Barnes & Noble is Really an Ally of Amazon

Barnes & Noble stores – lands of discovery for ALL readers – Even e-book readers!

B&N an Amazon ally? Many may not realize this fact; but B&N has helped Amazon succeed and Amazon should show a little respect!

B&N has had a recent spate of bad bumps caused by dings to themselves and the book industry in general — like the declining sales of Nook, the resignation of William Lynch as head of their tech side (due to a $177 million Nook loss), the big six downsizing to five with the Penguin/Random House merger and Apple losing it’s agency pricing case in court.

But, believe it or not, B&N STILL has solid business fundamentals as demonstrated by a 16% increase in earnings (EBITDA) even as sales declined by 5% – 6%.

The possible hidden power of B&N lies in the ability of the re-crowned head of the company (and the one who initially built B&N to a major bookseller chain), 72-year-old Mr. Leonard Riggio — who also loves the physical book stores. He also has a genuine respect for the new digital tech. Point is, he knows how to run a store with ambiance and panache!

Mr. Riggio wants to buy back all the B&N stores and take them private again. I think this is a good start as he won’t have to put up with a lot of investors and boards of directors that might not see his particular vision for the physical bookstore plus amenities that creates an intelligent respite from the cold, harsh world — You just can’t get this kind of ‘creation’ from a tablet.

So, just how is B&N an ally of Amazon? People just love to browse physical artifacts in a warm, restful space (Homo sapiens can’t live on-line ALL the time) — they look at books with neat covers, read the cover flaps and decide they want to buy — either in-store OR very often over their devices. B&N has probably acted as the catalyst for numerous digital buys!

Bookstores are ‘lands of discovery’, even for e-book readers.

So, B&N is still earning and publishers’ net revenue grew $1 billion in 2012, upping their take to $15 billion — much of it due to the wide margins provided by e-books (no manufacturing, no shipping and no remaindering) — If only they could get over the fact that Amazon’s concurrent growth makes them secondary characters in a business they used to control.

Really, there is room for everybody.

David Carr writes this for The New York Times:

Why Barnes & Noble Is Good for Amazon

On Thursday night in Clifton, N.J., Barnes & Noble was a way station, a third place between work and home where people sought respite and diversion. With its high ceilings, wide aisles and a large Starbucks, it is the kind of retail outlet that gives big-box stores a good name.

In one aisle, a father and daughter were having a spirited generational discussion over the side-by-side covers of “The Great Gatsby,” one of which bore an image of Leonardo DiCaprio. For reasons I wasn’t quite clear about but nonetheless found charming, an older couple used a book on vegetarian cooking to cover up a copy of “The Art of Seduction” on the shelf. Nearby, two apparent siblings, one sporting pink hair and the other purple, traded loud opinions over the True Crime display.

Watching the readers lounge in chairs with a view of Route 3, it was hard to reconcile the pageantry of retailing with the brutal recent headlines about the book business.

At the beginning of July, the Big Six publishers became the Big Five with the blending of Penguin and Random House. At the beginning of last week, the chief executive of Barnes & Noble left the company after a grim earnings report that highlighted a failed strategy to have the company’s Nook device compete in the crowded tablet space.

Then on Thursday, Judge Denise L. Cote of United States District Court in Manhattan issued a withering decision against Apple, writing that the company had conspired with the major publishers to fix the price of e-books in an effort to thwart Amazon’s momentum.

So far, what has been bad for the industry has not yet hit consumers directly. If they are among the many millions of people enthralled by CBS’s “Under the Dome,” and decide to read the giant Stephen King novel that inspired it, they can hop on Amazon and buy it with a click for $13.99. Or they could avoid its door-stopping heft and spend just $7.99 for the Kindle version.

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This Publishing/Writing Blog is available on Kindle :)))

Decoding the Business-Side of Being an Author

Online booksellers are continuously working on new platforms that make the publishing and selling of books easier for authors of all grades. Amazon and other onliners have come up with all kinds of dashboards that give author-clients instant, realtime info on their books’ sales, campaigns, visits, sample reads, etc…Data that traditional publishing furnished to its authors much more slowly and with less detail through BookScan.

