Do Book Publishers Have a Post-Barnes & Noble Plan?

Apologies to any middle children reading this. Honestly, I think you’ll be just fine. Well, sort of.

But woe to the business that finds itself sandwiched in the middle! It doesn’t matter what you make or what you sell, middle market players are always in a truly bad position.

I think this is even truer today than it was years ago, mostly due to the many positive changes the millennial generation is forcing upon society. Based on what I’ve read and observed, millennials like to shop online or shop local. In the world of books, online means Amazon and local means your excellent indie bookstore. Barnes & Noble is trapped in the middle.

B&N enjoyed the gorilla market position for years, as they knocked out regional book chains and independent bookstores with their large selections. But then along came Amazon who could offer the largest selection of books of anyone, plus just about any other product type you could want. Frequent one-stop online shopping means convenience, which means more business.

Furthering the challenge was the hubris B&N executives had in thinking that just anyone can enter the consumer electronics market. As someone who once worked in that crazy industry, I saw Garmin and Amazon try to make smartphones; Rand McNally try to make GPS, and IBM (yes IBM!) try to make laptops. It’s just not that easy, folks. You’ve got Apple, Samsung, Dell, and many others who know best how to navigate those tricky waters. But a bookseller? No way. So B&N could not move forward and cannot now go back to where they were, say like Waterstones in the U.K.

My prediction is that Barnes & Noble will need to file for bankruptcy protection sooner than most think because of its dangerously low operating cash and significantly increasing debt. (Full disclosure: I have no stake in this, don’t own or short their stock.) This will mean publishers will be paid pennies on the dollar owed. But what it really means is the current large-scale business practice -- sustained by a few bestsellers every year with huge author advances -- will find a shrinking number of outlets to sustain that model. Amazon will own the large-volume gorilla position and I expect many current and new independent local bookstores to gain business from the loss of B&N, same as what happened when Borders closed.

So my question for large publishers is: What is your plan without B&N in your mix? Hopefully you’re contingency planning for this behind closed doors.