Irony at the Cash Register

So it's not all that long ago that we were told what a big mistake it was for Borders not to have invested more in the e-book reader business.

Now, after a confused holiday season where Publishers Weekly was running articles right after Black Friday telling us how wonderful the indies were doing with the Kobo and now runs an article to say "oops never mind" and where Barnes & Noble was touting its Black Friday success with the Nook and now blaming a drop in holiday sales on a huge drop in sales for the Nook, can we still say that the problem at Borders was failure to invest in an e-reader?  Barnes & Noble doesn't have much to show yet but a lot of red ink or maybe saying that things would even be worse for the retail stores if it wasn't for the Nook, and it's hard to know if there's any way to monetize the business.  Maybe e-readers aren't dead, but tablets are so much better and are now available at prices comparable to the earliest e-readers, not so much for the iPad but certainly tablets by other players that have a lot more resources to pour into the business than Barnes & Noble.  Are e-readers any good these days?  When I had a Kindle, it was better in the principle than in the actual experience.  I've never looked back since getting an iPad.  If the e-reader business becomes a commodity business of selling below $50 in order to compete with tablets, it's not a great business to be in.

I don't know if there's a direct connection between this and the investments in the Nook, but when it comes to physical books Barnes & Noble is now plagued by the same inconsistent selection as Borders was, even in its prime.  Will a store have a partial selection of Nightside, Secret Histories and Ghost Finders books by Simon Green, or will it have all the Nightside, all the Secret Histories, all the Ghost Finders, a few of the Deathstalker books??  Will it have a core title like Elizabeth Moon's Deed of Paksenarrion that is in its third decade and outselling a lot of today's hot young things?  Three Tanya Huff books or eight of them?  It beats the hell out of me. It doesn't encourage people to go and buy books at their local Barnes & Noble instead of buying electronically.  I don't buy the argument that since the physical bookstore chain can never compete with the wide selection of e-books it shouldn't even bother to try.

It was also a big mistake for Borders to have so many stores with such long leases, but that was always a bit deceptive.  If Borders were doing better, having long leases on good locations would be a good thing.  Barnes & Noble now has a different problem.  By keeping a tighter leash on its real estate portfolio, it has a risk of losing too many of its best locations and not having a good way to replace them.  Plenty of stores like the one in Union Station in DC or by Lincoln Center in Manhattan or in Reston VA or in University Village in Seattle that I'm reasonably sure were good locations and profitable ones that B&N would prefer to be in.  But you can't pay top-line rents selling books.

For all of these reasons, I'm not bullish on Barnes & Noble right now.  It's not going away tomorrow, or even in five years, I don't think.  But it just seems to be on that path.

However, my biggest concern about the business is that the infrastructure for selling physical books will evaporate way sooner than the actual demand for physical books, and that this is by far the biggest threat to traditional publishing than the change to buying e-books.

I wrote this post on Sunday for later scheduling, and then Monday we saw a retweet from Tobias Buckell to this post by the co-publisher of Melville House, similar in theme but a little more passionate, I get hurt indirectly when the big chains screw up, he feels it first degree.