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back to article Investors circle Barnes & Noble as it plans Nook spin-off

Barnes & Noble has had a troubled few years. Part of the problem is that it continues to be a tablet business with a chain of bookshops connected to it rather than the other way around – with the tablet and ebook reader business growing at a savage pace, while the bookshop dawdles. But it clearly needs a new owner, and to that …

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Nook color

is a fine little tablet, but to really take on the iPad they need a 10" version. If they can do that at the right price point then the world will be their oyster, when I say right price point I don't mean matching I mean undercutting significantly.

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Re: Nook color

The Nook Color is only a nice bit of hardware until you put CyanogenMod on it. This is easier done than said as the NC has a bootable micro SD slot - just buy a micro SD card (from Amazon) with the software already installed and experience happiness.

The NC software, default settings and BN's policies suck lizard wee.

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Re: Nook color

Did that on day of purchase, dual booting since then.

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I'll never understand business

A struggling company is looking to sell off its fastest growing product line, and this is somehow considered a good idea?

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Anonymous Coward

Re: I'll never understand business

It's a good idea for the vultures who've snapped up the shares cheap, and now want to make a killing by floating the good part off separately and dumping their old B&N shares...

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Re: I'll never understand business

Seconded

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Re: I'll never understand business

Because while nook is doing great, it's distracting B&N from getting its brick-and-mortar business back on track (remember, Borders collapsed last year, leaving B&N and Books-A-Million the big cheeses in the physical book market--B&N doesn't want to be next). Plus B&N's physical business is dragging the nook in its fight against the all-virtual Amazon and its Kindle line. In addition, there's the risk B&N's physical trouble will tarnish nook's image; in essence, a B&N in trouble could threaten to take nook down with it.

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good. Now perhaps they will sell it outside the USA

But first they will have to let their servers accept NON US IP's to directly download books

AND

Make their 3g compatible with the rest of the world.

I looked at one last week whilst in the US. It was very nice indeed but the current restrictions made it really difficult to justify (financially).

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Re: good. Now perhaps they will sell it outside the USA

Color Nooks don't have 3G. They're WiFi only. The Kindle Fire is WiFi-only also IIRC. Newer products would probably be able to use more frequencies to make them better-suited for international use, if nook intends to increase its international presence. However, they would probably also have to establish whispernet agreements with wireless providers who may not otherwise like nooks piggybacking on their bandwidth.

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Holmes

Re: good. Now perhaps they will sell it outside the USA

One of the problem is that the right to sell a book is often (not always) held by different publishers in different regions. Some authors let a publisher buy all the rights, some find they can earn more by exploiting the region-split, and then there are translation rights. So B&N may not have the right to sell many ebooks into the UK or the EU.

Amazon is rather careless about what they advertise, physical books or ebooks.

With the news that at least one large publisher, with both US and UK labels, is dropping DRM, there's a potential for the Nook to exploit. It's an ePub reader, B&N have an internet sales and delivery system for eBooks, and they don't have the same bad rep in the business that Amazon has. Getting the Nook reader, and the ebook business, into a different branding to the bookstore business, could be a smart move.

Selling off a profitable part of the business to raise cash to improve the balance sheet is a very short-term plan. The Nook is the centre of what has a chance of surviving.

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Anonymous Coward

Paper Books are so 20th Century

Who will care about new paper books, they are heavy and bulky, especially for reference books and the absurdly large, large-print paperback books; light ePaper Touch-screen readers can now be bought for under £90. Only the backward and poor will end up buying paper publications, that is if they are even interested in paying for and reading them.

The Nook is irrelevant now, given the short sighted management in B&N limited it to the US, and the Kobo Touch was available for several months before the Amazon Touch, let-alone the poor value Amazon Fire. Ironically you can now buy much better spec. 7in Android tablets than the Amazon Fire on Amazon UK, for about £100!

B&N are a dinosaur of an obsolete age of paper and copyright, so will slowly die, it will only be a matter of time before their paper sales are too small to keep those parts of the business afloat; I'm frankly amazed anyone wants a part of them.

When large format (A4/A3), roll-up or fold-up screen, colour e-books arrive (the technology for both has been demonstrated), even lucrative paper reference books and magazines will become obsolete.

