Barnes and Noble results and the latest news from Perseus

15 September 2015

From Mike Shatzkin

The most recent Barnes & Noble financial results — which appear to have discouraged Wall Street investors — aren’t good news for the book business. They show that the sale of books through their stores is flat at best, as is the shelf space assigned to books. And it would take a particularly optimistic view of their NOOK results to see anything but an accelerating slide to oblivion for what was, for a time a few years ago, the surging challenger to Kindle.


The real failure we see at B&N, which almost certainly affected the NOOK business as well as the stores, was that the customer knowledge within the dot com and NOOK operations apparently has never been used on behalf of the store business. This might be blamed on organizational silos that ran these three components as separate businesses. The failure is otherwise hard to explain. How hard can it be, really, to dig up email addresses of people who bought a book by a particular author to let them know s/he’ll be autographing books near where they live sometime soon?

Or, putting that in terms Barnes & Noble should relate to, might you not be able to charge the publishers a promotional fee for doing that? (AND you’d drive more traffic and sell more books!)


The people who own and run B&N are plenty smart. Before the game changed and was complicated by the online option, they had organized their supply chain to give them real competitive advantage over Borders and all other book retailers. But they were tripped up by a combination of Amazon’s longer-term view as an upstart in the 1990s and early 2000s when B&N was an established and profitable company. This was a classic “innovator’s dilemma”, failing to employ a new technology to maximum advantage because a legacy position was being defended.

Amazon was willing to lose money for many years to build its customer base. That was how they could build their stock price. B&N was a profitable company at the top of their category. Profits were how they grew their stock price. This not only discouraged deep investment in the early years of online bookselling, it discouraged the kind of discounting from their online store that Amazon did. Both of them knew that discounted books online put competitive pressure on the brick-and-mortar business. That was fine with Amazon. It was not appealing to Barnes & Noble.


When B&N decided to go after the ebook market with the NOOK, organizationally they did it with a dedicated and largely independent effort, not an integrated one. That might have been necessary. But it also might have been B&N’s last chance to build on its one distinctive advantage: having a strong store base and a real dot com business. (Borders never had the latter and Amazon, of course, doesn’t have the former.)


But the time B&N has to change the reality that they can’t seem to grow their market share continues to shorten. The one big advantage they are likely to retain over their competitors in Seattle — who are certainly growing theirs! — will be a cooperative attitude from the publishers, who live in fear of Amazon’s growing power. But even that advantage has its limits.

Link to the rest here.

As a long time reader of Mikes blog I have to say this is one of his better posts. Some of this will no doubt be read by many here as information they already had, but the break-down is spot-on.

As for the changing landscape of B&N and its effect on the Big Five Randall views it as self-fulfilling. The dwindling shelf space at B&N will eventually lead to only the bestsellers being available. This will reduce the mid-list titles to an even smaller portion and effectively lock the Big Five into the blockbuster model for the remainder of their existence.

However, if you find yourself in sudden need of a birthday card, stuffed animal, calendar, scented candle and cup of coffee, B&N is your place for one-stop shopping. 

The Beginning of the End: B&N Shutters the International Nook Store

10 July 2015

From The Digital Reader:

Over the past month B&N has been making us wonder whether it was committed to ebooks. First B&N closed its office in Luxembourg, then it relaunched its website with a borked Nook area, and today B&N has removed all doubt.

Barnes & Noble is sending out emails to customers in Europe, sharing the news that they will soon be ex-customers.

You can find the email at the end of this post (translated from Dutch; Thanks, Martjin!) but the short version is that B&N has reiterated the announcement they made last month when they said the Nook Windows 8 app would no longer be available internationally.

B&N is abandoning most of its international customers on 7 August 2015.

The Nook Store had been available in 40 countries, including Australia, much of Europe, Canada, the UK, and the US; on 8 August the Nook Store will only be available in the US and UK (this was confirmed by B&N).

Link to the rest at The Digital Reader and thanks to Stephen for the tip.

