Home » Amazon, Bookstores, Disruptive Innovation, Nook » How Barnes & Noble Can Take a Bite Out of Amazon

How Barnes & Noble Can Take a Bite Out of Amazon

10 January 2012

The original quote was removed at the request of the author. PG regrets any inconvenience this may cause. PG has left his commentary up and believes you’ll find the comments very helpful.


These are some interesting ideas, but Passive Guy is skeptical about many of them and, in particular, Barnes & Noble’s ability to pull off the changes needed to equal or exceed Amazon even if it tried.

First of all, disruptive change is very, very hard. You don’t just schedule a company-wide meeting and announce you’re going to be a disruptive company going forward.

Technology disruptors tend to be people who get fired from established organizations. The only way many disruptors manage to survive to reach success is if their overhead consists of a cheap apartment, an internet connection and discount pizza prices. In the process of figuring out disruption, they’re likely to make big mistakes, the kind of thing that gets you fired from a public company like Barnes & Noble. Don’t forget that Apple fired Steve Jobs.

The whole idea of Big Publishing moving into direct sales to consumers is a loser. It’s a solution to a problem publishers have, not a solution to problems consumers have.

Running a successful ecommerce site requires a great deal of talent and hard work. You don’t develop the necessary skill set pitching category buyers for book store chains or having lunch with agents. Publishers can’t hire serious ecommerce talent because for somebody with real aptitude, working for a big publisher sounds about as sexy as working for a steel mill.

Big Publishing is a business built around selling at wholesale, not retail. The whole agency price-fixing fiasco is typical of the wholesale/cartel mentality. Was anybody thinking about what would please customers? Ham-handed price fixing by Big Publishing has played a key role in opening the doors to successful indie publishing.

If publishers can’t even get retail pricing right, they don’t have the chops to do ecommerce.

Plus, there’s the whole issue of being owned by a big media conglomerate and all the quarterly numbers pressure that entails. If Jeff Bezos had been hired to head up ecommerce for a big publisher, he would have failed. Losses are not permitted when you’re a subsidiary. Neither is failure to consistently increase profits quarter over quarter.

Finally, there’s the whole discoverability problem. Does anybody go to Google to find fiction?

A couple of years ago, the PG offspring who is an SEO genius, did a bunch of work for one of Mrs. PG’s novel websites for terms related to the subject of her book. After a few months, the site was #1 on Google for all sorts of terms that were descriptive of the novel.

Traffic? Nada. Sales through the site? Nada.

PG’s conclusion: Google isn’t any good for book discovery and very few people use it as such.

What do people use to discover books? Amazon. Amazon is the best search engine for books and it operates much differently than Google.

As has been discussed here before, the Nook store is pretty lousy for book discovery. If Barnes & Noble wants to take a bite out of Amazon, that would be one thing to start improving right away.

PG’s assessment of BN is that the in-store Nook boutiques are very important for selling Nooks and something Amazon can’t duplicate.

PG’s assessment of BN ebook sales is that their market share is not nearly as high as BN claims. He suspects most ebook sales are driven by customer capture arising from Nook ownership. There is nothing wrong with that, but BN’s ebook sales, whatever they are, are not a function of excellent design of the Nook online store.

A big problem with BN’s ebook strategy is that it’s been closing bookstores and will probably continue to do so. No bookstores = no Nook boutiques. I don’t think you can put a Nook boutique in a mall kiosk and generate the same sales punch as the boutique carries in a full-up bookstore.


Amazon, Bookstores, Disruptive Innovation, Nook

43 Comments to “How Barnes & Noble Can Take a Bite Out of Amazon”

  1. BN biggest problem is customer service – or lack there of. When I buy a Kindle book, it’s available on my device in mere seconds. Not so with a Nook book.

    BN also charges publishers more to deliver the same ebook. Am I going to send my potential readers to a place where I earn less? Nope.

    All that said, I hate the idea of Amazon growing a bigger and bigger monopoly. Sooner or later they’ll have the clout to bite both readers and authors. I hope BN and gets their act together to become a real competitor.

    • Lexus, it doesn’t seem like Amazon is going to bite the readers and authors any times soon. Their whole system has been to make things simple, fast and not leave a bad taste in people’s mouths. The more they keep it up, the more the market flourishes, the more money they make. The current e-book market is a cash cow for them, why shoot it when they can keep milking it indefinitely?

