I must have been living under a rock. Until the advent of agency pricing, I didn’t realize the contentiousness and longevity of the thirty years’ book wars. Oh, I do remember talking with one of my favorite book sellers – a retired teacher that opened a book store in Memphis. She shared that she was having a difficult time competing with Waldenbooks. And I remember her talking in dismay about the proposed purchase of Ingram Book Group Inc. by Barnes and Noble. And sure I watched the 1998 comedy, “You’ve Got Mail” with Tom Hanks’s Fox & Sons Books putting out of business Meg Ryan’s Shop Around the Corner. However I moved away to a smaller town, and became cocooned against the bookstore closings. Then in the spring of 2010, agency pricing got my attention in a big way. Since then I’ve tried to keep up with the current changes.
While Amazon is considered a disruptor company for many of the changes today – hated by independent book store owners and publishers, especially after they promoted their price-check app over the Christmas holidays, in the 80’s and 90’s Barnes and Noble was considered the “brutal capitalist” of booksellers. And its history is extremely interesting, considering what has been happening in the book world of late. Barnes and Noble was the first major bookseller to discount books, by selling The New York Times best-selling titles at 40% off the publishers’ list price. In the eighties they bought up chain book stores like B. Dalton, Doubleday Book Shops, and Bookstop. In 1998 they tried to purchase Ingram Book Group Inc., the largest book wholesaler in the United States but were unable to do so because of antitrust concerns. Supposedly one reason Waldenbooks and Borders opened so many stores was to keep up with Barnes and Noble’s superstores.
In 1996 B&N expanded into Canada with a 20 percent stake in Chapters Inc., the largest book retailer there, but sold it three years later. And then it tried to expand into the digital world, but the timing was a little off. As noted in this Wall Stree Journal article, “In 1998, they
But now it is the underdog to Amazon. If you have followed the news recently then you know that Barnes and Noble announced after posting earnings per share loss of $1.31 in 2011, they expect this year’s loss to be twice as large as previously expected, between $1.10 and $1.40. It has also put Sterling Publishing Company up for sale. It is not that stores aren’t successful, and the Nook has even gotten solid recommendations, as well as making inroads into Amazon share of the eBook market. However Digital Book World states “the operating loss in its online division (including online sales and “development and support”of the Nook) hit $66 million in its most recent quarter, up 17% from a year earlier, on a 26% increase in sales.” Barnes and Noble had toyed with the idea of spinning off their Nook division after disappointing Christmas sales of their basic touch screen. In order to promote the Nook they have entered into a partnership with The New York Times, in which the Times will subsidize the Nook for readers in exchange for a full year’s digital subscription to their paper.
The article, The Bookstore’s Last Stand, talks about how Macmillan, Penguin, and others all feel a “ sense of unease about the long-term fate of Barnes & Noble, the last major bookstore chain standing.” Of course these are the same publishing companies that are defendants in class action law suit brought by Hagens Bermans, the law firm representing eBook purchasers. In January this complain was updated to include new information and allegations including quotes by Macmillan CEO John Sargent, David Young Chairman and CEO of Hatchett Book Group USA, and information from Steve Job’s biography. You can read more about it here and even possibly become a plaintiff.
Rumors are spreading like wildfire on the web that Amazon is planning on opening a retail store in Seattle selling “Kindle e-readers, the Kindle Fire tablet, and related accessories, as well as the company’s growing collection of Amazon Exclusives book titles.” One reason is that Barnes and Noble and Book- A- Million and many independent booksellers refuse to stock books published by Amazon. While some view this as a smart move, Michael Souers an analyst at S&P’s Capital IQ, in this article from Time views the move as a way for B&N to firmly side with traditional publishers. “It’s kind of a symbolic gesture, one meant to ingratiate themselves with publishers,” Souers says. “And publishers are upset with Amazon for trying to cut them out of the process.”