To PG, it doesn’t look like Barnes & Noble thinks it can find a buyer for the Nook business.

Barnes and Noble Unveils Broken Nook Website

6 July 2015

From GoodEreader:


Barnes and Noble has been working on a massive upgrade to their website for the last two years. The new design gives us a sense on what the bookseller is hoping to sell more of, which are lifestyle products, print and e-books. Unfortunately there are a number of bugs with e-books and Nook that are preventing people from reading and this is resulting in a fair amount of apathy.

When you are looking to buy a new book and haven’t heard much about it, likely you want to check out the first few chapters with a digital sample. Barnes and Noble has an online reading platform called Nook for Web. Sadly, this system is totally broken and has not been revised to work in conjunction with the new B&N website.

. . . .

Another glaring error is the fact that any past purchases cannot be read online and the Nook Library does not recognize past purchases as being owned. If you click on any e-book you have bought in the past the only options right now is to archive it or purchase it again. If you try and buy it again there are a series of errors that do not allow you to complete the transaction.

Link to the rest at GoodEreader and thanks to Nirmala for the tip.

Barnes & Noble reports loss again as Nook sales plunge

25 June 2015

From Reuters:

Barnes & Noble Inc reported a fall in sales for the fourth consecutive quarter as demand for the company’s Nook tablets continued to fall and customers stayed away from its brick-and-mortar bookstores.

Shares of Barnes & Noble were down 3 percent at $25.55 in morning trading.

Stiff competition from online retailers such as Inc and a shift toward reading e-books on devices such as Amazon’s Kindle and tablets has hurt sales at Barnes & Noble’s bookstores.

Barnes & Noble invested hundreds of millions of dollars in its own device, the Nook tablet, which it launched in 2009 to give itself a fighting chance against Amazon.

Though the Nook initially met with success, demand fell rapidly, resulting in a sales decline at the division that has lasted for more than two years.

Nook sales fell 40 percent to $52.4 million in the fourth quarter ended May 2.

. . . .

To focus more on its core bookstore business, Barnes & Noble in February abandoned a plan to spin off a combination of its Nook business and its profitable and fast-growing college books unit. The company said it would spin off the college books unit by August, but keep its Nook tablets and e-book business.

The company said on Thursday it expects full-year 2016 core comparable sales, which exclude sales under the Nook digital division, to grow 1 percent due to likely improvement in its physical books business.

Link to the rest at Reuters and thanks to Nirmala for the tip.

PG suspects the spin-off plan went nowhere because nobody wanted to take the Nook business.

Barnes & Noble’s Galaxy Tab 4 Nook Tablets Were a Holiday Flop

11 January 2015

From Android Headlines:

When it comes to a good story, the path of the Barnes & Noble e-reader, the Nook, has not been a happy one…though somewhat interesting.  The holiday season was not exactly a merry one as sales plummeted 55.4-percent compared to 2013’s holiday shopping period.  Hardware, accessories and digital content were all down for the season – device and accessories sales were down by 67.9-percent and digital content were down 25-percent.

It has been a real struggle for Barnes & Noble when it comes to Amazon’s Kindle e-readers, not to mention the Apple, Samsung and Google’s Nexus tablets on which anybody can read a book by downloading an app.

. . . .

Why Barnes & Noble’s sales were down could be due to a number of things – did the Galaxy Tab 4 Nook make it too easy for purchasers to read books via other readers on the same tablet.  Were the sales of Android tablets down overall this holiday season?  Without exact sales figures for their entire line, it might be that the Galaxy Tab 4 Nook sold the expected amount, but their other e-ink reader, the Nook Glowlight – with no update during 2014 – could not hold off the upgraded and lower priced line of Amazon’s Kindles.

Link to the rest at Android Headlines

Nook Results Could Jeopardize Barnes & Noble Split-Up Plan

9 January 2015

From The Wall Street Journal:

Barnes & Noble Inc. ’s consumer stores enjoyed an upbeat holiday period, but poor results at the Nook digital business potentially complicate plans to split that division off into a separate public company with the college bookstore group.

