Uh oh. Barnes & Noble cuts its financial guidance again, and now it is saying it may push its Nook e-reading business into a new company. Investors are not pleased.

Barnes & Noble shares are slumping 29% in pre-market trading as Barnes & Noble reduced its fiscal-year guidance. Barnes & Noble said it is evaluating its reporting segments, which may mean the company will report Nook as a separate line item, and it is looking at options to push the Nook into a separate business altogether.

Barnes & Noble said Nook device sales surged 70% during the 9-week holiday period ended Saturday, with the bookseller saying tablet sales exceeded expectations though Simple Touch lagged.

rest: http://blogs.wsj.com/deals/2012/01/05/investors-are-freaking-out-about-barnes-noble/

I was shorting this stock a few weeks ago at $16 through a derivative. I'm kicking myself because I took it off too soon. Damn, the stock is below $10 now. I hate being right but not being able to capitalize on it because of lack of confidence.

About ~1.5yrs ago, I predicted this company would go out of business within 5 years. I'm keeping my original time table...they have ~3.5 yrs left.

So HP, RIMM, and Dell, et al, all failed with their tablets but B&N is going to succeed and do enough to save their Bricks and Mortar business? I don't see them hanging onto their market share. Also, is there really enough synergy between the Nook and the stores to justify keeping the stores open 2 years down the road when they are completely dead weight? Their core business is deteriorating. The synergies between the two could easily be accomplished through a commercial agreement with any store with wifi, the nook and other physical books can be sold online, electronics retailers can sell the nook retail.

Becoming a "kiosk" business, a permanent presence in a larger store or mall, allowing them to sell books and devices physically and online, would probably work for B&N. It could allow them to branch out into markets that did not merit a full store, and actually gain in visual presence, like the ubiquitous cell phone and accessory stores and kiosks.

It would be a severe restructuring of the retail level, but probably worth the effort in the long run.

Putting nook in a separate business would just about doom their stores, wouldn't it? Since they were doubling down on nook saving the company.

Putting nook in a separate business would just about doom their stores, wouldn't it? Since they were doubling down on nook saving the company.

Don't need large bookstores anymore, nor do we need multiple locations in a given area. As ebook use continues to rise, bookstores and libraries will need to trim down and consolidate services not best served online.

I will cry when our local B&N closes. I want to run right over there and buy something right now. (well I did just spend money in the cafe just yesterday).

On a side note: what kind of bad/informal writing do they have in the Wall Street Journal these days?? I thought the OP was a paraphrase, but it's the actual article. Uh-oh indeed.

eP

I will cry when our local B&N closes. I want to run right over there and buy something right now. (well I did just spend money in the cafe just yesterday).

On a side note: what kind of bad/informal writing do they have in the Wall Street Journal these days?? I thought the OP was a paraphrase, but it's the actual article. Uh-oh indeed.

eP

the wsj article was in a blog. here is the article. Barnes & Noble May Separate Nook Business as Losses Mount: http://online.wsj.com/article/SB10001424052970203513604577142481239801336.html#i xzz1ibLBju7Y

Putting nook in a separate business would just about doom their stores, wouldn't it? Since they were doubling down on nook saving the company.

Agreed. My local B&N is pretty nice. I bought a few things there over the holidays.

Via MSNBC:
http://bottomline.msnbc.msn.com/_news/2012/01/05/9974163-barnes-noble-may-split-off-nook-business

No surprise here; the clues were all over for the past six month.
Nook is a billion dollar a year business.
The concern, of course, is that if Nook alone is worth more than the entire B&N as currently consituted, the B&M operation has negative value.

Do note, that they face a "shortfall" of Nook STR sales.
It sold well; they epected and stocked up for more.

Explains where all the refurbs are coming from.
Expect more bargain sales.

I wonder if anybody will step up, ala Rakuten...

I still think the death of bookstores is over-exaggerated. With Waldenbooks, Borders and B.Dalton gone, who's left to sell books besides B&N?

That said, I would expect rather than the enormous size of B&N stores, we would see a reduction in size to more stores of the size that Waldenbooks and the like were before. I can't imagine why we would have stores the size of a Sears selling books...not enough to prosper, anyway.

But hey, B&N survived and they didn't, so what do I know? I would have thought the opposite - that the mega-size bookstore would die first and the smaller/more efficient ones would survive.

I still think the death of bookstores is over-exaggerated. With Waldenbooks, Borders and B.Dalton gone, who's left to sell books besides B&N?

Amazon.com, B&N.com, Kobo.com, Sony.com, ...

I still think the death of bookstores is over-exaggerated. With Waldenbooks, Borders and B.Dalton gone, who's left to sell books besides B&N?

That said, I would expect rather than the enormous size of B&N stores, we would see a reduction in size to more stores of the size that Waldenbooks and the like were before. I can't imagine why we would have stores the size of a Sears selling books...not enough to prosper, anyway.

But hey, B&N survived and they didn't, so what do I know? I would have thought the opposite - that the mega-size bookstore would die first and the smaller/more efficient ones would survive.

It makes sense to think B&N would thrive in a world in which they are the only physical book store left. However, the price of their books, movies, and cds in the store are so just so much higher than amazon.com's because their cost structure is so inefficient by comparison. I only go to a B&N for a purchase if I absolutely have to have the book within 24 hrs. I have free 2 day shipping from Amazon.com.

Amazon.com, B&N.com, Kobo.com, Sony.com, ...

Walmart, Target, K-Mart, Walgreens, CVS...

The BPHs have built their current business on the twin pillars of high-profile "NYT Bestsellers" and volume discounts.

The "bestsellers" don't need bookstores to move. Department stores and drug stores can move them just as effectively.
The rest of the catalog, low-volume and "slow-moving" compared to the cash cows, are best suited for online sales.

What remains is indeed a specialty, "kiosk"-style business.
B. Dalton would be king today if "somebody" hadn't bought them out to kill them. :rolleyes:

As is, Gamestop could easily fill the void if B&N were to fully implode.
(Not that they will. Not yet.)

It could be B&N is trying to figure out how to simply raise cash to save the core business.

Many of us were surprised that Kobo was sold for $300 million to Japanese e-commerce player Rakuten in November. ALL of B&N is valued at around $1 billion, and that includes 1300+ bricks and mortar consumer and college stores, as well as the Nook business.

If Kobo was worth $300 million cash, what is Nook worth, to the right buyer? And could that cash (and some longer-term royalty arrangement on content sales) be the ticket to B&N turning around its retail business finding a profitable long term landing?

There is no way to spin this favourably, however: Liberty Media walked away from a $1 billion purchase last summer and settled for a $200 million preferred share investment with an implied price of $17/share. Currently, B&N is trading close to $10 (where it has been up and down over the past 18 months).

Via MSNBC:
http://bottomline.msnbc.msn.com/_news/2012/01/05/9974163-barnes-noble-may-split-off-nook-business

No surprise here; the clues were all over for the past six month.
Nook is a billion dollar a year business.
The concern, of course, is that if Nook alone is worth more than the entire B&N as currently consituted, the B&M operation has negative value.

Do note, that they face a "shortfall" of Nook STR sales.
It sold well; they epected and stocked up for more.

Explains where all the refurbs are coming from.
Expect more bargain sales.

I wonder if anybody will step up, ala Rakuten...

It's also worth underlining how much the 2011 absence of Amazon in the "touch reader" space allowed other players an opportunity build their businesses (Nook Touch, Kobo Touch and, sadly, missed opportunity for the then over-priced Sony PRS series). At least, until November ...

The moment Amazon rounded out their line-up with a Kindle Touch -- B&N felt the impact directly. The Kindle with Special Offers pricing probably did the most damage. Kindle was relentless with very simple mass advertising: the Kindle is wonderful and its $79. The moment someone wonders into Best Buy looking for a Nook and it's drastically more than $79 -- never mind it is more capable -- the sales conversation gets muddied, diverted or lost altogether.

I still think the death of bookstores is over-exaggerated. With Waldenbooks, Borders and B.Dalton gone, who's left to sell books besides B&N?

That said, I would expect rather than the enormous size of B&N stores, we would see a reduction in size to more stores of the size that Waldenbooks and the like were before. I can't imagine why we would have stores the size of a Sears selling books...not enough to prosper, anyway.

Nobody is left. That's kind of the point. Not an exageration.

You're probably right about the smaller stores doing well, unfortunately I haven't seen many instances of a company successfully remaking itself in that way fast enough to avoid bankruptcy. Look at Borders, Blockbuster. The only one I can think of is Woolworth (now Footlocker).

It could be B&N is trying to figure out how to simply raise cash to save the core business.

I agree with you, especially when you add to it the other posting in News here that they are also looking to sell their Sterling Publishing subsidiary.

B & N wants to go international with Nook. With Amazon and Kobo already making great gains in the international market, they have to jump in now or end up trying to play catch up later. I don't really know much about business, but wouldn't spinning Nook off into its own company raise its value and perhaps help them to gain the capital they need for that expensive enterprise? I know that's one of the reasons why Indigo sold Kobo - they just do not have the finances to fund international growth on the scale Kobo is hoping to see.

B&N is, indeed, looking for a suitable non-US partner to expand its Nook business. It's possible spinning off Nook as a separate company would help that.

The US market is pretty big as it is: B&N could thrive nicely as a US-only player if they can drive costs out of their retail business. What you don't here B&N management ever talk about is what they are doing to gracefully downsize the bricks and mortar business. In real terms, in real time: renegotiating leases to smaller floor area would be a start; looking for expansion opportunities as mini-mart type locations; finding their voice vs. Books-a-Million and other regional players.

Looks like B&N is "Netflixing" or "Indigoing" by attempting to separate digital from physical. For one company it may work the other it didn't and they combined again.

B&N going international will be costly. Forming separate companies in these regions will be easier and cheaper if only selling (licensing) digital products like Kobo. I doubt B&N wants to sell physical books in various countries which they would then need warehouses and higher administrative and personnel costs.

Here's the problem with downsizing stores--when a store shrinks down like that, what's going to go away, the obscure stuff, or the bestsellers? The obscure stuff. So they're going to be offering bestsellers, with a smattering of other works.

So then they'll be competing with Target, Walmart, etc. And that's dangerous on two fronts. (1) People go to a big box store for a lot of reasons. So they get a LOT of exposure to the books that are being sold. (2) B&N can't undersell the big boxes.

If they keep the big stores, they're screwed. They can barely afford their leases as it is.

If they go to a small stores, they're going to die the same death that Waldenbooks did.

Either way, they're dead.

Either way, they're dead.

Long live BN.com

or Nook.com

I don't hold much hope for B&N bricks and mortar outside of a small coffee house, small selection type of store. They can attempt toys and whatever else to try and make those lease payments, but the fact remains that they still can't compete with Amazon online and they can't compete with Target and WalMart in bricks and mortar.

It seems to me like they're trying to jettison off the unprofitable segments of their business so they can eventually bankrupt them without harming the golden goose of Nook.

How about Nook/Starbucks stores in the malls?

Old people read a lot more than young people. Old people have a hard time buying items online. The bricks and mortar business still has some life, but a business plan based around old, dying people who are not savvy enough to realize the prices are terrible is not so great.

(sorry if I offended anyone...I was trying to be funny...)

Kindle was relentless with very simple mass advertising: the Kindle is wonderful and its $79. The moment someone wonders into Best Buy looking for a Nook and it's drastically more than $79 -- never mind it is more capable -- the sales conversation gets muddied, diverted or lost altogether.

The problem is the current *volume* customer base is the recreational reader. At $200-plus, it was dedicated readers; at $79, it expands to include younger readers and the occasional reader. Neither audience really *needs* the added capabilities. Talking about "more capable" pales before "solid, simple, and capable-enough" plus mindshare. (and "cheaper" sure doesn't hurt.)

And now, to the mix, add in the chilling FUD-effect of "B&N is going to sell off Nook because sales fell short". (Even if that's not quite what they said.)

B&N had a disappointing fourth quarter? Wait until the *next* quarter...
Whatever they're going to do, they'd better do it quickly. They can't afford a repeat of last year's "B&N is up for sale... and nobody want to buy".

And whatever they do, yes, they need to discuss what they're going to do with the 700-plus storefronts. One thing Indigo did right: they acted first, announced later.
The reverse is NOT.A.GOOD.MOVE.

Nook is a money-losing business, unlike the retail part of BN. Amazon may lose money on the Kindle fire etc, but the web store is well-supported by the rest of the Amazon business. The Kindle infrastructure is already paid for by the rest of the very profitable business. BN has to pretty much fund the ebook cloud and software infrastructure from scratch. Any third party buying the Nook would have to do the same.

Well, I'm freaking out over this, and I don't own B&N stock or a Nook. ;)


B & N wants to go international with Nook.
B&N has been too busy shoveling money at Nook development to "go international."

It's a huge mistake for them to even consider that move. They don't have a significant international presence or brand. International sales are expensive, complicated, and present diminishing returns. The US alone accounts for 25% of the world market; if they can't survive here, they won't survive by providing services to Sierra Leone.


wouldn't spinning Nook off into its own company raise its value and perhaps help them to gain the capital they need for that expensive enterprise?
Splitting off the Nook is basically a death sentence for the brick and mortar division.

