Monthly Archives: November 2017

Nobody Has a Clue

30 November 2017

Today, Barnes & Noble announced its latest quarterly loss. You’ll see several news reports in the following posts.

In the world of coachspeak (see examples below), coaches spout the same clichés over and over again without really saying anything.

PG didn’t listen to the Barnes & Noble earnings (losses) call with analysts today (he had previously planned to floss his teeth), but the quotes from BN’s CEO of the week sound like corporate coachspeak.

“As a result of the improving trends, we will continue to place a greater emphasis on books.”

“There’s too much stuff in the stores.”

“definite shift in strategy”

“Our goal is to get smaller.”

“Through customer research, we discovered that customers come to Barnes & Noble not only to browse and discover, but also to interact with our booksellers. This is a big takeaway for our store managers from a recent conference.”

“We remain laser focused on cost reduction initiatives that are centered on realizing efficiencies and simplification.”

“And while we’re not ready for prime time yet, I feel the team has done a very good job at loading up the pipeline with a lot of good ideas.”

“I think we’ve done a nice job of coming together to understand what needs to happen here.”

“What we can tell you is we have a better plan than we did at the start of the year.”

Here’s a transcript of the entire call.

PG’s editorial summary: They understand they’re pathetic but don’t have any idea how to change, so it’s leadership by cliché.




Amid Takeover Talk, Barnes & Noble Posts $30 Million Q2 Loss, Stock Sheds 10%

30 November 2017

From Forbes:

After eyeing a retail transformation through broadened product assortments and an in-store café (and restaurant) push, Barnes & Noble says it’s back to books following a disappointing quarter.

. . . .

“Book sales continued to strengthen, and we saw improved traffic and conversion trends. As a result of the improving trends, we will continue to place a greater emphasis on books, while further narrowing our non-book assortment,” said CEO Demos Parneros, who assumed his position in April after predecessor Ron Boire’s eight-month stint in charge.

. . . .

Barnes & Noble’s Nook brand of e-readers, billed as its digital business, brought in about $26 million in revenue for the quarter, a decline of more than 25% from last year. The retail segment saw sales dip about 7% to $770 million. The firm has been offsetting shrinking sales with cost-cutting attempts and said Tuesday it plans to reduce costs by $40 million for the full fiscal year.

The ailing bookseller is perhaps a prime example of the retail industry’s struggle to modernize itself in an age of consumerism increasingly dominated by ecommerce and helmed by Amazon.

Link to the rest at Forbes

Barnes & Noble losses: Blame it on Harry Potter

30 November 2017

From CNN:

The bookstore chain said sales fell 8% and losses soared. The reason: There was no new Harry Potter installment this year. “Harry Potter and The Cursed Child” hit stores during the same period last year.

The company said it expects sales will be flat over the final six months of its current fiscal year. But that forecast did little to assure investors, as the stock fell 10% in early trading following the report, leaving shares down 37% so far this year.

. . . .

[T]he company has been reporting more annual losses than profits in recent years, and has lost a total of $345 million since early 2010.

Link to the rest at CNN

Barnes & Noble Wants to Clear ‘Tchotchke’ Clutter, Sell More Books

30 November 2017

From The Wall Street Journal:

Barnes & Noble is on a mission to declutter its stores of gifts and games and make room for what it sees as its next big moneymaker—books.

“There’s too much stuff in the stores,” said Barnes & Noble Inc. Chief Executive Demos Parneros, in an interview after the company’s earnings call. “We’re drawing a line in the sand and reducing the assortment of gift items and what I’d call tchotchkes. For example, we love journals. But we have way too many. We’re refocusing on books.”

. . . .

Mr. Parneros described the decision to refocus on books as a “definite shift in strategy” prompted by what he said were disappointing sales results over the past 10 quarters. Barnes & Noble entered the educational toys and games sector aggressively in 2010, when digital books were growing fast, and later broadened its gift selection.

That gift merchandise will remain, said Mr. Parneros, but there will be less of it, partly in response to customers who said they wanted to see more books.

Link to the rest at The Wall Street Journal

Why Barnes & Noble Wants Smaller Stores

30 November 2017

From Fortune:

Barnes & Noble is the latest retailer to discover that less is more sometimes.

