Barnes & Noble: It's Time to Disrupt the Industry!

Three articles have sparked my thinking on this post. The are:

• The Charlie Stross piece entitled Cutting their own throats,
• Joseph Esposito's insightful post on How B&N Can Take a Bite Out of Amazon, and
• The New York Times article, The Bookstore's Last Stand

Stross talks about how the publishing industry has allowed Amazon to use DRM as a tool against itself. Esposito suggests "B&N needs an MCI solution" while the Times piece encourages B&N to have a sense of urgency in avoiding the same fate as Borders.

Rolling all of these together I have a radical, three-step suggestion for William Lynch, CEO of B&N:

1. Get publishers to understand they need to get out of their comfort zones before one player in the publishing ecosystem establishes what could become an irreversibly dominant position.
2. Start distributing ebooks not only in EPUB format, but also in mobi format.
3. Do it all DRM-free.

Yes, I realize I'm asking for a lot here, but I think it's time for bold moves from the brick-and-mortar leader. If Lynch implements what I've described above then suddenly bn.com is able to sell content to those millions of Kindle owners (not to mention owners of pretty much every other ereading device). More importantly, bn.com becomes the content destination for every smart consumer who doesn't want to get locked in to any particular hardware device or content vendor.

The risk to B&N? They lose some nook sales along the way...maybe. I'm not convinced that would happen though. What B&N would really do is radically expand their base of potential ebook customers and earn some serious goodwill as they break down the walls of DRM and platform lock-in. And so what if they were to lose some nook sales? All reports indicate B&N represents less than half Amazon's ebook device market share. Whatever they stand to lose in hardware sales could easily be made up in ebook sales to all those Kindle owners who want the peace of mind that they'll be able to read their library on any device in the future.

In today's world the winner is the company with the deepest pockets who can afford to sell devices and content at a loss longer than the competition can. In the world I'm describing the best device and content provider wins. I like the world I'm describing much better than the one we live in today. How about you?

Comments

[Vsandbrook]

So, so right! I love that the conversation about B&N has turned so much towards the concept of "disruption". I actually entitled my masters thesis "Surviving a Digital Disruption" because I'd gained such a respect for the term (and the tactic) in my research.

I agree that content providers and distributors need to start thinking about what people want out of their experience (all things you mentioned), not what is necessarily easiest to provide. I think a healthy dose of calculated risk in R&D would be good for publishers, and relying on any one file format, sales model, distributor, or vision of the future only sets the entire industry up for collapse.

[Len Feldman]

Joe, I agree with you, but we both know that it's not B&N that dictates the use of DRM, it's the publishers. O'Reilly doesn't use DRM, but you're in the minority of publishers. I know a number of distributors and resellers who would drop DRM tomorrow if their publishers allowed them to do so. The case for dropping DRM has to be sold to publishers first. Once that happens, B&N can get a big advantage over Amazon by dropping DRM, since Amazon will most likely keep DRM regardless of whether or not publishers demand it in order to maintain its Kindle lock-in.

[Joe Wikert]

Hi Len. I wasn't as clear as I should have been in point #1 in the original post. When I suggested there that publishers need to get out of their comfort zones I was implying that they need to abandon DRM. I should have come right out and said that rather than assume everyone would connect point #1 with point #3.

As Charlie Stross said, publishers are cutting their own throats by sticking with DRM. And I agree with you that Amazon would be more likely to hang onto DRM than the other ebook retailers, which would make things very interesting!

[Brian O'Leary]

For the last several years, Kirk Biglione has been making the argument that Stross picks up here. Kirk presented his arguments at Tools of Change in 2008 and 2010, in what I found to be the single best summary of why publishers should fear DRM.

While I agree that publishers need to adapt, it's not just about getting out of their comfort zones. It's about publishers understanding the reader experience, critically assessing the impact of device-specific DRM on their business models and (finally) separating the use of DRM from discussions of piracy.

I wrote about Kirk's 2010 presentation shortly after he gave it: http://bit.ly/wfUUd0 To me, his work is required reading for anyone who wants to understand the impact of DRM on Amazon's market power.

[Newcelona]

Hi
We are a digital publisher and we agree that DRM and file format wars are damaging the scenarion in favour of Amazon, but all the actors in the chain are reluctant to leave their comfort zones, not only the publishers, ask the literary agents and the authors themselves!
By the way, why not sell the eBooks directly from the publishers website?
We do, newcelona.com
Cheers!

[A Facebook User]

I like your position, Joe, it's something that needs to be said - and hopefully publishers will sit up and listen. No question about it, B&N has to bring the fight with Amazon beyond the nuts and bolts of e-readers production and into the e-platform area, i.e. content.

It really is all about content and that's something Amazon seems to have understood long before anyone else.Their platform is by far the most reader/buyer friendly, what with forums, readers reviews, search by keywords, like buttons, best seller lits by endless sorts of categories etc

Here is of course where DRM comes into play. It locks readers into a platform, if I understand this right, and of course Amazon won't abandon it for that reason. B&N has just tactically punched back by refusing to sell in its 750+ stores printed books published by Amazon since Amazon grabbed digital rights to titles that B&N are selling in printed form and not allowing B&N to sell the ebook version.

Add DRM to the mix and it becomes explosive! Publishers need to really think about this and develop their own strategy to reach out to readers (and stop worrying about piracy - with or without DRM it will always exist)...I have no idea how this is going to play out in the end, but it's pretty nasty for us writers, especially newbies on whom publishers don't want to take chances anymore...since they don't seem ready to take chances on themselves either!

[Dean]

DRM doesn't lock readers into a platform; proprietary DRM locks readers into a platform.

[Joe Wikert]

Dean, I can't say I agree with you. Give me an example of a DRM that doesn't lock readers into a platform. Adobe might be one answer. If so, I'd argue it locks you into *Adobe's* platform. I'm curious to hear which one you feel doesn't result in some sort of platform lock-in though.

[Kelly McClymer]

Joe, this is an interesting suggestion. I'm trying to see how it would work. I assume somewhat like what Smashwords allows -- you pick your format after you buy -- only with a more frictionless download directly to the device.

While I think this is something readers would love (buy anywhere for whatever reader you own), I don't see why Amazon wouldn't immediately follow suit if B&N instituted it (which I wish they would). In fact, I'm not sure why Amazon isn't already planning to do this. It dominates the e-reading marketplace at the moment, but that is not likely to last, unless it finds a way to sell books to consumers who are seduced by whatever new ereader strikes their fancy and want to seamlessly and frictionlessly transfer their e-libraries.

[Joe Wikert]

Kelly, I agree with you that Amazon and others would follow suit if one e-tailer takes the lead on this. That's OK though as it would still lead to a more balanced playing field (everyone selling all formats, no DRM). That's what I'm ultimately after anyway, not trying for one particular retailer to succeed or fail.