As people buy more and more ebooks, the physical bookstores lose sales, and can't keep stores open. Fewer stores mean lower sales, less shelf space, and less association of "buy books" with getting into the car, driving to the mall and browsing for a physical object. CD sales were probably around 25% of the market around the time that the record store chains died. (afaik physical CD sales are still close to 50% of the market, though it could be less - figures for 2011 should be out soon)

B&N will survive as a shadow of its former self -- as a bit player in the digital market, and perhaps running college bookstores. Maybe.

It's also worth underlining how much the 2011 absence of Amazon in the "touch reader" space allowed other players an opportunity build their businesses (Nook Touch, Kobo Touch and, sadly, missed opportunity for the then over-priced Sony PRS series). At least, until November ...

The moment Amazon rounded out their line-up with a Kindle Touch -- B&N felt the impact directly. The Kindle with Special Offers pricing probably did the most damage. Kindle was relentless with very simple mass advertising: the Kindle is wonderful and its $79. The moment someone wonders into Best Buy looking for a Nook and it's drastically more than $79 -- never mind it is more capable -- the sales conversation gets muddied, diverted or lost altogether.

I'm always amazed at what great marketing can do for a company. Amazon is touting $79 for Kindle, $99 for Kindle Touch (both with special offers) and $199 for Kindle Fire (8GB).

The Nook Simple Touch sells for $99 now (without ads, but does anyone care?) and the Tablet sells for $249 (16GB).

Am I the only one that sees this as being exactly the SAME pricing for their products? If I wanted an 8GB tablet, I'lll pay $199 for the Fire and if I need 16GB, I'll pay $50 more for the Tablet.

But all I read about is how the Kindle is now $79 (no touch) vs $99 for the Nook and how $199 is $50 less than $249 even though B&N gives us 8GB more internal storage PLUS and expansion slot.

Maybe B&N just needs to join the marketing game and offer some bare bones, stripped down products to compete for the mind-share of bloggers/analysts/reporters. I don't like it as a consumer, but from what I constantly read online and in the papers, it sure seems like the rest of us only focus on the lowest price offering a company has.

I'm always amazed at what great marketing can do for a company. Amazon is touting $79 for Kindle, $99 for Kindle Touch (both with special offers) and $199 for Kindle Fire (8GB).

The Nook Simple Touch sells for $99 now (without ads, but does anyone care?) and the Tablet sells for $249 (16GB).

Am I the only one that sees this as being exactly the SAME pricing for their products? If I wanted an 8GB tablet, I'lll pay $199 for the Fire and if I need 16GB, I'll pay $50 more for the Tablet.

But all I read about is how the Kindle is now $79 (no touch) vs $99 for the Nook and how $199 is $50 less than $249 even though B&N gives us 8GB more internal storage PLUS and expansion slot.

Maybe B&N just needs to join the marketing game and offer some bare bones, stripped down products to compete for the mind-share of bloggers/analysts/reporters. I don't like it as a consumer, but from what I constantly read online and in the papers, it sure seems like the rest of us only focus on the lowest price offering a company has.

Well said, you've hit it on the head.

Nook is a money-losing business, unlike the retail part of BN.

You sure?
Today's report claims the *dollar* value of B&N's store revenues went up 2.5%.
Not mentioned: the US inflation rate is 3.5%.

So, despite reduced competition with Borders gone (17% of the market last year), despite higher pbook prices, despite adding all sorts of non-book products, and despite 70% higher Nook sales...
Despite all that, B&N stores' revenue in the peak book-selling season *dropped* 1% year-to-year in inflation-adjusted terms.

Does that sound like their B&M retail business is healthy?
Dunno, but to me it sounds like a leaky boat that has the entire crew bailing water like crazy and is still oh-so-slowly sinking. At some point the crew is going to run out of tricks to try.

There is good reason for the investors to freak out.

Am I the only one that sees this as being exactly the SAME pricing for their products? If I wanted an 8GB tablet, I'lll pay $199 for the Fire and if I need 16GB, I'll pay $50 more for the Tablet.

But all I read about is how the Kindle is now $79 (no touch) vs $99 for the Nook and how $199 is $50 less than $249 even though B&N gives us 8GB more internal storage PLUS and expansion slot.


Spoken like a hardware vendor.
You're assuming that in consumers' minds the only thing that matters is the hardware specs. As if the products were generic and perfectly replaceable.

Problem is, ebook readers are a composite product.
When people buy an ebook reader, they're buying into an ecosystem, not just a hunk of glass and plastic. It is a long-term commitment.

Hardware is only part of the story.
Content is another part.
Services is yet another.
And the *company* that stands behind the product is also part of the equation.

People don't buy Kindles just because they want an ebook reader; they are buying access to *AMAZON'S* ebook ecosystem. Getting a hunk of glass and plastic is just the entry ticket.

Don't assume better marketting is going to make more people buy Nooks instead of Kindles. Especially after today.

Until we know what B&N is going to do with Nook, Inc--sell it like Kobo, spin it off and IPO-it, or keep it for lack of a good enough deal--the entire Nook ecosystem is going to be under a cloud; Nook owners who bought their readers because they trusted the B&N brand, who expected B&N to stand behind the "proprietary* ebook ecosystem, can no longer assume that relationship will endure. And it is pretty much undeniable that at least *some* Nook sales are due primarily to the B&N brand and the ties to the storefronts: B&N has made that the centerpiece of their strategy for two years. Look around: those folks are not happy today.

Two other points:

1- Nook STRs are not as ad-free as B&N wants people to think. At least a third of the STR home screen is devoted to ads--for B&N products. Main difference from Kindles is that Amazon pays you for looking at *their* ads.

2- Nook sales for the holiday season were actually very good. 70% improvement for a company with at least 25% market share (as opposed to one in the single digits) is very good performance. Yet, B&N management somehhow expected *more*. "Shortfall" they called it: B&N management expected, prepared, and *needed* better than 70% year to year improvement for Nook. That sounds like inventory management issues.

And that is a classic pitfall in the tech industry.
I hope I'm wrong but bad days are coming to the Nook ecosystem and the quality of B&N's marketting is soon going to be the least of their problems.

Spoken like a hardware vendor.
You're assuming that in consumers' minds the only thing that matters is the hardware specs. As if the products were generic and perfectly replaceable.

Problem is, ebook readers are a composite product.
When people buy an ebook reader, they're buying into an ecosystem, not just a hunk of glass and plastic. It is a long-term commitment.

Hardware is only part of the story.
Content is another part.
Services is yet another.
And the *company* that stands behind the product is also part of the equation.

People don't buy Kindles just because they want an ebook reader; they are buying access to *AMAZON'S* ebook ecosystem. Getting a hunk of glass and plastic is just the entry ticket.

Completely agree with you on this point, and that's why I think Sony is flailing in this market. B&N has a great ecosystem and brand. Every B&N I go to, there are always people looking at their Nook products, so I think B&N and Amazon have a comparable ecosystem (in terms of book publications).


Don't assume better marketting is going to make more people buy Nooks instead of Kindles. Especially after today.

I think better marketing WILL help B&N, and I don't mean more TV ads or online ads. When the Fire came out, Amazon had an amazing amount of PR. All news outlets were quoting Jeff Bezos and Co. and the device generated a huge amount of interest. When the Tablet was announced, the press was mostly "meh". Marketing includes PR, relationships with news outlets to get coverage on products, generating excitement, etc. Maybe no one believes in B&N and that's why Amazon gets all the PR, who knows.


Two other points:

1- Nook STRs are not as ad-free as B&N wants people to think. At least a third of the STR home screen is devoted to ads--for B&N products. Main difference from Kindles is that Amazon pays you for looking at *their* ads.

2- Nook sales for the holiday season were actually very good. 70% improvement for a company with at least 25% market share (as opposed to one in the single digits) is very good performance. Yet, B&N management somehhow expected *more*. "Shortfall" they called it: B&N management expected, prepared, and *needed* better than 70% year to year improvement for Nook. That sounds like inventory management issues.


Good point in that B&N promotes books/best sellers on their devices. I suppose that's like walking into a bookstore and seeing a prominently displayed new release.

I also think you are correct in that B&N management most likely expected a >100% year on year growth in sales of their Nook devices. And this is where I conjecture that they would have seen better sales if Amazon had not stolen the show with their barrage of new devices and new prices. And since it was obvious Amazon was going to go all out with their Fire and new e-paper Kindles, B&N should have been better prepared or had a better/faster response to keep the spotlight on themselves.

I also think you are correct in that B&N management most likely expected a >100% year on year growth in sales of their Nook devices. And this is where I conjecture that they would have seen better sales if Amazon had not stolen the show with their barrage of new devices and new prices. And since it was obvious Amazon was going to go all out with their Fire and new e-paper Kindles, B&N should have been better prepared or had a better/faster response to keep the spotlight on themselves.

It was all a matter of timing: B&N made their move in the summer, Amazon in late fall and it just didn't give them time to react. Two other blows to B&N's plans (at least on paper--not sure if they made much of an impact on sales) is that both Kobo and Sony matched the $99 price point: Kobo with their own ad-supported model, Sony without ads and with sound.

A couple other points:

1- If you look at Amazon's pricing you'll notice that their ad-free prices are not terribly aggressive. They weren't gunning for a price war.

2- The Kindle Touch is very clearly a rush job, probably started in the summer, so Amazon launching in November was not a clever move; just necessity. Ditto for FIRE.

3- Amazon is, as usual, obscuring their sales numbers so we don't know if *they* have a shortfall on the eink side. It is quite possible that eink reader sales have just plateau-ed. After all, there is a finite supply of book reading customers to sell ebook readers to. And the extremely fast growth of the last two years is (was?) unsustainable on a long term basis.

Add it up and it seem pretty clear B&N's problems are more about misreading the market than getting outwitted. Or outmarketted. ;)

Don't forget too that B&N sequesters a lot of the memory on the Tablet for B&N-only content... what is it, something like 14 or 15 of their vaunted 16 gig? So even though the Tablet has better technical specs than the Fire does, the Fire is more usable.

Old people read a lot more than young people. Old people have a hard time buying items online. The bricks and mortar business still has some life, but a business plan based around old, dying people who are not savvy enough to realize the prices are terrible is not so great.

This is just a really silly comment.

You need to broaden your horizons all my "old" friends have Nooks, Kindles or iPads and are buying and downloading books just fine. That includes myself.

Brick and mortar mind-think is B&N's nemesis. Of course they thought they'd sell more. Labor is a killer in these establishments and they were manning the Nook displays 14 to 16 hours a day through the holidays. I'm sure the expectations on the store managers was ludicrous. This had bad synergy all over it from the beginning. I wish a B&N sales associate would post some of the sales planning literature handed out before the holidays. They are always fun reads.

2- Nook sales for the holiday season were actually very good. 70% improvement for a company with at least 25% market share (as opposed to one in the single digits) is very good performance. Yet, B&N management somehhow expected *more*. "Shortfall" they called it: B&N management expected, prepared, and *needed* better than 70% year to year improvement for Nook. That sounds like inventory management issues.



B&N may still have a decent January. Gift cards aren't counted as sales until redeemed. Many families were on vacation between the holidays so they haven't been around to shop.

Of course, we can expect Nook returns to negatively affect January sales revenues also.

2- The Kindle Touch is very clearly a rush job, probably started in the summer, so Amazon launching in November was not a clever move; just necessity. Ditto for FIRE.



Amazon released 3 devices at the same time. And it showed. I didn't think the 2 e-ink devices were as refined as the K3.

I believe Amazon's price points surprised B&N ... and Kobo and Sony. This makes me wonder if anyone is making a profit on their hardware. 'Cause we know they aren't making much on those 99 cent ebooks.

There are a lot of ways to look at B&N.

I won't try to detail them all. Just one.
"Decisions are made for the benefit of the decision makers."

B&N is going out of business. It can't compete online with just books and support those all those Brick and Mortar stores. It can't sell those stores or spin them off profitably. Too many obligations.
The biggest players (the President, the VPs, the top managers) in the company know that and are going to organize the ledgers and the reports for as long as possible so that their paychecks and pensions are as large as possible these last few years before bankruptcy. No matter what else happens that is paramount in the secret, unspoken business plan.

As an aside, the small book sellers are now Walmart, Target, my local CVS, my local Inglis grocery store. There is no way that B&N can downsize quickly enough with all their obligations to compete with those stores.

I will give you a case of my favorite store.
COMPUSA. I loved that store. It died.
Then I took my computer business to Circuit City. It died.
Then I took my business to Best Buy. It's computer section, both hardware and software is slowly dying, but it sells enough TVs, games, etc., to get by, so far.
So now I have moved everything to Amazon, and instead of talking to salesmen, I read professional reviews and customer reviews. It is probably working out better than before, but it does take a lot more of my time.

It is a lot safer buying a book on line than a router, or a computer or a external hard drive. It is not such a large investment, and a book review or blurb is a lot easier to understand than a computer review.

It is fun for a lot of us to go into a book store, but obviously us fun lovers didn't support the stores enough.

One last question. What does the last big predator fish in the fish tank eat?

Well, I went to B&N last weekend in an attempt to spend my year-old gift cards and couldn't find a thing to buy. Ended up ordering a poetry anthology on-line to "use up the gift card" before it's worthless.

Amazon.com, B&N.com, Kobo.com, Sony.com, ...

Feedbooks.com, Smashwords.com, Baen.com, ...

This is just a really silly comment.

You need to broaden your horizons all my "old" friends have Nooks, Kindles or iPads and are buying and downloading books just fine. That includes myself.

