Barnes & Noble Gets Offer, Amazon Kindles E-Book Sales

Discussion
May 20, 2011
George Anderson

Earlier in the week, we learned that Borders wasn’t having any luck finding a single buyer to purchase the bookstore chain. Then, we found Barnes & Noble doesn’t have that issue as Liberty Media Corp. has offered $1.02 billion to acquire Borders’ larger rival. Finally, Amazon.com announces that its book business is doing very well, thank you, as the company is now selling more e-books than paperbacks and hardcovers combined.

To the Liberty Media bid for Barnes & Noble, it doesn’t appear based on recent history that the company has any plans to operate the chain. According to The Wall Street Journal, "The company has repeatedly purchased stakes in businesses in order to later spin them off. In 2009, Liberty invested $530 million in Sirius XM Radio Inc. in exchange for stock and seats on the board, which kept the satellite-radio operator out of bankruptcy. Sirius subsequently turned around its business, and Liberty’s 40 percent stake in the company is now worth $3.5 billion."

According to the same Journal report, Liberty’s bid includes language that would keep Leonard Riggio, chairman of Barnes & Noble, on board "both in terms of his continuing equity ownership and his continuing role in management."

Perhaps even bigger news, relative to the future of book retailing, was Amazon’s announcement.

"Customers are now choosing Kindle books more often than print books. We had high hopes that this would happen eventually, but we never imagined it would happen this quickly – we’ve been selling print books for 15 years and Kindle books for less than four years," Jeff Bezos, founder and CEO of Amazon, said in a press release.

So far this year, according to Amazon, it has sold three times as many Kindle books as it did during the same period in 2010. The company also said that its Kindle with Special Offers that retails for $114 has already become its bestselling Kindle unit in just five weeks since being launched.

Discussion Questions: Which piece of news from this week – Borders search for a buyer, Liberty Media’s bid for Barnes & Noble, Amazon’s Kindle book sales – was the most significant? What is your assessment of the near and longer-term future of the retail book market?

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12 Comments on "Barnes & Noble Gets Offer, Amazon Kindles E-Book Sales"


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Ryan Mathews
Guest
9 years 11 months ago
Clearly the Kindle news is the most critical. Traditional bookstores have just flat out missed the market over and over again. There is no reason why all physical bookstores didn’t have dedicated kiosks offering Amazon-like services (“If we don’t have it, we can get it for you in 24 hours”) in every store shortly after Amazon went online in 1996. Then they had blinders on when it came to e-books and probably stayed too long in the music business. Most recently they’ve failed to leverage the essence of the physical book buying experience. I walked into my neighborhood Borders yesterday only to find the adult books moved upstairs and huge amounts of greeting cards, toys, discounted music and DVDs and remainder candy and kid’s books dominating the first floor. The clear message–“We have floor space and we’re desperate. If you really love books and want to see what’s new, go someplace else.” Physical bookstores could have a future–but not at the rate they’re going. They don’t have to worry and digital retailing and technology putting… Read more »
Dick Seesel
Guest
9 years 11 months ago

The Amazon report is the most significant over the long term. The rate of e-books to printed books has moved very quickly from one-to-one to three-to-one, using Amazon’s reports, with no end in sight as long as e-readers (including tablets) gain popularity. This does not mean the end of the bricks-and-mortar bookselling business, however, and Barnes & Noble is in a good position to consolidate its market share. Liberty Media’s investment in B&N is a bigger puzzle: Are they in it for the long run, simply looking for a short-term win, or intrigued by the e-delivery potential of the Nook?

Tony Orlando
Guest
9 years 11 months ago

Amazon’s Kindle sales news is huge for electronic books, and bad news for bookstores. I still like to read books myself, but my wife loves her Kindle, and my kids do a lot of work online, so I guess that makes me a dinosaur. Kindles will be like PC sales, and everyone will have them in the future, The libraries are going to get a whole lot quieter in the future, as the new generation goes e-book.

Paula Rosenblum
Guest
9 years 11 months ago

The fact of explosive eBook and reader sales is obviously the biggest news of the week, but that still helps B&N as well. Its Nook is a great device.

