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Monday, June 10, 2019

Stripping the assets

It's just about all over for the major publishers now that Barnes & Noble has been acquired by a hedge fund:
Barnes & Noble Inc said on Friday it would be bought by hedge fund Elliott Management Corp for $475.8 million, marking the end of the once-dominant U.S. book retailer as a public company after years of falling sales.

Shares in the largest U.S. bookstore chain rose 11%, after ending up 30% on Thursday when reports of a potential deal surfaced.

Listed on the New York Stock Exchange since 1993, Barnes & Noble has struggled to grow its business since the arrival of Amazon.com Inc turned the book sales market on its head. Even the company's recent efforts to pull in a more tech-savvy audience with its Nook e-book reader failed to compete with Amazon's Kindle and other tablets.

Elliot's offer of $6.50 per share, represented a premium of about 42% to Wednesday's close, the day before media reports of a potential transaction first surfaced. Barnes & Noble has been exploring options for a buyout since at least last October, with multiple parties showing interest including founder-chairman Leonard Riggio. Riggio acquired the flagship Barnes & Noble trade name in 1970s, nearly a century after Charles Barnes started the business in his Illinois home. Riggio grew the business, adding several retail stores across the country, but could not sustain the growth in a retail landscape dominated by Amazon.

In 2014, Barnes & Noble closed its New York Fifth Avenue store - once the world's largest bookstore - and has faced declining sales for at least the last three years. As of this January, it ran 627 retail stores.
I very much doubt that Elliott Management has any interest whatsoever in building up a bookselling business. Instead, it's going to methodically extract the most valuable pieces of the business, sell them off, and profit from the dismantling of the business. This means that the Big Five publishers will probably merge and reduce themselves to a Big Three, with at least two attempts to set up their own competitor to Amazon, both of which will fail, like Macmillan's attempt to establish Pronoun, due to their structural inability to ignore the legacy requirements that inhibit their decision-making.

As a onetime Barnes aficionado, I'll be sorry to see it go away. Most of my dates with Spacebunny, including the first years of our marriage, involved us spending an hour or two in the evening browsing the bookshelves, drinking coffee, and leaving with about $50 worth of books.

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58 Comments:

Blogger CarpeOro June 10, 2019 7:43 AM  

I was a bigger fan of the defunct chain Borders (probably because it was based in my home state, but also seemed to have a better selection for sci-fi and fantasy), or the also defunct Walden Books, but I did enjoy occasionally going to Barnes and Noble.

Blogger Cataline Sergius June 10, 2019 7:45 AM  

As a onetime Barnes aficionado, I'll be sorry to see it go away.

I can appreciate warm memories of first dates and meetups with friends.

I have similar memories myself.

Except mine are of little specialty bookstores that B&N and Borders killed.

I suspect genre specific shops might be able to make a limited comeback particularity if they have a halfway decent used and out of print section.

Blogger VD June 10, 2019 7:46 AM  

I suspect genre specific shops might be able to make a limited comeback particularity if they have a halfway decent used and out of print section.

They won't, as a general rule, because people are reading about one-third the books they used to read.

Blogger OGRE June 10, 2019 7:48 AM  

the Big Five publishers will probably merge and reduce themselves to a Big Three

Rule of Three in action.
https://infogalactic.com/info/Rule_of_three_(economics)

Blogger Ken Prescott June 10, 2019 7:53 AM  

But without a distribution channel that's readily available, the Big Three will go down.

The Big Five have exactly one major asset left: their backlists. Vulture funds will be after those to sell the rights off to people looking to digitize thowe backlists.

Blogger Johnny June 10, 2019 8:25 AM  

Currently they charge really big bucks for textbooks.

>>A major conglomerate, my company was responsible for publishing nearly a third of all college textbooks and raked in nearly $2 billion in revenue in 2011.

I wonder to what extent the major book publishers are kept going by textbook sales alone?

Blogger camcleat June 10, 2019 8:28 AM  

OGRE wrote:the Big Five publishers will probably merge and reduce themselves to a Big Three

Rule of Three in action.

https://infogalactic.com/info/Rule_of_three_(economics)


Which oddly brings to mind the interesting counter-example of the US Uniparty in politics. Illustrative for the Cucks that continue to believe Conservative means opposition.

Blogger Cataline Sergius June 10, 2019 8:30 AM  

They won't, as a general rule, because people are reading about one-third the books they used to read.

Why must you ruin my dreams?

Although, in truth shops like A Change of Hobbit and the Merchant of Venus wouldn't be viable in the 2020s.

However, tweeners girls still read. Wattpad and Medium strongly indicate that this market exists.