More, the older readers were early adopters of the mainstreaming of ebooks. As recently as spring 2010, the market had a pronounced demographic bulge in the older age groups. It is only in the last 18 months, *after* the 3 hr price war, that the younger groups started to catch up.

http://www.teleread.com/ebooks/statistics-who-reads-ebooks-in-the-us/

The fact that every ebook can be a "large print" title makes ebook readers compelling for older readers.

B&N may still have a decent January. Gift cards aren't counted as sales until redeemed. Many families were on vacation between the holidays so they haven't been around to shop.

Of course, we can expect Nook returns to negatively affect January sales revenues also.

In past years the trend has been that hardware sells in december (and yes; returns in January) and ebooks sell in January.

When I talk about the cloud over Nook, that is one of the things that factors into it. And why I expect lots of STR bargains in days to come.

Just ran into this, more detailed, look:

http://www.wired.com/epicenter/2012/01/bn-separate-nook/all/1

Seems B&N is looking at, potentially, losses of up to $100 million.
That's about a million STR's worth.
(Probably not all the losses come from the "shortfall" but...)
I'm getting flashbacks to the Atari ET for 2600 debacle. :(

Hopefully tey won't landfill the STRs.
h
Also, worth considering: if they really have that many STRs to move, it'll poison the well for *everybody* in the epub ecosystem ad even Kindle is going to see slow sales of the eink readers.

2012 not off to a good start.

Old people read a lot more than young people. Old people have a hard time buying items online. The bricks and mortar business still has some life, but a business plan based around old, dying people who are not savvy enough to realize the prices are terrible is not so great.

I don't believe this for a second.

Old people read a lot more than young people. Old people have a hard time buying items online. The bricks and mortar business still has some life, but a business plan based around old, dying people who are not savvy enough to realize the prices are terrible is not so great.

This has to be the stupidest thing I've ever read on MR.

My sixty year old aunt has an iPad, an iPhone, and a kindle and she's perfectly comfortable with using the internet and her devices to make purchases.

As an aside, the small book sellers are now Walmart, Target, my local CVS, my local Inglis grocery store. There is no way that B&N can downsize quickly enough with all their obligations to compete with those stores.

One last question. What does the last big predator fish in the fish tank eat?

Good point.
The dept store/pharmacy/supermarket book depts *are* Kiosk businesses; but instead of free-standing in malls, they are based inside the multipurpose business. That sell commodities rather than specialty goods.

Hmm, that needs some thinking on.
"Bestsellers" are supposed to be traffic draws but if they're available everywhere doesn't each title become a commodity unto itself? If you're going to buy the newest Patterson book, it doesn't matter much *where* you get it; you get it the first place you find it at a good-enough price. That is commodity-like...
Something to chew on for later.

As to the predator thing: markets aren't neatly bounded like fish tanks. They overlap and overflow, they grow and shrink... They change.
When a "predator" outgrows its environment or its environment shrinks, it can and should look for new hunting grounds. Sometimes it even means abandoning its original niche instead of expanding it.
Survival comes first, second, and last.

Yikes, the day I can only get paper books at the Wal-Mart is the day literature dies.

In regards to old people, while some are technologically saavy you have my parents who are scairt of electricity. The effort involved in trying to help them get their photos off their camera to send to someone is unbelievable.

In regards to old people, while some are technologically saavy you have my parents who are scairt of electricity. The effort involved in trying to help them get their photos off their camera to send to someone is unbelievable.

Some younger people seem to believe that computers were invented no more than 4-5 years ago, and thus that anyone older than them can't really comprehend them. But of course this is nonsense - while my 78-year-old mother isn't exactly "tech savvy," she used a computer at work 20 years ago and knows her way around a computer and the internet.

On the other hand, some of the 20-something contractors my gf hires for her rental business don't have e-mail addresses or own computers. They may or may not have high school diplomas.

But I suspect that education and occupation have more to do with computer literacy than age alone does.

This has to be the stupidest thing I've ever read on MR.

My sixty year old aunt has an iPad, an iPhone, and a kindle and she's perfectly comfortable with using the internet and her devices to make purchases.

I guess I was trying to be funny.

It was a broad generalization but the gist is that B&N stores are being supported by people who don't realize they can get the same book cheaper online....but of course, more and more people are realizing the pricing online is better so eventually B&N stores will decline to the point where their big box capacity no longer makes sense...as what happens with Borders.

Some younger people seem to believe that computers were invented no more than 4-5 years ago, and thus that anyone older than them can't really comprehend them. But of course this is nonsense - while my 78-year-old mother isn't exactly "tech savvy," she used a computer at work 20 years ago and knows her way around a computer and the internet.

On the other hand, some of the 20-something contractors my gf hires for her rental business don't have e-mail addresses or own computers. They may or may not have high school diplomas.

But I suspect that education and occupation have more to do with computer literacy than age alone does.

Desire to learn is more important in my mind and as you said technological illiteracy runs through all generations. My parents were well educated in science to boot, yet they still fail to really learn much about computers. My dad had to write course material on computer, yet it's still pulling teeth to get him comfortable around the stuff.

I can't get my parents to shop on-line even when I show them real books I get shipped for free at a discount of usually 20%-30% over what you'd pay in the regular store. But bless them, because they are the reason the local Chapters still exists and I find use in the physical bookstore because it's still how I find a lot of new stuff.

I guess I was trying to be funny.

It was a broad generalization but the gist is that B&N stores are being supported by people who don't realize they can get the same book cheaper online....but of course, more and more people are realizing the pricing online is better so eventually B&N stores will decline to the point where their big box capacity no longer makes sense...as what happens with Borders.

This sparks a thought here: often, you can't get the same book cheaper online... at least, not as an e-book. E-book readers are being supported by those who are used to buying books new.

My mom is reasonably tech-savvy, but she has no interest in buying an e-book reader right now. Why? Because, while she's a heavy reader, she gets her books from the used book store in her town. She's used to paying a dollar or less for a book. She's also used to being able to buy a bunch of books, read them, then bring them back and get some reasonable fraction of what she paid for them as credit toward getting different books.

She's retired now, and probably reading two books a week on average, judging by what I see on my visits home... but she's not going to spend $10 for an e-book of a bestseller, when she can get the physical book for less than that from the used bookstore.

I have to wonder how many other people like my mom are out there, who read voraciously, but don't buy their books new.

Old people read a lot more than young people. Old people have a hard time buying items online. The bricks and mortar business still has some life, but a business plan based around old, dying people who are not savvy enough to realize the prices are terrible is not so great.

I understand the tendency to jump on this statement with anecdotal statements about this or that friend or family member. I help at the local senior center in a town in Minnesota with a very high education rate (we've got so many retired teachers and professors that you can't swing a cat without clobbering a dozen). When I've done "tech" sessions on e-readers and tablets the room's been absolutely jammed. There's a LOT of interest.

But, at the same time, there are a lot of people that bring in their e-reader because they can't figure out how to download a book from the library to their Kindle, or can't understand the relationship between ADE and library books and how to get things onto their Nook...

So, yes, you may know a bunch of "someone's" that are 70+, tech-savvy, and happily downloading from the library, hitting the online bookstores, and skulking around the darknet, but from what I've seen, there's a LARGE group of "elderly" that read for pleasure, like the idea of e-readers where they can change font sizes, and would LIKE to do all these things, but have a very hard time going though the process of actually navigating the labyrinth.

She's retired now, and probably reading two books a week on average, judging by what I see on my visits home... but she's not going to spend $10 for an e-book of a bestseller, when she can get the physical book for less than that from the used bookstore.

I have to wonder how many other people like my mom are out there, who read voraciously, but don't buy their books new.

Valid points.
But remember, there is more to ebooks than the annointed "bestsellers".

What many ebook readers do to get cheap reads is tap into the Public Domain, the promo freebies, and most important of all, is the $0.99 cheapies. And in the process, they discover there are good reads outside the BPH's domain.

When Amazon had their face-off with MacMillan two years ago, the BPHs constituted some 40% of Amazon book sales. That number is now lower and dropping. It will never be that high again. Not at Amazon, not anywhere.

Also, while some people who get ebook readers stop buying print, there is no law that says you have to. Used books are a fine way to supplement an ebook reader. Or vice-versa.

This sparks a thought here: often, you can't get the same book cheaper online... at least, not as an e-book. E-book readers are being supported by those who are used to buying books new.

My mom is reasonably tech-savvy, but she has no interest in buying an e-book reader right now. Why? Because, while she's a heavy reader, she gets her books from the used book store in her town. She's used to paying a dollar or less for a book. She's also used to being able to buy a bunch of books, read them, then bring them back and get some reasonable fraction of what she paid for them as credit toward getting different books.

She's retired now, and probably reading two books a week on average, judging by what I see on my visits home... but she's not going to spend $10 for an e-book of a bestseller, when she can get the physical book for less than that from the used bookstore.

I have to wonder how many other people like my mom are out there, who read voraciously, but don't buy their books new.

But if she can borrow it from the library for FREE! (as I informed my eye doctor's assistant yesterday :D)

Just ran into this, more detailed, look:

http://www.wired.com/epicenter/2012/01/bn-separate-nook/all/1



Nice article. Thanks for posting. Interesting how both Kindle Fire and Nook Tablet were the best selling product for each company.

A quote from the article:
This suggests that despite the charms of E Ink for long-form reading, there is a limit to how quickly that market can grow, at least domestically. That limit is not bound by price, but by interest. And right now, tablets and other color devices, which are also quickly dropping in price, are attracting the most interest.

If the US market peaked already, that will drive down hardware prices to crazy levels.

Well I just now went to B&N and spent $8 on a greeting card and a mad-lib. I even paid with cash so B&N wouldn't have to eat the credit card fees.

I think we can all breathe easy for another day. Or I can, at least.

eP

I was seriously considering moving to a Nook device, and consolidating most of my purchasing to Barnes & Noble. I was even going to buy one for my younger sibling. This news has me waiting to see what happens.

The Barnes & Noble wishlist is a PITA to operate, and I have no wish to lock* purchases into that ecosystem when it's not rock-solid certain what's going to happen.

This uncertainty is not helpful for Barnes & Noble where consumers like me are concerned.

*Yes I can deDRM my files. I just don't want to have to check all the time if a book has been updated/typos fixed and re-deDRM.

EDIT: I very much like the Amazon ecosystem. But I can't stand the tower of eBabel with regard to their Kindle formats. If every book went to a strict definition of KF8, then I would consider a Kindle.

Old people read a lot more than young people. Old people have a hard time buying items online. The bricks and mortar business still has some life, but a business plan based around old, dying people who are not savvy enough to realize the prices are terrible is not so great.

(sorry if I offended anyone...I was trying to be funny...)

Well I do somewhat get the point you are trying to make here. The problem is that it is about 20 years outdated. In the 1990's technology was thought to be and marketed to primarily 18 to 36 year old males. Not only age-ist, sexist to boot. :p

But today when the business world speaks of "old people" they are generally referring to the Baby Boomers and they are a huge marketing demographic.

This is the generation thatinvented modern technology and by far most of them not only use it quite adequately, they love exploring it.

Agreed, abookreader. People in their 60s are using technology. The "old people hate technology" line was relevant 10 years ago, but not anymore. In fact, most of the people I run into who refuse to get a computer are in their 40s and paranoid about the government tracking them.

Damn. I better spend all those B&N gift certificates that I have, so I don't lose them like I did my Borders ones. :(

Damn. I better spend all those B&N gift certificates that I have, so I don't lose them like I did my Borders ones. :(

Yep!



.

If the US market peaked already, that will drive down hardware prices to crazy levels.

Yes. But only if the vendor's been caught flat-footed and needs to clear the inventory fast.
And that appears to be exactly what has happened to B&N. ($49 refurb STRs? Wait a few weeks.)

Amazon? Nobody knows. And this may be *exactly* the reason why they've been careful never to specify just how good good is, when it comes to Kindle. Still, if we start seeing ever-lower refurb deals on a weeky basis at the Amazon Warehouse... ;)

The thing is, if the US eink reader market plateaus now, Amazon has the UK and its other international markets (France, Spain, Italy, with Brazil coming up soon) to bleed off the surplus inventory. B&N doesn't have that option.

All the clues have been in place for three months now.
And the likely outcome is looking decidedly dangerous.

Damn. I better spend all those B&N gift certificates that I have, so I don't lose them like I did my Borders ones. :(

Now, now.
Let's not get carried away here.

B&N is supposed to have about $150 Million left from their Liberty Media loan.
So even in the worst-case, minus-$100 million scenario, they won't be immediately bankrupt. And Nook is something Borders never had; a spinoff+plus IPO can generate enough cash to float the boat for at least another year.
They're not insolvent.

But they *will* be living paycheck-to-paycheck like most of us. ;)
The biggest problem they face is they have just FUD-ded themselves and effectively frozen the market for Nooks (and possibly *all* epub eink readers) until the other shoe hits the ground.

If you have gift cards and find something you need, then use them. But don't waste them on stuff you don't need just yet.

Don't. Panic! ;)

Good point.
The dept store/pharmacy/supermarket book depts *are* Kiosk businesses; but instead of free-standing in malls, they are based inside the multipurpose business. That sell commodities rather than specialty goods.

Hmm, that needs some thinking on.
"Bestsellers" are supposed to be traffic draws but if they're available everywhere doesn't each title become a commodity unto itself? If you're going to buy the newest Patterson book, it doesn't matter much *where* you get it; you get it the first place you find it at a good-enough price. That is commodity-like...
Something to chew on for later.

