Save Barnes & Noble!

7 May 2018

From The New York Times:

Barnes & Noble is in trouble. You hear that, in worried tones, when you talk to people in the book business. You feel it when you walk into one of the chain’s stores, a cluttered mix of gifts, games, DVDs (DVDs?) and books. And you really see the problems if you dig into the company’s financial statements.

Revenue from Nook, the company’s e-book device, has fallen more than 85 percent since 2012. Online sales of physical books have also plummeted. At the stores, where business was once holding up, it’s down about 10 percent over the past two years. Several stores — like my local one, in the Washington suburbs — have closed, and many have reduced staff.

The company’s leaders claim that they have a turnaround plan, based on smaller, more appealing stores focused on books, and I hope the plan works. It’s depressing to imagine that more than 600 Barnes & Noble stores might simply disappear — as already happened with Borders, in 2011. But the death of Barnes & Noble is now plausible.

. . . .

The full story revolves around government policy — in particular, Washington’s leniency, under both parties, toward technology giants that have come to resemble monopolies. These giants are popular, because they provide good products and service. But they have also become mighty enough to vanquish their competitors and create problems for society.

. . . .

For most of American history, the government viewed giant corporations of any kind as inherently problematic. Their size gave them too much power — to eliminate competition, raise prices, hold down wages and influence politics. So the government passed laws to restrain businesses and occasionally broke up the largest, like Standard Oil and AT&T.

In the 1970s, however, a new idea took hold: Size was not a problem so long as prices remained low. Bigness could even be good, because it promoted efficiency and thus lower prices. The legal scholar Robert Borkwas the most influential advocate for this view, and it soon guided the Supreme Court, the Reagan administration and pretty much every administration since.

But the theory has two huge flaws, as a new generation of scholars, like Lina Khan, is emphasizing. One, prices are not a broad enough measure of well-being. Wages, innovation and political power matter as well. If prices stay low but wages don’t grow — which is, roughly, what’s happened in recent decades — consumers aren’t better off. Two, regulators have focused on short-term prices, sometimes ignoring what can happen after a company drives out its rivals.

. . . .

The book business is looking like a case study. Amazon is taking over, yet has never run into antitrust scrutiny. It has reduced prices, after all. It sells many e-books for $9.99 and hardcover best sellers at a big discount. So what’s the problem?

Plenty. Amazon has been happy to lose money on books to build a loyal customer base, to which it can then sell everything else. “Amazon isn’t primarily concerned about books these days,” Oren Teicher, who runs an association of independent bookstores, told me. “They are far more focused on getting consumers into their ecosystem so they can sell them every other product under the sun.”

But the artificially low prices have created a raft of problems. Fewer books are commercially viable. Publishers are focusing on big-name writers. The number of professional authors has declined. The disappearance of Borders deprived dozens of communities of their only physical bookstore and led to a drop in book sales that looks permanent.

. . . .

“It’s in the interest of the book business,” Teicher says, “for Barnes & Noble not just to survive but to thrive.”

Link to the rest at The New York Times and thanks to Susan and others for the tip.

PG suggests the fundamental purpose of antitrust law is not to benefit the corporate losers in commercial competitions, but rather to benefit consumers by promoting competition in a variety of marketplaces.

These laws are not intended to punish successful competitors because of their size or to permit courts to choose winners and losers in the marketplace.

In an active marketplace, consumers will be benefited by the improvements in products or services and/or the lowering of prices that result when sellers are competing for the business of buyers. Each seller is focused on capturing and holding the loyalty of buyers by providing a more attractive product or service to those buyers. Buyers vote with their dollars, but no seller can assume that their customers today will be their customers tomorrow unless the sellers continue to attract and serve buyers with features the buyers desire tomorrow, whether they be price, selection, service, a better purchasing experience or whatever buyers value tomorrow.

Consumers are subject to the threat of substantial damage in a market that is not competitive because established sellers are relying on something other than the free choices of buyers to select the most attractive product or service by interfering with the competitive process.

How has Amazon beaten many of its competitors? Better prices, certainly, but also with better service (2-day delivery with Prime and real-time updates on delivery status, for example), a huge selection of goods, lots of customer reviews to provide additional information to prospective purchasers and easy returns and refunds if a product does not satisfy a customer.

