Publisher

BUSINESS PLAN

INFOGUIDE INC.

118 Wilson Ct.
Paramus, N.J. 12204

February 12, 1992

Infoguide Inc. is a reference publisher. This plan provides details on how it intends to utilize additional funding to purchase, market, and support the continued production of a title it will purchase from a larger publisher.

• executive summary
• present situation
• objectives
• product/service description
• market analysis
• competition
• risks
• marketing strategy
• pricing and profitability
• selling tactics
• assumptions: base case
• production/fulfillment
• financial projections
• best/worst case analysis

EXECUTIVE SUMMARY

The Bakers Bread Guide, completed and first introduced in April 1991, is the only updated source of bread laws reporting instructions for every state, county, city, town and parish in the U.S.-some 4300 jurisdictions. It is an annual subscription service priced at over $500 per year. More than 200 grocery stores and bakeries already subscribe to the Guide: annual subscriptions are over $90,000 today.

Able Bakery Publications has agreed to sell the Guide to me for its balance sheet book value, about $131,000, because the Guide is not significant enough as a new product within their new business strategy.

Initial Financing

I have established a company, Infoguide, Inc., a New Jersey Corporation, which will be capitalized at $200,000, for the purpose of producing and marketing the Guide. The company will be owned 2/3 by me jointly with my wife and l/3 by my wife's mother. $75,000 will show as common stock; $125,000 will be a subordinated five-year balloon note.

This financing is adequate to meet the needs of the expected forecast for cash needs to operate and market the Guide successfully.

Five-Year Goal

Most of the purchase price will be allocated to 750 sets of the Guide which are held in inventory ready for distribution. The initial goal and total focus of the company will be to get these 750 sets into the hands of power users, the grocery stores and bakeries which do a national business.

At the anticipated sales rate of 240 sets per year, the 1000 subscriber level will be accomplished in 1996.

Once all 1000 sets originally printed are subscribed, annual sales will exceed $500,000 while production and fulfillment costs will be less than $200,000. In other words, the products will become a cash cow.

Excess cash will be invested in related products and services and/or acquisitions, leveraging the company into a position to sell out or go public.

Marketing/Sales Strategy

I have access to a number of lists of prospective subscribers, including continuing access to Guide clients under the acquisition agreement. The markets are very highly targetable: total penetration will be about 3000 sets worth almost $2 million in annual sales.

The most effective sales approach to the target markets is telephone sales. I have identified two successful salespeople to work as independent contractors selling the Guide to firms I will identify.

Additional Financing

I intend to obtain another $100,000 in term financing in order to sell the 1000 sets more quickly and to reduce production costs significantly.

PRESENT SITUATION

The marketplace has a genuine need for the Bread Laws Guide as demonstrated by the fact that five of the top ten grocery stores in the U.S. are already subscribers. However, markets are still mostly untapped because the present owner of the service is unwilling to commit adequate resources to direct marketing.

I am poised now to get to the target markets with adequate resources and effective selling propositions.

Products and Services

At its present stage, the Bread Laws Guide is fully developed as an annual subscription print service. It is the only updated service of its kind. It was introduced initially in April 1991 with a quarterly update cycle. Since then, three updates have been completed.

Product Life Cycle

The current service is early in its life cycle, with total sales of 200 in a market estimated at 3000 potential users. There is little likelihood that the need for such a service will diminish because the bread statutes are law in all 50 states.

During the next few years, the objective of the company will be to increase the subscription level to 1000. At that point, sufficient funds will be available from operations to extend the product line to include ancillary services, such as online access, a call-in service, a newsletter, and Bread Laws forms sales.

Pricing and Profitability

Current prices may be too high at $595 per year for initial penetration marketing; this will be reviewed as soon as the Guide is acquired. There is significant leeway in pricing because of the economics of this type of annual subscription publication.

Profitability is, in a real sense, controllable because the most substantial cost is for marketing/sales rather than for production, fulfillment, and administration. At the targeted 1000 subscription level, in any event, the service is solidly profitable with positive cash flow.

Why Is Able Bakery Publications Selling?

First, the division responsible for the Guide was restructured in 1991 for many reasons, one of which was that many of the companies had become unprofitable. Second, the Guide produced an accounting loss of $137,000 in fiscal 1991 and was expected to show a loss of $50,000-100,000 in fiscal 1992.

The combination of these three factors led Able Bakery Publications to consider my purchase offer at their book value because it solved short term problems for them, that is,

• No further worry about producing the publication.
• No further operating losses during development.
• No writedown in the disposition.

Customers

Current customers are using the service daily in preparing their Bread Laws reportings. They are reportedly enthusiastic about the usefulness and quality of the service.

Management and Staffing

Management is in place. Initially, staffing will consist of family members and independent contractors who are familiar with the Bread Laws marketplace and services. Printing, storage and fulfillment are done under contract by Brown Printing, a major, quality printing firm in Rochester, N.Y. An independent direct response marketing firm may also be utilized if cost-effective.

Financial Resources

After acquisition and startup costs of $150,000, an additional $50,000 has been allocated initially to marketing/sales activities.

The current annual sales of $90,000 are adequate to cover most operational cash needs during the first year because operating costs will be kept to a minimum.

OBJECTIVES

The primary objectives of Infoguide, Inc. are to:

• Establish and maintain a unique position among Bread Laws publications as the only reference work of its type.
• Generate significant profits and cash flow after the second year of operation.
• Develop related products and services through internal creation and by acquisition.
• Position the company for a public offering or acquisition by a major publisher within five years.

Business Goals

Profits …Annual profits will approach initial investment by year five

Products …Focus on serving the Bread Laws market niche will be maintained

Customers …Company motto is "Love Thy Subscriber"

Quality …Products and services will set a standard for quality… "Gold Stripe" Service

People …After the initial investment phase, a professional organization will be built

Growth …Cash flow will be reinvested first into expanded market penetration and then into ancillary products/services

Compared to past performance of the Bread Laws Guide in its first year of publication (April 1991 -March 1992) under Able Bakery Publications, I intend to be both more creative in marketing and more aggressive in selling in order to penetrate the marketplace more effectively, as detailed below.

Rationale

To understand the potential of the Bread Laws Guide, I looked at a sister publication service provided by Able Bakery Publications, called The Cookie Service. That publication sells for over $900 per year and has over 3000 subscribers. It is the only publication that provides an up-to-date compendium of cookie laws for all fifty states. Each year the price is raised and the renewal rate is over 90%. I estimate that its production and fulfillment costs are no more than $200 per subscriber per year.

Like The Cookie Service, the Bread Laws Guide is also unique in its niche.

One of the markets of the Bread Laws Guide is the same grocery stores that purchase The Cookie Service. Therefore the key to matching the success of The Cookie Service is to get the Bread Laws Guide into the hands of these firms: this is the key element of my marketing strategy. In addition, the costs of production and fulfillment will be less than those for The Cookie Service, making the breakeven point very low and marginal profits after that high.

Return on Investment/Financial Objectives

Based on a 31% market share for the Bread Laws Guide by 1996, I estimate the return on investment to be 83% in 1996 alone. In summary, here are the figures in thousands of dollars:

Position for Growth

The initial focus of the company will be on the core subscription service, concentrating on basic activities and priorities in sales, production, etc. with a goal of adding 240 subscriptions per year, for a total of 1000 by the end of 1996.

At that point, options of acquiring other related products, selling the company or going public can be considered.

Potential Products/Services

Once this growth pattern is realized, the company will expand beyond the core service. Various new product ideas are noted in this presentation.

PRODUCT/SERVICE DESCRIPTION

The Bread Laws Reporting Guide (Bread Laws Guide for short) is the only comprehensive publication related to Bread Laws.

