Advertising: New Unit to Turn Brands Into Publishers

Just a few months earlier, IPG Mediabrands, a division of the Interpublic Group, a competing conglomerate, provided its own signal, albeit a less flashy one, that data collection was gaining importance: it announced that it would automate half of its media-buying business over the next three years.

The move to automation — high-speed, algorithmic programs that buy and sell ads based on a desired audience — was expected to be complemented by a second announcement by IPG on Thursday. The company is creating a new internal publishing group that will help advertisers create content like videos and manage their Web sites and social media platforms like Twitter and Facebook.

“Everybody who had anything to do with the New York Stock Exchange could have told you the exchange could have automated probably decades before they did,” said Matt Seiler, global chief executive of IPG Mediabrands.

Employees in IPG’s new publishing division, which will be called Mediabrands Publishing, will spend their time “creating the digital content that matches up with the automated delivery,” Mr. Seiler said.

Automation will help the company save costs by buying and selling media more efficiently, Mr. Seiler said.

“There will be new people coming in with different, very highly valued skills, people within the organization who will be redeployed and there will be people whose jobs are replaced with technology,” he said.

“As we get to that 50 percent,” he said, referring to the balance between automated ad buying and created content, “we’re able to reinvest the saved dollars and reinvest more on the custom and sponsorship end.”

Susan Bidel, a senior analyst at Forrester Research, said automation could lead to staff cuts, but relationships between sellers and buyers “are important and lead to the biggest programs and the largest chunks of revenue.” Sales staffs will be smaller but more strategic, Ms. Bidel said.

“They will be made up of women and men who can understand the technology and understand the audience and package it appropriately for advertisers,” she said.

Mr. Seiler said that media agencies had traditionally been planning and distribution vehicles, with creative duties being “outsourced to somebody else.” Adding a publishing division will create a new agency model of “you come up with it, you make it and you distribute it,” he said.

The new division will be led by Mark Himmelsbach, who will become its chief operating officer, and Teddy Lynn, who will be the chief creative officer. Before IPG, both men worked at BBDO, an agency in the Omnicom Group.

“We will not be looking to have brands to produce content to put out on NBC,” Mr. Himmelsbach said. “We will be looking to help brands produce content to put on their own channels,” like a Web site or social media.

“Instagram, Vine, Twitter, Facebook, each channel requires something different that must resonate with consumers,” he said.

Having one location to manage all of a brand’s media assets will give IPG a competitive edge when it comes to creating multiplatform advertising campaigns, Mr. Lynn said. “It’s not just social but what happens when you are in a parking lot reading Twitter, what happens when you walk into a store,” he said.

Susan Jurevics, a senior vice president at Sony, a brand that works with IPG, said the new publishing unit, combined with more automated media buying, had the potential to help streamline all of the moving parts of an ad campaign.

“Producing content that’s relevant to your audience is actually really hard, especially if that’s not a core competency of what you do,” she said.

Understanding how to create and distribute different types of content for specific audiences across multiple platforms is a challenge for many brands, she said.

One target for Sony is consumers from 13 to 30, the so-called millennials. Traditional 30-second ads are not as effective with that group, Ms. Jurevics said, adding “they really don’t want to be marketed to.”

Marc Speichert, chief marketing officer at L’Oréal USA, said, “We’re excited about the initiative because more and more we position ourselves as publishers.”

For a beauty and cosmetics company like L’Oréal, the desire for video tutorials on how to use products is great, Mr. Speichert said.

“It means creating more assets than ever before,” he said. “The whole point about how you take media and creative and bring them together, I think it’s what all agencies should be obsessed with.”

Embracing Tablets, Comic Book Publishers Cash In on a Digital Revolution

At Comic-Con International, the annual comic book convention here last week, publishers embraced tablets and e-readers to show off their wares, and companies like comiXology demonstrated technological innovations to better distribute those offerings.

ComiXology, which has become one of the biggest distributors of digital comic books, hit a milestone in June when it reached 180 million unique comic book downloads since it started business in 2009, said David Steinberger, the company’s chief executive, and a co-founder. Of those downloads, 80 million were in the last six months.

The company’s success mirrors a surge in digital sales, which reached $70 million last year, up from $25 million in 2011, according to a report released July 15 by ICv2, an online trade publication that covers pop culture. Digital sales made up 19 percent of the total North American market, which rose 13 percent to $750 million in 2012, up from $665 million the year before.

At the comiXology booth at Comic-Con, fans swiped their fingers across a variety of tablets to view the offerings as comiXology employees explained how the system worked.

“Amazing!” said Chris W. Palmenberg, a visitor from Tucson, Ariz., as he gave the comiXology team a thumbs-up. “When I first saw the iPad, I knew this would be great for comics,” he said. A longtime reader of print comic books, Mr. Palmenberg made the switch to comiXology’s platform two years ago for the ease of portability.

