Is There Hope for Barnes & Noble Redux

Last week I offered the suggestion that Barnes & Noble (B&N) consider getting out of the brick-and-mortar end of the business and instead franchise its name and cut deals with indie bookstores to promote its Nooks and ebooks. The reception was varied, with some commenters thinking this was a great idea and others thinking it was a lousy idea, and yet a third group thinking it was — at least — an idea. Yet the overall tenor running through all the comments was that B&N will be steamrolled by the Amazon juggernaut no matter what it does.

That gave me pause and made me think some more about B&N and its relationship with its customers.

My relationship with B&N goes back a great many years. Even when I worked for Borders, I shopped at B&N. I have been a member of the B&N club for many years and I even have a B&N Mastercard. Until this past year, my wife and I generally visited the local B&N store at least twice a month and I spent thousands of dollars a year at the local B&N as well as at B&N online.

Yet as I sit at my desk and think about my long-term relationship with B&N, I realize that the flame has gone out. The more I think about it, the more I realize that B&N began spritzing the flame when it released the Nook; changed the spritzing to a more forceful watering when it firmly adopted its own DRM and refused to give members any member advantage over nonmembers when it came to either the Nook or ebooks; and has finally doused the flame with its newest changes to its membership plan. Try as I might, and although I will continue to buy from B&N rather than Amazon so as to do my part to keep competition alive, the reality is that B&N has consistently spurned me, and the changes in my book buying (and the amount I spend at B&N) reflect that spurning.

As you may recall, I was unhappy when B&N came out with the Nook (the original one I thought was poorly designed; the new Touch is very nice but not nice enough to make me replace either my working 1-year-old Sony 950 or my working 4-year-old Sony 505 with it) and wouldn’t give me my 10% member’s discount — even though I was prepared at the time to buy two Nooks at $249 each! B&N’s rationale was that at $249 it was already losing money on the device; my rationale was that as a relatively big book buyer ((I spent thousands of dollars a year at B&N on books, very few of which were the heavily discounted “bestsellers”), B&N should be willing to give me a small incentive to remain a B&N book buyer — especially when its primary competition was selling for less. It wasn’t the money so much — afterall, I spent more on my Sonys than I would have on the Nooks — as much as I wanted to feel that this was a partnership.

If B&N was losing money at $249 it must be shooting itself in the head with a machine gun every time it sells a Nook for $99. More importantly, because it chose to save $25 — a shortsightedness that Jeff Bezos would not tolerate at Amazon — it lost me as an ebook customer. True, if you look at my Nook library you’ll find I have purchased more than 125 ebooks from B&N, but if you look at the prices paid, with the exception of a very few, the purchase prices were “free.” And to add a nail to the coffin, nearly all those that I did pay for, I paid for with B&N’s own money — the gift cards I earned from using the B&N Mastercard.

More importantly for B&N is that in the last year my purchases at the local B&N have been few. We went from visiting the store (and buying at each visit) at least twice a month to visiting once every three or four months and sometimes not buying at all. (For the first time in six months I bought a book at the local B&N last week.) For the most part, my wife and I have become ebookers and most of the ebooks we read are purchased from Smashwords or Sony, not B&N.

I recently discussed with my wife making more visits to the local B&N. It would be easy to do as the B&N is in the same mall as our grocery store. But then came the news that the terms of the membership were changing. The discount remains unusable for ebooks but instead of a 20% discount in the store on all adult hardcovers and 40% on bestsellers, the discount is changing to 10% and 40%. As we rarely buy the “bestsellers,” B&N is simply cutting our discount. Not much of an incentive to buy at the local B&N. (Interestingly, as a general rule the books available at B&N online are much more steeply discounted than at the local store even with the membership card — and it has been quite a while since the membership did anything but give you free shipping online.)

The point of all this is to say that maybe B&N is on a suicide path and without hope for long-term survival. It is losing sight of the fact that 75%+ of the book market remains pbooks. eBooks are important, and the area of greatest growth, but ebooks are still in the childhood stage. Although they cannot be neglected, they cannot be focused on to the exclusion of the dominant portion of the market. To remain viable, B&N has to dually focus on both ebooks and pbooks. Sadly, it is becoming dangerously myopic when it comes to pbooks.

It has taken no steps to encourage those core readers, the ones who read several books a month and who are B&N members, to be active buyers of its ebooks or pbooks. Whatever it has done, it has done with the broad market in mind. Many months ago I argued that this was a mistake, that B&N really needed to cultivate that core group of book buyers who could be the proselytizers for its future. I said months ago when the Nook was introduced that B&N needed to reward its members for being members and not treat members like everyone else or B&N would ultimately be sorry.

I’m sorry to say, but perhaps there is no real hope for B&N. Whoever does their strategic thinking is spending too little time thinking and too much time doing harmful things to B&N’s future. I looked at a Nook Touch last week. The free-Touch-with-a-New-York-Times-subscription offer tempted me. But I can get the New York Times for the same price on my Sony 950 so that wasn’t much of an incentive. In the end, I was peeved over the change in membership terms and simply decided to pass on the offer. B&N really doesn’t want me; B&N has successfully extinguished the last of the embers.

The sad thing is that putting out my fire, and the fire of other B&N members, B&N may be also be putting closed on its door.