Physically it is a five volume loose leaf set containing approximately 6000 pages of text organized by state for each of the 50 states plus Washington, D.C. The pages contain information as follows:

• 4300 jurisdictions reporting/searching information
• An introductory section
• The Bread Laws code for each state, notated for non-conformance with the model act
• Illustrations of the forms acceptable in each state

The set is presently updated quarterly based upon a questionnaire distributed to all the reporting jurisdictions and upon information gathered regarding new and revised legislation and regulations in each of the states. The first three updates were as follows:

• July 1991—600pages
• October 1991—1200pages
• January 1992—1200 pages

Subscribers may order the entire set or individual states. Pricing is set so that a subscriber with a need for more than 5-6 states would order the entire set. A facsimile service is also offered: a client may call for a specific jurisdiction and receive a copy of the current Guide page immediately by facsimile.

Development of other ancillary products/services is in progress and future products/services are planned to be introduced as cash flow allows. The first of these will be a facsimile newsletter, which will be sent out whenever there is a significant change going into effect in any state.

Unique Selling Proposition

As noted, the Bread Laws Guide is not a look-alike directory so frequently produced by publishers. It is rather, the only frequently updated guide to Bread Laws reporting and the only one with specific information about the local (4200) reporting jurisdictions.

Proprietary Technology

The product is protected in the following ways:

The publication itself is copyrighted and carries an ISBN number. "Bread Laws Guide" and similar expressions will be trademarked at the federal level.

The information for the 4300 jurisdictions is maintained on a computer database that may be loaded to an online system for immediate access as a future product. The database presently makes communication with the jurisdictions inexpensive.

Pay Back Benefits

For most subscribers, the Bread Laws Guide will pay for itself in terms of cost and reject savings within a few months for the following reasons:

• 15-25% of Bread Laws reportings are rejected by every jurisdiction because of preparation errors (e.g., use of wrong ink) or wrong fees, which use of the Guide eliminates.
• Ease of lookup in the Guide cuts down on Bread Laws reporting preparation time and expense: all the information for a jurisdiction is on one easy-to-read page.
• Experience just in 1991 indicates that almost half the states will change their Laws, regulations or fees during a typical 12 month period.
• Professionals who file under the Bread Laws cannot afford to use out-of-date information because and bad bread can lead to million dollar lawsuits.

Useful Purpose

The Bread Laws Guide does not purport to be a legal text. There are other services and publications which fill this requirement. Rather, the Guide is for the professional who needs to do a reporting now and who understands the law itself. It is a practical working tool in other words.

Features Highlights

There is no other source of this up-to-date reporting information.

The Bread Laws Guide is extremely easy to use because:

• It is sorted by reporting jurisdiction name alphabetically within each state.
• Each state section begins with overall information about that state, including a list of cities to assist the user in determining where to file.
• Each state section contains the actual law for the state highlighted with differences from the model law which appears in the introductory section.

The combination of quarterly updates with the planned newsletter keeps the publication current (and will keep the service before its audience in each firm continually). The nearest competitor issues an annual paperback that is out of date before it is published.

Economies of Scale

As sales ramp up, the profitability of this publication surges because of the characteristics of an annual subscription service, summarized as follows:

• Product cost in the initial year of subscription includes five binders and all 6000 pages (about $150); product cost of updates in the second and later years is about half that.
• Marketing cost per initial subscription is high (estimated $200); marketing cost to keep an existing subscriber is maybe one-quarter as much.
• The cost of maintaining the information annually is fixed.
• The cost of printing pages decreases as subscription levels increase because of the fixed cost component of composition, etc.

Product/Service Life Cycle

The Bread Laws were first enacted in the 1970's. They cover the sale, leasing, and financing of commercial bread manufacturing establishments. Each state has enacted its own version of the model act recommended by the American Bakers Association. Even the model act has been altered a few times over the years. Therefore major inconsistencies exist from state to state in the law and regulations, including reporting fees.

Most states have some form of local reporting, which requires reporting two forms, one at the state level and one at the local level. The local level also varies depending upon the state, and may be a town, city, county or parish.

Over the years, there has been continuing discussion of the possibility of federalizing the law, that is, centralizing all reportings at the federal level. This is as likely as the federalization of corporate law.

Planned Products/Services

The company plans to develop new products and enhance existing products. New products/services that are to be developed in the near future include a facsimile newsletter, paperback semiannual summary guides, and reporting services.

Concepts for follow-on (next generation) products or services include an online version of the service (on Lexis, Westlaw) and a CD-ROM version.

Just as important as my own vision of the future, I and my staff will be listening carefully to the subscribers in order to determine their future needs which the company can meet.

MARKET ANALYSIS

Key points in defining the market segment for the Bread Laws Guide are by service type, user type, and geographic location.

In the service type dimension, the service is unique. The only other publications are an annual paperback put out by Charlie Baker, the leading Bread Laws forms provider in the U.S., and a small, general booklet from Bread Reporting Services. The user type dimension is critical to targeting. The significant user types are as follows:

Geographic location is also considered a market dimension because of the obvious disparity in the size of states. Clearly New York and California are not only the largest states, but also are the baking centers where the national bakers are located. Therefore any marketing plan will focus especially on these two states.

Currently, the only market distribution information available is from: Charlie Baker, which reports that it has over 7,000 subscribers to its annual paperback; and Warren Gorham Lamont, which sells a number of Bread Laws related publications, has 30,000 names on its subscriber mailing list (which I will use for leads). These figures do confirm that the estimated market potential for the Bread Laws Guide (3000 subscribers) is within reason.

Of course, the current recession has seen the reduction in both grocery stores and bakeries, as well as greater difficulty in selling publications because of budget constraints. However, these short-term trends will not have that much impact on long-term potential for the Guide since the total market size is so large. The key to marketing is to get the Guide into the right user hands.

Strengths

The Bread Laws Guide has several distinct advantages over the potential competition, of which the top six are listed here.

• It is an advantage to be the first up-to-date service. To the extent that the Guide gets into firms before any competing service comes along, barriers to any other entrant will be too high to overcome.
• The comprehensiveness and depth of information in the Guide makes it the most complete possible source, with a full page of information about every reporting jurisdiction in the U.S. It is presented by jurisdiction within state for easy, efficient access.
• Since the information is maintained on a computer database, other forms of publications and non-print access will be easy to create as ancillary products.
• My own experience in and knowledge of these markets is a key strength because I know precisely where to focus marketing efforts for the Guide.
• The Guide is the only product of the company. Therefore, there will be no confusion about where the priorities of the company should be directed. All efforts, resources and imagination will aim at just this one target: get the Guide in as many hands as possible.
• The initial investment of $200,000 constitutes a key financial strength. Although the company is small, a budget of $200,000 which essentially can be dedicated to marketing the Guide over the first two years represents a major investment even by comparison to a large professional information publisher.

Weaknesses

There are two distinct handicaps inherent in the product today, which I will focus on remedying as noted below.

• Promotional activities since the inception of the product by Able Bakery Publications have not been sufficient to establish the level of demand. In fact, direct response mailings have been mishandled, follow-up by telemarketing has been nonexistent, and too little funds have been allocated to target marketing. Because of this, the marketplace does not yet appreciate how significant this new tool is. Promotional efforts will be extended to my contacts in the states, in the American Bakers Association, and in other associations to get the word out better. I will mount a major, focused marketing effort ($50,000) to the target markets, including mail telemarketing and in-person visits where necessary, in order to get all 1000 copies of the Guide out of inventory and into the hands of potential long-term subscribers.
• Product updates are too slow in getting out, and some of the initially designed subscriber communication vehicles (fax update, newsletter to users) have not been implemented. Within two months I will have these important marketing tools in place to maintain and increase interest of current subscribers, thereby protecting renewal rates.
• I am also considering in house printing and fulfillment to replace the outside printer in order to get sets out faster while saving expenses.

Opportunities

The upside potential for the Bread Laws Guide within these target markets over the next five years may well be greater than the 1000 sets forecast based upon the money allocated to marketing under the conditions introduced in the Present Situation and Strengths/Weaknesses analysis.

In addition to the product extensions discussed elsewhere in this presentation, an altogether new application for this type of product/service would be tapping environmental related markets. Since this field is so new, the kinds of procedures that have been standardized over 20 years for the Bread Laws are hardly in place for searching or reporting environmental-related records. I am working on a "Bible" on how to deal with environmental agencies around the U.S. (state and federal) to assist the same markets the Guide is sold in now.

