A Band-Aid for B&N's gunshot wound

JIIt's been a rough week for Barnes & Noble. And month. And year. And it may get worse before (if) it gets better. For those of you who have been in cryogenic sleep the last few weeks, here is a brief recap:

Barnes & Noble reported a fiscal fourth quarter loss of $188.6 million, over double what it was the same quarter a year ago, a feat accomplished by only a few other greats like MySpace, Enron, and the MC Hammer farewell tour. The Nook tablet was asked what it would like for its last meal, and William Lynch "voluntarily" removed himself from both the CEO post and the B&N Christmas Card list. Oh, and they are still planning on closing at least a third of their stores over the next decade. (Place your bets in Vegas on the over/under on the timing and number of stores.)

That's what happened. But what's even more troubling is what is buried in the fine print. William Lynch is being replaced by Michael Huseby, who was the company's CFO and who will report directly to Len Riggio, the B&N executive chairman and largest stockholder. I'm sure Mr. Huseby is great with numbers and has a solid golf game, but CFO's are not traditionally known for having strategic minds. And B&N desperately needs a plan.

If we surveyed multiple astronomers on planet alignment, they may concur that B&N is preparing itself not to try and save the Nook Media, but to spin-in off, sell it, prepare for crash landing, etc. This speculation is supported when you take into account that the Nook tablets are going to be put to rest, and despite what the public is being told, these devices had to bring in a significant portion of the declining revenue stream. Underneath all of this, there has been a quiet exodus of talent from B&N over the last few months which is a huge red flag.

The biggest problem that Barnes & Noble has right now is time. Time is not its friend. It has a gunshot wound and the band-aids that have been applied will not save it, but will only slow its death. It is bleeding cash and without a decisive plan and talented people, even more things will begin to unravel.

So, now what? There is value in the Nook Media infrastructure, but transformative, strategic decisions will have to be made to turn this around. Here are a few ideas for Barnes & Noble (or whoever owns the Nook Media assets in the near future):

  1. Stop Trying to be Amazon - The "us too" and "strong number two" approach has to be ditched and replaced with a new strategic vision. In a street fight, don't ever go blow-for-blow with a bigger, stronger opponent in their own backyard. B&N needs to do what Amazon won't do, and most of it is related to their closed ecosystem. B&N needs to create an open ecosystem, which allows independent bookstores and anyone who wants to sell books to build into their infrastructure, via APIs, iframes, and other tools. Instead of asking publishers for money, build closer partnerships with them to help them build audiences, capture metadata, and establish new sales channels like corporate and special sales. Imagine IBM having an internal ebook library which leverages B&N books, a white-labeled reader and app, and community aspects. What if every author could leverage their own networks to drive sales and then gather data and users on their sales? In other words, B&N has to be willing to shoot any sacred cows and approach the digital world with a vision of supporting authors, partnering with publishers, and doing things Amazon is unwilling to do.
  2. Be Radical and Transparent - Anyone who is not playing in oncoming traffic on a daily basis knows that B&N is in trouble. Yes, there are those pot-smoking optimists who can't fathom B&N going the way of horse-drawn carriages, 8-track tapes, and VCRs, but the transition is already happening. Atari used to be a powerhouse. MCI Worldcom a behemoth. Lehman Brothers and Bear Sterns were household names. Barnes & Noble doesn't have to have its brand disappear, but they do have to start making some radical changes and being transparent about them. As good strength coaches will tell you, go two steps beyond what is comfortable. Instead of closing one third of the stores in ten years, close them this year. Tactically sift through your staff, cut all B and C level players, which may be half the company, and empower your A-level team to be decision makers. Anything that is dead-weight needs to be discarded, sold, or ignored. By making radical changes upfront, the market will adjust to all the news at one time, and new optimism can be injected with a fresh vision and leadership.
  3. Look Outside for Innovation - All great executives and entrepreneurs I know have adopted the mantra of "not invented here." Instead of trying to come up with every great idea and plan, they are constantly looking for talented individuals, great technology, and new ideas that can be mapped into their company. With all of the changes in publishing, there is more unencumbered strategic and technical talent floating around than ever before. Stealing a page from the Google playbook, they need to do acqui-hires, plan joint ventures, recruit entrepreneurs-in-residence (EIRs), and seed book ecosystems. They have been staring at the trees for too long and need to take a step back and look at the forest. Other companies and individuals who envision the same type of book future can help.

Nearly everyone I know in publishing is cheering for Barnes & Noble. But the clock is ticking. As a publishing and reading community, we need to realize that Barnes & Noble is not the answer for the future of books, but they can be a catalyst and significant player if their next steps are decisive and well played. Let's hope they are.

This article was written by contributor Jason Illian and was previously published by Publishers Weekly. It has been re-published here with the author's and PW's permission.

