Archive for Business News
Barnes and Noble wants to change how they are currently selling books online by a massive effort to rebuild their website. They have been working at a feverish pace to insure the new design will make discovering and buying content easier than ever.
In the latest quarterly filings, B&N cut its overall net loss to $28.4 million in the first quarter of fiscal 2015, down from $87 million in the same quarter last year, with $50 million in cuts coming from downsizing the company’s Nook segment. Cuts alone won’t return profitability to the ailing e-reader and tablet brand, but selling digital content will.
Barnes and Noble is betting that the Samsung Galaxy Tab 4 Nook will lead to more digital consumption. They have really been hyping the additional $200 worth of free eBooks, magazines television shows and movies you receive from buying the tablet. You can think of it, as showcasing all of the different type of materials that can be purchased in the Nook ecosystem.
If you don’t have a dedicated Nook device, your options to purchase digital content from the largest bookstore chain the USA is questionable. You can have to rely on a slew of apps, with no single app acting as your all-in-one solution. Take Android for example, if you want videos, you have to download Nook Video, the main B&N app just works with eBooks, graphic novels and magazines. If you want kids books, there is a dedicated one for that too, but keep in mind, its US and UK only, whereas Amazon and Kobo are basically global.
Will a new website that focuses on search, discovery and a responsive design be received well in the online world? This type of undertaking consumes lots of money and resources, with no clear indication that it will lead to an influx of sales. There is no denying that the US is completely saturated with Apple, Amazon, Kobo, Netflix, Zinio and a host of others all offering specialized content. It remains to be seen that a new website will magically solve all of the forces that work against Nook.
Barnes and Noble has just released their latest quarterly figures and things are looking fairly bleak. The NOOK segment (including digital content, devices and accessories) had revenues of $70 million for the quarter, decreasing 54.3% from a year ago. Device and accessories sales were $18 million for the quarter, a decrease of 78.6% from a year ago, due to lower unit selling volume. Digital content sales were $52 million for the quarter, a decline of 24.2% compared to a year ago, due primarily to lower device unit sales.
One of the big reasons why Nook has declined so much over the last few months was primarily due to the summer months and people not making big investments in technology. Things may pickup for the seminal holiday season with he release of the brand new Samsung Galaxy Tab 4 Nook tablet.
Barnes and Noble is continuing its quest to officially separate the Nook division from their core bookstore business. This would make it easier for for an eventual sale. In a statement they said “In an effort to optimize the structure of the separation, the Company has been exploring various options and is in discussions with its NOOK Media partners to potentially restructure existing agreements; and with potential third-party partners. Such discussions could affect the structure and timing of the separation.”
Amazon is playing hardball with Disney in ongoing contract negotiations. The Seattle based e-commerce giant has suspended pre-orders for all future DVD and Blu-Ray releases including two of the summers top hits, Captain America and Maleficent. These films combined earned over $700 million worldwide.
The hardball tactics employed by Amazon is designed to get the new contract signed as soon as possible. The suspension of DVD and Blu-Ray pre-orders is meant to give Disney “motivation” to fast track the new contract.
The elimination of pre-orders is nothing new for Amazon and has been standard business fare over the course of the past few years. Earlier this summer they did the same thing to Warner Bros before the new Lego Movie was slatted for a home release. Ultimately, the two sides reached an accord, and DVD and Blu-ray disc sales resumed.
Customers are buying less DVD and Blu-Ray movies and instead have gravitated towards online streaming services like Netflix, Amazon Instant Video, and iTunes. Despite all of this, home video sales still continue to play an important role in underwriting the cost of the film.
Amazons tactics with the film industry has certainly not garnered the type of press as their ongoing dispute with publishing giant Hachette. The two sides have been locked in a bitter contract dispute since May 2014. This is prompting many public statements released by Amazon, Hachette and Authors United.
Authors United has taken out a full page ad in the sundays edition of the New York Times. They accuse the online retailer of slowing delivery of Hachette’s books, refusing to discount its works, and saying its books are unavailable. The letter is backed by many big-name writers, including Douglas Preston, Stephen King and John Grisham. The letter says the authors are not choosing sides, but urges Amazon to stop “hurting authors” as part of the negotiations.