As to the predator thing: markets aren't neatly bounded like fish tanks. They overlap and overflow, they grow and shrink... They change.
When a "predator" outgrows its environment or its environment shrinks, it can and should look for new hunting grounds. Sometimes it even means abandoning its original niche instead of expanding it.
Survival comes first, second, and last.

:) I threw that predator thing in thinking about big book stores swallowing little book stores until finally there was only one. Sounds like that movie with the line "there can only be one."
Anyway, sure the big fish has grown and there are not really any good sized fishes to eat but it can subsist on plankton, algae, kelp and such as well as the little tiny winy fish (minnows like individual customers) that it has to expend a great deal of energy chasing.
Then all of a sudden those damn fishing birds start diving into the water and grabbing the larger little minnows, and those bears and people with hooks and fish spears start grabbing the little minnows and they aren't afraid of taking a big predator fish either. It can be tough out there in the wild, and it takes a while for a big predator fish to evolve wings, or legs to walk on the ground.

How is that for an ecosystem. (Next we will bring in army ants, and alligators!)

:) I threw that predator thing in thinking about big book stores swallowing little book stores until finally there was only one. Sounds like that movie with the line "there can only be one."
Anyway, sure the big fish has grown and there are not really any good sized fishes to eat but it can subsist on plankton, algae, kelp and such as well as the little tiny winy fish (minnows like individual customers) that it has to expend a great deal of energy chasing.
Then all of a sudden those damn fishing birds start diving into the water and grabbing the larger little minnows, and those bears and people with hooks and fish spears start grabbing the little minnows and they aren't afraid of taking a big predator fish either. It can be tough out there in the wild, and it takes a while for a big predator fish to evolve wings, or legs to walk on the ground.

How is that for an ecosystem. (Next we will bring in army ants, and alligators!)

As long as there are no head-chopping scots running around it should be safe enough here.

If we're talking ecosystem adaptation, there's the aussie shark story from last week: with the changing water temps, two close-kin shark variants have been hybridizing.

For B&N, hybridizing might be reducing book floorspace and selling other products, just as other retailers are encroaching on their food supply. ;)

As long as there are no head-chopping scots running around it should be safe enough here.

If we're talking ecosystem adaptation, there's the aussie shark story from last week: with the changing water temps, two close-kin shark variants have been hybridizing.

For B&N, hybridizing might be reducing book floorspace and selling other products, just as other retailers are encroaching on their food supply. ;)

What if they aren't running? (http://www.youtube.com/watch?v=08jOGYFZCkM)

BN has been in a woeful and fundamental state of delusion for two years. Under that type of "leadership," there is no chance of adequately responding to dramatic challenges.

B&N same store sales up 2.5% and the doomed analysis by brokers and public causes stock to drop 17%.

Best Buy same store sales drop 1.2% and analysts happy because BB sales were only slightly worse than expected bringing stock price up 3%.

Difference is BB is still profitable. Markup on mobile phones, tablets, appliances, ereaders and movies saved them.

Best Buy is in an entirely different competitive position than B&N.
They too have been bleeding business to online (and not just Amazon) but a lot of their problems are just that their core business is discretionary-spending items. The new penny-pinching "normal" is not helpful to them.

But they did about as expected and one of their few national B&M competitors (Sears) is going to be trimming back.
They are also moving to make *their* online more competitive and they've cut back their money-losing foray outside the US.
Unless they have a dismay Super Bowl TV-selling season, they'll be in better shape this year than last. No great but not worsening.
Stock pricing being forward-looking, BB gets a minor boost.

*Their* clouds just aren't as dark as B&N's right now.
And that is a change.

B&N same store sales up 2.5% and the doomed analysis by brokers and public causes stock to drop 17%.

Best Buy same store sales drop 1.2% and analysts happy because BB sales were only slightly worse than expected bringing stock price up 3%.

Difference is BB is still profitable. Markup on mobile phones, tablets, appliances, ereaders and movies saved them.

also, i think that same store sales were up for B&N but a lot of that is because of the borders bankruptcy. so perhaps, analysts thought it would do better. the other issue is that they warned that the ereader fell short of expectations and the nook business still isn't profitable despite being highly successful in terms of market share in the US. when does it become profitable? the other thing is that the same store sales are up because the nook sales are up, partly. but how is the core non-nook biz doing, excluding the borders bankruptcy effect?

amazon can scale the kindle globally, whereas B&N cannot. amazon can take losses on the kindle by cross selling a lot of other products. B&N cannot. amazon is a tech company. it is their dna. B&N is not.

if the nook fails, B&N is in trouble (unless they sell it for a nice price, which is what they might do). if the nook succeeds, B&N's stores are likely in trouble because of the shift to ebooks. so, actually selling the nook at a fair price and doing commercial agreements makes some sense in that it gets out of this lose-lose situation. the nook also requires a lot of advertising and tech investment, which B&N might not be able to afford....

the obvious buyer/partner for the nook is google. google is about to do their own tablets (they are buying motorola mobility). they could make the nook their 7" tablet or a flavor of their 7" tablet lineup. they could have a 10" tablet which they could integrate with content from B&N. B&N could be a show room for some google tablet products. google has their own online book store which they could cobrand with B&N. that makes some sense. google could integrate the nook into its overall mobile strategy better and they have deeper pockets to compete. google is a tech company, B&N isn't. but B&N has that relationship with the customer and a brand that is valuable and physical stores. it could become a fruitful relationship. tablets are strategically important for google so they may be able to pay the most for the nook.

but google will be thinking that they could buy the nook for $700M+, or whatever the price is, or they could just try to build that business themselves or integrate it with the overall tablet strategy. u can buy a lot of advertising with $700M.

those are some thoughts.

Brick and mortar mind-think is B&N's nemesis. Of course they thought they'd sell more. Labor is a killer in these establishments and they were manning the Nook displays 14 to 16 hours a day through the holidays. I'm sure the expectations on the store managers was ludicrous. This had bad synergy all over it from the beginning. I wish a B&N sales associate would post some of the sales planning literature handed out before the holidays. They are always fun reads.

The way B&N allocates costs to the Nook business can be instructive. In your example, all the selling costs -- sales staff manning the Nook booth, the floorspace rental for the Nook booth, the construction of the booth -- are borne by the consumer retail division of B&N. The store gets a margin only from selling each device (as if it were any other inventory item like a hard cover, CD or toy).

In effect, Nook is not bearing the true cost of selling the device in its own stores (something which is not true when it sells through Best Buy, for example, a company that charges vendors to appear in flyers, for any premium shelf space, for in-store displays (like demo units) and, depending on the product, bonuses for sales teams hitting targets). In essence, B&N consumer retail is subsidising the Nook business in a further financial way not reflected in the already money-pit which is the Nook division.

The store gets a margin only from selling each device (as if it were any other inventory item like a hard cover, CD or toy).



That *is* how it is sold in the partner outlets, no?
And it appears to be the way Amazon bookkeeps Kindle.

As a rule, retailers' overhead covers the cost of stocking and selling a product, unless they're receiving co-marketting or rebate funding. It makes sense to treat Nook as a separate product if it is to be a self-sustaining business at some point.

What I don't quite get is how, at 29% of the ebook market and $1.5 billion a year in sales, Nook could *not* be standalone profitable. At that scale, development and customer support costs should be practically noise and while hardware margins are clearly thin the content margins are plenty healthy. So, where the losses?
Nook is supposed to be in the same general league as Kindle and a cut above Kobo and Sony, among the high-visibility players, and Kindle is by all accounts self-sustaining. Unless their margins on their retail-partner sales are unusual, their hardware losses should be offset by their ebook profits with plenty left over.
The only three ways I can see Nook as a money-losing proposition at this point is if:
- Their Nook hardware costs are way higher than Amazon's
- Their customers are getting their ebooks from places *other* than their ebookstore
- Their back-end/overhead is eating them up alive

Considering their aggressive hardware pricing over the last 18 months it would be the height of folly to be *forcing* a race to the bottom on hardware prices if either of those three were true, no?

I'd hate to think they were pursuing a Palm-style "market-share at any cost" campaign, considering their shallow pockets.

the obvious buyer/partner for the nook is google. google is about to do their own tablets (they are buying motorola mobility). they could make the nook their 7" tablet or a flavor of their 7" tablet lineup. they could have a 10" tablet which they could integrate with content from B&N. B&N could be a show room for some google tablet products. google has their own online book store which they could cobrand with B&N. that makes some sense. google could integrate the nook into its overall mobile strategy better and they have deeper pockets to compete. google is a tech company, B&N isn't. but B&N has that relationship with the customer and a brand that is valuable and physical stores. it could become a fruitful relationship. tablets are strategically important for google so they may be able to pay the most for the nook.

but google will be thinking that they could buy the nook for $700M+, or whatever the price is, or they could just try to build that business themselves or integrate it with the overall tablet strategy. u can buy a lot of advertising with $700M.

those are some thoughts.

Interesting. Google certainly has the cash. Off hand I can't think of another company with the cash and experience that may want to take over B&N. Except a venture capital firm or Warren Buffet.

It's been very difficult for ereader companies to earn a profit. I am not sure any of them actually have.

Interesting. Google certainly has the cash. Off hand I can't think of another company with the cash and experience that may want to take over B&N. Except a venture capital firm or Warren Buffet.

It's been very difficult for ereader companies to earn a profit. I am not sure any of them actually have.

Well, Google would only be interested in the Nook part of the business, with a commercial agreement for integration with stores, etc.

Liberty Capital, a John Malone company, was thinking of buying out B&N but they settled for a convertible preferred I believe. So Liberty gets a nice dividend and are in the money on the options at like $17.

My reading is that if you really believe in the Nook and the ability to save the stores, then B&N is worth well more than $17. But I think they will ultimately come up short, and will thus be worth close to nothing in the end. This is why I think selling the Nook now, but with a partnership with Google, makes some sense since u retain the benefits of the Nook business, the upside and integration with the stores yet limit the downside (possible failure of Nook and the high cost of the business).

What I don't quite get is how, at 29% of the ebook market and $1.5 billion a year in sales, Nook could *not* be standalone profitable. At that scale, development and customer support costs should be practically noise and while hardware margins are clearly thin the content margins are plenty healthy. So, where the losses?
The only three ways I can see Nook as a money-losing proposition at this point is if:
- Their Nook hardware costs are way higher than Amazon's
- Their customers are getting their ebooks from places *other* than their ebookstore
- Their back-end/overhead is eating them up alive

Considering their aggressive hardware pricing over the last 18 months it would be the height of folly to be *forcing* a race to the bottom on hardware prices if either of those three were true, no?


Nook owners are purchasing content elsewhere plus the discerning shopper looks for "cheap reads." B&N has public domain and other free offerings, Friday's free book promo, and Overdrive library lending. All at no cost. Plus, all the non-Agency discounting. And the thousands of 99 cent books. The fewer people purchasing the $9.99+ titles the less money earned.

When you think about it $3 profit on a $10 ebook isn't much unless you're selling millions of them. And I am talking several hundred million books a year. We know they aren't doing those kinds of numbers. They may be doing better on newspaper and mag subscriptions as these are recurring purchases. A $20/month NYT sub probably nets them more than an ebook.

Hardware costs are eating them alive. They had to discount the NST from $139 to $99 to $79 (limited time) to $75 (limited time). Perhaps, earning $40 more a Nook would have made a big difference. And we don't know R&D, manufacturing costs, shipping, retailer markup, returns, etc.

The same is true with Amazon. Their 3rd quarter results very disappointing. Yes, they eeked out a small profit but warned they may lose money during the 4th quarter ... as much as $200 million. How costly was releasing 3 devices and the rest of their digital division? Enough to possibly wipe out all profit from the rest of the company during the busiest time of the year. Fortunately, Amazon has $450 million earned so far this year and can stand the temporary loss.

I think its a good idea actually to branch Nook off. As much as I like going to Bookstores ereaders and tablets are killing those businesses and its time for BN to change with the times.

No one should cry over this. Everyone who has an ereader are what helped (if not the main reason) killed the bigbox bookstores IMO. Smaller bookstores will take over for the customers who dont want an ereader and still want to buy the lastest hardcover releases.

It was a short but fun ride. Time to say goodbye now to these types of bookstores.

That *is* how it is sold in the partner outlets, no?
And it appears to be the way Amazon bookkeeps Kindle.

As a rule, retailers' overhead covers the cost of stocking and selling a product, unless they're receiving co-marketting or rebate funding. It makes sense to treat Nook as a separate product if it is to be a self-sustaining business at some point.

No, what B&N execs stated on their earnings call recently was that in-store costs like building kiosks were being born by B&N consumer retail, ie. not charged to the Nook division.

Third party retailers like Best Buy charge for space in their flyers, any premium space in stores (like end-caps) and certainly if they were to build a Nook kiosk (like Comcast was doing: 100% of that cost is born by vendor, not the Best Buy).

To the extent B&N consumer retailer has dedicated staff manning those kiosks, as well as other associated costs (floor space for example) -- not to mention any special incentives for the sales staff -- those are "hidden" subsidy costs that don't get charged back to Nook in the same way the identical practise in third party would. It just means the true cost of the Nook to B&N corporate is probably higher than what's been stated (in very general terms I might add) to date.