Further opportunity for product extensions depend upon generating funds from the Guide itself.

Still another possibility for development involves Bread Laws reporting and search services. However, this direction would involve a commitment to compete with Able Bakery Publications, which I hesitate to do for a number of compelling business reasons.

COMPETITION

Direct Competition

The only complementary products/service already in use by these customers is the Charlie Baker Guide, a paperback which is published once a year around December at a price of $15.95. It goes out of date very quickly and only includes state level information.

Other publications that contain general Bread Laws information include:

• Bread Reporting Handbook, $9.95, contains brief descriptions of state reporting information.
• NBI subscription service, $665.00 annually, covers the law but not the fees, addresses, etc.

The latter publication is for the legal researcher, whereas the Bread Laws Guide is for the person who actually has to report under the law.

As noted, the print competition is not in the same category as the Bread Laws Guide because the Guide is in fact unique.

The question for the future is whether anyone will decide to enter the market with a comparable product. On the one hand, a prospective competitor could use the Bread Laws Guide to get a head start on its data collection. On the other, it is unlikely that another publisher will chance such an entry when the niche is so small. For comparison, The Cookie Service on Able Bakery Publications and the NBI Bread Laws Law Service have no competitors.

See the marketing plan for information about how I intend to keep any competition out of the market.

Indirect Competition

A source of indirect competition must be considered: service companies that prepare reportings for attorneys and bakeries. As already explained, hundreds of these companies are located in state capitals around the country. Although most are primarily local to their own state, many also do a significant national business. Since these companies will purchase the Guide themselves to handle their own clients, those same clients may not need the Guide.

The impact of this competition is not anticipated to be all that great because 90% of Bread Laws reportings are traditionally prepared by the institution or its attorneys.

RISKS

This table shows how I evaluate the risks involved in the development of the Guide today. It allows a comparison of exposure, given various assumptions.

I have weighted each element according to its importance to the success of the Guide and listed them in descending order.

Rationale

Maturity In this initial stage, gaining subscriber confidence is critical. Therefore, both weight and risk factor must be considered high.

Strategy Effective product/service, price distribution, promotion strategies are critical. Therefore strategy is highly weighted. Risk is only medium because I am able to take advantage of lessons learned over the past year.

Competitive Position The market is wide open with few competitors today.

Industry: Company must stay competitive as business matures. Company must keep out any direct competitors. Risk is low because good products/services have loyal long term fallowings in these markets.

Management Careful planning, clear objectives and experienced leadership are in place.

Past Performance Medium risk because results to date could have been better except that resources were not applied.

Economy The economy must be considered because the current recession has significantly slowed service company sales and Bread Laws reportings, and represents some risk. However, capitalization of the company will take it through this period and the company is prepared with its inventory to take advantage of the next upswing in the economy.

Conclusion

These risks clearly point to the need for focus in the marketing plan to place the Guide in as many potential subscriber offices as possible as soon as possible. This strategy is the key to addressing almost all the risks, as discussed below.

MARKETING STRATEGY

The marketing strategy of the company may be summarized in two statements:

• Focus on the logical buyers of new subscriptions and attack them in every effective way.
• Once the initial sale is made, "Love Thy Subscriber" with "Gold Stripe" Service.

Comprehensive Plan

The overall marketing plan for the Bread Laws Guide is based on the following fundamentals:

• The Guide is not just a publication. It is a unique, essential service for all power Bread Laws reporters. As an entirely new concept, however, it cannot sell itself.
• The target market segments are well known, but it is sometimes difficult to determine the decision makers within individual firms.
• Direct sales methods are best for the service because it demands personal contact with the prospect and subscriber to assure that it is used effectively.
• Selling never stops. Renewals are just as important as new sales, and depend upon satisfied subscribers who understand how to use the service effectively.
• Users, decision makers, and librarians all need to be sold.

To prove the value of The Guide, the marketing strategy will focus on benefits of use, including efficiency improvements, cost savings, and elimination of rejects. This can be done not only by the typical brochures, cover letters and telesales scripts, but through personal professional contacts I have developed, references by satisfied subscribers, etc.

Product Strategy

The Bread Laws Guide will be treated as a long-lived product/service, which will be improved only in small ways beyond the basic service concept. No frills are needed to sell successfully, as long as a basic focus on top grocery stores and financial institutions is maintained.

Positioning

Because of the special characteristics of these markets, the strategy must incorporate a strong message that the Bread Laws Guide and its publisher are the experts in the field.

This position will be enforced through the ancillary products/services, such as the facsimile newsletter for instant updates on significant changes as well as through a continuing dialogue with the top people in the field.

The Guide is seen in this light by many of the current subscribers, but more promotion is obviously needed to get the publication into the minds of the entire target markets.

Its unique characteristics can be exploited to arrive at a winning position in the consumer's mind. In terms of market segmentation advantages, I will use the satisfied subscribers more effectively.

"Love Thy Subscriber"

Since the long-term success of the Guide depends upon renewals, annual, constant, effective, and positive contact with subscribers must be maintained. Most publishers do not seem to recognize who the actual subscribers are; they are not just the person or department that pays for the service.

I define a subscriber as anyone who uses the Guide. Therefore, contact must be established with paralegals who use copies in their libraries and documentation specialists in bakeries who prepare Bread Laws reportings. One account may have dozens of users.

They will be identified through telephone surveys, questionnaires and the like, and will then be kept informed about the Guide.

"Gold Stripe" Service

In order to produce a consistent identity, I will introduce "Gold Stripe" Service to the subscribers. It will include the following features, plus others to be added in the future in order to maintain the highest possible renewal rate:

• Next day shipping of all orders.
• No hassle return policy: anytime you are not satisfied, your Guide subscription may be canceled.
• Fax Newsletter: news of important changes in reporting requirements sent directly to all users in the subscriber firm.
• Whatever payment plan is most convenient for the subscriber, including monthly, quarterly, annual and even longer.
• A free annual jurisdiction name/address/telephone directory.

The name "Gold Stripe" has been chosen for a very specific reason. After the acquisition, the Guide is not allowed to continue to use the name Able Bakery Publications, leaving me with 6000 binders costing $6.00 each, which has already been embossed on its spine with the name Able Bakery Publications. Not wishing to throw away $36,000, I came up with the idea of obtaining a high quality, gold-leaf or brass overlay that can be firmly glued over the Able Bakery Publications name: thus, "Gold Stripe" becomes the logo of the company.

Critical Mass

The concept of critical mass is important to understanding the selling tactics which will be utilized initially (Stage One) and how these tactics will change over time (Stage Two). Stage One tactics are discussed in the Selling Tactics Section, and Stage Two is discussed in the Advertising Section.

A product/service has reached critical mass when it has gained enough market penetration to become a sort of household word in its industry. In other words, once critical mass in a market is reached, a significant percentage of sales will come from more indirect marketing, and tactics such as advertising and public relations make sense to keep the product name before the customers. Before critical mass is reached, however, such indirect marketing is a waste of money because there is little name recognition to start with in the market.

Therefore, the Stage One sales plan will be focused on obtaining critical mass status for the Bread Laws Guide. This will be accomplished by directing all marketing resources into the telesales channel with a goal of placing the first 1000 sets of the Guide in the top 500 grocery stores, bakeries, etc. I estimate that the Guide will reach its critical mass once these 1000 sets are in place, at which time the marketing strategy will be adjusted to Stage Two.

Next Steps

Based on this strategic plan, I am presently pursuing the following tasks:

• Put together prospect lists for telesales.
• Identify telesales personnel.
• Identify printer for brochures, etc.
• Review and adjust fulfillment procedures with Brown Printing.

PRICING AND PROFITABILITY

The prices for the products/services are determined first and foremost by value to the subscribers. Since pricing is not constrained by direct competitive pressures, the approach taken is to test various levels of prices, volume discounts, for cash, package deals, etc. in order to find the best price-volume mix in each market.

