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Barnes & Noble Cuts Back Simon & Schuster Titles

25 March 2013

From The Wall Street Journal:

Barnes & Noble Inc. has sharply reduced the number of Simon & Schuster titles it carries in its stores as well as the promotion it gives those books as a result of a financial dispute between the two companies, say people familiar with the matter.

The dispute, which one publishing executive likened to a blackout of TV channels by a cable operator, reflects tensions created by the shift to digital reading and the impact of online discounting, which are shaking up publishing.

. . . .

Barnes & Noble is also pressing Simon & Schuster for more compensation, such as costs associated with in-store promotions. Publishers typically give retailers money to cover certain store marketing costs. The retailer is arguing that its stores serve as the primary way for consumers to discover new writers, say people familiar with the situation. The retailer worries that consumers use its stores as “showrooms” to find titles that they then order online at a discounted price, the people said.

. . . .

The dispute holds risks for both sides. Simon & Schuster is losing sales and promotions at the biggest book chain in the U.S. While the retailer is still carrying the publisher’s biggest books in quantity, titles by lesser-known authors have been cut sharply, said the people familiar with the matter. Orders for some titles have been reduced by as much as 90%, according to one literary agent.

. . . .

The disagreement comes as readers increasingly embrace e-books. At Simon & Schuster, for example, digital-book sales grew 24% in the fourth quarter, even as total publishing revenue fell 6%. Digital books represented 24% of total publishing revenue that quarter, up from 18% a year earlier.

Link to the rest at The Wall Street Journal (Link may expire)

Big Publishing, Bookstores

29 Comments to “Barnes & Noble Cuts Back Simon & Schuster Titles”

  1. Ah! The rats fighting with each other instead of leaving the sinking ship – because they are not doing a very good job of figuring out how to keep the ship afloat.

    Is a feeling of Schadenfreude too early?

    Neither of the antagonists has a lot of other alternatives. Where exactly do they think this is going to end?

    Which implies ‘thinking.’

  2. This is having a serious impact on authors with new S&S releases, including Jamie Mason, whose debut novel is caught up in this mess. Here’s an article some of the affected authors are trying to get spread around in hopes of salvaging some of their sales: http://mjroseblog.typepad.com/buzz_balls_hype/2013/03/if-youve-been-browsing-for-books-in-bn-you-havent-seen-these-books-why-theyre-missing-due-to-an-ongoing-negotiation-between.html

    Then again, imagine a world in which there is no B&N at all anyway.

    • That world seems to be approaching more and more quickly, judging by the number of desperate moves B&N keeps announcing.

      Frankly, I think S&S is being one of the most forward-thinking of the BPHs, by refusing to fork over increasingly useless marketing and promotional money to a failing store.

      Once again, authors and readers are the ones who suffer, while the leviathans muddy the waters…

  3. Is there no true retailer left at BN? They seem to forget that their main source of money is the CUSTOMER, not their suppliers. Because they are mad with S and S, they penalize their customers, who cannot find those titles online or in stores. Books are not interchangeable like bulk goods “Oh, they are out of my brand of toilet paper so I guess I will try out this other brand”. Please, BN, put true retailers in charge again, folks who know that you need to supply what the customer wants when the customer wants it. It seems like they handed over the decision-making to some agent of Amazon so that the business is driven in that direction. Fighting over the pennies while the dollars escape out the door.

    • The good news is that the customers can go to Amazon. I have an idea that this will end very badly for B&N. It may cause S&S to realize just how unimportant chain bookshops have become.

      I don’t think, in the long run, that will do S&S a lot of good. But it may do B&N a great deal of harm. If B&N starts saying to the other passengers on the Titanic, ‘You can’t come on my lifeboat!’, it may eventually find that the boat is useless because there is nobody to row it.

  4. Actually, I think this is the first good business move B&N’s made in quite a while. Amazon’s a beast in getting discounts from publishers because of its strong market position. As the last giant physical bookstore standing, they’re smart to leverage that position to get greater discounts. If I was them, I’d do the same to every other big publisher, too. Especially the part about jacking up the price of premium in-store positions. Publishers need B&N, B&N needs some positive financial moves. They’d be stupid not to press this leverage.

    • They are. One unnamed publisher paid, S&S didn’t.
      The others are waiting to see how it plays out.
      Whether ir is a good move or not depends on how indispensable B&N stores really are.

      Lost in all the bickering is that consumer behavior is changing and that changed behavior is what is really squeezing B&N.

