Here’s Why B&N College Was Sold Today As Part of the MS-Nook Deal

Barnes & Noble made a huge splash this morning when they announced that they were spinning off the Nook into a new subsidiary, with Microsoft to buy 17% stake in the company for $300 million. As amazing as that news might be, there was one part that had me puzzled.B&N College, the division that operates 600 plus college bookstores, was also being bundled into Newco (the working name for the new spinoff). I thought B&N College was just a retailer, so it was a little strange to see it included in a tech company.

But then I came across a post by Rob Reynolds, the Director of MBS Direct Digital. Rob is an old friend, and he pointed out that NookStudy, B&N's hot textbook app, was actually developed by B&N College in a completely separate effort from the Nook platform. I followed up on this elsewhere and I got confirmation that NookStudy was a separate project.

NookStudy launched in mid-2010, so the development happened in 2009. B&N had bought B&N College by that point, and it was also building the Nook platform. But apparently B&N College was allowed to do its own thing and that included all the market research, testing, and development work needed to launch a textbook app. In fact, their website mentions that they're still doing original development work (although the ebook stuff is now concentrated in the Nook division.)

This detail is new to me but it explains a lot. NookStudy isn't terribly compatible with the Nook platform. It offers  a lot of annotation options but very little  of it will also show up in the Nook apps. I've always wondered about that.

In case it's not clear by now, the new spinoff is most likely to be some kind of entry into the academic digital content market.

Note that I'm not saying digital textbooks, B&N already has that in NookStudy. B&N College is likely doing something new that warrants inclusion in the spinoff. (And no, that wasn't clear right away; at first glance it looked like a poorly conceived reorganization.)

While B&N College isn't doing ebook software development, they could have something else in the works. I don't know what it is but it's bound to be something interesting and it's a near certainty that B&N College was included for reasons other than it was a college bookstore retailer.

My guess would be collaboration of some kind, but in any case I look forward to finding out.

 

About Nate Hoffelder (11598 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader:"I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

10 Comments on Here’s Why B&N College Was Sold Today As Part of the MS-Nook Deal

  1. The Academic market is ripe for a tech disruption all its own in the form of a classroom-focused computer. A Win8 based tablet might be the perfect platform for this, especially since it will come with OneNote as well as MS Office. (Even in the ARM versions.)

    It’ll be interesting to see how “Newco” organizes itself once the deal closes; they seem to have two software development groups, one hardware group, the ebookstore and the college outlets. In the US. Let’s not forget the international Nook efforts will go to “Newco”.
    Basically all the growth parts of B&N are going to “Newco” and the shrinking legacy parts are going to the “OldCo” holding company.

  2. So I’m wrong, huh? Ha! We’ll see. *shakes fist with the smugness of those who are right*

  3. Micro$oft $$$ are the kiss of death.

  4. Hi Nate:

    My father-in-law was the Sr. VP at B&N who founded their College Division thirty or more years ago.

    The basis of the business model up to now has been the “lease” from institutions (on a % royalty of annual sales basis) of (usually ineptly-managed) college stores and the rolling of those stores into an efficient nationwide purchasing and distribution infrastructure … plus building upon those economies of scale through professional non-institutional in-store management.

    Fifteen or so years ago, when B&N went public, Lenny Riggio and his family held back the College Division and did not include that property in the public offering. It is only relatively recently, I think within the past two years, that the public corporation purchased the College Division.

    B&N currently has leases on 641 stores. Sales have been dropping of late. And the purchase of this White-Elephant-in-Decline from the Riggio family has in the recent past been a major bone-of-contention between the B&N board and activist investor Ron Burkle, who has said he views the current B&N board as a rubber-stamp for Riggio family interests.

    Of course, much of B&N’s advantage in the traditional college bookstore paradigm goes out the window with the advent and spread of digital textbooks. B&N’s brick-and-mortar/distribution/store management economies of operation will mean little when the majority of texts or downloadable, purchased online, for consumption on tablets, PCs and Smartphones.

