Jan 5 2012
I’m not certain what this means, but it is possible that the privately held BN is trying to leverage its different components into another sale. First, it is actively seeking to sell Sterling, it’s print publishing arm. Today’s press release also touts some great Nook numbers and the announcement that it will explore the benefits of spinning off the Nook division, the only growth segment of BN.
During the nine-week holiday period ending December 31, 2011, NOOK unit sales, including NOOK Simple Touch(TM), NOOK Color(TM) and the new NOOK Tablet(TM), increased 70% over the same period last year. Sales of NOOK Tablet exceeded expectations, while sales of NOOK Simple Touch lagged expectations, indicating a stronger customer preference for color devices.
Digital content sales also grew briskly during the same nine-week period, increasing 113% on a comparable basis. Content sales are defined to include digital books, digital newsstand, and the rapidly growing apps business.
In order to capitalize on the rapid growth of the NOOK digital business, and its favorable leadership position in the expanding market for digital content, the Company has decided to pursue strategic exploratory work to separate the NOOK business.
Kobo sold to Ratuken for $315 million on much lower sales:
Kobo’s sales were C$40.9m in the 13 weeks to 1st October, leading to a loss of $10.8m, compared with sales of C$13m and a loss of C$6.8m. In the half-year to 1st October 2011, Kobo had sales of C€58m leading to a loss of C$23.4m.
I’m not sure what the assets are of a physical component of BN. The leases? The spin off and ultimate sale may make the most financial sense to the shareholders of BN, primarily the Riggio family. I thought this article about how BN is the Best Buy of retail book sales was really illuminating.
I’m not convinced that the Barnes & Noble stores are a net asset. They currently operate near breakeven or a little below. Is it going to get any easier to make money in book retail in the next few years in a soft economy? I just don’t see it.
BN needs to move internationally sooner than later. According to The Gadget Website, over a million ereaders were sold in the UK over the holidays, with 92% of them being Amazon.
Hachette announced that digital sales for James Patterson grew by 2 million in the past seven months versus 4.7 million for print sales.
Brilliance Audio, owned by Amazon, is pulling its digital titles out of the library lending market. Privately, I heard that agents of popular authors are pushing for this (as well as DRM).
ffective January 31, 2012, as instructed by the publisher, BrillianceAudio will suspend the availability of all download audiobook titles for library purchase across all vendors. This change does not affect any titles currently in your library’s catalog. You will not, however, be able to add any additional copies.
This is a strangely documented account of an interview with Kelly Gallagher of Bowker. Essentially, Nook is growing in market share over Kindle and print still dominates with over 86% of all sold titles in print. Gallagher said that the publishers hopes are that lower prices equal more purchases but they aren’t seeing it yet (I guess for hardcovers) :
And the bet that retail and publishing are taking is that … people ultimately will buy more. At this point, we see it as more units, but because of (e-books’) lower price point and not significantly more units, we see more cannibalization going on, or substitution purchasing, vs. them suddenly now buying twice as much as they used to buy in print.
Price is a big deal for readers, both digital and print. As a reader, it’s easier to pay print prices because the print book has utility beyond the read. You can resell, trade it, share it, or even give it away. It has some shelf value as well. Digital books with their limitations on sharing, trading, resale, and the like, have much less utility and there is no palpable extra utility thus digital books valued lower by readers. This lower value expectation has been driving the price of books down. The question I have (and to which I don’t have the answer to) is whether sub $4 prices (which is where I think consumer expectations will settle) is sustainable. Valve co founder Gabe Newell sat down to talk about Steam, the cloud based video gaming platform. Newell argues that piracy is not a pricing issue but a service issue:
One thing that we have learned is that piracy is not a pricing issue. It’s a service issue. The easiest way to stop piracy is not by putting antipiracy technology to work. It’s by giving those people a service that’s better than what they’re receiving from the pirates. For example, Russia. You say, oh, we’re going to enter Russia, people say, you’re doomed, they’ll pirate everything in Russia. Russia now outside of Germany is our largest continental European market.
Steam has also done a ton of pricing experiments from which they’ve derived some interesting data (discounted promotions do better than free promotions which I’ve wondered about before).
Promotions on the digital channel increased sales at retail at the same time, and increased sales after the sale was finished, which falsified the temporal shifting and channel cannibalization arguments. Essentially, your audience, the people who bought the game, were more effective than traditional promotional tools.
His conclusion is that they aren’t sure of anything yet but that they will keep experimenting. This is really a must read article.
Nicole from BlogHappy alerted me to the fact that a number of traditional regency authors are republishing their backlists digitally. The following is a small selection of them priced at $.99.
- A Gamble on Love by Blair Bancroft * 0.99 * A | BN | K | S
- Lady Silence by Blair Bancroft * 0.99 * A | BN | K | S
- The Temporary Earl by Blair Bancroft * 0.99 * A | BN | K | S
- Scandalous Virtue by Brenda Hiatt * 0.99 * A | BN | K | S
- Lady Dearing’s Masquerade by Elena Greene * 0.99 * A | BN | K | S
- A Compromising Situation by Shannon Donnelly * 0.99 * A | BN | K | S
- Barely Proper by Shannon Donnelly * 0.99 * A | BN | K | S
- Proper Conduct by Shannon Donnelly * 0.99 * A | BN | K | S