I suspect boutique shops that cater to that segment would be viable.

Girls like to travel in herds. If they take a liking to them it would work.

Hell, I never thought coffee houses would make a comeback.

Blogger anorganicbear June 10, 2019 8:35 AM  

Can someone elaborate on what the SDL meant by:

"due to their structural inability to ignore the legacy requirements that inhibit their decision-making."

Blogger VD June 10, 2019 8:36 AM  

Why must you ruin my dreams?

Because I find it annoying when people attempt to Boomerize reality and claim that their historical experience correctly defines the current situation even when it is observably different.

How hard is it to simply pay attention to what is rather than what was or what we wish it to be?

Blogger Matt June 10, 2019 8:52 AM  

A damn shame. The good new is, the few B&Ns still running tend to be in nice upper middle class suburban neighborhoods.

Blogger Freeholder June 10, 2019 8:56 AM  

Turn about is fair play, Barnes and Nobles did the same thing to BookStop when they bought them decades ago. You could tell it was coming since a good portion of the store was now games and other gift items. I suspect Half Price is soon going to be the largest book chain.

Blogger OGRE June 10, 2019 9:00 AM  

@7 camcleat

Your point re uniparty and cuckservatives is true, no doubt. But the Rule of Three applies to for-profit firms operating in a competitive market, not political parties in an extremely regulated environment. Among the many differences, the US political "market" would at the least be oligopolistic--if not outright monopolistic--with immense barriers to entry.

Blogger James Dixon June 10, 2019 9:02 AM  

> Most of my dates with Spacebunny, including the first years of our marriage, involved us spending an hour or two in the evening browsing the bookshelves, drinking coffee, and leaving with about $50 worth of books.

Been there, done that. Though for us it was usually their B. Dalton Bookseller mall locations. When the mall didn't have one of those it usually had a Waldenbooks.

Blogger Steve Canyon June 10, 2019 9:03 AM  

Similar to the demise of Toys 'R Us, of which I had fond memories of a childhood trip to the toy store and the fascination and wonder that had, I too lament the demise of B&N. It was better than the library (in my town, doubled as a homeless shelter and a place for ruffians to peruse the internet in Air conditioning) for studying, and I also enjoyed looking through the military history section and buying a book when I could afford it.

Fortunately, there's a decent chain of used bookstores in my area. The selection tends to be a bit better as the occasional esoteric small-publisher book winds up on the shelves, at least for what I'm looking for. I don't imagine B&N putting more indie published books on the shelves makes for a viable business model though.

Blogger James Dixon June 10, 2019 9:08 AM  

> I suspect Half Price is soon going to be the largest book chain.

Our local Books a Million still seems to be doing OK. It is in a college town though, which may have something to do with it.

Blogger Chris Ritchie June 10, 2019 9:12 AM  

CS is right. My daughters read a ton. No TV in the house so they are all about the books. Definitely a niche market though.

Blogger Purge187 June 10, 2019 9:16 AM  

More consolidation of communications and publishing. This is worrisome.

Blogger Beardy Bear June 10, 2019 9:27 AM  

VD those dates sound exactly like my wife and I now. This is bitter news.

Blogger wreckage June 10, 2019 9:31 AM  

"due to their structural inability to ignore the legacy requirements that inhibit their decision-making."

Their business is built on and shaped by the old demands of book-selling. It's not just a matter of habit, but of staff, seniority, location, and owned assets.

When they make a decision it is constrained by the question "what do I do with these tools?" in much the same way as a buggy wheelwright with a workshop might be. The market has changed fundamentally, but most, especially the large, will simply be incapable of re-tasking to the new situation.

All of that, plus their mental habits and social structures, constrains their new decisions so rigidly that it could almost be called an illusion of choice or volition. Sometimes an unusually brilliant strategist can change that, but it's rare.

I think that's a pretty fair summary, but I do not, at all, speak for the SDL.

Blogger JG June 10, 2019 9:34 AM  

I stopped buying physical books when the Kindle came out due to the "no place to put them" problem. I still buy dozens of books each year, but now these are almost exclusively eBooks and audiobook+. I don't have Kindle Unlimited anymore, that budget is now spent mostly at Arkhaven.

For technical books, eBooks tend to be priced much higher than used copies, so I still have these used technical books lying around in piles.

The last time I was in a bookstore, it was because there was an attached coffee shop.

Blogger justthinkin June 10, 2019 9:45 AM  

The Main Street bookstore in my small city gave up the ghost just this year. Sad.