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Anonymous Coward

Re: Paper Books are so 20th Century

My wife buys a book and reads it.

Then she lends it to friends.

Then she takes the book to school where her students can borrow it.

Then when a book is no longer being borrowed she donates it.

With an ereader this would be:

My wife buys a book and reads it.

Electronic readers make the reading experience better, but electronic book ownership is worse. They could have created a lending system that mirrored physical book ownership and increased profits simply because the electronic medium is cheaper, but instead the profit chase is putting off an avid reader like my wife. Maybe they'll kill bricks and mortar and she'll have no choice. Except to read less.

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Anonymous Coward

Re: Paper Books are so 20th Century

actually, quite a few places allow for lending now on e-books yes not to the extent of physical media but still, its better than nothing at all.

The whole concept of lending books is part of the initial problem, you take a book, typically paperbacks, and sell that book to a shop, you make money as does the author, that shop then sells it to a customer, so they can make their cut, at this point the author and publisher makes no further money. Each time that book is then lent and passed on is no further benefit to anyone but the person who sells it.

Lets assume that with paperbacks every book is passed on at least once,. if the publishers actually got money for that transaction they "could" sell the book initially for much less

on the assumption it would get sold on. with paper formats that's almost impossible to Govan but with digital its quite possible.

Personally I wouldn't mind paying for any book I want, but what I begrudge is paying too much.

Hardbacks are different, people don't tend to sell on these things so it would be harder to work out and rightly should be more expensive. although I think £20 is getting a tad high

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Re: Paper Books are so 20th Century

I can see it now; the Nook is split off, crashes and burns amongst the competition, with B&N left only with a 'paper business' folding soon after.

The UK market seems to be pretty much stitched up with Kindles at the low-end and iPads at the the top-end. Kobo don't seem to me to be making significant in-roads even with some price cutting. Maybe Nook will fare better elsewhere but I wouldn't be confident.

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Re: Paper Books are so 20th Century

Why do you think a publisher should get a cut if I sell my used book? Should Honda get a cut if I sell my car too?

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Mushroom

Re: Paper Books are so 20th Century

Uh, yeah, good luck with the e-book version of "Rebuilding Civilization" after the apocalypse.

A bit OTT, but having been through a couple of lengthy power outages due to Mother Nature throwing her weight around, a dead tree version gives you something to do while waiting for the power to come back on.

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Re: Paper Books are so 20th Century

Backward and proud of it

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Re: Paper Books are so 20th Century

Lending is one of the big turn offs for me atm. I read a lot of books most of which I have borrowed the first in the series off of someone and then brought that series.

Without that you get to read the shot bit at the back/front covering the whole book. This is usually totally different to the feel of reading the book itself.

Without lending a lot of my collection would not have been bought.

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Anonymous Coward

Re: Paper Books are so 20th Century

you miss my point,

Im saying that lets say a book gets transfered 3 times

ithe book could cost half has much initially if the publisher would get more from the other two sales.

This only works for digital media, but makes more sense than selling the book at almost the same price as a physical copy.

Simply put the whole concept of digital copies of anyithng is dated and not effective.

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Re: Paper Books are so 20th Century

Until Honda decide that you only have a license to use the software in your car's engine management system and can't resell it. Or that they will only service the car for the original owner and will expire servicing on cars more than 5years old and have design patents on the shape of each component to stop any third party spares.

Of course it would be ridiculous for an industry to behave like that to it's customers

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Headmaster

Getting the facts straight

This is a thorough look at Barnes & Noble, but contains several factual errors that mislead the reader.

1. Categorizing John Malone's $204m Liberty investment as a "rescue of the business" is misleading. As you point out, Barnes & Noble is a multi-billion dollar company: $200 million is more "an expression of interest" than a rescue. Liberty's investment was coincident with the Burkle maneuverings but "this is what necessitated the Liberty rescue move in the first place" is simply incorrect.

2. The statement "a number of companies have fought in the past over ownership and potential breakup of Barnes & Noble" is also incorrect. No one has "fought" to break up the company -- the idea has been floated by several including B&N management. The only company that fought over ownership is the company you then mention, Burkle's Yucaipa. G Asset Management, a minor player with minimal shareholdings, thought a breakup might benefit shareholders, but was in no position to fight for it.