Barnes and Noble is teaming up with Google to delivery books the same day you order them online. Books will only be shipped to a few key markets, but the intention is to use Manhattan, West Los Angeles and the San Francisco Bay Area as a pilot for an eventual Nationwide rollout.
Google has been running Shopping Express only for only a year and only recently expanded out of California a few months ago. The premise Express is to partner with companies like Costco, Guitar Center, L’Occitane, Smart & Final, Staples, Target, and Walgreens and allow people to get things delivered to their house the same day the order is placed.
Barnes and Noble is betting on a few factors to make their same day book delivery system work. Shopping Express is offering a free six month subscription to get free shipping. Alternatively you can simply pay $4.99 for each shipment, instead of subscribing. Amazon’s same-day service costs $5.99 for members of its Prime program, which also has an annual rate of $99.99.
So what B&N stores are participating in this pilot project? The Union Square store in Manhattan, the Marina del Rey store near Los Angeles and a store on Stevens Creek Boulevard in San Jose. They will all have a dedicated person on site to assist customers in placing online orders for books, toys, games, magazines and other items. Google will collect the orders and hand them to a courier. Barnes & Noble stores have 22,000 to 163,000 titles, depending on the store size.
We live in an age of instant gratification. This is why the eBook industry exploded in the last few years and major publishers trumpet that they account for 21%-28% of their entire revenue stream. It is all too convenient to buy a book on your e-reader, smartphone or tablet and instantly be able to read it. Barnes and Noble is betting that same day deliveries will encourage more people to buy the print edition.
The Canadian bookselling industry is dominated by Chapters Indigo. You can get a good indication on how many people are buying print books by looking at their overall financial profitability. The latest quarterly results are in today and the future looks dark.
Chapters and Indigo are on the brink of disaster. The bookseller announced a loss of $10 million last November and a massive $20 million decline in June. The latest figures published today have their resources shrinking further with a $14 million loss and C$180.8 million in total revenue. One of big reasons the losses were not nearly as profound as they could have been, was primarily due to the fact seven bookstores closed.
The flagship store on Robson Street in Vancouver and Indigo Yorkdale have been doing brisk business selling American Girl Apparel. Heavy promotion is being done outside the stores with posters to bring people in to buy dolls and accessories. This product line has been so successful that Indigo made the call to bring it to the Chapters Rideau store in Ottawa.
During the earnings call Indigo drew attention to their lifestyle products were seeing success. It took awhile for their inventory selection to catch on with the Canadian public that often shops at Pier One Imports for that sort of thing. A new selection of content that is available anywhere else is now available at the bigger stores.
Books have seen greater success and Indigo reported that for the first time since 2010 they sold lots. This is due to major titles being released this year by Hillary Clinton and JK Rowling.
Amazon Prime members often get a bevy of benefits including Prime Music, Prime Video, one free eBook a month and free two day shipping. If you live in rural areas where FEDEX subcontracts shipping to your local mail service or if you don’t mind waiting a few days, there is a new program. Starting today, if you order something online with Amazon and are an existing Prime member you will earn $1 in credit you can use to pay or rent videos.
In the past, Prime members trying to purchase something would see a few choices, such as free standard shipping, free two-day shipping, and one-day shipping at an extra cost. There is now a new option: “Free No-Rush Shipping (5-7 business days).”
In return for waiting the few extra days you will earn $1 whenever you make a purchase. The credits are automatically added to your account and are only compatible with Prime Video. This allows users to be able to purchase movies, television shows or use the credit to rent them instead.
Amazon has penned an open letter on their website which spells out their mentality in approaching the ongoing Hachette eBook dispute. They primarily contend that selling eBooks at the $9.9 price point sells more copies and garners more money than titles that retail for $14.99.
In a written statement Amazon said “A key objective is lower e-book prices. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market — e-books cannot be resold as used books. E-books can be and should be less expensive.
It’s also important to understand that e-books are highly price-elastic. This means that when the price goes up, customers buy much less. We’ve quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000. The important thing to note here is that at the lower price, total revenue increases 16%.
Amazon also made the keypoint of exactly how royalties are pointed to be shared between Hachette and the Seattle based company. “While we believe 35% should go to the author and 35% to Hachette, the way this would actually work is that we would send 70% of the total revenue to Hachette, and they would decide how much to share with the author. We believe Hachette is sharing too small a portion with the author today, but ultimately that is not our call.”