Magellan Media Partners’ analyst Brian O’Leary feels that it’s foolish for Barnes & Noble to attempt to punish Amazon by dropping titles where Amazon has a special deal with the publisher. “In general” he said, “it’s a mistake for any author or publisher to create scarcity in the channel. It sends the wrong message to readers.” So if you looking for Connie Brockway’s book The Other Guy’s Bride, you won’t find it in Barnes & Noble stores. In a similar move back in October 2011 both Barnes and Noble and Book-A-Million pulled DC comics off their shelves after Amazon announced an exclusive four month deal to sell the comics on their Kindle Fire.
If that is not enough, Penguin, which only offered backlist eBook titles for library lending, announced that it is terminating its contract with OverDrive, the library digital vendor, and starting February 10 will cease to offer any of its eBooks or Audiobooks to libraries. From what I understand they are threatened by OverDrive’s partnership with Amazon, which allows wireless downloads to their Kindles. Simon & Schuster, Macmillan and the Hachette Book Group are among the major publishers that already limit eBook availability to libraries. And of course last year HarperCollins limited the number of time a library could check out an e-book before having to purchase it again.
Honestly, these turf wars are getting old. I like Amazon but that doesn’t mean I want Barnes and Noble or other bookstores to go out of business. Competition is good for readers, and I’d also like to be able to get my books from more than one source. And then there’s the issue of certain stores not selling books from another store’s publisher. After all, if I read on a Kindle, what happens if a favorite author signs a deal to publish on the Nook with Barnes and Noble, and I am unable to read the book? Publishers continue to hang on to the old way of doing business, refusing to move forward, and for the most part we, the people who only want to read great books are caught in the middle. So, what do you think about the latest changes?
– Leigh Davis
I enjoy spending as much time as I can between the covers of a book, traveling through time and around the world. When I'm not having adventures with fictional characters, I'm an attorney in Virginia and I love just hanging out with my husband, little man, and the cat who rules our house.
It gets worse. Amazon not only listens to consumers and delivers what they want, it listens to authors and delivers what they want, too. B&N treats authors with the same disdain & high-handedness previously dished out by traditional publishers – and guess what? We don’t have to take it anymore. We’ve got somewhere else to go.
Example: Go to bn.com and try to email someone in the authors’ service department. Oh, that’s right, you can’t. There isn’t one. So if someone else’s bio is showing up on ALL your titles’ sales pages at bn.com, there is no one to whom you can point this out.
I have emailed four times and received absolutely no response at all. Not even an auto-response saying that they’ve received my email.
You can’t run a business this way in 2012, folks.
I wouldn’t buy a Nook, thank you. B&N is heading for history’s scrapheap. That’s my story & I’m sticking to it!
Happy reading –
Barnes & Noble was not the first bookseller to enter the publishing business. Waldenbooks tried it in the late 1980s with their Pageant line, a joint venture with Crown Publishers (which was eventually swallowed up by Random House). The first thing I asked my agent, Richard Curtis, when he called to tell me he’d sold a book of mine to Pageant, was “”Are they going to have the books anywhere besides Waldenbooks?”” His response was of course they would, but I didn’t believe him. . . . or them. Sure enough, the other bookseller chains (B. Dalton, Reader’s World, etc. in those days) wouldn’t touch them, and the project lasted less than a year. Duh.
“”For readers, high price points for ebooks might drive them to a library, except that publishers have withheld titles from libraries. Therefore, some readers might turn to pirated digital editions; others might turn to other forms of entertainment; others find cheaper books on Amazon. It has a dark beauty: through the combination of usurious pricing strategies and their undeclared war on libraries, the largest publishers have unerringly drawn their customers – readers with whom they’ve never cared to have a direct relationship – closer into the arms of the retailer whose market power and influence they most fear – Amazon. So much for a strategy of self-interest.””
Amen. . .
I am not sure about the M-Edge article . I read it when it came out in December. It seems very similar to articles I read talking about how Wal-Mart deals with its supplies.
I did see the IPG (Independent Publishers Group)article after I had already written this. I thought there were still in talks, but I could be mistaken.
