February 26, 2013

Barnes & Noble’s founder wants to buy the business, but not the Nook


Len Riggio

Remember last June, around the time of the BEA, when Barnes and Noble released its comments to the Department of Justice about the issues of collusion, the agency model, etc.? There’s something eerie about it now — check out the final paragraph of the MobyLives report we ran, which is a quote of a Publishers Weekly report:

The proposed settlement would “harm Barnes & Noble and other brick-and-mortar e-book distributors by leaving them where they were two years ago:  a dominant player will set uncompetitive prices that all other potential competitors must meet to compete,” B&N says. “Unable to compete with below-cost pricing, e-book distributors will drop from the e-book space,” and consumers will be left with “limited choice in where they buy their books: online retailers such as Amazon or large, multipurpose brick-and-mortar stores such as Costco, Wal-Mart, and Target, which offer only mass-market selections.”

Here we are, not even a year later, and the settlement has certainly had an effect on Barnes & Noble. Stores are closing all over the nation. In recent news, independent bookstores are suing Amazon and the Big Six over DRM, as it is limiting their ability to sell e-books to customers. E-book distributors are struggling to compete with Amazon’s prices as well as its devices.

Barnes & Noble hasn’t dropped out of the device market just yet, but it’s likely to cut back. On Monday, as a New York Times report details, Leonard Riggio, the founder and Chairman of Barnes & Noble, told the company’s board of directors on Monday that he intends to make an offer for Barnes & Noble Booksellers, barnesandnoble.com, and other retail assets. It’s notable that this explicitly does not include Nook Media.

Riggio’s interest may be related to the executives’ idea to move away from the e-reader market and “focus more on licensing its content to other device makers,” as the New York Times reported on Sunday. A logical move, it seems, after the announcement that Nook Media would fall well below sales projections for the third quarter of 2013. (B&N figures will be announced on Thursday.) They will still sell the device, but it doesn’t seem to be competing with the leading devices in quite the way they’d hoped. The company’s focus will shift to making its digital content accessible on other hardware.

Riggio currently owns almost thirty percent of Barnes & Noble, the biggest chunk of the company. He worked as a clerk in the NYU campus bookstore in the early 1960s, and he acquired the Barnes & Noble name in the 1970s (as well as its flagship store). Discounting was a big issue in 1975, just as it is today: Barnes & Noble offered forty percent off New York Times bestsellers, something other bookstores couldn’t afford to do. Other investors haven’t always been positive about B&N’s majority shareholder. A committee is being formed by the board to consider his offer.

As we’ve mentioned before, it feels a little weird to root for Barnes & Noble, a chain that contributed to the closing of many small bookstores across the country. But I hope this sale will keep the remaining brick-and-mortar bookstores open a little longer, and it’s good to hear B&N hasn’t dropped out of the e-book distribution business yet.


Kirsten Reach was an editor at Melville House.