B&N is Having Money Problems

When I reported last week that B&N was delaying payments, I didn’t know whether it was the result of the office closing or a sign of money issues.

In what is an eery reminder of the end of Borders, B&N has now admitted that they are having money issues so severe that they are even delaying ebook royalties (which are a negligible percentage of B&N’s revenue).

Edit: Snashwords posted a similar message to their update page. Then they posted a second update with the news that B&N will be making full payments to authors and distributors.

Draft2Digital sent out an email today, passing along the bad news.

Recently we informed you of certain issues facing Barnes & Noble, resulting from the impact of COVID-19. We wanted to update you with some news, and with a special request.

Just as each of us has individually faced unexpected challenges during this worldwide crisis, so have major retailers. With many of B&N’s storefronts closing during the pandemic, the retailer has seen a dramatic drop in cashflow. One result of this has been a delay in paying publishers for ebooks sold via their Nook Platform.

We’ve been informed that these delayed payments are being done for larger accounts, such as Draft2Digital, and not necessarily for all smaller accounts.

Barnes & Noble has advised us that full payment may be delayed up to 90 days. However, B&N has agreed to pay us 1/3 of the total for February sales now, and to pay the remaining 2/3 of funds at a future date.

Do you want to know how small fry the Nook is to B&N?

In B&N’s last fiscal year, Nook revenues, including both hardware and content sales, totaled $92 million, while revenues for the fiscal year totaled $3.6 billion.

That is not a lot of money when divided into monthly payments, which is even more worrisome. A back of the envelope calculation suggests that Nook royalty payments for February are in the ballpark of $3 to $4 million.

To be fair, with over 400 stores closed to the public, B&N has lost anywhere from a third to half of their revenue, so that minuscule Nook revenue now represents a much larger percentage of company revenues.

Furthermore, ebook sales are bound to increase as a result of the shutdown, which means that B&N’s ebook sales could grow to be as much as ten to fifteen percent of company revenue this quarter.

We’re not talking chump change any more, but it remains to be seen whether the company will still be around to make those sales.

image by batmartin79 via Flickr

Nate Hoffelder

View posts by Nate Hoffelder
Nate Hoffelder is the founder and editor of The Digital Reader. He has been blogging about indie authors since 2010 while learning new tech skills weekly. He fixes author sites, and shares what he learns on The Digital Reader's blog. In his spare time, he fosters dogs for A Forever Home, a local rescue group.

6 Comments

  1. Disgusting Dude23 April, 2020

    Chapter 11 has long been necessary.
    They’ve refused it for fear the BPHs would push them to liquidation like they did to Borders.

    They’ll soon have no choice: no revenue from the Storefronts doesn’t mean they don’t have to pay the leases..

    Reply
  2. Xavier Basora24 April, 2020

    The book publisher betvon paper and lost big time. It’s the same in Europe.

    While regrettable new owners/publishers will arise to meet customer demand. They’ll be smaller and more local but that’s the global trend right now.

    xavier

    Reply
  3. Gwen Liebo24 April, 2020

    Bad corporate decisions and bad management since 2006.
    Whoever hired the district managers and the upper management was either desperate or out of their mind but don’t worry about them, they’re going out with a nice severance.
    It’s the employees who they’ve treated badly, they’re the ones you should feel bad for!

    Reply
  4. Arlene N Parker25 April, 2020

    B&N has some of the worst managers of any business I ever worked for. The district manager for the Somerville store discriminates against seniors and disabled workers. My disability was the result of an accident in the Receiving Department of the store I worked in. The accident was recorded to the manager on duty and no compensation was paid. I still suffer pain from this accident.

    Reply
  5. Olivier27 April, 2020

    I (perhaps naively) assumed that the revenue streams were more compartmentalized, i.e., that Nook revenues were used to pay ebook publishers or authors. If instead B&N is cannibalizing the smallish Nook revenue stream to pay for general expenses then the situation must be dire indeed.

    Reply
  6. […]   Des indices sur des problèmes de trésorerie avaient déjà été relevés le 13 avril par The digital reader. Barnes & Noble accusait en effet un retard dans le paiement des éditeurs pour les livres […]

    Reply

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