Experience so far confirms that the current pricing is not excessively high, but further testing is needed to determine whether lower prices can expand demand (Is there any price elasticity?). Testing will be done continuously as part of the direct response and telemarketing programs.

The other annual subscription services mentioned in this planare priced for $665 to $900 per year, and the only Bread Laws-related newsletter is priced at $395 per year. The Bread Laws Guide retail price of $595 per year again appears to be in the right range from these comparatives.

I feel that customers will pay in the $400-700 per year based upon the perceived values discussed in the Description Section (Payback) and in the Strategy Section. To reiterate, potential subscribers must be convinced of these values through the correct marketing strategy.

The current price structure appears in the Exhibits. The volume discounts, which previously applied only if the purchase order came from one place in a company, will now be extended to all locations from one company, even under separate purchase orders.

Also, the Bread Laws Guide can be examined and returned for full credit within 30 days of receipt if the customer is not 100% satisfied. Experience so far indicates less than a 10% return rate.

Margin Structure and Long-Term Economics

Profitability in the long run is not so much a function of the initial price cost relationship as of the number of years a customer renews the subscription. Consider the following:

The lesson of this example is that lower cost (or for that matter, higher initial price) does not equal more profits in the annual subscription business. If as a result of costs being twice as high subscribers renew for 5 years versus one year, profits are significantly higher and they get even better in 10 years. Thus, as the marketing strategy explains, the Bread Laws Guide philosophy will be "Love Thy Subscriber," and significant resources are allocated to obtain and maintain each subscriber.

This analysis does not mean that I am cavalier about costs: just the opposite, in fact. Non-marketing expenses, including personnel, printing and other costs will be watched severely so that maximum resources can be committed on a continuing basis to obtain new subscribers and keep existing ones.

The costs and expenses, as detailed in the financials, are as follows per subscription per year:

Experience to date has indicated that the cost of obtaining a new subscriber is relatively high ($200) because of price and market characteristics. Although I will be examining ways to increase the efficacy of each marketing dollar, I feel it is only fair to use this figure in the forecasts. Any productivity improvements will only improve results further.

Initially, therefore, I plan to lose $99 on each new subscriber the first year based upon an average net sales yield perset of $500, and to earn $86 on each renewal subscription.

The wisdom of this approach becomes clear over time: while new subscriptions will continue to cost more to obtain than renewals, costs will decrease significantly as the subscriber base rises, leading to 60% margins ($300 profit on $500 sale) on renewal business by 1996.

It should be noted that the 6% delivery charge is inherently very profitable ($300 of sales versus $6 for postage).

Discounts

All estimates are based upon experience to date. For example, the $500 average sales price was determined from the sales of the first 200 sets, some at full price of $595, some at the introductory price of $545 and some at multiples of $75 for individual states. The reason the average of $415 on the sales worksheet for 1991 is lower than the forecast is that 30 sets were given to Able Bakery Publications offices at $215 per set. Per the acquisition agreement, Able Bakery Publications will pay over $400 per set starting in 1992.

Discounts will continue to be offered to subscribers as an inducement for:

• Early payment of new subscriptions
• Early payment of renewal subscriptions
• Multiple sets in the same firm
• Upgrade from a few states to a full set
• Special deals for association members

SELLING TACTICS

Three selling approaches have been used by Able Bakery publications, with mixed results:

Direct Mail

Over 25,000 pieces have been sent out, resulting in about 60 sales. At a cost of $1.00 per piece, this approach has cost over $400 per subscription. However, the best of mailings, from the Warren Gorham Lamont list, showed a .5% sale rate, for a cost per subscription of $200.

Telesales

The 20 Able Bakery Publications telesales people "mention" the Guide in their presentations to Bread Laws search prospects and clients as part of their overall sales pitch. Very few sales arise from this source.

Outside Sales

The 20 outside sales people were instructed each to sell 5 sets in the July-august period of 1991. Actual sales achieved were about 3 per person, which accounts for the sales bulge in those shown on the sales worksheet. Since that time there has been little focus on this product and fewer than 5 sales per month come from this source.

The remainder of sales to date come from word of mouth and from calls to other service companies.

A little advertising was done and a public relations piece was put out, both with little effect. Some complimentary sets were sent to important figures in the American Bakers Association and other recognized national Bread Laws experts, but recently these people were insulted by being asked to pay for updates.

None of these approaches have yielded satisfactory results as far as I am concerned.

Stage One Planned Sales Method: New Subscribers

These experiences lead to the conclusion that a more focused sales approach is necessary in order to grow sales at a faster rate and/or at a lower unit cost, as follows:

• Combine targeted lists of high potential prospective subscribers to obtain master lists of individual users within each firm.
• Develop specific telephone scripts for each market segment. Develop sales materials specifically to support telephone sales.
• Contract independent, experienced telephone sales people to contact the individuals on the master lists.
• Spend no money on indirect sales methods, such as advertising, although creative, low-cost ideas will be pursued.
• 800 number support line.

The following sections discuss each of these steps in more detail.

Many specific sources of Bread Laws reporting firms are available to me, including,

• Client lists are available as part of the acquisition agreement.
• I have developed lists of all bakeries who report liens in the major states (NY, CA, IL, TX, PA). These lists are particularly valuable because they can be cross matched to find multistate filers who are the most qualified prospects for the Guide.
• Warren Gorham Lamont's list of publication buyers (30,000) names is the best commercially available mailing list. National Commercial Finance Association list includes most large asset based bakeries.
• The Charlie Baker Guide, mentioned in this presentation a number of times, is owned by two brilliant men in St. Louis, MO. I have contacted them to obtain a list of their 7000 subscribers. Their initial response was to allow me to have this list. I will be following up with them once the acquisition is complete.

All these lists are just raw material, of course. I have developed logic and programs to match and combine these lists for use by the telephone sales people.

The resulting combined file will contain multiple individual names and multiple locations for each significant national grocery store chain.

Telephone Scripts

The combined lists will provide more than one access to each targeted subscriber, which in turn will allow multiple scripting for different kinds of contacts, such as:

• Ask the librarian who utilizes the NBI Bread Laws law service since those people will be interested in reporting also.
• Ask the librarian for names of paralegals in the baking or M&A sections of the grocery store.
• Ask the client who is responsible for preparing Bread Law reportings and how many states the firm files in.

In other words, the telephone will be used for initial contact with an objective of identifying the people in each firm with the greatest need for the Guide. When these people are identified, they will be approached with a specific script focusing on the benefits of the Guide:

• Did you know there is a new and only source of accurate reporting information to help you file more efficiently?
• Did you know that there is a way to reduce rejects of Bread Laws reportings to almost none?

The close of this call will usually be to send the prospect more information (the sales material) about the Guide, or even better, to get a commitment to try the Guide on a trial basis.

The follow-up call will review the material and ask for the order.

Of course, if this particular prospect does not agree to purchase, the sales person will call another user in the firm. There is always another user in each firm who will listen.

Once a trial is assured, the telesales person will ask for the names of other users in the firm and will notify them that the Guide is available. The more people who use the Guide, the easier it will be to keep it in the firm year after year.

Sales Materials

Sales material is designed specifically to support the telephone sale, that is, to address the questions of the user and to help convince that person to find it in the budget to purchase the Guide.

Materials will include:

• Brochure explaining the contents of the Guide and showing what each jurisdiction page contains.
• Question and answer sheet.
• Note from the Publisher showing that I am an expert in the field.
• Actual jurisdiction sheets. (Use up old sheets that have been replaced. Each will be stamped "Out of date; do not use.")
• How to use the Guide sheet to be sent to each user when the Guide is delivered.

Experienced Sales People

Some of the sales people who worked for me on past projects are now available to work for the Guide as independent contractors, and I will contract with two of them, one in the East and one in the West. They have the following characteristics in common:

• Knowledgeable in Bread Laws law and products/services.
• Knowledgeable on how attorneys, paralegals and baking think, and how they differ from one another from a selling perspective.
• Client oriented. They listen to what the client wants and pass all suggestions on for response.
• Incentive motivated.
• Comfortable on the telephone and in person.
• Well-dressed.
• Used to working with me.