“I think that we contributed to the revolution in digital comics,” Mr. Steinberger said. Supported by in-app purchases, comiXology was No. 3 on Apple’s list of top 10 apps in 2012. Its business model helped persuade DC and Marvel to sign deals to distribute their comic books digitally through comiXology the same day they are released in print.

Working with partners like comiXology on distribution allows DC to better focus on producing good stories, said Jim Lee, the co-publisher of DC Entertainment, adding, “The Holy Grail was the distribution issue.”

For years, comic book publishers faced a problem of poor distribution. In the 1960s and ’70s, comic books were sold at newsstands and bookstores. As they migrated to specialty shops, publishers broadened their offerings and aimed at a niche audience, fueling a speculation boom among collectors in the 1980s. After an eventual bust a decade later, the number of specialty shops shrank. By this time, distribution had become too focused on existing readers and had failed to attract new ones.

But with the digital revolution, publishers seem to have overcome their distribution woes. Through computers and mobile devices, they can now reach readers anywhere in the world.

DC said it had been able to take advantage of the new distribution model to reach new readers. Thirty percent of readers of Injustice, a book based on a video game, were new to comic books, Mr. Lee said.

Not only does technology promote innovation, it lowers barriers to the market, allowing new publishers to enter.

After taking two years to develop its technology to create motion books, Madefire, based in Berkeley, Calif., opened for business last year. Its initial strategy was to focus on original content with features like animation, sound and music and deliver it through its own app. Madefire also has a Web distribution deal with DeviantArt.

“We’ve optimized for a digital-first reading experience,” said Ben Wolstenholme, a co-founder and the chief executive of Madefire.

To broaden its audience, Madefire started working with small publishers like Top Cow and Boom Studios. It recently announced a deal with IDW to create motion books for Star Trek, My Little Pony and Transformers. Now, Madefire has to balance its original content with licensed properties, but Mr. Wolstenholme said the strategy was to reach a more mainstream audience.

Lion Forge Comics, a start-up based in St. Louis, is also taking a similar approach. This was its first year at Comic-Con, but it has already announced a deal to publish comic books based on old NBC shows like “Knight Rider” and “Punky Brewster.”

“I think it’s a good time for new companies,” said David Steward II, managing partner and creative director at Lion Forge. “You can do new things in different ways, versus changing direction, which the more established companies can’t.”

In Europe, Publishers Dealt a Setback Over e-Book Pricing

BERLIN — The European Commission settled its antitrust case against Apple and four book publishing groups over e-book price fixing on Thursday, in what was described as a victory for the leading online seller, Amazon, and a setback for publishers fighting for the ability to set prices for electronic literature in the digital marketplace.

The European Union’s competition commissioner, Joaquín Almunia, said he was ending his office’s investigation after Apple and the publishers — Simon & Schuster, HarperCollins, Hachette, and Holtzbrinck, the owner of Macmillan — agreed to end their attempt to set prices for e-books through a series of preferred selling agreements.

Under those agreements, made in 2010, publishers could set their own prices on e-books, with the retailer acting as an agent taking a commission. Apple championed this agency model.

For print books, by contrast, publishers act as wholesalers, charging retailers about half the cover price for a book and then allowing retailers to set their own price to consumers. Amazon built a huge business by offering consumers discounts under this wholesale model.

Publishers fear that under the wholesale model, Amazon can sell e-books for less than it pays, taking a loss in the short term to drive smaller competitors out of business, thus gaining a monopoly, to the detriment of the publishers.

European Union officials, however, see things differently: that collusion by publishers would lead to higher prices for consumers.

“Obviously, the coordination of commercial behavior between competitors — here, with the help of Apple — is forbidden by our competition rules,” Mr. Almunia said in Brussels in a statement. “Whatever the publishers’ initial concerns about retail prices, dealing with this situation through collusion is not acceptable.”

Under terms of the settlement, Apple and the publishers agreed to immediately end their preferred agency agreements, the legal pacts that contained “most favored customer” clauses effectively blocking sales to price discounters. Apple and the publishers, Mr. Almunia said, tried to make the agreements standard in the industry.

Amazon and other online retailers that refused to agree to the group’s pricing terms, Mr. Almunia said, “were told they might not be supplied with e-books if they did not agree to the switch.”

“Retailers had little option but to surrender their discretion in setting retail prices if they wanted to avoid a serious disruption of their business,” he said.

The decision by Mr. Almunia, a Spanish jurist who has set a pattern of compromise since becoming Europe’s top antitrust officer in February 2010, followed a similar resolution in the United States. In September, a federal judge approved the U.S. Justice Department’s settlement with HarperCollins, Simon & Schuster and Hachette.

Mr. Almunia had opened the European investigation in December 2010. He had signaled recently that a compromise was in the works, and the announcement on Thursday was seen as no surprise by European competition lawyers.

Jean-François Bellis, a lawyer in Brussels who represented Microsoft in its own multiyear European antitrust case, said Mr. Almunia’s settlement in the e-book case reflected his preference for fast, inexpensive solutions to corporate attempts to abuse market dominance.

