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Can E-Books Save Barnes & Noble?

Posted by: Douglas MacMillan on July 20, 2009

Digital downloads doomed brick-and-mortar music retailers like Tower Records and Virgin MegaStore. Now, booksellers are trying to stave off a similar fate by getting in the budding business of e-books.

On Monday, Barnes & Noble launched an online bookstore and a new e-book reading application for PCs and mobile devices. The company’s eBookstore is launching with a collection of hundreds of thousands of bestsellers and classics comparable to Amazon’s offering on the Kindle, many marked with the price tag Amazon charges for its new e-books, $9.99.

But rather than edge in on Amazon’s turf, analysts expect Barnes & Noble to generate wider interest in the e-book format among mainstream consumers. “If anything it helps build demand for e-book reading more generally,” says Forrester analyst Sarah Rottman Epps. According to the Association of American Publishers, sales of e-books grew to $113 million in 2008, up 69% from the previous year.

But unlike vibrant technology players Amazon and Google — the search giant announced a foray into e-book sales last month— Barnes & Noble is looking for a lifeline in a quickly sinking industry. The number of physical stores operated by the company, along with those of Borders and Books-a-Million, shrank by 19% between 2002 and 2008. Barnes & Noble’s stock is worth less than half what it was in March 2006, before a recession stifled the book-buying public.

“E-books are not enough to save any publisher or retailer,” says Michael Norris, analyst with media researcher Simba Information. Even though it costs virtually nothing to sell digital copies of books, the small number of shoppers to online bookstores won’t make up for the huge losses associated with brick-and-mortar stores for a long time to come, he adds.

The company did put into play a big X factor Monday, when it also announced a deal to be the exclusive online bookstore for Plastic Logic's e-book reading device, due in early 2010. Previewed at the recent D:All Things Digital conference, the superthin, touch screen operated Plastic Logic reader "has the potential to blow the Kindle out of the water," says Norris. "It’s Barnes & Noble's way of hedging their bets and being able to attach their name to a cool electronic device."

But the device could also be a liability. Doubts have been raised about Plastic Logic's ability to deliver a product competitive to the Kindle in its set time frame. "It’s going to look bad for Barnes & Noble that device doesn’t make it to market," says Forrester's Epps.

Even so, the company's electronic bookstore is somewhat platform-agnostic: its books can already be purchased and read on iPhone and iPod Touch devices, Blackberries, and on Mac and Windows computers.

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Reader Comments

johnny amazing

July 20, 2009 10:08 PM

We just need to be patient and order books online, that come in the mail. No device can trump a paper book--you can only read one at a time, a book doesn't run out of batteries, and you can lend/give a book to a friend or colleague without much worry about


July 20, 2009 10:18 PM

I know it's probably a minor thing in the landscape of this economy, but Barnes and Noble is also very stingy with the discounts.

It's insulting that I pay $25 a year for their membership, only to get an extra 10, maybe 15% off over the 10% membership discount once every couple of months. Borders consistently has a 20% coupon at, and every couple of months a 30% or even 40% off coupon comes out. Last month they offered two different free beverage coupons, too, and their membership is free. In this economy, who wants to pay for loyalty to B&N (and all of their credit card spam) when they can not compete on prices with Borders or Amazon?

I also can't believe that their Manhattan stores close at 10pm, either. Union square doesn't open until 10am. When I lived in the Jersey suburbs, my B&N was open until midnight on Fri and Say. They are in the city that never sleeps, occupy prime real estate, and neighbor Cooper Union and NYU. Do they really think it's a good idea to plow hundreds of customers out of the store every night at 10 pm, and miss out on serving breakfast and morning coffee to the students, tourists, and business people crawling the area?

Tom Gable

July 20, 2009 10:30 PM

I wonder how many readers still enjoy wandering the aisles of bookstores, thumbing through magazines and scanning a newspaper front-to-back? I do. Unlike simply going online and clicking from one choice to another, you can see things in context in newspapers and magazines -- how the news was played, in what position, how prominently, etc. There is discovery and serendipity, finding nuggets you wouldn't have otherwise. The same for browsing the aisles of a bookstore, seeing something interesting, feeling its heft, scanning for meaning and taking it home or moving on to something else. Tower Records offered the same kind of experience -- searching for the familiar with seeing a gem you may have wanted before but forgotten about. You can enjoy the same spirit of discovery in wine stores, department stores and even the butcher shop. It's a personal approach and one that can be incredibly rewarding and enjoyable. I can go online anytime and click through efficiently without feeling the sense of discovery. I think I am going by the nearest Barnes & Noble tomorrow just to browse and experience -- before it's too late.


July 20, 2009 10:31 PM

Can E-Books Save Barnes & Noble?


Can articles about Barnes & Noble save Businessweek?



July 20, 2009 10:44 PM

Maybe they should do a Net Zero model for books.


