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Thursday Midday Links: BN lays off several key retail employees

BarnesNoble_logo

After the Christmas holiday here in the U.S., Barnes and Noble issued a press release revealing that it had its strongest nine week holiday sales in over a decade.   Why was this?   According to the press release:

The company significantly exceeded both online and in-store sales forecasts, led by strong consumer demand for Barnes & Noble's NOOK brand of eReading products.   The company sold virtually its entire inventory of NOOKcolor and E Ink devices during the holiday season while exceeding its sales plan for accessories associated with the NOOK product line.

In a previous press release, BN announced that its online retail site was selling more digital books than physical books.

Barnes & Noble also announced that it now sells more digital books than its large and growing physical book business on BN.com, the world's second largest online bookstore. With its growth across device and NOOKbookâ„¢ sales over the critical holiday selling season, Barnes & Noble has successfully established itself as a leader in digital reading.

When your primary money making product is a device that delivers digital content, the need for a large physical retail space declines.   BN knows this and has been systematically not renewing leases, even at landmark locations like Fisherman’s Wharf in San Francisco or Lincoln Center location in Manhattan. Frex:

According to this article on CNN, the leases on 400 BN stores will come up for renewal by April 2014. The same article notes that BN believes that retail locations are necessary for the sale of the Nook. Not the sale of physical books, but the sale of the Nook and digital books.

So I guess it should come as no surprise that Barnes&Noble is shifting resources from the physical retail side to the digital side but it comes at a cost. BN has laid off the vice president of merchandising, Bob Weitrak, and many of the buyers. Merchandising, I’ve been told, is the profit center of a retail store. The merchandising department decides how books are displayed (end caps, new release shelves, front of the store shelves, table tops – which are all paid placements by the publishers), organized, and promoted within the store and managing physical inventory. The buyers, who reported to Weitrak, are responsible for ordering physical inventory from the publishers. Most of the names of the buyers laid off were in the non fiction category, but one, a mystery buyer, is purportedly laid off as well. The reports are the lay offs number in excess of forty.

A reduced footprint for a retail bookstore that makes most of its money off of non book items like toys, games, and a digital reading device will result in far fewer actual books being stocked. This, in turn, will reduce the print run size of books which reduces the advances of authors. Eventually, I think we will see a phasing out of the mass market book and instead see more trade paperbacks and hardcovers. The margin for a digital mass market is fairly good under today’s pricing scheme by the big publishers. At $7.99 per digital book, the publisher is seeing a 40% increase in revenue per unit sale (or more) so long as it can continue to obtain 70% of the proceeds of each sale (which it does under it’s “Agency” model).

One thing I haven’t seen yet but think must be coming is digital first arms of these traditional publishers much like Carina Press is the digital first arm of Harlequin.

I used to think 2020 was going to be the tipping point where ebooks overtake digital books but now I’m thinking it is more like 2012 as some estimate that there will be 35 million Kindles in circulation in 2012. As was quoted in the last paragraph of the preceding linked article, “Last week, the e-book outsold the print version for 18 of the top 50 books on USA TODAY’s Best-Selling Books list, including all three Stieg Larsson novels. The week before, 19 had higher e-book than print sales. That was the first time the top 50 list has had more than two titles in which the e-version outsold print.”

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

41 Comments

  1. Janine
    Jan 20, 2011 @ 12:49:55

    Wow. I love my ereader and buy almost all my books digital these days, so I’m contributing to the e-revolution, but the idea that brick and mortar bookstores will disappear worries me, for a couple of reasons.

    (A) What will happen to libraries?

    And

    (B) What will happen to used bookstores where out of print books which have not yet been digitized can be found?

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  2. Annabel
    Jan 20, 2011 @ 13:00:32

    Hold onto your books, people! They’ll be exotic antiques someday…like papyrus or scrolls. :-)

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  3. Kerry Allen
    Jan 20, 2011 @ 13:03:59

    Janine: Libraries are among the first victims in the government spending cuts, so the e-revolution is probably the least of their concerns right now.

    I found this Times Union article ( http://bit.ly/eRHAQY ) about independent booksellers’ response to the mega-chain collapse disheartening. I had hoped, with lower overhead, better customer service, and a more intimate knowledge of their customers’ interests, there would be a revival of smaller book stores.

