Conflict between Barnes & Noble and Simon & Schuster continues

[charmian]

http://online.wsj.com/article/SB1000...googlenews_wsj

Simon & Schuster is losing sales and promotions at the biggest book chain in the U.S. While the retailer is still carrying the publisher's biggest books in quantity, titles by lesser-known authors have been cut sharply, said the people familiar with the matter. Orders for some titles have been reduced by as much as 90%, according to one literary agent.

http://www.nytimes.com/2013/03/23/bo...?smid=pl-share

Those familiar with the disagreement — who spoke on condition of anonymity because the negotiations are confidential — say Barnes & Noble believes that because its physical display space is so important to publishers, and because it is the last major retail chain remaining, publishers should be doing more to support it. Barnes & Noble has told Simon & Schuster, a senior executive said, that at least one other publisher has accepted these new terms.

[fjtorres]

Hmm...

The retailer is arguing that its stores serve as the primary way for consumers to discover new writers, say people familiar with the situation. The retailer worries that consumers use its stores as "showrooms" to find titles that they then order online at a discounted price, the people said.

"We do not comment on specific relationships with publishers. However, we do support those publishers who support our physical and digital businesses," Barnes & Noble said in a statement.

Ah, yes...
The showrooming argument *and* the discovery myth. A two-fer.

One could argue they are blatantly asking for payola except payola is already the standard in B&M retailing so what they are arguing over is how much of B&N's overhead S&S must subsidize for B&N to bother with their midlist.

The dispute holds risks for both sides. Simon & Schuster is losing sales and promotions at the biggest book chain in the U.S. While the retailer is still carrying the publisher's biggest books in quantity, titles by lesser-known authors have been cut sharply, said the people familiar with the matter. Orders for some titles have been reduced by as much as 90%, according to one literary agent.
.
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For Barnes & Noble, the dispute could cause customers who can't find the books they want to instead shop online at Amazon.com Inc.

This could get interesting: A new two-tier retailing model emerging? One that would make the mid-list even *less* profitable for the BPHs?
"Bestsellers we'll stock for free but the dinky mid-list you'll have to pay us to carry."

I notice there is no thought given to the possibility that customers might buy from B&N.com... Gotta wonder if the WSJ even knows B&N has an online pbook store. Or maybe they know something...?

(shrug)

I guess B&N really *is* facing hard times: they've gone Crazy Eddie...
The only thing that distinguishes them from Costco is the midlist so, *of course* they threaten to stop carrying midlist titles.

Vintage Crazy Eddie.

[Apache]

This is nothing new in retail. Grocery Store Chains get paid big bucks by Vendors, for prime shelf space.
Apache

[fjtorres]

Originally Posted by Apache

This is nothing new in retail. Grocery Store Chains get paid big bucks by Vendors, for prime shelf space.
Apache

The publishers already do the same with B&N, paying for preferred placement for their intended bestsellers. But they only offer the "standard" volume discounts for midlist titles.
B&N wants preferred payment just to carry the midlist. So as long as S&S doesn't cough up the cash, they won't carry the titles. Since those aren't the big bucks "bestsellers" the margins are a lot lower and there isn't much money to dish out even if they are carried in the big stores.

Publishers have already raised the minimum sale bar for retaining midlist authors so they'll either have to raise prices (leading to reduced sales) or raise the sales volume bar again (dropping authors). Easy to see why S&S has been balking.

[LovesMacs]

Whatever financial arrangement publishers have made with stores to carry anything beyond the top sellers, it's apparently not enticing enough when B&N and other brick and mortar retailers choose to have less shelf space for books and more for other items instead.

[fjtorres]

Originally Posted by LovesMacs

Whatever financial arrangement publishers have made with stores to carry anything beyond the top sellers, it's apparently not enticing enough when B&N and other brick and mortar retailers choose to have less shelf space for books and more for other items instead.

