Goliath has fallen. The leviathan Barnes & Noble, the big-box chain that reinvented retail and defined a generation…is no more.
Reuters announced early last Friday that the hedge fund Elliot Management Corp. would be purchasing the former book giant for roughly the equivalent of Kim Kardashian’s jewelry allowance ($683 million including debt).
This bold move marks an end to the once-dominant book retailer’s status as a publicly traded company.
After almost a decade of abysmally stupid business decisions and plummeting sales—and me blogging and b#@!$ing about it the entire time—this buyout feels like a mercy killing to me.
Someone might finally save Barnes & Noble from itself.
***I secretly suspect this buyout was the only option left after Mary Kay declined to sell cosmetics alongside records, movies, toys, stationary, gifts, knick knacks, coffee, candles, essential oils and everything else NOT BOOKS.
Now that the former mega-retailer’s fate is in the hands of the Elliot Group, perhaps Barnes & Noble can go back to being a…wait for it…wait for it… *whispers*…a bookstore.
Failure in Leadership
Yes, today I feel ranty. I’m angry. No, I’m past angry and onto livid. I’m not the sort of person who enjoys saying ‘I told you so.’
First, I agree wholeheartedly with the Bloomberg Opinion. I don’t quite know the future of Barnes & Noble, because they can’t keep blaming everything on Amazon.
Yet, before we focus on that bugbear, I’d like to take an opportunity to call out those in publishing leadership. Why?
Because when Barnes & Noble sneezes, we all catch cold.
And that fact just ticks me off.
In order to understand exactly how delicate of a time we’re all in (writers), it’s imperative I paint a full/accurate picture of the colossal mess we’ve been handed.
First, publishing is a business.
Might have been a good start for the powers that be to have remembered that.
To offer any reasonable projections, it’s critical for us (writers) to properly appreciate the sheer scope of the incompetence that’s led us all to this place.
Here is how leadership should work. Yes, even in publishing.
PLEASE NOTE: Most of the major houses we once referred to as ‘The Big Six’ operated under the directives of multi-national conglomerates and giant media companies. The agents and editors and everyday people in the NY (New York) publishing trenches are NOT the ‘leadership’ folks I’m calling to the carpet.
***Looking at you, CBS***
Back to leadership. First and foremost…
Protect the Resource
The top echelon/leaders in charge of the publishing business had ONE job. Protect the writers. Simple. If there are no writers, then there is no content (no stories or information). No stories or information (books), then publishers and bookstores are irrelevant.
This is NOT rocket science.
Take care of writers (resource) and readers (consumers of said resource).
Publishers were NOT charged with preserving the paper industry or protecting/rescuing incompetent retail outlets….especially at the expense of their most valuable resource (writers).
About Those Authors
From all indications, the powers that be ‘forgot’ that writers play a fairly important role in the whole publishing process.
They aligned with the big-box chains and, in doing so, brokered deals that lined their coffers while simultaneously decimating the author middle-class.
Authors who’d previously been making a living wage under the B. Dalton (smaller chain and independent bookstore) model suddenly had to polish up the resume.
The Raw Deal
Under the big-box model, selection and variety ruled. Shelf space was precious and finite, meaning these mega-stores didn’t carry those extensive backlists like the old independents.
Problem was, those backlists had once been the bread-and-butter for the working author.
Under the new big-box model, the stores would only stock the backlists of the top earning authors (because those were guaranteed to sell).
The New York publishers (a.k.a. ‘The Big Six’—Penguin, Simon & Schuster, Macmillan, HarperCollins and Hachette) and other large traditional publishers used this business reality to justify mothballing the backlists of virtually all authors who weren’t household names.
It’s Just Business
This meant instead of an author earning royalties off, say, fifteen books, they could only earn royalties off their most recent title.
Many authors witnessed decades of work vanish along with the small bookstores that supported them.
Not only did this change mean a DRASTIC pay cut, but it also meant these authors had no viable backlist to cultivate existing fans into future fans. There was no longer a way to truly earn their way into household name status.
It was a formula to fail.
