Barnes & Noble is Dead

Barnes and Noble I s DeadThe year was 2010. Stephen Riggio, then CEO of Barnes & Noble, heralded the company’s entry into the epublishing world. In a breathless announcement, Riggio euphorically proclaimed that Barnes & Noble would top the 18 % mark in e-books “overnight.” Not to be outdone by his own enthusiasm, Riggio predicted that Barnes & Noble would earn better margins from e-books than print books. Its booksellers would become, in his words, “e-bookevangelists.”.
Beware of enterprises that require new jargon.
Today, even as I write, Barnes & Noble is burning and crashing. According to CNET, the company’s earnings slumped an astonishing 63 percent, from $150 million last year to $55.5 million this year.
Over the last quarter, Barnes & Noble watched in horror as Nook sales, their e-book division, plummeted 26 %, with losses of over $190 million. It was like watching Icarus fall out of the sky. Stephen Riggio’s dream of “overnight” success was so far off the mark, one had to wonder if he was high when he made his announcement two years ago.
Riggio wasn’t high. Nook is a great e-book reader. Anyone who has worked with Nook’s. epub files can tell you they are infinitely better than the cumbersome.mobi files used by Amazon’s Kindle. Epub files produce a nice, cleanly formatted page that looks just like a book. Mobi files look just like a mess. But, as every entrepreneur knows, better products do not necessarily lead to better sales. Where did Barnes & Noble go wrong?
Where B&N went wrong.
Barnes & Noble had a better product, a better reputation, and a farther reach than anyone else in the book selling business. The problem was that Riggio misjudged– very badly– how to handle the burgeoning business of self-publishing.

With the advent of epublishing, writers who could never hope to see their books in print could get their work to readers without the time-consuming, and usually fruitless, task of trying to snare an agent, followed by the even more frustrating job of trying to hook a publisher. With the elimination of pesky editors who demanded “show don’t tell” and required the proper use of apostrophes, everything that went on or between an e-book’s cybercovers was entirely up to the writer. To add icing to the cake, writers who epublished got to keep 70-80 % of their royalties.
This surge in self-publishing, owing in large part to e-books, represents not just people “living the dream,” but an enormous business opportunity for anyone with the ability to turn other people’s dreams into their hard cash. Barnes & Noble, with its gentlemanly rules of conduct and brick-and-mortar mentality, simply had no concept of how to corner the market.
The coup de grĂ¢ce– Amazon’s KDP Select.KDP Select
Writers could put their e-books up for sale much as they did their used print books. Barnes & Noble did the same thing, but the difference– and this is crucial– was that if you enrolled in Amazon’s KDP (Kindle Direct Publishing) Select program, you got to give your book away.
Writers quickly discovered that giving an e-book away for free was the fastest, cheapest, and easiest way to build a readership. Books in popular genres could rack up 20,000 to 30,000 downloads in a single weekend.
Cottage industries have sprung up around the KDP Select phenomenon. Numerous websites will not only post which Kindle books are free on any given day, but will review them, and even send daily free titles to your inbox. There is no denying the appeal of getting something for nothing.
For writers, and for Amazon, it is a win-win situation, because free days are fantastic promotional tools. Invariably, free days lead to increased sales. And for those writers who simply must hold their precious darlings in their hands, Amazon also provides print-on-demand. Amazon’s CreateSpace took first place in the self-publishing world last year with 57,602 new titles. Amazon is happy. Writers are happy. Customers are happy. Everybody is happy.
Except Barnes & Noble. Which is dead.

Stephen Riggio, then CEO of Barnes & Noble, heralded the company’s entry into the epublishing world. Not to be outdone by his own enthusiasm, Riggio predicted that Barnes & Noble would earn better margins from e-books than print books. Over the last quarter, Barnes & Noble watched in horror as Nook sales, their e-book division, plummeted 26 %, with losses of over $190 million. Barnes & Noble, with its gentlemanly rules of conduct and brick-and-mortar mentality, simply had no concept of how to corner the market. Barnes & Noble did the same thing, but the difference– and this is crucial– was that if you enrolled in Amazon’s KDP (Kindle Direct Publishing) Select program, you got to give your book away.

 

To Higher Profits in the New Year,

Alexander J. Kubicek

MPeMG

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