about AOL’s ability to combine its audience, workforce, technology and ad sales to produce a next-generation publishing platform. And in the interview, he offers a very nice parable about visiting Amazon’s (AMZN) warehouse, where technology and humans coexist quite nicely.

Okay. But what about the robots he’s supposed to be in charge of? “I don’t know anything about the robots,” Hansell says. “I haven’t gotten there.”

Anyway, Hansell was a good sport about letting me shove a Flip camera very close to his face, and he can tell his story much better than I can. So here you go:

[ See post to watch video ]

Warner Music Earnings: Out of Tune

Peter Kafka — Tue, 24 Nov 2009 11:48:41 +0000

Warner Music Group has a mixed bag of results for Wall Street this morning: The music label posted revenue of $861 million, a bit higher than the $820 million analysts had expected. But even after factoring out one-time severance charges of $14 million, the company lost three cents a share, and the Street was assuming it would earn four or five cents a share.

The breakdown: The company did well overseas, where revenue jumped 17.8 percent after factoring out currency effects, and poorly in the U.S., where sales dropped by 7.4 percent. Digital, which grew by 11.5 percent (excluding FOREX), now makes up 21.4 percent of Warner’s (WMG) revenue.

Operating income dropped by 18 percent, to $54 million, but all of that decline stems from the severance charges. Factor those out and operating income would be up slightly to $68 million.

For years, the music industry has watched music sales drop while music publishing–money generated by the underlying compositions of songs–has increased. But this time around that’s not the case. Warner says recorded music sales were up 3.7 percent (net of currency changes) and that music publishing revenue was up 11.7 percent.

But all of the publishing increase stems from a one-time gain of $25 million “from an agreement reached by the U.S. recorded music and music publishing industries, which will result in the payment of mechanical royalties accrued in prior years by record companies.”

Shhh! EMI Posts Quietly Surprising Results.

Peter Kafka — Mon, 23 Nov 2009 16:06:57 +0000

The people who own EMI Music Group may regret the purchase, but here’s a tiny bit of good news: Sales are creeping up, even as the rest of the business contracts.

The company’s revenue climbed 7.4 percent in the 12 months ending March 31, the company disclosed (via PaidContent).

The rise is due to increases in both the sale of recorded music and publishing revenue; increases in the former are particularly rare these days. And these numbers ought to bump again in the coming year given that they’ll include dollars/pounds generated by the re-release of the Beatles albums.

Alas, since EMI owner Terra Firma is deep in the midst of negotiations with Citigroup (C), which lent it billions to buy the company, it’s not handing out any other details about the company’s performance, so hard to tell what’s really going on there.

Still, we do know that music has been in decline for a decade, and EMI’s bump up is the first, no matter how modest, in many moons (click on table below to enlarge).

AOL's Mass Layoffs Will Cost $200 Million

Peter Kafka — Thu, 12 Nov 2009 13:43:03 +0000

AOL formally acknowledged that it plans on a round of very large cuts: In a filing with the Securities and Exchange Commission, the Time Warner (TWX) unit said it plans on taking up to $200 million in restructuring charges through the first half of 2010. Earlier this week, Kara Swisher reported that AOL’s coming spinoff would be followed by layoffs of up to 1,000 employees.

Some perspective: As I noted last week, AOL has already spent $83 million on separate restructuring efforts through the first nine months of this year. And parent company Time Warner has said it will spend $100 million on its restructuring/mass layoffs at its Time Inc. publishing unit.

Does Your Mom Edit Your Blog? Google Wants to Know.

Peter Kafka — Thu, 05 Nov 2009 17:30:56 +0000

Do a Google news search, for say, “Will Ferrell,” and you’ll see that the search giant has started labeling news items from blogs as…news items from blogs. Why?

Turns out Google (GOOG) CEO Eric Schmidt isn’t quite sure himself.

But posed with that question during a Boston news conference yesterday, Schmidt did use the opportunity to expound on the difference between pro bloggers and amateur ones. Or at least, his vision of the difference.

