Wednesday, 6 February 2013
Barnes and Noble may be bordering on collapse
Sales of digital content like e-books and magazines rose 13.1 percent during the holidays, a much slower pace than the 38 percent gain last quarter and 113 percent in the 2011 holiday season, suggesting Barnes & Noble is having trouble holding on to its 25-30 percent share of the U.S. e-books market.
"We are way beyond the point where you should see content sales accelerate.That hasn't materialized and that's concerning." Peter Wahlstrom, Morningstar analyst.
To compound the gloom , fewer shoppers came into its bookstores during the Christmas period.
Barnes & Noble, which had enjoyed a sales bump after onetime rival Borders Group liquidated in 2011, reported a 10.9 percent decrease in sales at its bookstores and on its website over the holiday period.
Sales at stores open at least 15 months fell 3.1 percent, excluding Nook products, despite the benefit of some store closings -- Barnes & Noble operates 689 bookstores, 14 fewer than a year ago.
This is devastating news for traditional publishing who are still reeling from the loss of the Borders chain and with Amazon no longer bulk ordering books, but rather ordering titles as required, they will have themselves having to lower already slim print runs.
“Barnes & Noble, once viewed as the brutal capitalist of the book trade, now seems so crucial to that industry’s future. Sure, you can buy bestsellers at Walmart and potboilers at the supermarket. But in many locales, Barnes & Noble is the only retailer offering a wide selection of books. If something were to happen to Barnes & Noble, if it were merely to scale back its ambitions, Amazon could become even more powerful and — well, the very thought makes publishers queasy." Julie Bosman, The New York Times.
And if this wasn't enough woe Barnes and Noble are also terrified that the US DOJ now looks ready to take its case against Agency Pricing to court which according to industry experts will further weaken Barnes and Nobles standing in the digital market and make Amazon the only player in town.
The Wall Street Journal recently stated in an article on Barnes and Noble's problems that a return to “wholesale pricing” will, at the very least, driver an ever-greater number of readers away from physical Barnes & Nobles stores to e-books. And the majority of those books are still being read on the Kindle.
In the follow-up to its initial report, the Journal published an ominously-titled article on Friday – "B & N could face rough justice” – in which it pointed out that DOJ action could drive down Barnes & Noble’s 30% share of the digital market. And with its earnings already sluggish, B&N is considering splitting its digital and print operations, a decision that might be hastened by the threat of legal action.
As a book lover this all depresses me - of course, I don't want to see a world where Amazon are the only bookseller and I would hate to see print book vanish, but at the same time I'm enjoying the ease of eBook s and the vast amount of titles that are only available as eBooks means that if you are a serious reader then we've now reached the point where digital is now more important than print.