In other words, I am assembling a mature sales force whom I am confident will achieve my sales goals of 240 sets per year.

Compensation will consist of commissions based upon paid sales with additional incentives for achieving sales over my targets. The company will pay for all sales materials, telephone calls, mailing lists and travel expenses.

These people will also be the feedback loop between the product and the customer. They continually ask for suggestions and improvement ideas as well as addressing any complaints. In fact, these sales people will be fully empowered to address any subscriber need, including flexibility to price the Guide creatively in order to get the order and to maintain the renewal subscription.

Low Cost Ideas - No Frills

As discussed in the Marketing Strategy Section, advertising and other forms of indirect or pull marketing do little good for a product such as the Guide that has not reached critical mass in its market penetration. Therefore, these costly frills will be avoided until Stage Two.

I will, however, implement two indirect sales plans that will cost the company virtually nothing and which will produce an extra 30-100 subscription sales per year, as follows:

• Able Bakery Publications will continue to sell the Guide through its 40 person sales force. I will pay a small 10% commission on these sales, which I expect to total about 30 sets per year.
• I will offer a special price for members to the two major associations in the industry, NBA and AAEL, if they will promote the Guide on behalf of the company. Promotion could take the form of direct response marketing by them or merely an endorsement of the product. This is an experiment, but it is worth a shot as a separate sales channel.

Support Line

The Guide will, as part of the acquisition package keep in place its distinct 800 number: 800-4-BREAD. This number is used by subscribers to place orders, to ask for information including the fax order service, and to contact the Guide for any other reason. It is also used by jurisdictions to let the Guide know about impending changes in regulations, procedures, etc.

The number will ring in the Paramus headquarters, and any messages for the sales people will be forwarded to them by voice mail. The phone will be answered in person from 8-5 Eastern time.

PRODUCTION AND FULFILLMENT

Production

The Guide has been in production since April 1991. As noted above, it has already gone through three update cycles. At present this cycle is quarterly. Updates are based upon information from the following sources:

• Quarterly, all 4300 jurisdictions are surveyed by mail. The survey repeats the information that appears in the Guide and includes a return envelope for changes, additions or deletions. The survey is easy to produce because the mailing information is kept in a computer database. Over 80 percent of jurisdictions have responded to the survey, because they appreciate how the Guide helps to eliminate rejects. In the future, I will ask the jurisdictions for their help in identifying filers who have high reject rates as a source of leads.
• Other services are searched continually.
• Through the International Association of Bread Law Adminstrators, which the company will support through sponsorship of their annual convention. I maintain personal relations with many of the Bread Laws administrators in each state. I will enlist their aid to send me all proposed changes in each state in order to have more up-to-date information.

As information arrives, it is entered immediately into the jurisdiction database so that the most current information will be available for call-in customers (and later for immediate updating of an online database). Then, once a quarter, the altered pages are printed and distributed by Brown Printing.

I contemplate three significant improvements in this process:

• The quarterly cycle is arbitrary. Most subscription services of this type send updates whenever anything significant happens, which may often be on a monthly basis. Certainly, changes are more likely in the fall than in the summer because of legislative schedules. Also, if a state has substantial changes (over 60% of pages), the whole state section will be reprinted to save subscribers the trouble of replacing individual pages.
• Nomatter how fast changes are printed and sent out, any change to reporting requirements that is not known immediately by a filer my cause a reject. The goal of the Guide is of course to eliminate all rejects. Therefore, I will demand that all critical changes in jurisdiction information be faxed to users in time to assure reportings are not made in error. Critical changes are if fees are changed or acceptable reporting form changed.
• The costs of composition and printing are expected to rise from $40,000 per year to $80,000 by 1996 as the subscriber base expands. Of this amount, almost half the cost is for composition because the press runs are so short (1000). One use of term loan funds being requested will be to obtain a desktop publishing PC system with a high quality laser printer (total cost - $20,000) which will be utilized to do composition in-house. Savings will be invested in additional marketing/sales.

Fulfillment

Brown Printing not only prints the Guide and its updates, it also inventories sets; fulfills orders for new sets; packages and delivers updates; and updates the sets in inventory. The company will continue to use Brown for fulfillment services because they have a fine reputation for service, accuracy and timeliness.

I will make only two changes to the fulfillment process:

• New sets are sent out by courier, which will continue. However, I am designing a new, permanent courier package in the form of a briefcase for deliveries. The package will be returned to the company by the subscriber once the set has been accepted. This packaging will protect the sets better from dents and the like, while making a statement that this service is a premier subscription like no other. One other benefit is that a subscriber who wants to return a set must call the company in order to get a package to return it, giving the company a chance to save the account.
• Brown charges $10-12 per set to update the ones in inventory. The total cost can amount to over $15,000 per year because so many sets are still in inventory. This cost will be eliminated by having my family do the updates.

ASSUMPTIONS: BASE CASE

The base case is what I consider the most likely scenario for sales, costs, and growth. The next section examines worst and best cases as well.

General

Inflation is not considered in the forecasts and estimates because prices for this kind of subscription service typically can be raised to offset cost increases.

The column entitle "Factor" on some of the worksheets contains cost per unit or growth factors used in the forecasts.

Sales

The sales forecast is based upon experience to date. 1992 sales are for 10 months, on the assumption of a March 1 purchase date.

Note that sales tax will only be charged in New Jersey because the new company has no other locations.

Cost of Sales

New sets include 5 binders at $6 each. 6000 pages of test, tabs and the like. 750 sets were purchased as part of the acquisition.

Update costs are computed at 2400 pages per year per set at $.04 per page.

Production/Editorial Expense

Management fees, such as a salary for me, are not included in the estimates, as my compensation will depend upon results and available cash flow.

Editor fee is estimated based upon prior results.

Postage is for new sets and update delivery, newsletters and faxes.

Telephone is for administrative and jurisdiction calls.

Jurisdiction mail is estimated at 4300 pieces of mail four times a year at $.75 per letter, including return postage.

Production coordinator is a part-time position that will be contracted out.

Subscriptions and supplies are needed for research and general operations.

Amortization of startup expenses is taken over three years.

Interest is calculated at 6% on the subordinated debt of $125,000.

Royalties at 6% of sales are due to Able Bakery Publications as part of the acquisition agreement.

Marketing/Sales Expense

Mailing list costs are primarily for the Warren Gorham Lamont list.

Brochures include the cost of about 20,000 direct mail pieces utilized by the telephone sales people at $.80 per set of sales materials.

Postage includes direct mail and delivery of new sets and updates.

Telephone is estimated at 80 calls per day/$1.00 per call.

Commissions are estimated at $100 per new subscription sold.

Cash Flow Projection

See balance sheet assumptions for most cash flow items.

Cost of sales for new sets is not a cash expense because of the 750 sets purchased in the acquisition, until 1995 when the present inventory has been depleted. At that time, 500 more full sets (New Inventory) will be printed and packaged at a cost of $150 per set.

Note that withdrawals for management fees and to pay taxes on earnings by stockholders (subchapter S corporation) are not included in this presentation.

The initial stockholder investment of $200,000 is allocated as follows:

• 750 sets of the Guide in inventory at $150 per set.
• Startup expenses include attorney fees of $10,000 and development fees taken over on the acquisition of $26,000.
• Unearned income represents the remainder of each paid 12 month subscription, net of set costs, as of acquisition date. I have chosen not to use this accounting method for the forecasts in order to keep the presentation simple. However, for tax purposes, I intend to use the unearned subscription approach to defer taxes on corporate profits.

Balance Sheet Detail

Receivables are estimated at 60 days sales outstanding.

No fixed assets are shown because the computer equipment obtained in the acquisition is expensed. No other capital assets are required to operate the business.

To be conservative, no payables are assumed.

