Harry Potter and the Deathly Book Leaks

We're still a few hours away from the release of the final book in J.K. Rowling's Harry Potter series, and Scholastic (Nasdaq: SCHL  ) is already putting out fires. The stateside publisher has been chasing down online retailers who shipped the book too soon, as well as reviewers with early critiques and cyber-spoilers who have put pages from the book online.

It probably doesn't help that Rowling, who hasn't had a problem offing key characters in recent installments, has made no bones about the need to kill a few more in the final book.

Does Harry die? Will his buddy Ron Weasley meet his literary demise? Is Hermione Granger no stranger to the grim reaper?

I don't know. And even if I did, I wouldn't tell you. Secrets were a lot easier to keep when everyone didn't have one-click access to the rest of the world through blogs, online discussion boards, and personal websites.

It's hard to keep a secret these days
Anticipated releases are going to be leaked digitally. It's been happening for years with music. Now that broadband usage has widened, hit movies are being illegally distributed before they even begin their cinematic runs. So it's no surprise that books have joined the fray. Bookworms like to jump the gun, too.

The way technology keeps evolving, one has to wonder how quick the dissemination would be down the road if Rowling had a few more Potter books -- and even meatier plot twists -- to put out over the next few years.

In any event, Scholastic is right to go after the sources of the leaks. The problem, however, will be proving the financial harm. The company is printing a record 12 million copies of this 784-page book. It also bumped up the retail price of the book earlier this year, realizing that Potter fans are unlikely to balk at higher prices for the heavy hardcover.

It's unlikely that a spoiled ending will lead to unclaimed pre-orders. Sales are proceeding at a fever pitch leading up to tonight's release. Amazon.com (Nasdaq: AMZN  ) has received more than 1.4 million pre-orders for the book. As of last week, Barnes & Noble (NYSE: BKS  ) had gotten 1.2 million pre-orders, with most of those coming from readers who will be showing up at their local retailer for the Midnight Magic events leading up to the official release, when the clock strikes 12 this evening.

If anything, all of the premature peeks may actually help drum up interest for the surefire best-seller of the summer. With media reports claiming that some of the leaks appear to be contradictory, those who can't wait until midnight may very well be getting unreliable news, anyway. But it does make you wonder: Are the conflicting leaks the handiwork of Potter pranksters, or could it even be part of a devious marketing campaign out of Rowling's camp, to maximize the buzz about the book?

Potter: the epilogue
The real investing angle here is interpreting what the book's content will mean down the line. Forget about Scholastic, which would sell a ton of these books even if they consisted of two words and 784 empty pages.

I already wrote about how Amazon.com may wind up being the biggest winner. We don't know who the lucky publisher behind the next hot series will be, but we do know that it will go through online retail channels. And no one does online retail better than Amazon. Those 1.4 million pre-ordering customers who stand to get their books delivered tomorrow know they'll be able to count on Amazon for future pre-orders.

However, could there be any losers if Rowling's final book takes a grim turn? If some endearing characters getting killed, will fans find it too painful to head out to the multiplex for the final two Time Warner (NYSE: TWX  ) movie adaptations? (The most recent, Harry Potter and the Order of the Phoenix, hit theaters a little more than a week ago.)  

As we speak, the Islands of Adventure theme park in Florida -- partly owned by General Electric (NYSE: GE  ) and Blackstone (NYSE: BX  ) -- is making a major investment in a 20-acre environment themed after the Potter franchise. It won't open for another two years. A regretful ending, coupled with resentful readers, could doom the nine-figure investment that the park is counting on to turn things around after a couple of years of declining attendance.

So let Scholastic go after the baddies if it wants to. The real threat, balanced delicately by the open-ended nature of opportunity, was put to paper months ago by Rowling herself. There's only casualty we know for sure: At the stroke of midnight tonight, a magnetic seven-book series meet its end. 

Investors well-versed in casting levitating spells now need to figure out which public companies will keep thriving in a post-Potter world.

Amazon and Time Warner have been recommended to Motley Fool Stock Advisor newsletter subscribers. Mere muggles like you and me can check out the newsletter service for free with a 30-day trial subscription offer.

Longtime Fool contributor Rick Munarriz has barely skimmed the Potter books, though his wife is caught up in them and fearing the worst tomorrow. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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