Nope.
And yet, those books are what distinguish bookstores, especially the big chains, from Costco or Target.

[charmian]

re: discovery and showrooming. So B&N is inviting publishers to put their money where their mouths are. It looks like so far at least one has, but will the others, including Random Penguin?

Is there any commentary on this in more specialized publications/blogs? If what the articles are saying is true, this could have catastrophic consequences for the midlist. As it is, I've read the amount of shelf-space (nationally) is shrinking. So shelf-space, to B&N, must be a scarcer commodity that they can charge more for.

[Fbone]

Midlist authors always had difficulties in B&M stores. Their paperbacks cost about the same as most bestsellers. Now they tend to be cheaper online often $1.99 as the Kindle Daily Deal. The midlist author is probably destined and/or better suited for ebooks. That's probably where their discovery and sales will be.

Re:conflict

2012 was the year of the Bestseller. Fifty Shades, Hunger Games, Gone Girl and Diary of a Wimpy Kid ... 8 titles ... had 75% of all book sales in the US (print & digital). Not much room or interest for anything else. It's likely bookstores returned many quality titles last year and want to prevent such this year. Trick is in determining what will sell big.

[fjtorres]

Originally Posted by charmian

As it is, I've read the amount of shelf-space (nationally) is shrinking. So shelf-space, to B&N, must be a scarcer commodity that they can charge more for.

Indigo took that approach in Canada but that is a slightly different market; they're in a much stronger position because of the local content laws.

That shelf space in the US has shrunk is undeniable; the Borders implosion wiped out at least 25% of the shelf space and, when you factor in B&N closures and their own repurposing, a 30-35% loss of shelf-space isn't out of the question. But...
...the need for shelf space has *also* gone down because of users migrating to online pbook sales and ebooks. And one of the (many) reasons Borders without the BPHs even blinking was an actual glut of shelf-space.

So the real question is *what* has gone down more: shelf-space or B&M pbook demand?

That is what makes this fight interesting: B&N thinks they're indispensable, S&S begs to differ. With the fight now approaching three months, the two seem pretty entrenched.

I suspect we'll see some kind of resolution once the first quarter sales reports get in. I doubt either side will completely cave in but it's not totally out of the question.

[fjtorres]

Originally Posted by Fbone

2012 was the year of the Bestseller. Fifty Shades, Hunger Games, Gone Girl and Diary of a Wimpy Kid ... 8 titles ... had 75% of all book sales in the US (print & digital). Not much room or interest for anything else.

And there were north of 3 Million titles published...
Was that unit or dollar sales, btw?

It's a disaster either way but the nature of the disaster depends on which.

[Fbone]

Originally Posted by fjtorres

And there were north of 3 Million titles published...
Was that unit or dollar sales, btw?

It's a disaster either way but the nature of the disaster depends on which.

Unit sales.

[fjtorres]

Originally Posted by Fbone

Unit sales.

So it's the bigger disaster...

[MovieBird]

I think BN is just in denial, at this point.

Originally Posted by NBC News

Barnes & Noble said on Friday it would give away a free Nook Simple Touch e-reader to any customer who buys its high-definition Nook HD+ tablet next week, a sign it may still be grappling with excess inventory of the unpopular e-reader.

[taustin]

Originally Posted by Apache

This is nothing new in retail. Grocery Store Chains get paid big bucks by Vendors, for prime shelf space.
Apache

Indeed. And big box retailers will make their vendors send in employees to stock the shelves. As you say, nothing new.

And it B&N management believe this is the more profitable way for them to operate, it would be irresponsible for them to act any other way.

[ebusinesstutor]

Originally Posted by fjtorres

Hmm...

I guess B&N really *is* facing hard times: they've gone Crazy Eddie...
The only thing that distinguishes them from Costco is the midlist so, *of course* they threaten to stop carrying midlist titles.

Loved the Crazy Eddie metaphor. I'll have to start using that one more.