An American Editor

January 30, 2012

Is There Hope for Barnes & Noble?

As readers of my columns know, Amazon is not my favorite bookseller. It is not because Amazon doesn’t offer value or quality service; it is because I fear Amazon’s attempts to monopolize the book marketplace vertically, that is, everything from acquiring and publishing to selling exclusively. Right now consumers, especially ebookers, are happy with everything Amazon because the prices are lower, the selection is existentially broader, and the customer service is great (especially as Amazon is more interested in market share than profit from the book division). But will all that change should Barnes & Noble follow Borders into the “I remember when” category: I remember when there was competition and prices were low and customer service was great — before Barnes & Noble went out of business!

Maybe I’m alone in my thinking, and maybe I’m alone in my willingness to pay a little bit more in hopes of keeping B&N and competition alive, but the demise of B&N is something I do think about. I have been thinking about it even more often with the latest revelations that B&N is thinking of spinning off its Nook business. My thoughts are now traveling along the lines of “what would you do if you were CEO of B&N?”

It is pretty clear to me that the future lies in the world of ebooks. I think that for at least the next 100 years pbooks will retain a significant place in our culture, but over those 100 years, the market share of pbooks will decline while that of ebooks will increase. This is the hurdle that B&N faces because of its brick-and-mortar (b&m) stores and publishers face as they have not yet come to grips with the reality that their growth and future lies in the ebook world.

Yet I think there is a role for the b&m store in the ebook world, and I think B&N needs to exploit this role, something that Amazon is not well-positioned to do. Thus I play “if I were CEO….”

The real value to B&N of the physical bookstores is the brand Barnes & Noble. That was really the only valuable asset of Borders when it went under. Consequently, I would look to franchise the Barnes & Noble name. Get the company out of directly owning b&m stores, and convert all current stores into employee- and/or small business owner-owned franchise stores.

As part of the franchise, require the stores to sell Nook products and B&N ebooks. But make it profitable for the franchisee to sell those ebooks. If it is to be believed that except for the heavily discounted loss-leading bestsellers, all other pbooks and ebooks can provide a decent profit, then B&N needs to offer franchisees at least 50% of the profit on an ebook in exchange for selling the ebook.

B&N showed some inventiveness with the Nook line. I grant that most of the innovation was done by others — for example, let’s give Sony the credit for the touch screen method that all of the competitors have adopted — but B&N needs to step to the plate and lead in innovating a seamless method by which I can enter a local B&N store, decide I want to buy a particular book but as an ebook, and buy that ebook before leaving the store, giving me the book, B&N the sale, and the franchisee the sale credit. I can think of a couple of ways to accomplish this, so I’m sure the engineers that B&N hires can come up with ways to do this as well.

This idea also has benefits for publishers. If Amazon succeeds, it is the publishers who will suffer the most first. Consequently, publishers need to become creative in how they support the local indie bookstore, including any B&N franchisee. One thing they could do is offer a payment to a store in exchange for the stores displaying a pbook version on the store’s shelves. There are other possibilities as well, things that can be done for a physical bookstore that cannot be done for a virtual bookstore, and that are not directly tied to a book’s price, thereby avoiding having to give the same break to Amazon. Something to think about, at least.

Then there are the indie booksellers. B&N’s survival is as dependant on the indie booksellers as it is on the Barnes & Noble branded bookstores. Even if not franchisees, these booksellers should be given the opportunity to participate in the ebook selling aspects. Because, as sure as the weather changes in upstate New York, if B&N neglects the indie bookseller, Amazon will not. B&N needs to follow Amazon’s lead and jump into a market area quickly and first. More importantly, B&N needs to think of its market in much broader terms than it currently does.

B&N needs to focus its efforts on the Nook and ebooks; it does not need to be distracted by b&m stores. Yet it cannot abandon the b&m market altogether because it is that market, which if carefully supported and nurtured by B&N from the outside, can lead to B&N’s ultimate survival and its ability to compete against Amazon.

B&N needs to focus its efforts on its brand and making people think of B&N first when it comes to book buying. I think B&N can pull this off, but only with much more creative thinking by its management than has been shown to date. B&N has unwilling allies in the indie bookstores because Amazon is a threat to all booksellers and because Amazon is very nimble in addressing marketplace needs. B&N has to convert these unwilling allies into willing allies because all their futures are intertwined.

We will know within a few short years, if not sooner, whether B&N has the wits to survive.

6 Comments »

  1. Hi Rich

    We have mostly franchised bookstores in Australia (Angus and Robertson [A&R] and Dymocks are the biggest) and they are struggling — badly. They really haven’t embraced the eBook world and just can’t compete with the prices Amazon and other online retailers sells books for, even accounting for postage costs. So unless they undertake a revolution — and quickly — they will fail, just like Borders did here a year or so ago. Neither A&R and Dymocks have a monopoly or tie-in with eReaders (like Amazon does with the Kindle and B&N does with the Nook), so they could struggle to sell eBooks that can be read on more generic devices like the Kobo.

