In the July/August issue of Q&Q: 2011 fall preview

The busy season for publishers has no shortage of big new releases, with novels from Ondaatje, Vanderhaeghe, and Endicott, the Massey Lectures from Adam Gopnik, and kids’ books from Kenneth Oppel and Kit Pearson. In the July/August 2011 issue, Q&Q takes a look at the fall season’s top titles.

Also in this issue, QR-code marketing, novelist Esi Edugyan’s sophomore blues, and publishers’ reactions to Indigo’s new co-op program. Plus reviews of new books by Lynn Coady, Nicole Lundrigan, Cary Fagan, and more.

FEATURES
Fall preview
A sneak peek at the season’s top fiction, non-fiction, children’s, and international titles

The CBA’s balancing act
The Canadian Booksellers Association looks to new digital partnerships – and old-school member outreach – to regain its place as the united voice of booksellers

After the collapse
Canadian book distributors remain optimistic following the bankruptcy of H.B. Fenn and Company

FRONTMATTER
Esi Edugyan finds an unlikely inspiration for her sophomore novel, Half-Blood Blues
Winnipeg’s Aqua Books revinvents itself as a popular community hangout
Joshua Knelman’s art-theft investigation landed him a book deal
Best short stories: Michael Christie on David Bezmozgis’s “Tapka”
Indigo’s new co-op program faces mixed publisher reaction
Is QR-code marketing just a fad, or can it sell books?
Cover to cover: Caitlin Sweet’s The Pattern Scars
Snapshot: eBound Canada CEO Robert Hayashi

REVIEWS
The Water Man’s Daughter by Emma Ruby-Sachs
Alone in the Classroom by Elizabeth Hay
Glass Boys by Nicole Lundrigan
The Antagonist by Lynn Coady
How Shakespeare Changed Everything by Stephen Marche
PLUS more fiction, non-fiction, and poetry

BOOKS FOR YOUNG PEOPLE
Dear Baobab by Cheryl Foggo; Qin Leng, illus.
Nini by François Thisdale
The Summer of Permanent Wants by Jamieson Findlay
Testify by Valerie Sherrard
Born Ugly by Beth Goobie
Peter Nimble and His Fantastic Eyes by Jonathan Auxier
PLUS more fiction, non-fiction, and picture books

THE Q&Q/BOOKNET CANADA BESTSELLERS

THE LAST WORD
Authors who borrow from historical events face real ethical issues, writes novelist D.J. McIntosh

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Kobo closes $50-million round of financing

Kobo today announced a $50-million investment round.

The financing was led by an unnamed institutional investor, with $13 million raised from existing investors. Indigo maintains its position as Kobo’s main shareholder.

In a statement, Kobo CFO Greg Twinney said, “Kobo will use the new funding to continue its explosive growth internationally.”

The timing of the announcement coincides with the North American launch of RIM’s BlackBerry PlayBook, which comes pre-loaded with the Kobo app. Last week, Kobo announced that in May it will open its first  eBookstores in Germany and Spain, followed by eBookstores for France, Italy, and the Netherlands this summer.

In early March, Kobo announced a Series C investment for an undisclosed amount, and in December 2010, the company raised $16-million from a group of investors that included Indigo, Cheung Kong Holdings, the U.S.-based Borders Group, and REDgroup Retail, which operates Australia’s bankrupt Angus & Robertson and Borders chains.

E-books will account for 40 per cent of book revenue within five years, predicts Reisman

Two years ago, Heather Reisman, CEO and “chief booklover” of Indigo Books and Music, predicted that e-books would cannibalize 15 per cent of traditional book sales at her stores  in five years’ time. Reisman has since revised that prediction. She now puts the figure at as much as 40 per cent.

The Globe and Mail‘s Marina Strauss interviewed Reisman about how Indigo plans to cope in a market in which e-books are gaining popularity faster than anyone had expected. How do traditional booksellers survive in a world in which a large minority of sales doesn’t require physical stock to move through the store? In a word, says Reisman, they don’t.