If fans wanted the mid-list or multi-published author’s earlier books, they had to go find them in secondary markets (used bookstores, garage sales and all places where the author wasn’t paid).
That was bad enough, but, when e-books became a viable option, NY had a second chance. An opportunity to do right by their authors.
They could have resurrected those titles at least in e-book form.
When Amazon first came on the scene, Borders was still alive and Barnes & Noble dominated the bookselling industry.
Yet, when Amazon launched the first affordable & user-friendly e-reader (the Kindle), early adopting readers found themselves in a conundrum.
They had a new gizmo where they could read all the books they wanted…but there weren’t all that many books. In fact, far too many of the available e-books were unvetted garbage that wouldn’t pass high school English, let alone a NY gatekeeper.
This didn’t have to be so.
NY possessed a ready arsenal of thousands of mothballed titles, novels that had already been thoroughly edited and market tested.
If The Big Six didn’t want to discount their new titles on Amazon? Fine. But they could have field-tested the efficacy of the digital model using backlists that weren’t doing anything but taking up space.
***Many of these books even had earned the coveted titles of USA Today and/or NY Times Best -Selling Book.
Amazon would have had good books for their customers to load on their new Kindle device and they’d make money.
Winner, winner, chicken dinner.
The mothballed authors would have been happy because they’d be back earning money off books liberated from cold storage.
NY could have not only made money (and happy writers) but they could have also used the backlists to appease Amazon and gather critical data to guide future business decisions.
Did they want to keep offering ebooks on Amazon or maybe create their own publisher sites for e-book distribution?
Was this e-book thing really just a fad?
The E-Book Gold Rush
Alas, instead of creating a Big Six controlled e-book division staffed with eager college grads to format books and flood Amazon with gatekeeper-approved books, NY decided…
E-books were evil.
And that readers would always want paper and a ‘browsing experience’ in an oversized store with ridiculous overhead.
Publishers initially handed backlists back to the authors because they believed these books were worthless. They truly believed e-books were a fool’s pipe dream and a fad (though did nothing to test this opinion).
Ah, but when those spurned authors started converting their cast-off backlists INTO E-BOOKS…and making a boatload of money?
With readers desperate for good e-books, these authors started making far more income than they ever had being traditionally published.
This e-book gold rush ignited a mass exodus of multi-published and mid-list authors…right into Amazon’s welcoming arms.
That’s Gonna Leave a Mark
NY was suddenly in BIG trouble. The next generation of ‘household names’ had historically been cultivated, groomed then promoted from the ranks of the mid-list.
But the mid-list authors, after years of loyalty, got fed up with being treated so poorly…and so #ByeFelicia.
What did the publishers do? Did they see the error of their ways and make an e-book division strictly for backlists?
Maybe even broker a deal that if enough e-book copies sold, a book/series could garner a fresh print run?
They Did THIS Instead
Publishers changed all the contracts to make it where authors no longer had rights to their backlist…ever. Those backlists would remain the property of the publisher indefinitely to do with what they wished.
A once-devoted author pool suddenly turned bitter (for very good reasons). Not content to starve, a large portion of the traditional talent went rogue.
They cut their losses and began self-publishing. More than a few created indie houses of their own that were more efficient and geared toward the digital marketplace.
The authors who’d once made money for NY suddenly became additional competition (with Amazon’s blessing).
Ironically, The Big Six unwittingly financed Amazon’s rise as a publishing powerhouse.
What’s insane is that most of the traditional authors had ZERO desire to leave. They’d been publishing traditionally for years, even decades. Going it alone meant a lot more work and a STEEP and highly technical learning curve.
…from a group that feared e-mail.
Most of these authors simply wanted to just write the books like they always had.
Ah, but when faced with starvation? You serve the master who feeds you.
In a dismal twist of fate, NY helped self-publishing transition from ‘shunned last-ditch of the hack wanna-be writer’ into a viable and respectable publishing alternative.
About Those Indie Bookstores
The Big Six didn’t treat the smaller chains/indie bookstores any better. It didn’t matter that small chains, indies, and countless mom-and pop bookstores had been the beating heart of publishing since its inception.