Coming off another awful quarter, the big-box retailers’s executives said on Thursday that the path to better financial performance could lie in operating smaller stores more focused on books with a more limited selection of items like games and toys.

“Our goal is to get smaller,” Barnes & Noble Chief Executive Demos Parneros, who took the reins in April, told Wall Street analysts on a conference call. “We want to have smaller stores that are more efficient.”

It’s easy to see why one of the pioneers of big-box retailing would be interested in making a major change to its business model. Barnes & Noble said that comparable sales fell 6.3% in the quarter ended Oct. 28., the seventh straight three-month period to see sales decline. The company said half of that decline stemmed from big sales last year of a Harry Potter book and the absence in this year of a similar blockbuster. But the problems also stemmed from non-book products that aren’t catching on with customers. Comparable sales of those products were down even more sharply than the company average.

. . . .

“Going forward, we will place a greater emphasis on books, while further narrowing our non-book assortment,” Parneros said, signaling a reversal of Barnes & Noble strategy to diversify its offerings and jump on hotter categories like games and toys. The company has nonetheless benefited in recent years from hot trends like coloring books and vinyl records to prop up sales. (Last year it blamed the absence of a hit like Adele’s 2015 album “25” for its dismal holiday season numbers.)

. . . .

So Barnes & Noble isn’t exiting such categories, but will offer fewer such items, lest it find itself again with an overflow of unsold merchandise it can only clear at bargain basement prices. Such deeply discounted clearance sales were one of the reasons Barnes & Noble’s net loss rose nearly 50% to $30 million in the quarter.

As for the future Barnes & Noble stores, Parneros said two new different-format stores would be instructive in how the chain opens new locations or remodels old ones. A new store in the Dallas suburb of Plano is only 10,000 square foot in size, compared to about 26,000 square feet on average. And another prototype is in Ashburn, Virginia.

Luckily for Barnes & Noble, its store leases tend to be relatively short, meaning some 20% of its 632 stores (it has closed about 20 a year in recent years) come up for renewal a year, allowing it to close stores as needed, or downsize them.

. . . .

One thing Barnes & Noble is doing is giving customers who bought a book a coupon to get a discount on a coffee at its café.

. . . .

Another is to encourage its booksellers to engage with customers, something that should go without saying for a bookstore given that it is a rare reason to buy a book in a store rather than online from

. . . .

Barnes & Noble’s shares were down 12% on Thursday

Link to the rest at Fortune and thanks to Dave for the tip.

The art of the steal: When does a copyright go too far?

30 November 2017

From CNN:

If you want to riff on the “Mona Lisa,” go ahead. Scratch a biro mustache on her. Give her a full beard if you like.

Don’t go drawing facial hair directly on the original, of course; that’s the physical property of the Louvre, and the museum’s conservators are likely to get very angry with you. But otherwise feel free to do your best or worst with Leonardo’s portrait of Lady Lisa.

You can copy it or adapt it; you can even rephotograph it and Photoshop your signature on to it if you want. The original is out of copyright, and has therefore become part of the global creative commons.

If you use a photograph of the “Mona Lisa” as a basis for your art experiments and then try to sell the results, though, be aware that that photographic image may be separately copyrighted material. (Photographers have rights, too.) And it should go without saying that if you make an exact oil-on-board copy and try to pass it off as Leonardo’s original, you may be charged with forgery. But otherwise knock yourself out. You are (almost, within carefully circumscribed limits) absolutely free.

. . . .

If you want to do something with Pablo Picasso’s “Les Demoiselles d’Avignon,” on the other hand, you are much less free. Newsweek hailed it as “the most influential work of art of the last 100 years” in 2007, when it was precisely 100 years old, but just because it was likely made before your grandparents were born doesn’t mean that it’s in the public domain yet.

In fact, that hoary old museum piece “Les Demoiselles” will be in copyright for several more decades, because copyright’s term has been extended considerably since Hogarth’s day, when it ran from 14 years from the date of first publication. Now the formula is life plus 70 — that is, until 70 years after the death of the author.

(The calculation is based on works providing for two generations of an artist’s family after his or her decease; I wish my grandparents’ pension plans had had similar provision.)

. . . .

Ownership of a physical work of art can be transferred in perpetuity (sold), but even if you had personally paid $100 million for a painting by an artist who either was still alive or had died within the past 69 years, you would not have the right to exploit the work’s image commercially; copyright would remain with the artist’s estate.

