B&N, DOJ vs Apple: No lazy, hazy days for the book world this summer

Summer is no longer a slow season in the publishing world. Photo: (RT) Beach reading

DOTHAN, Ala., July 11, 2013 — It seems that very few people in publishing still adhere to the idea that summertime means four-day work weeks and catching up on leftover projects. So far this summer we have seen a number of major events in the world of books and publishing. 

  • William Lynch stepped down as CEO of Barnes and Noble (B&N) after the company reported a continuing sales decline for the Nook. B&N is now looking at possible restructuring and investors are leery of the chain ending up like former competitor Borders. The jury is still out on whether e-books bought for the original Nook will become as obsolete as the device itself. 
  • The Department of Justice (DOJ) ruled against Apple in an e-book price-fixing trial that went on for some months. Penalties are still to be determined and little impact is expected to selling books since the publishers involved already settled with the DOJ last fall. However, the action puts a dent in Apple’s e-book retail plans and potentially gives Amazon at least a temporary competitive edge. 
  • News Corp split its print side, which includes book publisher Harper Collins, from its broadcast operations. This follows a general trend of growth for digital and broadcast while print continues to decline, especially in the news arena. Harper Collins continues to flirt with Simon & Schuster, but what direction Harper will take for the long term remains to be seen. 
  • The merger between Penguin and Random House was finalized. The new company has been named Penguin Random House, though it would be much more fun if they had chosen a name like Penguin House or Random Penguin instead. 
  • Book distributor Baker & Taylor acquired Bookmaster in order to increase its offering of publishing services, and Amazon launched a new imprint for comics and graphic novels called Jet City Comics. 

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How are publishing executives supposed to enjoy the lazy, hazy days of summer with all that going on? Should consumers care? 

The book publishing industry has now contracted down to the Big Five, and that could drop to the Big Four if Harper Collins keeps flirting with Simon & Schuster and they decide to elope. The expansion and contraction of the industry presents a unique problem for readers. Homogenization may be good for corporate profits, but it frequently means bland books.

As publishing houses grow in size, they become risk averse and rely too much on guaranteed hits the same way Hollywood does. Readers seeking fresh new authors and books have to turn more and more to independent publishers whose works may not be as widely distributed. 

It is ironic that while large publishers lament losing readers to the independents and to the self-published market, they themselves are driving consumers away. Consolidation also has a negative impact on the auction process for new works by limiting competition and dampening advances for authors. Authors who are unhappy with their shrinking royalties are showing great interest in self-publishing, but the jury is still out on how well they can market themselves.


SEE RELATED: Barnes & Noble to drop Nook as sales plummet


The best way to describe the changing relationship between authors and publishers is just to say “it’s complicated.” 

On the book retailing side of the business, B&N learned the hard way that sticking to your core business is sometimes the best course for long-term survival in a tumultuous marketplace. In what may one day be referred to as “Lynch’s Folly,” the general failure of the Nook product to stand up against Amazon’s Kindle is a classic example of getting blinded by new technology and trying to go it alone into an untried market.

In many ways, the original Nook was a better product than the original Kindle, but Lynch overlooked the complexity of supporting and growing a hardware product line while at the same time converting to a digital content business model. It was a bit like Napoleon invading Russia and discovering too late about the harsh winters there.

Lynch, like many before him, fell into the trap of thinking new technology could rescue the chain from declining performance at its physical bookstores. That strategy might have worked if B&N had a technology partner with deep pockets and marketing savvy right from the start. Microsoft has deep pockets, but is generally loathe to spend more than it has to and is clueless about the book market. It was not an ideal partner. 


SEE RELATED: Frustrated publishers find there are no easy solutions to book piracy


If Lynch was Napoleon, then Amazon’s Jeff Bezos must be the modern Genghis Khan, sweeping across the vulnerable publishing landscape crushing all competitors. Already considered the world’s largest book retailer, Amazon is stepping boldly into the publishing arena as well. It has several genre-based imprints, including the newly announced Jet City Comics, and is a key player in the self-publishing and e-book markets as well.

Amazon’s Kindle Fire tablet is manufactured by Taiwan-based Quanta Computer, reportedly the largest laptop maker in the world with clients like Apple, Dell, Compaq and a host of other well-known names. That arrangement suggests that Amazon does not have to bear the full cost of technology research and can probably choose what pre-designed features to include in its tablet products. 

Amazon has proven to be adept at maximizing economies of scale in order to offer low prices and one-stop online shopping. What it cannot do is let consumers touch and feel goods and products in person before buying them. B&N had a distinct advantage for selling print books, but chose to ignore it to chase the digital dream. As a result, B&N unwittingly became a physical showcase for Amazon. Consumers would often browse at a store then go home and order books online at a lower price and without sales tax. The term for that in retail is called “showrooming.” 

The upside to publishing’s current downside is that books are more plentiful and more widely available than at any time in human history. Competition and digital printing both tend to push down book prices and push up reading rates, and that is a good thing.

It might also be a good thing if publishers went back to taking summers off and let everyone else catch up on their reading.


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Rick Townley

Rick Townley was a bookseller before switching to electronic publishing with The New York Times, Reuters, Grolier and others. He is the author of a humor book, For Boomers Only – Exploring Life in the New Millennium, a supernatural novel, Stepping Out of Time, and numerous short stories. In addition to contributing to the Washington Times Communities, Rick is working on a fiction series called Stigma and resides in southern Alabama with his 7-year-old granddaughter, Chloe.

 

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