Sarah Lacy of TechCrunch wrote the following article giving more details:

First Amazon Took Down Booksellers…Are Publishers Next?

  

It’s not that Amazon set out to destroy small book stores. They just offered a better option for a large number of people. Now, Amazon is increasingly offering small features here and there that taken together may start to make a traditional publisher a lot less necessary for authors.No one is more shocked by that sentence than I am. While I’ve jumped firmly from old-media to new-media when it comes to articles and videos, I’ve remained a big believer that self-publishing via eBook isn’t yet a viable option for most authors, assuming you want a lot of people to read your book. It’s just not personally satisfying either. A book is something I spend years of my life writing– usually for a comparatively small amount of money — and I want to hold it once all the pain is over. I want it to sit on my coffee table.  I want it reviewed in the New York Times. And I want to walk in a book store and see it on the shelf. In most cases, only a traditional publisher can do that for me.

Don’t get me wrong–  I’m sure I will sell more eBooks than physical books this year and over my lifetime. But without the vetting, marketing, distribution and clout of a major publisher, I doubt I’d sell many of either. The first question anyone asks an author is, “Who’s publishing you?” Much like how the WashingtonPost.com relies on the brand and legacy of the Washington Post, unless you are a huge name, you need the anchor of a “real book” for your eBook to do well and be taken seriously. That’s just reality.

But it won’t always be reality, and Amazon has quietly been doing small things on Author Central to help authors take more control. My second book comes out later this month, so I’ve been taking a close look at the services Amazon offers to authors. It’s changed dramatically since my last book was published in 2008.

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Serious Publishing Disruption Over Near Horizon!

Mike Shatzkin, The Idea Logical Blog, has laid out in quite finite detail what many have feared for some time…that the traditional publishing industry will be totally eclipsed by new digital delivery systems and sales in the very near future; blowing away most of those in the present publishing supply chain!

Talk about the on-going intrigue in this fast-changing industry! And God bless those who can’t or won’t adapt to change…

Mike Shatzkin writes:

The monthly release of ebook sales figures by the IDPF provides a regular reminder about how fast this market is growing and it always provokes me to project the curve into the future and think about the implications. It was an IDPF data release that triggered the thought that we needed a “Tipping Points” panel at Digital Book World last January which turned out to be one of the highest-rated presentations by the attendees of the conference. And it was another release of that data that made me say on this blog on March 22 that I thought ebook sales would reach 20-25 percent of the sales for new works of narrative writing by the time of Obama’s reelection in November 2012.

Then last week, The Economist had a story quoting Carolyn Reidy, the CEO of Simon & Schuster, forecasting S&S ebook sales in that range in “3 to 5 years.” This is the first time that I’m aware of that a Big Six CEO has been willing to put their name on a forecast that is just about as aggressive as my own. Another conversation with the head of another one of the Big Six companies captured a forecast that is in the same ballpark.

So I think it is worth a few moments to contemplate what it means if this forecast is accurate, or even close to accurate.

If by the end of 2012, 25% of sales for a new book are digital, then about half of new book sales will be made through online purchases if we count the print book sales made through online retailers (mostly Amazon.)

Online print sales can be served through inventory generated on demand. So, if these estimates are right, we are less than three years away from a publisher (or author) being able to reach half the market for a book without inventory risk!

Having half the market reachable without print-run risk or inventory storage; having half the customers connecting with their reading through online paths that make them at least theoretically identifiable; and having a quarter of those customers reading through a medium that enables interactivity will make all the changes we’ve seen so far in trade publishing appear trivial. And if the very perspicacious Carolyn Reidy, her unnamed counterpart, and I are right, that disruption is going to take place before many books now under contract reach their publication date.