      As to a monopoly, take at look at what the Big Six have been doing with e-books. There is still legal action pending on that action.

      Still, don’t worry there will always be competition for Amazon. For every big company that faulters to bad decissions, there are a dozen startups trying to cut a new slice out of the pie.

      • People in general have issues with monopolies. But the thing is, a company isn’t bad or evil just because it’s a monopoly. It’s just better at doing what it does. Hopefully “doing what it does” is “customer service and convenience” and not “squishing competitors under its boot heel,” and sometimes that is the case. So far I’ve heard a whole lot of panic and fear about Amazon becoming evil, but I haven’t seen any evidence of it happening. When the day comes that Amazon starts treating authors and customers as badly as publishing houses and media companies do now, I’ll be happy to buy elsewhere.

  2. It seems like a good idea for big publishers to open their own “Outlet e-shops” using B&N. For that matter why not have Amazon do the same thing? The problem is that those Publishers e-shops must sell their books only through those e-shops, and nowhere else, otherwise why have them. And if they do that they’ll price the books like a monopoly, high prices. I don’t know of any successful business that succeeded by selling high on the Internet.

    • I think being afraid of lowering prices is one of the biggest problems with Big Publishing, DG.

    • But Baen sells its ebooks only on its own site, and prices them around $4-$6, except if you want to pay impatience fees and buy an e-ARC for $15. And except for the Baen Free Library. (Must run, or would link.)

  3. I have to agree that discoverability on B&N is a serious problem and it is exactly why so many writers were willing to go exclusive with Amazon.

  4. I think you’re right about a lot of the problems with the article, particularly with respect to publishers’ ability to sell directly to readers. Not likely, based on the problems you cite, plus the notion that publishers don’t have brands (at least not important ones to readers), authors do. Publishers would have to take on the work of maintaining author-brand-focused sales, which they’ve already decided is the authors’ problem. Opportunity to do it right exists, but I don’t see any will to carry it through.

    BN has some good options, though. You’re right about book discoverability, both via Google or in the BN store (physical, online, or via Nook). There’s no reason BN couldn’t buy Goodreads, as you recently advocated Amazon do. It would likely end badly if they get into a bidding war with Amazon, but Amazon is A) already outstanding at recommendation/merchandising and B) strongly inclined to develop software rather than buy it. Given the strength of their recommendation capabilities, they could just as easily let Goodreads go, figuring they have more users, more recommendations, and more ability to write a good platform quickly — and they’d probably be right.

    For BN, though, Goodreads would be a gold mine. Tying it into the Nook would be relatively easy, since it’s a simple site and would require only a simple android app to start.

    I also don’t know why a mall kiosk for Nooks wouldn’t work. People spend hundreds of dollars on cell phones in them, buy expensive sun glasses, etc. For every BN store where I’ve shopped, the Nook nook has always felt like a digital farmer’s market set up there by a third-party vendor renting space from a struggling retailer. It’s not as if there are even any physical books near the Nook nook (save for the clearance coffee table books: $3.99 for “1200 Knots for the Modern Sailor” and $5.99 for “Betty Page: The Convent Years”.) Since the Nook area is only vaguely in a book store in the first place, putting it entirely outside the book store just removes the distraction of the Angry Birds pillows or the milk-steaming machine. They could even add steamed milk it would help.

    Besides, for the price of a brick and mortar store, they could probably put up 20 kiosks.


    • I could be wrong about the mall kiosk, Rich.

      I do agree that Goodreads would probably be more of a net plus for BN than for Amazon.

  5. This Forbes article on why Best Buy is doomed seems relevant to the difficulties of established bricks and morter businesses trying to cope with ecommerce: http://www.forbes.com/sites/larrydownes/2012/01/02/why-best-buy-is-going-out-of-business-gradually/. As the article says, it’s revolutionary for businesses, but evolutionary for customers.

    Tying your fate to the whims of Google seems like a bad strategy to me, whether or not it works right now. Google changes its search algorithm all the time, and keeps it a black box; are you going to bet the company on that?

  6. The place to put a Nook boutique is Starbucks. Heck, you could put in an Espresso Book Machine and sell a greater variety of print books than a B & N.

