Bugging the Strategizing Back-Rooms of Barnes & Noble

Customers at a Nook kiosk in a Barnes & Noble store. The company
said that it would no longer manufacture color tablets

Barnes & Noble is in a 'make-or-break' corner. Beat up pretty bad from its digital dalliance with the Nook e-reader --- bleeding blood-dollars from its coffers.

B&N wanted to expand its business in 2009 so they ventured into the digital field with the introduction of its first black and white e-reader, the Nook. The Nook had some initial success that convinced the B&N strategizers to further expand into more bells and whistles for the Nook --- But, this placed the Nook e-reader-turned-tablet into a field of bigger, heavier hitters which just overwhelmed the bookseller-recently-turned-digital-entrepreneur --- resulting in Barnes & Noble's digital plans being blown to hell.

"For the fiscal fourth quarter, the Nook unit showed a $177 million loss in earnings before interest, taxes, depreciation and amortization, or Ebitda, more than doubling the loss from the period a year earlier. Sales fell 34 percent, to $108 million."

On top of this, Mr. William Lynch, the tech wizard hired to run B&N's digital division, quit! Talk about pressure and intrigue.

So now Mr. Leonard Riggio, the chairman of B&N and the one who initially built the bookseller into a powerhouse, is once again in the captain's chair. He also cherishes the physical bookstores.

So you can just see the 'think tank' smoke billowing out of the B&N's boardrooms --- resulting, hopefully, in financial soundness for the last major bookstore chain. 

If B&N survives and grows, you will hear a universal sigh of relief emanating from publishers, authors and agents!

So, stay tuned!

More details by Julie Bosman in the New York Times:  

Fork in the Road for Barnes & Noble

William Lynch was brimming with the enthusiasm of a start-up entrepreneur. It was January 2012, and Mr. Lynch, Barnes & Noble’s chief executive, was showing off the company’s shiny Palo Alto, Calif., offices, a 300-person outpost that was the center of its e-reader operations.

He and other executives proudly displayed their new devices, talked about plans to expand and promised that the bookstore chain could go head-to-head with the giants of Silicon Valley.

“We’re a technology company, believe it or not,” Mr. Lynch said.

But only 16 months later, Barnes & Noble’s digital plans are crumbling. Last month, a disastrous earnings report coincided with the company’s announcement that it would no longer manufacture color tablets. And on Monday,Barnes & Noble announced that Mr. Lynch, the young, tech-savvy architect of the company’s digital strategy, had abruptly resigned. A new chief executive was not named.

That leaves the nation’s only major bookstore chain without a clear path forward, reviving fears among publishers, authors and agents — who are deeply dependent on a viable Barnes & Noble — about its future.

Barnes & Noble executives have acknowledged one fact: the digital business that was to be the centerpiece of its growth strategy must be retooled.

After introducing its first black-and-white e-reader in 2009, called the Nook, Barnes & Noble joined the tablet race, a move that industry experts have pointed to as a source of the company’s current troubles. Barnes & Noble’s inexpensive color tablets aimed for a niche in the market below the iPad. But while the company grabbed close to 25 percent of the e-book market, its digital division was getting pummeled by larger competitors, and bleeding money.

“Barnes & Noble was in a Catch-22. They had to do something in digital and Nook was their best shot at it,” said Peter Wahlstrom, a retail analyst with Morningstar Equity Research. “William Lynch had a good vision, but he was overwhelmed and fighting with one hand behind his back.”

Mr. Lynch’s departure, which was effective immediately, leaves Leonard Riggio, the chairman of Barnes & Noble, with a much more visible and powerful role within the company. Mr. Riggio, who built the company into a national force, is known to cherish the physical bookstores. His increased influence, analysts said, could shift the company’s focus more toward the retail side of the business.

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EXTRA! EXTRA! Top Media Moguls Form Venture to Compete AND Lead in Digital and Print Book Markets

From left, Barry Diller, Frances Coady,
Evan Ratliff of Atavist and Scott Rudin.