These stores promoted authors, held events and book signings. They pushed literacy, actively sold books and made The Big Six what it was.
Oh, but how short the memory gets with big new friends with deep pockets.
The Big Six participated (obliquely) in the virtual extermination of the small independent bookstores.
Kristen! How can you say that?
Uh. Math. The larger the order, the deeper the discount. Doesn’t take an economist to to do that calculation.
Without the purchasing power, the smaller chains and mom-and-pop indies couldn’t compete. They steadily died off until only a tenacious remnant remained.
***Refer to the movie You’ve Got Mail.
This was all well and good before Web 2.0.
Goliath is a formidable ally until someone bigger, meaner and hungrier comes along.
As I detailed above, NY had countless opportunities to adopt a different business model and didn’t. They ignored all the data, and pretended the marketplace and consumer buying patterns hadn’t changed since the 90s.
Ultimately, NY continued to support the big-box stores at the expense of authors (talent) and smaller bookstores (their former allies).
All of this was utterly unnecessary. It isn’t as if people like me (and those way smarter than me) haven’t been jumping up and down screaming DANGER! for over ten friggin’ years.
I’ve blogged my fingertips bloody begging NY to see reason and turn things around. I even wanted Barnes and Noble to listen and change their ways (for reasons I’ll explain in a moment).
There Were SO Many SIGNS
It wasn’t like the folks in charge didn’t see Amazon’s way of doing business had more red flags than an Ashley Madison dating profile.
The Big Six got sucker-punched as early as January 2010 when Amazon removed the BUY buttons from all the Macmillan titles. The next red flag? When a ‘mysterious’ glitch temporarily removed the BUY buttons off ALL the Big Six titles—Penguin, Simon & Schuster, Macmillan, HarperCollins and Hachette.
The NEXT of many red flags? Amazon (allegedly) removed virtually all the discounts on Hachette titles, according to a 2014 article in Forbes. I could go on, but y’all get the point.
Short of a weird rash that wouldn’t go away…
Red Flags EVERYWHERE
To be clear, I am not Amazon-bashing (yet). But just the examples above clearly demonstrate how legacy publishing refused to acknowledge how completely vulnerable they were.
For instance, maybe it really was a glitch that temporarily removed ALL The Big Six’s BUY buttons.
***And maybe I’m a Chinese jet pilot.
But, giving the benefit of the doubt—and assuming Amazon wasn’t flexing digital muscles to make the old dogs sit and stay—any one of these episodes alone should have been a major turning point in how The Big Six did business.
These were the crucial moments, the pinch points.
Publishing leadership should have thrown everything they had into innovating and making darn sure no one ever again had the power to grab them by the tender bits.
Everything is Okay, Nothing to See
After ALL this, did the major publishers innovate? Perhaps listen to analysts and bloggers and update their business plan? Maybe remove its parasol and bustle?
Did they pay attention to the digital tsunami that had already obliterated Kodak, Radio Shack, Blockbuster, Sam Goody and Tower Records?
Did they pay attention to why Borders went bankrupt? Hot wash it to make a better plan? No.
Did they pay adequate attention to the fact that Barnes & Noble has had FIVE C.E.O.s in the past FOUR YEARS, each one increasingly more incompetent than the previous?
Wasn’t anyone in charge concerned that Barnes & Noble was shuttering an average of twenty-one stores a year as of 2017?
That the only way Barnes & Noble stock valuations could have dropped faster would’ve been to strap them to The Titanic?
Short of using sock puppets to act this out, I just…literally can’t even.
There was a time those in charge of big publishing could have learned and retooled.
If they’d cared about their writers—or listened to those agents and editors so loyal they were practically working for slave wages to maintain some sort of quality control—this whole Barnes & Noble situation might not gall me the way it does.
They could have been a contender. Could have changed. Instead?
They doubled down with Barnes & Noble, a company so inept it couldn’t find its own @$$ in the dark with Google maps and a service dog.