  7. I have a Nook, mostly because I wanted it to read books from Project Gutenburg and the like, and also because I hate DRM and don’t want to support platforms (Kindle, iAnything) that force me to use proprietary formats.

    I don’t shop for books at barnesandnoble.com. I shop for books at Amazon. When I find what I want to buy, I go over to B&N and see if they have the book available for the Nook. If they don’t, I click the little button that says “Hey, you missed a sale.” Then I go back to Amazon and either look for a different book, or I decide whether I want to buy the paper version. If I decide on the paper version, I’ll usually check and see if my local B&N has a copy. If they don’t I order it – from Amazon.

    I’m sure I’m not the only person who does this.

    @William Ockham – I would love to see more Espresso Book Machines. They should really look into partnering with Starbucks, that’s a fabulous idea. It would actually get me to go into a Starbucks.

    • Mercy, you may want to look a bit more closely at the B&N site. Just check the link below and search for “DRM”.

      “What does DRM mean, and how will it affect my NOOK Book ownership?

      Digital Rights Management (DRM) is used to ensure that a specific copy of a NOOK Book is owned by one owner, and is not just given away. This ensures that copyright laws are respected and that authors and publishers are fairly compensated.

      DRM means that when you buy a NOOK Book from your NOOK or from BN.com, you own that copy forever, unless you delete it from your online digital library. You can read it, but others cannot read it.

      Because the NOOK Book is in your online digital library, you can open your copy from any of the supported NOOK app platforms registered under the same B&N account.

      You can also lend a NOOK Book one time for up to 14 days. When you lend the NOOK Book, you also lend your digital rights, so you cannot read the book while the lending offer is pending and while the book is on loan.”

      So yes, the Nook does lock you in to their platfrom just as much as the Kindle or iBooks. DRM stripping, unaccounted for *coughs*.

      • Knave, good point. I haven’t tried loading any of my B&N epubs onto a different device. I mostly use the Nook to read epubs I get elsewhere. (Which sorta goes back to my original point, I suppose…)

        Although all of my ebooks that I upload to B&N are supposed to be DRM free, so I wonder if by DRM they just mean that they make it a PITA to get the files downloaded (which they do, as Lexus pointed out).

        Has anyone here tried loading a B&N-purchased book onto a different epub reader? I’d love to know the results.

      • B&N, like Amazon, allows the publisher (or self-publisher) to set the DRM, at least. I have recently bought ‘Pay Me, Bug!’ from B&N, and pulled the ePub into Stanza. I may have pulled it into Calibre first, but I don’t have that enabled for DRM cracking.

    • Mercy – I just checked the Project Gutenberg site and they offer Kindle versions of at least some (and maybe all) of their books.

      • I have a first gen, not sure if Gutenburg had Kindle at the time. But Google Book Scan didn’t – pretty sure still doesn’t. I find a lot of my research books through them.

  8. I’m still dubious about the claim of ‘25% of the e-book market as opposed to Amazon’s 27%’ as I have YET to see what those numbers are based on.
    Is this total volume of titles, sales or procedes?
    Are they based off sales of a select sampling of Big Six titles?
    Are these samples random or cherry picked?
    Are these numbers based on data or where they pulled out of thin air?
    Did these numbers come from a software program, a professional bean counter, an independant statistical tracker or did they read them off the bathroom stall?

    . . .

    If it wouldn’t hold up in court, than I really don’t like to hear it echo’ed across the web. So, has anyone seen this elusive proof?!?

    • Knave – What surprises me is that Barnes & Noble is a public company, which opens them to some liability for making misleading statements.

      My guess is they use some subset of all books sold to come up with that percentage.

  9. Google isn’t any good for book discovery and very few people use it as such.

    For fiction, yes. For non-fiction, esp, self-help, the answer is no. Type in Dating a Widower and my site comes up in the first couple spots. I get 100+ visitors a day off these keywords and sell many books from it. If you book helps people solve problems and they’re looking for answers to those problems online, it can be very, very good for sales.

  10. Instead of B&N competing with Amazon, Amazon should take on the physical bookstore by opening its own version of a bricks ‘n mortar store. There’d be a snack bar where items from Amazon’s online gourmet grocery store are served and where the items can then be instantly ordered and sent to your home.