The Nook isn't the problem no matter how you swing it. B&N MUST have the Nook. Whether as an inhouse device or spun off to its own division, the thing that will separate the majors from the wannabees is the availability of an edevice. This is what is going to affect the Kobo, it may be the only other device than the Kindle left available if B&N goes down.

What the drag for B&N is right now is that they have too many B&M locations in bad areas. They have to shrink or the economy has to pickup to make those viable. Until that happens, cash flow is too tight.

What the drag for B&N is right now is that they have too many B&M locations in bad areas. They have to shrink or the economy has to pickup to make those viable. Until that happens, cash flow is too tight.

Location is a part of B&N's overhead problem but the fact that they are diversifying their catalog beyond books points to the *size* of the locations as a bigger problem; they are simply not selling enough books to justify the size of the stores. Revenue per square foot is down and dropping further.

B&N needs revenue and if Nook isn't doing it fast enough...

Ok, it's been a while since I've been here, and reading this thread has reminded me of why that is.

This is possibly the most inane, delusional and just "out there" rambling I've possibly read in the last three months.

For those self proclaimed amateur financial wizards out there pulling a fantastic chicken little act, it's worth noting that investors AREN'T "freaking out" and it certainly has nothing to do with Lynch's statement regarding exploring options with the nook side of the business.

In fact, the announcement that B&N was exploring splitting off the nook side of the business was regarded positively and had a stabling effect on the market. Earlier that morning, B&N had issued a guidance statement in which they announced they were adjusting earnings downward, based on a few factors.

Understandably, the market didn't like that too much. So Lynch gets sent out to let investors know that the digital side is doing very well and therefore B&N is looking at its options for capitalizing on that success.

You people might want to stop your slavering over "the impending bankruptcy" of B&N to rejoin the rest of the world in reality.

The reality of it is that B&N has absolutely no intention of selling off the digital division, nor are they shopping it around. What that statement means is that B&N is looking in to the possibility of a spin-off for the digital/nook division, which has a lot of potential upsides in terms of favorable restructuring of debt and regulatory benefits such as potentially giving B&N the ability to offer ebooks without being required to collect sales tax due to physical presence (which is a huge advantage amazon has at present).

Bottom line...do you due diligence before leaping along with the other lemmings. There's a reason for the buy and strong buys outnumbering the sells.

Ok, it's been a while since I've been here, and reading this thread has reminded me of why that is.

This is possibly the most inane, delusional and just "out there" rambling I've possibly read in the last three months.

For those self proclaimed amateur financial wizards out there pulling a fantastic chicken little act, it's worth noting that investors AREN'T "freaking out" and it certainly has nothing to do with Lynch's statement regarding exploring options with the nook side of the business.

In fact, the announcement that B&N was exploring splitting off the nook side of the business was regarded positively and had a stabling effect on the market. Earlier that morning, B&N had issued a guidance statement in which they announced they were adjusting earnings downward, based on a few factors.

Understandably, the market didn't like that too much. So Lynch gets sent out to let investors know that the digital side is doing very well and therefore B&N is looking at its options for capitalizing on that success.

You people might want to stop your slavering over "the impending bankruptcy" of B&N to rejoin the rest of the world in reality.

The reality of it is that B&N has absolutely no intention of selling off the digital division, nor are they shopping it around. What that statement means is that B&N is looking in to the possibility of a spin-off for the digital/nook division, which has a lot of potential upsides in terms of favorable restructuring of debt and regulatory benefits such as potentially giving B&N the ability to offer ebooks without being required to collect sales tax due to physical presence (which is a huge advantage amazon has at present).

Bottom line...do you due diligence before leaping along with the other lemmings. There's a reason for the buy and strong buys outnumbering the sells.

I think most of us understand that. They want to branch Nook off into its own which IMO is a good thing.

Still though BN itself most likely will either fold or downsize bigtime in the future.

The majority of the discussion has been about how the brick-and-mortar store is going to survive, whether or not the Nook is spun off into a separate division. That is neither inane nor delusional.

The majority of the discussion has been about how the brick-and-mortar store is going to survive, whether or not the Nook is spun off into a separate division. That is neither inane nor delusional.

:thumbsup:

Does the WSJ really say "Investors are freaking out"? That doesn't sound like the sort of language that Wall Street Journal is prone to using.

This is possibly the most inane, delusional and just "out there" rambling I've possibly read in the last three months.
Did you happen to make similar statements about Borders any time in the year or two before they went belly up? :D


For those self proclaimed amateur financial wizards out there pulling a fantastic chicken little act, it's worth noting that investors AREN'T "freaking out" and it certainly has nothing to do with Lynch's statement regarding exploring options with the nook side of the business.
For most of December, their stock price was around $15. Now it's closer to $11 -- and staying there. I believe it hasn't been this low since... 1994?

Yeah, that's a "freak out." ;)

(By the way, the title of the thread was is the exact title from a WSJ blog entry, which was posted at 9AM when the stock was down 29%.)


Understandably, the market didn't like that too much. So Lynch gets sent out to let investors know that the digital side is doing very well and therefore B&N is looking at its options for capitalizing on that success.
Wow, you're pretty good at spin. Do you do this for a living? :D

Now, I'm definitely not doing equity research for JP Morgan -- and wouldn't be posting my opinions on an ebook forum if I was. That said, B&N does not have a rosy future.

They've lost almost $100 million since Q2 2009, and posted losses 8 out of the past 10 quarters; during that same time period, Amazon posted $2.33 billion in net income, and had no negative quarters. They're revising earnings down for 2012; they were unable to find a buyer earlier this year; Liberty openly admitted that investing in B&N was a "flyer." B&N certainly did not announce they're selling the Nook division next week, but breaking it out as a separate business does make that an easier option.

Plus, some of us have seen this before. B&N's in-store sales will likely pop up a bit for Q4 2011 -- because Borders disappeared earlier this year. However, as digital sales increase, the physical stores will lose sales and be harder to sustain. Their online division has never matched Amazon, nor has the Nook.

Now, in many respects B&N is much better off than Borders. Despite the proxy wars last year, they have a much more stable management; debt hasn't skyrocketed; they learned from their massive mistakes in developing online sales.

Still, their core business -- brick and mortar stores -- is slowly sinking, and it is fairly likely that it will take most of B&N down with it. (It's not going to end up much different than the music biz, and where can buy CD's now? Best Buy, Walmart and online.) I wouldn't be surprised in the slightest if they announce store closures in January or February.

Thus B&N will likely survive in some form, but it is already a shadow of its former self -- long gone are the days when they struck terror into the entire industry with a proposed merger with Ingram.


Bottom line...do you due diligence before leaping along with the other lemmings. There's a reason for the buy and strong buys outnumbering the sells.
What is this, a Yahoo stock message board? :D

While B&N may be okay-ish now, I think it's pretty clear that the brick and mortar business is in deep trouble...it may take 5 years or so for the coming collapse, but the signs are all there:

1) Massive cutbacks in inventory. My local B&N appears to be carrying about half of what it did 2-3 years ago.

Lots of push to shoppers on non-book items, like the Nook, games, etc...thinks that take up a lot of room with very low product density. After all, Build-a-Bear and other non-book crud was what was going to save Borders, right?

The current B&N reminds me a LOT of Borders a couple of years ago just in terms of how the stores "feel": selection, display, general attitude.

2) Many stores that are far too large for their market (if this were not so, the stores would be full of merchandise instead of having half-empty shelves, minimal backlist and huge sections devoted to the Nook and other non-core business items, huge open areas on the floor where shelves used to be, etc.)

3) The Nook is a fickle bet...Amazon has made it clear that they are willing to do whatever it takes to be cheaper, to have better pricing. B&N is using up a ton of money on engineering and manufacturing a device with an extraordinarily short life-cycle. I almost think they would be better off pushing the Apps more (PC, Mac, Android) and working with other tablet manufacturers to get the Nook app on their devices.

4) The advantage of bricks-and-mortar B&N is discoverability...you can just wander into a store and find something you never knew existed but once you see it, you just have to have it.

Online retailing does not replicate that experience at all.

Yet, by cutting back on inventory, by telling shoppers, "We can special order it and have it in a week...or you can get it right now on Nook," they are pushing people away from the chain's one remaining strength.

B&N is, in effect, telling customers, "Don't bother coming to our stores, just buy online."

But the problem with that approach is that they are a clear 2nd-class player online. Much as I dislike some of Amazon's policies, they are clearly dominant and there is nothing I've seen to suggest that B&N is going to be able to distinguish themselves enough to be anything more than a much smaller rival to Amazon.

I think B&N needs to give serious consideration to reviving the small bookstore concept, like B Dalton/Waldenbooks: much lower rents and overhead, not nearly as many titles need to give the impression of a "full store." I don't see how the big box stores in many markets can survive as ebooks take 10%, then 20%, then 30%+ of the market -- sure, the right stores in the right locations will continue to thrive, but a lot of the existing B&N stores are going to be in real trouble.

Don't think there is any disputing that B&N reported good news, bad news, and disturbing news on Friday:

Good - Nook sales were, year to year, 70% better. Total Nook business for the year $1.5billion.

Bad - They expected (and needed) even better Nook sales. Nook STR has a sales shortfall. This translates into: lots of Nook STRs clogging the pipeline.

Disturbing - They announced they were looking to "separate" Nook from the rest of B&N. What makes that bland announcemennt disturbing is that it came wrapped in the same package as the other two announcements.

If B&N had said the exact same thing two months ago, right after Indigo announce they had *quietly* sold Kobo off, nobody would have "freaked out"; it would have been seen as a company taking stock of its business in a changing competitive environment and evaluating the worth of it assets and how to best deliver stockholder value.
(Sort-of like when Hulu got an un-solicited buyout offer and then essentially put themselve up for auction before turning down *all* deals because they were all too high. ;) )
The B&N stock price would've likely gotten a nice boost.

Not now.
Making the announcement in the teeth of the other two facts simply says B&N is running out of money. They have a cash crunch coming and inventory issues.
That isn't spin; it is fact. They said so themselves. The numbers speak for themselves.

As the WIRED article points out, they're looking at a swing of (possibly) as much as a hundred million.
They can cover it: nobody is saying B&N is headed for chapter 7.
But they *can't* both cover their looming losses *and* grow Nook internationally at the same time.

B&N simply needs more money and just selling Sterling alone isn't going to cut it.
Closing stores and laying off people won't do it.
The options are to pro-actively monetize Nook or file for Chapter 11 and watch a court do it for them.

The Nook long term may or not be bright as a supernova.
The storefront long term may or not be dismal.

But the issue at hand is the short-term: how to survive 2012.

The stock market saw this and kneejerked the stock by what? 20%?
Think of it as a risk penalty: B&N stock just became a lot riskier to hold.
And that is why they issued those three announcements together; without the first two, they wouldn't *need* to do the third.

The sky isn't falling.
But it sure as heck isn't bright and sunny either. More like overcast with gale force winds coming.

The stock market saw this and kneejerked the stock by what? 20%?
As JJoyce did correctly point out, most of the drop was because B&N revised their earnings projections for 2012 down sharply, and anticipate a loss of $1.10 - $1.40 per share. B&N announced breaking out the Nook business to try and stop the stampede to the exits.


As the WIRED article points out, they're looking at a swing of (possibly) as much as a hundred million. They can cover it: nobody is saying B&N is headed for chapter 7.
I'll say it. :D

Actually, I foresee more a big reorganization, lots of store closures, a dramatic loss of status, and potential buy-out by another media company. It'll take time, but I also suspect Borders crashed and burned faster than most expected.

I'll say it too and it has little to do with the Nook in particular, but in their business methods and the schizophrenic behavior they have displayed.

My recent visit to the local store just reinforced that perspective, the selection of books (CORE BUSINESS!) was atrocious, I could not find anything to spend my $30 gift card on so have to order something from the website. This behavior is going to drive core customers away in droves. It has me.

I'll say it. :D

Actually, I foresee more a big reorganization, lots of store closures, a dramatic loss of status, and potential buy-out by another media company. It'll take time, but I also suspect Borders crashed and burned faster than most expected.

Chapter 7 liquidation for B&N?
Sorry, I don't see it getting that far. Not even as a reach. ;)
Chapter 11 reorganization? That is more likely.
Not probable, today; not with what's been revealed so far. The most likely scenario, today, is B&N finds a way to mortgage Nook and stay in business for another year while they try to shed stores or find other uses for their non-productive floor-space.

Problem is, there is another shoe drop ahead of us: Amazon's 4th quarter.

As of November, Amazon was skating on thin ice themselves; they even warned about "flirting with red ink". Since then, their very positive sales reports have consolidated FIRE and eink reader sales. Depending on how those numbers break down, Amazon could find themselves reporting an eink "shortfall" of their own.

If it comes to that, all bets are off, no? After all, who would want to buy even a piece of a bleeding #2 in a business where even a well-run #1 is hurting? That's all pure speculation, of course, but the scenario where US eink reader sales flatten out in now in play regardless of the news from Amazon.

Again, the question out there is simply: how much risk would a hypothetical Nook white knight be willing to assume? And what price would it demand? Ditching eink? Ditching ADEPT compatibility? (Think about it.)

As I said: there's not enough data yet to worry about an immediate catastrophe, but there are plenty of bad-endings in sight and few good-endings in view. Hence the stock drop.

Meh, Amazon has always skated on thin margins, it's what had made them dominant in the market....well that and exceptional customer service. :D

I'm also wondering if B&N is doing this to try and get better terms from publishers, suppliers and distributors. They are so dependent on B&N and media reports say they have a good relationship (cooperative?) with many of them.