Nook revenue, which consists of digital devices, e-books and accessories, fell 55% to $56 million for the nine weeks ended Jan. 3, compared with the same period a year ago. Device and accessories sales sank 68% to $28.5 million, while digital content sales declined 25% to $27.4 million.

The downbeat results could make it difficult for Barnes & Noble to complete the Nook separation, planned by the end of August, some analysts said, because it will be hard to convince investors the business has a future.

The decline in digital content sales suggested Nook owners were “abandoning” the Nook e-bookstore, said James McQuivey, an analyst with Forrester Research. “Otherwise, you’d have seen stabilizing digital content sales,” he said.

. . . .

John Tinker, an analyst with the Maxim Group, said the Nook losses are so bad that Barnes & Noble may not be able to move forward with the split. Selling off the Nook business to a third party buyer, he said, could be equally challenging.

“There is still value but it’s a lot harder now with these numbers,” he said.

. . . .

Mitchell Klipper, chief executive of the Barnes & Noble retail group, said the results showed that “people are coming back to physical books and want to be in bookstores. Traffic is moving in the right direction.” Mr. Klipper cited gifts and educational toys and games as two particularly strong categories.

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

Barnes & Noble Buys Back Nook Stake From Pearson

30 December 2014

From The New York Times:

Barnes & Noble said on Tuesday that it had reached an agreementto buy back Pearson’s stake in the booksellers’s struggling e-book business, Nook Media, for nearly $28 million.

The company said that it would pay $13.75 million in cash and 602,927 shares of Barnes & Noble’s common stock. The move follows an exit by Microsoft from Nook earlier this month. Barnes & Noble bought out the software giant’s stake for about $120 million.

. . . .

 The company is planning to split into companies, one with Nook and its college bookstores and another consisting of the retail stores and website, by the end of August.

Link to the rest at The New York Times

Wal-Mart Should Buy Barnes & Noble’s Struggling Nook Division

5 December 2014

From The Street:

Since his promotion to CEO of Barnes & Noble  in January 2014, Michael Huseby has been preparing the struggling Nook digital media division for sale, but so far no suitors have shown themselves. Huseby should look no further than the world’s largest retailer, Wal-Mart Stores .

Wal-Mart has been steadily investing in and growing its digital businesses and needs to find more ways to compete with Amazon. While Nook has been failing since 2012, it still has underlying assets — a catalog of millions of e-books, thousands of relationships with publishers and suppliers, and a robust self-publishing services business — that would be valuable for a company interested in investing in e-books and would be hard to build from scratch.

. . . .

“It is definitely a good idea if Wal-Mart cares about being in the book business or the digital media business long term,” said book publishing consultant Mike Shatzkin. “If that’s a priority for them, acquiring Nook would probably be the cheapest way to ensconce themselves in the game.”

With Nook, Barnes & Noble was once solidly the No. 2 e-book retailer in the U.S., behind Amazon, with a reported 25% market share to Amazon’s 65%. That was in 2012, when Nook revenues eclipsed $900 million and then-CEO William Lynch charted a course to reach $1 billion in annual revenue.

The plan involved Nook continuing to sell more Nook devices in the growing tablet business, as well as selling more e-books on those devices and increasing digital content sales across the board.

Neither of those things happened.

. . . .

What’s next for Nook?

Barnes & Noble has said that spinning off Nook as a separate public company is also an option to exit the business. With a consistent track record of losses and declining revenues, it’s not a very good one.

Instead, Barnes & Noble should sell Nook to Wal-Mart.

According to one source who did not want to be named, the big retailer is exploring entering the e-book business. Buying Nook would be an easy and inexpensive way for the company to do so. Wal-Mart declined to comment.