Jason is the Founder and CEO of BookShout!, an innovative reading platform that empowers publishers/authors and builds community around books.  BookShout! is working closely with publishers and authors to re-imagine the future of books.

Direct sales and community building

JIIf you’ve been anywhere near publishing recently, you’ve probably been hit by the shrapnel of an exploding business model, a narrowing distribution network, or mind-numbing cutbacks. It’s fashionable for people who aren’t pouring their daily energies into words and stories to compare the changing ebook environment to the music industry. But it’s different.  Much more simple and complex at the same time. And I believe--even without gulping down an alcoholic beverage--that publishers and authors can come out on top when the dust settles.  

But it will require change. And partnerships. And innovation. We need to do what great authors do--draw readers in by telling an intriguing story and getting them involved. But this time it won’t be just into a book, but into the industry itself.

I’ve sat on both sides of the table, both as an author and an executive in the publishing industry. So I’m constantly viewing the future through the lens of a win/win scenario, where authors/publishers and readers thrive. And I believe that direct sales and community-building are an important first step. Having direct relationships and building audiences are instrumental to publishers controlling their own future. So let’s take a quick look at both...

Direct Sales

I recently had a conversation with a VP at a major publishing house and he/she said, “We’re not interested in direct sales. We have partners and retailers who do the selling for us.”  

Sensing that we were not speaking the same language, I asked a few poignant questions:

“Are you interested in having the contact information for anyone who buys your book?" 

“Well, yes.”

“Are you interested in better understanding the reading habits and preferences of your readers?”


“Are you interested in developing a number of creative marketing, sales, and promotional opportunity for your authors?”

“Of course.”

“Then you are interested in direct sales.”

As we began discussing further, we both realized there is a difference between building a direct sales channel and joining a direct sales channel. For the most part, “building direct sales” has been synonymous with “a publisher acting like a retailer and going direct.” In my opinion, publishers should not be interested in this type of situation. It is expensive, wrought with technical complications, and limiting for the end consumer. At a time when most publishers are pruning their teams, it is simply not a good strategy to tackle more with less. Moreover, readers accustomed to robust digital storefronts are not going to hunt down books at separate publishers.

But joining a direct sales channel is different. If a publisher can be part of a larger retail ecosystem but still enjoy the benefits of gathering contact information and staying connected to the end reader, it is the best of both worlds. Publishers can extend their reach from content acquisition all the way to consumption and feedback. Likewise, consumers can visit one location and find all the content they desire.

Direct sales is about visibility and transparency into the sales and consumption of a book. And who doesn’t want that? At BookShout!, we are making this a reality today. Working less like a traditional retailer and more like a retail portal and ecosystem, we are aggregating publishers together and allowing them direct access to the end reader. This includes allowing publishers to export contact information, create innovative marketing campaigns across social channels, and build author platforms.

Community Building

Seth Godin calls it “building your own tribe”. Others refer to it as “growing your audience.” Regardless of the terminology, community building is about bringing like-minded readers together and facilitating a discussion. 

Did you notice that I said “facilitating”, not “controlling?” Some of the most successful audience builders I know understand that growing an audience is like throwing a great party. Make sure there is enough food, the right music, a place to congregate, and a topic to discuss. Then stand back and just keep the conversation going. The community will strengthen as others step up and manage the discussions. Influencers will begin to emerge. People want to belong, and content communities allow for this.

We don’t all agree that the Yankees are a good team, but we all agree that word-of-mouth referrals are gold. When a friend recommends a great book to me, I’m ten times more likely to buy it than if I’m being sold by a third party. When we build audiences around verticals, brands, and authors, we can help passionate people share their experiences. Plus there is the added benefit that a growing tribe creates noise, which in turn, continues to grow the tribe exponentially. All of these things begin to move the needle on sales.   

Amazon didn’t buy Goodreads because they had an extra $150M+ lying around. They bought it because of the community aspect and the ability to tie these rabid readers closer to the buying experience. At BookShout!, we specifically built our platform around letting people create communities, what we call “circles.” We believe that if an author, publisher, brand, or book can establish its own community, they can better facilitate conversation, which in turn, develops more sales and marketing possibilities. It’s a self-sustaining ecosystem that can feed itself.

One thing is certain--you won’t get it right the first time. Building a direct channel and an audience is an iterative process. Give yourself the right to pivot, change directions, try new things, create micro-genres, and start conversations. We certainly don’t have it all figured out at BookShout! but we are actively listening so we can continuously improve. The one thing you can’t do is nothing. If publishers and authors do nothing, nothing will be all that’s left.

This article was written by contributor Jason Illian. Jason is the Founder and CEO of BookShout!, an innovative reading platform that empowers publishers/authors and builds community around books.  BookShout! is working closely with publishers and authors to re-imagine the future of books.