What the Barnes & Noble news is really telling us about the future of digital content

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Wow, it’s been quite a week for Barnes & Noble and the industry at large.

B&N got hammered—not only on the numbers, but on the optics as well. They are out of the tablet business (smart), but the drain on their bottom line was significant, and they’re facing a triple whammy with high overhead, no big blockbusters to make up for last year’s 50 Shades of Hunger, and little consensus on the most viable way forward.

Most people in one way or another are asking if the nation’s only remaining bricks & mortar chain bookseller is going to be around in five years.

Looking beyond the immediate question about whether B&N’s moves will allow it to retool and refocus on its core business—namely selling books and (and lots of higher-margin gift merchandise)—this week’s news has me thinking more broadly about our horizon line.

For instance, is B&N really the counterbalance to Amazon as was suggested when Microsoft took a stake in Nook? What is the technology lifespan of stand-alone readers as a category generally? Is this a transitional technology? (I think it is.) Finally, when we expand our perspective to the global marketplace, what does the explosive growth of mobile mean for the future of publishing? Are we prepared?

There are all kinds of flags for those paying attention.

The International Telecommunication Union estimates that at the end of 2012, there were 6.8 billion mobile subscriptions worldwide. That is equivalent to 96 percent of the world population (7.1 billion according to the ITU). And is a huge increase from 6.0 billion mobile subscribers in 2011 and 5.4 billion in 2010.

Likewise, mobile subscriber rates in the developed world are rapidly reaching saturation point with at least one mobile subscription per person. Mobile penetration in developed nations is around 128 percent of the population. (The Americas-109%; Europe-126%; the states of the former Soviet Union-170%.) This means market growth is being driven by demand in developing world, particularly in India, China, and Africa.

Here in the US we have a mobile device in our hands pretty much all of the time, which is starting to impact how we discover and relate to all kinds of content.

Kids books by channel 2013In the study I edit with Bowker Market Research, Understanding the Children’s Book Consumer in the Digital Age, our most recent findings show that while in-store and traditional browser-based book purchasing remained relatively stable between January 2012 and February 2013, stand-alone e-reader book purchases fell from 6% to <1%, while in-app purchases grew from 1% to 7% in the same period.

And, lest you think this is a kids-only behavioral change, according to the research of website optimization technology provider Monetate, tablet and smartphone use nearly doubled in the last year in the US. Mobile share of all Internet activity is now around 25% on average, and is clearly on a steep growth curve.

Why should we be connecting these dots more carefully? Because, according to a 2013 study by Comscore—final data-point, I promise—approximately 82 percent of time spent with mobile media happens via apps.

This means all of our traditional ideas about how our customers interact with our online content—visiting an author’s website, doing online research, following bloggers, or browsing online sites—is going to change.

If we’re heading into a mobile app-driven world, and away from discovery via publishing establishments like B&N, what is the game-plan?

SargassoIs it creating stand-alone apps for single books or properties that we set adrift in the wide Sargasso Sea that is the app store?

What about pinning our hopes to customers buying and reading on their Kindle mobile app, or via the iBookstore especially when we have no ownership over those customers or their behavioral data? Hummmmmm.

In order to truly understand the potential impact of mobile on the future of publishing we have to understand that it’s not just about the immediate challenge of getting someone to buy a single “app” or a single e-book.

At the end of the day, three things will move the dial and drive a sustainable app-enabled future for the publishing market:

  • Increased profitability (for the publisher & content creators)
  • True ownership of audience
  • Transparent, timely access to data that drives better business decisions and optimizes sales

Furthermore, a successful app strategy will:

  • Be audience-driven & not dependent on the app store for discoverability
  • Will have in-app sales across all platforms
  • Will have a centralized engine but infinite customization on the consumer side – imagine hundreds of thousands of custom apps driven by a single engine in a data environment publishers can participate in

Yeah, baby. That would be a paradigm shift of the first order.

A rational, cohesive app strategy will deliver all of this to a publisher or content creator in the next few years. If your current app strategy doesn’t, you better be thinking hard about it. It is a tall order, but achievable based on the tools I am seeing emerge right now. Feel free to drop me a line if you want a pointer in the right direction.

As for me, I believe B&N will be here five years from now because they’ve got some smart management, but they won’t look the same.  I also believe the market share for every book retail channel will be radically retooled in a similar way.

This is the wakeup call B&N’s news is delivering to us this week.

Are you listening?

***

Hammer image courtesy of Shutterstock.

Children’s survey data citation courtesy of Bowker Market Research. Contact James Howitt for more information.

Sargasso Sea map courtesy of Greenrock.org and the Bermuda Alliance for the Sargasso Sea (BASS)

Kristen McLean

About Kristen McLean

Kristen McLean is a book futurist, consumer zoologist, and idea omnivore. She is also the founder & CEO of Bookigee, a Miami-based company that develops groundbreaking tools and innovative analytics to help the $28B book publishing industry meet the digital future. Additionally, she is the co-chair of O’Reilly Media’s Author (R)evolution Day project, and the series editor for Bowker Market Research's ongoing Understanding the Children's Book Consumer in the Digital Age demographic study. When Kristen isn’t building her company or speaking about the future of publishing, she’s on the prowl for great coffee and interesting conversation.

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2 thoughts on “What the Barnes & Noble news is really telling us about the future of digital content

  1. Hi Kirsten; great to read your writing! May I add a couple of related comments?
    1. With p-book title count dropping monthly in B&N stores, again, there is a more woeful outlook for a turnaround.
    2. Platform-based apps are ruling now, but the standard for design & production of digital content of all sorts is moving toward HTML5 and CSS3. When this is the case the product is infinitely is more flexible for everything from \native app\ tweaking on the one hand to being device-responsive browser-viewable. In this BYOD world (bring your own device) this may still be a good bet. And within the ePub 3 CMS maintains the capability for fixed layout & PDF creation as well. This is more bad news for Adobe InDesign than B&N or anyone else.
    3. I picked up the Nook HD+9\ for $179 on a promotion from BN.com. It was a steal! Fabulous device running the Ice Cream version of Android (meaning almost the apps in Google Playstore work), 9\ diagonal screen (perfect size) and lightest in category. Cons are no cameras & a clumsy proprietary device-to-HDMI-interface, but everything else is terrific. Get one while they are still around if you want a non-iOS tablet!\nKeep it up, Kristen.

  2. HI Michael! So nice to hear from you. I totally agree with your analysis. I leave it to greater minds than my own to look ahead to the final format questions, but I think there will be a settling on an industry standard sooner or later.

    Yes, I really like the Nook Tablet too. I only hope they continue to offer updates & support as it transitions to an outside vendor.

    Wild times.

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