IDG Books Worldwide, Inc.

views updated

IDG Books Worldwide, Inc.

919 E. Hillsdale Boulevard
Suite 400
Foster City, California 94404
U.S.A.
(650) 655-3000
(800) 434-3422
Fax: (650) 655-3299
Web site: http://www.idgbooks.com

Public Company
Incorporated: 1990
Employees: 450
Sales: $141.5 million (1998)
Stock Exchanges: NASDAQ
Ticker Symbol: IDGB
SICs: 2731 Books, Publishing

The fastest growing computer book publisher of the 1990s, IDG Books Worldwide, Inc. made publishing history when it introduced DOS for Dummies in 1991. The book quickly sold out its initial print run and in the first 14 months sold 1.5 million copies. It was the beginning of the immensely popular “for Dummies” series of black and yellow books on topics ranging from sex to golf. By the end of 1998 IDG Books had published approximately 350 titles in the series, which annually accounted for some two-thirds of the company’s revenues.

1990 Origins as a Subsidiary

IDG Books Worldwide was founded in April 1990 as a subsidiary of the privately held International Data Group (IDG), one of the world’s leading information technology publishers (Computerworld, Macworld, PC World). Its mission was to publish quality computer books. Based in Foster City, California, IDG Books was co-founded by John Kilcullen and IDG founder Patrick J. McGovern.

After a string of unsuccessful titles, IDG Books published DOS for Dummies, written by Dan Gookin, in November 1991. The idea of the “for Dummies” series originated in 1987. John Kilcullen, then an employee of Bantam Doubleday Dell Publishing Group in New York, had overheard a software customer request a simple, basic book on the DOS operating system. Not knowing anything about computers, the customer suggested, “Something like DOS for dummies.”

The remark stuck with Kilcullen. In 1991 he was attending a publishing conference as the co-founder and publisher of IDG Books Worldwide. One of the speakers at the conference was author Dan Gookin. Impressed with Gookin’s take on the publishing industry, Kilcullen signed him up to author DOS for Dummies.

The first print run of DOS for Dummies was 7,500 copies. The book appeared six months after the release of MS-DOS version 5.0. It initially was met with skepticism. Most bookstore chains did not want to stock it. Critics said the book should have been released when MS-DOS 5.0 was released, not six months later. They also were afraid the “for Dummies” title would offend readers.

Kilcullen countered that the “for Dummies” branding strategy would endear the book to customers as something they could immediately relate to and identify with. As it turned out, Kilcullen was right. DOS for Dummies sold out its initial print run in about a week, and in its first 14 months the book sold more than 1.5 million copies.

Marketed as “A Reference for the Rest of Us,” the “for Dummies” series with its bright yellow and black covers stood out as different. Helping achieve a strong brand identity was the Dummy character. The “for Dummies” series of books was designed to be informative yet entertaining. The text contained some humor, and illustrations and icons were used to guide readers to key points. Each book’s chapters were ordered logically to make it easy for readers to find the information that was needed.

The success of DOS for Dummies caused rival computer book publisher, Macmillan Publishing USA, to launch its own “Complete Idiot’s Guide” series, including The Complete Idiot’s Guide to Personal Computers. Macmillan later launched a successful “Teach Yourself” series of computer books. Although IDG Books was headquartered in Foster City, California, it edited and produced its computer books from its Indianapolis office. Macmillan’s editorial offices for computer books also were located in Indianapolis. IDG Books CEO John Kilcullen had worked at Que Corporation in Indianapolis in the early 1980s, and he felt there was an editorial talent pool in the city because of Macmillan’s presence there.

By early 1993 the company had seven “Dummies” titles in print, and all of them were on bestseller lists. Two new series were planned to launch later in 1993. When Microsoft Corporation launched its MS-DOS 6.2 upgrade in November 1993, it made a groundbreaking agreement with IDG Books. IDG Books would publish a special edition of its DOS for Dummies book called MS-DOS 6.2 Upgrade for Dummies with three Microsoft disks holding the actual DOS software. Both companies would distribute the book-and-software package. It was the first time a major software product was marketed with an independent publisher’s book. The first printing of MS-DOS 6.2 Upgrade for Dummies was 250,000 copies.

‘for Dummies’ Expanded to Non-computer Topics: 1994

The “for Dummies” books were intended to help the average consumer overcome the frustration they felt about technology and other confusing subjects. At first, the series covered computer and technology-related subjects. Then, in April 1994, IDG Books expanded the scope of the “for Dummies” series beyond technology with the publication of Personal Finance for Dummies, by Eric Tyson. The book was an immediate success, selling out in bookstores within three weeks. Later that year Dr. Ruth Westheimer penned Sex for Dummies for IDG Books.

Expanding the scope of the “for Dummies” series led to dividing the Dummies Press into two groups: Dummies Technology Press, which published computer and technology titles, and Dummies Trade Press, which published general interest titles. Among the areas covered by the Dummies Trade Press were sports and leisure (Golf for Dummies), education and test preparation (The SAT I for Dummies), food and beverage (Red Wine for Dummies), the arts (Shakespeare for Dummies), health and fitness (Pregnancy for Dummies), home and garden (Painting and Wallpapering for Dummies), business and personal finance (Mortgages for Dummies), and more.