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  4. Lynne Connolly
    Jan 20, 2011 @ 13:22:42

    I attended a talk by, among others, Marcy Posner of Folio Literary Agency last November, at the UK HNS Conference.
    She said she’d been heartened by the renaissance of the independent publisher in the USA over the last year, and she could see the independents becoming important again in selling physical books.
    It makes sense. With the megachains here in the UK and in the US losing money, the smaller store could have closer connections with the publisher, and take fewer risks.
    The huge returns from companies like Borders seriously impaired the publishing companies, so I can see that pattern disappearing, especially with the decline of the big carriers. (Robinsons’ went bust a couple of years ago).
    Something we don’t often discuss – what could happen with the magazine? Newspapers and magazines are/were distributed with books, often to the same stores, but as yet they don’t seem to have made a push for online sales, although color devices like the ipad make it possible.
    Kudos to Harlequin, who saw this coming years ago and was among the first of the big publishers to set up a decent bookstore (but ditch the DRM, hmmm?)

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  5. Isobel Carr
    Jan 20, 2011 @ 13:31:58

    “Last week, the e-book outsold the print version for 18 of the top 50 books on USA TODAY's Best-Selling Books list, including all three Stieg Larsson novels. The week before, 19 had higher e-book than print sales. That was the first time the top 50 list has had more than two titles in which the e-version outsold print.”

    I find this really surprising. My friends and I discuss this and compare numbers all the time. Most traditionally published authors I know (debuts to best sellers) are seeing their eSales hold steady at around 5% for new titles (but creeping up slowly for backlist once the print books are off the shelves).

    Granted, the data we get is six months old, but there just seems to be a major disconnection between what I see in the press and what I know my friends and I are seeing on our royalty statements. Personally, I'd love to seem my eSales trounce my paper #s. I make a lot more money that way. I'll be really curious to see the first statement for my upcoming release and see if this supposed trend hits my sales at all.

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  6. Isobel Carr
    Jan 20, 2011 @ 13:35:55

    @Lynne Connolly: But magazines also sell by subscription. I take 20+ magazines. The only time I ever buy one in a store is at the airport (airplanes and celb gossip rags just seem to go together).

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  7. Janine
    Jan 20, 2011 @ 14:00:59

    @Kerry Allen: I’m not talking about the short term, but in the long term, if books as physical objects disappear, and only ebooks are published, it doesn’t bode well for the out of print, non-digitized books that libraries and used bookstores carry. Ideally, everything will be digitized before the physical books disappear, but that seems unlikely to me.

    But certainly government cuts don’t help.

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  8. FiaQ
    Jan 20, 2011 @ 14:32:06

    @Lynne Connolly:

    Something we don't often discuss – what could happen with the magazine? Newspapers and magazines are/were distributed with books, often to the same stores [...]

    Print magazine cover sales, circulations and subscriptions are declining. Have been for years. Three mags – all EMAP – that I worked for were already experiencing problems during late 1990s. Periodical/magazine publishing has always been an expensive and tough business, but it was badly hit when the Internet became commonplace.

    There’s no way of stopping the decline because advertisers – the backbone of magazine publishing – are switching to other means of advertising including online, broadcast and radio.

    Advertisers won’t return until the circulation improves massively or when ad space is super cheap. A chance of either happening is zero. The majority of mags are already struggling with existing ad space prices. Twenty years ago, an 1/8th ad was something like £80 and now? £40. Advertisers want to push it lower to something like £10 or £40 per five issues or expand it to a colour half for the price of a 1/8th B&W. Bloody impossible.

    [...] but as yet they don't seem to have made a push for online sales, although color devices like the ipad make it possible.

    Periodical/magazine publishing could be revived by multimedia devices like iPad, but an online magazine isn’t that different from a popular and well-designed blog nowadays.

    Also, there are more devices that enable users to access the Internet anywhere they like. What if one is an aeroplane? There are programs that allow one to read blogs offline. Ebooks will do, too.

    This makes it hard for people to be willing to pay a subscription. A typical core of loyal subscribers (aka lifesavers) simply isn’t enough to keep a typical mag above the fire line, online or not.

    With both in mind, there is no surprise that there isn’t a big push for them. There is no serious money in it these days.

    I do think there will be a solution that could save both industries, but right now we are still stumped.

