Wednesday, August 4, 2010

Goodbye, Barnes & Noble

I'm a habitual news junkie—it's sort of an occupational liability. Last night before I went to bed, I read a story that Barnes & Noble was considering putting itself up for sale. "Just considering," I thought. "The board is floating the idea. Nothing to it."

But this morning, I woke up to find out that, indeed, it's true. And one other detail hopped out at me: Barnes & Noble's total market capitalization is less than $1 billion. Woah. That might still seem like a lot of money, but in the world of corporate America, for a company with such a recognizable brand and national reach, it's actually peanuts. I've worked for people who could write a check and buy Barnes & Noble. That's amazing.

Enter mixed feelings.

I know writers and readers wax poetic about bookstores, with good reason, but Barnes & Noble is sort of the Wal-Mart of the book industry, no? Isn't this the bookstore chain that was considered the rapacious villain not too long ago? I remember when local communities would PROTEST a Barnes & Noble going in. In my college town, we had a beloved independent bookstore that was driven out of business shortly after Barnes & Noble came to town. And didn't Barnes & Noble sort of perfect the art of extracting money from publishers for front table placement? And isn't Barnes & Noble the company that uses returns as a way to enhance cash flow at publisher's expense? Isn't there a sort of direct correlation between the trouble publishers are in and Barnes & Noble "wallpaper" strategy of stocking thousands and thousands of books it can't sell in giant stores, then returning them at full cost?

But B&N isn't exactly riding high these days. I looked it up this morning and saw that B&N's profitability has steadily declined over the past three years. I think profits last year were about one third what they were three years ago. Sure, a recession is just ending, but the latest round of corporate earnings reports was actually pretty stellar.

So I was a little conflicted, actually. When I grew up, going to bookstore either meant a Waldenbooks in the mall or a little independent store not too far from my house. I could walk there, and must have spent hundreds of hours in those four shelves of books. When B&N and Borders came along, I had no problem with it. I knew it was wiping out the independents, but hey, I figured, that's capitalism. Markets consolidate. Size achieves efficiency and clout. That's how the game works. And now, when B&N seems like it might get plowed under by market forces and technological innovation, it seems kind of hypocritical to work myself up into a lather.

Either way, this is a pretty amazing moment in publishing and the media world. I'm still getting notices from the bankruptcy court handling the Tribune's recent bankruptcy (they owed me money, so I got stuck in their arbitration pool). My biggest clients right now are either online or POD companies, and print is in third place. And while the money is still in print books, if the B&N tells me anything, it's that this won't be true for long. It feels like pretty soon Amazon will complete its transformation into Random House, HarperCollins, Barnes & Noble, and Borders all wrapped up in one package.

9 comments:

Mark Terry said...

I think this was inevitable with the current growth in e-books and I wonder to the extent that it will effect publishers. There's an assumption out there that Amazon's going to be the sole e-book retailer and/or book retailer in general, and it certainly looks like that's a possibility, although I'm not sure to what extent that will affect publishers.

I am thinking musingly of a comment John Scalzi made on his Whatever blog last week, and it was how he got his start writing for AOL, which he noted back in the late 80s and early 90s existed in the same intellectual space that Google does today, a statement that Google doesn't like to hear.

At the moment the trend looks like Amazon's going to be the dominant player in e-book retailing. But I suppose that's a little bit like arguing that in the 70s and 80s IBM was going to be the dominant player in the personal computer space.

If there's one thing history has shown us recently it's that digital technology dominance can fade fast. I wonder what would happen to Amazon if the big 6 publishers decided to open their own online bookstore and go head-to-head with Amazon.

Or if one of the big 6 decided to purchase Barnes & Noble.

Jon VanZile said...

All good points.

True about IBM and the 1970s. At the time, who would have guessed that the fabled duel between IBM and Amdahl would basically be completely forgotten? I've read a lot about that era (having been a toddler at the time), and it was the biggest thing going.

