Barnes & Noble: Managing the e-Book Revolution

The matrix shows high digitization in the products and processes of companies offering eBooks
The matrix shows high digitization in the products and processes of companies offering eBooks
Digitization of Products and Processes in eBooks market High | | EBooks and reader devices(Kindle, Nook) | Low | | | | Low | High |

In a world of tablets and smartphones, people tend to feel confused whether a dedicated e-reader is the right choice. E-Readers give the ability to carry thousands of books on the go saving paper and helping to make this planet greener. The big question is whether a dedicated e-reader is better than multipurpose tablets and smartphones. There are many advantages these e-readers have against tablets: 1. They are easier on the pocket since they turn out be lot cheaper than tablets 2. They are portable and lighter 3. They have more comfortable screens to read from and do not cause LCD burnout unlike iPads and other multipurpose devices

Tech savvy readers involved in long reading sessions and who are interested in a wide variety of books can be the target segment for these e-reader devices.
While eBooks will help independent publishers to make their content more popular by selling it in eBook format, however the e-book industry also poses a threat of piracy to major US publishers since the e-book content is prone to be hacked and pirated in multiple forms. The publishers still have a big role in the eBook market since they get to decide the pricing of the books and distribution of the content. Furthermore, the Agency Model forces the revenue from sales of the eBooks to be split between the publishers and the content providing device.
Barnes and Noble Inc. once the country’s dominant book retailer has fallen prey to a technology not of its own making. The advent of e-Books forced the company to divulge into the world of technology which is grappled by several complications like Digital Rights Management, formatting standards and competition against tablets and smart phones. While the e-Books industry posed a serious threat to the retail books industry, Barnes and Noble jumped into a new market too soon and unprepared. In order to prove itself equal, Barnes and Noble has sacrificed its biggest advantage – physical bookstores which catered to book lovers’ impulsive need of selecting books from the shelves. The company launched its own dedicated e-reader device – Nook to get itself into the e-books game which cost them a heavy R&D investment especially when their core business has always been low tech. While the features offered in Nook are almost similar to Amazon’s kindle, it is still far behind the Kindle’s 60% market share.
Nook’s decreasing sales patterns over the years have revealed that Amazon, Apple and Google are the major industry players in the reading device market and Barnes and Noble is lagging behind because it lacks the innovation required for a software company. Barnes and Noble could never afford to sell Nook devices as cheap as Kindles, and hence they should have collaborated with one of the industry players – Apple or Google in order to be in the race of eBook readers. If Nook fails in future, Barnes and Noble should go back to the retail sales of physical and eBooks since they were the pioneers of Book Selling companies.
Unlike DRM relaxation in digital music, publishers did not want to do the same with eBooks because they feared what happened to the music business when Napster arrived on the scene and resulted in widespread piracy of music content. Book publishers did not want the book authors to file lawsuits like band Metallica did against Napster.
If Amazon opts to sell eBooks below cost, Barnes and Noble shouldn’t be doing the same and follow the Agency Model instead. Since publishers play an important part in the eBooks industry by providing the content, the prices of eBooks should be decided in consensus with them. With the ongoing war between Amazon, Barnes and Noble, Apple, Google with Sony and Kobo in the rear, there is no possibility of a single winner with more than 50% market share in eBooks market. This is primarily because of the freedom in digital conversion which enables all these readers to read the multiple eBook formats (Exhibit 4). Multiple winners with convertible standards are better for consumers and publishers because there is less chance of getting locked down to a single (or probably wrong choice of) technology.