    Meanwhile in a back corner there would be featured non-book items that can, likewise be instantly ordered and sent off to you. Remember: you’ll get them in two days with Prime. Or they could be items stocked in a nearby warehouse, which Amazon promises will be delivered that very day. These items need not be related to books at all, but could be, depending on Amazon’s whims.

    If books published with an Amazon imprint end up with products being merchandized along with them (such as cups, pillows, toys, clothing, etc.) there’d be another corner of the store devoted to those items that.

    The bulk of the store would be POD books that can be looked at in-store (already PODed for display purposes), then purchased and printed right there, or — if you prefer a digital version — you can order it online from their convenient in-store computers. Or (if you don’t have a Kindle, but do have another brand e-reader) Amazon will provide you with the book in the correct format saved to a flash drive you can connect to your computer. Yes, even Nook books. Amazon, meanwhile, is raking in a ton of money from its Create Space operation because indie authors are eager to have their books available as PODs in-store, and they want that in-store exposure to stimulate their e-book sales as well.

    Did I forget to mention the other two corners in the store? One is where anyone can walk in off the street, present their book file, and Create Space will turn it into a book that’ll be for sale in the store or as a download. Create Space’s rep will also help authors with any technical matters that need to be fixed.

    In the other corner there is an author having a friendly conversation with any readers who mosey in to chat. Coffee, tea, and hot chocolate — which are also sold in Amazon’s online gourmet shop — are served, along with some tasty cookies which can also be purchased online even as you munch them, thanks to those in-store computers strategically-located throughout the store.

    And who’s that walking through the aisles of books (which are not meant to be sold from the shelves, just looked at, then purchased or ordered as stated above)? Ah, yes, it’s a model — showing off some of the latest fashions to hit the Amazon.com clothing and accessories store (she’s wearing shoes from Zappo’s, of course). As you would expect, once again in-store ordering is enabled.

    What’s that in the model’s hand? The Kindle Fire, with a popular new movie playing. In-Store ordering is enabled yet again. Step into the back room and watch trailers from other great movie releases that await your one-click purchase.

    And what’s that display up by the front window? Oh, Kindles. No surprise there. That donation bin beside the display collects the used DTBs customers bring in and Amazon distributes to libraries, nursing homes, schools, and other operations that welcome them. Amazon gives donors a $10 Amazon Gift Card for every ten pounds of DTBs donated — which, in effect, costs them nothing.

    • I love it, Patricia. You’ve figured out everything.

      How about giving customers those small hand-held scanners like some stores use to help people prepare bridal registry lists. If you see something you like in the store, scan the bar code.

      When you’re finished, give the scanner and your credit card to a clerk (or do a self-checkout) and everything you scanned is ordered.

      • Oooh, I like it! I want to go to this store NOW.

      • Why a physical scanner? There’s an app for that — or could be: a program that uses the camera on your smartphone to read the bar code (and download & display part of the data, to confirm it was read correctly) and store it, then send the list via Bluetooth to the cash register when you’re ready to check out.

        They might keep a few scanners around for me and the rest of the bone-in-the-nose brigade.


    • I can’t imagine Amazon actually doing this because they focus single-mindedly on their core business and they really don’t want to have physical presence in any more states for sales tax reasons. On the other hand, it sounds like an interesting franchise opportunity.

    • I think the Amazon showroom concept has a reasonable chance at happening.

      But they will likely be smallish–typical mall-sized stores vs superstores–and space will be at a premium and that means Amazon will be able to charge people to “advertise” their product in the showrooms. So they will be generating money both from sides.

      A newbie author getting their POD book in an Amazon showroom gratis is a pipe dream.

  11. One of the things I find interesting is that Amazon isn’t trying to be Amazon — they view their biggest competition as Google. Amazon wants to be the place that you go to first when you’re searching for something (the implication is when you’re searching for something to buy.) That’s why it’s so easy to find things.

    If B&N would set their sights on Google, and try to innovate that way, they might have more of a chance. But I keep shaking my head at their business decisions, and am not too optimistic.

    • I think Amazon views Amazon as their greatest competitor. They’re always looking for ways to outdo themselves.

  12. “The whole idea of Big Publishing moving into direct sales to consumers is a loser. It’s a solution to a problem publishers have, not a solution to problems consumers have.”

    What a brilliant statement.