B&N may also have underestimated the thriftiness of Nook owners. Buying more free and 99 cent titles than expected.

B&N lost me years ago, long before I adopted ereaders. Their inventory was pitiful even when locations benefited from a large volume of customers. Worse, management allowed a complete takeover of the store daily by college-age students who monopolized every chair, table and bench for the alleged purpose of studying when the vast majority were bare-footed nappers with drinks, laptops, and paraphernalia strewn everywhere. I wasn't aware that B&N was a public library. For any potential customer (such as myself) wanting to browse, sit and read before buying, it was a dreadful experience and an instant sale killer.

They are reaping what they have sown.

I fully expect Amazon's stock price to "correct" radically. The price to earnings (PE) ratio and the growth ratio (PEG) do not support anything close to the price the public seems willing to pay for it, even accounting for optimistic analyst estimates of future earnings. I predict a huge crash-and-burn on its price but it already soared higher than I expect or understand.

[...]but she has no interest in buying an e-book reader right now. Why? Because, while she's a heavy reader, she gets her books from the used book store in her town. She's used to paying a dollar or less for a book. She's also used to being able to buy a bunch of books, read them, then bring them back and get some reasonable fraction of what she paid for them as credit toward getting different books.

Exactly why I don't buy an e-book reader for my mom, even though she goes through HUGE piles of books. She buys all of her "trash novels" (er, sorry mom!) at about $.50 each at the local thrift store, then donates them back. This was also my biggest hesitation before buying an e-book reader, I also bought the majority of my books used -- it's definitely not a money saver for me.

Meh, Amazon has always skated on thin margins, it's what had made them dominant in the market....well that and exceptional customer service. :D

The tea leaf readers are reporting that they expect eink Kindle sales to be down.
Worse, eink *is* reporting a decline in monthly sales for december.
http://paidcontent.org/article/419-are-new-tablets-slowing-the-growth-of-e-readers/P0/

Mind you, the numbers they're estimating for Kindle sales are scary even at the "reduced" numbers; 23-25 milion eink and 15 million FIREs per year through 2014. :eek:

I've generally been skeptical of the IDC claims that NorthAm is 80% of the eink market, but if Kindle is indeed selling 2 million a month on average Amazon *hurting* is going to be mostly a theoretical exercise. And the content sales coming from the gadgets ought to take the sting out of the news.

I would suspect that e-ink is staying the same or declining (slightly) with all the tablets, but I don't think it's a dead duck yet. :D

I would suspect that e-ink is staying the same or declining (slightly) with all the tablets, but I don't think it's a dead duck yet. :D

My expectation, too.
At least for the North American market.
But the implications are not terribly comforting: the term "shakeout" comes to mind.
If the market flattens out *now*, it means that what we see is what we'll get for the next few years: Amazon well over 50%, B&N struggling to stay afloat, Kobo with a bare toehold, and Sony showing the flag out of pride.
With everybody else lost in the noise.
And with both color eInk and Mirasol thudding at launch there doesn't seem much chance of a disruption changing the current dynamic.

Its going to get... boring...:D

Oh I don't know....ultrabooks are the rage. :p

The tea leaf readers are reporting that they expect eink Kindle sales to be down.
Worse, eink *is* reporting a decline in monthly sales for december.
http://paidcontent.org/article/419-are-new-tablets-slowing-the-growth-of-e-readers/P0/

Mind you, the numbers they're estimating for Kindle sales are scary even at the "reduced" numbers; 23-25 milion eink and 15 million FIREs per year through 2014. :eek:

I've generally been skeptical of the IDC claims that NorthAm is 80% of the eink market, but if Kindle is indeed selling 2 million a month on average Amazon *hurting* is going to be mostly a theoretical exercise. And the content sales coming from the gadgets ought to take the sting out of the news.

Those are very high numbers. 23-25 million? I wonder how many are Kindle owners just upgrading. Could be the same 25 million people buying Kindles over and over again. Or they expect international sales to skyrocket in 2012. Or prices to drop to dollar store levels.

How many people in the US read? We must be nearing literacy capacity.

How many people in the US read? We must be nearing literacy capacity.

Oooo, that's cold :rofl:

Oooo, that's cold :rofl:

Not. Really.
:bookworm:

Official US literacy runs 95-97% but that includes a lot of social promotion.
More, ebook readers depend on people who read for entertainment more than once or twice a year.
This summer, ereader penetration was running at 15% of households with another 15% planning to buy this past holiday season. If two thirds of those actually bought readers, we should be at 25% penetration.

I doubt the US market for ereaders runs much bigger than 30%. For comparison, TV penetration runs 97% and PC penetration about 75%.

BTW, with the US holding about 120 Million households, 25 percent works out to 30 million households, 33% to 40 million. A good portion of those will be multiple reader households, so we're looking at a max installed base of something in the 50-60 million range, especially factoring in hand-me-downs.

Kindle sales for 2010 were generally estimated in the 14 million range and 2011 estimates ran from 16 to 22 depending on the source. Likewise, depending on the source, *North America* makes up 60-80% of the total eink reader market and Amazon sells half of the world total.

Anyway you slice it, eink readers are a *big* business and Amazon sells a honking lot of Kindles in and out of the US, with international sales due for big boosts out of continental europe, brazil, and whatever market they target next.

So any US sales flattening shouldn't have much of an impact on their bottom line, but the flattening isn't far away if its not here yet.

Not. Really.
:bookworm:

Official US literacy runs 95-97% but that includes a lot of social promotion.
More, ebook readers depend on people who read for entertainment more than once or twice a year.
This summer, ereader penetration was running at 15% of households with another 15% planning to buy this past holiday season. If two thirds of those actually bought readers, we should be at 25% penetration.

I doubt the US market for ereaders runs much bigger than 30%. For comparison, TV penetration runs 97% and PC penetration about 75%.

BTW, with the US holding about 120 Million households, 25 percent works out to 30 million households, 33% to 40 million. A good portion of those will be multiple reader households, so we're looking at a max installed base of something in the 50-60 million range, especially factoring in hand-me-downs.

Kindle sales for 2010 were generally estimated in the 14 million range and 2011 estimates ran from 16 to 22 depending on the source. Likewise, depending on the source, *North America* makes up 60-80% of the total eink reader market and Amazon sells half of the world total.

Anyway you slice it, eink readers are a *big* business and Amazon sells a honking lot of Kindles in and out of the US, with international sales due for big boosts out of continental europe, brazil, and whatever market they target next.

So any US sales flattening shouldn't have much of an impact on their bottom line, but the flattening isn't far away if its not here yet.

Ah, but I've purchased about 10 in the past year....skews the figures perhaps. :p

:rofl:

FWIW, I know a few people with tablets (iPad or Galaxy Tab), and I don't think that a single one reads books on it.

I think it's a mistake to think that the sale of LCD tablets has reduced the sale of eInk readers. I think they are two different markets, notwithstanding the practices of some of our members here.

I doubt the US market for ereaders runs much bigger than 30%. For comparison, TV penetration runs 97% and PC penetration about 75%.

BTW, with the US holding about 120 Million households, 25 percent works out to 30 million households, 33% to 40 million. A good portion of those will be multiple reader households, so we're looking at a max installed base of something in the 50-60 million range, especially factoring in hand-me-downs.

Kindle sales for 2010 were generally estimated in the 14 million range and 2011 estimates ran from 16 to 22 depending on the source. Likewise, depending on the source, *North America* makes up 60-80% of the total eink reader market and Amazon sells half of the world total.

Anyway you slice it, eink readers are a *big* business and Amazon sells a honking lot of Kindles in and out of the US, with international sales due for big boosts out of continental europe, brazil, and whatever market they target next.

So any US sales flattening shouldn't have much of an impact on their bottom line, but the flattening isn't far away if its not here yet.

I certainly don't see any problem with those projections but it's the market that's key. These things are aimed at the cellphone crowd. New, more capable models will appear constantly and they will rebuy every 2 to 3 years. The absolute numbers aren't critical, but the ability of the designers/manufacturers to come up with new is vital.

This where B&N has to worry and is probably really wanting out from under the development cycle. If they can offload the Nook like Chapters/Indigo did with the Kobo then they are golden. They can continue to market "FRESH, NEW, BETTER" and not have it drain the coffers dry for development.

It's also worth underlining how much the 2011 absence of Amazon in the "touch reader" space allowed other players an opportunity build their businesses (Nook Touch, Kobo Touch and, sadly, missed opportunity for the then over-priced Sony PRS series). At least, until November ...

The moment Amazon rounded out their line-up with a Kindle Touch -- B&N felt the impact directly. The Kindle with Special Offers pricing probably did the most damage. Kindle was relentless with very simple mass advertising: the Kindle is wonderful and its $79. The moment someone wonders into Best Buy looking for a Nook and it's drastically more than $79 -- never mind it is more capable -- the sales conversation gets muddied, diverted or lost altogether.

I'm late to the conversation, but from the forums I was and am on, it wasn't really the touch aspect (That didn't hurt.) It was access to library downloads. There were threads and threads of people who bought simply for the library access--and some of them already had Kindles. Then, there were threads and threads of people who "Haven't spent one dime on books--getting all freebies and library books." If you visit the B&N nook forum you see a much larger percentage of people looking for lending sites, lending buddies and library info.

B&N has a referral program like Amazon's associate program but when Kindle came out and in the years after, there were many, many sites doing book sorting and referring. With B&N there were a few. There are still a few, but I think the more successful ones are like Books on the Knob who find books in more than one market (B&N, Sony, UK, US, Australia, Kindle) and so on. I followed two B&N only sites and both stopped posting within 6 months. No idea if it was lack of traffic or just too much work to sort.

I do think there is room in the market for both readers (as well as the others) but any time there is shaky financial news, it can impact sales.

I'm late to the conversation, but from the forums I was and am on, it wasn't really the touch aspect (That didn't hurt.) It was access to library downloads. There were threads and threads of people who bought simply for the library access--and some of them already had Kindles. Then, there were threads and threads of people who "Haven't spent one dime on books--getting all freebies and library books." If you visit the B&N nook forum you see a much larger percentage of people looking for lending sites, lending buddies and library info.


Hmm...
Basically, you're suggesting that people *understand* and accept that Kindles' primary role is as an Amazon storefront and use it as such, whereas Nook customers are more likely to see it as a vehicle for free content...
Interesting thought...

eBooks is such a new business that nobody really understands how consumers behavior breaks out.

If it holds into the larger population (internet communities being self-selecting samples and all-that) it might explain the puzzling assertions that Nook is a money-losing operation despite its size. By all rights, 29% of the US market *should* be a money maker. But if a portion of that installed base is composed of non-buyers, the razor/blade model falls apart. Trouble lies that way.

If it holds into the larger population (internet communities being self-selecting samples and all-that) it might explain the puzzling assertions that Nook is a money-losing operation despite its size. By all rights, 29% of the US market *should* be a money maker. But if a portion of that installed base is composed of non-buyers, the razor/blade model falls apart. Trouble lies that way.

Absolutely, B&N and Amazon (and others) don't make anything on the freebies. And what is the net profit on a 99 cent book? Rough estimate is 65 cents minus transaction costs of 24 cents (new debit card law) is 41 cents max. You better be selling millions and millions a day just to be noticeable on a balance sheet. My guess is anything under $2.99 is at cost or less otherwise they would have made the 70/30 cutoff lower.

Hmm...
Basically, you're suggesting that people *understand* and accept that Kindles' primary role is as an Amazon storefront and use it as such, whereas Nook customers are more likely to see it as a vehicle for free content...
Interesting thought...

eBooks is such a new business that nobody really understands how consumers behavior breaks out.

If it holds into the larger population (internet communities being self-selecting samples and all-that) it might explain the puzzling assertions that Nook is a money-losing operation despite its size. By all rights, 29% of the US market *should* be a money maker. But if a portion of that installed base is composed of non-buyers, the razor/blade model falls apart. Trouble lies that way.

I was pretty surprised when I joined the two B&N forums. The most popular thread was the Philly library thread and how to join and discussions of joining other libraries and lending. In talking with people looking at readers and trying to decide, the number one thing they said about nook was, "library access." Not touch, not local store--it was library access over and over. As kindle became library-usable, some of those same conversations appeared on Kindle forums, but NOTHING like the popularity I saw on Nook forums.

When a friend of mine was considering a reader, she wanted a Kindle--but was leaning to the nook because of library books until I mentioned that Kindle had just announced the library lending would be live shortly. She bought the kindle.

COMPLETELY anecdotal evidence, my sales took a pretty big hit when Kindle library lending became available.

I still see the same pattern on the Nook forums that I am on--new threads asking for the best lending groups and that sort of thing. To a lesser degree I see it on Kindle forums although I'd also say that participation in such forums is down by better than half (Some of the newness wearing off, moving on to other things or now that people know the ins and outs, they don't need forums as much.)

So in some ways I think Nook targeted a different kind of reader (intentionally or unintentionally.) The library feature was and still is a big hit. I have another friend who is a Kindle owner. She has been picking up the freebies as they show up in the thousands, but once library lending started, she began reading more on her kindle--instead of checking out physical copies, she gets the Kindle copies. I don't know if she buys less books as a result of the Kindle library feature--she was always a big library user and nothing is likely to change that.