July 20, 2009 11:09 PM

Since when does Barnes & Noble need saving? I hardly think they need saving at all, nor do I think this article has a firm grip on reality. People live in the physical world, not the virtual one, and bookstores will always have a place in people's lives regardless of whatever 'fad' technology is purported to replace them (to that end, we're all still waiting for the segway to replace the automobile ::chuckle::) In any case, every B&N I've shopped at in the past year has been jam-packed with customers, people go with their families, kids, get a cup of mocha, read the magazines.. and they buy books. The checkout lines are not empty mind you. Not that I think eBooks don't have some merit, but this has always been a topic of much over-hype and fluffy bunnies that lead to nowhere. Twenty years ago people predicted the fall of the public library, yet there it continues to stand, there's one down the street from me. The only thing we can all be sure on is the eBook manufacturers telling us how the sky is falling on bookstores. Don't be gullible and taken in by the hype, because that's really all it is.

Cary Martin

July 20, 2009 11:31 PM

The author of this article must not be a reader. While e-books and things like the kindle are cute and trendy, nothing will replace the feel of a book in my hands, nor can I safely take an electronic reader all the places I can take a book stuck in my pocket or back pack.

The author is obviously in a sinking industry that requires him to make dire and basically false predictions to whip up interest in his readers.

Mark Douglas

July 20, 2009 11:48 PM

"E-books are not enough to save any publisher or retailer?" The author is left in the lurch. My books are on the e-book list but I receive no payment from the publisher or retailer when my work (c) is sold.
I am listed on Borders, Amazon, Barnes & Noble, and ignored by my publisher Trafford, Vancouver, BC., with my USS Hoquiam series.
So, sorry, no sympathy from me.

Mark Douglas

David Milne

July 21, 2009 12:09 AM

After signing up I tried to bye an ebook. Write near the end of the transaction they explain that they cannot sell ebooks to people who have a billing address outside the United States. Why?


July 21, 2009 03:43 AM

Other comments sum it up nicely. Here are a couple of extra reasons of why not e-reading: people like me who work 10h a day on a computer long for getting away from screens; besides these devices radiate a lot of unwelcome heat.


July 21, 2009 04:22 AM

I Think e-books are very overpriced at the moment. A bit of competition will drive prices down


July 21, 2009 09:25 AM

Initially I too thought nothing beats the feel of holding a book. But due to a change in my lifestyle, I'm only able to read when I'm out of the house. So I decided to give ebooks a try after I got an iPhone.
And wow!! I love the convenience of it! I can read while waiting for the train, on the bus, in office or while in queues. I just need to carry one device. From not having read a single book for 3 years, I've read like 15 ebooks in the past 5 months. I'm so happy I've rediscovered the pleasure of reading.


July 21, 2009 09:50 AM

"It costs virtually nothing to sell digital copies..."

Does Norris think it cost nothing to completely redo the B&N site? That it costs nothing for publishers who protect copyrighted works with digital rights management to convert one file into all the various formats? Because the ebook market is still such a small segment, individual titles rarely pay for themselves.

@David Milne - I'm guessing the reason you can't buy from a foreign country is because the publisher may not have the right to distribute outside the U.S. Rather than have some titles available and some not, B&N is probably just limited sales to U.S. to be consistent.


July 21, 2009 11:33 AM

Certainly in a minority on this board but I love my e-books. Anyone who says that they need to feel the 5 lbs of a book in their hands to truly feel like they're reading, hasn't really tried to read on a Kindle. True, you can't share an e-book the way that you can a paper book but you can't share an iTune the way that you could a CD and that hasn't stopped Mac from creating a powerhouse of a platform to deliver music.

Verna Wade

August 2, 2009 03:32 PM

It is nice go be able to go to a big fat bookstore and brouse. But what about us poor schmucks in the toolies? Ebooks are a godsend for us. So bring em on!

John Smith

August 3, 2009 05:40 PM

I have my doubts about e-books. I have only ever once seen somebody with Kindle. I find computer screens are just too hard to read for text - even my nice LCD screen. As somebody else said - a cheap novel is something you don't worry about losing, sitting on or misplacing. A $500 e-reader is another thing entirely. For the price of one of those I could buy 50 books and be able to read them when there's no electricity.


August 13, 2009 09:52 AM

to John Smith: how do you propose to read a paper book without light? Just wondering.

Robert S

September 11, 2009 04:36 AM

A quick comment: An e-reader device enables reading in a dark area (airplane, bed, subway, a sub, cargo ship, plane or box. Has anyone tried to download the B&N ereader and order the free book offered. Well, the book is actually $0.01 and a Credit Card is required where they will credit the $0.01. The note also indicates my credit card number will be kept on file. Considering the number of privacy and security failures I could not take advantage of even the free offer. I qickly removed my B&N reader from the computer and will look elsewhere.

D.E. Putnam

September 21, 2009 02:24 AM

While I find the technology comprising the eBook industry fascinating, I am still not impressed in the least with the practicality of it all.

All the aspects of eBook use touted as positive enticements simply cannot negate the largest negative aspect of using them. The experience of reading an eBook is cold and impersonal; like sitting down in the sterile environment of a hospital room beneath artificial fluorescent lighting with an HVAC system piping in air. Whereas reading a good 'ol fashioned paper on ink book is more akin to taking a seat in the fresh open air of a lush garden beneath the warmth of natural lighting. The two worlds of either type of book are, well, worlds apart and I do not foresee that ever changing. Books in electronic format simply will never be able to provide what a paper on ink book can and I am not sure eBooks will ever be able to surmount that difference.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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