      After all, Amazon isn’t the only alternative to B&N’s big box stores. There is B&N.com, Rakuten/Buy.com, indies seling pbooks online, and the whole ebook indusry.

      • True, but right now B&N’s still responsible for a pretty hefty chunk of big publisher’s print sales. This was my concern when they went all-in on the Agency deal to slow ebooks and prop up print. Now, they’re even more dependent on a desperate, declining market segment. Squeezed from both ends

        • Yes, people have been buying a decent chunk of pbooks at B&N stores. But that doesn’t mean that if B&N stops carrying those books, the sales go away. People do know there are other stores…
          …and many of the alternatives are more convenient than driving 30-50 miles to B&N.

          That is the risk B&N is running: that S&S may look at sales without them and crunch the numbers and figure out that it might be cheaper to actually promote a book than to pay to play at B&N.

          Publishers long ago outsourced marketting to the retailers but there is no reason theyy can’t insource it again.

          Note that Jodi Piccoult did hit #1 at the NYT *without* B&N.

  5. The main difference between bookstores and stores that happen to sell books (supermarkets, dept stores, drug stores) is the midlist. B&N boycotting the midlist to squeeze a publisher leaves them to sell just the bestsellers you can get pretty much everywhere.

    Now, what seems to be the bone of contention is that B&N wants the publishers to give them better terms (pay-to-play) on the midlist just to carry the titles. (Unlike the bestsellers, where the publisher pays for preferred placement.) Of course, the midlist titles don’t generate the kind of volume the mass market bestsellers do so if the publisher is going to pay to play, where is the money coming from? Price hikes? Lower advances? Higher sales bar on which authors to sign/keep?

    B&N thinks that shelf space is valuable and limited enough to charge for it. They bring out discoverability and showrooming. But they forget that just two years ago, 25% of the shelf space vanished overnight in the Borders implosion. Book sales went up. B&N has been closing stores and repurposing their floorspace; their sales went down, everybody else’s went up.

    Makes you wonder if maybe all shelf space isn’t created equal. Which the recent Bowker report on where people buy books made clear when they reported big chain stores were down to 19% of book sales (from 32% in 2010) and online sales of pbooks and ebooks were up to 44%, with everybody else holding steady or growing slightly from 2011-2012.

    Basically, B&N wants their suppliers to make up for their lack of competitiveness. They think they’re indispensable.

    If the standoff lasts a while longer, S&S will get the first quarter sales reports and they’ll know just how dispensable B&N is or isn’t.

    The middlemen fight and the creators and consumers get to watch. Or not. There’s always online.

    Here’s the NYT take, BTW:
    http://www.nytimes.com/2013/03/23/books/barnes-noble-simon-schuster-dispute-said-to-hurt-sales.html?smid=pl-share&_r=0

    • They think they’re indispensable.

      I wonder where they got that impression. Maybe… all these publishers putting up a big flap about how important they are?

      So B&N decides to test if the publishers will put their money where their mouth is.

      Not saying it’s a “good idea”. I’m not educated in business of that sense. But that’s how it looks to me, an outsider.

      • They *used* to be indispensable, way back in the last century. So was Borders. Since then, things have changed…
        They still haven’t wrapped their tiny little minds around the idea that they are now a second-tier player…at best. They’re throwing their weight around as if they were still top dog, as if everybody is afraid to call them out.
        Well, S&S wasn’t afraid to call them out.
        When publishers talk of the importance of bookstores they are talking in the abstract, about the mythical purveyor of culture that magically raises the visibility of every single title the stock. For *that* magical place, they’ll do anything.
        For B&N?
        Well, that’s what the fuss is about: just how special the B&N storefronts really are.

  6. So Barnes and Noble can go back to being evil now? I’m just trying to keep track of publishers’ thinking in this ever-changing business.

    • Don’t you have to be effective before getting rated as evil?
      If you’re ineffective, you just get rated as a pathetic poser.
      To be evil B&N would have to be able to push around the Random Penguin. Not sure how that would play out.

  7. The way things are going, we need scorecards and a bracket system. Maybe we could put indie and small press on one side and the Big Six, B&N, and the British retailers on the other? (Please bear with me, there’s a rabid Duke fan in my house.)

  8. This is way too original for publishers, but S&S should announce that it’s making a major promotion buy with Amazon to increase sales of both print and ebooks.

    • Or BAM.
      Or Walmart.
      If you’re going to pay to play for the midlist, how about playing where the buyers are?

      Or maybe spend the money on advertising instead of propping up a tottering minority channel?

    • @ PG – lol.

  9. When my kids fight over a toy, neither one gets to have it. In this case, the toy is the customer dollar and it is going to be taken away.