The immediately disruptive effects of this, for which every major publisher should be preparing right now, include:

1. Publishers are going to really have to rethink the development process for their ebooks. Right now, publishers put their creative energy into optimizing print books; ebooks are an afterthought. The most forward-thinking houses are going to XML workflows which will reduce the costs of conversion to ebook formats. But are any of them fundamentally rethinking how the editor and author shape the project to optimize the ebook experience? That working relationship is going to have to undergo fundamental change.

2. It will be eminently sensible to launch books with a no-inventory strategy and move to press runs with returns allowable when reviews or sales have proven that it makes sense. Of course, publishers will be happy to sell anytime on a no-returns basis and for some books launched “digital first” there could be enough no-returns demand to generate a printing, but the idea of printing and distributing speculatively will make less and less sense as the potential market to be reached by that tactic diminishes as a share of the whole. By the way, this reality would give B&N, the only retailer with its own DC resupply infrastructure, an additional competitive advantage.

3. A non-US publisher will be able to reach half the US market without needing an operation of any kind in the States. This is a sea-change that could even encourage our UK counterparts to reconsider their staunch defense of territorial rights. We already know that the greatest part of marketing value beyond the display and positioning in a bookstore is generated online. That means it can be done from anywhere without a local nexus. By the end of 2012, we’re saying half of all the sales potential can also be reached with the product without a local nexus: no requirement of local inventory or any shipping or revenue collection facility beyond your digital distribution and print-on-demand partner.

4. Because books or ebooks will be purchased by half of their customers electronically, the potential exists to know exactly who those are and to establish interaction with them. Obviously, the intermediaries have both selfish and customer-oriented reasons not to share data, but for ebooks, at least, publishers will find hooks to get readers to check in with the publisher and establish contact. (Of course, they will also be selling more and more units direct to consumers, without any intermediary at all.) This opportunity presents a new battleground for competitive advantage that publishers will have to pursue both for marketing and for author relations.

5. Publishers will have to start devoting the bandwidth and resources to direct sales that they devote to intermediary sales today. The notional 50-50 split of sales between terrestrial and online means that half the sales are actually direct sales. Publishers will increasingly find ways to influence those sales decisions, but the companies that devote management attention and resources to the challenge will find those ways faster, to their competitive advantage.

6. There’s an inevitable concurrent downward spiral of brick-and-mortar retail inherent in this forecast that sales are moving online. The nearly-limitless online selection has been an increasingly powerful magnet since the day Amazon opened and in the new paradigm there will be a growing body of talked-about content not visible on store shelves. It is beyond the scope of today’s speculation to consider what this means for the strategy and survival of bookstores and wholesalers and for publishers’ expectations for them, but it’s not likely to be pretty.

7. Self-publishing strategies for entities that can do the marketing become much more compelling. It is no secret that an author can make more money on each copy sold managing her own publication through Lulu or Author Solutions or Bookmasters. If half the market is directly available without regard to the effectiveness of a field sales force then we can be sure, at the very least, new title acquisition will be more challenging for established publishers. The big players will still be the only big bankrolls in town, but that’s a two-edged sword that can lead to overspending and losses as well as to securing desirable projects.

8. If the infrastructure for direct sales management at most publishers will be woefully lacking, the infrastructure for print warehousing and delivering print orders at most houses is likely to be heavily underutilized. That should lead to a reduction in the charges for distribution services, adding pressure to a business that will already suffer from the growing viability of no-inventory publishing. And publishers with volume-related pricing contracts with their printers will find they don’t need as much capacity as they contracted for a year or two before.

For the past three years, Ted Hill and I have conceived and organized the program for the Book Industry Study Group’s Making Information Pay conference, coming up on May 6. Our theme this year — Points of No Return — addresses precisely this issue from the perspective of how functions will be organized, what the changing skill sets will be, and how secure people doing jobs today can feel about having a job they can do tomorrow. If you found that this post gave you something to think about, you’ll find MIP a morning very well spent.