Barnes and Noble has been in the news a lot this year. Not just because of poor earnings—again—but because they seeming have no eBook strategy or plan to deal with their predicament. Ever since admitting their Nook unit was not performing as expected it has been a chain of bad news stories. People are beginning to ask if the end could be near.
It may be near as we know it, but there is no reason Barnes and Noble's eBook infrastructure and talent can't be extended.
Here are 3 things BN has going for it:
- BN is the largest “industry standard” eBook retailer.
- Unlike Amazon, they support the EPUB open eBook standard. Many others do as well but BN is the largest.
- Their competitor in this regard is Apple. But unlike Apple, BN makes reading apps for numerous devices including Apple's iOS devices. Moving away from their Nook hardware will open up new eBook content distribution opportunities with Windows and Android hardware manufactures.
- Unlike both Apple and Amazon, BN uses Adobe's DRM software. That means Adobe could prove to be a strong ally in supporting BN's eBook efforts.
- Some books, such as children's illustrated and reference books, don't perform well as eBooks. This provides an opportunity for BN to leverage its physical bookstores. The physical stores remain profitable and they should be careful about how many games and toys they stock as replacements for books. (In fact why not grow the base through franchising?)
- Do the traditional publishers want to see BN fail? They too may be on the ropes but if they lose BN they'll surely suffer even more.
Thinking outside the bookstore box
BN suffers from being too focused on a shrinking retail category: selling books to consumers. All their competitors have multiple revenue streams and far more digital assets and experience. So where can they create a new business that leverages their still considerable assets?
Take a page from IBM, HP, Xerox and Dell and add a services revenue stream. Create a business that private labels eBook stores for businesses, associations and publishers.
Those big tech manufactures realized years ago that services was the perfect complement to an increasingly commoditized world. No one of BN's scale or experience is doing this. Get away from the notion of trade publishing being a discrete channel from education, STM, corporate, association and newspaper publishing. We're all publishers now. Thousands of organizations (and self-publishers) want to sell direct to their customers and a BN solution would offer them three important benefits:
- Pricing flexibility. Publishers outside the trade channel need to sell their highly specialized content for more than $9.99. Let them choose a price that doesn't damage their margins.
- Support for DRM. It is expensive for lower volume eBook sellers to setup their own online selling program with DRM protection.
- Eyeballs. Amazon's big draw is that it’s the Google for information products. Businesses often place content there for promotional reasons. BN's experience, and website traffic, could be leveraged to help private label sellers….for a sales commission.
Two other BN assets might also be better utilized. There is not a writer alive who doesn't want to see their book on the shelf of their local bookstore. So create a business model to allow local authors to work with local stores. Second, as of this writing, BN has a hardware supply chain and what many call the best eReading devices on the market. Perhaps there is a window of opportunity to private label the devices for others.
I’m afraid this may get worse before it gets better. Current management is entrenched and holds a large voting block. In situations like this pride is a significant stumbling block. But if Barnes and Nobel can focus on an eBook strategy outside their traditional trade book roots, they might just have a shot.