If you want to see what a sinking corporate ship looks like, you have to look no further than Barnes & Noble. Unlike the Titanic, there is no band playing on the deck as the ship sinks. Instead, the call for “business as usual — in the 1990’s” has gone out. B&N plans to steam backward into obscurity.
The downward trend was confirmed earlier this month when B&N announced its quarterly revenue declined — yet again — 6.6% with a decline on the Nook side of 28.1%. I gave up counting how many quarters in a row the bookseller posted a decline long ago. Between the revolving door in the boardroom and the revolving door in the CFO’s office, the company faces an uphill battle I’m pretty sure it will lose without a major overhaul of the business and the operating plan. But that isn’t what we see coming from the ivory tower. In fact, far from it.
We got our first indication of that in the conference call between Demos Parneros, B&N’s CFO, and their shareholders. In a word salad address that said nothing new, Parneros said this:
As we look to reinvent our customer value proposition and growth sales, we’re focused on a number of initiatives to increase the value customers derive from shopping at Barnes & Noble. Our value proposition is comprised of membership, convenience, digital offerings and most importantly our stores where customers come to browse, discover, and interact with 26,000 knowledgeable booksellers.
Pricing is a key consideration and over the past few months, we’ve launched a number of price tests tied to our membership program to see which authors resonate best with customers and increase the overall value of the program. Our goals are to increase enrollment, conversion and visit frequency.
Beyond pricing, we’re also focused on growing sales by improving the overall shopping, browsing and discovery experience for better visual merchandizing and signage as well as personalized recommendations. This includes testing changes to existing store layouts and remerchandising certain businesses. We believe there are significant opportunities to manage our inventory better, increasing trends and reduce unproductive merchandize.
As part of our efforts to better understand customers and develop a robust data analytics program, we’ve recently installed customer counters in all our stores and reintroduced mystery shops. We plan to enhance customer engagement and personalization through improved customer insights. And recently we’ve established an analytics team building the foundation for better analytic rigor.
Stores are an integral component of our value proposition and recently we made a few critical hires to oversee our store growth initiatives. Carl Hauch has joined as Vice President of Stores and will oversee the entire retail store organization and profitable growth of the business. Jim Lampassi has also joined the leadership team as Vice President of Real Estate Development and is responsible for developing and executing our real estate strategy. I’m excited to have Carl and Jim join our team.
In addition to the two new test stores we have in the pipeline, we are reviewing our entire portfolio in identifying opportunities to open new stores in new markets as well as opportunities to relocate stores as their leases expire instead of simply vacating markets. Our goal is to position the company for net store expansion.
As noted by The Digital Reader, they are going to sell more stuff. Riiiiight.
But it gets better. In a move that shows just how bad things are for the bookseller, Len Riggio, interim (or should we say perennial) CEO, “assured shareholders that B&N is no longer in the tech business. While the Nook e-reader and e-books will remain a part of the company’s offerings to customers, bricks and mortar stores will be its focus.” He went on to say they only got into the digital market because they felt they had to because of Amazon and Google. In other words, they didn’t have the infrastructure for it, they didn’t spend the money necessary to develop it and, let’s not forget, they colluded with publishers to fix the prices for e-books in an attempt to harm Amazon. But they learned nothing in the process. Instead of making their website more user friendly, instead of working to lower the price of e-books to a level that their customers would buy more product.