For your $100 million you get the painting with all its attendant aura, but that doesn’t mean you can stop the artist or the artist’s estate from making the same sum again by authorizing the use of its image on supermarket carrier bags. Every groceries-shopper could have a copy for small change.

. . . .

Copyright is a cornerstone of any democratic, progressive, free society that values and wishes to continue to enjoy the benefits of a knowledge-based economy.

“As the founders of this country were wise enough to see,” former register of copyrights Abraham Kaminstein told the United States Congress in the 1970s, “the most important elements of any civilization include its independent creators — its authors, composers and artists –who create as a matter of personal initiative and spontaneous expression rather than as a result of patronage or subsidy. A strong, practical copyright is the only assurance we have that this creative activity will continue.”

Most people agree that the world would be poorer without the works of Picasso, and in so far as his “creative activity” was supported by copyright, copyright must be a Good Thing.

But, you might ask, what is the “creative activity” of Picasso’s estate?

Link to the rest at CNN

Beg, Steal & Borrow: Artists Against Originality by Robert Shore, the author of the OP, is available on Amazon.


30 November 2017

From Seeking Alpha:

It’s that time of year again. Time for the analysts and pundits to start looking ahead and muse about their favorite investment themes for the coming year in 2018.

. . . .

So what’s among my favorite investment themes for 2018? The “Anti-Amazon” trade.

. . . .

The prefix “anti” has two meanings among others. It can mean “against.” It can also mean “opposite of.”

. . . .

I’m not against Amazon in any way. In fact, as mentioned in previous articles, I love the company.

. . . .

I love Amazon the company. The stock does cause me to shudder a bit, however, for any stock that has quadrupled over the course of three calendar years to become the fifth-largest company in the U.S. as measured by market cap despite profitability that remains razor thin and spotty at best certainly raises an eyebrow. Granted, I know the company is sacrificing profitability to gain market share. I also know the company is a prolific cash flow generator and the profit machine can supposedly be turned on at the flip of a switch once the world has been conquered, but the last I checked many of the businesses in which they operate (mass market consumer retail, I guess groceries now too) are razor thin margin businesses in their own right and remain exposed to heavy future competition.

. . . .

One of the various absurdities that has defined the investment marketplace narrative over the past few years in general and 2017 in particular is the following notion: once Amazon merely decides to enter a new industry, all other competitors are toast. While such ideas make for grand talking points in the financial media, they are largely unreasonable from a fundamental business standpoint. Sure, Amazon has the competitive girth to enter an industry and dominate. But such dominance is not obtained overnight no matter what the size of the entrant. Instead, this supremacy is gained over extended periods of time that can extend over years if not decades, often with a vicious competitive fight with the existing industry participants the magnitude of which depends on their financial strength.

. . . .

A perfect example of this point came this past summer with the announcement by online retailer Amazon that they were acquiring bricks-and-mortar grocer Whole Foods. No sooner did the news hit the headlines then the shares of the grocery store retailers already operating in the space including the likes of Kroger were completely obliterated. The share prices of major food companies such as General Mills also came under fire. The narrative? That the new Amazon Whole Foods was effectively going to immediately run over competing grocery stores across the country and because of its low price strategy would compound the price disinflation/deflation pressures in the food industry.

. . . .

Looking at this from a different perspective, is it at all possible that Amazon’s acquisition of Whole Foods, its first major foray into bricks-and-mortar retailing for the online giant, was not a move hell bent on global grocery domination but instead an implicit admission of failure around the notion of successfully selling groceries online including the sale of those particularly challenging perishable fresh items? Or is it possible that Amazon’s purchase of Whole Foods was not a move hell bent on global grocery domination but instead a move more specifically targeted at gaining greater access to the potentially more profit boosting high income consumer in the selected wealthy metropolitan statistical areas where Whole Foods already has an established presence?

If either of these notions are true, it makes me all the more glad I got long Kroger after the June cascade to the downside. And I’m loving Kroger even more on Thursday following the release of their latest quarterly numbers.