    Readers don’t want to be held hostage to corporate disputes. I think we’ll see a lot of folks trying out the Kindle app on their tablets as a result of this silliness. Chances are the title is cheaper on Amazon anyway.

    This kind of corporate stupidity is the ‘gateway drug’ of eReading.

    If they leave, they probably aren’t coming back.

    • +1 for this.

      I have a Nook color and I love it a lot.

      Guess what I want for my birthday? A Kindle. I hadn’t considered it before now, but I need to go where the books are.

  10. Good for B&N. I can not for a moment comprehend what S&S is thinking here.

    S&S NEEDS B&N. This is crazy stuff.

    • S&S needs B&N? Really?
      At *any* cost?
      They’ve had three months to think it over and they’re not bending. Looks like they both *want* to take it to the mattresses.

      Sometimes, when faced with unpalatable choices, corporate execs are forced to suck it up and take a stand. And sacrificing their own profitability on the altar off somebody else’s inefficiency is not usually their first choice, in those situations.

      B&N relying on the kindness of strangers panhandled at gunpoint is not something that is likely to end well.

    • @ Felix – it is not new for the Big Pubs to make dumb decisions.

      This really has nothing to do with a ‘money’ war between corporations, although S&S evidentally thinks it is. This has to do with print vs. digital, and the survival of the Big Pubs.

      The future of Big Pubs pretty much hangs with print. The only real trading card they have with authors is access to bookstores. That’s Barnes and Noble in the U.S.

      But who am I to argue with a Big Pub that wants to hasten its demise. Maybe it is deluding itself, thinking it can survive with Amazon’s print delivery and Independent bookstores.

      Go for it S&S. And please take your Author Solutions with you.

  11. An ugly fight in which no one wins.

  12. In the long run, I agree. But for right now, whatever mess the overall company is, most of their brick & mortar stores are in the black. B&N, even weakened, still represents 20% or so of the total book market. They vanish, then its Amazon, Costco & a relative handful of indie shops. I wouldn’t expect the discounts to be any better in that environment than whatever B&N wants here. Besides, publishers like S&S have spent the past half decade espousing how valuable bookstores are, and how indispensible they are to new discovery. They practically invited B&N, as the last giant bookstore to wield significant market power, to up the rates on premium positioning at the very least. B&N’s future is pretty bleak, in my opinion, but if you’re gonna do business in print books on the scale of S&S, you gotta pay to play. Walking away from B&N right now may end up even bleaker with immediate lost sales and more entrenched dependence on Amazon.

    • That could indeed happen.

      But I’m thinking of last XMAS…
      What if the traffic that can’t get their pbook fix at B&N simply goes to the nearest Indie bookstore? That would not be a bad thing for publishers, would it?
      By now pretty much everybody nows online is cheap and fast and cheap and secure and… well, cheap. And some people *still* choose B&M stores instead of online. That suggests that B&M shoppers are looking for something other than just a good shopping experience at low prices.
      And the place they can find that, if they refuse to deal online, is going to be one of the *thousands* of indie booksellers. (They’re not a handful–but a small horde.) They don’t have the visibility of B&N but together they likely match or better B&N’s reduced book retail shelf space. And they do offer that old-timey ambiance and shopping experience.

      We saw hints of this in the anecdotal reports from the holiday season, in B&N’s admission of lower storefront traffic, and in the (admitedly sketchy) Bowker numbers.

      Me, I’m intrigued by the possibiity that we’re looking at a real trend. The opening stages of a new front in the book wars; the return of the Indies to the front lines.

      That would make for an interesting story all by tself.

      • What if the traffic that can’t get their pbook fix at B&N simply goes to the nearest Indie bookstore?

        WHAT Indie bookstore?

        I suppose there might be one or two in Portsmouth, but that’s a ways away — further than the B&N — and has lousy parking. The B&N at least has strip-mall parking without charging for it.

        What do I have, here in Middle-of-Nowhere, New England? …well, I’ve got a very nice used book store. Not quite sure how it stays in business, but apparently they manage to do enough turnover to pay the rent. (I think it’s like one guy and an employee or two, and a labor of love done reasonably professionally.)

        B&N killed most of the indie bookstores, long ago. And there aren’t any springing back within the however-big-it-is kill zone. If B&N doesn’t carry something, I’ll have to make sure to special-order it from them to rub salt in their wound. (Which, since I have the Last Good B&N Store, will be pretty painless and give me an excuse to hit up the Trader Joe’s nearby when I place and pick up my order.)

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