I don't know what it means for the future of Kindles or Nooks--or B&N, but I think from the start Kindle did view the reader as a way to sell content, whereas I'm not sure B&N had a huge plan either way. The fact that they sold less than expected this Christmas doesn't bode particularly well for the company or the e-readers.

Correct me if I'm wrong, but this seems to be the real weak spot of eink readers

The tea leaf readers are reporting that they expect eink Kindle sales to be down.
Worse, eink *is* reporting a decline in monthly sales for december.
http://paidcontent.org/article/419-are-new-tablets-slowing-the-growth-of-e-readers/P0/

Is it correct to assume that there is only one manufacturer of eink technology? Compare that to all the companies who have an incentive to be in the LCD manufacturing business for cellphones, televisions, and PCs. Things that almost everyone wants and "need", especially the younger generations.

If the company that manufactures e-ink goes under what is there to replace it? What company or investors will resurrect the technology given that it began losing ground when the primary sellers (Amazon, B&N) started seeing more demand for the color "readers". Given this demand and the fact that Amazon and B&N can make even more money selling apps and videos with the color reader it is fair to assume that their advertising dollars will be spent on promoting these "readers" and putting e-ink readers on the back burner.

I think its fair to say that Amazon's advertising and hype of eink created a much larger market for it than existed prior. My impression is that B&N, to stay in the game against a competitor that has already hurt their business, was forced into selling and promoting an e-ink device also. And if the company that manufactured eink business depends on Amazon's and B&Ns marketing muscle to have enough demand to meet cost then that company is in trouble because Amazon's and B&N profits are no longer tied to their success.

I was pretty surprised when I joined the two B&N forums. The most popular thread was the Philly library thread and how to join and discussions of joining other libraries and lending. In talking with people looking at readers and trying to decide, the number one thing they said about nook was, "library access." Not touch, not local store--it was library access over and over. As kindle became library-usable, some of those same conversations appeared on Kindle forums, but NOTHING like the popularity I saw on Nook forums.



Library usage- Customers love it and use it extensively. B&N and Amazon are noticing it. We can assume the publishers are too and this is why they are placing restrictions on it. Or trying to. Library access was more popular than expected.

Why buy something you are only going to use once?

And if the company that manufactured eink business depends on Amazon's and B&Ns marketing muscle to have enough demand to meet cost then that company is in trouble because Amazon's and B&N profits are no longer tied to their success.

E-ink, the company is *not* solely dependent on eink panel sales.
They have other revenue streams, some from LCD panels.
e-ink panels themselves are not dependent solely on reader sales, much less just Amazon and B&N (there are dozens of companies selling the things, most in markets that haven't started down the road to mainstreaming). Eink tech is going into signage uses and has been used for watches and other gadgets.

Also, E-ink isn't the only company selling electrophoretic displays, SiPix and several others are playing at the margins.

Don't expect Eink readers to collapse; the category is to big to just vanish, no matter what multi-function fans might want to believe. The only thing that is in play is that nobody knows what the natural market for the devices is and what its long term economics really are like.

We've been this way before with other nascent technology products; calculators, gaming consoles, PCs, media players, and even smartphones. Some turned out to be big, others small.

One thing *all* have in common, though: all had at least one big shakeout and not all the early players survived it.

They have other revenue streams, some from LCD panels

Thanks for the information. I'm glad to hear this and this does give me some more hope. Playing devil's advocate here, its important to keep in mind what started this whole thread. B&N talking about selling off part of their business in hopes of not having one area of the company sink the area that actually shows potential. It would NOT be unusual for a larger corporation to split off and sell a division or even eliminate it entirely if it wasn't profitable. There are many examples of this. Look at Microsoft with their Zune player or the experience with Palm. Different circumstances and situations to be sure, but it does happen.

It's good to hear there are other companies involved in eink also.

Don't expect Eink readers to collapse; the category is to big to just vanish, no matter what multi-function fans might want to believe

I don't think multi-function fans really care if it collapses or not. The presence or absence of the eink reader has no impact on them. They are set and the Kindle Fire and Nook Tablet make it clear that things are moving in a direction that supports what they want. I'm not even sure there is such a thing as multi-function "fans" who are really invested to believe one way or the other like you would have in Android vs. Apple. The battles there seem to me to be more along the lines do you want to see the future of hardware\content\apps\etc exist in a more open-source, competitive type space or more of a walled garden approach.

I think the most interesting effect will be amongst those people who are eink Kindle\Nook owners who have decided to "upgrade" to Kindle Fire\Nook Color. What type of impact do losing these types of readers make on the eink device sales long term? These are people who we can assume are dedicated enough readers to have purchased an eink device in the past, but are perfectly content with moving on to the color tablet devices. I'm sure there are people here on this forum who can speak to what motivated them on this decision. Obviously they have less eye strain concerns. Maybe they don't read for long periods of time?

In any case, I hope your predictions are correct and we will still have a choice for eink five or ten years down the road.

Library usage- Customers love it and use it extensively. B&N and Amazon are noticing it. We can assume the publishers are too and this is why they are placing restrictions on it. Or trying to. Library access was more popular than expected.

Agreed. The publishers will have to have some sort of recurring revenue from it or they won't do it anymore. Private companies (like amazon is trying to do) will continue to try and work that recurring revenue deal to be able to lend, but it remains to be seen how and if it will work.

The whole idea behind freebies (For not just the retailer, but the author) is to get people to buy the next book or other books. I'm following a few threads now on that subject as authors try the freebie thing with Amazon's select program (the exclusive to Amazon). Most of the results indicate that if a book was selling fairly well anyway, it gets a nice bump and then continues to sell well anyway. The ones that weren't selling well get downloads and a smaller bump that still doesn't shoot the book into the lists that keep the book selling (movers and shakers, top fantasy, etc.)

Some authors miss this point; they have one book and they put it in the freebie bin hoping that sales just continue after it is no longer free. But they have nothing else on offer or only short stories and...let's face it. Even if 5k download your freebie, only a small percentage will read it--and not necessarily soon. Of those that read it only a smaller percentage might be moved to see what else that author wrote. So it's a fairly risky and hopeful and long-term strategy for the author.

Now those who were already selling well, when they entered the program, Amazon picked up some of these nicely selling books and gave them some additional promo (or others in the series.) Deborah Greary (I may be spelling her first name wrong, but I think I got last name right.) is one such example. She went exclusive and then suddenly popped into the "Books of the month for under $3.99.) But I haven't seen a book that 1. wasn't exclusive and 2. wasn't already a decent seller make that list (doesn't mean it hasn't happened, but I haven't heard about it.)

FWIW. I'm not even sure it means anything. But free books do not a career or living make--not for Amazon or the author. So at some point the model will have to shift. Same for B&N. If they are selling the Nook at cost, they MUST find a way to get people to the store to buy content--or it will fail.

But free books do not a career or living make--not for Amazon or the author. So at some point the model will have to shift.

Free books are a promotional tool, plain and simple.
And they serve different purposes for the retailer and the author.

They can be used to promote the retailer's platform, they can be used to promote an author's brand, or to promote the actual story being peddled.
Remember, most free ebooks on Amazon (and most *new* $0.99 offerings) are offered that way *temporarily*. Free isn't a business model for authors. ($0.99 is a whole different story, though.)

If you're a total unknown as an author, giving away 5000 copies might, in fact, result in maybe 500 reads (Assuming the thing is good enough to get that many people to finish it) and maybe 5 reviews. Some might say that is 500 lost sales, but others would argue that a good product with five reviews has a better chance to sell than one with none. ;-)

As you pointed out, some people get ebook readers primarily to pick up free reads so the platform holders need to "discount" their install base numbers appropriately to temper their revenue and sales expectations. These "customers' " practices will impact the platform holder but not the authors, though, because those people wouldn't have bought the book anyway.

So, I expect the practice of (temporarily) free ebooks (especially at launch) to continue. And I expect to see ebooks dropping to $0.99 for a week every few months to become a common practice among authors interested in maintaining their visibility, at least as long as there is a large pool of buyers trolling the top-sellers list for new reads.
Before we see a change, we'll need broad adoption of new discovery mechanisms among the buyers.

Before we see a change, we'll need broad adoption of new discovery mechanisms among the buyers.

Let's hope retailers can hold on until then. No one is making money on free ebooks. (Except Overdrive) And with more and more websites offering content/listings/emails/tweets/text msgs of newly available free stuff (including MR) this mechanism may last for quite some time. Today we have 2800 freebies on Amazon alone according to ereaderIQ. Who cares what other books the author wrote and I am required to purchase for $2.99. I have thousand more free items possibly even better to read yet.

The lost sales are not the "free so I didn't have to pay." They are the "I didn't bother to buy anything on my wishlist because I picked up so many freebies this week." THOSE are the lost sales.

I've seen the threads, especially from people who just received an e-reader this holiday. They were hit with so many freebies--very visible freebies, their shopping has become "What's free today?" rather than, "I'm looking for a good book in genre x...what is out there...?"

It has even affected me. I almost always browse Books on the Knob and DailyCheapReads, but lately, I don't even need to. I've downloaded probably 100 freebies in the last month (and I'm fairly selective. I don't grab everything I see. I do sort and read reviews before even bothering with the freebies in most cases.) My wishlist? I'll look at it if I'm already on Amazon to buy something--there might be a cheap paperback to throw in the order. But I used to peruse Books on the Knob pretty carefully for bargains. At the moment I have so many freebies and the constant threat of more that I'm lucky to take the time to make sure a favorite author isn't on the bargain list (something I used to check for pretty carefully.)

As Fbone said--let's hope the retailers and those who have books for sale can last through this period. They are the ones with lost sales.

The lost sales are not the "free so I didn't have to pay." They are the "I didn't bother to buy anything on my wishlist because I picked up so many freebies this week." THOSE are the lost sales.


Ah, I see your position; the freebies crowd out the non-free book's mindshare.

It's possible.
But so far, it's not happening.
Paid ebook sales keep going up and for all the talk that "nobody" is making money in ebooks, a lot of people seem to be doing fine. Quarter by quarter, the dollar amounts grow and so does the size of the available book catalogs. And that ebook growth is outpacing the drop in pbook revenue at most of the BPHs.

I don't doubt that there are a fair amount of, ahem, frugal readers living off the freebies. Just as I don't doubt there is a fair amount of piracy out there.
But a lot of both is just hoarding and, just as every pirated ebook copy doesn't represent a lost sale for anybody, I don't think each and every freebie d/l corresponds to a lost sale for anybody, either.

All the publicly-available evidence so far suggests that the majority of readers do buy ebooks and that a good portion of the quality promo-ebooks result in increased sales for the author. Even the Price Fix Six seem to be doing okay despite their eroding ebook market share.

Whatever their numbers may be, it doesn't look like over-frugal readers are an industry-wide issue. It may come to pass or it may not.

And like I said, I wouldn't necessarilly take online chatter as representative of even B&N's customers, much less Sony, Kobo, or Amazon. The issue is worth considering but without actual data from Nielsen or another of the poll-takers...

After all, if it were really an issue, it is one that has a simple solution: stop freebie promos. As long as freebie promos continue, the signs I see say it is more of a solution (to obscurity) than a problem. So far.

All the publicly-available evidence so far suggests that the majority of readers do buy ebooks and that a good portion of the quality promo-ebooks result in increased sales for the author. Even the Price Fix Six seem to be doing okay despite their eroding ebook market share.

Whatever their numbers may be, it doesn't look like over-frugal readers are an industry-wide issue. It may come to pass or it may not.



Ebook revenues don't match up with the number of ereaders sold.

We have estimates of 14 million Kindles sold in 2010 and at least that many in the first 10 months of 2011. Add in the Nooks, Sony and Kobo. Can we say 40 million devices sold? The APA reported $807.7 million ebooks sold (20 publishers reporting) the first 10 months of last year. That's about $20 in ebooks per device. People with devices are reading on average more than 2 books a year so they are extensively reading public domain, library, freebies, or ebooks from non-reporting publishers. Add in unauthorized downloaders.

If all Kindle owners alone bought 4 NYT bestsellers last year at $12.99 each, sales from just Amazon would reach $1.4 billion.

And I am not figuring in Apple and all ebook apps.

Yes, but lots of those devices sold aren't to Americans, so won't be buying American books. So you can't assume all X devices are going to feed into US book sales.

If a Norwegian that only reads in Norwegian buys a kindle, sales of US 'Reporting Publisher' books from that device = zero, forever.

You are right about independent etc. though. Of the several hundred I bought last year, I think a handful only would get counted in US publisher reporting sales.

E.g. the other dozen would be UK or Australian publishers.

Ah, I see your position; the freebies crowd out the non-free book's mindshare.

It's possible.
But so far, it's not happening.
Paid ebook sales keep going up and for all the talk that "nobody" is making money in ebooks, a lot of people seem to be doing fine. Quarter by quarter, the dollar amounts grow and so does the size of the available book catalogs. And that ebook growth is outpacing the drop in pbook revenue at most of the BPHs.

I don't doubt that there are a fair amount of, ahem, frugal readers living off the freebies. Just as I don't doubt there is a fair amount of piracy out there.
But a lot of both is just hoarding and, just as every pirated ebook copy doesn't represent a lost sale for anybody, I don't think each and every freebie d/l corresponds to a lost sale for anybody, either.

All the publicly-available evidence so far suggests that the majority of readers do buy ebooks and that a good portion of the quality promo-ebooks result in increased sales for the author. Even the Price Fix Six seem to be doing okay despite their eroding ebook market share.