By mid-1995 IDG Books had about 150 “for Dummies” titles in print, and more than 15 million “for Dummies” books had been sold. The company launched a number of new formats to complement its “for Dummies” line, including a “Quick Reference” line, a “Dummies 101” tutorial series, a “For Teachers” line, and calendars. The company also experimented with the CD format, producing its first CD-book package in a licensing agreement with Angel Records called Classical Music for Dummies.

As IDG Books celebrated its fifth anniversary in 1996, it had 213 titles in print, translations into 30 languages, and previous year’s sales of $50 million. It was virtually the only computer book publisher that had achieved success in the trade market, selling to consumers through bookstores rather than through computer stores.

At the end of the year, Steven Berkowitz was promoted from chief financial officer (CFO) to president and publisher. Former president and co-founder John Kilcullen remained the company’s chief executive officer (CEO). Berkowitz had joined IDG Books in 1994 as CFO and formerly was the publisher at MIS:Press and M&T Books in New York City.

Acquisition of MIS:Press and M&T Books: 1997

In 1997 IDG Books acquired two computer book publishers, MIS:Press and M&T Books, from Henry Holt and Company for $5.4 million. In 1997 MIS:Press and M&T Books published about 80 titles.

By the end of the year IDG Books had published 300 technology titles and more than 55 non-computer trade books in its “for Dummies” series. Of those 355 titles, 29 had achieved sales of more than 250,000 copies, including The Internet for Dummies and PC’s for Dummies. With estimated annual revenues of $150 million, IDG Books was regarded as the number two computer book publisher behind Macmillan Computer Books.

Going Public: 1998

When IDG Books published DOS for Dummies in 1991, there was already a book for dummies on auto repair in print by another publisher. In February 1998 IDG Books acquired three “Dummies” books from Ten Speed Press: Auto Repair for Dummies, Auto Repair for Dummies Glove Compartment Guide, and Wheeling and Dealing for Dummies. IDG Books would revise and repackage the books to fit into its own “for Dummies” series for fall 1998. Auto Repair for Dummies was first published in 1976 by Ten Speed Press and had sold about 750,000 copies.

In a move to further merchandise the “for Dummies” strong brand identity, IDG Books signed an agreement with game and toy manufacturer Pressman Toy Corporation of New York to produce three board games based on the series: Trivia for Dummies, Crosswords for Dummies, and Charades for Dummies.

Company Perspectives:

IDG Books Worldwide, Inc., publishes best-selling, high-quality computer, business, and general reference books that bring skill-building instruction to readers of all levels around the world.

After filing registration statements with the Securities and Exchange Commission (SEC) in May, IDG Books had its initial public offering (IPO) in July 1998. The company planned to raise $50 million from the sale, of which $38.4 million would go to parent company International Data Group (IDG) as a debt repayment. After the IPO, IDG would continue to hold a majority interest in IDG Books.

The SEC filing revealed that revenues at IDG Books had increased some 357 percent from fiscal 1993 (ending September 31) through fiscal 1997, reaching $120.7 million. Net income for the period rose 84.2 percent to $7 million in fiscal 1997. The “for Dummies” series accounted for approximately two-thirds of the company’s revenues, reaching $82 million in fiscal 1997. Technology titles accounted for the remaining $38 million of revenues in fiscal 1997. At the time of the IPO, IDG Books had about 700 active titles, about half of which were “for Dummies” books.

Revenues for fiscal 1998 (ending September 31) were $141.5 million, a 17 percent increase from the previous year, and net income rose 45 percent to $10.2 million. Sales of the company’s technology titles increased 33.8 percent, while those of the “for Dummies” series rose 9.3 percent.

In December 1998 IDG Books acquired Cliffs Notes, based in Lincoln, Nebraska, for $14.2 million. Founded by Cliff Hillegass, the company had about 300 backlist titles consisting of literary study guides, test preparation guides, and advanced placement guides. Commenting on the acquisition, IDG Books President Steven Berkowitz told Publishers Weekly, “Our strategy in building the company is to build brands, and Cliffs Notes is well-known among its core audience of students 12 to 20 [years old]. We intend to invest heavily in the brand and feel we can extend the Cliffs Notes name beyond its current audience.” It was not yet decided whether the Cliffs Notes editorial staff of about 55 people would remain in Lincoln.

Outlook

At the end of 1998 IDG Books launched a new “for Dummies” series on health, beginning with Alternative Health for Dummies and Herbal Remedies for Dummies. For 1999, the company planned to release 400 titles, including new and revised editions, of which more than 200 would be in the “Dummies” series.

IDG Books implemented a strategy of achieving wider distribution by taking a 49 percent stake in a new Canadian publishing company for about $1.7 million. The new company was to be formed jointly with Macmillan Canada, a division of Canada Publishing Corporation, and would be called CDG Books Canada Inc.

For spring 1999 IDG Books and Netscape Communications Corporation planned to jointly produce a line of books and book-and-CD-ROM packages under a new Netscape Press imprint. It was not clear how America Online’s announced acquisition of Netscape would affect the agreement.

The growing use of personal computers and people’s frustration with using new technologies—two factors that contributed to the success of DOS for Dummies —promised a strong market for IDG Books’ “for Dummies” series well into the 21st century. Although the company had many competitors, it had built a strong brand identity for the “for Dummies” series that would enable it to increase readership, reach new markets, and grow its market share in computer and trade publishing.