“In the book industry, when you are in a situation where you know that 40 per cent of your business is going to go digital – you need to change,” Ms. Reisman, chief executive officer at Indigo, said in an interview in her office, which she recently cleared of decorative penguin figures and other mementos in a nod to her company’s transformation in the digital age.

Her road map for the country’s largest book seller takes a detour from physical books. Indigo, like many book retailers worldwide, has a toehold in the digital books business, with a majority stake in Kobo. But in the stores, Ms. Reisman, who had a head start in envisaging Indigo as a “cultural department store,” is betting more than ever on other categories. Indigo is stepping up its offerings of tableware, toys and tote bags – even putting comfy chairs back in the stores, in the hope of stemming the tide of consumers abandoning the retailer for Web-based alternatives.

Strauss points out that although Indigo owns a majority stake in Kobo, the e-book retailer posted a loss last quarter, and Reisman doesn’t expect it to start turning a profit until at least next year. In the meantime, she is betting the house on the kind of product diversification that could make Indigo, in Reisman’s own words, “the world’s first lifestyle store for booklovers.”

Indigo announces new president and CFO

Indigo Books & Music has announced major changes in its senior ranks.

Effective April 1, current president Joel Silver, a well-known figure in Canadian publishing circles, will be appointed to Indigo’s board of directors. Silver will lead Trilogy Growth, a partnership with Trilogy Retail Enterprises LP, Indigo’s majority shareholder.

Taking over from Silver in the role of president is current board member Tedford G. Marlow, a seasoned international retailer who most recently served nine years as the global president for Urban Outfitters. Marlow has also held senior positions at Neiman Marcus, Saks Fifth Avenue, and Limited, Inc.

In addition, Indigo senior vice-president of finance Kay Brekken is being promoted to the position of chief financial officer, also effective April 1. Brekken succeeds outgoing CFO and COO Jim McGill, who will continue as Indigo’s COO until July.

Indigo founder and CEO Heather Reisman said in a press release: “We are deeply grateful for the contributions that have been made by both Mr. Silver and Mr. McGill. Each has made an invaluable imprint on our Company.”

Reisman added: “It is most exciting to welcome Ted to our Company. As our industry changes, we are committed to becoming the world’s first lifestyle store for booklovers as well as being major participants in the evolving world of ereading through Kobo.”

Kobo celebrates e-book week with a round of financing

Kobo today announced it has closed a new round of financing.

The amount of the Series C investment has not been disclosed, but in a statement, the Toronto-based e-publishing company says, “Indigo Books & Music Inc., Kobo’s founding shareholder, invested in this round and maintains majority ownership.”

In December, Kobo raised $16-million from a group of investors that included Indigo, Cheung Kong Holdings, the U.S.-based Borders Group, and REDgroup Retail, which operates Australia’s Angus & Robertson and Borders chains. In the last month, both Borders and REDgroup have filed for bankruptcy protection. There was no mention of either company in Kobo’s statement, which says it plans to use the funding to support “growth in the worldwide eReading market through continued product innovation in the eReading experience and international expansion with new distribution partners, support for a wide range of languages and the world’s best content.”

The announcement arrives during Read an E-Book Week (March 6-12), which celebrates 40 years since Project Gutenberg founder Michael Hart entered text from the U.S. Declaration of Independence into a Xerox Sigma V mainframe computer.

In a guest blog post for Kobo, Hart predicts that in another 10 years one billion e-books will be available for download.

Borders on the brink, but Kobo continues to grow

A year ago, in the week following Christmas, Canadian publishers and distributors were greeted with the dismaying news that one of the country’s leading bookstore chains, McNally Robinson Booksellers, was significantly scaling back its operations, closing down locations in Toronto and Saskatoon Winnipeg. This year, a retail shakeup on an even bigger scale is taking place in the U.S., where the future of the bookselling chain Borders, which operates 676 bookstores across the U.S., is in question.

Late last week, the Ann Arbor, Michigan–based chain announced it is delaying payments to some of its vendors in an attempt to restructure its debt. The news set off investor panic, resulting in the company’s share price falling by 22 per cent on Friday.