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  9. Brandy
    Jan 20, 2011 @ 14:40:16

    I find this very disheartening. As it is, I utilize my library because I can’t afford hardback or Trade size prices. I, as yet, don’t purchase many ebooks and until I am forced to do so I will not.

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  10. Jane
    Jan 20, 2011 @ 14:41:30

  11. Jane
    Jan 20, 2011 @ 14:43:35

    @Isobel Carr: Well, we can always assume that USA Today is lying about its stats or that the pubs are lying to USA Today about the sales stats.

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  12. DS
    Jan 20, 2011 @ 14:45:31

    @Lynne Connolly: The first “bookstore” I ever visited– really the only one within 50 miles at the time, was called a newstand but it wasn’t an outside kiosk.

    It was dark and dingy and had two aisles. One held magazines and newspapers, the other a rack of mass market paperbacks. In the back was a few shelves of hard cover books and the Modern Library series– there was also an inconspicuous door when gentlemen could find more– er– racy material.

    It was open from four in the morning when the trucks dropped off the first edition of the papers to midnight. I loved that place. I wish I could find some place like that again.

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  13. Miranda Neville
    Jan 20, 2011 @ 14:51:59

    While there’s no question the growth in digital is huge, be a little careful of those USA Today numbers. I think you’ll find most, if not all, of the titles where digital is the top selling format, are also published in hardcover and/or trade and MMPB. The girl With the Dragon Tattoo, available in all four formats, sold more ebooks than any other format. That could be as little as 26% of total sales. It’s unlikely (though possible) that digital outsold all three print formats combined. We can’t tell from the USA TOday list.

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  14. Goddess of Blah
    Jan 20, 2011 @ 15:22:20

    I love real books.

    The feel of a book is comforting. And its a hobby that remains in the past time. Unlike TV and video games etc, books have a timeless quality to them.

    They also last longer – the amount of e-books that (like DVD’s) have messed up are ridicolous.

    I love books stores. Perhaps we ought to have more bookstores that provide large cafés’ and e-book services. That way we get the best of all worlds – the rich culture of cafés, the real hardcopy books and the e-revolution.

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  15. Jane
    Jan 20, 2011 @ 15:24:09

    @Goddess of Blah My digital versions of your paper books seem quite real. I pay real prices for them. If they are fake, I would like my money back.

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  16. Jane
    Jan 20, 2011 @ 15:28:23

    @Miranda Neville Of course, but the idea that a digital version could outsell any number of print versions is very telling and obviously points to why BN is moving away from selling physical copies of books to becoming more of a tech oriented company. Obviously that is very meaningful for traditional publishing. It may be soon that Wal-Mart is the only key retailer for print romance books.

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  17. FiaQ
    Jan 20, 2011 @ 15:52:08

    @Jane: Thanks. Yeah, I’m not surprised. IMO, considering the current technology and connectivity, the idea of having a print magazine in electronic form still has a long way to go.

    The biggest problem is, of course, the industry mindset where ads and ‘ad-free’ are concerned. I honestly can’t see how a mag can be ad-free without inflating subscription fees massively. For the ad-free subscription edition to work, editorial, sales and production teams would have to be volunteers or have their salaries reduced to £100 p.a.

    Romantic Times, aka RT magazine, are trying to adapt to the changes by opening up to other genres, aren’t they? They made some changes, too. I have no idea if it’s succeeding. Does anyone know?

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  18. hapax
    Jan 20, 2011 @ 17:02:40

    @Jane #15 — Well, there doesn’t seem to be any easy way that Amazon can break into my house and take back the paper books that I have bought from them. Nor can they stop me from lending them, re-selling them, or giving them away. In all these ways printed books are significantly more “real” than e-books.

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  19. Heather
    Jan 20, 2011 @ 17:09:17

    It may be soon that Wal-Mart is the only key retailer for print romance books.

    What a horrifying thought, Jane. I don’t think what I look for in a book would necessarily be what Wal-Mart looks for.

    This whole article and discussion makes me sad. I love my mass market books and would hate to see them go. I rarely get trade and hardbacks. I usually turn to the library for those. And with libraries in trouble…

    We have an ereader, but only use it for free books. Until I can do more with my e-book copy than dump the file in the recycle bin when I’m finished with it, I don’t see myself getting on the e bandwagon.