    I live in the country. For me to go to the nearest b&m bookstore is a 50 km round trip. I would only go if I was going to that town anyway, and then I can’t be sure the store will have the book I want as they only carry limited stock for the masses, not the specialist books I want. I can buy pbooks from Amazon or Fishpond or myriad other online sellers and they are delivered to my door within a few days or at the most a couple of weeks. Some, like Fishpond, don’t charge me postage either.

    Of course, with the ubiquity of Kindle apps (for PC, Mac, Android, iPad, iPhone etc. and even the cloud), I can buy and receive a Kindle book in seconds no matter where I am in the world as long as I have access to WiFi/3G. I don’t have to get out of my pyjamas to buy a book, I don’t have to fit in with the hours the b&m stores are open (we don’t have Sunday trading here, for example, and most stores close by 6 pm), I can get specialist titles that I might have to wait months to get in pbook format, etc. So why would I buy a pbook from my local b&m store? Just yesterday I downloaded about 10 books from Amazon for my Kindle app on my Android phone to read on my 20+ hour flights to/from the US in March. I just have to take my phone — no books to lug onto a plane and dispose of somewhere along the way.

    So I see the b&m bookstore shrinking to either specialist, niche market book stores, or just a few in each city. Video stores were everywhere in the 80s, but you’d be hard-pressed to find many now. They’ve either consolidated or gone to the wall. I see b&m bookstores going the same way. I don’t think franchising will save them.

    Another area I’d like to hear your thoughts on is libraries and eBooks. I still like the feel of books and use my public library — a lot. I use it in preference to buying books (when I worked as librarian, I had 25K books to manage — you get over the need to amass your own personal collection very quickly!). But I’d also like to be able to borrow an eBook from my public library, just like I borrow a pbook now. Instead of paying $15 for the eBook from Amazon, I want to be able to borrow it for a 3-week loan period, for example, and have it sent to my Kindle app. Just like I do with pbooks. There is existing Public Lending Right legislation in many countries, which distributes royalties to authors for books lent through public libraries. Why can’t this happen for eBooks? Is it just a matter of time, will, and technology? Your thoughts?

    –Rhonda

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    Comment by Rhonda — January 30, 2012 @ 4:41 am | Reply

    • Rhonda, it would be hard for me to comment on libraries for several reasons. First, in the United States, libraries apparently work differently than in Australia. Second, in the United States, we do have library ebook lending that works with the Nook, Sony, and Amazon devices. Third, although I support my local library financially, I am not a library user. I prefer to buy the books I want to read. It has been more than a decade, probably closer to two decades, since I last visited my local library. (When my children were young, I did take them weekly to the library and to the local bookstore. They both borrowed books and bought books.) Consequently, I really have no experience with public libraries and ebooks.

      There are lots of things that b&m bookstores can do to stay in business. I made some suggestions in Repurposing Brick-and-Mortar Bookstores in the eBook Age (see ).

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      Comment by americaneditor — January 30, 2012 @ 6:28 am | Reply

  2. B&N does have an “indie” site which is called Fictionwise (http://www.fictionwise.com/home.html) and boasts to be the largest of its kind.
    I agree that B&N needs to do some serious thinking and bring in some innovative ideas to keep the B&M stores alive. However, I can’t help thinking back to the turn of the century when there were multiple formats of ebooks available from the majority of the online booksellers, and they were cheap (I paid about $6 on average for a new release). I have only had an ereader for less than a year because I did not want to buy a dedicated ereader, I wanted one that would accept multiple formats – DRM free if possible. I recieved a Kindle as a gift, and being one of those people that uses gifts that people went through the trouble to by me, but I still buy B&N books which I convert to mobi and remove DRM; I also never download directly to my Kindle because when I buy a book it is mine to use on what ever device I have – now or in the future. I think online and B&M retailers should get back to multiple formats at a low cost which should also be supported by publishers. By limiting the format of an ebook you are limiting sales; increase the number of formats and you will increase your customer base. lower the cost; it does not the same for a new release ebook as it does for a hardcover, I don’t care what anyone says (I’ve read most of the arguements) ones and zeroes do not cost the same to copy as paper.

    David

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    Comment by David Beals — January 30, 2012 @ 1:43 pm | Reply

  3. […] here (with the NYT article he references here). The American Editor blog volunteers an idea about franchising the B&N brand (and idea I’d be very wary of, brand dilution alert). I suspect B&N (with added […]

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    Pingback by Flashlight: Strobing the Book World #9 « Green Light — January 30, 2012 @ 8:39 pm | Reply

  4. How I hope some B&N executive reads this! There is no better place to meet with my writer friends than at a B&N table, with a hot cup of coffee. We discuss, critique, then browse and buy. It would be so sad to lose this great tradition.

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    Comment by Leslie Payne — January 31, 2012 @ 2:02 pm | Reply

  5. […] Is There Hope for Barnes & Noble? – an interesting take by Rich Adin. […]

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    Pingback by News You Can Use – Jan. 31, 2012 | The Steve Laube Agency — February 2, 2012 @ 5:01 am | Reply


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