CASH FLOW PROJECTION (1992-1996)

BEST AND WORST CASE ANALYSIS

Best Case: Schedules

A term loan of $100,000 is added to the balance sheet to be used as follows:

As a result of the increased investment in sales, the number of new sets sold is doubled to 40 per month, and the cost of updates is decreased by utilizing advanced computer methods.

By 1996, sales will rise to $799,000 because of the compounding effect of renewal sales, 77% more than base case sales of $452,000.

Expenses reflect both the interest on the term debt and the depreciation over 5 years of the computer equipment.

Although cash flow appears to be less advantageous than the base case, in fact this is only due to the continued discretionary increased marketing/sales expenditure levels. Profits before these discretionary expenses in 1996 are $414,000 vs $239,000 in the basecase. In other words, the company has a lot more to spend on future growth because of the additional impetus provided by the term loan funds.

Worst Case: Schedules

The worst case scenario continues expense projections at the base case rate while sales decrease to only 10 sets per month, or half the base case rate.

It is significant to note that even without a cutback in market/sales expenses, a cash shortfall of only $5500 is generated. Renewal sales still put the company into positive cash flow over the 5 year period.

Best Case Cash Flow Projection (1992-1996)

Worst Case Cash Flow Projection (1992-1996)

BOOK PUBLISHING

Publishers Modernize

During the nineteenth century, most book publishers in America believed theirs was an ivory-tower profession, bearing the cultural and social responsibility of providing Americans with works of literary distinction or political and philosophical distinction, whether such volumes returned a profit or not; but in the decade 1900 to 1909, shocked by the collapse of two of the nation's oldest and most formidable houses, Harper and Appleton, publishers grew progressively less genteel and more aggressively profit-oriented and business-minded. In the very first year of the decade, the venerable institutions of Harper's and Appleton did not disappear from the American publishing scene, but only because they were rescued from bankruptcy by Wall Street financiers. In the process, Wall Street found the publishers' idealism quaint and their mismanagement maddening; and in the following years a much more fiscally minded generation of managers moved into the industry to work alongside the high-minded editors and proprietors. As a result, although many major houses, like Scribner's, Putnam's, and Dutton, continued to be owned by the families whose names they bore, they began rapidly trans-forming their business and marketing methods and dramatically expanding into large-scale businesses of the twentieth century.

Growth and Expansion. In this dynamic and turbulent period, more and more books were mass-produced, a feat made possible by the fact that printing and binding were becoming progressively mechanized. In 1900 Publishers' Weekly noted that the capacity of bookprinting houses and binderies in New York alone was estimated to be one hundred thousand volumes per week. The same publication observed that the publishing industry was developing in other ways: in the single year 1900, for example, more than seven thousand new books, mainly by American writers, had been published by nearly six hundred publishers. By 1907, despite the panic of that year, the number of new books published had risen to 9,620, the largest number ever recorded. As the decade proceeded, new publishing houses, such as Doubleday, Page and Company sprang up—mainly in New York City—and traditional houses, such as Scribner's, incorporated. At the same time, to increase markets and guard their balance sheets, the new breed of profit-oriented publishers saw to it that the distribution of their titles became more national and even international, as American books appeared in homes and bookstores in Europe, Canada, and Mexico. And in this important transitional decade, as the business grew and redefined itself, New York City became the undisputed capital of the publishing world.

Fiction Predominates

Meanwhile, the boom in fiction publishing that had begun after the Civil War showed no signs of abating, and while biography, history, economics, and poetry continued to sell, fiction became the great mainstay of the industry. Sales of novels of all types climbed higher and higher, with best-sellers enriching author and publisher alike. In 1900 Mary Johnston's To Have and To Hold, a historical novel about colonial Virginia, sold more than 250,000 copies in six months. For perspective, consider that an analyst a few years later recalled that, as recently as the late 1890s, a book was considered highly successful if it sold 25,000 copies. Then in 1904, according to the annual listing in The Bookman, a top best-seller was Rebecca of Sunnybrook Farm, by Kate Douglas Wiggin; in later years writers such as Upton Sinclair and Booth Tarkington enjoyed huge sales; in 1908 Mary Roberts Rinehart, one of the most popular authors of the time, published yet another best-seller, The Circular Staircase. In this same year, of 9,254 new titles published, 1,458 were works of fiction; these numbers represented a constant trend during this time, and if they were to include fiction for children, they would be much larger. During these years America's taste for fiction, especially popular fiction, seemed insatiable. High-brow publishers took pains to distinguish melodramatic and sensationalistic novels from the more worthy and realistic "literature," such as that advocated by William Dean Howells, and written by Henry James, Edith Wharton, and Stephen Crane. Publishers generally vied for successful fiction writers by offering large advances and royalty rates as much as 20 percent of sales, and devoted great energy to wooing the reading public by spending ever larger sums on advertising and promotion. Even as rates for ads placed in books and magazines skyrocketed, one noted publisher estimated in 1904 that even small publishers spent $50,000 a year on advertising. Indeed, in 1909 Henry Holt, a longtime giant in the business, complained that with so much competition for fiction readers, marketing and advertising costs had made it difficult to clear a profit on a book.

Authors' Rights

In the nineteenth century, publishers generally treated their authors with little consideration; but in the years 1900-1909 American writers, aided by a new cadre of literary agents, began to demand better compensation and more control over their work. Quickly gone were the days when Henry Holt had refused to give his authors written contracts and declared that royalties in excess of 10 percent were "immoral." In the past, both publishers and editors had changed manuscripts to suit their own tastes, without consulting the person whose name would appear on the book. This practice, too, stopped, as the growing number of literary agents worked ever more aggressively to protect the integrity of the authors' works, and, of course, ensure their authors' largest advances and highest royalties. In addition, the first decade of the twentieth century saw the first bidding wars between houses for the works of popular authors, a practice appalling to traditional publishers, who yearned for the years when, at least in their memories, a loyalty existed between publisher and author, and business was conducted on a more gentlemanly basis. In the new commercial climate of the early 1900s, Charles Scribner II, a titan of the industry, was aghast that he might be forced to pay more than "whatever the book is fairly worth." Despite his resistance to such new methods, however, he managed to assemble an impressive literary stable at Scribner's, whose authors included Edith Wharton, Thomas Nelson Page, and Richard Harding Davis.

SALESMANSHIP ON PAPER

Riddle, circa 1901:

"Why is the merchant who doesn't advertise like a man in a rowboat?"

"Because he goes backward, I suppose.*

"No; because he has to get along without sales."

After a couple of decades when advertising used enticing impressions and images to draw buyers to a product, it returned to the language of the hard sell at the turn of the century. In 1904 an enterprising copywriter arrived at the Chicago offices of the eminent Lord and Thomas advertising agency. He sent up a note that said, "You do not know what real advertising is. If you want to know, let me come up and tell you." An executive named Albert Lasker was sent to receive the visitor, one John E. Kennedy. The two spoke until three o'clock in the morning, when Kennedy was made the firm's new chief copywriter.

"Advertising," Kennedy told Lasker, "is salesmanship-on-paper." Forget pretty and diverting ads, he said. Tell the customer in repertorial prose the hard facts that a skilled salesman would convey in person. Treat the customer sensibly, as if he or she was uneducated but smart. And so began a new phase in advertising style, which was actually another turn in an old cycle that would continue to turn throughout the twentieth century.

Source:

Stephen Fox, The Mirror Makers: A History of Ameritan Advertising and Its Creators (New York: Morrow, 1984).

