Jan 5 2012
Thursday News: BN Is Selling Off Assets, Trad Regency Book Deals
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.
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Hachette announced that digital sales for James Patterson grew by 2 million in the past seven months versus 4.7 million for print sales.
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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.
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Deals
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
Send to Kindle
Jan 05, 2012 @ 10:27:17
Ouch.
Jan 05, 2012 @ 10:47:40
I’m really disappointed to hear about the Brilliance Audio books stopping digital sales to libraries. I can still remember how excited I was to find out I could download straight to my iPod from the library rather than check a dozen CDs and load them on my computer.
It boggles me, too, that they would take this stand. When I download the library CDs to my computer, that book is available in my iTunes forever. When I download digitally (through Overdrive) I’ve got 21 days and the book disappaears.
Do they think I’m going to magically develop a budget that includes audio books if they take away my digital access? I’ll just go back to the library’s CDs. I feel like I’m missing the point. Is it a pirating thing?
Jan 05, 2012 @ 11:32:16
@Carin: I’m right there with you.
I use the library for audiobook downloads quite a bit. It’s also led me to purchase tons of audiobooks that I would not have bought had I not been able to give the first few books in a series a try first.
If it’s a piracy thing then they’re idiots as this will have little to no effect on that.
Jan 05, 2012 @ 11:42:48
My bf stopped pirating pc games when he got his Steam account. Not only that, but he’s also willing to pay full price for new releases. Most of his friends are also on there. I think that the community feel of Steam (friends, chat, talking with your team while you play) is also helping keep the users there. If all their friends play a game via Steam, chances are higher they’ll join and keep buying games through Steam IMO.
Jan 05, 2012 @ 11:47:02
Unless Nook’s prices seriously undercut Kindle and Kobo’s, and/or have a rocking iThing app, I don’t see them taking off internationally. They’re at least a year too late.
Jan 05, 2012 @ 12:33:24
Chiming in to agree with Carin and Brian. I frequently download audiobooks from the library and am more likely to seek them out for purchase once I’ve had a chance to listen to say, one of a series, or a specific narrator who really nails it. Case in point, I listened to Tavia Gilbert’s narration of one of the Night Huntress novels by Jeaniene Frost and totally LOVED it. More than I had when reading the book. So much so that I’ve turned into a fan of the series and have purchased several of the subsequent books in print and audiobooks on CD.
This move makes little sense to me, but I can only assume it’s driven by the mistaken assumption that in the absence of exposure to audiobooks via the library, we’ll suddenly go out and start buying them full price en masse. Ain’t going to happen here.
Jan 05, 2012 @ 12:51:36
I just got an email today that Joanna Bourne’s Her Ladyship’s Companion is available at Regency Reads as an ebook ($5 US). I know that the paperback is going for $40 on Amazon marketplace. I remember someone mentioning this title in the recent review of The Black Hawk.
I just discovered the traditional regencies and I am loving the release on ebooks of these titles. I have downloaded several of Blair Bancroft’s and Carola Dunn.
Jan 05, 2012 @ 13:50:55
@Sarah T – to chime in on the Nook. A couple of my friends got Nooks for Christmas. I have the app on my iPad but haven’t really used it. They sent me email requests through the Nook “Be my Nook Friend”. Sounded interesting to me, and we’d be able to lend books. I would change reading apps if it connected me to friends. Except the friend thing didn’t work. I tried several times. I tried logging on to my Nook account and trying to friend them. It didn’t work.
I talked with my friends with the Nooks (instead of just the app) and heard they were having difficulties, too. Two people were “friends” but they weren’t sure what worked, because it took many tries.
Since I was messing around anyway, I tried opening a book with the Nook app and realized I couldn’t. That’s right, the Nook app will only open up books bought at B&N. No way to sideload onto the Nook App. (I think this is an app issue, because I’ve heard you can sideload onto a Nook reader.)
Anyway, I’m done with Nook. Back to Bluefire. But what a loss. Because if the Nook App had done some sort of friendy thing and been able to read my books, I probably would have moved over. Same thing happened to me with Kobo. I would think they make more money selling ebooks than they do ereaders, so why not have a decent app?
From where I sit, if BN was going to be saved by the Nook it doesn’t look good. And the fact that Jane reports they are looking to separate the Nook business from the rest of BN doesn’t look good either.