    I think that this pinpoints why publishers keep missing the boat, on their reluctant conversion to ebooks, on their fixation on piracy, on their pricing strategies, on their in-house websites, on their actions regarding libraries, etc etc.

    M. Louisa Locke

    • It’s also a pretty good statement of how the article is missing the boat. A publisher moving into direct sales doesn’t really need or want a middle man. And Amazon probably has 95% of the architecture they need in place to do something like that themselves. If B&N did this and it was something Amazon really saw as a threat They’d have a competing interface up within a week or two.

      On the electronic end B&N really needs to become a better book finder than Amazon. It needs more and better suggestions about what books to read if you liked a series, an author, or a title. It needs a better way to organize its results than Amazon (If you’re looking for books in a series amazon’s results are not nearly as helpful.) And once people realize that it’s better organized and more helpful than amazon then they need to start offering exclusives.

  13. I disagree with you in one way:

    Google is critical to book discover — but it isn’t for book SHOPPING. Shopping and browsing for books is dead (or at least much much less important to booksales than it used to be).

    I’ll use an analogy: news. Used to be that I would get news on TV, or reading a paper, or going to a news site. While I still do those things, MOST of the time I _discover_ news on Twitter. Or heck, even reading blogs.

    For instance, just as I looking to read this blog, Yahoo had a trending topic at the top of my RSS feed “7.5 Earthquake.” I was not looking for news, I was looking for this blog, and on the way I learned about the earthquake and tsunami warning off Sumatra.

    Even in the old system, most people read books because they’ve already heard of the book or the author. Where do they hear about them? Just in going about their every day business.

    The magic of Google and other search engines is the depth of their algorithms. Unlike Amazon, they aren’t trying to match the customer with a product, but they are trying to put things of interest to you in front of your eyes. As a reader, I don’t have to search for books, I search for _sites_ which share my interests.

    And because of that — which is driven by Google more than any one entity — I come to have heard the names of authors and books, which I will search on after I’ve heard enough about them.

    Later on, maybe I’ll “discover” those books on Amazon or via shopping for books — but that isn’t discovery. That’s just a buying opportunity for a discovery which was already made. There’s a huge difference there.

  14. Yes, as a BN.com discard I’m afraid I have to weigh in on a couple of things here.

    1) The Scholarly Kitchen makes the remarkable claim that “B&N has around 25% of the US trade book market; no one knows exactly what Amazon’s US market share is, but Amazon is almost certainly a third or more smaller than B&N in the domestic market.” Well, lets look at the numbers. In 2010, Amazon’s North American media sales (which include music and DVDs) were $6.88 billion, while Barnes & Noble’s US-only sales (which also include music and DVDs but are, obviously, preponderantly books) were $4.4 billion and its Barnes & Noble.com subsidiary’s were $573 Million — so together just under $5 billion. What on earth makes The Kitchen Scholar think Amazon’s US market share is more than a third smaller than B&N’s? Is Canada a far bigger slice of Amazon’s media sales than anyone ever dreamed? Are music and DVDs outselling books on Amazon by 2 or 3 to 1? Sheesh.

    2) PG makes the remarkable claim that “Google isn’t any good for book discovery and very few people use it as such.” Well, that’s a rather easy claim to verify: let’s head over to Google AdWords and check Google’s numbers for some book-related searches. How about “Mockingjay” (90,500 local monthly searches), “Stephen King” (450,000 local monthly searches), “Unbroken” (135,000 local monthly searches), or “Immortal Life of Henrietta Lacks” (40,500 local monthly searches)? If by “very few people” you mean compared to the entire US population, I guess you’re right. But if you search on any of these terms you’ll find an Amazon link “above the fold” in the page 1 results for each. Sure, if you’re an author and you want to sell books on your personal website, doing SEO to boost your Google Page Rank won’t help your direct sales. No one wants to have to open an account on an author’s website just to buy a book — they’d much rather go to an online bookstore where they already have an account. The way to go for the author is to become an Amazon *affiliate*; if your site was showing up at the top of page 1 on novel-related search results you must surely have been getting *traffic*, if not sales. Sporting a link to Amazon for buyers would likely have netted you more cash than selling direct, no?

    • Although I too disagree with PG’s statement about Google, I’ll come to his defense in one way:

      Those searches you mentioned are not “discovery” searches. They are searches by people who already know about the book. Nobody searches for a book they don’t know about. They can’t.