Revolts against Commercialization of Literature

Between 1900 and 1909, the dramatic and accelerating commercialization of the book industry provoked strident protests from some publishers, especially older ones, who, keeping a nineteenth-century ideal of the nature and purpose of publishing (which one had likened to teaching and even the ministry), felt their traditionally honorable profession was being corrupted. These men—there were very few women in publishing management at this time—were repelled by the growing and seemingly irreversible dominance of economic issues in the publishing business. They disliked the new literary agents, the bidding wars for books, the huge advances paid to authors, the excesses of advertising, the cutthroat competition for readers, the sheer yearly volume of new and frequently undeserving books. One prominent publisher contemptuous of such trends was Henry Holt; writing in 1907, he particularly vented his spleen against literary agents, charging that they had "forced over-production by selling several of an author's books before they were written, and dazzling him with forced earnings from forced work, followed by inferior earnings from inferior work." Holt then declared, on a larger point: "It would be an immense gain for the cause of literature and to the profit of all worthy authors … if the 'commercial enterprise' that has come in from Wall Street … were taken out of the publishing business—if the competition consisted simply in selecting books wisely, making them tastefully and honestly, informing the interested public of their existence and supplying them to whatever legitimate demand they might effect through their own merit." Another publisher who disdained business trends in this decade was Walter Hines Page, former editor of the Atlantic, who wrote in A Publishers Confession (1905) that publishing was "the worst business in the world," and that every successful publisher "could make more money going into some other business." Why, then, do people continue to become publishers? According to Page, the genuine publishers "every year invest in books and authors that they know cannot yield a direct or immediate profit … because they feel ennobled by trying to do a service to literature."

Doubleday, Page and Company

On January 1 1900 a new house made its debut in New York City. Frank Doubleday, who had left Scribner's after a tempestuous relationship with Scribner and briefly gone into business with magazine and newspaper publisher Frank McClure, decided to form a partnership with Walter Hines Page. A deeply committed professional and a prodigy of energy, Page's aim was nothing less than the promotion of social democracy, education, science, sanitation, and dignity. Combining forces, the two men founded Doubleday, Page and Company, establishing their offices in Union Square, an area of New York rapidly becoming the heart of the publishing district. In the following years, these two publishers brought the new house to rapid prominence. Frank Doubleday was tall, zestful, charismatic, and very commercially astute. He pioneered advertising techniques for his company's books by, for example, placing his ads in newspapers and particularly in magazines, whose readers he judged more likely to be Doubleday patrons. He was fascinated by the challenges of book advertising. He observed: "Each book is its own individual advertising problem, and when you have made a success with one you have hardly any definite principle to put into words or guide you in advertising the next." Besides starting a chain of bookstores, he took mail-order and subscription selling of books far beyond their nineteenth-century dimensions. Both he and his partner, meanwhile, encouraged the seeking out of writers of merit and importance and the forming of long and fruitful relationships. In the course of the decade, Doubleday, Page and Company set a new standard among successful New York publishers, and the only thing more impressive than its list of authors—which included Joseph Conrad, Booth Tarkington, Sir Arthur Conan Doyle, O. Henry, Edna Ferber, and Joel Chandler Harris—was its profit statement.

ARE JOURNALISTS BORN OR MADE?

Joseph Pulitzer first conceived the idea of a professional school of journalism in the early 1890s, but the trustees of Columbia University rejected his plan. By 1903 the university had accepted his gift of $2 million, but debate within the newspaper profession raged over the wisdom of this approach. Many reporters believed that news talent was born rather than made. Influential educators asserted that a course in liberal arts and experience on a college newspaper would suffice as formal training. Reporters of the hard-knocks school dismissed the idea of journalism education, saying it would create a two-tiered profession. Pulitzer countered that he had never met a born editor and proposed courses in law, ethics, truth and accuracy, the liberal arts, statistics, science, principles of journalism, and news. Conceding that some people had an innate "news instinct," Pulitzer nonetheless believed that education would keep that instinct from overriding the "restraints of accuracy and conscience." The groundbreaking ceremony was held in 1904, and the Columbia School of Journalism officially opened in 1912.

Source:

Marion Marzolf, Civilizing Voices: American Press Criticism, 1880-1950 (New York: Longman, 1991).

Sources:

Mark Sullivan, Our Times: The United States, 1900-1925; volume 1, The Turn of The Century; volume 2: America Finding Herself; and volume 3: Pre-War America (New York: Scribners, 1927, 1930);

John Tebbel, Between Covers: The Rise and Transformation of Book Publishing in America (New York: Oxford University Press, 1987);

Tebbel, A History of Book Publishing in the United States, volume 2: The Expansion of an Industry, 1865-1919 (New York & London: Bowker, 1975).

book publishing The term publishing means, in the broadest sense, making something publicly known. Historically, it came to refer to the issuing of printed materials, such as books, magazines, periodicals, and the like; it now also encompasses issuing such materials in an electronic form. There is, however, great latitude of meaning, because publishing has never emerged, and cannot emerge, as a profession completely separate from printing on the one hand and the retailing of printed matter on the other.

Early History

The practice of making extra copies of manuscripts goes back to ancient times; in Rome there were booksellers—Horace mentions the Sosii, who were apparently brothers—and the copying of books by trained slaves reached considerable proportions. With the introduction of printing into Europe in the middle of the 15th cent. (see type ), book publishing sprang into lively existence. The author, the printer, and the publisher of a work were sometimes all the same person, as in the case of members of the Estienne family in France in the 16th cent. The differentiation of printer, publisher, and bookseller appeared early, however, as patrons of literature had books printed for distribution and booksellers had their printing done by others to meet the growing demand.

The Emergence of Publishing Houses

The first important publishing house (1583–1791) was that of the Elzevir family in Holland (see Elzevir, Louis ). The Elzevirs were businessmen rather than scholars, and the business of bookselling grew as literacy increased. Concurrently, printing, publishing, and bookselling spread learning across the West. Religious controversy bred polemics, and arguments printed in broadsides, pamphlets, and books were handed out zealously and bought eagerly by partisans. An interest in knowing the future also increased the amount of literature issued by bookseller-publishers, and almanacs and the like were issued for the wider public.

With the steadily broadening mass of readers, great publishing houses slowly came into being; many were well established by the late 18th cent. Leipzig had become a printing center in the 15th cent. and retained its eminence, along with Munich; most of the larger German cities had flourishing publishing concerns by the end of the 19th cent. Modern European cities with long traditions of publishing are Vienna, Florence, Milan, Zürich, Paris, London, and Edinburgh. In the United States, Boston, Philadelphia, and especially New York City took the lead.

Specialization

During the late 19th cent. and throughout the 20th cent., specialization has been an increasingly important factor in book publishing. Music publishing became a completely separate business, as did map publishing. Some publishing houses now specialize in religious books, textbooks, art books, technical books, and children's books. Frequently a house issuing works for the general trade may also have a strong textbook department, juvenile division, or reference department. A house founded for more or less special purposes may broaden its scope, as sometimes happens with the university press .

In the late 19th and 20th cent., specialization also grew within publishing houses. Editorial departments became distinct from production, and both were quite separate from the sales or marketing departments. Publishers also specialized in the means by which their books were distributed. Trade books are fiction and nonfiction books sold to readers primarily through bookstores, whereas textbooks are directed toward school boards and faculty for use by students in the classroom. Many volumes are issued with the book club market in mind.

Paperback Books

Since books are basically a luxury item, a purchaser can dispense with them in hard times. One partial solution in the United States has been the issuance of paperback books, long a standard form of book publication in Europe. During the 1930s and 40s the paperbound, pocket-size book rose meteorically in popularity in English-speaking countries, and in the 1950s the "quality" paperback appeared, presenting durable yet inexpensive editions of well-known writers. By 1998 mass-market and trade paperbacks represented about 14% of all books sold in the United States.

New Technologies

By the 1970s, the advent of new technologies for the transmission, storage, and distribution of data, once the prerogative of book publishing, had become a problem for the industry; television screens and databases became symbols of the challenges to editors and publishers (see computer ; information storage and retrieval ). The increasing use of sophisticated copying machines posed new problems to the need of publishers and authors to protect their property by copyright , and in 1976 the U.S. Congress passed a major revision to the federal copyright law that attempted to define to what extent published material could be reproduced without payment of royalties.