Tonight's post takes us right into the big business boardrooms, through media chiefs' critical thinking/analyses and exposes the latest venture that is about to enter 'the turbulent world of book publishing'.

Perhaps Amazon will at last get a worthy opponent :)

David Carr (Julie Bosman contributed reporting), The New York Times, reports the details:

Media Chiefs Form Venture to E-Publish
 
Two powerful entertainment moguls, Scott Rudin, the film and theater producer, and Barry Diller, the chairman of IAC/InterActiveCorp, are joining together to enter the turbulent world of book publishing.

Mr. Rudin and Frances Coady, a longtime publishing executive, have formed a partnership with Mr. Diller in a new venture called Brightline. It will publish e-books and eventually physical books in a partnership with Atavist, a publisher based in Brooklyn with expertise in producing electronic books and articles.

The alliance creates a new competitor in the rapidly changing digital book market, one that is dominated by Amazon, the online retailer, which has roughly 65 percent of e-book sales. Though fledgling, the new venture will enjoy the support of two influential executives who control a wide array of resources in media and entertainment.

Atavist and Brightline will exchange an undetermined amount of minority equity interests in each other’s ventures, and IAC will provide $20 million in capital to build out Brightline as a publisher in addition to making investments in Atavist.

Atavist, a start-up conceived by three friends in Brooklyn — Evan Ratliff, Jefferson Rabb and Nicholas Thompson — received attention for its content management system, which the group used to produce multimedia storytelling for various electronic devices. In May, Eric E. Schmidt, executive chairman of Google, was among a group of high-level technology executives who invested in an early round of financing for Atavist.

There were informal discussions this summer in which Mr. Diller and Mr. Rudin discussed paying as much as $10 million for a controlling interest in Atavist. A partnership grew out of those discussions.
“The book business has a concentrated number of players and is unquestionably in transition,” said Mr. Diller, sitting at a conference table at IAC’s Manhattan headquarters on Monday with Ms. Coady, Mr. Rudin and Mr. Ratliff. “There is a possibility here that if we start with a blank piece of paper that you could hit the opportunity that exists in the book business now.”

Mr. Rudin, who frequently works with authors like Michael Chabon, Jonathan Safran Foer and Jonathan Franzen to turn their books into films, said he had heard a steady stream of complaints about the opaqueness and resistance to change in the publishing business.

While traditional publishers are now releasing books in both paper and digital formats, e-book sales have surged in the last several years. E-books now account for more than 15 percent of publishers’ revenue, posing a challenge to the dominance of print in the long run and leaving the future of brick-and-mortar bookstores in doubt. Fiction has been an especially rich market for digital books: major publishers say new novels often sell more e-book copies than print copies in their initial weeks of sale.

Mr. Rudin worked for Mr. Diller as head of production at 20th Century Fox during the 1980s, and the two men have remained friends. For this venture, they decided to work with Ms. Coady because she was an early innovator in trade paperbacks at Random House and went on to work with authors like Augusten Burroughs at Macmillan’s Picador imprint.

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B&N's Nook Gets Huge 'Shot In The Arm' from Microsoft - Sparks Ebook Battle

Propelled by its Nook devices,
Barnes & Noble has more than
 25 percent of the e-book
 market, but it still
lags behind Amazon.

Could Amazon (as well as Apple) be getting a real competitor?

This $600 million dollar investment by Microsoft in Barnes and Noble's Nook will lift both past market leaders who have lost some ground in the recent past.

This deal will give the largest bookstore chain (with 25% of ebook market)a global reach while giving Microsoft a foot in 'one of the the most important battles reshaping the landscape in technology, retailing and media.'

Details given by By MICHAEL J. DE LA MERCED and JULIE BOSMAN
in the New York Times:

Microsoft Deal Adds to E-Book Battle

By MICHAEL J. DE LA MERCED and JULIE BOSMAN

Microsoft agreed to invest hundreds of millions of dollars in Barnes & Noble’s Nook division on Monday, giving the bookstore chain stronger footing in the hotly contested electronic book market and creating an alliance that could intensify the fight over the future of digital reading.