From Nieman Journalism Lab blogger Zachary Seward’s transcript of his exchange with Schmidt:

Me: A very small question. Google News very recently added a label for blogs, to differentiate from non-blogs. It seemed weird in 2009 to make that distinction. I wondered, did you have any input on that or –?

Eric Schmidt: I was not directly involved in that. There seems to be a difference between blogs and traditional news. It’s sometimes hard to distinguish because many people in the traditional news are also bloggers.

Me: Or they use a blog platform.

Schmidt: Or they use a blog platform. So we’re trying to find that line. And it’s hard to articulate what that difference is.

Me: How would describe that line if it’s not based on the tech behind the publishing platform?

Schmidt: No, it’s not the technology. My guess is–again, I’m speculating, which is always a mistake–it has a lot to do with the infrastructure around the writer. So a blog that’s associated with a major, legitimate organization–of which, I think, the majority, if not everyone, in the room is associated with–would be, I think, treated differently than an individual blogger who’s using his or her right of free expression to say whatever he thinks. So the presence of an editor, as an example. You know, an editor that’s not your mom.

As Seward points out, Schmidt is wrong about the way Google News categorizes. As best I can tell, Google basically lumps all blogs, including this one, which I like to think of as reasonably professional, in its “blog” category. And no, despite her occasional appearances on this site, Kara Swisher’s mother is not an editor here.

Anyway, the real question for me isn’t “how does Google refer to my work in its search results?” but “how does Google determine where to put my my work in its search results?” Schmidt and company can call it whatever they want–just send those eyeballs my way.

[image credit: kevindooley]

Bloomberg Buys BusinessWeek for a Song, Plus Up to $5 Million

Peter Kafka — Tue, 13 Oct 2009 21:35:45 +0000

What’s one of the biggest names in magazine publishing worth? These days, maybe $5 million, plus liabilities.

That’s the high end of the range Bloomberg will be paying for BusinessWeek, reports BusinessWeek, which has done an excellent job of covering its sale. One important note to make about the price: Those liabilities could total up to $32 million, although it’s not clear whether Bloomberg will assume all of them.

Can’t call this one a surprise, as Bloomberg has reportedly been the lead bidder for some time now. BusinessWeek employees spent most of the day waiting for an announcement to that effect, and finally heard one, via Bloomberg’s wire service, shortly after 5 pm EDT.

Shortly after, BusinessWeek Editor Stephen J. Adler gathered his troops for an informal meeting to discuss the news and to discuss some blocking and tackling: No news on rumored (and expected) layoffs. But he did tell staffers that those who are cut after the deal closes later this year will receive the same severance package they would have gotten if they were still employed by McGraw-Hill (MHP), the magazine’s parent company.

There most certainly will be cuts: McGraw-Hill is selling the 80-year-old magazine because it’s a money pit that was losing between $20 million and $40 million a year, depending on your accounting. And the publisher’s bankers promoted a layoff plan as part of the sales process.

What exactly deep-pocketed Bloomberg intends to do with the publication, however, is unclear. The company, which makes its money renting its namesake terminals to Wall Street traders, is thought to be running its magazine and TV news operations at a loss as it tries to grab a footprint in consumer media. It may ultimately be willing to run BusinessWeek at a loss for a while, as well.

And now a tiny bit of context: At the beginning of this year, there were four major business magazines. Now one, Condé Nast’s Portfolio, has been shut down and another sold at a fire-sale price. Meanwhile, my former colleagues at Forbes expect to hear about yet another restructuring round in the near future. And while Time Warner (TWX) CEO Jeff Bewkes was careful to list Fortune magazine among the core assets at his company’s Time Inc. unit at an industry event today, that can’t assure the queasy souls who work there.

Here’s the memo to BusinessWeek staff from the magazine’s BusinessWeek publisher, Keith Fox:

All,

Moments ago, McGraw-Hill announced that Bloomberg L.P. has agreed to acquire BusinessWeek. This is exciting news on many levels. Joining forces with another of the world’s leading news organizations enhances BusinessWeek’s ability to further serve our global audience and our valued customers. And Bloomberg will gain a powerful brand with a history of editorial excellence and strong reach among business professionals.