Blogger binks webelf June 10, 2019 9:58 AM  

OT:

http://joemiller.us/2019/06/people-are-canceling-netflix-and-disney-and-the-revenue-losses-are-growing-by-the-hour/
People Are Canceling Netflix and Disney—and the Revenue Losses Are Growing by the Hour

Blogger John Rockwell June 10, 2019 10:01 AM  

Whilst on this topic.

A new corporate model may be in order:
https://hbr.org/2018/11/the-end-of-bureaucracy

https://www.mckinsey.com/business-functions/organization/our-insights/the-five-trademarks-of-agile-organizations


The most free and more agile organizations follow this model.

Blogger Mark Stoval June 10, 2019 10:01 AM  

In light of the new book publishing environment, how does a new writer become a new Hemingway? How does a young "great one" get established?

Blogger Snidely Whiplash June 10, 2019 10:45 AM  

Johnny wrote:Currently they charge really big bucks for textbooks.

>>A major conglomerate, my company was responsible for publishing nearly a third of all college textbooks and raked in nearly $2 billion in revenue in 2011.

I wonder to what extent the major book publishers are kept going by textbook sales alone?

The problem with textbooks is the same problem the publishers have all across the landscape. They have no way to really influence the market. Textbook publishers are entirely dependent on instructors assigning the books. So far they have gotten away with giving the instructors a taste (ever notice how often your instructor or his boss is a "contributing editor" of the textbook assigned?) or outright bribery. But schools have their own problem. They're trying to compete in an overcrowded market. The significant impact of book costs and the college book store racket have made it a competitive advantage for the college to step away from it. Already sever top-tier colleges require their instructors to put all materials online for their classes. It would not take many more for the whole pyramid to crack.

Blogger Noah B. June 10, 2019 10:49 AM  

Abebooks.com is a good alternative to Amazon for buying and selling books. Lots of the smaller and niche book dealers have set up shop there.

Blogger David The Good June 10, 2019 10:51 AM  

I went on a lot of dates at B&N. Sad to see them go.

Blogger David The Good June 10, 2019 10:53 AM  

VD wrote:Why must you ruin my dreams?

Because I find it annoying when people attempt to Boomerize reality and claim that their historical experience correctly defines the current situation even when it is observably different.

How hard is it to simply pay attention to what is rather than what was or what we wish it to be?


Yes. We're headed directly into Canticle for Leibowitz territory for the next century at the very least. Just accept it and pray the mutants don't eat you.

Blogger JG June 10, 2019 11:09 AM  

Here's a handy chart of the big 5 publishers, if you're curious about how things may shake out:

http://almossawi.com/big-five-publishers/

Blogger Astrosmith June 10, 2019 11:20 AM  

Need a new Tom Hanks/Meg Ryan rom-com about this...

Blogger Nostromo June 10, 2019 11:29 AM  

There are 2 types of people in the world, readers and non-readers. My wife and I read, me voraciously. She has transitionedcover to audiobooks now though, something I can't stand. Her son's stepson reads. I'm trying to encourage that.

Blogger pyrrhus June 10, 2019 11:33 AM  

Hmmm...Stripping assets....Mitt, is that you?

Blogger camcleat June 10, 2019 11:34 AM  

OGRE wrote:@7 camcleat

Your point re uniparty and cuckservatives is true, no doubt. But the Rule of Three applies to for-profit firms operating in a competitive market, not political parties in an extremely regulated environment. Among the many differences, the US political "market" would at the least be oligopolistic--if not outright monopolistic--with immense barriers to entry.


True, and your distinction is of course spot on.

My weak attempt at analogy was to imagine a reply to the Cucks, especially those that like to try to apply economics as a general all-encompassing, principle: "But in a natural and free system, there should be three strong parties, not merely two."

Call it evidence of a sort to illustrate the political party system is not what it seems or purports to be.

Still, you are right. I was trying to be too clever by at least half.

Blogger Richard Martel June 10, 2019 11:36 AM  

Why would people need to read when Big Media can just tell them everything they need to know?

Blogger pyrrhus June 10, 2019 11:38 AM  

Our family spent a lot of time at Borders, which was larger and friendlier back in those days, and had a nice coffee area...Better sci-fi too....

Blogger pyrrhus June 10, 2019 11:41 AM  

"Among the many differences, the US political "market" would at the least be oligopolistic--if not outright monopolistic--with immense barriers to entry."

Of course...State laws are carefully crafted to make it extremely difficult for a 3d party to even get on the ballot...The Elites invariably suppress political competition until there is none, and now we have the Uni-Party...

Blogger Balam June 10, 2019 11:44 AM  

VD wrote:Because I find it annoying when people attempt to Boomerize reality and claim that their historical experience correctly defines the current situation even when it is observably different.