It’s a funny thing about eBook readers. Once you use one, the notion of buying and reading a paper book seems oddly self-indulgent and inefficient. The only paper I like these days is magazines. For the rest, the eBook is the wave of the future.

Jonathan Marek
Guest
9 years 11 months ago

The Barnes & Noble news is clearly the most “new,” as it wasn’t clear this would happen.

The Kindle news is big, but is indicative of an important trend Amazon has been talking about for awhile now. It’s the benefit of how easy they’ve made it to buy on their platform.

I can’t imagine the Borders news would surprise anyone.

Ed Rosenbaum
Guest
9 years 11 months ago

Reading the article makes one wonder if there is a future for Border’s. Clearly, Amazon’s announcement of e-book sales is huge. They made a similar announcement last month, and backed it up again this month. Then comes Amazon’s announcement on their huge e-book sales being larger than the hard or soft cover sales. Border’s becomes left outside looking in with no doorway in sight. Sad, isn’t it?

I wonder what peaks Liberty’s interest in B&N? Certainly not brick & mortar sales. It has to be the future of e-books in the market.

Bill Emerson
Guest
Bill Emerson
9 years 11 months ago

In truth, these two items are part of one story, which is not new. Technology is disruptive. Just ask Blockbuster, or the blacksmiths for that matter. The most important part of this story is that, if one of the finest brands in America is vulnerable, every brand is vulnerable.

Joel Warady
Guest
Joel Warady
9 years 11 months ago
The Amazon news is certainly significant. It further validates the fact that readers will continue to transform their reading habits from ink on paper to digital. Amazon is well positioned to take advantage of this situation. That being said, the Liberty Media deal is potentially bigger news. The greatest asset that B&N has is not their stores, but their customer base and their Color Nook. Very quietly, the Nook has captured a large segment of the “very inexpensive” tablet market, and unlike the Kindle, programmers have figured out how to watch videos on the Nook, including sites such as Hulu. I believe that Liberty Media sees in B&N this huge customer base that will watch their content, and a hardware option that will allow them to deliver the content. Add to that the fact that B&N is the 2nd largest seller of e-books, and the fact that they own their own publishing division called Sterling Publishing, and B&N/Liberty becomes a huge content provider, fully vertical. And Borders, they should just shut down quietly and go… Read more »
Camille P. Schuster, PhD.
Guest
9 years 11 months ago

The combination of news is most interesting. This is a great examples of a dynamic business environment. Identifying which innovations are significant, testing new alternatives, proposing new directions, and leading the change are necessary for success in a dynamic market. Not all new ideas will be successful, but not experimenting with new directions is a recipe for disaster. Barnes & Noble may not have installed kiosks–as suggested in an earlier response–quickly but did create the Nook and move toward digital books. Borders has done neither as far as I can tell. E-books are selling very well, but the question now is what will the new direction of the market be?

Gene Detroyer
Guest
9 years 11 months ago

There are no surprises here. It is all very predictable. And this isn’t a book story. This is a retail story. All retail store sales for April were down in excess of 1%. Internet sales were up 19%. The variance in those numbers is extraordinary and there is no reason to believe they will ever reverse.

Craig Sundstrom
Guest
9 years 11 months ago

“Customers are now choosing Kindle books more often than print books. We had high hopes that this would happen eventually, but we never imagined it would happen this quickly.”

Come on Jeff, I think you’ve imagined this for each and every day of these past four years; but back on topic, I agree with Bill: these are all elements of the same story; we have one bookseller who receives no interest, one who receives interest from a group that seems to specialize in failing firms and the third who crows about how its e-books outsell the real thing…the common element, of course, is that they’re all bad news for the printed page.

Mark Burr
Guest
9 years 11 months ago

Print is moving towards a ‘niche’ at lightening speed. It will exist in some way, shape, or form for a long time to come. It has already ceased to be a dominant form of media and has not been for a long time, in spite of those still in it as a majority of their business claiming it still has breath left in it.

This item may be the fastest migration to technology to date. That is, on the book side. Electronic media on the news side has been the dominant force for some time and will continue to grow further and faster than our momentary imaginations combined.

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