In closing Amazon said “Is it Amazon’s position that all e-books should be $9.99 or less? No, we accept that there will be legitimate reasons for a small number of specialized titles to be above $9.99.”
Santa Monica hotel Shutters on the Beach is doing something very interesting. They will buy the books you want to read during your holiday and have them awaiting you in the room upon check in
In order to have one or a bunch of books waiting in your room, simply call the front desk up to 24 hours in advance. A dedicated book buyer will purchase books, magazines and newspapers from the local Barnes and Noble bookstore. The cost of them will be billed in your room and your poolside
Apple is looking to beat Amazon at the eBook discovery game with the acquisition of BookLamp. The Idaho based startup has focused their company primarily on analytics services that is specialized on big data.
BookLamp’s claim to fame was the Book Genome project, a book discovery engine that analyzed the text of books to break them down by various themes and variables to let readers search for books similar to books they liked.
BookLamp also provided content analysis services to a number of e-book distributors like Amazon, Apple, and other publishers, screening books for categorization and providing a platform for publishers to screen manuscripts.
The one thing that BookLamp did really well was look at a specific title and extrapolate the underlying metadata. As you can see from the Stephen King example above, it categorizes all of the main themes of the book, to help with indexing and organization in the bookstore.
Apple has not formally announced the amount of cash it has ponied for the company, but the rumor was between $10 and $20 million dollars. BookLamp was actually in negotiation with Amazon prior to the sale to Apple, but the talks fell through.
What will Apple do with BookLamp?
Aside from the clientbase that BookLamp already has, there are a number of things Apple could do with the technology. The first would be to develop a competitor to Amazon X-Ray, which would give you the people, places and things in a book, but also major themes. It would also assist in vetting out titles that would not be appropriate for kids or young teens.
Apple iBooks currently does not really focus on recommendations or personalization. They mainly have a series of top lists, editors choice, or recommended titles from Apple curators. Some of this data is changed based on geography, for example in Canada you would see a number of French language titles.
BookLamp technology would allow Apple to give more personalization based on past purchases. This is similar to the type of data Amazon employs and it often leads to more sales, especially if the data could be displayed on the iPad/iPhone, but also via Email.
James Joyce’s Ulysses is one of the most important books to be written by a biped. It is on many peoples reading list, but seldom completed. The novel is fairly daunting and this is prompting Dublin filmmaker Eoghan Kidney to develop a 3D immersive experience using Oculus Rift.
The filmmaker is looking to raise $5,000 to turn the chapter Proteus into a visual Cliff’s Notes. In this installment Dedalus wanders across a desolate beach, closes his eyes, and ponders the shifting nature of reality and the disconnect between his inner self and the external world.
The intention behind this project is to make the book more accessible, even if the crowdfunding initiative is for a single chapter. The filmmaker has disclosed that if this is successful, he will make a playable, immersive world of the entire novel.
The publishing industry could be turned onto its head with a recent revelation that Amazon is in talks with big 5 publisher Simon and Schuster. No one seems to know what the discussions are about, whether it has to do with eBook pricing or if they are talking about an acquisition. If Amazon were to purchase S&S it would give Amazon major distribution to physical bookstores and finally legitimate their own publishing imprints.
Amazon Publishing first launched in 2009 and is now composed of a number of imprints including AmazonEncore, AmazonCrossing, Montlake Romance, Thomas & Mercer, 47 North, New Harvest, Day One, and Powered by Amazon.
When Amazon got into the publishing industry initially major bookstores were very much against it. Barnes and Noble famously said it would not stock a single Amazon published title in their bookstores. At the time, they said “Our decision [not to stock Amazon published titles] is based on Amazon’s continued push for exclusivity with publishers, agents and the authors they represent.”
There are some obvious benefits of Amazon purchasing S&S. It would legitimize their publishing efforts and give Createspace users the ability to stock their books more easily in stores. It would also give authors signed to their imprints to be stocked in stores under existing S&S contracts and also assist them in their efforts to get books in the library via Overdrive, 3M and Baker & Taylor.
CBS Corp currently made $800 million in revenue in 2013 from their S&S publishing division. CEO Leslie Moonves said in a recent interview that “We are negotiating with Amazon as we speak.”