As compared with physical stores like Barnes & Noble, an Amazon customer can choose from a far, far wider selection of books than any Barnes & Noble store carries. An Amazon customer can typically purchase books for lower prices than are offered at a Barnes & Noble store. An Amazon customer can purchase a book when a Barnes & Noble store is not open or not convenient to visit or staffed by sullen clerks working for little more than minimum wage.

An Amazon customer can purchase books from independent authors instead of large corporate publishers exercising monopoly power by offering authors substantially identical terms and compensation as other corporate publishers do. When an Amazon customer makes such a purchase, she can do so knowing that much more of the price she pays for the book will be received by the individual author than would be the case if a purchase was made from a corporate publisher. A savvy purchaser will know that she is not subsidizing the victimization of authors by corporate publishers as has occurred on several occasions during recent memory.

 

 

Amazon, Bookstores, Legal Stuff, PG's Thoughts (such as they are)

29 Comments to “Save Barnes & Noble!”

  1. As of this moment there are 759 comments on the article on the NYT site, and they are fun to read.

  2. You made your bed in the 90s, tradpub, when you cut special deals with B&N and killed off indie booksellers and regional book distributors. Now sleep in it!

  3. Oh, bull shit. (pardon my language) Barnes & Noble wasn’t in the least concerned about saving the thousands of indie bookstores it put out of business. The ‘book business’ will survive just fine just as it did BEFORE B&N came into existence.

  4. I hasten to add as an indie author not only the ease in uploading a book on Amazon’s site but also the fact that as an indie author I’m accepted, allowed, and encouraged to do so. You want to compete? Maybe allow indie authors equal promotion or how about having a site that’s easy for consumers to use? Just a couple of thoughts.

  5. I came up with 37 Reasons to Shop at Barnes & Noble Bookstores

    1. Barnes & Noble is filled with individuals who read, and love books.

    2. Has a great ambiance for browsing.

    3. You can see the whole array of books as you walk around, not just a single book at a time.

    4. It’s a great place to hang out.

    5. Gives you time to reflect on a book, on fellow readers, on life in general.

    6. Great people watching place.

    7. Barnes & Noble has published a wide and wonderful array of Classics.

    8. There is a Starbucks in the store where you can read, drink coffee, and eat.

    9. In four stores (so far, with more to come), Barnes & Noble offers craft beer, wine, and dining, in their “Barnes & Noble Kitchen.” Currently locations are in Eastchester, NY; Edina, MN; Folsom, CA; and Loudon, VA. They plan to open more. (I hope they hurry up.)

    10. Barnes & Noble is a neighborhood and community resource.

    11. Employees and customers are book people, who love to read.

    12. You can delve into areas of interest, and learn stuff.

    13. Barnes & Noble bookstores are infinitely perusable. (And, yes, this applies to independent bookstores as well.)

    14. You can scout for gift ideas for those who love to read.

    15. B&N is an important anchor store for malls, which are struggling right now.

    16. It’s a fun place to wander around.

    17. It’s family friendly, with wonderful kids and young adult sections.

    18. If you love the feel and smell of new books, Barnes & Noble is your place.

    19. Barnes & Noble has an unparalleled array of magazines and periodicals (and no one will tell you that you must buy it before you read it).

    20. Physical Barnes & Noble stores take you away from the omnipresent computer screen.

    21. If you’re a writer, perusing the isles of your chosen genre can help you target your next book.

    22. You can also observe the way in which customers peruse and choose.

    23. Discover new titles and topics.

    24. Delve into your favorite topic, and take a deep dive into its most successful books.

    25. It’s a place to think.

    26. It gives Amazon much needed competition. (It’s one of the reasons that Amazon decided to open its own bookstores.)

    27. It’s a place to work and write.

    28. The full array of knowledge of Western and Eastern Civilization is on display.

    29. You go because you love books.

    30. It’s fun.

    31. Literary culture is on display.

    32. In one area, Barnes & Noble beats Amazon on price—their Bargain Books, which offer an incredible array of fiction and non-fiction on every conceivable subject, at amazingly low prices.

    33. Barnes & Noble has organized many special collections, such as local schools’ reading lists, local authors, and staff favorites.

    34. It’s a good place to get ideas, especially if you’re a writer.

    35. You can socialize with other readers.

    36. Authors show up for discussions of their books, and book signings.

    37. Finally, for our own self-interest, let’s help Barnes & Noble to not suffer the same fate as the once great Borders Books.

