Permutter $65 million, Kirby $0?

Two semi-unrelated items. First, as everyone interested in comics knows by now, Jack Kirby's heirs are asserting their rights to the characters that Jack Kirby had a major hand in creating.

The heirs to Kirby, who co-created the Fantastic Four, the X-Men, the Avengers, Iron Man, Hulk, Thor and Captain America - and had a hand in creating Spider-Man, pretty much completing the set - have sent out 45 notices of copyright termination to companies including Marvel Entertainment, Disney, Paramount (distributors for Iron Man, Hulk and the next five Marvel movies), Sony (the studio behind the Spider-Man movies, 20th Century Fox (X-Men and Fantastic Four) and others, expressing intent to own copyright on Kirby's creations. The notices did not only involve comic books and movies; apparently, Hasbro and Universal also received notices, for the toy and theme park rights as well.

The Kirby estate is taking the claim seriously, hiring Marc Toberoff, the attorney who's been representing the Siegel estate in the recent Superman/Superboy lawsuits. While Marvel itself has offered no comment on the notices yet, Disney issued a statement saying, essentially, that it's not a big deal:

The notices involved are an attempt to terminate rights seven to 10 years from now, and involve claims that were fully considered in the acquisition.

(Graeme McMillan, Io9, September 21, 2009)

Likewise, all fanboys know about the Disney deal mentioned above to purchase Marvel. Yesterday Disney filed an S-4 (a form filed with the SEC by a publicly traded company disclosing any material information about a merger or acquisition).

There was also some interesting details deeper into the proxy – the part that spells out what various executives get post-deal. A quick tally for Perlmutter shows that it will add up to around $65 million, including $34 million in options that were just granted this past March. Those options were granted at around $25 a share and vest immediately and the takeout price is $50, which seems like some pretty good timing. (Michelle Leder, Footnoted.org, September 23, 2009)

Now I am not going to try to get into legal arguments, because I am totally incompetent to do so, and don't know the details of the Kirby situation. But just on the face of it, it is hard to see why Perlmutter deserves $65 million and Jack Kirby (and since Jack is dead, his family) deserve nothing. But the point of view that the Kirby heirs deserve nothing is expressed widely (in the comments of the Io9 article and on other comics message boards). Astonishing!

Barnes & Borders?

A couple of months back, there was the news that Borders was considering selling itself. (Specifically it hired JPMorgan and Merrill Lynch to investigate options, including divestiture or acquisition). I didn't pay it much mind at the time.

Now it looks like Barnes & Noble is considering buying Borders.

Now as a book buyer, this is horrible. A lot of Borders (and B&Ns) would close as B&N would remove stores that cannibalize sales of the combined entity. B&N and Borders currently don't have identical stock--which is good. It means a browser like me can sometimes find something at one store that the other doesn't have. (If I don't get it first at Kaboom or Domy or Brazos Bookstore.) Combining them would inevitably mean less choice. And Borders is simply the better of the two stores in terms of bookselling, if not in running a business. So we could see a decline there too.

If I was still selling books, though, I wouldn't miss those trips to Ann Arbor and Border's charmless headquarters. It can't compare with B&N's location--right off of Union Square in New York.

Will Local Papers Become Extinct?

Yes, according to Felix Salmon. He doesn't based this on any analysis of data, but on statements he heard from four regional newspaper executives.

They talked about their children or their grandchildren not reading newspapers, they talked about terribly smart web-design kids, they got really excited about multimedia content which genuinely was exciting ten years go. Hell, Brian Greenspun of the Las Vegas Sun gave a long presentation a large part of which was devoted to recounting in excruciating detail how his website can be updated more than once a day as news comes in. Ted Olson talked about (really!) setting up a 15-member commission to look into all of this. This was a panel of dinosaurs, who are being driven by fear and necessity rather than vision.

Brutal. Salmon's post is well worth a read (as is his blog as a whole). This shows again the wisdom of companies like Thomson Reuters.

John Maynard Keynes' Publishing Deals

I'm reading John Maynard Keynes: An Economist's Biography by D.E. Moggridge, and this little fact jumped out at me:

On 26 July he offered the book, which he called The Economic Consequences of the Peace, to Macmillan, who accepted it two days later, although the terms changed over the ensuing weeks as Keynes was more optimistic than his publisher over the book's sales. Eventually he retained the American rights and published the book in England on a commission basis. He was to pay all the costs involved in producing, distributing and advertising the book and to keep all the profits after paying Macmillan a royalty. He was to publish on this basis for the rest of his life.

This is, of course, the opposite of the usual publishing arrangement, wherein the publisher takes the risk on production and marketing, and in exchange pays the author a royalty for the right to use his or her content. But the fact that the latter is the normal agreement shows mainly how inflexible publishing is. In the early 90s, when Dark Horse Comics was experiencing some tight times, an editor there, Jerry Prosser, suggested offering this arrangement--in which Dark Horse would be, in effect, an a la carte provider of publishing services--to selected artists and writers. When the idea was rejected by management, he attempted to institute it on his own, secretly, which ultimately got him fired. I was a young editor at Dark Horse then, and I thought it was a very interesting, innovative notion. Little did I know that Keynes had published under the same arrangement more than 70 years earlier.