“This is something indeed that was expected,” Mr. Bellis said. “I am seeing more and more that the commission is resorting to settlements. This is a more practical approach than fines and lengthy prosecutions.” Apple benefits from the resolution because it will not have to pay a fine, Mr. Bellis said.

The regulator’s decision will not help the fragile situation of many publishers, said Françoise Dubruille, director of the European and International Booksellers Federation, a Brussels group representing the 27 E.U. national bookselling organizations, which in turn have many small and medium-size publishers, in addition to large groups, as members.

Ms. Dubruille said the settlement would effectively further Amazon’s ability to set the purchase price of e-books in Europe, which would not help a struggling publishing industry.

“We aren’t happy about this,” Ms. Dubruille said of the decision. “We think the big players in this industry have disproportionate power and influence in the digital market. We want to see fair competition. This might look like a victory for consumers, but in the long run, this is bad news, because the pressures on prices will increase.”

Apple and Amazon did not immediately respond to requests for comment.

Google Deal Gives Publishers a Choice: Digitize or Not

It was a small step forward for Google’s plan to digitize every book and make them readable and searchable online, known as the Google Library Project, but it did not resolve the much bigger issue standing in Google’s way — litigation between Google and authors.

Though the settlement will not change much about the way that Google and publishers already partner, it is the newest signpost for defining copyright in the Internet age. It is also the latest evidence of the shift to e-books from print, and of Google’s efforts to compete with e-book rivals like Amazon.com. Digital books were a new and daunting prospect when the publishers first sued Google seven years ago, but they have now become commonplace.

“They had this lawsuit hanging around for years, and basically the publishers have all moved on,” said James Grimmelmann, a professor at New York Law School who has closely followed the case. “They are selling digitally now. That’s the future. This just memorializes the transition.”

Thursday’s agreement, between Google and the Association of American Publishers, had been expected since last year. The publishers involved in the settlement are the McGraw-Hill Companies, Pearson Education, the Penguin Group, John Wiley & Sons and Simon & Schuster.

The deal allows publishers to choose whether to allow Google to digitize their out-of-print books that are still under copyright protection. If Google does so, it will also provide them with a digital copy for their own use, perhaps to sell on their Web sites.

For books that it has digitized, Google allows people to read 20 percent of them online and purchase the entire books from the Google Play store, and it shares revenue with the publishers. The two parties did not disclose additional financial terms of the agreement, but the publishers had not asked for monetary damages.

Google has been offering publishers the opportunity to sell digital books for years, and digitizing new books has become routine for publishers. But under the settlement, publishers get the benefit of Google digitizing out-of-print books that they might not otherwise have turned into e-books. Meanwhile, Google can expand the library of e-books it sells to consumers.

“What’s really exciting about today’s settlement is the fact that Google will be getting access to books that have long been out of print, that are in copyright,” said Tom Turvey, director of strategic partnerships at Google. “It’s good for users who weren’t able to buy them before, and for publishers.”

The settlement does not answer the question at the heart of the litigation between Google and publishers and authors — whether Google is infringing copyright by digitizing books. It essentially allows both sides to agree to disagree, and gives publishers the right to keep their books out of Google’s reach.

“We’re very pleased because the settlement acknowledges the rights and interests of copyright holders and publishers, and whether they’re going to make their rights available,” said Tom Allen, chief executive of the Association of American Publishers. But the bigger case, between Google and the Authors Guild, remains tied up in court. An agreement between those two parties will determine whether Google can move forward with its broader, more ambitious digitizing plan.

“That’s the lawsuit with high stakes,” Mr. Grimmelmann said.

The settlement with the publishers could help Google in that litigation, he said. “Maybe the fact that the publishers don’t think this is a lawsuit worth pursuing will help Google slightly,” he said.

The Authors Guild, once a partner of the publishers against Google, said Thursday that the publishers’ settlement did not resolve any of its issues with Google’s book-scanning project.

“The publishers’ private settlement, whatever its terms, does not resolve the authors’ copyright infringement claims against Google,” Paul Aiken, executive director of the Authors Guild, said in a statement. “Google continues to profit from its use of millions of copyright-protected books without regard to authors’ rights, and our class-action lawsuit on behalf of U.S. authors continues.”

The settlement also did not address the difficult issue of so-called orphan works — those that are still under copyright but whose copyright holder or author cannot be found.

The groups representing authors and publishers sued Google in 2005, arguing that its digital book-scanning violated their copyrights. After years of litigation, they agreed to a $125 million settlement, but it was rejected last year by a federal judge, Denny Chin, who said it went too far and raised copyright, antitrust and other concerns.

After that, the publishers and authors, who had partnered when negotiating with Google, split. While the authors remain in court, the publishers reached the agreement with Google privately, so it is not subject to court approval.

Julie Bosman contributed reporting from New York.