Link to the rest at Seeking Alpha

Ten Years Ago Amazon Started A Revolution and It Just Gave Me a Very Good Month

30 November 2017

From veteran publishing consultant Mike Shatzkin:

Ten years ago, Amazon released the first Kindle device. There had been electronic book reading devices before the Kindle and, indeed, the Sony ereader was actively in the market when Kindle arrived. (Others, like Rocketbook and Softbook, had perished for lack of interest.)

Kindle and Amazon succeeded where others failed for several reasons. First and foremost was the power of Amazon, which already had the attention of a very large segment of the book-reading and book-buying public. But Amazon helped themselves with three big breakthroughs — one technological and two commercial — which made what they were doing different from what had been done before.

The technological breakthrough was integrating the purchasing into the device, eliminating the two step “download and synch” process that previous ebook readers had required. Since wifi didn’t exist yet, executing on that required Amazon to take the risk on dial-up connection charges that MIGHT have been used by Kindle owners to do things other than make ebook purchases.

. . . .

The other commercial breakthrough was pricing. Amazon was willing to take real financial risks to present ebooks as a money-saving alternative to print. They wanted to establish a maximum ebook price of $9.99, so that’s what they charged even if the publisher’s price to them was higher and they had to take a loss on the sale.

. . . .

Back near the beginning of ebook time, a friend at Kobo put together a collection of the first two years of Shatzkin Files blogs into an ebook. Then, about a year ago, a British digital publishing operative named Simon Collinson felt the blogs were worth collecting into annual “books”. He did an extraordinary amount of work to arrange the blogs by subject and to give me the drafts of annual summaries. This turns out to be a pretty decent history of the ebook revolution since its dawning.

And now those ebooks are available in all the ebook formats for 20112012201320142015, and 2016.

Link to the rest at The Shatzkin Files and thanks to Nate at The Digital Reader for the tip.

“Since wifi didn’t exist yet” in 2007, ten years ago when Amazon introduced its first Kindle, is an example of both MikeSpeak and MikeWorld.

The first version of the 802.11 wifi protocol was released in 1997. This was updated in 1999 with 802.11b to permit 11 Mbit/s link speeds which really got things going.

Within five years, wifi exploded to about 100 million users, tens of millions of wifi devices being sold, etc. PG can’t remember when he first installed wifi in Casa PG, but recalls regularly using hotel wifi in the early 2000’s.

PG suggests that wifi may not have existed in New York publishing circles in 2007 (MikeWorld), but it was in common use at airports, restaurants, homes, etc., at that time. For example, in 2004, Slate published an article entitled, How to Steal Wi-Fi and How to Keep Your Neighbors from Stealing Yours.

PG has always viewed Shatzkin’s thoughts as reflective of the current thinking in traditional publishing.

Unfortunately, that thinking is consistently out of date and seems unable to draw any lessons from other businesses that have been diminished or destroyed by disruptive technology. The ebookstore, the ebook and the ease of self-publishing an ebook together constitute a hugely disruptive technology.

Traditional publishers are accustomed to paying only a small percentage of the revenue generated from book sales and licensing to the author. Of course, Amazon pays a much higher percentage to authors who self-publish via KDP. Depending on the pricing the author chooses, the majority of the price a reader pays for an ebook will flow through to the author.

Publishers are fond of talking about all the things they do that an indie author can’t do, chiefly getting printed books into traditional bookstores. From the publishers’ viewpoint, this sales channel is very important. From the author’s viewpoint, looking at the money the author actually receives from the physical bookstore channel, it’s less important.

Simply put, an author can often generate a higher income from a given book by self-publishing ebook and POD paperback editions only and selling exclusively through online bookstores than the author can generate by paying a much higher percentage of each book sold to a traditional publisher and accessing the physical bookstore channel. The publisher captures the lion’s share of income from physical book sales, so from the author’s viewpoint, that channel is much less important to his/her financial well-being than it is to the publisher’s.

If publishers were willing to enter into hardcopy only publishing agreements with authors, permitting authors to retain ebook rights for self-publication, business-savvy authors would be happy to sign such agreements. Even with low royalty rates, the hardcopy only agreement would generate net income to the author that the author would not otherwise receive while the author would benefit from the much higher percentage available from independently publishing his/her ebook editions.

One last and obvious point – twenty years ago publishers generated all of their income from print-only operations. If, as the traditional publishing press keeps saying, readers are returning to printed books and physical bookstores, a return to an earlier era of print-only publishing would seem to be a viable business proposition.

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