    Feel free to offer your own ideas and suggestions as to why we should patronize Barnes & Noble Bookstores.
    Meanwhile, you may wonder why I haven’t championed small, independent bookstores. They are most worthy of our patronage and support. Yet, my selfish purpose of this comment is to help keep Barnes & Noble in business!

    As I mentioned in #37 above, I don’t want B&N to suffer the same fate as Borders. Yes, Barnes & Noble is a business that must compete. It is also a community treasure that we don’t want to see disappear.

    So, what can you do? Go to Barnes & Noble today. Buy a book. Better still, buy two… or three. Check out their Bargain Books. Have fun!

    • Felix J. Torres

      There is one reason that supercedes all those:

      It is a for profit business run by self-important incompetents that couldn’t make money selling water in a desert.

      They deserve to go under.

      • Felix J. Torres

        Sweep them away to make room for a new generation of booksellers who do know how to operate in tbe 21st century.

      • Felix J. Torres

        I’m not above quoting myself.
        From last month:

        http://www.thepassivevoice.com/barnes-noble-amazon-independents-whos-disrupting-whom/#comment-413542

        The subject was whether B&N saw online disrupting B&M:

        “Maybe B&N did recognize the existential threat of online and simply failed to execute. After all, they have never shown any great competence in technical matters this century:

        – at its peak, Nook controlled over a quarter of the US ebook market yet Nook lost (by their accounting) some $260M that year and by their accounting they have never turned a profit selling ebooks.

        – back in 2010 they tried to undercut Amazon on ereader pricing, seemingly unaware that the build cost of the Kindle2 was significantly lower than the Nook. Amazon promptly matched and undercut B&N. The whole “price war” was over in four hours.

        – they gave the Nook the ability to open generic ADOBE DRM ebooks sold by competitors while simultaneously refusing to sell ebooks in that format. Or to sell their own ebooks beyond US borders. When they moved the ereader market to near-cost pricing, this made the Nook extremely attractive to buyers of generic ADOBE ebooks the world over. So they sold a lot of ereaders that never generated a single ebook sale for them. This also made it easier for Nook store ebook customers to migrate their libraries to non-Nook hardware once the Nook’s viability became questionable.

        – they released several electronic gadgets without (apparently) checking to see what existing patents they might need to license and when the patent holder came calling, they refused to deal and forced a legal showdown where there defense was to accuse Microsoft of bullying. When it turned out they couldn’t actually pay to license the patents, Microsoft offered a cash infusion in return for a Nook app for Windows 8 and a piece of the revenues generated by the app. And then B&N failed to meet all deadlines for the app, failed to fix bugs, and forced MS to fix their app. In the end they had to return what remained of the MS cash infusion.

        – they released a line of tablets that could only run games and videos from the Nook appstore without doing much to actually provide games and media. The hardware was good, the support system awful. They ended up with a massive write-off on unsold tablets.

        – at a point tablet sales were clearly leveling off and sales moving to cheap models (Fire Tablets) they committed to selling a million high-priced Samsung tablets. They fell about 800,000 units short.

        – over the years they have spent more time and effort limiting what Nook owners can do with their readers than fixing bugs.

        And that’s just a sampling of their hardware failings. No need to go into their ebookstore failings, like the downlisting of Indie romance titles, their catfight with DC over a handful of graphic novels, and their lead in assembling a B&M boycott of APub titles that has (almost certainly) led to the creation of AmazonBooks.

        Let’s face it, it really doesn’t matter if they saw the challenges coming since they failed miserably at each and every one. “

    • A little rebuttal to: I came up with 37 Reasons to Shop at Barnes & Noble Bookstores

      1-7,10-13, 16-25, 27-36. So’s a library, and they’re free to read.

      8, 9. Sorry, some of us aren’t interested in propping up bad coffee/other companies either … 😉

      14. Unless you ‘know’ for a fact what they like and already have, a gift-card would do them better – and to a store that might actually have what they want (so not B&N, no …)

      15. Another used to be – like Sears, Wards and Target.

      26. If they can’t compete with Amazon why do we need to prop them up?

      37. Barnes & Noble and trad-pub killed Borders Books, I see no reason that they shouldn’t in turn die.

      • I go into a B&N (rarely) to find a specific title or to scope out the history section. I rarely leave with a purchase. They don’t tend to carry books I want to buy. If I’m searching by title, I tend to strike out at Barnes and Noble about 99% of the time, and their web site is virtually useless, so I get that title at Amazon.