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  20. Kaye
    Jan 20, 2011 @ 17:14:44

    Just a note regarding libraries – mine has been developing and expanding it’s ebook capabilities. The inventory seems to grow daily and I like that the titles expire after two weeks. A downside of ebooks is – what to do with them? I can’t swap them like I do books, they are just going to hang around in my ereader forever……

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  21. LG
    Jan 20, 2011 @ 17:27:25

    @Kaye: Speaking as a librarian, another downside is that it’ll get harder and harder for libraries to take up the bookstore slack, in terms of keeping stuff around when it goes out of print or just doesn’t sell as well. You can get stuff at a library that you might have to pay an arm and a leg to own or might not be able to find at all. What will libraries do when all their holdings are in the form of electronic resources that they either don’t own or might not be able to change to a new format as technology evolves?

    That’s assuming, of course, that library funding isn’t completely cut in the future…

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  22. hapax
    Jan 20, 2011 @ 17:54:12

    @LG — that is a very real concern, especially since the primary e-book vendors don’t actually sell their books to the libraries — they sell *access* to those books.

    If the companies should go out of business (or, more prosaically, if the library should not renew their annual contract) what happens to the thousands of dollars worth of material that the library once “owned”?

    There is also the very real problem that most libraries receive substantial — 40- 60 % — discounts on the printed materials they buy, through vendors. Those low prices are mostly subsidized by bulk sales from publishers.

    As print runs decrease, and publisher margins vanish, it is extremely unlikely that library budgets will be increased to make up for the loss of discounts.

    At least one “public” library near where I live has returned essentially to the old “subscription library” model, where access to a wide variety of reading materials becomes just another privilege of the well-off.

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  23. Jane
    Jan 20, 2011 @ 19:13:08

    @hapax I disagree. The content is the same. It is the container and method of delivery that is different. What is more ephemeral and needs to be changed in the digital world is the concept of ownership. If publishers and authors want to eliminate or erode ownership rights then the price will have to decline commensurate with that.

    I can’t recall who said it upthread (I’m commenting from the admin side of DA) but books are now competing with other forms of media and when you can buy a game like Angry Birds for $4.99 and have endless hours of entertainment, who is going to pay 7.99 for a book?

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  24. De
    Jan 20, 2011 @ 20:30:18

    @hapax:
    “There is also the very real problem that most libraries receive substantial -’ 40- 60 % -’ discounts on the printed materials they buy”

    Serioiusly? I’d LOVE to know where someone’s getting 60% off from. No, really, I would. I do most of the adult buying for my library, regular print fiction and nonfiction, dvds, and cds. We typically get 35% off, except for when it’s 10% off or nothing off.

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  25. GrowlyCub
    Jan 20, 2011 @ 20:56:07

    I hate the idea of mmpbs disappearing. I don’t buy HC and I actively loathe trade sized books – overpriced, floppy, heavy, unwieldy ickies that they are.

    I read quite a bit of e-, but only if the price is right and it hasn’t been since last April. Right now, I’m getting most of my e-books from netgalley or my online library and if I like a book I find a mm paper copy.

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  26. Ridley
    Jan 20, 2011 @ 22:12:52

    @Jane:

    You paid for Angry Birds?

    On that note, I keep thinking of you lately and how you say piracy is a fraction of the threat to publishing that other media is. Between hockey season and WoW Cataclysm launching Dec. 7th, I’ve read a single book since November. I’ve bought zero. The guilt is approaching Catholic levels, but I can’t seem to fight the distractions lately.

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  27. brooksse
    Jan 20, 2011 @ 23:08:13

    @hapax: “Well, there doesn't seem to be any easy way that Amazon can break into my house and take back the paper books that I have bought from them.”

    While it’s true that Amazon (or B&N or whomever) might have access to remove books from their own wifi-enabled reading devices, or from an online archive at their store, it would be much, much more difficult for them to hack into my computer and delete the backup copies I have stored in various directories on my hard drive. And no way could they remove the copies I have on thumb drives, SD cards, or from my Sony Reader that dooes not have wifi.