There is some discussion how publishers would eliminate DRM and level the field:
That Charlie Stross piece is also a great read, and makes the point pretty explicitly that the publishers created their own problem by insisting on DRM’d ebooks:
As ebook sales mushroom, the Big Six’s insistence on DRM has proven to be a hideous mistake. Rather than reducing piracy, it has locked customers in Amazon’s walled garden, which in turn increases Amazon’s leverage over publishers. And unlike pirated copies (which don’t automatically represent lost sales) Amazon is a direct revenue threat because Amazon are have no qualms about squeezing their suppliers — or trying to poach authors for their “”direct”” publishing channel by offering initially favourable terms. (Which will doubtless get a lot less favourable once the monopoly is secured …)
If the big six began selling ebooks without DRM, readers would at least be able to buy from other retailers and read their ebooks on whatever platform they wanted, thus eroding Amazon’s monopoly position. But it’s not clear that the folks in the boardrooms are agile enough to recognize the tar pit they’ve fallen into …
However it doesn’t make sense to me. If retailers can’t discount e-books because of agency pricing then there is no advantage to me to shop around.
And I like what this author said:
Kassia Krozser: Last week’s rather confusing co-op story — in which Amazon is apparently demanding higher amounts for (digital) co-op and publisher-generated media — highlighted a fundamental truth: all is not fair in love and business. Like its bricks and mortar relatives before it, Amazon will squeeze vendors as much as possible.
But that is pretty much beside the point. Amazon’s consumer base is too large for publishers to play serious hardball — readers have too many options for publishers to lock themselves out of the Amazon readership. And, frankly, it is the policies of many publishers that have led us to what I like to call retailer lock-in.
I agree with Chris. There’s no reason that B&N or other Brick and Mortar Book Sellers should act as showrooms for Amazon’s digital content they cannot sell. Shelf space costs money. If Connie Brockway wants her books on B&N or Books A Million etc shelves then she shouldn’t have signed an exclusive e-book deal with Amazon. That stance just might keep other higher profile authors from doing the same.
This KDP/Prime thing with Amazon with their demanding 3 months exclusivity of e-book titles has become very annoying. Yes there are some good deals but an awful lot of slush pile stuff to wade through and I’m wondering how many sales and future business authors are losing because of their restriction to one platform. Most people are not going to follow most authors from one platform to another to buy a book.
Amazon’s margins aren’t looking all that healthy either in their fight to be an industry loss leader to bowl over the competition. Their Net Income for the 4th Quarter was $177 million (less than three times B&N even though their revenues were 7-8 times larger) on about $17.43 billion with a forecast for a loss in the next because of operating expenses
And this is with other sales aside from Kindle and e-book sales picking up the balance sheet. Kindle like Nook seems at this point to be an investment in the future more than current profit. (B&N’s stores actually made a profit last year unlike the Nook division)
Amazon’s stock has been down at times about 25-30% of it’s highs from last Nov. (when it was in the 240s – now at 180) Investors are looking for larger profit margins and Amazon seems to be responding not by rising prices but by trying to squeeze some of it’s publishers and vendors into smaller margins for their businesses. Look at the recent bust ups with M-Edge which sells covers (but no longer on Amazon) and IPG (which resulted in 5,000 titles being removed from Amazon) when Amazon tried to change the terms in their contracts
I love my Kindle and most of the ebooks I buy for it are low priced bargains. Amazon also offers quite a few free books. Very rarely do I buy a higher priced ebook. Even print books I mostly get second hand from Amazon or my local paperback exchange. I dislike B&N – they often don’t have what I want and if they do I can get it cheaper through Amazon which also offers better customer service.
It’s not that I am pro Amazon and anti bookstores per se – it’s just that Amazon usually gets me what I want cheaper and quicker.
I’m with you, Carrie. I have a Kindle and like it very much (notice I don’t say LOVE), but when the Kindle version is the same price as the paperback, forget it! ….. I’m off to the Library or better yet, the used bookstore for my very own hard copy!
All I can say is I hope the lawsuit prospers and the Agency pricing (and Apple) get busted. It’s price-fixing, pure and simple. I refuse to buy any agency book unless it’s been heavily discounted– 99 cents for example. Otherwise, I use the library, shop used book stores use coupons for print books, or simply read something else. I read between 250-300 books a year, and I haven’t had any trouble avoiding agency-priced ebooks. It’s not the price so much as the control that bothers me. One person’s stand might not mean much to the big publishers or to Apple (who I also won’t patronize anymore), but it helps me sleep at night.
