HOLT UNCENSORED #35
by Pat Holt
Friday, February 5, 1999
B&N: SNARFING 'EM UP
B&N: SNARFING 'EM UP
Holy cow! I can't believe a couple of zeroes sneaked into the last column to make it appear that Barnes & Noble gave NuvoMedia $400 million to develop the electronic book called the Rocket eBook. In fact, Barnes & Noble is reported to have given "only" $4 million, which Martin Eberhard of NuvoMedia then said was closer to $2 million.
But then holy cow! It turns out that all this may be a bit of hair-splitting since this week a news item from the Israeli newspaper Ma'ariv (2/2/99) reports that barnesandnoble.com is negotiating to buy VersaWare Technologies of Israel for an honest-and-true (at least so-far-stated ) $200 million.
No, VersaWare is not an Israeli version of colorful table settings but a company that "turns books into electronic titles," which means that the stakes for many in the electronic book race have just been raised about 100 times.
So isn't this nice: As mentioned in previous columns, Barnes & Noble is now snarfing up the OLDEST PART of the bookselling industry by building a used/rare/out of print bookselling empire that's going to have a tremendous impact on independent bookstores (I know! this is a controversial stance; see Letters at end of this column for readers' comments). AND the company is snarffing up THE NEWEST PART of the bookselling industry by spending money like a drunken sailor (and hey! where are you getting it, you b&n.com - you only got $200 million from Bertelsmann to begin with and didn't you use at least half of that already?).
Meanwhile the book industry watches these developments with heads whipping back and forth from used books to electronic books as though at a tennis match, with very little coming out of it in a positive way for anybody, particularly independent booksellers. The only big snarfer-upper is Bertelsmann, again, which by the way begins its huge online bookselling operation in Europe this week, where it will collide headlong with Amazon.com, which started business in Germany and Britain in October. "In the United States we want to be a tough competitor for Amazon and No.1 in Europe," a spokesman told Der Spiegel. Say, did you ever hear the story of the tortoise and the hare . . .
Call for Websites:
Thanks to the many readers who asked for websites they can use to search for used, rare and out-of-print books. Used book dealer Julie Stein sends the following:
-Searches Advanced Book Exchange, Powell's Books, Bibliocity, Antiqbook, YourBooks.com, and Amazon.com (in-print titles)
-All of the above search their member dealers' used book listings. ABE and Bibliofind allow you to enter a "want" if you don't find what you are looking for. If a dealer posts that book, you will be automatically notified.
About Used Books:
Christine Volk says, "the supply of out-of-print books is almost limitless, and the sources are incredibly varied. Barnesandnoble.com has no control over any of those sources of supply, nor are they acquiring used books in a way which gives them an economy of scale." If out-of-print loses meaning, Barnes & Noble has the best access to e-technology and publishers print fewer and fewer "real books," used stores aren't going to have much of a "limitless" source.
Of course this won't happen tomorrow or even next year, but it is going to happen at one point. Will used book people become first edition and rare "real book" dealers, like music stores that still stock old LPs, or can they change into something else that the B&N's can't compete with? And, of course, what about us niche-market new/used bookstores? I don't know the answer (yet) but we have all got to start preparing for this as well as our ongoing battles with the chains.
More about Used Books:
I am a used book dealer, [and] . . . . I really don't know why everyone dismisses B&N as stupid and ignorant about used books. For years they ran a used bookstore in lower Manhattan. It would be very easy for them to set up shop as used book dealers.
There are many price guides avilable for purchase, and there are two great databases online; Bibliofind and ABE, where clerks can quickly look up prices and editions. It is easy to train staff on how to buy. Another plus is they already have people coming into the store inquiring about used books so it would so easy (if they realize there is profit there), to set up a desk and train some staff to buy over the counter. Right now we have been assured they will not.
The Half-Price book chain has for years mixed remainders with used books and bought and traded books over the counter. I always thought they would really expand and take over. They have the same big comfy stores and good locations in shopping centers like B&N. One thing holding back is that they pay so little for used books. In conclusion, don't underestimate B&N business instincts. And where would we used book dealers be, if B&N (Bertslmann) buys the Half-Price chain?
More on Used Books:
I helped set up the OP book program at Amazon.com, and it was always clear there that we would probably have to mark up from dealers prices. The notion was that "service" was to consolidate information, and then customers were offered the price. They weren't automatically required to pay any given price, so a savvy customer might then go and investigate other outlets.
When we started the OP program, ABE and Bookfinder.com and so forth were not really the engines of force that they are today, nor were as many used dealers online in a fashion that was easy to consolidate. However, today's consumers aren't really faced with the "book search fee" issue for finding an OP title; they can quickly search Powell's, Bookfinder, ABE, and others, and see if their title is available without a charge.
B&N is simply following in Amazon.com's footsteps.
Glenn Fleishman, email@example.com
About Electronic Books:
FYI, the really important thing about Rocket books from my (the agent's) point of view is the move by Penguin Putnam, first among publishers, to specify a royalty on each copy sold which is capped at the royalty paid on equivalently priced books.
Superficially, it sounds nice for authors. Guess what guys! Look at how generous we are: we'll pay you the same royalty as you get on your books! It's not. Think about it. Book publication has big overhead costs. Production, Printing, Binding. Ebooks are as follows: Author delivers the etext, Publisher presses button. Zero overhead to publisher on the same or more gross revenues. The Author loses because the publisher creams 100% of the productivity gains.
Authors should get a piece of that. A (large) percentage of net is how this should be negotiated.
More on Electronic Books:
I read your e-book column closely, & was left wondering about one large issue that seemed underaddressed (or only implicitly addressed, anyways): who sells the technology which supports e-books, or rather, who doesn't. Bookstores. It's nice there are only two vendors now for e-book "sets"; soon there will be scores since the technology itself can hardly be proprietary--add a slightly different chip & you can have a slightly altered patent.
When NPR had an article about e-books three or four (more?) months ago, I went looking to see if I, Ordinary Independent Bookseller, could sell the computers - or whatever you want to call them - that people need to buy in order to read e-books. The answer is a resounding No. As you say, Levenger's has an exclusive with one of these businesses, & I guess one of the superstores with the other; frankly, I lost the stomach for finding out more after that.
Point being, as I suspect a large part of B&N's 'profit' is made from real-estate, not books, I strongly suspect the new profit to be associated with e-books--which are supposed to cost half as much as paper books--will come from the technology which supports them, not the 'books' themselves. And guess who controls that technology?
Who has access to that technology?