So what does this mean for Nook customers? No one knows for sure, but I wouldn’t be buying a new Nook anytime soon. It’s possible another company, perhaps Kobo, would buy the Nook end of the business. Or its possible BN will backtrack yet again. Who the heck knows? All I know for sure is this is the way to keep customers is not to sell them tech and then quit supporting it. What they need to do is look at what the true underlying cause of the company’s decline is. I suggest they start with their CEO. Under Riggio’s leadership, both as CEO and as head of the board, “stock price dropped from over $17 a share (when Riggio sold stock in 2014) to $7.30 a share today”
But that’s not the only idiocy B&N has done of late. I started seeing posts a month or so ago about how it had amended its Terms of Service for those indie authors and small presses using its Nook Press platform. That was done with little to no fanfare. What happened, however, is almost immediately BN started purging erotica titles from its catalog. It sent emails to authors, telling them their accounts had been frozen or, in some cases, deleted. Titles were no longer for sale. All I could think of was when Kobo did that some years ago, especially when I read how non-erotica titles were included in the purge. Note, this only applied to those using the Nook Press platform. Traditionally published books weren’t included. So not only was the bookseller angering authors but it was angering its customers by refusing to apply standards equally across the board. Keep the higher priced books from the side of the industry they want to keep and toss out those evil riff-raff authors who dare go direct to the public, bypassing the gatekeepers.
There is a lot to be concerned about with the new Terms of Service.
Please be advised that submitting or posting any of the following content in your eBook file, cover image or product data may, in the exercise of Barnes & Noble’s sole and unfettered discretion, result in the removal of said content and/or termination of your account. Please be advised that the content listed represent examples only and the following list of content is non-exhaustive. Such content includes but is not limited to:
- Obscene or Pornographic material: This may include content that graphically portrays sexual subject matter for the purposes of sexual arousal and erotic satisfaction.
- Libellous Material: False defamatory statements that intentionally harm or have the potential to harm an individual or a third party.
- Infringing Material: Any content to which you do not own the copyright or otherwise control the right to distribute. Additionally, content that may violate any other intellectual property rights, such as trademark and trade dress, and/or content that may infringe upon a party’s proprietary rights, such as the right of privacy or the right of publicity
- Illegal Content or Other Offensive Material: As we may determine in our sole discretion, content that is illegal, content that violates the laws of any jurisdiction, whether or not we sell in such jurisdiction, or other content we deem offensive in the exercise of our sole discretion including but not limited to works portraying or encouraging incest, rape, bestiality, necrophilia, paedophilia or content that encourages hate or violence.
- Material Violating Privacy: Any content that violates an individual’s privacy.
- Advertisements: Content contained within your eBook or other content that primarily seeks to sell a product other than the eBook or content itself.
As stated above, the information that describes your eBook (Product Data) is also subject to our Content Policy. Please note that in addition to the points listed above, Barnes & Noble prohibits the following data points in your Product Data:
- Hyperlinks of any kind, including email addresses.
- Request for action (i.e.: “If you like this book, please write me a review.”).
- Advertisements or promotional material (including author events, seminars etc.).
- Contact information for the author or publisher.
First, the language is vague and gives total control to BN to decide what is or is not in violation of the ToS. There is no appeals process listed. Now, there bight be elsewhere in all their documentation but it is not listed where it should be. Worse, there are no definitions for what the important terms mean. So it is totally subjective and that means it can and probably will be applied differently depending on who reviews a title.
But it gets better. Note the language on “offensive material”. It can determine content violates the law of other jurisdictions, even those where it doesn’t sell products, and use that as an excuse to delete content. Under this clause, many mysteries, thrillers, and historical fiction could be excluded because it portrays things BN “can” determine is offensive. Welcome to the land of the perpetually butt hurt.
Authors, it gets worse. You can’t include your email address in your product data. You can’t urge readers to post a review at the back of your book. In other words, in your “from the author” or afterword, you can’t say “If you like this book, please consider leaving a review”. You can’t even put in contact information for you or for your publisher.
Technically, this means if you have your logo and publisher name on your title page, you can’t have the PO Box listed as well. You can’t have it hyperlinked. In other words, they want to make it as difficult as possible for your readers to reach out to you. Now, they say this applies only to your “product data” but the earlier language of the ToS makes it possible for them to apply it to everything about your ebook and to change the terms without reasonable notice.
I’ve gone on too long already but I will admit that this is making me wonder if I should reconsider putting titles into BN. If they don’t want my business, either as an author or as a reader, why should I go out of my way to help them? That’s a question we each have to ask ourselves. B&N might not like our answers.