P.S. Page down to my first post in the thread, reply #77 . I think there are instructions for both mac and pc.
To those having trouble with ADE possibly caused by Sony Reader, this is the thread that helped me with it: http://bookclubs.barnesandnoble.com/t5/NOOK-Book-Discussion/Sony-e-book-gift-cards-discounted-at-Target-this-week/td-p/512139/page/4
(The discussion moved very far from the original topic!)
I understand what you are saying. However, I think most people view Barnes and Noble as a retailer -brick and mortar store – where they go to browse and find books. I used to live in a town a 100 miles from the nearest Barnes and Noble. So I either found the books at Wal-Mart (no Target) or the local entertainment books-dvd store. When I went shopping in the “”big city”” and B&N I usually had a list of books I couldn’t find locally.
I think that is part of the problem. You go into a store and they say we don’t have it but we can special order it and it will be here in four days. Why do that when you can just order it online to begin with.
Personally I think Barnes and Noble needs a print on demand Expresso machine. . .but I just read the articles and not sure how cost effective it would be.
As far as B&N and other booksellers not stocking Amazon’s authors . . . why should one retailer (say, B&N) offer another retailer’s in-house product (say, books from an author published with Amazon) when the the fastest-growing sales segment for that product (say, ebooks) is not available to the first retailer (i.e. Connie Brockway’s book is not available for Nook.) That might be stupid, like helping spread the name recognition for a competitor’s product.
And fwiw, you can buy Brockway’s latest (w/ Amazon as publisher) in print at B&N online. But not in ebook. You can only get ebook for a Kindle. It’s not been made available for Nook.
Seems that the company artificially restricting supply & locking out a competitor is Amazon.
When Amazon went into publishing this way (i.e. more than a venue for self-publishing) it changed the game. Now it has to play by those rules, which I’m sure it’s perfectly happy doing. But it’s understandable that their main competitor cannot treat them simply like a competitor, nor like a publisher. New game, new rules, and everyone’s figuring it out as they go.
This subject just depresses me. Two years ago I could spend an entire day browsing bookstores. Now I have two UBS’s and B&N to go to. I can’t afford B&N prices so I mainly shop at Amazon, who doesn’t make me pay $25.00 for a discount. I just get such darn good deals with them. But I’ll be honest: I’m afraid. If Barnes and Noble goes under Amazon will own the reading world in the US. It may even get global domination. Not sure I want that. . .
Maggie, many people seem to feel that way. In fact it’s pretty amusing to watch the book world, which a few years ago was screaming that B&N would destroy the book trade, now doing the same with Amazon. But the market being as it is, I don’t think that’ll happen. Amazon may have a brief period as top dog, but one day the publishing companies (or former employees thereof) are going to raise serious money to launch a viable competing model. Where there’s big money to be made, you can count on competition.
Google has already launched ebooks (and google reader apps ) for use with some ereaders (but not the kindle. They too are investigating self-publishing.)
Thank you so much for all the links, Leigh. I try to keep up with the changes.
Maggie, I really miss my days of shopping at all of the 10 bookstores (used and new) within an hour or two from my home. It was a wonderful way to relax. I used to go booking at least once a week.
Willaful, thank you for your help. I will check GoodReads out.
louiseaar – In one of the articles I read the the analyst did recommend that Barnes and Noble sign up their own authors. The problem is that Amazon’s eco-system is so much better and Barnes and Noble can’t keep up. I just read that they now have a Nook Tablet for $199.
LeeAnn – Exactly.
Farmwifetwo – Amazon is definitely delivering. I thought this article did a good job of explaining Amazon strengths:
Of course Barnes and Noble is not down for the count – Here are the reason they can succeed and romance readers and children books are one of them:
Renee and Lynnd – I completely agree.
Fenwick, I just saw an article on Forbes talking about how Barnes and Noble can avoid the same scenario as Kodak:
I haven’t read it yet, but I am off to do so.
Lada – it really upsets me too that the libraries are suffering because of this.
