The departing CEO reminds us that Barnes and Noble is of interest and a source of concern for all publishers
From veteran publishing consultant Mike Shatzkin:
When Barnes & Noble interrupted Holiday week day-dreaming to announce that recently elevated CEO Demos Parneros had been abruptly dismissed for a contract violation that also eliminated his severance, it not only ignited a minor industry of speculation about “what happened?” but it also called attention to the commercial situation at Barnes & Noble.
And that, in a couple of words, is “not good”.
There are two inexorable and unrelenting shifts taking place in the book businiess, and while neither of them are B&N’s fault, it is also true that neither work in B&N’s favor. One is that more and more book purchasing is taking place online and less and less in physical stores. And the other is that more and more books are being published and sold, or distributed, from outside the commercial realm. That is, the entities publishing books to make money on them are seeing their share being sliced away by countless cuts from independent authors and various corporate and cause organizations that want to put books into people’s hands and devices to increase their fame or promote a message, not primarily to make a profit.
Since Barnes & Noble’s great expertise centers around promoting and selling books to consumers in physical stores working with publisher trading partners who are trying to make a profit, that means that their part of the book market is just getting smaller in ways that could only be addressed by selling more online and being a more effective conduit for non-commercial distribution. They’ve failed miserably for two decades at the former and there isn’t big money in the latter.
But commercial book publishing — especially the Big Five with their high-volume flow of commercial new titles and deep backlists but also a diminishing but still long tail of university presses, smaller general trade houses, and specialty publishers — really needs B&N. They’re needed for the hundreds of bookstores they maintain and because they present the one significant alternative to the retailing giant that is growing on the back of the larger trends: Amazon.
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Just before the Parneros announcement, I had lunch with an industry expert who expressed mild surprise that “the publishers haven’t just bought B&N and fixed it”. This same seer thinks Amazon may be teetering on the edge of vulnerability because they have taken the tactic of steering customers to their own product too far for their own health in the book business.
And on the day that Parneros’s firing was announced, I had met with a publishing veteran from just-smaller-than-Big-5 publishing. He does commercial books, but the ones that don’t usually command six-figure advances. He finds it hard to imagine how publishers will navigate a world without B&N in it and is quite candid about how difficult negotiations with the already-nearly-hegemonic Amazon already are with the B&N counterweight still alive and active.
. . . .
The suggestion that publishers buy and fix B&N surprised me a bit. There was talk about publishers setting up their own online book sales competitor to Amazon 20 years ago and it is evident now why that wouldn’t have worked. Amazon’s significant competitive advantage came from the fact that making money from the book business wasn’t their primary objective: building a customer base on the back of the book business to create a bigger marketplace and ultimately a cloud computing behemoth was where they were going. No publisher or consortium of publishers was going to adopt a vision like that.
But the suggestion does have logical elements. Publishers have the most to gain from a prosperous Barnes & Noble and the most to lose if it goes away. Publishers are, along with store lease-holders, B&N’s most significant trading partners and creditors. And Amazon competes as a publisher, Barnes & Noble still owns a publisher, and major publishers owned the Brentano’s and Doubleday bookstore chains in decades past, so publishers and booksellers have owned each other over the years.
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Yes, it is a correct analysis that the super-sized bookstore is a dinosaur; massive in-store selection with many titles that hardly ever sell is a relic of the pre-Internet age. And the “curation” that makes a small selection work effectively is more easily delivered by Amazon’s massive supply chain and highly localized market knowledge, not to mention their ability to “promote” by email the existence of a store or anything in it to a large percentage of purchasers in any locale. Similarly, Amazon will find it easy to sell “home goods”, or whatever else is the right thing for any particular location because they probably already do. And while B&N is being urged to ditch the money-demanding Nook ebook line, Amazon would be using Kindle as a springboard to the extent that is relevant at all to a store-shopping audience.
And I’m going to admit to a bit of a chuckle when I read “build a community”. A community? One community? Does that mean one community for people who read Civil War history and romance fiction? No, that’s a silly idea. A bookstore actually needs to foster many communities. You can be pretty confident that Amazon knows that.
Link to the rest at The Shatzkin Files
PG says very smart retailers are worried about competition from Amazon. The idea that some big publishers (which are not very big at all compared to Amazon) know how to sell books at retail better than Amazon does is ludicrous.
Besides, none of the large US publishers are independent entities. They are all owned by large conglomerates in Europe or the US. PG suggests that these conglomerates (which are themselves much smaller than Amazon) have no appetite to fund a bunch of retail bookstores that are very unlikely to be any more profitable than Barnes & Noble has been for several years.