Jan 05, 2012 @ 14:02:13
@Carin: I own a Nook, and so does a friend of mine. When my friend noticed that some of the e-books she bought from B&N were lendable, she tried to lend me one. We tried two times, and, both times, I could accept the lending offer but couldn’t download the book to read. We theorized that we had to both have our Nooks on and connected to wi-fi for lending to work, but the first two times were so frustrating that we haven’t tried since then. Either we just weren’t getting how to properly do the lending, or B&N has more problems than just with its apps.
By the way, yes, you can sideload books onto the Nook. That’s how I add all of my e-books, since I buy them all from sources other than B&N.
Jan 05, 2012 @ 14:07:58
@LG: Angie James and I tried to connect with each other through the nook friends program (I had the nook color at the time). We could never get it to work and I couldn’t find any instructions other than “find other people through your email address book” which was never going to happen!
Jan 05, 2012 @ 15:00:42
BN seems to be really suffering in terms of programming ability. In addition to this screwed-up lending-to-friends function, they’ve got problems with something as basic as their wish list function. Unlike Amazon, BN requires a dedicated wish list for ebooks — and last month a number of users lost their ability to add items to their Nook wish list while browsing on-line. BN knows it’s a problem, but either they can’t come up with a fix, or as far as they are concerned it’s not an issue. They are losing sales because of it, though — ARe makes it much easier for me to keep track of books I want to buy, so that’s where I end up buying them….
I love my Nook, but I’m about to buy an e-reader as a gift, and I’m feeling pretty clear that it’s not going to be a Nook.
Jan 05, 2012 @ 15:28:11
That sucks!
Jan 05, 2012 @ 15:32:10
@TFQ: I find this fascinating since BN is obviously starting to realize the ebook future is much brighter than print, at least for the foreseeable future. Why would they not invest in that part of their business? I have always found BN’s site clunky and slow and less informative than Amz’s.
BN’s staggering lack of web-related customer service (as envinced by Jane and other’s inability to use what was originally one of Nook’s selling points over Kindle – lendability) is going to contribute to their downfall.
Jan 05, 2012 @ 16:03:06
The absolutely absurd lack of usability is the reason my husband ditched a one-year-old Nook for a new Kindle Fire this holiday.
Jan 05, 2012 @ 16:18:16
The interview with Kelly Gallagher had more ellipses than a Barbara Cartland heroine’s declaration of undying devotion. I’m wandering what was cut out.
Jan 05, 2012 @ 16:18:19
@TFQ: I have this problem with adding books to my nookbook wish list online also. I’ve found a way around it (go to the wishlist, click on Add more Items, search for the title there and add it) but it’s unnecessarily time-consuming. I buy almost all my books through their website, so they really need to fix it because I find it quite frustrating to deal with right now, even with a workaround.
Jan 05, 2012 @ 17:09:10
@Beverly: That’s ridiculous. How do businesses expect to stay in business when they make it hard for customers to give them money?
People like to accuse Amazon of killing off the competition with low prices; but low pricing isn’t Amazon’s most attractive feature. Ease of use is.
Did Apple smoke the competition with their low prices? Ha! No. iThings are easy to use, convenient, and fun.
Jan 05, 2012 @ 19:04:46
@Carin: I don’t which nook app you’re using, but I have no problems sideloading with the desktop app. I load all my non-BN books (epub and PDF) to the app and then port to my nook. In the PC app, you have to switch to the My Stuff screen, then there’s a button to bring up a file load menu.
Interestingly enough, there’s an article from Forbes that I was reading on Google News today about how BB is working their way into bankruptcy. http://www.forbes.com/sites/larrydownes/2012/01/02/why-best-buy-is-going-out-of-business-gradually/
Jan 05, 2012 @ 19:08:13
@sandra: I think Carin is referring to the Android or iOS apps.
Jan 05, 2012 @ 19:28:11
@Beverly: I have now created an “Essential wish list” on BN.com, and I can add books to that list from the “Add to a list” drop down on the book page, so that’s how I keep track of books in a pinch. It’s easy enough to copy books from the EWL to the Nookbook list, except that I have to actually remember to do it, which is a chancy proposition some days. And it annoys me in a major way to have to do it.
Jan 05, 2012 @ 19:48:51
I got a Kindle. B&N failed to sell e-books to me in Russia, where I live. The sales staff was uninterested in my situation, so, I’ll be buying my books from Amazon, now. Way to go B&N!
