The Work

More on Barnes and Noble

As usual, Michael Cader does the hard work in poring through filing documents to find the facts that elude everyone else.

Rather than a spin-off of Nook and associated businesses, however, people may come to the reasoned conclusion that Barnes & Noble is really preparing to leave behind the retail stores, quarantined in a unit of their own. What’s good for Nook–and to some extent the college business–may not be good for the regular stores, and both publishers and the investment community will be taking a good hard look at who is going to own, operate and potentially wind down those stores.

When Len Riggio took over Barnes & Noble in the 1970s, it was (and continued to be) a college bookstore. We think of the Barnes & Noble trade stores that populate every city and suburb, but those are the stores that are most vulnerable to economic shifts – real estate, disposable income of the residents, and the impact of ebooks on large swaths of the trade market. The college bookstores are essentially for captive audiences – students who are told to buy certain books, certain editions, and the most convenient place to get those is right across the quad. Internet shopping has disrupted some of this, as students do price comparisons, but the college bookstore business is not as imperiled as the trade stores are.

By merging the college side into NewCo, Riggio is protecting it (and lending some stability to the still-volatile ebook business) while looking for avenues to extend it. The digital transition in the textbook market is very different from that in trade. Many textbooks don’t render so well on an e-ink device, and other devices are expensive. Laptops are critical – textbooks, workbooks, lab manuals need to be integrated with online learning systems such as Blackboard.

Len and Steve Riggio have not been in this business for the quick payoff. The company has been owned by the same people for over 40 years – and these people have a lot of experience. Yes, they’ve made a couple of missteps (allowing themselves to feel burned after the Rocket/Gemstar mishaps prevented them from being early adopters in the face of Kindle, for example, or being slow off the mark in launching BN.com), but they know this industry like almost no one else. There are a lot of counties in Bookland, and Barnes & Noble has sold to them all. Don’t underestimate people who are in it for the long game. Despite appearances, they are far, far more radical than anyone would believe.

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