The Future of Barnes & Noble
Bloomberg Opinion’s Sarah Halzak said it best in yesterday’s post:
“…perhaps it is inevitable that Barnes & Noble is a smaller, less influential retailing force now than it was at the height of its powers. But it was not preordained that Barnes & Noble has become as irrelevant as it has.”
Barnes & Noble has squandered opportunity after opportunity to change their fate. Clearly the brick-and-mortar bookstore is a valuable concept or Amazon wouldn’t have gone through the trouble it has to open stores of its own.
Alas, the brick-and-mortar model wasn’t the problem…and privatization may or may not be the answer.
The Privatization Pickle
Unfortunately, Barnes and Noble is still in trouble. Privatization is no panacea. Yes, it can be a viable shield to reorganize, rebrand and regroup. More often than not? Privatization is a harbinger of death and for sound reasons.
Too often, the weight of a private equity buyout is simply too much burden to bear.
We’ve seen this sort of debt load crush once-robust brands such as Toys “R” Us, Wet Seal, The Limited, and, most recently, Payless Shoes.
Even the former office supply giant, Staples, faces an uncertain future. The Sycamore Partners, who acquired the struggling leviathan roughly two years ago, had initially planned on rebranding and splitting the giant into three.
Now? Sycamore seems set on simply cashing out.
According to a recent Bloomberg article by Davide Scigliuzzo and Eliza Ronalds-Hannon:
“Sycamore Partners is looking to take most of its cash out of Staples Inc. through a recapitalization that will saddle the company with roughly $1 billion of additional debt…”
Sadly, the most valuable thing about Staples might be its debt.
Now that a hedge fund has acquired Barnes and Noble (and its debt) this is a tenuous time. They wouldn’t be the first giant beheaded under the PE (Private Equity) sword then parted out, the rest left to the scavengers.
Some Good News
Barnes & Noble (and the publishing industry as a whole) can breathe a small sigh of relief, namely because Elliot Advisors (namely C.E.O. James Daunt), possesses a solid reputation for rescuing completely incompetent book chains.
“The acquisition follows Elliott’s purchase of the British bookstore chain Waterstones in June 2018. James Daunt, the chief executive of Waterstones, will also act as Barnes & Noble’s C.E.O. and will be based in New York.”
Daunt actually has a stellar reputation in publishing and ran his own chain of bookstores—Daunt Books—before he went on to acquire the U.K. version of the bookstore big-box, Waterstones.
James Daunt—using creativity, vision, and common sense—rescued Waterstones from bankruptcy and made the stores profitable again.
He hopes to do the same with Barnes & Noble.
***I highly recommend the The New York Times article detailing all this. I imagine many of Daunt’s solutions will seem eerily familiar for those who’ve followed this blog any length of time.
A Small Celebration
Personally, I’m thrilled Barnes and Noble FINALLY has a) someone who knows the book business in charge and b) a leader with an actual success record.
Because this was me envisioning the old Barnes and Noble hiring process for C.E.O.s…
Have you recently driven a household name into the ground?
Have you any experience bankrupting a perfectly salvageable company?
Do you know ANYTHING about books or publishing?
Party’s Over & Back to Business
ALL this said, there is a reason I’ve taken y’all the long route from where the book business started fracturing in roughly 2006 to where it sits today.
We (writers) have to hope and pray that C.E.O. James Daunt can deliver or we might all be spelling Amazon, M-O-N-O-P-O-L-Y.
Amazon (or anyone) having total control should be scary for all authors. But, it is a particularly frightening scenario for indie and self-published authors, because many aren’t repped by agents with the legal know-how to fight a large machine.
Oh, I suppose we could sue, but Amazon has armies of high-powered attorneys to make a lesson out of any of us who tried.
I know this sounds a little Orwellian, but if Barnes & Noble tanks for good and any meaningful competition evaporates? What’s to stop Amazon from having ‘technical errors’ that just happen to lose YOUR books?
Food for Thought
What’s to stop another BUY BUTTON ‘glitch’? What’s to stop them from demanding we all sell our books for $2.99 and if we don’t comply, we suddenly start having ‘technical errors’?