I’ve been long aware that Russians pirating of e-books (widespread) is a function of not an unwillingness to pay, but a lack of legal e-book stores that meet the needs of the consumers, whose experience of internet purchases is very different from Americans.
Jan 05, 2012 @ 21:46:10
@Jane
Excellent post and commentary. Thanks for the link to my post on Barnes & Noble. I’ve also got a 3-part series about Barnes & Noble running on the Digital Book World site. I’ve looked at their advantages. Tomorrow I’ll be examining these headlines. And next week, a thorough overview of the challenges that the company is facing.
Barnes & Noble’s important role in the book publishing ecosystem means that we all have a stake in the outcome.
Jan 05, 2012 @ 22:57:15
Interesting about Russia. I get a surprising number of hits from there on a weekly basis. Although I hate to assume, most could be pirates. Pirate articles generate thousands of hits.
Jan 05, 2012 @ 23:46:54
I really hope Barnes & Noble survives. I don’t know where else I’d buy from! I really don’t like Amazon for various reasons and I love having physical bookstores. I can’t imagine not being able to take my future children to a bookstore… the thought makes me extremely sad.
Jan 06, 2012 @ 14:21:02
@Rebecca: I’m with ya. I just took my seven-year-old niece for a book shopping trip. As we promenaded through the various shelves, she stared up in awe and said, “I really love this library.” I pointed higher so she could see the second floor and whispered, “Look, there are even more books up there.” It rook her breath away.
I bought her four books and then we had cookies and milk and frappe in the cafe.
I’m a dedicated Nook user, but I love print books too and I love bookstores.
Jan 06, 2012 @ 16:10:00
For those of you having problems with B&N’s online ebook wishlist.
Just create a new (general) wishlist and use that one for ebooks.
Jan 06, 2012 @ 19:32:57
Many in other countries it ( piracy) may be a service issue but in the us it is a price issue.@ jane you provide readers of your blog where to find to find a good deal on book and codes to cheapen the expense of buying digital and paperback books. I believe that if it was a service issue people like me would not go into blogs like Janes or Smart bitches to lower the cost of ebooks. I am making the assumption that publishers make the assumption we readers after paying rent/morgage, bills, kids ( what ever is ur budget).have 5.99, 8.99 or 10.00 to spend on an ebook when i can just ( in theory) buy the reissued book in a library,used bookstore, garage sale, thift store for .25 cent per book , 1. for 4 .
No piracy occurs when the mass public or a certain % of the public doesnt care about the copy right laws or an individual doesnt care or a culture doesnt care about the copyright law. I personally believe that guy who said piracy is a service issue is an idiot.
In our county we have strict puinshment for violating copy rights laws.In other parts of the world it is norm or even part of the culture to find some viloating copy right laws . If i remember correctly that is why the mexico has one tv set, u.s has 3 or more, u.k. same but in africa everyone is poor. If there is no property( copyright law) violation in place the little people are very poor.
Jan 06, 2012 @ 21:42:22
@Geert: That works, but you can’t access the general wishlist when you want to purchase directly from your device.
Jan 06, 2012 @ 22:22:24
@lisa The guy who said that piracy is a service issue runs one of the largest, most profitable video game companies in the world. I think to be able to do that would be the opposite of being an idiot.
B
Jan 07, 2012 @ 04:11:36
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Jan 07, 2012 @ 13:32:58
[...] Jane from Dear Author wrote an amusing piece about it in her Thursday News post: http://dearauthor.com/features/industry-news/thursday-news-bn-is-selling-off-assets [...]
Jan 07, 2012 @ 13:43:10
What’s got me really interested in this is I *thought* I’d read somewhere that when you were in a BN store and purchased an ebook over their wifi through either your nook or your nook app, the story received a credit for that sale. It seemed like a good way to help keep the physicals stores solvent. But if they’re spinning off their Nook, I’m not sure what the actual plan is. Also, my local BN saddened me. They took out all the nice chairs and most of the tables except for in the cafe and so when I wanted to find a nice chair to sit in and surround myself with books and coffee, I can no longer do it there. My local Hastings, however, can. It really hurts my heart to think that physical book stores may indeed be going the way of Borders
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Jan 12, 2012 @ 19:26:17
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