If bookstores are reverting to the normal, considering that the boomer era wasn't normal at all, there indeed are not going to be a lot of bookstores. The bookstore era was the Boomers eating the seedcorn once again, I'm not even sure how this time, and creating an artificial unsustainable boom.

https://www.theatlantic.com/technology/archive/2012/06/a-golden-age-of-books-there-were-only-500-real-bookstores-in-1931/258309/

""In the entire country, there were only some four thousand places where a book could be purchased, and most of these were gift shops and stationary stores that carried only a few popular novels," Davis writes. "In reality, there were but five hundred or so legitimate bookstores that warranted regular visits from publishers' salesmen (and in 1931 they were all men). Of these five hundred, most were refined, old-fashioned 'carriage trade' stores catering to an elite clientele in the nation's twelve largest cities."

Furthermore, two-thirds of American counties -- 66 percent! -- had exactly 0 bookstores. It was a relatively tiny business centered in the urban areas of the country. Did some great books come out back then? Of course! But they were aimed only at the tiny percentage of the country that was visible to publishers of the time: sophisticated urban elites. It wasn't that people couldn't read; by 1940, UNESCO estimated that 95 percent of adults in America were literate. No, it's just that the vast majority of adults were not considered to be part of the cultural enterprise of book publishing. People read stuff (the paper, the Bible, comic books), just not what the publishers were putting out."

Going back to pre-world war 2 standards just about all the bookstores are going to close as we go back to having less 'urban elites'. It's not even going to be literate rurals not reading either, but 3rd world plague bearing illiterates.

Blogger Chris Ritchie June 10, 2019 11:44 AM  

@35 - https://www.brainyquote.com/quotes/eric_schmidt_557851

@36 - B&N has a birthday club our children have been a part of now for awhile. They get a free muffin or cookie and my wife or I takes them to pick out a book or two. One on one time with mom or dad, hard to get with 7 children. Of course there are easy alternatives, but B&N had some guaranteed revenue with our family from this program.

Blogger Chris Ritchie June 10, 2019 11:50 AM  

@38 - Good find. Of course "normal" is relative based on time span. I fear our reversion to the mean may go back generations prior to the lottery winning jackpot that was the post WW2 years. While many here think a lot about agriculture, weapons proliferation, and basic infrastructure services, I hadn't considered the number of book stores to be a part of that equation.

Blogger Ray - SoCal June 10, 2019 11:53 AM  

Abebooks has been owned by Amazon since 2008

Blogger sammibandit June 10, 2019 11:54 AM  

I wonder if Indigo in Canada will be affected. I used to order sci fi books from there and Theodore Dalrymple.

Blogger kurt9 June 10, 2019 12:16 PM  

I very much doubt that Elliott Management has any interest whatsoever in building up a bookselling business. Instead, it's going to methodically extract the most valuable pieces of the business, sell them off, and profit from the dismantling of the business.

Of course, we call these kind of funds "vulture capitalist" funds, because this is what they do.

Blogger Paradise Lost June 10, 2019 12:17 PM  

Goodwill stores seem to be in the running for used book sales.

I always disliked the clerk sneering over half-glasses as I purchased conservative titles in lieu of the liberal fare that kept fore front in the aisles and windows.

Blogger pyrrhus June 10, 2019 12:53 PM  

Here in Tucson, we have large bookstore chain called Bookman's which has been quite successful buying and selling used books and other used products like cds and cartomancy items...It now has about 5 stores, and is very popular, and isn't in direct competition with Amazon.

Blogger Snidely Whiplash June 10, 2019 12:55 PM  

Balam wrote:Going back to pre-world war 2 standards just about all the bookstores are going to close as we go back to having less 'urban elites'. It's not even going to be literate rurals not reading either, but 3rd world plague bearing illiterates.
Your source leaves out magazine and other periodicals, which in the day were far more substantial and far more literate than at any time since WWII, as was the population. Far more substantial and literate than the book publishing industry is today. Books were a small minority of the publishimg world, and a not-very-profitable one at that.

Blogger Damelon Brinn June 10, 2019 1:03 PM  

We're headed directly into Canticle for Leibowitz territory

I just re-read that the other day. One thing that struck me was that, even though the monks had saved a lot of documentation, it was worthless because no one understood any of it after a few centuries focused on simple survival. A radio schematic means nothing if you don't know what resistors are. It shifted my thinking a bit about what's coming and what will be valuable.

Blogger Skyler the Weird June 10, 2019 1:07 PM  

Only a matter of time before Amazon bans you from your books and audio and visual libraries on Kindle due to Wrong Think.