The deal, which gives Microsoft a 17.6 percent stake, values the Nook unit at $1.7 billion — roughly double Barnes & Noble’s entire market value as of last Friday — and bolsters the bookseller’s efforts to make its digital business the linchpin of its future growth.

The announcement was the latest surprise in an unpredictable and rapidly shifting e-book market, which is crowded with technology giants trying to chip away at Amazon.com’s dominance. Amazon once had close to 90 percent of the e-book market, but since then, a handful of players, including Apple, Google and now Microsoft, have edged in.

The alliance binds together two onetime market leaders that have lost ground. Barnes & Noble, which is the nation’s largest bookstore chain and has more than 25 percent of the e-book market but still lags well behind Amazon, has a rich and powerful partner with global reach. At the same time, the deal will give Microsoft a close ally in one of the most important battles reshaping the landscape in technology, retailing and media.

Microsoft has been forced to radically reimagine Windows, its flagship software franchise, for a future in which much Web browsing, movie watching, book reading and other activities occur on tablets.

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Agents Employ Intrigue to Get Books Judged Upon Their Own Merit

Author Patricia O'Brien AND Kate Alcott

Ahh, good ole deception and sleight of hand (or head). I love intrigue in the publishing industry that produces positive results.

In this case, cajoling a supposed literary 'gatekeeper' into accepting a good, worthy work that had been anointed with a reject 'scarlet letter' based on false analytics --- Prejudged on other than it's own stand-alone merits, you might say :)

The intriguing trick employed by many is again highlighted, this time by Julie Bosman / New York Times News Service through BendBulletin.com:

What’s in a name? Publishing deals

The pen name can bring fresh opportunity to struggling authors

Patricia O’Brien had five novels to her name when her agent, Esther Newberg, set out last year to shop her sixth one, a work of historical fiction called “The Dressmaker.”

A cascade of painful rejections began. O’Brien’s longtime editor at Simon & Schuster passed on it, saying that her previous novel, “Harriett and Isabella,” hadn’t sold well enough.

One by one, 12 more publishing houses saw the novel. They all said no.

Just when O’Brien began to fear that “The Dressmaker” would be relegated to a bottom desk drawer like so many rejected novels, Newberg came up with a different proposal: Try to sell it under a pen name.

Written by Kate Alcott, the pseudonym O’Brien dreamed up, it sold in three days.

O’Brien and Newberg had cannily circumvented what many authors see as a modern publishing scourge — Nielsen BookScan, the subscription service that tracks book sales and is at the fingertips of every agent, editor and publisher — with a centuries-old trick, the nom de plume. It has been employed by writers from Samuel Clemens (Mark Twain) to Mary Ann Evans (George Eliot) to Stephen King (Richard Bachman).

“It meant that the story I had wanted to tell had sold,” said O’Brien, a chatty 70-something who wears her hair in a smooth brown bob, talking over a tray of herbal tea and lemon cookies this week in her spacious apartment in the Wyoming building in the Adams-Morgan neighborhood here. “My book wasn’t getting a fair chance. And choosing a pen name gave it a fair chance.”

The book, a story of a scrappy seamstress who survives the sinking of the Titanic, went on sale this week, ushered in by sparkling reviews — Kirkus said it had “an appealing, soulful freshness” — and with translation rights sold in five countries, something that had never happened to any of O’Brien’s books before.

Doubleday has 35,000 copies in print after two printings, said Todd Doughty, a spokesman for the publisher. That gives “The Dressmaker” a major head start over “Harriet and Isabella,” O’Brien’s previous novel, which was considered a flop. It has sold 4,000 copies, according to BookScan, which tracks about 75 percent of retail sales of print books.

