Choppy water ahead

Sometime in the last week, I came across a blog post where someone talked about going into a newly opened Barnes & Noble and how surprised they were by what they found. The store had opened in the space once occupied by a Borders, iirc, and the blogger had had high hopes for the new B&N. The only problem was that, when they went inside, there was little to show that it was a “book” store. A large portion of the main floor was taken up with a display and sales station for the Nook and various accessories for it. Even upstairs, the number of books available seemed to be a great deal smaller than they should have been. Fewer shelves, fewer books, fewer displays. Oh, but plenty of toys, stationary, etc.

As I read the post, I was torn. Part of me was thrilled to know that BN had moved into the large digs and was giving a neighborhood back its bookstore. But another part of me could only shake my head and say that this is part of the problem with the bookselling industry — and with publishing in general. The big box stores haven’t yet figured out that big doesn’t necessarily mean better. Folks don’t go to a bookstore like they do to a Walmart or Target. They go for books, magazines or newspapers, not necessarily for toys, etc. Perhaps instead of opening such large stores with a huge overhead that includes, rent, utilities and salaries, BN should be looking at smaller stores, possibly even boutique stores. It is time for them to realize the old business plan doesn’t work and they need to find something new.

Now, I get that BN is having to face this sort of decision on all sides. It’s no secret that they are having trouble with the Nook arm of the business. It hasn’t made them the money they’d hoped for. There’s been talk about spinning that part of the company off, even talk of selling it. In an attempt to boost sales, for a limited time this month, BN is giving away a free Nook Simple Touch with the purchase of the Nook HD+. The free Nook is an e-ink device usually priced at $79. The Nook HD+ is their answer to the Kindle Fire HD and the iPad. Unfortunately, BN has been a day late with its dedicated e-readers from the beginning. Problems with the HD+ interface and hardware has some folks waiting for the next version to come out. Whether customers will see this giveaway as a great deal or as desperation by a company in financial difficulties  has yet to be seen.

If that, along with the falling sales from their physical stores, isn’t enough, BN is now in a battle with Simon & Schuster. The internet has been alive the last week or so with authors talking about how BN’s choice to either not stock their books or to not reorder them is hurting their sales. The basis of the problem is the contract renegotiation between BN and S&S. According to the New York Times, BN has cut back “substantially” on the number of titles it is ordering from S&S. While the company is still ordering, albeit in lesser numbers, titles from the so-called best sellers, the orders of books from lesser known authors are reported to be basically nil. The more well-known authors are worried that their books aren’t being given as advantageous placement in the stores as they’ve enjoyed in the past. The end result is less money in the pockets of the publisher and that means less money in the pockets of authors — and, since the traditional publishing industry lives and dies on Bookscan numbers, it means there may be some authors who will not get new contracts because their sales figures were hurt by this dispute.

Since this is an ongoing contract negotiation, no one is really saying exactly what the problems are between BN and S&S. “Unnamed” sources who don’t want to go on the record allege the issues include BN wanting to pay less for the books it stocks while receiving more for prominent display space. If true, you can’t blame BN for flexing its retail muscle and trying to get more money from the publishers. It is the last major bookseller chain in the country. That makes it a huge cog in the wheel of physical book distribution. Also, according to the NYT, BN has told S&S that at least one other publisher has already accepted the terms it is insisting on in the new contract.

But there appears to be another issue at the core of the conflict as well: which party will bear “the financial burden of e-book discounting” now that S&S has agreed to settle the price fixing suit brought against it and other publishers by the Department of Justice. This has to be an issue with as much, if not more, importance for BN than the issue of payment for display space. As I noted above, their Nook arm of the business hasn’t taken off the way they expected. The company has invested huge amounts of money into its digital arm and without much impact in the digital market. I doubt they can match the discounted prices Amazon (and Apple eventually) will be offering on e-books from the publishers who settled with the Department of Justice. Since the company is already bleeding cash, it has to find ways to slow the flow and start plugging the leaks.

Unfortunately, the bookseller and publisher aren’t the only ones who will be impacted by this dispute. Readers are impacted because the books they want aren’t going to be as easy to find from their preferred retailer. It’s possible, at least in the short term, that Simon & Schuster e-books may even disappear from the online store. (Whether the Amazon haters want to admit it or not, BN has also removed the “buy now” button for e-books before.) But it is the authors who will pay the ultimate price. BN is the main source for Bookscan numbers for the sales of printed books. Every S&S author should be quaking in their boots because of this. New contracts are offered based on those Bookscan numbers. If those numbers drop below whatever the magical number du jour happens to be, many of those authors may find themselves cut loose — and not just by S&S. Other publishers look at Bookscan numbers before signing an author. Oh, the dahlings of publishing and the so-called best sellers probably won’t hurt too badly, at least not in the long run. But the mid-listers, those few who still have contracts, and the new authors will.