Blogger Barbarossa June 10, 2019 1:25 PM  

@44 Your very true observation reminds me of a visit I paid to the Reagan boyhood home in Dixon, Illinois probably about 15 years ago. After the tour, I went into town for lunch and then stopped to take a peek at a local independent bookstore. It was staffed with exactly the sort of pinch-faced literati who you knew despised the farming hoi polloi that surrounded them. Was looking for any sort of Reagan material and couldn't find a single title. Not a one. Talk about bad business practice. Get woke, go broke.

Blogger Balam June 10, 2019 1:33 PM  

Snidely Whiplash wrote:Your source leaves out magazine and other periodicals, which in the day were far more substantial and far more literate than at any time since WWII, as was the population. Far more substantial and literate than the book publishing industry is today.

That is true, it gives a throwaway mention to newspapers and comics books but nothing else on the topic. However wouldn't people buy magazines/comics from newstands and mail-order? Today both can be replaced by internet and mail-order (which is also done through internet). No reason to keep any bookstores open for their sake.

Blogger Doktor Jeep June 10, 2019 1:44 PM  

I come here for these 20 lb temporal monkey-wrenches (delivered kinetically) :

"Because I find it annoying when people attempt to Boomerize reality and claim that their historical experience correctly defines the current situation even when it is observably different."

Blogger OvergrownHobbit June 10, 2019 2:17 PM  

@46 Even the comics pages were more literate. Which is a sad commentary.

Also possibly left out: Mail order books, which were a thing back in the 1800s (Little Women, the Little House books).

Finally: Non-bookstores reliably carried books, and were serviced by publishers reps who knew the locales.

Blogger Jack Amok June 10, 2019 2:40 PM  

. However wouldn't people buy magazines/comics from newstands and mail-order? Today both can be replaced by internet and mail-order (which is also done through internet). No reason to keep any bookstores open for their sake.

Not too many years ago, most supermarkets had a fairly large magazine section. I can't recall seeing one lately.

Blogger Karhu June 10, 2019 3:07 PM  

@38 Balam quoting an Atlantic article:

"No, it's just that the vast majority of adults were not considered to be part of the cultural enterprise of book publishing. People read stuff (the paper, the Bible, comic books), just not what the publishers were putting out."

High printing quality books, but there were also mail order book clubs, like Book of the Month club offering 5 volumes every month starting in 1926, and as @46 Snidely Whiplash says, all sorts of magazines, including literary ones. One of my grandmothers started subscribing to the Reader's Digest as far back as the mid 1950s and saving the issues, reading these a couple of decades later was very educational.

Blogger OneWingedShark June 10, 2019 10:02 PM  

Damelon Brinn wrote:We're headed directly into Canticle for Leibowitz territory

I just re-read that the other day. One thing that struck me was that, even though the monks had saved a lot of documentation, it was worthless because no one understood any of it after a few centuries focused on simple survival. A radio schematic means nothing if you don't know what resistors are. It shifted my thinking a bit about what's coming and what will be valuable.

That's a very god point — if you're going to preserve electronics schematics, grab a couple of college textbooks from circa 1965 and a contemporary dictionary.

Blogger Avalanche June 11, 2019 10:07 AM  

@45 "we have large bookstore chain called Bookman's which has been quite successful buying and selling used books"

Problem with that may be that the authors don't get any pennies... Britain, I read somewhere, has/had a book tracking system, whereby if you bought a used book, the ISBN was registered, and the actual author got a bit of change for the resale. I vacillate, on Amazon, between buying new -- and giving the author a bit for the work -- and saving a couple dollars buying used. Don't have a hard-and-fast 'line' -- but if it's just a few dollars more and I'm feeling reasonably flush, I'll buy new to pay the author.

Blogger Owen June 11, 2019 2:37 PM  

I’m a bit saddened as well. The amazon bookstore in Time warner center is a pale imitation of the old school book stores

Blogger GithYankee June 14, 2019 6:51 AM  

Would a traditional/conservative, call it what you will, Amazon banned books, "right" wing-type bookstore work? Real historians, Warhammer. Science fiction, but only Heinlein, Lovecraft, Poul Anderson, etc. I really think this could work, but it might even have to be a private club that happens to sell books.
The advantage would be you could buy "edgy titles" with cash without the whole universe knowing what you bought. New books by Castalia House. Also, I wish there were better examples, Arktos, Counter Currents. The full raft of dissident online literature, but in a physical space. Probably just a dream, but a large part of B&N's failure is not selling what people want. The Right Reads, and I don't think that's entirely wishful thinking.

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