      I don’t want to put words in his mouth but I’m pretty sure PG didn’t mean to say that Google doesn’t help fans of Stephen King find pages about him, or find his books on various bookstores.

      What he underestimates is how useful those kinds of searches are to writers, publishers and booksellers. It’s not just that Amazon’s pages are above the fold — as I said, odds are that anyone searching on the name or title of a bestseller probably has already read the book. The magic here is that people looking for Stephen King will find blog pages by people with the same tastes, and those people will talk about other writers and other books.

      So yes, it’s true that Google is incredibly important in discovering books these days. It’s just more under the surface than people imagine.

      • You’re probably right about “discovery”, Camille. My apologies to PG for misunderstanding what he actually meant.

        Now that I’ve reread his observations I’m deeply curious about Mrs. PG’s lonely website and why its SEO resulted in no traffic. (I’m not at all surprised about the lack of sales, which I’ve already mentioned.) Were the relevant keywords vetted to determine how often they’re searched? I don’t need to bother going to Google AdWords to know that “mysteries” gets more searches than “murder mysteries”, and “murder mysteries” gets more searches than “English cozies”. (But let’s find out! “mysteries” [673,000 local monthlies], “murder mysteries” [49,500 local monthlies], “English cozies” [73 local monthlies]; if you check out Google Insights for “murder mysteries”, however, it suggests that many who search this term are looking for news about actual murder mysteries and not books — or novels — about same. So PG may be right, simply because the % of Google users who are book readers — and are thus predisposed to check results for book-related links — is inevitably small. Though that still doesn’t explain why tens of thousands of Google searches are carried out monthly on book titles. On the other hand, know how many local monthlies are carried out on the term “google.com”? Only 13,600,000. Who on earth uses Google to search on “google.com”? You can’t make this stuff up.)

        • No apologies necessary, Dick.

          Camille was correct that Mrs. PG’s book wasn’t one that many people were likely to search on by its title.

          We worked through lots of descriptions that we expected people would use who were interested in subjects closely related to the theme of Mrs. PG’s novel. We also looked at how often those terms were used in Google searches.

          In addition to book information, we also put content on the site that we thought would interest our target audience.

          After conducting this analysis and selecting our target terms, we used a lot of standard white-hat SEO techniques and got the book site in the top 5, and usually higher, for most of our terms.

          We didn’t sell the book from the book website, but rather used links to send prospective purchasers to Amazon.

          One of the conclusions we reached was that someone looking for a novel probably doesn’t write a description of the novel into Google to see what comes up.

          • I’m not out to pry into Mrs. PG’s real identity or the name of her novel, but would you mind listing some of the search terms you optimized for? Also: if you were this diligent about SEO, I assume you made sure your link names were on-target and included irresistible descriptions. I’m flummoxed that you got her above the fold on page 1 of Google search results but got *no traffic*! It doesn’t seem possible.

            • Let me see if I can find them, Dick. To be clear, when I say, “no traffic,” I mean no meaningful traffic.

  15. “Was anybody thinking about what would please customers?”

    B&N and a host of others in the book business are not going to make it unless they have this mindset.

    The ignorance about the Amazon dynamic is stunning.

  16. One other thing to remember:

    No matter who has the better user interface, customers online do to online stores EXACTLY what Amazon was doing last month to brick and mortar stores: they use the search features of one store and then go buy on another.

    I read somewhere that a lot of Nook users use Amazon to either browse books, or to find the exact name of a book they only half remember — then they go buy the book at the Nook store.

    I have no other explanation for the fact that about 25-30 percent of my sales last year came from B&N. I never post a B&N link. People can’t find my books unless they’re looking for them. (Okay I do have one other theory, but it still depends on people discovering my books FIRST.)

    So in the end, the hardware wars will make a big difference. B&N’s store will be as successful as their sales of the Nook, and their ability to carry all the books their customers are looking for. People can do the discovering any place they please — but if they have a Nook, they’ll buy from B&N or a general ePub seller like Smashwords in the end.

    Which isn’t to say that the user interface isn’t important — iPhone users, for instance, are likely to have the apps for all the vendors, and buy from whichever site they like best. And Amazon’s years of developing their Affiliates means that every place you find a link to a book is likely to give you an Amazon link.

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