O’Brien, who has also written three nonfiction books, said she did what she had to do to get her book published in a time when publishers are being unusually cautious about which books they can invest in and how much they can pay in advances. The rapid rise of e-books has thrown out the old rules of traditional publishing, and publishers have been more conservative with advances than in the past.

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E-Books Published With Wide Distribution

Perseus Books Group says they will offer marketing and distribution services for self-published e-books; allowing authors to keep 70% of revenues.

One catch: they will only take on authors who are represented by an agency who has signed an agreement with Perseus!

Julie Bosman of The New York Times has this to say:

The Perseus Books Group has created a distribution and marketing service that will allow authors to self-publish their own e-books, the company said on Sunday.


The new service will give authors an alternative to other self-publishing services and a favorable revenue split that is unusual in the industry: 70 percent to the author and 30 percent to the distributor. Traditional publishers normally provide authors a royalty of about 25 percent for e-books.

The service arrives as authors are increasingly looking for ways to circumvent the traditional publishing model, take advantage of the infinite shelf space of the e-book world and release their own work. That’s especially the case for reviving out-of-print books whose rights have reverted back to the author.

Bloomsbury, a publisher based in Britain, said on Wednesday it had created a new publishing arm that would release digital-only titles. Companies like Open Road Integrated Media have successfully published digital editions of backlist books whose rights were not held by a publisher.

The new Perseus unit, called Argo Navis Author Services, will be available only to authors who are represented by an agency that has signed an agreement with Perseus. David Steinberger, the president and chief executive of the Perseus Books Group, said that the company had made an agreement with one major literary agency: Janklow & Nesbit Associates, whose authors include Ann Beattie, Anne Rice and Diane Johnson. Curtis Brown Ltd., which represents Karen Armstrong and Jim Collins, is also close to signing an agreement to make Argo Navis available to their authors. Perseus is in discussions with more than a dozen other agencies.

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A Reborn Nation of Readers!

God bless e-readers! They just may be our nation's salvation from a very dangerous dumbing-down period.

The recent mass availability of economical e-readers has sparked young adults and teens to devour e-readable media and re-introduced many of the old intellectual classics (as well as new knowledgeable and intelligent word-fare) to an excited and hungry audience.

E-readers are common riders in backpacks, purses and briefcases...AND this is good!

It's good for our future as a country as well as for those who write and publish and/or will be doing so in the future.

This from Julie Bosman of the New York Times:

E-Readers Catch Younger Eyes and Go in Backpacks

Something extraordinary happened after Eliana Litos received an e-reader for a Hanukkah gift in December.

“Some weeks I completely forgot about TV,” said Eliana, 11. “I went two weeks with only watching one show, or no shows at all. I was just reading every day.”

Ever since the holidays, publishers have noticed that some unusual titles have spiked in e-book sales. The “Chronicles of Narnia” series. “Hush, Hush.” The “Dork Diaries” series.

At HarperCollins, for example, e-books made up 25 percent of all young-adult sales in January, up from about 6 percent a year before — a boom in sales that quickly got the attention of publishers there.

“Adult fiction is hot, hot, hot, in e-books,” said Susan Katz, the president and publisher of HarperCollins Children’s Books. “And now it seems that teen fiction is getting to be hot, hot, hot.”

In their infancy e-readers were adopted by an older generation that valued the devices for their convenience, portability and, in many cases, simply for their ability to enlarge text to a more legible size. Appetite for e-book editions of best sellers and adult genre fiction — romance, mysteries, thrillers — has seemed almost bottomless.

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U.S. Publishers Dove Deeper Into Digital in 2010

This year big house publishers have experimented with video ebooks and complex content, digitized their older titles and made their new publications available in both digital and print.

They are accepting and learning to utilize digital e-formats instead of fighting the new trending technology...And, that's good if they want to adapt, survive and ultimately thrive again!

As a result of this digital acknowledgment, U.S. publishers' profits are up and looking brighter.

This report by Julie Bosman of the New York Times through the Stateman.com, an Austin, Texas news site:

U.S. publishers expanded digital offerings in 2010

Industry embraces electronic books, sees big jump in sales, but hardcover concerns linger.

