Friday, 10 July 2015

Some Recent News from Barnes and Noble, Chapters Indigo and Penguin Random House Canada

Here are a few of items of interest for those of us following trends in the publishing business.

Barnes and Noble taps Sears Canada head to be CEO (Globe and Mail, page B7, July 3, 2105)

The first item concerns the appointment of a new CEO by Barnes and Noble, the big U.S. bookstore chain.  Their new head is to be Ron Boire, whose previous experience was in such non-book related businesses as Brookstone (a “lifestyle goods” store that filed for bankruptcy in 2014), Toys R Us (toy store having problems competing with Wal-Mart), Best Buy (electronics store, who recently bought, then shut down Futureshop) and Sony (electronics company, often said to be flirting with bankruptcy).  Mr. Boire's most recent job was CEO for Sears Canada (a department store flirting with bankruptcy), which he held since last October.  An analyst (John Tinker) says “The message here is that they're not just a bookstore”.

That's one message.  Clearly, they are pivoting towards toys, electronics, pillows and knick-knacks, in much the same way that Chapter-Indigo has in Canada.  That's the strength of the new CEO.  That might help Barnes and Noble stay alive, but it means that their bookstore business will drop off to second place, perhaps to irrelevance.  Most likely, books would mainly be kept on as gift items, which means a relatively small selection of current best-sellers and classics.

Here's another likely message: impending doom.  The interesting thing about the new appointment, is that it falls quickly upon the heels of the last one, Micheal Huseby, who had only been Barnes and Noble CEO since January 2015, a mere 18 months earlier.  He is taking over the college bookstore unit, which is seen to have better prospects.  Previous to being at B&N, he was Cablevision Systems Corp.

So, there you have several signs of impending disruption and/or disaster:

·          Rapid turnovers in leadership.

·         These leaders are jumping ship from one business in trouble to another (e.g. Sears Canada to B&N).

·         The new leaders don't really know the business that they are jumping into, as they are supposed to revivify it through transformational change.

What does this mean for Indies?  Mostly it means that traditional publishing's advantage over Indies, as far as putting books in bookstores goes, is waning.  No bookstores, no advantage.  Smaller bookstores, smaller advantage.

Here’s what a snarky Indie might say to Barnes and Noble (I'm not snarky by nature, but the comic is too good to pass up). 

Indigo’s core business still set on books, says CEO Heather Reisman (Globe and Mail, June 26, 2015)

Heather Reisman is bullish on paper books, claiming that the transition to e-books has stopped:

She said one of the reasons behind the company’s decision to stock more books in stores is that the appetite for digital books may be waning.

“We can only go by what the curve says and the curve right now has completely flattened out,” said Reisman. “That’s not to say that over the course of 10 years, we’re not going to see an increase. But for the moment, books seem to be behaving in a contrarian way to other digital media.”

Maybe she means it, but she is obviously hedging her bets.

But even though Indigo is continuing to bet heavily on books, the company is still readying itself to grow into more than just a bookseller. It hopes to complete its five-year transformation to become the “world’s first cultural department store” by 2015.

Some of these changes have already taken hold, as the stores continue to expand their gift sections with candles, soaps and jewelry, and educational toys. The company has also opened Apple kiosks that sell iPads and Apple TV, and American Girl doll boutiques, in hopes of drawing in more customers.

As for financial results, there’s this, which speaks for itself.

Last month, Indigo reported a $14.4-million net loss in the fourth quarter as the company cited lower margins along with costs for severance and store closures and continuing investments in its transformational strategy. That compared with a net loss of $8.2-million, or 32 cents per diluted share, for the same period a year earlier. Revenues for the quarter came in at $184.3-million, up from $184-million year-over-year. Indigo reports its first-quarter earnings on Aug. 5.

The first quarter results should be interesting.


How to publish a book in Canada (Globe and Mail, page R3, July 4, 2015)

This is from a column by writer and critic Russell Smith.  In the column, he quotes Brad Smith, CEO of Penguin Random House Canada as saying “I'm not interested in a book that is going to generate less than $100,000 in revenue, unless the editor or publisher has a compelling vision for the book and/or author.”

Mr. Smith then runs through some reasonable print-based calculations, showing that this threshold would basically eliminate much of the print publishing in Canada, especially the category known as “literary fiction”.  Most of these books just don't sell enough copies to hit this mark, even if they are highly acclaimed via prizes and reviews.  The “compelling vision” clause may be a minor out, if the publisher or editor likes you enough, whatever that really means.  

So, what's left, according to Mr. Smith?  Small, government supported local publishing houses, to which mid-list writers can migrate.  He seems pretty sanguine about it, but “Good luck with that” would be my response.

Digital and self-publishing are not addressed in the column.  I presume the lack of “curation” is the reason that they don't rate a mention.  But, if “bookstores” (like Barnes and Noble) quit selling books and big publishing houses (like Penguin Random House Canada) quit publishing anything but actual or projected best-sellers, curation will be a quaint, obsolete concept anyway.  Literary fiction people might as well get used to it, and join us genre-based Indies down here in the on-line trenches.

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