Jane Steen – You are right. In the link above- talking about the four disadvantages of Barnes and Noble it lists Amazon strengths:
OT: Fenwick, you should be able to get the Harlequin books onto your Nook from ADE. Are you on GoodReads? If so, come join our Nook group and we’ll try to help you figure out the problem. There’s also support from other users at the B&N Nook boards and if you google around, you might find a description of your problem and how to fix it. (Do you buy books from Sony? If so, you might have authorized the Reader App in a way that messes with ADE. A very common issue.)
I have also heard bad things about the B&N power cord. Although they say you must use their cords, they are standard and any USB cord will work. When I travel, I charge my Nook with my cell phone charger.
Good point. I have a sony reader and I have had problems getting other books to transfer to my Nook. I would also be interested in how I can fix the book transfer problem.
Trying to figure out the most appropriate ways to get my books is making me crazy. I love my Nook Touch, think if far superior to the Kindle, and don’t want Amazon to take over the world — but I hate B&N’s website, customer service, their insistence on using their own special form of DRM so their books won’t work on other ereaders.
The other day I saw an agency book by a favorite author, fairly reasonably priced and thought, hey I should support her and reasonable pricing. Then I saw it was published by HarperCollins, which i am boycotting because of the library issue.
And I thought ethically shopping for food was bad.
We bought three Nooks last year. My son and husband buy a book a month (agency publishers mostly) so thy are happy. At Christmas I picked up a Kindle three since I ran into problems with Barnes and Nobel. The BN power chord has a 1 rating from customers since it is cheaply bad and tends to break apart.
I am picking up new non agency authors for good prices at Amazon and have few agency authors left I still buy. I had planed to rebuy about 1000 books over the next few years to clear out my bookshelves but when I saw the prices being charged for 10 and 20 year old agency books,I said no thanks.
I still haven’t mastered downloading from other publishers. The Carla Kelly books I bought from Harlequin stayed in my Adobe Digital Reader app and will not transfer to the Nook .
So for now I buy power cords from B and N and books from Amazon.
Great roundup of the story so far. I don’t think any of this is helping bookstores (online or physical), writers and, in the long run, the readers that the bookstores are fighting over. The winners will be those who make the best (not necessarily the largest) selection available to readers at a price that sustains the writers who supply the words and yet allows readers to explore new writing. They will drive sales by suggesting titles and understanding their customer. So far, this description seems to fit Amazon best, but who knows what’ll come next as the shakeout continues?
To farmwifetwo – for the record, unless you travel a lot and often download the books from places where you don’t have your personal wifi access, the 3G is not necessary. I have the WiFi Kindle, had it for a year and a half, and have never thought to myslef – wow, wish I had 3G. From your post, it doesn’t seem that on the road dowloading is a big deal, so the $79 Kindle may be just right for you! Save the money to buy books! :)
Loiseaar – I live on a farm without wifi or cable. I could hook up the rotor but that leaves my boys with unfettered internet access and I’m not interested in doing so at the ages of 10 and 12. I have their DSi’s internet etc access under parental lock at the moment for when we go to my Mother’s. So, the 3G for me is the better option. If I lived in the city where wifi is everywhere, then it would be the preferred option.
The kobo touch was wifi and I never used it enough to see how much I liked or disliked having to do everything at the library. Maybe it would have been “”ok”” but I disliked the set up, the difficulty organizing my books, the too easy ability to delete my books b/c I touched something wrong, the frustration at turning pages – when I could get them to turn – and the annoying cutsie “”how much you read”” sticker thing they had on it.
So, I’m looking for a new toy. My old kobo is ok for now but I’m shopping for a replacement.
Thank you for your article, Leigh. It answers many of my questions about Barnes and Noble and ebooks.
I listened to a TV analyst compare the book business to what happened to Kodak. He said it is easier for a new’ younger business to change to adapt to new technology than for an older established business with employees who see their vested interests in the old way of doing things and resist any change.
He pointed out Kodak invented the first great digital cameras but the people in charge did very little to take advantage of them, instead opted to try to keep their photo processing business healthy. They lost to new upstart companies.