Now, The Wall Street Journal is reporting that at least one major vendor, Rowman & Littlefield Publishing Group (which owns the distributor National Book Network) has temporarily suspended shipments to the retail chain. Other publishing companies, including Hachette Book Group and Sourcebooks, are also reported to be considering similar options. From the WSJ:

“When a customer of that size calls you up and says you aren’t getting a check, that’s a piece of information you have to act on,” said Jed Lyons, CEO of Rowman & Littlefield.

Mr. Lyons said he wanted more information from Borders and expected to learn more from the bookseller this week. “Up until now they’d been paying us like clockwork,” he said.

[...]

Mr. Lyons said that about a year ago, National Book Network approached its clients and said that if they wanted their books distributed to Borders, they would have to assume the risk associated with that business. Most clients, he added, responded by saying they wanted to continue shipping to Borders.

Borders is the U.S. retail partner for Kobo, the Indigo-owned e-book company, which nevertheless put a rosy spin on its holiday numbers. In a press release, Kobo reported that it had its best weekend ever on Christmas and Boxing Day, and that the number of registered Kobo users had nearly doubled since mid-November.

“Earlier this month we predicted that Christmas would be a record breaker for Kobo, and we have exceeded our expectations driving several ebook downloads per second since Christmas Eve, or an equivalent number hardcover books stacked as high as 50 Empire State Buildings [sic],”  Kobo CEO Michael Serbinis said in the release. Kobo also noted that it had experienced some of its biggest gains outside North America, in countries such as Germany, the Netherlands, and Singapore.

Way to Display! C’est Noël, David! at Indigo in Montreal

That’s right: it’s the holiday edition of Way to Display!, with a too-cool-for-yule display for C’est Noël, David! (Scholastic Canada), the French edition of David Shannon’s It’s Christmas, David!, at the Indigo in downtown Montreal. (Photo courtesy of Scholastic Canada)

Amazon, Indigo compete for lowest shipping charges

Yesterday, Amazon.ca announced that it was immediately lowering its “Super Saver Shipping” threshold – the amount customers have to spend to receive free shipping – from $39 to $25. “With the Holidays fast approaching, we felt this was the perfect time to give an early gift to our customers,” said Amazon.ca director John Nemeth in a press release.

The announcement clearly had an impact on Indigo CEO Heather Reisman, who began promoting a similar reduction on her company’s homepage today. Stay tuned to see if Amazon responds with yet another reduction.

Price drop rumored for Kobo eReader

When it launched in May, one of the Kobo eReader’s big selling points was that it was one of the cheapest e-reading devices on the market at $149. But now, with Barnes & Noble selling the new wi-fi Nook for $149, and Amazon selling the new wi-fi Kindle for $139, the Kobo eReader – which requires a Bluetooth connection – suddenly has a lot less to recommend it. No surprise, then, that a Kobo price drop appears to be in the works. Though nothing has been announced officially as of yet, a current online-only piece in The New Yorker suggests that Kobo will be lowering prices very soon.

Reporting on a swanky rooftop party Kobo recently hosted in Toronto, The New Yorker had this to say:

Kobo is perhaps the scrappiest and most focussed player in the e-book war. Its online store has a vast and rapidly expanding catalogue of e-books that can be read on almost any mobile device (notable exception: the Kindle). And its own e-reader’s simplicity and affordability (it will reportedly be down to $99 in time for Christmas) has spawned a cult following. In Amazon’s rear-view mirror, Kobo is quickly gaining ground.

When asked by Q&Q to confirm the $99 rumor, Kobo vice-president of content, sales, and merchandising Michael Tamblyn said he wasn’t currently at liberty to comment on future pricing.

Daily book biz round-up: Andrew Wylie gets serious; Nicole Krauss gets touched; and more

The links du jour:

• Andrew Wylie threatens to cut publishers out of the equation
• Indigo to offer self-published authors in-store placement
• What will future e-readers look like? (They’ll look like Fruit Roll-ups, apparently)
• Bookseller Otto Penzler not “a rich guy”. (“I’m not rich! I just lives in disgusting luxury!”)
• David Grossman touches Nicole Krauss at the place of her own essence
• A possible method for selling e-books in physical stores