The Morning Coffee – 11 December 2012

Here are a few stories to read this morning.

  • 4 Books That Would Be Better as Choose-Your-Own-Adventures (Book Riot)
  • Barnes & Noble Investor Wants A Nook Spinoff For Christmas (Minyanville's Wall Street)
  • EU identifies 6 issues to modernize digital copyright (TNW)
  • Fifty years ago, a strike that changed New York publishing (MobyLives)
  • Five Dos and Don’ts for Picking an Editor (Omnivoracious)
  • Heisenberg's Uncertain Copyright (Go To Hellman)
  • How I Replaced Shakespeare - Joel Stein of Time Magazine on Common Core State Standards (PandaWhale)
  • In Lab Lit, Fiction Meets Science of the Real World (NYTimes.com)
  • Let the Ebook Price Wars Begin: Three Ebook Pricing Predictions (Forbes)
  • A New Form of Price Gouging? (Bite The Book)
  • Post-Apocalyptic Reading: A short story from the end of the world (TeleRead)

 

7 thoughts on “The Morning Coffee – 11 December 2012

  1. The Forbes article about ebook pricing is rather interesting nand to some extent thought provoking. However I personally do not concur with the author’s conclusion. If the price for a given ebook does not provide to customers a perceived correct ‘value-for-money’ relation this will increase piracy on locked down eco-systems.
    Customers willing to pay for a work, but unable to get it as an ebook in a format that works on their preferred reading device at the lowest price available on the market will drive some consumers to obtain that work illicitely. That’s just my 2 cents.

    Greets from still snowy France!

    Ralph

  2. I’m thinking the B&N shareholder revolt over Nook is a bigger story than most people realize.
    The deal with MS was a match of desperation on both ends:
    B&N needed cash, fast. And without the kinds of strings their last deal brought.

    MS needed to match (or better) iTunes for their tablet push.
    That means games (XBOX and XNA will provide) music and video (they already have both discrete sales and rentals for download *and* streaming, plus a music subscription service, so they’re golden), and it means books. Uh, not-so-golden…
    That meant either belatedly getting into ebook sales (waaaay late for that) or buying into an existing operation. And with B&N chronically in need of cash…

    I’m thinking that one likely reason the shareholders would want to see a Nook spinoff is that an independent Nook Media would, in case of financial disaster, be a target for Microsoft acquisition. They *need* ebooks to match up with Apple so, no matter how bad things get at Nook, MS won’t let it fold. (E-X-I-T S-T-R-A-T-E-G-Y, anybody? Indigo found a way to flip Kobo before the going got tough, B&N ought to be thinking along similar lines.)

    After all, Amazon isn’t for sale, Rakuten won’t let Kobo go any time soon, the Sony store (and the other generic Adept stores are too small to be any good) and its too late in the game to build one up. And Microsoft needs to match iBooks for its tablet push to have a chance.

    So they bought a chunk of Nook at a price that values the rest much higher than *all* of B&N, Nook included.

    That brings consequences.

    And if Nook sales “underperform” expectations again, this XMAS, the shareholders will have a much stronger case for spinoff off Nook Media or even selling it outright to MS. Its not as if a couple billion will dent Microsofts checkbook. They may not be in the billion bucks a month club with Apple, but they do make a few billion a year here and there. :)

      1. Stock manipulation? Maybe, but I’ve seen these kind of reports before and once the idea is out there it costs money (that B&N doesn’t have) to put the revolt down.
        The unavoidable fact is that tech companies *are* valued differently than B&M retailers.
        And Nook media alone is worth more than B&N with Nook Media included.
        Now B&N itself does not have negative value so the shareholder is absolutely correct that B&N is worth worth in pieces than as a unit. Even if all they do is spin off Nook media and give all the Nook Media stock (that isn’t owned by MS) entirely to current B&N stockholders that would still result in big value to *all* the owners of B&N.

        Look, by all reports, the B&N storefronts are treading water fine; all the losses are at Nook.
        A tech company losing money as it expands worldwide scares nobody. In fact, the stock would most likely appreciate.
        A book retailer losing money scares the crap out of investors. Regardless of what they may or not be doing to create a “successor” business. Not opinion: fact–it’s happening to Best Buy as well as B&N.

        And since pbooks will never go fully away and B&N is slowly downsizing their storefronts as their leases expire the B&M retail operation should be a nice and *stable* business to invest in. Some investors *like* stable. But they’re not always the same ones that look for growth tech stock to invest in. Which is why the curret setup doesn’t work: B&N losses scare off conservative investors while the B&M stores depress the growth potential of the aggregate company, which reduces the appeal to tech investors. (Also, a lot of storefront resources are being offered to Nook Media effectively for free–remember the Kobo affiliate fees?–so the current setup is is some way transfering Nook costs to the storefronts. The storefronts might actually be profitable if Nook were an independent company paying for its floorspace and staf training and time.)

        And Nook is still burning money fast…
        The $650 million MS money may get them past 2013 but not much further.
        And if this XMAS result in more Nook hardware underperformance they are going to run out of cash even sooner.
        By every reasonable measure, a spinoff is overdue.
        And the idea is now out in the open.
        This isn’t going away.

        1. In fact, the stock-boosting aspect will only force the spinoff sooner.
          With the idea that B&N is a good candidate for breaking up, they are now going to be attracting the attention of raiders. I expect the B&N bylaws and financials are under tighter scrutiny today than a month ago as the raider types look to see if they can swoop in and force Riggio’s hand.
          The fight is coming and the timing is really bad.

    1. That article isn’t important.

      Read what the guy is saying. He doesn’t care about BN or NOOK at all, he just wants to make a quick buck. He wants BN to sell off the only division that is going to be relevant in a couple decades, then take the money from the sale and give it as dividends or stock buybacks – just enrich investors (himself) at the expense of the company.

      He is a great example of why IPO’s are a terrible idea. You get a nice burst of cash inflow in the short term, then are beholden to selfish billionaires who care nothing about the long-term health of your business for all time.

      1. B&N is a publicly traded company.
        They are by law obligated to work to maximize investor value and return as long as it is done legally.
        Companies can play the long game (amazon does) only if the stockholders are willing.
        Many Amazon haters keep expecting Amazon shareholders to revolt and force Bezos to raise prices and stop his growth-focused strategies but it isn’t happening; Amazon stckholders are on board with the long game for the ong haul. Otherwise, they wouldn’t own Amazon stock.
        Now we have at least some B&N stockholders saying *they* don’t want to play the long game. That the way B&N is structure is depriving its stock (and them) of its true value.
        If enough stockholders agree, Riggio would have to buy them out (at a premium) and take the company private or be bought out himself, or he’d have to give in.
        Riggio just doesn’t have many cards left to play. He’s currently playing with Microsoft money, not his own. He couldn’t take the company private when he put it up for sale so he is not free to do as he wishes regardless of who objects. So he has to deal with his shareholders. And if he buys one out, others will too.
        One way or another the shareholders will be paid.

        Since the plain reality is that the parts of B&N are worth more separately than together this *is* important.

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