In the late 20th cent., computers and such related innovations as the CD-ROM (see compact disc ) and the Internet allowed publishing to expand, making readily updated texts available on line and on disk and fostering multimedia presentations and interactive uses (see hypertext ). The easy access to and copying of electronically published material raised additional copyright issues, and in 1998 Congress passed legislation that extended copyright protection to on-line material. In addition, the wide availability of computer-driven desktop-publishing technology to small presses and individuals gave impetus to the production of a wide variety of self-published books. By the beginning of the 21st cent. several large U.S. publishers had set up separate electronic ventures and a number of independent on-line print-on-demand (or publish-on-demand) web companies had been created. The fastest growing of the independents, Lulu.com, was founded in the United States in 2002. Only four years later it had more than 30,000 titles available, was creating about 1,000 new ones every month, and had expanded its operations into several European countries.

Technology also led to the development of the electronic book or "e-book," which combines the storage, search capabilities, and adaptability of a computer with the simulated page format of a traditional book; early versions appeared in the late 1990s. By 2000, thousands of books were being digitized, to be read on line, downloaded, printed out by the reader, or printed on demand by the publisher, thus assuring that their electronic versions need never go out of print. That same year, as reading devices became more compact and sophisticated, several of the largest U.S. publishing houses opened separate on-line publishing ventures while smaller electronic publishing start-ups became more common.

Meanwhile, some books also became available in component parts (chapters, maps, tables, and even paragraphs) that, for a price, could be customized into new entities created by their readers and, like other electronic books, be either downloaded from the Internet or printed on demand by the publisher, bound, and shipped to the customer. Since 2000, e-book readers have been developed that can store hundreds of publications, and they have become extremely popular with segments of the reading public. Software for reading e-books on computers, electronic tablets, and smartphones also has been developed. With e-books and e-book readers widespread, previously unknown writers have found it relatively easy to self-publish on websites that make their books available for download; by 2011, several of the books of such "indie authors" had become electronic bestsellers.

Mergers and Acquisitions

Publishing traditionally had been an industry of numerous, small, family-owned firms. After the 1960s, however, publishing houses were regularly purchased by and consolidated with other companies. For example, Rinehart & Company and the John C. Winston Company were purchased by Henry Holt & Company to form Holt, Rinehart & Winston, Inc. In addition, publishing firms were being taken over by conglomerates, e.g., Holt, Rinehart & Winston, Inc., was purchased by the Columbia Broadcasting System; in 1986, Harcourt Brace Jovanovich (now Harcourt, Inc.) bought the educational and publishing division of CBS Inc., which included Holt, Rinehart & Winston; Henry Holt & Company was then sold to the Holtzbrinck group of Germany (Holtzbrink now also owns St. Martin's). Time Warner, the world's largest entertainment and media company, owns Little, Brown & Co., Warner Books, Time Life Books, Book of the Month Club, and many popular magazines.

Some publishing houses became part of larger corporations in other countries. Rupert Murdoch 's Australia-based News Corporation acquired HarperCollins (formerly Harper & Row), William Morrow, and Avon, plus many other American, Australian, and British publications as well as television and radio stations. Doubleday, along with its houses Delacorte and Dell, was bought by the German firm Bertelsmann and merged with Bantam; when Bertelsmann later (1998) acquired Random House, it became the largest U.S. trade publisher. Robert Maxwell of England bought Macmillan, the New York Daily News, and many other publishing enterprises. Maxwell's empire collapsed in the early 1990s, and Macmillan was eventually acquired by Viacom, which already owned Simon & Schuster. Viacom (which also owned Prentice Hall, Scribner, and other companies) later (1998) sold many of these publishing operations to the Pearson Group of England. Pearson's holdings now include Allyn & Bacon, Appleton & Lange, Macmillan, Penguin Putnam, Prentice Hall, Silver Burdett Ginn, and Simon & Schuster.

Associations and Awards

Among publishers' associations, the most notable in the United States is the Association of American Publishers. Some professional associations present awards for books of unusual merit. The National Book Committee, for example, presents the National Book Awards in five categories: fiction; poetry; arts and letters; history and biography; and science, philosophy, and religion.

Related Entries

For material on magazine and newspaper publishing see journalism ; newspaper ; periodical ; see also book ; book collecting ; children's literature .

Bibliography

See H. S. Bailey, The Art and Science of Book Publishing (1980); J. W. Tebbel, A History of Book Publishing in the United States (4 vol., 1972–80); L. A. Coser et al., Books: The Culture and Commerce of Publishing (1982); A. Pettegree, The Book in the Renaissance (2010); J. B. Thompson, Merchants of Culture: The Publishing Business in the Twenty-First Century (2010); Literary Market Place (issued annually).

PUBLISH

To circulate, distribute, or print information for the public at large.

Inlibel and slanderlaw, to utter to a third person or to make public a defamatory statement; incommercial paperlaw, to present an instrument for payment or declare or assert that a forged instrument is genuine.

The meaning of the term publish differs according to the context in which it is used. In its broadest sense, the term publishing describes the act of making something known to the general public. A publication can be accomplished by speaking in a public place, printing information on paper and distributing it on the street, buying or otherwise securing time on television, placing information in a circulated newspaper or magazine, or other similar methods.

Laws can mandate specific forms of publication of certain information. For example, federal administrative agencies are required to publish their rules in the federal register. 5 U.S.C.A. sect; 552 (1996). These rules are later published in a subject-matter arrangement in the code of federal regulations. Similarly, federal law requires that administrative agencies under the executive branch publish a notice in theCommerce Business Daily before entering into a contract worth more than $25,000 with a private business. 41 U.S.C.A. § 416 (1997). The notice must contain information that is relevant to the proposed job and give all qualified private businesses an opportunity to compete for the contract with the agency. An agency may use additional sources of publication, such as trade journals, magazines, newspapers of general circulation, and other mass communication media to advertise its intention to enter into a contract with a private business.

Publication of information is required by law in other areas as well. State laws require a mortgagee who has foreclosed a mortgage on real property to publish a notice in a local newspaper before conducting a sale of the property. Both state and federal laws require administrative agencies to publish notices of public hearings that will be held by the agencies. Before taking action that affects legal rights, administrative agencies hold public hearings to give members of the public an opportunity to be heard.

In libel law, a defamatory statement can give rise to civil liability if the statement is made public. To be libelous, a statement must appear in print, in a picture, or in a sign. To be considered published, the statement must be received by at least one other person apart from the speaker and the defamed person. In the law of slander, the term publish refers to defamatory statements that are spoken in the presence of at least one other person. A transitory, humiliating gesture that is defamatory also constitutes slander if it is published, or understood, by a third party.

The term publish has another meaning in the law of commercial paper. Commercial paper law relates to negotiable instruments such as bills of exchange, promissory notes, bank checks, and similar documents. In the law of commercial paper, publishing occurs when a check or other negotiable instrument is presented. Publication also occurs when a person vouches that a forged instrument is in fact genuine. By publishing a negotiable instrument, the publisher declares that the instrument is valid.

further readings

Kunz, Christina L., et al. 2000. The Process of Legal Research. 5th ed. Gaithersburg, Md.: Aspen Law & Business.

cross-references

Defamation; Libel and Slander.

pub·lish / ˈpəblish/ • v. [tr.] 1. (of an author or company) prepare and issue (a book, journal, piece of music, or other work) for public sale: we publish practical reference books | [intr.] the pressures on researchers to publish. ∎  print (something) in a book or journal so as to make it generally known: we pay $10 for every letter we publish. ∎  [usu. as adj.] (published) prepare and issue the works of (a particular writer): a published author. ∎  formally announce or read (an edict or marriage banns). 2. Law communicate (a libel) to a third party. DERIVATIVES: pub·lish·a·ble adj.

pub·lish·er / ˈpəblishər/ • n. (also publishers) a person or company that prepares and issues books, journals, music, or other works for sale: the publishers of Vogue a commercial music publisher. ∎  a newspaper proprietor.

publish make publicly known XIV; issue copies of (a book, etc.) to the public XVI. ME. puplise, -ische, publishe, f. stem of OF. puplier, (also mod.) publier — L. pūblicāre make public, f. pūblicus PUBLIC; see -ISH2.
So publication XIV. — (O)F. — L.

Book Publishing. See Printing and Publishing.

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