February 8th, 2012

Advice for Barnes & Noble

Predicting the imminent demise of Barnes & Noble ("look what happened to Borders!") has become a popular conversational gambit and delivering advice to Barnes & Noble for how to avoid that demise has become a popular idea for generating blog entries.

http://www.the-digital-reader.com/2012/02/08/amazon-vs-big-publishing-800-lbs-vs-798-lbs/

I enjoy reading Nate Hoffelder's blog, so much so that I frequently get a few paragraphs into a Rich Adin post before I realize, hey, wait a second! Here's what gave the game away this time:

"There is no reason why the Big 6 can't offer exclusive deals to Kobo and B&N. Give them
a 3-month exclusive selling period for expected ebook best-sellers and do away with the agency pricing during that period."

Adin goes on to speculate about antitrust repercussions afterwards, which I found incredibly jarring. Perhaps it didn't occur to him how thoroughly pissed off some of the customers might be. I got mad at the Big 6 when Adin proposed this -- and the Big 6 hadn't done a thing or even speculated about doing such a thing! Sort of like push polling that way. (http://en.wikipedia.org/wiki/Push_poll)

A variety of people have suggested Barnes & Noble spin off the Nook business to refocus on bricks and mortar -- or to get out of bricks and mortar to focus on the Nook. People use their own experience as customers of Barnes & Noble as a basis for some of this advice. That's especially interesting in comments threads, because it gives a detailed window into book buying habits that never seems to make it through in big surveys (at least not when I read them).

I've argued for a long time that book purchasers (this is not exactly the same as book readers in several important ways) are bimodally distributed. There's a skinny, tall peak which is a few people buying an outrageous number of books every single year (measured in dozens). And then there's a flat, wide hill which represents all the other people who do buy books, from one or two a year to one a month. I have further argued that Amazon has damaged book chains by cherry picking the skinny, tall peak, altho as Amazon has spread out into other areas, they're presumably picking up more of the flat, wide hill as well. My jokes about misunderstanding the goals of 50 books a year people (how do they get that low?) should make it clear where I think I fall on this graph.

So who are the customers of Barnes & Noble after Amazon has cherry-picked them? Well, my walking partner. She has an e-reader -- it was a Christmas present from her family not last year but the year before. I believe it is a Sony Reader. It was a reasonable thing to try -- she's a two+ book a week purchaser and also gets several books a week from the library. I'd estimate she reads between two and three hundred books a year, and often uses NPR coverage as a basis for selecting new books, so she's buying new-in-hardcover frequently, and her preference is to get the audio book and the p-book at the same time. If there is a Perfect Customer for a bricks-and-mortar bookstore, she's it because she's extremely averse to adopting new technology (she has an iPhone, because it's the first cell phone she's been able to use; her previous cell phones went completely ignored, just like the reader), and her weekend routine includes a minimum of one visit to a bookstore, sometimes more. Alas, for bookstores, my walking partner is not representative of any group of people anywhere.

Her mother also bought an ereader for herself, which she uses. She got a Nook. The reasons people give for getting a Nook rather than a kindle or a Sony are varied, but often include mentioning the library and the ePub standard and sometimes extend to liking the store being available for support.

This very limited set of data points would suggest that getting out of bricks-and-mortar to focus on the Nook or getting out of the Nook to focus on the bricks-and-mortar might be problematic.

Earlier, I blogged shock about a reference to a survey about the fraction of people who came out of a bookstore with a newly purchased book who went into that bookstore intending to buy a book. I really was shocked and my friend H. set me straight: twice as many people are going into the bookstore because it's a good experience -- and then buying -- as people going into the bookstore to buy books (independent of the quality of the experience).

It would seem to me that Barnes & Noble is actually executing just about perfectly. Obviously, we weren't going to have two chains survive Amazon, ebooks, expensive gas and an economic downturn. Barnes & Noble was the one that made it. Obviously, they are going to have to prune the number of stores they have -- which they are doing, mostly by closing stores where the lease is up. Equally, they'll have to cost-cut the remaining stores. They have to get used to a world no longer subsidized by idiots like me walking in with credit cards and walking out with as many books as we can comfortably carry. They've been headed that way for a while, however, extracting a few dollars here and there with other merchandise, at least some of which is intended to amplify and monetize the experience.

It's a little bit of a bummer for Barnes & Noble that executing perfectly (or as near as makes no difference) means they are running a shrinking business that is believed to have a floor. Even if ereaders were ready to replace pform (which they definitely are not, as a general case), _readers_ aren't ready for that, and it's going to be a while before they are.

But I hope people keep predicting the imminent demise of Barnes & Noble, because I personally enjoy being a contrarian. And I hope they keep giving Barnes & Noble advice about what they should be doing, because I learn a lot about how the world doesn't work by trying to figure out why their advice strikes me as so quixotic.