But I had to snort at the idea of a Big 6 publisher buying B&N. In the old, pre-Amazon days, that would be called a vertical monopoly. Now I guess they'd call it "too little, too late."

Personally, and without any real insight that's not freely available to anyone with a modem, I think publishers are in tremendous trouble. I think print books will be around for a long time, and certain kinds of books will stay in print longer than others, but whole (very profitable) sections of the genre market will be peeled away, beginning with romance and erotica and moving rapidly to thrillers. It's already happening. Textbooks, too, will make the rapid transition. YA and MG will be slower. LIterary fiction will eventually make the jump, if only to hold down costs.

What does this mean for the print companies left behind? To quote a certain agent, "That's the sound of inevitability." They will be much smaller companies.

Kath Calarco said...

Jon, don't make me slap you. Not when gravity has won in my fight to stay toned...not when the coolest thing to happen in the legal secretary pool was the IBM Selectric and I was SO HAPPY to be able to pick one out in any color I wanted - RED!

A toddler indeed. :-( lol

I was saddened by the B&N news, too, only because it's the end of an era. Books. Sure, they might blame the publishers, the new fangled electronic readers, the fact that people aren't reading. I view it as a natural evolution. That's the history of technology. It breeds competition. Recall Eastman Kodak Company, Rochester, New York's largest employer - generations of families worked there. It was the ultimate job security. And then technology moved forward; digital cameras. Was Kodak asleep at the wheel? Didn't see that one coming, maybe?

Just saying that although some will miss 35mm film, darkrooms and all the applicable chemicals, the masses embrace the newest gadget. Ipods, e-readers, the Roomba, whatever makes life easier, perhaps.

But I still enjoy the feel of a weighty book, and always consider the possibility that one day the power might go out, the Kindle will discharge. But my shelves of books still work in the daylight. :-)

Mark Terry said...

I think paper books will be around for a long time too because there will always be people that want them, but my guess is either mass market paperbacks are going to die to e-books or hardcovers are. Probably not both. I also suspect you're going to see tiered availability in terms of paper books. That is to say, low-end print runs and midlist authors--bye-bye paper, publishers can't afford you. Bestsellers, yup, we can still make money off you, particularly if we make you available at Costco, Wal-Mart, Sam's Club and the few remaining bookstores.

Natasha Fondren said...

For some odd reason, my allergies are sort of livable in Borders, but B&N (and libraries) debilitate me instantly. So I won't miss B&N, but if Borders goes, I will bawl my eyes out. For months. I don't know what I'd do. I really wish the stores would let you buy ebooks, that way they could still make some money. Browsing is an important part of the process, and definitely worth a store getting a share of the money.

Jon VanZile said...

Kath,

Two things:

1. Red Selectrix are awesome.
2. My family is from Rochester and used to work for Eastman Kodak, until it wasn't such a great place. Then my dad got a job at GM and stayed there for 40 years. Apparently he has a knack for picking these sorts of companies.

Jon VanZile said...

Mark,

I wouldn't be surprised if you were right ... Too bad, too, because it will make it that much harder for the rest of us.

Jon VanZile said...

Natasha,

I agree, but I think part of the problem is that why would authors share ebook money when they don't have to? It's sort of like the question you see on Konrath's blog all the time: what do bookstores and even publishers have to offer authors in return for a cut of the revenue? So far, I haven't seen anything compelling.

But I also totally agree about browsing. I bought books this weekend that I never would have bought if not for browsing. And even Kindle's sampling feature can't really replace the immediacy of flipping through the first few pages.

Kath Calarco said...

"And even Kindle's sampling feature can't really replace the immediacy of flipping through the first few pages."

And the cover art. Seriously, I've bought books for just the cover (not the clutch ones - I get Victoria's Secret Catalog for free). And I'm thinking the trend toward all things e-books will affect cover artists, too. *sigh*