The publishing industry used to be afraid of electronic books. In 2010, it embraced them.

Publishers expanded their digital divisions, experimented with video-enhanced e-books, worked on digitizing their older titles and made sure new books were available simultaneously in e-book and hardcover editions.

Now, having laid the tracks for digital growth, they are waiting to see what their efforts will bring in 2011.

"Is it going to be cause for celebration because it takes us to another level and makes books accessible and popular in new ways?" said Anne Messitte, publisher of Vintage/Anchor, a division of Random House. "Or will the story be different?"

E-books now make up 9 to 10 percent of trade-book sales, a rate that grew hugely this year after accounting for less than half that percentage by the end of last year. Publishers are predicting that digital sales will be 50 percent higher or even double in 2011 what they were in 2010.

January could be the biggest month ever for e-book sales, as possibly hundreds of thousands of people download books on the e-readers that they receive as Christmas gifts.

The anticipation of that jump in sales, and a feeling that the recession might have loosened its grip, has dissipated some of the death-of-print malaise that has lingered in the publishing industry for years — and helped soften the blow of a significant drop in hardcover sales this year.

"There's definitely less doom and gloom," said Peter Ginna, publisher and editorial director for Bloomsbury Press. "Most of us publishers have seen big gains from electronic books this year. We've seen some tailing off of the print sales, but for most companies, the growth of e-books has been so great that there's a lot of revenue coming from that side that's sort of gravy for us."

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Random House and Marketing Books Directly to Consumers

When you know who is looking for something to download, you can make suggestions directly to that person! Right on. AND, when you know that the download device is a new eReader, you know what that person wants...EBOOKS!

Simple enough concept, even for me.

Well, Random House has used this simple concept to come up with a delightful, functional and FREE marketing device for the holidays helpful to us consumers.

Julie Bosman, New York Times, has the details:

A Christmas Morning Spree

This year, the book publishing industry has its own version of Black Friday or Cyber Monday. It’s called Christmas Day.

On that day, hundreds of thousands of consumers are expected to unwrap new e-readers that they received as gifts, and quickly begin downloading books to read.

Random House, the publisher of Stieg Larsson, John Grisham and Stephen Sondheim, is hoping to be there to make a few suggestions. It has prepared a free e-book, “The eBook Insider,” that is full of recommendations, reviews and book excerpts directed squarely at consumers who have just received e-readers.

“With so many people receiving an e-reader for the first time on Christmas, one of the things they’re going to want to do is go looking for the books they want to read,” said Anne Messitte, the publisher of Vintage/Anchor, a division of Random House. “And we think it’s an ideal moment to really begin helping a reader curate the collection of e-books that they want.”

Unlike the traditional holiday book advertising that takes place in the weeks leading up to Christmas, the promotion for “The eBook Insider” is scheduled to begin on Dec. 25, first with social media messaging and then with Google ads and also print ads in The New York Times Book Review and The New Yorker.

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Self-Publishing a Printed Book--A New Niche?

When you hear of self-publishing today you mostly think of "digital"...Even though most self-publishers offer both digital and POD (print on demand).

However, Blurb, a popular self-publisher in San Francisco who delivers first-quality printed products, has set up a "pop-up" store in SoHo, New York to teach the process of developing a first-class printed book for those who want a physical product...a product allowing them to print their own books easily and relatively cheaply, without the help of a literary agent or trade publisher.

Julie Bosman, New York Times, reports:

Self-Publisher Comes to SoHo

To make a book using an online publishing service, you create the design, add text or images, pay the fee, and in a few days or a week, the finished product is delivered to your door.

But there is the nagging question: Will it look homemade?

Blurb, a popular self-publishing company based in San Francisco, has tried to assuage that fear by planting a pop-up store, its first, in the middle of SoHo in New York. It will be there until the end of the month, complete with displays of finished books created by real customers.

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