    At least for me, electronic copies are proving to be more durable than hard copies. With hard copies I was limited by physical space, and as soon as space ran out to store books, I had to decide which books to keep and which ones to get rid of. Occasionally, I would find myself re-buying a book at the used bookstore that I had previously traded in because I wanted to re-read it years later.

    With digital copies, I don’t have that issue. My Calibre library currently has over 400 ebooks (a good number of which were promotional freebies or ridiculously cheap). With hard copies, I think my limit was between 50 and 75 books.

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  28. SAo
    Jan 21, 2011 @ 01:23:07

    Many magazines offer plenty of free content on the web. I find between the free sections of the many magazine available, I have no need to choose which to buy a subscription to.

    I’ve also found, perhaps it is because I am overseas, that on-line magazines will outsource their ads to Google. I read parts of Taunton Press’s Threads and was disappointed to find instead of the ads for useful sewing supply stores they have in their print version, they had outsourced ads to Google where clearly, the keyword was sewing or sewing machine and the tone and target audience of the magazine was irrelevant. Instead of say, sources for interesting or antique buttons, the ads featured things like industrial sewing machines in lots of 100.

    No magazine is going to make money on the click through rates of poorly targeted ads.

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  29. DS
    Jan 21, 2011 @ 07:24:02

    After having to help someone throw away most of their mmpbs due to a burst water pipe or had to commiserate with another friend whose house burned down taking out their total library, I can appreciate a library that I can backup and stick in my fireproof lock box– and most of it is also available to me nearly anywhere because it is also in my Dropbox as well.

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  30. MicheleKS
    Jan 21, 2011 @ 07:41:46

    I recently read an article that said paper books will become a niche market. And I can see that happeig because of the brick-and-motar mega bookstores becoming a thing of the past like the mega music stores. I don’t know of a major music store chain left yet I do know in my part of the world there are still independant music stores that cater to music buyers looking for cd’s or even vinyl records. Independant bookstores may become the place for book buyers to buy their paper copies or out of print stock in the coming years. It’s just an evoloution in business models that I don’t think anyone can predict past a certain point.

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  31. Patrice
    Jan 21, 2011 @ 09:26:07

    I see the rise of the independant bookstore again, like before the big box bookstores rose to popularity. Anyone recall the movie “You’ve Got Mail”? Our independant store does a lot of community events like author booksignings, book clubs and childrens story hours, etc.

    I will mourn mass market paperbacks if they indeed fade away. To me that IS a paperback. If publishers go to only trade format I think they will lose a lot of business! I refuse to pay the price for trade format. I go to the library for those and a lot of my books. Thankfully our library is very active with lots of community programs and media rooms and elending programs.

    We have iThings, laptops, Kindle and books and continue to use and enjoy all formats. We buy online and in brick and mortar bookstores and will stop to browse in a bookstore almost as often as Home Depot! lol A weekend visit to the library is almost a given. I don’t see us changing any of that. The publishing and distribution business models may change but readers will find the books they enjoy.

    I do need a class on how to back up my Kindle. I am still not comfortable with how to sideload stuff to different devices, but I am easily distracted and would rather be reading. LOL

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  32. MaryK
    Jan 21, 2011 @ 09:47:19

    I used to feel like it was safer to have physical books than invisible ebooks but I’ve gotten over it. I have to buy a new laptop about every 3 years because that’s about the time they completely die on me. But between backups and salvaging harddrives, I’ve never lost data so I’m confident my ebooks will last. Now my worries (because I always have some) are the out-of-sight-out-of-mind aspect of ebooks and how I’ll get backlist titles of out of print books that were digital only.

    BTW, is it just me or has the subscribe without commenting feature disappeared?

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  33. Joy
    Jan 21, 2011 @ 09:57:33

    @Patrice: “will mourn mass market paperbacks if they indeed fade away. To me that IS a paperback.”

    Mass-market is, technically, a distribution/marketing route and not a format or size, and involves product-destruction or quick sale. It’s totally possible to issue a mass-market SIZE paperback using trade pb distribution/marketing methods, although it may not be profitable.

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  34. Heather
    Jan 21, 2011 @ 10:20:58

    I find it really interesting that so many of the comments talk about being able to back up their e-books on computers or thumb drives. Interesting, because I keep so few of the books I read (maybe 10%) and I’m not a big re-reader. I don’t want to keep them.

