This piece was prompted by a post on Eoin Purcell’s blog, entitled “Some Thoughts on B&N’s Nook Problem,” and breaking down the fairly abysmal news from Barnes & Noble’s Nook segment, which saw a 60.5 percent fall year-on-year at $125 million “for the nine-week holiday period,” digital content sales falling 27.3 percent and devices and accessories 66.7 percent.

Smashwords“The big question for B&N is whether there is a profitable ebook and digital content business to be pulled from the mess of Nook,” Purcell concludes. “For too long, the digital content side of the business has been a slave to the device side.” He also cites the falling unit prices of ebooks, which leads to B&N’s huge challenge in rebuilding unit sales.

Purcell sees one of B&N’s key challenges as to “increase its stock of exclusive content (which sounds like an impossible task given Amazon’s attractiveness in this area).” I don’t think he’s understating. Personally, I believe that self-publishing in general, and Kindle Direct Publishing in particular, is having a transformative effect on the publishing industry and book trade far beyond its audience share, which is already substantial enough. And Purcell is essentially saying that it’s not enough to be an online bookseller or ebookstore if you want to be serious competition to Amazon: You need to have your own direct publishing operation as well. Otherwise you’re just not going to have a compelling offering as an alternative.

Well, who does have that? Smashwords. In fact, it’s almost the only entity I can think of offhand that does, at least on so significant a scale. There’s Kobo, of course, but I don’t think anyone expects Kobo to buy the Nook assets. However, if Smashwords wanted to pick up a large chunk of book market real estate that would flesh out the operation and put it on closer to an equal footing with Amazon Kindle, then they could consider them.

Mark Coker might well answer that he has no need for a declining hardware operation, no matter how good its tablets and ereaders, and that his own business is humming along very nicely, thank you. Maybe. But it’s an intriguing proposition nonetheless. And after all, it’s one of the few ways that you can still see any kind of future for the B&N Nook division. And it would be an admission of just how much self-publishing matters now.

 

6 COMMENTS

  1. This is a dumb idea, and if you had looked at the financial statements before proposing it you would have known that.

    Smashwords’s revenue for the 2013 calendar year was $20 million, up from $15 million in 2012. Nook loses more than that in a quarter.

    In the last 4 quarters Nook Media has lost almost $500 million:
    http://www.barnesandnobleinc.com/press_releases/2_28_13_fy_2013_3Q_financial_results.html
    http://www.barnesandnobleinc.com/press_releases/6_25_13_2013_FYE_financial_results.html
    http://www.barnesandnobleinc.com/press_releases/8_20_13_2014_1Q_results.html
    http://www.barnesandnobleinc.com/press_releases/11_26_13_bn_2014_2q_results.html

    So even if B&N was willing to give SW complete ownership of Nook media, SW would still need to raise a billion dollars just to continue funding a decrepit and dying company.

    Why would they want to do that?

  2. It might be a better use of resources to simply add buying and reading Smashwords books to a popular reading app such as Marvin. It can already import books from calibre, Dropbox, and other sources. Why not Smashwords?

    Let others worry about hardware that has to be updated every year or so.

  3. Nate and Mike, please reread the last para. I don’t mean this as a serious business proposal. I do mean it as a provocation to get people thinking about … yes, how much self-publishing matters in the entire ebook ecosystem now, and in publishing as a whole. Also, as to how Smashwords and similar platforms might want to evolve and move forward. And as to whether anyone can compete directly with Amazon at what Amazon does. And whether anyone would want to.

  4. A far more interesting thought experiment would be the prospect of Google buying Nook Media. Google has been adopting a real go-slow approach to e-books. I don’t know the exact reasons for that, but my theory is that they were waiting for the book scanning lawsuit to be finally done/settled – and that has dragged on for years longer than anyone suspected it would.

    Google obviously has the search platform, which is being integrated more and more with both Google Books and the Play Store. Google has slowly started making their interface more friendly for self-publishers and small publishers. It already has some devices out there – phones and tablets – but both the store and the selection (in books at least) is way behind the competition. Google has very little of the e-book market, and a deal for Nook Media could catapult them into an interesting position. While Google prefers to develop its own in-house products, they also know when to cut their losses and buy a smart competitor (Google Video vs YouTube) – and it certainly has the working capital (and patience) to ride out the losses until they can turn a profit.

    I’m not saying it’s likely, but it’s interesting to consider.

  5. Paul,

    Your article seems to indicate you don’t realize BN/Nook have nookpress (formerly pubit) — a direct publishing operation. And mentioning Kobo without mentioning Apple’s iBookstore (which, admittedly, has no more interest in acquiring Nook than Kobo) is also mystifying.

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