        Nobody I know told B&N to turn their Schaumburg, IL store into a tchotchke-mart. They drastically downsized the book section without our advice or consent.

    • On the whole I place little value on the things you mentioned. I value my time too much to want to visit Barnes and Noble. I’d much rather spend the time reading.

    • Ashe Elton Parker

      I have not been to a physical Barnes & Noble store (or even its online store) for, oh, about five or six years now. I haven’t missed any of those things you mention. If I had thought I had, I may actually have read the entire list.

    • I, too, have many fond memories of Barnes & Noble. In it’s heyday, it was a wonderful place for all of the reasons you describe.

      Unfortunately, times change.

      I don’t object to the sentiment that Barnes & Noble should be saved. What I do object to is government intervention to save them.

      There has never been a better time in the history of the world to be a reader than now. It wasn’t Barnes & Noble who made this happen, but tech companies like Amazon and Apple, social media like Goodreads, publishing platforms like CreateSpace, Smashwords, Draft2Digital, etc.

      Saying that we should break up Amazon to save Barnes & Noble is like saying NASA should drop SpaceX to bring back the space shuttle. I’m nostalgic for the space shuttle too, but the Falcon-9 and Falcon Heavy are way, way cooler.

      • Felix J. Torres

        And the BFR? 😉

        • I’ll hold judgement until it’s off the ground. Elon Musk is cool, but I’m not one of those people who worships the ground he walks on.

          • Felix J. Torres

            Me neither but I am fascinated by the idea of a 50’s style rocketship actually working.

            It would make so many old movies look good! 😉

      • Apple has nothing to do with it being a good time to be a reader. If it was up to them we would still be buying all our books from Big5.

  6. The NYT would like to see B&N protected from their own stupidity. Maybe because the NYT sees the writing on their own wall and hopes that, when the time comes, they’ll get the same protection.

  7. Why should government step in and save a that company pays a dividend to shareholders?

  8. When it comes to book selling, Amazon is hardy a monopoly. Books are available from a wide variety of sources besides Amazon.

    • Is this person aware of the gazillion indie booksellers who sell on Amazon? I’ve bought from third party booksellers many, many, many times (maybe 1/4 of book purchases). Some of them are charitable booksellers (such as the one that funds an HIV charity with profits). Amazon is not just Amazon. Amazon is a lot of mom/pop sellers, small stores, etc.

  9. Bruce Arrington

    Save Barnes & Noble!

    Save the clock tower!

    Oh, wait, that was Back To The Future…

    Does Barnes & Noble even have a future?

    • Felix J. Torres

      If they can find a source with 1.21 gigawatts of power and a way to fix their broken flux capacitor.

  10. The New York Times is shameless. It places the interests of its advertisers above the interest of its readers, and then tries to scam those readers into believing it is on their side. It’s not. It never was. The NYT supports publishers and their big-money Manhattan office and expensive Manhattan lunches and doesn’t give a toss about readers being able to access more books more easily and at lower prices. Just as long as those publishers can keep paying for that Manhattan real estate…

  11. This type of click bait trolling article gets me every time. It is the most outrageous propaganda. It has no regard for facts and uses the same old discredited myths to pursue that holy grail, the taxpayer’s money.

    But the death of Barnes & Noble is not “now plausible”. Inevitable would be a better description, barring of course some miracle.

  12. I respectfully suggest — as did an article in The Guardian (a UK-based paper!) a couple of months ago — that B&N’s problems are at least as much from real estate as they are from the book business. On one hand, B&N management and ownership comes disproportionately from commercial real estate backgrounds; management has thus bought into “constant by-period return per square foot” as the appropriate measure of “competitiveness,” which in turn led to B&N moving substantial proportions of its stores away from publishing products in the first place. On the other hand, as the Guardian article points out (I’m away from my references and can’t find a URL), third-party commercial-real-estate speculators are driving ALL retail outlets toward desperation and worse… even more than they do with residential real estate in “hot” markets like Seattle and San Francisco.

    When an entire business model is unsuccessful despite a history of constant tweaking, look at the infrastructure. The WHOLE infrastructure, including its facilities requirements and characteristics. Hint: That’s one of the reasons that it was easy to predict that Borders would go down before B&N did — Borders had an infrastructure forced upon it in the 1990s by K-Mart when it was owned by K-Mart (how’d that work out, anyway?), which was EVEN MORE ridiculous.

  13. Big ‘James T Kirk’ voice:

    “Let

    them

    die …”

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