    That’s one of the things that keeps me away from e-books: I can’t get rid of them. Or I can, but not in any good way — like selling to a used book store, sending it to a friend who might like it, or giving them to Goodwill for a tax deduction. And for that, the prices keep me away, among other things.

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  35. Jane
    Jan 21, 2011 @ 10:38:46

    @MaryK Yes, I apparently have missed that in updating the theme. Will get that worked out later today.

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  36. Lynne Connolly
    Jan 21, 2011 @ 12:06:56

    I’ve learned a lot in this discussion, and I just wanted to say thanks.
    More like this keep us all well informed and stops panic!

    If the mmpb is going the way of the dodo, then that means the print run is gone, too. Trade paperbacks are usually produced to order, the numbers much more flexible. There are still returns, but that’s because the bookstores insist on sale or return orders.

    That’s a profound change for the publishing industry.

    And yes to the paper books v ebooks issue. When I want to make a mess, ie make notes, leave little stickers around, and generally demolish a book, usually a non fiction book, I’ll still go to paper, but I get most of my fiction in ebook these days. I sideload most of mine, through Calibre, and thanks to instructions here and elsewhere, it’s a cinch.
    You can save all the books on your Kindle just by plugging it into your computer and copying the My Docs folder. You might not be able to read the books without a Kindle program or app, but you can get one for almost every format and device (except for BlackBerry in the UK – why, BlackBerry, why?)

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  37. LG
    Jan 21, 2011 @ 12:20:55

    @Heather: While I buy some stuff with the intention of keeping it (I read a library copy and decided it was good enough to own), and while I fall in love with some stuff I buy that I had never read before, I’m like you – I don’t want to keep everything. I’m unlikely to get the same amount back that I originally paid for the book, but at least I can sell the “meh” books and the stinkers and put the money towards other, possibly better, books. I don’t like the idea that I might pay the same, or nearly the same, price for an e-book and not be able to get that little bit of money back if the book turns out not to work out for me.

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  38. Stumbling Over Chaos :: Brrr! Linkity from subzero (Fahrenheit) land *insert plentiful shivering*
    Jan 21, 2011 @ 19:43:01

    [...] news from Dear Author and Book Lovers [...]

  39. Susan D.
    Jan 21, 2011 @ 21:02:43

    @Lynne Connolly Trade paperbacks are not printed to order. (Neither are hardcovers.) They are printed speculatively (hopefully with smart data). Even when reprinted, the number chosen is speculative: how many do we think we will we sell in some amount of time, and what’s the unit cost on various quantities so we don’t take a bath on the book’s P&L.

    If a book sells 25 copies a year or fewer, Print on Demand (POD), or print to order, is a great option. More than that and the unit cost probably favors SRDP, or perhaps even offset.

    Short run digital printing (SRDP) print runs vary from 26 copies (aka super short run digital printing) to about 1000 copies. Somewhere between 800 and 1250 copies it becomes more economical to go offset.

    I suppose the model might be different for a publisher who is primarily an ebook house who also sells in print. And this is just one publisher’s opinion…. :)

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  40. hapax
    Jan 22, 2011 @ 19:09:07

    @De #24:

    “I'd LOVE to know where someone's getting 60% off from”

    Ingram or B & T, on big orders. What book jobber do you use? Are you a smallish library? I know that they have tiered discounts, depending on purchase ammounts.

    Is a consortium possible for your library?

    Of course, with the size of print runs decreasing, this will probably all become a moot issue anyways.

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  41. brooksse
    Jan 22, 2011 @ 20:26:00

    @Heather: “I find it really interesting that so many of the comments talk about being able to back up their e-books on computers or thumb drives. Interesting, because I keep so few of the books I read (maybe 10%) and I'm not a big re-reader. I don't want to keep them.”

    The main reason I back up my books is to make sure I don’t lose access to the books I haven’t read yet. My TBR pile is crazy big thanks to freebies, coupons, sales, and limited time specials.

    As for keeping books after reading them… occasionally something I’m reading now sparks an interest in a book I’d read previously. I might want to re-read parts of the previous book, or maybe just look something up. I’m already backing up the books I haven’t read; it’s no big deal to also keep copies of the ones I have read. Since it’s just bytes stored in a folder somewhere, I don’t see a point in not keeping copies of books I’ve read, just in case.

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