What’s to keep Amazon from demanding we all flash mob and act out King Lear with jazz hands?
Okay, maybe that’s going too far.
This was why I began this post the way I did. Publishing leadership (those powerful media companies) should never have allowed our industry to devolve to such a piteous state.
We are now ALL vulnerable.
I know expectations are riding a fresh high, but remember they were riding high with Staples, too.
If Barnes & Noble doesn’t salvage something out of this mess, it could be catastrophic for legacy publishing.
Remember, to finance operations, the remaining legacy publishers NEED those bulk orders that stock the Barnes and Noble brick-and-mortar stores.
They also *winces* need orders from those mom-and-pop stores they once ‘didn’t need’ and—with help from their besties Borders and Barnes &Noble—damn near killed off.
Wow, that has GOT to be an awkward conversation.
At the end of the day, if the Elliot Advisors hadn’t ridden to the rescue, the entire U.S. legacy book industry could have collapsed. Some other investor or corporate raider could have bought the whole shebang…then promptly held a yard sale.
***Refer to the movie Pretty Woman.
Sure, Amazon sells legacy published books, but they don’t keep a large amount of stock and buy as-needed. They don’t do the large preorders that keep the lights on and employees paid.
This is still a blow because there will be a major contraction. Barnes and Noble will have to consolidate and lose a lot of fat.
The remaining stores will likely be consolidated and many closed. Excess inventory will be sold off to reduce the debt load. This is all necessary to get back in the black.
If they fail to adequately reduce overhead and debt, they could very well find themselves in the same pinch as Staples…where their debt is their most valuable asset.
In Conclusion: Put on Our Big Writer Pants
It’s all kinds of fun to play armchair analyst and blame greedy multi-national media conglomerates for our sorry state. Yet, while ‘the suits’ certainly hold a lot of the blame, they don’t have all of it.
Just like Barnes & Noble can’t keep blaming everything on Amazon, writers can’t keep blaming everything on everyone else.
There is no Publishing Sugar Daddy. I know many writers who want to ‘only write books’ and not worry pretty little heads over that icky business stuff. This is a recipe for disaster.
Trust NO ONE.
Becoming a mega-author won’t fix our problem anymore than winning the lottery will replace our retirement fund.
Chuck Palahniuk (author of Fight Club) is close to broke after his literary agency’s accountant embezzled $3.4 million. The famed agency Donadio & Olsen has now declared bankruptcy. Meanwhile, their former accountant is free after posting bail.
Ironically, Palahniuk had suspected something fishy a few years ago but suspected piracy. He never thought (as if anyone would) to grill those who were being paid to handle his affairs.
If we want to thrive in the new publishing paradigm, we have GOT to be educated and know the business of our business, regardless the path we choose.
We also have to write excellent books. The more books we write and the better they are, the more negotiating power we’ll have.
And, finally…y’all knew I was going to end up here.
An author brand/platform is not an option, it is a LIFELINE.
The ONLY way to Amazon-proof ourselves is to create a passionate and vested following who will buy our books no matter where we list them.
Then, if Amazon (or Barnes & Noble, or Joe-Bob’s Book Barn or whoever) ceases to be a good business partner?
We can…leave. Yay!
***brains all over laptop***
I hope you enjoyed and I LOVE hearing from you!
What Are Your Thoughts?
Other than this post is long. Trust me, I KNOW. But, hey, encapsulating fourteen years of the publishing business into one post is no easy feat.
Do you feel a bit less terrified now that you know Barnes and Noble might just pull through?
What are your thoughts, concerns, ideas for what we writers can do differently in the future?
Are you hopeful? Disillusioned? Confused? Frustrated? All of the above?
I hope this post has helped y’all gain fresh (and balanced) perspective of where you sit in the greater scheme of publishing. Yes, it’s a tumultuous time in publishing, but while industries change, humans never do.
Humans will ALWAYS want stories and information.
So long as there are humans, there will be educators, inspirers, and storytellers. Our industry might be a mess, but our jobs are secure.
Long live the dreamers!
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