Amazon and CBS have a really solid relationship outside of books and eBooks. CBS initially went into business with Amazon three years ago as a digital test. But the relationship proved valuable as funding from Amazon helped underwrite the cost of “Under the Dome,” a summer series based on a best-selling Stephen King novel. CBS greenlit the high-profile project only after making sure the show would make money, and Amazon provided a key piece of the funding. “Under the Dome,” which was produced by Steven Spielberg, went on to be the most-watched summer TV series in 21 years. It also was the most popular program on Amazon’s service last year. No other broadcast network shows currently have such a quick turnaround on a subscription series.
Amazon offers other CBS-owned shows, including the complete “Star Trek” franchise and TV classics such as “I Love Lucy,” without commercials. CBS said its drama “The Good Wife” was the No. 1 show on the Amazon service during the fourth quarter of 2013.
In the last few years Amazon has been acquiring many companies to boost their publishing efforts such as book discovery site GoodReads and digital comic luminary Comixology. Amazon is responsible for more than three out of every five e-books sold, according to research firm Codex Group.
Update: Many sources are claiming that the talks are not about an acquisition but have to do with eBook pricing. Currently Hachette and Amazon are in talks to renew their contract and S&S might be starting early stage talks on their new arrangement. I doubt this is the case, in talking with major eBook stores such as Apple and Kobo, they are mandated to renew each contract individually within a certain window period. The pitfalls of discussing new contracts all at once would be tantamount to collusion and would go against the DOJ settlement on agency pricing.
Update 2 – Sources close to the situation have told Good e-Reader that the two sides met about a number of issues. One of them was avoiding some of the pitfalls that erupted during the Hachette contract dispute and getting on the same page. The second post of discussion was getting S&S support for Kindle Unlimited and contributing their backlist and midlist titles to help legitimize the new platform.
Amazon has found itself in hot water in France, as government authorities were ready to hit the company with hefty fines. This stems from a new law that was signed by France’s ruling Socialist Party and the opposition UMP Party that banned online retailers from shipping discounted books for free. It comes in the form of an amendment to a 32-year-old law that sets the value of new books at fixed prices. Instead of fighting it out with the French government, Amazon has bowed to pressure and will no longer ship books for free.
Amazon has increased the cost of shipping books by one centime. This is basically sending books out for only a penny, which satisfies the new laws but circumvents the spirit of it.
Culture minister Aurelie Filippetti has previously singled out Amazon, saying that it “destroys” bookshops. “Once they are in a dominant position and will have crushed our network of bookshops, they will bring prices back up,” she told a conference of booksellers last year.
France is highly protective of its bookshops, enshrining measures to preserve them in law since 1981 when discounts above 5% were banned to prevent big chains from using bulk orders to undercut smaller independent bookshops. France has 3,500 bookshops compared to just 1,000 in the U.K., of which roughly 700 are independent.
The US Federal Trade Commission is suing Amazon for not having enough safeguards in place to prevent children from racking up millions of dollars worth of virtual currency and in-app purchases.
FTC chair Edith Ramirez said in a statement: “Amazon’s in-app system allowed children to incur unlimited charges on their parents’ accounts without permission. Even Amazon’s own employees recognized the serious problem its process created.”
Amazon keeps 30 percent of all in-app charges, the FTC said in its complaint. The case “highlights a central tenant” of consumer protection laws in the U.S., that companies should get customer permission before charging them, said Jessica Rich, director of the FTC’s Consumer Protection Bureau, during a press conference about the lawsuit.
Amazon, in a letter to the FTC July 1, said it was “deeply disappointed” that the agency was moving toward filing a lawsuit. “We have continuously improved our experience since launch, but even at launch, when customers told us their kids had made purchases they didn’t want we refunded those purchases,” wrote Andrew DeVore, Amazon’s associate general counsel.
This is not the first time the FTC went after a company over in-app purchases by children. In January 2014 Apple provided full refunds to consumers, paying a minimum of $32.5 million, to settle a Federal Trade Commission complaint that the company billed consumers for millions of dollars of charges incurred by children in kids’ mobile apps without their parents’ consent.
Likely Amazon will have to make a token payment to make the FTC complaint go away. Given that Apple has the larger ecosystem and more user engagement, the likelihood of having to pay the same amount or more is not viable.