    While it makes sense for B&N to make a reach for a digital solution to this erosion of a most profitable base, I don’t see how the effort is likely to gain them any tangible “corner” on the college market.

    Campus-by-campus exclusivity on sales will no longer exist.

    Advance adoptions, print-runs, etc. will be things of the past.

    Also, textbook publishers will almost certainly create multiple editions of their books deployable across the range of operating system platforms: Android (including Nook), iOS and (probably as an afterthought, given what we are seeing in the sales of tablet and Smartphone hardware these days) Windows tablets.

    Which raises the question, what does the Microsoft partnership gain B&N outside of $300 million in cash? I don’t think much. OK, so they’ll have a Nook app for Windows 8. Great. And, I suppose, they’ll have help merging the College Division’s version of the Nook platform with the retail version. Terrific.

    But the fact remains: Nook-specific texts are far less likely to emerge than are versions conceived more broadly, on an operating-system specific level. B&N’s “College Division” will effectively have absolutely no advantage over any other digital bookseller, whether those competitors have a “College Division” or not.

    At least that’s my view, “my two cents,” for whatever it is worth (probably two cents).

    Cheers, —— E

    • “It is only relatively recently, I think within the past two years, that the public corporation purchased the College Division. ”

      I’m told it was in 2008.

    • Ed,
      You probably have in mind the model of the traditional textbook. This will become obsolete very soon – much sooner than many think. The format for the textbook of the future (or should we say the learning material?) has not yet been settled. Apple is doing something, but in their approach you would need to use their development tools and then could not deploy the resulting book to other platforms. Do you think that will change?

      BN and Amazon are working on some extentions to their formats to enhance the reading experince, but what they currently have or will have soon is more about multimedia and some elements of interactivity. eLearning is about much more than that. Notice that the press material talks about a strategic partnership, i.e. long term collaboration.

      There are several advances towards (online) eLearning in which the big eBook players are not involved yet (as far as I know) – big universities are moving to online courses, new companies are created to offer online courses (look into the one started by Sebastian Thrun off Stanford). Their learning material will most likely include ways to personalize the learning experience, program code examples that can be run dirrectly from the “book”, and who knows what else in the future. I do not think such learning material will be easily generated for different platforms and reader (runtime?) environments from the same base that a publisher/author will put toghether. I am more familiar with STEM learning material, so things may look different for the rest.

      I don’t know what the future will be, but I know the current textbook model will not last long. I don’t see anything settled when it comes to the future of learning media, so BN & Microsoft have a good shot at it. Apple also has a good shot at it, and if Amazon dominates the Android tablet maket and gets “control” over Android in that arena as analysts are writing now on the Internet, they will also have a good shot at it.

    • Ed,

      Having been to college recently, and getting the chance to help tons of students get their textbooks, I can tell you that the “textbook publishers” are rapidly becoming a thing of the past.

      Think for a minute of how many professors wrote a book and then assigned it as required reading or even as the text book for their class (and that was in the days when publishing was not easy). Now days publishing an ebook is quite painless.

      If NewCo offers book development tools that allow profs to create ebooks and offers wide distribution on win8 computers and tablets (thus beating Apple who require the books created with their software to remain on an iPad) then I believe they will have a compelling new product.

      It would be simple to include the ability to read these books in an update to windows media player (again beating apple to the punch since iBooks is only available on the iPad). Or NewCo could introduce an app that MS could include with all Win8 computers, tablets, and phones. I know a lot of people jock Apple because they are so cool (I say with a smile) but the reality is there are far more windows based products on the market (and more importantly in peoples homes).

      • >>>If NewCo offers book development tools that allow profs to create ebooks and offers wide distribution on win8 computers and tablets (thus beating Apple who require the books created with their software to remain on an iPad) then I believe they will have a compelling new product.

        Bingo!

  5. I don’t know anything about the college business, but I found this interesting as a Nook Study user. I’m not a student, though. I simply use Nook Study as my desktop PC reading app because it is vastly superior to B&N’s watered-down Nook for PC app.

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