Thomson: Publishing Mutates into Information Trafficking

I'm someone who worked in publishing for a long time, but a few years ago I decided that publishing (of things printed on paper) was a business that was inevitably shrinking. This is not because we are living in some post-literate moment (that may come, I guess, but not yet), but because publishing with pixels is just so much cheaper than publishing with paper. So much cheaper, in fact, that the entire profit model has to be completely changed. Hence the importance of search engines. In old paper publishing, the equivalent of search engines existed (primarily in services sold to libraries), but they were necessarily a small part of the entire industry. Similarly, even though in old publishing and new publishing, we have things called "subscriptions," they really are totally different. A subscription to the Wall Street Journal gives me a paper six days a week. A subscription to the online WSJ gives me a searchable database of decades worth of information.

Anyone who knows me knows that I am a book-lover. I am no internet/computer triumphalist. (I mean, I love me some blogs, but I still walk around with my nose in a book.) Nor do I think it is impossible to make money publishing things on paper--individual companies and sectors do and will continue to do so for a long time, even as the "publishing on paper" industry as a whole shrinks.

The reason I mention this topic is an interesting post from The Curious Capitalist (Time's business and economics blogger). As many may know, Thomson just acquired Reuters (the new company is called Thomson Reuters). Thomson used to be in the newspaper business. It divested those assets. It was also in the textbook business until last year. Now as far as I can tell, it is exclusively in the information business. Some of the information is information that newspapers buy (syndicated through Reuters), but Thomson doesn't bother with printing its information itself. Instead, it sells its information through such divisions as Westlaw, Reuters, and Thomson Scientific.

Thomson seems like the very model of a company that recognizes that its business is a broad abstraction instead of a particular thing. "Information" instead of "newspapers and books." The counter-example that's always used in business school are passenger railroads. Because passenger railroads perceived themselves as railroad companies instead of "people transportation" companies, they didn't change with the times to successfully compete with automobile manufacturers and airlines. Because Thomson realized it was in the information business, it was able to ask itself, "How will we make money with information in the future?" Then it could act accordingly.

Real Estate Finance & Investments: a Self-Publishing Story

Self-publishing. Usually a bad idea, although there are some notable successes. (Rich Dad Poor Dad started out that way.) The main problems with self-publishing are these:

1) Undiversified income stream. Publishing is a hard enough business to survive in, but at least professional publishers don't put all their eggs in one basket. If one book fails, perhaps another one will succeed. Self-publishers don't get that luxury.

2) Lack of publishing expertise. If you don't know how to typeset a book or design a book, you have two choices: figure it out as best you can, or pay someone else. Either choice is a fraught one for a self-publisher. The first choice often leaves a self-publisher with an ugly, unprofessional-looking book; the latter choice brings with it the likelihood that the publisher will be overcharged by service providers. This goes double for pricing printing. A publisher can really lose his or her shirt at the printer's--it is, after all, likely to be the single largest expense. Oh, and does a self publisher know what an ISBN is, or how to get one?

3) Lack of channels. Book distributors often handle self-publishers, but it is usually a long hard trip before a self-publisher realizes there is such a thing as a book distributor, much less how to contact them and choose between them. Without a book distributor, getting your book in front of potential readers will be especially tricky, if not downright impossible.

All this is a prelude to a surprising discovery I made. One of my textbooks this semester, Real Estate Finance & Investments by Peter Linneman, was self-published! This strikes me as an amazingly weird thing--I have never heard of a self-published textbook.

Most textbooks are published by large corporations like McGraw Hill, Pearson, and Cengage (formerly Thomson Learning). (These companies also have valuable business information businesses as well--or had. Thomson sold off Thomson Learning, which has recently bought Houghton-Mifflin.) I kind of recoil at the way textbooks are handled--they are so expensive, and new editions obliterate the secondary markets. Then again, certain people sometimes buy supercheap Indian editions of textbooks for less than a tenth of what the US publisher charges. I've heard. In any case, I also admire these companies for leveraging knowledge and information. While they have been around for a long time, and seem to be in kind of a horse-and-buggy industry, they also seem very much pushing into the future with a specific kind of product--continuously updated knowledge, often delivered electronically.

But one thing about university textbooks is that they are boring. Lord, are they dull. Personality-free. Occasionally a glimmer of wry-ness, quickly tamped down. Another thing--they are expensive. Slick paper, duotone or color, often with CD-ROMS.

Linneman's book is relatively modest. It is a hardcover, but beyond that, he makes no concessions to fashion. Likewise, you can tell no editor smoothed out his writing, which is very personal and opinionated (without sacrificing the step-by-step explanatory function of a textbook).

I wonder why he self-published? Did McGraw-Hill or Pearson read his manuscript and say--this cannot stand! We will have no human beings writing our textbooks! Good day to you, sir! How did he decide to self-publish? He is a professor at Wharton, so he was unlikely to make the simple business errors that most self-publishers initially make. At the very least, he must have known that there was a lot he didn't know about publishing when he started. How did he set up relations with wholesalers? With his printer?

He must have been reasonably successful--this is the 2nd edition. And in a way, he is like a miniature McGraw-Hill--he is a provider of business information, through his professorship and through his newsletter.

If you want to read a pretty accessible but non-trivial book about real estate finance, I think you can't go wrong with this one.