The only thing I can say is that this is yet another indication of just how the industry is changing and how the old guard is still trying to cling to the old way. Where everything will finally shake out is anyone’s guess. Will publishing survive? Yes. But in what form I have no idea. All I can say is now is the time to make sure the hatches are secured, the engines fueled and everyone is ready to bail because the sea is getting choppy yet again. As we wait for calmer seas in the sea of traditional publishing, go explore what small presses have to offer and look at what your favorite authors may be bringing out on their own. It’s amazing the number of authors who are now bringing out their backlists.

7 comments

  1. Bookscan needs to be repudiated as a valid indicator. It is similar to credit ratings. They both have gotten detached from what they are supposed to tell a user. People continue to use them because they see no alternative, and plain laziness.
    I listed my books for sale on Nook. They simply didn’t sell. I withdrew them because I could make more giving Amazon an exclusive, and loaning the same books out to Amazon Prime members instead of selling them on Nook.
    I’d add one more point. I’m older and physically limited. It hurts to walk far or stand a long time – such as standing looking at shelved books. This is typical of the older reader to which they are selling, yet when I go in a book store there is no place to sit, nor one of those little roll-along stools to pull over so I can search the stock sitting. I have not been in a B&N for about six months because of this. Some young marketing genius decided to make us pick something out, and move along to the cash register. Not loiter and browse. I moved along to my computer, where I can sit and browse Amazon.

    1. I will second this. I’m not that old. I’m normally not physically limited. HOWEVER it’s become preferable not to kneel to look at low shelves (mostly because these days when I’m out I’m in nice clothes, mind, but still.) The arrangements are not congenial. I prefer to shop from home.

      1. And what you both were too nice to say was that they are now making it even more difficult to get to the books. They are moving them further away from the front of the store. In stores that are more than one story, the ground floor all too often is used to promote the Nook (if you are in a BN) and non-book items. You have to go upstairs to find most of the books and heaven help you if you want to wait for the elevator.

    2. The scariest thing about bookscan is the publishers know they’re wildly innacurate, and not by a predictable amount (it ranges, it seems, anywhere from 20% – 75% (for authors who sell, mostly via their publisher’s co-op with B&N I’d guess)) and know they make no reference to the other outside of the author’s control determinants of a sale (distribution, degree of co-op, amount of publisher marketing, print run size, pre-order and re-order status- ONE of my books is on automatic re-order. It has sold 3 times everything else. And still sells)) or profitability (advance, sell-through, expenditure on covers, marketing expenditure – all factors which have huge effects on the profitability and the sales numbers), let alone the failure of a big book chain to take (I’ve been there, twice), or sell off of the collapsing one’s stock.

      And they still make decisions based on those bookscan figures? Even if they have a reliable guess at what say Baen’s reporting proportion is (which will differ between bestsellers and not) it’s clear to anyone that given these factors an author whose book which actually sells say 3000 copies, but got the minimal spend on cover, no push, no co-op, a new author so no pre-order (unless they do a lot of personal marketing) and got left off B&N and several other orders is WAY more viable than one who sells say 12 000, but got all the bells, whistles, re-order status, and pre-order status.
      What’s more author A cost them 1k for a cover, 2K for an advance, and 2K for printing and shipping, and no editorial, and say a K for poor quality proofing, sell-through (no re-oder or reprint) of 95%… made a profit of nearly 4K
      And author B cost them 5K for the cover, 20 for the advance, 12 for printing and shipping, 10 for marketing, 4 for editorial and proof time and made a sell through of not atypical 50%… made the company a loss of around 30K.

      But when a second publisher chooses an author… they say author B is 4 times as good, based on the bookscan figures, we’ll take her!

      That’s not just stupid. It’s almost unbelievably stupid. And yet, that is normal practice.

      1. Dave, you’re absolutely right on all points. What’s going to be “interesting” over the next few years is to watch how the darlings they’ve spent all this money on fare without the mid-listers that had been the ones making the most money per unit for them. We’ve already been hearing how some of the best sellers aren’t getting the advances they used to. How long before some of them start seeing series dropped or new contracts not being given because they aren’t delivering the way the publishers thought they had been? This is going to be especially true as BN renegotiates with the various publishers, especially if they repeat the same tactics they are using with S&S right now and either not ordering or reordering titles or severely cutting back the number of copies for the so-called best sellers.

    3. As I’ve said before, it’s run by the same folks who do the Neilsen figures for TV and we know how valid those are as well. (Rolls eyes). I still say there is no reason in this day and age of technology that publishers and distributors can’t keep a much more accurate count of number of books printed, shipped — and shipped to where — sold and returned. In this day of barcodes and capchas and whosits and whatsits, as long as there’s a scanner and the appropriate software, anything can be tracked.

  2. Talk about having the last of the rug ripped out from under you! Authors and Cypriot bank account holders seem to be in the same boat this week: lots of uncertainty, a rapidly changing situation, and a sense that someone is running things from behind a curtain.

    Over at the Passive Guy’s place, I saw that a few of the S&S midlisters have banded together and are advertising their books as a group on at least one of the authors’ websites. That may be a way for people to salvage what they can: coop advertising with links to other e-tailers, even if it costs the authors Bookscan numbers.

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