While the ink is barely dry and the long-term plans are being worked out, we do know that Bloomberg is committed to and values our brand, our editorial integrity, and our ability to drive advertising, circulation, and new digital revenue.

BusinessWeek will strengthen Bloomberg’s online, television and mobile products and creates an opportunity for Bloomberg News to reach decision makers in the c-suite. Online, BusinessWeek.com and Bloomberg.com will have more unique visitors than any non-portal business and financial site. In addition, Bloomberg expects to build television content around the powerful BusinessWeek brand and our world-class journalists.

I am tremendously proud of the work all of you have done in the past few months. Despite the uncertainty, we have continued to produce first-class products for our readers and advertisers, and I want to thank you deeply for your efforts. I also want to thank Steve Adler, Jessica Sibley, Tania Secor, Roger Neal, and Linda Brennan, for their extraordinary ability to personify the best of BusinessWeek during the deal process while leading their respective organizations.

I know that while this announcement answers some of the questions you’ve been asking over the past few months, it raises others. The sale is expected to close by the end of the year and we will be working on transition plans in the coming weeks. I can tell you that all BusinessWeek staffers will remain employees of The McGraw-Hill Companies until the transaction closes, and that it will be business as usual–producing the magazine and the website, and serving our advertisers–through the close. We will give you more details when we can.

We’ll be holding a town hall meeting later today at 5:45 EST, after which a Q&A will be provided to all employees; you will receive more details shortly. A call for the Asia teams will be scheduled shortly.

Again, I want to thank you all for your professionalism and dedication during a challenging time. I look forward to working with you on the promising next chapter in BusinessWeek’s history.

Keith

Fighting Words! Time Warner Says Comcast/NBCU as Dumb as…Time Warner/AOL.

Peter Kafka — Tue, 13 Oct 2009 15:02:39 +0000

Just in case anyone thought Time Warner had any lingering interest in NBC Universal, this ought to put it to rest: Time Warner (TWX) CEO Jeff Bewkes just compared the proposed Comcast/NBCU deal with the disastrous one his company made with AOL nearly a decade ago.

At a TVWeek conference in Manhattan, Bewkes repeated arguments he has made in the past: Chiefly, that big media mergers have a lousy track record and that he couldn’t see how Comcast (CMCSA) could unlock any value by buying a majority stake in NBC Universal from GE (GE).

“Somebody has finally noticed that these things don’t work out so well,” he said, adding “We love to see our competitors taking risks.”

But just to hammer that point home, Bewkes compared the proposed deal to the one his company made nine years ago when it embarked on an ill-fated merger with AOL. That deal (made when Bewkes was running Time Warner’s HBO unit) “basically made no sense” at the time, he said.

The main talking point in favor of that transaction–that connecting Time Warner’s content with AOL’s Internet distribution would create synergy–was “nonsensical,” he said. But “these kind of arguments, you’ll hear some of them this week, in the other merger that we’ve been talking about,” Bewkes said.

Clear enough?

Wall Street, by the way, remains unimpressed with the proposed deal as well: Comcast shares are down about 10 percent since word got out.

In other reiteration news, Bewkes also said, again, that he doesn’t plan on selling his Time Inc. publishing unit. Though he left himself a tiny window of wiggling room by noting that “no public company can ever say that it wouldn’t consider restructuring some part, whether it’s Warner, HBO, whatever.”

But Bewkes insisted that Time Inc.’s best-known magazine brands, including “Time, People, Sports Illustrated, InStyle,” are holding their own as print products and that the challenge will be turning them into online successes.

“We have basically a healthy business in terms of our relationship with readers. These brands mean something and they’re evolving…,” he said. “If you can’t take the leading titles that people have known for decades, and use the new world to make them relevant, really, shame on us.”