Whatever their numbers may be, it doesn't look like over-frugal readers are an industry-wide issue. It may come to pass or it may not.

And like I said, I wouldn't necessarilly take online chatter as representative of even B&N's customers, much less Sony, Kobo, or Amazon. The issue is worth considering but without actual data from Nielsen or another of the poll-takers...

After all, if it were really an issue, it is one that has a simple solution: stop freebie promos. As long as freebie promos continue, the signs I see say it is more of a solution (to obscurity) than a problem. So far.

I think one of the reasons Amazon resisted allowing Indies to go free for so long is because it IS an issue. With all those freebies, it cuts down on the other books sold. I'm guessing they weren't expecting the deluge of freebies that we see now (and this phenom hasn't been accounted for in any numbers because it didn't start happening until...Dec? I think.)

I honestly wonder if they will continue it past the first 90 days or if they will change the terms. It *has* to be cutting into sales. I know it is for a fact because my wishlist has totally languished and some of those purchases were ones I intended to make after getting Christmas gift cards. Turns out I just haven't gotten around to it. (So in this case it's probably more a pushed-out sale than a lost sale.)

Sales of ebooks are very hard to track. Indie sales aren't reported with the trad numbers (even though those are going up.) I get sent surveys from one of the tracking companies and I don't participate...I'm kind of private about that stuff and perhaps a tad on the lazy side with filling out the survey. It was rather LONG.

Personally, I think Amazon allowed indies into the Prime and free program to pressure more traditional publishers to get into prime and to do more promos. Now whether it will work, I don't know. From a reader standpoint I'd like to see it. From an author standpoint, it could further cook my goose!

Yes, people are still buying books, but all of this industry change is going to push prices down (that's not a bad thing so long as it doesn't start also changing the selection.) And setting expectations for free can be hard to undo. If it happens to cost B&N or other retailers to shut down, that is also a bad thing.

Personally, I think Amazon allowed indies into the Prime and free program to pressure more traditional publishers to get into prime and to do more promos. Now whether it will work, I don't know. From a reader standpoint I'd like to see it. From an author standpoint, it could further cook my goose!

Yes, people are still buying books, but all of this industry change is going to push prices down (that's not a bad thing so long as it doesn't start also changing the selection.) And setting expectations for free can be hard to undo. If it happens to cost B&N or other retailers to shut down, that is also a bad thing.

Just out:
http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-news&nyo=0

http://www.mediabistro.com/ebooknewser/j-a-konrath-earns-100k-from-1-book-in-3-weeks_b19352

"Some animals are more equal.."
Some people will get paying customers, some will be left unnoticed.
Quality and luck matters.
Hard work and self-promotion doesn't hurt, though.

Just out:
http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-news&nyo=0

http://www.mediabistro.com/ebooknewser/j-a-konrath-earns-100k-from-1-book-in-3-weeks_b19352

"Some animals are more equal.."
Some people will get paying customers, some will be left unnoticed.
Quality and luck matters.
Hard work and self-promotion doesn't hurt, though.

There's no doubt he has a lot of momentum behind him. Thanks for the link. I wondered how he was doing since he went Select and also signed with Amazon. I know his books were featured in the books of the month under X and I think he did a couple of his for free during December.

Whether he does well because of freebies or in spite of them, there's no way to know. Although from his blogging, I think he's a fairly big supporter of the feature.

Yes, but lots of those devices sold aren't to Americans, so won't be buying American books. So you can't assume all X devices are going to feed into US book sales.

If a Norwegian that only reads in Norwegian buys a kindle, sales of US 'Reporting Publisher' books from that device = zero, forever.



True, but I was very conservative with my numbers. Two analysts have estimated 40-50 million Kindles will be sold in 2011 and 2012. North America has they say 80% of the market. That's still a lot of devices.
Plus add an unknown number of Nooks, Sonys and Kobos.

The hardware manufacturers need people to buy books from their stores to help defray the ongoing ereader production and development costs.

The hardware manufacturers need people to buy books from their stores to help defray the ongoing ereader production and development costs.


THIS.

This news is disappointing if indeed B&N fails.
What does it take to be successful or at least functional bookstore today?
I visit the only local B&N weekly, sometimes more than once a week.
There were 2 Borders and another B&N last year at this time, now no more!
Electronic tech is indeed the future I have accepted with reluctance. My Kindle 3 has become indispensable now. YET I still go to a brick and mortar store. Why? Because I enjoy the browsing, discovering new titles and new authors and new magazines and newspapers!
How else would I know of new item? Sure I can browse websites it is yet to be rewarding for me.
It is not like McDonald's advertising new hamburger or Gillette advertising a new razor.
The only way to know is to be present on site.
To be allowed and to be able to find a specific item is great.
To be allowed and to be able to find an unknown item is great!
Without brick and mortars how is that to happen?

Without brick and mortars how is that to happen?

Happens to me every day, right at my iMac. I see book recommendations on news sites, blog sites, forums like this, Goodreads, Amazon, etc. I would estimate that I add at least 5 books to my wishlist per day. If anything, I have wishlist overload.

This news is disappointing if indeed B&N fails.
What does it take to be successful or at least functional bookstore today?
I visit the only local B&N weekly, sometimes more than once a week.
There were 2 Borders and another B&N last year at this time, now no more!
Electronic tech is indeed the future I have accepted with reluctance. My Kindle 3 has become indispensable now. YET I still go to a brick and mortar store. Why? Because I enjoy the browsing, discovering new titles and new authors and new magazines and newspapers!
How else would I know of new item? Sure I can browse websites it is yet to be rewarding for me.
It is not like McDonald's advertising new hamburger or Gillette advertising a new razor.
The only way to know is to be present on site.
To be allowed and to be able to find a specific item is great.
To be allowed and to be able to find an unknown item is great!
Without brick and mortars how is that to happen?

Browsing online is a totally different experience. I missed not going to stores at first, but my local B&N is very small so their selection seemed to be reduced every time I visited. If I had them order something for me it took two weeks. If I pre-ordered through them, they usually had the book on the day of release or at most two days later. The trouble is that Amazon can have the book on my doorstep day of release. Once in a while they miss and it's a day late. My odds and customer service has proven better with Amazon.

Of course with no competition, how long can I expect that to last? One wonders.

There is a joy to perusing shelves and shelves of books. Or finding a stranger who has a book in hand and saying, "Hey, I've read that. It's awesome." (That sort of happens online, but not quite the same way.)

I do hope B&N makes it and does extremely well. Competition breeds a better experience for all of us (author, reader, retailer, investor, community.) But I don't know if it's going to happen. They've had a steep hill to climb for a while and people are getting more and more used to shopping online.

This news is disappointing if indeed B&N fails.
What does it take to be successful or at least functional bookstore today?
What does it take to be a functional record store today?


To be allowed and to be able to find an unknown item is great!
Without brick and mortars how is that to happen?
By reading reviews, "browsing" online bookstores, and downloading samples.

But the fact is that people are less and less willing to pay the premium, in terms of money and time, to patronize physical bookstores.

Believe it or not, the world will survive this transition.

What does it take to be a functional record store today?



By reading reviews, "browsing" online bookstores, and downloading samples.

But the fact is that people are less and less willing to pay the premium, in terms of money and time, to patronize physical bookstores.

Believe it or not, the world will survive this transition.

The weird thing is that record stores are making a comeback. We saw one not long ago and went in. Apparently vinyl is "retro" and cool. We were actually looking for a turntable to replace ours (we have a lot of vinyl) Turntables cost more now than 5 years ago. People are selling them from their closets for 100 or more. My husband actually works from vinyl to create digital copies (for himself). But see, what is, is not and what once was, might be again and it goes round and round. :p

The weird thing is that record stores are making a comeback. We saw one not long ago and went in. Apparently vinyl is "retro" and cool. We were actually looking for a turntable to replace ours (we have a lot of vinyl) Turntables cost more now than 5 years ago. People are selling them from their closets for 100 or more. My husband actually works from vinyl to create digital copies (for himself). But see, what is, is not and what once was, might be again and it goes round and round. :p

Record stores never quite went away.
What happened was the big chains folded, the regional players folded, but the boutique Indies who lived off audiophiles survived. They had a clientele and cattered to it. When volume markets go away, specialty remains.
(You can still buy buggy whips today, you know.)
http://jedediahsbuggywhip.org/services.nxg ;)

I expect a similar end-point for pbook stores circa 2025 or so.
The smell fetishists alone should be good for a few thousand sales a month per store in, say San Francisco (pop 700k). Scale from there to see how many pbookstores most cities will be able to support.

My all-time favorite Bookshop was Moonstone Bookcellars in Washington, DC. It was literally a cellar under a barbershop a couple blocks from the White House. They carried nothing but SF and fantasy, walls and walls worth, at a time when the chains of the day carried maybe one rack. They stocked backlists on-site and did a healthy business stocking foreign editions.
I always stopped by whenever I visited DC. They'd been there for decades, apparently. Then one trip, in the late 80's, they were gone. Done in by Borders and B&N.

Times change, consumers adapt.
The sky isn't falling; it's just a t-storm coming.

"...I do hope B&N makes it and does extremely well. Competition breeds a better experience for all of us (author, reader, retailer, investor, community.) But I don't know if it's going to happen. They've had a steep hill to climb for a while and people are getting more and more used to shopping online.

Your point about better experience for all of us is an excellent point!
I understand the retro vinyl experience. Nearly same as books just no coffee. lol. At this time I am simply waiting for the dust to settle from last year's actions.

I certainly hope B&N well, I've been buying from them for ages, though I'll grant you with cheaper online prices Amazon and my local used book store has gotten 95% of my print book business for the last 5-6 years. I have a nook ST now, so I have a horse in the race so to speak. As it comes to being locked in to content. That is what DRM removal is for. I certainly wouldn't have gone with a nook if I couldn't remove DRM from content to load it on and I wouldn't buy from BN.com if I couldn't remove the DRM if for some reason they went under, or next year I decided Kobo had the best and newest ereader or Amazon or someone else. Frankly the same goes with buying a Kindle.

I HATE with a firey burning passion DRM, especially on books. If I pay for the content I should be able to do damn well whatever I want with it so long as I am not selling it or giving it away. None of this buying in to an ecosystem BS.

When it comes to ebooks (not that I have had the nook ST long, about 3 weeks now) I buy/plan to buy them from BN.com so long as the prices are the same or comparable to Amazon or others. I've bought a couple of ebooks from Amazon, because well...they were listed for $2.79 from the regular 9.79 and BN has them for 10.49. Buy, strip DRM, convert, side load. It ain't piracy no matter what someone may say.

I've bought a couple of other ebooks from BN because the price was the same or within a few pennies. I've still downloaded and stripped the DRM. If nothing else, so I can read them on my iPad 2 if I ever want, or on another ebook reader if I ever buy a different manufacturers.

Just my 2 cents and opinions. I wish BN well, but at the same time I only have a limited amount of money, and if someone else is a lot cheaper, well they get my business. The Nook ST I think is the best ebook reader (eink based at least ) on the market right now for what I want and need, so I got it. BN is not always the best ebook seller out there, so not all of my purchases will be through them (though to support them, same price or within a buck or so and I will buy from them).

When it comes to ebooks (not that I have had the nook ST long, about 3 weeks now) I buy/plan to buy them from BN.com so long as the prices are the same or comparable to Amazon or others. I've bought a couple of ebooks from Amazon, because well...they were listed for $2.79 from the regular 9.79 and BN has them for 10.49. Buy, strip DRM, convert, side load. It ain't piracy no matter what someone may say.


You can also root the Nook, install Kindle for android and skip the conversion. :)

Both are practices that may or not be impacting the bottom line on either side of the Kindle vs Nook debate but that probably don't give B&N execs the warm and fuzzies. :D

Piracy involves "stealing." You bought the books. You didn't steal them. You then altered them. While that may be against the law and license you signed, it is not piracy until/unless you upload/sell/giveaway etc.

I think B&N allows us to upload and not apply DRM, but do you know, I can't remember. I know I don't have to choose it at Amazon or Smash...but I can't recall whether B&N has that option.

There are deffinitely books on BN.com that don't have DRM, including paid books. The first book I bought from BN to "test out" the DRM removal before I plunged in to buying more books from them (so that I could be device/reader independent from them in the future) didn't have DRM, as Calibre read it just fine without me having setup the plug-in. The next book I bought did have DRM and it took me about an hour to get the plug-in to work. Mostly because I didn't realize once I had the plug-in setup I had to THEN import the book, it wouldn't strip DRM from books already loaded in my Calibre library.

As for how that is setup for DRM vs. non-DRM for books on BN.com I am not entirely sure, but there deffinitely are at least a few that are non-DRM.

There are deffinitely books on BN.com that don't have DRM, including paid books. The first book I bought from BN to "test out" the DRM removal before I plunged in to buying more books from them (so that I could be device/reader independent from them in the future) didn't have DRM, as Calibre read it just fine without me having setup the plug-in. The next book I bought did have DRM and it took me about an hour to get the plug-in to work. Mostly because I didn't realize once I had the plug-in setup I had to THEN import the book, it wouldn't strip DRM from books already loaded in my Calibre library.

As for how that is setup for DRM vs. non-DRM for books on BN.com I am not entirely sure, but there deffinitely are at least a few that are non-DRM.

Yup, you're right. There's an option. It's hard for me to keep it all straight when uploading. Or downloading for that matter...