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Did B&N Threaten Penguin?

There’s an interesting but improbable story going around today about some behind the scenes machinations that may have affected the library ebook situation here in the US. According to Extreme Tech, the real reason that Penguin dropped library ebooks was pressure from B&N.

Publishers, however, aren’t the only faction concerned about the impact of digital lending. Major bookseller Barnes & Noble has a history of imposing restrictions of its own over what it sees as preferential treatment. In October, when DC Comics announced an exclusive deal to offer e-book versions of popular comics via Kindle, B&N retaliated by pulling 100 DC graphic novels from store shelves. There are rumors that Penguin’s retreat from the e-book market was caused by Barnes & Noble taking a similar stand as it did with DC and threatening to pull Penguin titles off store shelves if the company didn’t capitulate.

I don’t believe it.

Even assuming B&N had the guts to try it, I don’t think they would be stupid enough. This isn’t a case of refusing to carry a few dozen titles from Amazon nor is it the same as when B&N pulled those 100 graphic novels.

Penguin is simply too big of a source of books. If B&N made this threat, when they tried to follow through they would have realized that dropping Penguin would hurt them almost as much as it would Penguin.What’s more, Penguin is owned by Pearson, a major media company. A threat made against Penguin would have a ripple effect across the many components of Pearson. It would sour working relationships across I don’t know how many market segments.

I don’t think B&N would even try to make such a threat.

On the other hand, I could see Barnes & Noble trying to talk Penguin into pulling back from the library ebook market; it might seem like a good idea from B&N’s viewpoint. But threaten? Never.

So what do you think? Could the Extreme Tech rumor be true?

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fjtorres February 13, 2012 um 11:20 am

Well, the timing of the Penguin angst lines up with Overdrive going live with the Kindle library ebooks. But the Extreme Tech position that the bone of contention is Kindle’s frictionless, OTA access (without a PC middle step) seems a tad off; Sony’s T1 and every iPxx and Android device running Overdrive Media Console are equally frictionless.
So either they want to get rid of *all* OTA library ebook access (quite possible) or there is another motivation.
B&N suddenly becoming less enthused about library lending and whispering poison thoughts to Penguin, however, is a lot more likely. Once Kindle matched and *improved* on the feature, it lost its bragging-rights value and the minuses came to the fore.
I agree that B&N *threatening* Penguin sounds unlikely, but they *have* been throwing tantrums lately as if they were still top dog and the do have a pretty big stick: if they delist Penguin ebooks, Penguin would *really* be at Amazon’s mercy.
I’d say there’s a small possibility of a threat, a moderate probability of nudging, but a much bigger probability that it all came from deep in the bowels of Penguin; it really aligns with their long-standing practices and policies.

Mike Cane February 13, 2012 um 1:36 pm

No. Penguin is too big to bully like that. Pull out all those Ayn Rand books that sell in B&N stores? Not going to happen.

And we’ve seen B&N get pushed around by publishers over their Lending feature in the Nook. And didn’t they also wind up restricting Read In Store too?

dave February 13, 2012 um 3:06 pm

Sounds as though Amazon hasn’t quite got a handle on the situation. I tried to check out a Penguin book from the LA County Library this morning and was directed to the Amazon site as usual. There was a notice on the page that due to publisher restrictions the book had to be downloaded to the PC & transferred to the Kindle device via USB. However, there was no link on the page to initiate the download and linking on the book title onlt took me to the 1-click purchase page. A call to Amazon was no help as they had no clue that there is a problem…Dave

Peter February 13, 2012 um 6:37 pm

Barnes and Noble has a lot more sway over the traditional publishing industry than Amazon for several two reasons.

1. They pay a lot of cash up front for their inventory – whereas Amazon initially stocks a handful of each title and simply orders more as orders come in. This is good for Amazon, but bad for the publishers.

More specifically: I’ve read that the break-even cost on setting up an offset printing run falls somewhere between 750-1500 copies. Once this run is set up, printing additional copies is essentially free. Thus, the big gamble for publishers is whether or not the first 1500 copies of a book will sell.

Since Barnes and Noble has approximately 700 locations, if they commit to simply stocking two copies of a title in each store, then a publisher knows they’ve already broken even on that print run and can move full steam ahead. Even if Barnes and Noble RETURNS 700 of the titles, oh well, at least it covered the cost of the print run.

Amazon, on the other hand, may ultimately selling millions of copies of a new title, or they may just sell 100 and the publisher ends up eat the cost of the print run.

2. Shelf space is the largest form of advertising that most book will ever get.

3. As Mike Shatzkin says, book publishers have simply evolved to fill a niche created by the existence of bookstores. Adapting to sell books online well would be like trying to learn how to breathe ammonia instead of oxygen.

So It wouldn’t surprise me to find the action was performed due to a request by Barnes and Noble, but I don’t think Penguin would view it as a "threat". More like a "bailout".

Peter February 13, 2012 um 6:37 pm

several two= 3, apparently

Tyler February 13, 2012 um 7:43 pm

They also have more in-house book promotions with authors and displays for books that are either going to be best sellers or trending to sell well. I know I would have never read many books if it were not on display at Barnes and Noble (and the now defunct Borders).

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