The Nook is a great tablet but the Kindle is focused on books and the readers who buy every day or week on a budget.
I have my copy of Celebrity in Death on reserve at our local library. I will buy it in ebook form in the summer when the price drops. Our library has 20 copies on order, with 6 already going out to readers. I would imagine the publishers sell many copies of their books to the libraries. The book war seems likely to pull the libraries into the battle.
I could not agree more. Great analogy with Kodak. The book industry needs to be revamped for the new technology and be proactive to change. What happened to Borders is a perfect example. They got involved in the online book market and ebooks too late and were not proactive to the changes in the marketplace. Hence, no Borders.
I think that libraries have been in the battle for quite awhile already. Pretty much every since Mr. Jobs and his iThings made deals with the publishers that allowed them to set the prices they wanted, pricing and availability of ebooks to libraries became windowed and limited. The Amazon/Overdrive deal just shoved it into an all out war. I’m very sad my library can only offer a very limited number of ebooks now but on the brighter side, they’re offering books by sites like Smashwords allowing me to discover new authors.
BnN may have been the initial demon on the horizon for publishers but now they seem to be on the same side against Amazon. There’s nothing publishers fear more than BnN going the way of Borders thus giving Amazon control of the whole market. Ultimately and very unfortunately, it’s the authors and readers who suffer most in this war.
Sorry wrong button – I meant to add – you are absolutely right about this. Until the publishers and other booksellers start listening to what customers want, their market share is going to decline.
Leigh, this is a very interesting post. I have both a nook and a sony reader and I wonder what happens to the book choices for those who have e-readers that are not tied to either barnes and noble or amazon. Will we be limited in our selections, too? I think this is a situation where it is better for the market place as a hold to have multiple sources of books ( offering libraries full access, too). Unfortunately, having too narrow of a view, ended up hurting Borders and could do the same for Barnes and Noble and the book publishing industry as a whole.
FWIW… should have added….
90% of my books come via the library. 5% would be from UBS’s which leaves about 5% or less I buy. I usually buy via Chapters or my hqn’s at Zellers etc where I can get 25% off on them. Kobo… I’m unimpressed with. I have an original one and a touch. Used the touch twice and I dislike it and it sits in it’s box. Ebooks are too much money unless there’s a really good coupon and on OOP hqn I want. I’m thinking about a 3G Kindle. I asked about paying for the cell line and was told “”Amazon does that””…. maybe for my birthday.
Amazon was all set to expand into Canada with ebooks and kindle but the agency publishers blocked it somehow. I think Amazon is fighting this block of agency ebooks.
(Barnes and Noble was also making plans to expand but pulled back when they talked to the publishers.)
Leigh, you’ve posted the annual booksales before and in them the big authors would sell btwn 100 and 200 thousand books in a year… in a 300 million person marketplace. Think of how many would be libraries and how few are actually bought by individuals. Amazon looks at that and thinks… if I lower the price, sell more copies to more people I can make a bundle…. So, they did. Then the consumer wanted quicker shipping… for a price they do that. Then the consumer wanted one stop shopping… they did that… Now, I prefer Chapters for my dvd’s and kid toys since they come from their warehouses not a 3rd party like Amazon and they arrive ASAP. Then the consumer wanted an e-reader. They built one. Then the consumer wanted lending abilities… for a price they allow that too. Authors wanted somewhere to publish their books independantly… Amazon offers that service to.
Amazon has listened to the consumer and delivered. Everyone else is trying to tell the consumer that they, the publishers/B&N etc, know better than you do.
Where would you shop??
I can’t help thinking it all sounds like a bunch of teenagers fighting over territory on a playground.
I never thought of that, Leigh. I have a Kindle and it never occurred to me that there would be a book that was published only by B&N. But after reading your article, I could see it happening. Something is on the horizon. The ebook industry is going to have to change the publishing and book seller industry. It is inevitable.
All I know is that if I don’t buy a book for my kindle, I go to my local independent book seller. So maybe in the end, the good thing to come will be more “”Shop Around the Corner”” booksellers and Amazon ebooks and that will be the choices. It will be intersting to watch – as long as I still get the books I want! :)