3. Poison pills do not ordinarily expire -- they are not usually designed as a time-limited defense.

4. "B&N was valued at under $1bn, but had revenues which were around $6bn and growing rapidly" -- again incorrect -- B&N's revenues have increased YTY until recently, but certainly not "rapidly".

5. It is of course easy to imagine that because Jana is active with McGraw Hill that it is somehow eyeing B&N's Nook to be "sold with a captive textbook market place, courtesy of McGraw Hill" etc. But you're completely ignoring that B&N's NookStudy platform already has the required access to all McGraw-Hill textbooks in digital form (as well as all other major textbooks). McGraw-Hill is already a partner in the eTextbook company CourseSmart which finds its success by operating as a "United Nations" of eTextbooks. The textbook market is too fractured and too much in flux for a captive Nook to be an intelligent strategy.

I cover all of these topics and many more in my new ebook: "Stripping Covers off the Hunger Games: How 7 Billionaires are Deciding the Future of Book Publishing in America" (available from B&N, Amazon, Kobo, etc.)

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It certainly seems to me that the elephant in the room will be the textbook market. Right now B&N is operating the bookstores on 600 university campuses and that places them in both the first and second hand markets. I think whomever figures that out and makes it work in the e-book space will benefit greatly. Indeed the only reason I can figure the price of textbooks and frequency of new editions is precisely because of the second hand market. Sure you get to sell N new books the first year and N/20 books every year after until a new edition is required when the cycle starts over again. I can't imagine there are a whole bunch of non-physics majors who want to hang on to that $230 physics textbook they had to buy, preferably used, to fulfill a mandatory science elective when they can sell it back and maybe have 80% of the price of the next used book they will need for exactly one semester.

I imagine in a campus setting it wouldn't be too hard (I'm imagining remember) to keep login access to a cloud kept version of an e-book that a student only pays a nominal fee to access for a semester and it disappears from their e-bookshelf after that. It could even be automatic and included with the course registration and have the option for the student to "keep" a downloadable copy. The trick is it would have to be seamless and not an immediate "the server ate my homework" excuse.

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Or a better system - they pay $230 for the e-textbook but can't resell it at the end of the year. And with an electronic version next years edition can very quickly have all the page and question numbers changed so students can't use a previous one.

You can also produce homework questions that can only be answered by clicking a link in the ebook in case any students still try and get out of paying the publishers.

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Pirate

Amazon Should Buy B&N

Amazon should buy the whole B&N business. Merge the Nook and Kindle ranges. Use the shops as pick-up points for internet orders (since UPS/DHL/etc will never deliver when someone is at home) as well as showrooms for books and e-readers/tablets as at present. Personally I prefer the ambiance of a bookstore to to that of an Apple store. If Amazon bought B&N, they'd instantly have a physical presence to rival Apple.

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FAIL

Re: Amazon Should Buy B&N

And elsewhere we learn that Microsoft has just entered a $300 million e-reader partnership with B&N. No doubt that'll go as well as there partnership with Nokia. Hopes Amazon.

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Coat

Re: Merge the Nook and Kindle

And call the result Kook?

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Coat

Re: Merge the Nook and Kindle

Or Noodle?

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Turn it into an advantage

I go to B&N often to browse and drink coffee. I don't often buy any books though, I flick through or read the back to decide if I should download a copy for my tablet.

Any bookstore like B&N need to take advantage of this physical presence - book people still like going into bookshops - just not buying. If the had an app that would let you scan the barcode right away and make the purchase whilst you're standing there in store I think they'd have a killer feature. Or maybe even a free digital copy with the physical purchase.

Imagine standing at the shelf, you like the book, instead of going home or going somewhere else and forgetting it, you scan the barcode and buy, then with the book downloaded, you go sit and drink coffee while you read it.

They could even implement a system whereby you can download previews of books whilst you're on their free wifi, causing more people to come and drink coffee there whilst reading free previews (and occasionally converting into a sale).

I'd hate to see B&N go the way of Borders, but whilst they still have the attention of physical customers (who are increasingly making digital purchases) they need to take a few risks and try to make digital purchases part of an 'experience', rather than a process.

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