Barnes & Noble financials: NOOK sales continue to tank, so the stock…

Barnes & Noble financials: NOOK sales continue to tank, so the stock…

I freely say that I’m no expert on stocks. How the investors react to financials is often a mystery to me.

I can humbly say that I have more expertise on bookstores and book sales. I’m the former manager of a brick-and-mortar bookstore, and I’ve been covering the world of e-books in this blog for close to seven years, averaging more than a post a day and more than 1,000 words a post, I believe.

Barnes & Noble, the largest remaining physical bookstore chain in the USA, reported their financials for the fiscal year:

press release

None of it was a reason to celebrate, and the NOOK sales (both devices and content) continued their freefall…dropping 27.4% year over year. The press release helpfully explains that it is due “…primarily to lower device and content sales.”

Yep.

Now, that doesn’t automatically mean that Amazon is crushing them. I think that in devices, the NOOK is simply an anchor for them right now. Amazon’s devices continue to sell well, from what we can see. My intuition is that Kobo is doing reasonably well. People are reading on phones and tablets, and  I suspect that audiobooks and text-to-speech use is going to spike  in the next few years, with them becoming one of the colors in people’s audio palette. People who rarely sight read books may listen to books more, increasing their exposure to literature.

In terms of NOOK content: that is largely traditional published e-books, and that part of the market is likely dropping over all. A much larger part of Amazon’s e-book sales than NOOK book sales comes from indies (independent publishers…often just the author) and from the company’s own publishing.

However, if NOOK hardware becomes largely a legacy thing (no new development), that will drag down NOOK book sales, even though you can read them on other devices. Serious readers are likely to want the option for an EBR (E-Book Reader)…I think Amazon’s newer version of its least expensive model, which has Bluetooth so you can listen to audio, is going to do quite well. I wrote about it yesterday:

New Kindle EBR with text-to-speech via Bluetooth!

Without that option for NOOK books, and since you can’t read NOOK books on a Kindle EBR, that’s going to be a problem.

Overall, the B&N bookstores, not counting the impact of the NOOK on them, actually slightly increased.

Barnes & Noble stock, as you can see in this

Money/CNN graph

dropped on the 22nd, the day of the announcement, but more than recovered on the 23rd.

Just about everything will drop today, because of reaction to the Brexit (British Exit from the European Union) referendum vote. The UK voted to leave the EU. This will have a big impact, at least in the short term.

Amazon, by the way, is a much more international company than Barnes & Noble, and is therefore safer when any market is affected…I would say, honestly, even when all markets are affected.  It’s a bit like having a robust gene  pool versus a narrow one. Purebred dogs tend to have more and more serious health problems than those with a robust background.

I know I have NOOK users amongst my readers. My guess is that your prior purchases will continue to be available to you…that someone will buy and service the accounts if B&N were to stop doing NOOKs and NOOK books. I think the NOOK hardware is nearly dead. B&N as a company can survive, although they will become decreasingly focused on books…we already see them looking more intently at food and beverage sales, and they do toys, games, shirts, that sort of thing.

How does this affect publishing overall?

One key change is that publishers are decreasingly getting pre-sale money. With an e-book, the publisher does not get paid until the book is purchased…and it’s often some time after that. With a p-book (paperbook), we would pay them for the books before we sold them. If they didn’t sell, we could generally return them for future purchase credit.

That’s  a very different economic model, and it will create a different strategy.

If you knew you had a blockbuster bestseller coming, like the new Harry Potter book, you could count on using the money from that to invest in prestige books which would have a smaller market. Pre-sales means that the money comes in over a longer period of time…it has the sales period, plus the pre-sales period.

With e-books, by the way, when you pre-order them Amazon and the publisher don’t get the money until the book is sent to you…not on the day you order it.

Paper publishers will become more risk averse. They will do fewer prestige books, try fewer new authors…unless the latter prove they have a market through independent publishing first.

On the other hand, that will increase indie publishing of new author and prestige books, with less competition.

One remedy to the loss of pre-sales from brick-and-mortar sales can be crowdfunding. While some crowdfunding waits to  collect the money until the product is released, much of it is intended to create development capital.

I’ve had great times in brick-and-mortar Barnes & Noble bookstores (although I didn’t get good customer service online). I love bookstores: I used to spend at least five days a week in one.😉 I have to say, though, that even though I love books more than I love bookstores, I think the bookstore experience is not at risk. I think indie bookstores, and destination/experience stores, can do very well in the next five years.

What do you think? Will B&N survive? If so, how much will paperbooks play into their strategy? How does Brexit affect publishing and what we read? Feel free to tell me and my readers what you think by commenting on this post.

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* I am linking to the same thing at the regular Amazon site, and at AmazonSmile. When you shop at AmazonSmile, half a percent of your purchase price on eligible items goes to a non-profit you choose. It will feel just like shopping at Amazon: you’ll be using your same account. The one thing for you that is different is that you pick a non-profit the first time you go (which you can change whenever you want)…and the good feeling you’ll get. :) Shop ’til you help! :) By the way, it’s been interesting lately to see Amazon remind me to “start at AmazonSmile” if I check a link on the original Amazon site. I do buy from AmazonSmile, but I have a lot of stored links I use to check for things.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog. To support this or other blogs/organizations, buy  Amazon Gift Cards from a link on the site, then use those to buy your items. There will be no cost to you, and a benefit to them.

 

 

5 Responses to “Barnes & Noble financials: NOOK sales continue to tank, so the stock…”

  1. Phink Says:

    I have a co-worker who’s a NOOK customer and she actually ordered the waterproof one yesterday with her free Apple lawsuit money. She buys so many books her gift certificate was close to $300. Makes me sorry I bought so many free books LOL.

    She may be mistaken here or she may be dead on. I’d have no way of knowing. She said she can no longer download NOOK books onto her computer. They are only available in the cloud now. She used to download them and side load them onto her NOOK. I told her that was very strange and as far as I know that’s not the case with Kindle but I have not done this in a few years so I may have to try it just to see.

    • Lady Galaxy Says:

      When Amazon was warning users of the K3 that failure to upgrade to the most recent software would mean loss of access to the cloud, I did a trial run of downloading a book to the computer and then transferring it to my K3, and it worked.

    • Bufo Calvin Says:

      Thanks for writing, Phink!

      I understand the envy…remember, though, that she now has the option to spend her own money twice, and you read for free.🙂

      I haven’t heard that about NOOK books…if I get a chance, I’ll check on it.

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