Like many Amazon competitors, Wal-Mart has been trying to expand in digital. It expects its e-commerce sales in 2015 to increase to $12.5 billion after accelerating its digital investments to between $1.2 and $1.5 billion, up from $1 billion in 2014.

While $12.5 billion is nothing to sneeze at, it’s a fraction of Amazon’s projected 2015 revenue, which will eclipse $100 billion. And it’s less than 3% of Wal-Mart’s $473 billion in sales in 2014, which are expected to grow 2% to 4% in 2015.

A Wal-Mart spokesperson said that funds for digital acquisitions would not come from its capital expenditures on digital expansion and pointed out that the company has made 14 e-commerce acquisitions in the past several years.

“We are open to acquisitions if they fit into our enterprise strategy,” the spokesperson said, via email.

Nook “is a nice fit with Wal-Mart’s print book business,” said James McQuivey, a vice president and principal analyst at Forrester focused on the book publishing industry. “They could probably also get it for a decent price.”

To be sure, there are significant risks. In the U.K., retailers Tesco and Sainsbury both launched e-book businesses, but Amazon still has about 90% of the market.

Link to the rest at The Street

PG says if Big Publishing thinks Amazon is tough when negotiating contracts with suppliers, they’ll gain some perspective on that subject should Wal-Mart enter the ebook business.

Barnes & Noble, Microsoft End Nook Pact

4 December 2014

From The Wall Street Journal:

Barnes & Noble Inc. said it has terminated its commercial agreement for its Nook e-reader with Microsoft Corp. , a move it said provides a clearer path toward the impending split of its business.

The bookstore retailer bought out Microsoft’s preferred interest in Nook for about $120 million in cash and stock, freeing Microsoft from further investments in the business.

Barnes & Noble, struggling to adapt as book buyers migrated to online retailers like Inc., said Thursday that it expects the planned split of its Nook Media unit from its retail stores to occur by the end of August, behind its initial projection for a separation by March.

The company also reported a much weaker-than-expected profit for its November quarter, helping push its shares down about 8% premarket.

Microsoft invested in Nook in 2012, pledging more than $600 million to help prop up Barnes & Noble’s digital-reading business.

. . . .

For its second quarter ended Nov. 1, the Nook segment’s revenue fell 41% to $63.9 million, while digital content sales fell 21% to $45.2 million. Device sales fell 64% from a year earlier, though cost-cutting helped stem the division’s loss in the quarter.

Sales at the company’s retail unit, meanwhile, fell 3.6% in the quarter, due partly to store closures.

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

Barnes & Noble jumps into print-on-demand

12 November 2014

From Geekwire:

In a move to pick up more self-publishing clients, Barnes & Noble has launched Nook Press Print, a new print-on-demand service for independent authors looking to take their manuscripts into the physical world.

Users can pick from a variety of materials and formats, including hardcover and softcover books, in a number of different sizes. Authors can get their texts published in full color or black and white, and select different paper materials.

. . . .

It’s a move to attract people to Barnes & Noble’s publishing platforms at a time when the bookstore chain is feeling increasingly challenged by Amazon. The company plans to break off the Nook division into a separate company, and is now outsourcing the production of its latest tablet to Samsung.

Amazon already offers print-on-demand services through two of its subsidiaries: Booksurge and CreateSpace, which offer similar options to those offered by Nook Press Print. The Seattle-based retailer’s existing ecosystem of self-published authors is a lucrative business for the company: there have been a number of hit books which started as self-published titles on Amazon, like “The Martian,” which exploded in popularity and was recently got picked up for a film deal.

Link to the rest at Geekwire and thanks to Shelton for the tip.

Here’s the link to Barnes & Noble’s announcement

If PG were running Nook, he would have spent money on major improvements to the website instead of POD. Being able to list and sell POD books on the Nook website won’t do much good if potential readers can’t find them.

[Update] You can’t list and sell your POD books on the Nook website. You’ll have to go to another POD service if you want to do that.

Then there are the add-on packages that begin at $999 and immediately caused PG to think of Author Solutions.

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